As filed with the Securities and Exchange Commission on November 7, 2002
1933 Act Registration No. 2-27334
1940 Act Registration No. 811-1540
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 91 X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
---
Amendment No. 91 X
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(Check appropriate box or boxes.)
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Copy to:
John Lively, Esquire Martha J. Hays, Esquire A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP 11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor Houston, Texas 77046 Philadelphia, Pennsylvania 19103-7599 |
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Amendment
It is proposed that this filing will become effective (check appropriate box)
If appropriate, check the following box:
--- this post-effective amendment designates a new effective date for a previously filed post-effective amendment.
AIM International Emerging Growth Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
DECEMBER , 2002
This prospectus contains important
information about Class A, B, and C shares
of the fund. Please read it before
investing and keep it for future reference.
As with all other mutual fund securities,
the Securities and Exchange Commission has
not approved or disapproved these
securities or determined whether the
information in this prospectus is adequate
or accurate. Anyone who tells you otherwise
is committing a crime.
Investments in the fund:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
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INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Return 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 ------------------------------------------------------ The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 5 ------------------------------------------------------ Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 ------------------------------------------------------ SHAREHOLDER INFORMATION A-1 ------------------------------------------------------ Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-5 Exchanging Shares A-8 Pricing of Shares A-10 Taxes A-10 OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM Stylized and/or Design, AIM Alternative Assets and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and AIM Lifetime America are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objective by investing at least 65% of its total assets in securities of small and mid-sized international companies. The fund considers a company to be a small-capitalization or mid-capitalization company if it has a market capitalization, at the time of purchase, no larger than the largest capitalized company included in the Russell MidCap--Registered Trademark-- Index during the most recent 11-month period (based on month-end data) plus the most recent data during the current month. The Russell MidCap Index measures the performance of the 800 companies with the lowest market capitalization in the Russell 1000--Registered Trademark-- Index. The Russell 1000 Index is a widely recognized, unmanaged index of common stocks of the 1000 largest companies in the Russell 3000(R) Index, which measures the performance of the 3000 largest U.S. companies based on total market capitalization. These securities may include common stocks, convertible bonds, convertible preferred stocks and warrants. Under normal conditions, the top 10 holdings may comprise up to one-third of the fund's total assets.
At least 65% of the fund's total assets will be invested in securities of companies located in countries outside of the United States. The fund will normally invest in companies located in at least four countries outside of the United States. The fund may invest up to 35% of its total assets in the securities of foreign companies located in developing countries, i.e., those that are in the initial stages of their industrial cycles. The fund may invest up to 35% of its total assets in securities of U.S. companies.
The fund may invest up to 20% of its total assets in securities exchangeable for or convertible into equity securities of foreign issuers. For cash management purposes, the fund may also hold a portion of its assets in cash or cash equivalents, including shares of affiliated money market funds. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The portfolio managers purchase securities of companies that have experienced, or that they believe have the potential for, above-average, long-term growth. In selecting countries in which the fund will invest, the portfolio managers also consider such factors as the prospect for relative economic growth among countries or regions, economic or political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security. The portfolio managers consider whether to sell a particular security when any of these factors materially changes.
The fund is non-diversified, which means it can invest a greater percentage of its assets in any one issuer than a diversified fund can. With respect to 50% of its assets, a non-diversified fund is permitted to invest more than 5% of its assets in the securities of any one issuer.
In anticipation of or in response to adverse market or other conditions, or atypical circumstances such as unusually large cash inflows or redemptions, the fund may temporarily hold all or a portion of its assets in cash, cash equivalents or high-quality debt instruments. As a result, the fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to equity securities of small companies, whose prices may go up and down more than the prices of equity securities of larger, more established companies. Also, since equity securities of small companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or impossible for the fund to sell securities at a desired price.
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures.
The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
A large percentage of the fund's assets may be invested in a limited number of securities. In addition, as a non-diversified fund, the fund will invest in fewer securities than if it were a diversified fund. As a result, a change in the value of these securities could significantly affect the value of your investment in the fund.
The fund may participate in the initial public offering (IPO) market in some market cycles. Because of the fund's small asset base, any investment the fund may make in IPOs may significantly increase the fund's total return. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the effect of IPO investments on the fund's total return.
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.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance (before and after taxes) is not necessarily an indication of its future performance.
The following bar chart shows the performance of the fund's Class A shares. The bar chart does not reflect sales loads. If it did, the annual total return shown would be lower.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURN
----------- ------
2001................................................................... -10.48%
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The Class A shares' year-to-date total return as of March 31, 2002 was 7.46%.
During the period shown in the bar chart, the highest quarterly return was 21.34% (quarter ended December 31, 2001) and the lowest quarterly return was -17.19% (quarter ended March 31, 2001).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------------------------------------------------------
(for the periods ended SINCE INCEPTION
December 31, 2001) 1 YEAR INCEPTION DATE
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Class A 08/31/00
Return Before Taxes (15.37)% (25.57)%
Return After Taxes on Distributions (15.53) (25.68)
Return After Taxes on Distributions
and Sale of Fund Shares (9.36) (20.30)
Class B 08/31/00
Return Before Taxes (15.52) (25.21)
Class C 08/31/00
Return Before Taxes (11.96) (22.88)
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MSCI EAFE--Registered Trademark--
Index(1) (reflects no deduction for
fees, expenses, or taxes) (21.44) (21.25)(2) 08/31/00(2)
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After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A only and after-tax returns for Class B and C will vary.
(1) The Morgan Stanley Capital International Europe, Australasia, and Far East
Index measures performance of global stock markets in 20 developed
countries.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) CLASS A CLASS B CLASS C -------------------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1,2) 5.00% 1.00% -------------------------------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(3) -------------------------------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C -------------------------------------------------------------------------------- Management Fees 0.95% 0.95% 0.95% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 Interest 0.02 0.02 0.02 Other Expenses(3) 3.25 3.25 3.25 Total Annual Fund Operating Expenses 4.57% 5.22% 5.22% Fee Waivers(4,5) 2.55 2.55 2.55 Net Expenses 2.02 2.67 2.67 -------------------------------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2) Effective November 1, 2002, if you are a qualified retirement plan participant, you may pay a 1.00% CDSC if a total redemption of the qualified retirement plan assets occurs within 12 months from the date of the qualified retirement plan's initial purchase.
(3) There is no guarantee that actual expenses will be the same as those shown in the table.
(4) Other Expenses and Fee Waivers have been restated to reflect expense arrangements in effect as of March 4, 2002.
(5) The advisor has contractually agreed to waive fees and/or reimburse expenses (excluding interest, taxes, dividends on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) for Class A, Class B and Class C shares to the extent necessary to limit the Total Annual Fund Operating Expenses of Class A shares to 2.00% (e.g., if AIM waives 2.55% of Class A expenses, AIM will also waive 2.55% of Class B and Class C expenses).
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. To the extent fees are waived and/or expenses are reimbursed, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
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Class A $ 983 $1,854 $2,733 $4,963
Class B 1,021 1,861 2,796 5,041
Class C 621 1,561 2,596 5,163
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You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class A $983 $1,854 $2,733 $4,963
Class B 521 1,561 2,596 5,041
Class C 521 1,561 2,596 5,163
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THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 175 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
The advisor is to receive a fee from the fund calculated at the annual rate of 0.95% of average daily net assets. However, during the fiscal year ended December 31, 2001, the advisor did not receive any compensation due to voluntary expense limitation arrangements between the advisor and the fund.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the management of the fund's portfolio are
- Jason T. Holzer (lead manager), Senior Portfolio Manager, who has been responsible for the fund since its inception in 2000 and has been associated with the advisor and/or its affiliates since 1996.
- Barrett K. Sides (lead manager), Senior Portfolio Manager, who has been responsible for the fund since its inception in 2000 and has been associated with the advisor and/or its affiliates since 1990.
- Shuxin Cao, Portfolio Manager, who has been responsible for the fund since its inception in 2000 and has been associated with the advisor and/or its affiliates since 1997.
- Borge Endresen, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1999. Prior to 1999, he was a full time student.
They are assisted by the Asia Pacific and Europe/Canada Teams. More information on the fund's management team may be found on our website (http://www.aimfunds.com).
SALES CHARGES
Purchases of Class A shares of AIM International Emerging Growth Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Certain purchases of Class A shares at net asset value may be subject to the contingent deferred sales charge listed in that section. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
The information has been audited by PricewaterhouseCoopers LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
CLASS A
--------------------------------------------------
AUGUST 31,
2000
(DATE OPERATIONS
SIX MONTHS COMMENCED)
ENDED YEAR ENDED TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------- ------------ ----------------
Net asset value, beginning of period $ 7.10 $ 7.97 $ 10.00
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a) (0.08)(a) (0.03)(a)
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.95 (0.76) (2.00)
================================================================================================================
Total from investment operations 0.93 (0.84) (2.03)
================================================================================================================
Less dividends from net investment income -- (0.03) --
================================================================================================================
Net asset value, end of period $ 8.03 $ 7.10 $ 7.97
________________________________________________________________________________________________________________
================================================================================================================
Total return(b) 13.10% (10.48)% (20.30)%
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $14,260 $ 5,202 $ 5,625
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers and expense reimbursements 2.00%(c) 2.02% 2.11%(d)
----------------------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 2.97%(c) 4.55% 6.83%(d)
________________________________________________________________________________________________________________
================================================================================================================
Ratio of net investment income (loss) to average net assets (0.62)%(c) (1.12)% (1.09)%(d)
________________________________________________________________________________________________________________
================================================================================================================
Ratio of interest expense to average net assets -- 0.02% --
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate 43% 145% 30%
________________________________________________________________________________________________________________
================================================================================================================
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(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less than
one year.
(c) Ratios are annualized and based on average daily net assets of $8,555,748.
(d) Annualized.
CLASS B
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AUGUST 31,
2000
(DATE OPERATIONS
SIX MONTHS COMMENCED)
ENDED YEAR ENDED TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------- ------------ ----------------
Net asset value, beginning of period $ 7.07 $ 7.95 $ 10.00
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.13)(a) (0.05)(a)
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.96 (0.75) (2.00)
================================================================================================================
Total from investment operations 0.91 (0.88) (2.05)
================================================================================================================
Net asset value, end of period $ 7.98 $ 7.07 $ 7.95
________________________________________________________________________________________________________________
================================================================================================================
Total return(b) 12.87% (11.07)% (20.50)%
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 4,818 $ 2,016 $ 1,992
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers and expense reimbursements 2.59%(c) 2.72% 2.81%(d)
----------------------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 3.56%(c) 5.25% 7.53%(d)
________________________________________________________________________________________________________________
================================================================================================================
Ratio of net investment income (loss) to average net assets (1.21)%(c) (1.83)% (1.79)%(d)
________________________________________________________________________________________________________________
================================================================================================================
Ratio of interest expense to average net assets -- 0.02% --
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate 43% 145% 30%
________________________________________________________________________________________________________________
================================================================================================================
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(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average net assets of $2,658,517.
(d) Annualized.
CLASS C
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AUGUST
31, 2000
(DATE OPERATIONS
SIX MONTHS COMMENCED)
ENDED YEAR ENDED TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------- ------------ ----------------
Net asset value, beginning of period $ 7.07 $ 7.95 $ 10.00
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.13)(a) (0.05)(a)
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.95 (0.75) (2.00)
================================================================================================================
Total from investment operations 0.90 (0.88) (2.05)
================================================================================================================
Net asset value, end of period $ 7.97 $ 7.07 $ 7.95
________________________________________________________________________________________________________________
================================================================================================================
Total return(b) 12.73% (11.07)% (20.50)%
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 3,644 $ 2,588 $ 2,649
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers and expense reimbursements 2.59%(c) 2.72% 2.81%(d)
----------------------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 3.56%(c) 5.25% 7.53%(d)
________________________________________________________________________________________________________________
================================================================================================================
Ratio of net investment income (loss) to average net assets (1.21)%(c) (1.83)% (1.79)%(d)
________________________________________________________________________________________________________________
================================================================================================================
Ratio of interest expense to average net assets -- 0.02% --
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate 43% 145% 30%
________________________________________________________________________________________________________________
================================================================================================================
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(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $2,980,436.
(d) Annualized.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consult your financial advisor as to which class is most suitable for you. In addition, you should consider the factors below:
CLASS A(1) CLASS A3 CLASS B CLASS C CLASS R
---------------------------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge
- Reduced or waived - No contingent - Contingent deferred - Contingent deferred - Generally, no
initial sales charge deferred sales charge sales charge on sales charge on contingent deferred
for certain redemptions within redemptions within sales charge(2)
purchases(2,3) six years one year(5)
- Generally, lower - 12b-1 fee of 0.35% - 12b-1 fee of 1.00% - 12b-1 fee of 1.00% - 12b-1 fee of 0.50%
distribution and
service (12b-1) fee
than Class B, Class C
or Class R shares
(See "Fee Table and
Expense Example")
- Does not convert to - Converts to Class A - Does not convert to - Does not convert to
Class A shares shares at the end of Class A shares Class A shares
the month which is
eight years after the
date on which shares
were purchased along
with a pro rata
portion of its
reinvested dividends
and distributions(4)
- Generally more - Generally more - Purchase orders - Generally more - Generally, only
appropriate for appropriate for limited to amounts appropriate for available to section
long-term investors short-term investors less than $250,000 short-term investors 401 and 457 plans,
section 403 plans
sponsored by a
section 501(c)(3)
organization and IRA
rollovers from such
plans if an AIM Fund
was offered
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Certain AIM Funds also offer Institutional Class shares to certain eligible institutional investors; consult the fund's Statement of Additional Information for details.
(1) As of the close of business on October 30, 2002, Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund will be closed to new investors.
(2) A contingent deferred sales charge may apply in some cases.
(3) AIM Opportunities I Fund will not accept any single purchase order in excess of $250,000.
(4) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund at the end of the month which is seven years after the date on which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until the end of the month which is eight years after the date on which you purchased your original shares.
(5) A contingent deferred sales charge (CDSC) does not apply to redemption of Class C shares of AIM Short Term Bond Fund unless you exchange Class C shares of another AIM Fund that are subject to a CDSC into AIM Short Term Bond Fund.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund with respect to its Class A shares) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Sales charges on the AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
A-1 MCF--10/02
CATEGORY I INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION(1) OFFERING PRICE INVESTMENT
--------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
--------------------------------------------------------------
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(1) AIM Opportunities I Fund will not accept any single purchase order in excess of $250,000.
CATEGORY II INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
--------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
--------------------------------------------------------------
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CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
--------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
--------------------------------------------------------------
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SHARES SOLD WITHOUT A SALES CHARGE
You will not pay an initial sales charge on purchases of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund.
You will not pay an initial sales charge or a contingent deferred sales charge (CDSC) on Class A3 shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND
You can purchase $1,000,000 or more (a Large Purchase) of Class A shares of Category I and II Funds at net asset value. However, if you redeem these shares prior to 18 months after the date of purchase, they will be subject to a CDSC of 1%.
If you made a Large Purchase of Class A shares of Category III Funds at net asset value during the period November 15, 2001 through October 30, 2002, such shares will be subject to a 0.25% CDSC if you redeem them prior to 12 months after the date of purchase.
If you currently own Class A shares of a Category I, II or III Fund and make additional purchases (through October 30, 2002 for Category III Funds only) at net asset value that result in account balances of $1,000,000 or more, the additional shares purchased will be subject to a CDSC (an 18-month, 1% CDSC for Category I and II Fund shares, and a 12-month, 0.25% CDSC for Category III Fund shares.) The CDSC for Category III Fund shares will not apply to additional purchases made prior to November 15, 2001 or after October 30, 2002.
Generally, qualified retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor pays a concession to the dealer of record, the Class A shares may be subject to a 1% CDSC at the time of redemption if all qualified retirement plan assets are redeemed within one year from the date of the qualified retirement plan's initial purchase.
You may be charged a CDSC when you redeem AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund if you acquired those shares through an exchange, and the shares originally purchased were subject to a CDSC.
The distributor may pay a dealer concession and/or a service fee for Large Purchases and purchases by certain qualified retirement plans.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE CLASS CLASS PURCHASE MADE B C -------------------------------------------------------- First 5% 1% Second 4 None Third 3 None Fourth 3 None Fifth 2 None Sixth 1 None Seventh and following None None -------------------------------------------------------- |
You can purchase Class C shares of AIM Short Term Bond Fund at their net asset value and not subject to a CDSC. However, you may be charged a CDSC when you redeem Class C shares of AIM Short Term Bond Fund if you acquired those shares through an exchange, and the shares originally purchased were subject to a CDSC.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS R SHARES
You can purchase Class R shares at their net asset value per share. If the distributor pays a concession to the dealer of record, however, the Class R shares are subject to a 0.75% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the retirement plan's initial purchase. In addition, individual purchasers of Class R shares may pay a 0.75% CDSC if the distributor paid a concession to the dealer of record and a redemption of such shares occurs within 12 months from the date of purchase.
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
MCF--10/02 A-2
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with shares currently owned (Class A, B, C or R) for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all other shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, Class A3 shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class B and Class C shares of AIM Floating Rate Fund will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges pursuant to Rights of Accumulation or Letters of Intent.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privileges; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem Class C shares of an AIM Fund other than AIM Short Term Bond Fund and you received such Class C shares by exchanging Class C shares of AIM Short Term Bond Fund;
- if you redeem Class C shares of AIM Short Term Bond Fund unless you received such Class C shares by exchanging Class C shares of another AIM Fund and the original purchase was subject to a CDSC;
- if you are a participant in a retirement plan and your plan redeems, at any time, less than all of the Class R shares held through such plan that would otherwise be subject to a CDSC;
- if you are a participant in a retirement plan and your plan redeems, after having held them for more than one year from the date of the plan's initial purchase, all of the Class R shares held through such plan that would otherwise be subject to a CDSC;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
There are no minimum investments with respect to Class R shares for AIM Fund accounts. The minimum investments with respect to Class A, A3, B and C shares for AIM Fund accounts (except for investments in AIM Opportunities I Fund, AIM Opportunities II Fund and AIM Opportunities III Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
----------------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings
(SEP) accounts, Salary Reduction (SARSEP) Plans)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 25
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------------
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The minimum initial investment for AIM Opportunities I Fund, AIM Opportunities II Fund and AIM Opportunities III Fund (the Special Opportunities Funds) accounts is $10,000. The minimum subsequent investment is $1,000. The maximum amount for a single purchase order of AIM Opportunities I Fund is $250,000.
A-3 MCF--10/02
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below. Purchase orders will not be processed unless the account application and purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information requested in the current account application, your purchase order will not be processed.
PURCHASE OPTIONS
----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and check to the transfer agent, slip from your confirmation
A I M Fund Services, Inc., statement to the transfer agent.
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name:
A I M Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Select the AIM Bank Connection
methods described above. option on your completed account
application or complete an AIM Bank
Connection form. Mail the
application or form to the transfer
agent. Once the transfer agent has
received the form, call the
transfer agent to place your
purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
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SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $25 ($1,000 for any of the Special Opportunities Funds). You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to a Special Opportunities Fund is $1,000. The minimum amount you can exchange to another AIM Fund is $25.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
MCF--10/02 A-4
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF CLASS A SHARES AND AIM CASH RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE PRIOR TO NOVEMBER 15, 2001.
If you purchased $1,000,000 or more of Class A shares of any AIM Fund at net asset value prior to November 15, 2001, or entered into a Letter of Intent prior to November 15, 2001 to purchase $1,000,000 or more of Class A shares of a Category I, II or III Fund at net asset value, your shares may be subject to a contingent deferred sales charge (CDSC) upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of Category
Category III Fund(1) I or II Fund shares
- AIM Cash Reserve
Shares of AIM Money
Market Fund
- Class A - Class A shares of - No CDSC
shares of Category III Fund(1)
Category III - Class A shares of
Fund(1) AIM Tax-Exempt Cash
Fund
- AIM Cash Reserve
Shares of AIM Money
Market Fund
|
(1) Beginning on February 17, 2003, Class A shares of a Category I, II or III Fund may not be exchanged for Class A shares of a Category III Fund.
REDEMPTION OF CLASS A SHARES AND AIM CASH RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE ON AND AFTER NOVEMBER 15, 2001
If you purchase $1,000,000 or more of Class A shares of any AIM Fund on and after November 15, 2001 (and through October 30, 2002 with respect to Class A shares of Category III Funds), or if you make additional purchases of Class A shares on and after November 15, 2001 (and through October 30, 2002 with respect to Class A shares of Category III Funds) at net asset value, your shares may be subject to a CDSC upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of Category
Category III Fund(1) I or II Fund shares
- AIM Cash Reserve
Shares of AIM Money
Market Fund
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category Fund months of initial
III Fund purchase of
Category III Fund
shares
- Class A - Class A shares of - 0.25% if shares are
shares of Category III redeemed within 12
Category Fund(1) months of initial
III Fund - Class A shares of purchase of
AIM Tax-Exempt Cash Category III Fund
Fund shares
- AIM Cash Reserve
Shares of AIM Money
Market Fund
|
(1) Beginning on February 17, 2003, Class A shares of a Category I, II or III Fund may not be exchanged for Class A shares of a Category III Fund.
A-5 MCF--10/02
REDEMPTION OF CLASS A SHARES AND AIM CASH RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE AFTER OCTOBER 30, 2002
If you purchase $1,000,000 or more of Class A shares of any AIM Fund on or after October 31, 2002, or if you make additional purchases of Class A shares on and after October 31, 2002 at net asset value, your shares may be subject to a CDSC upon redemption as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of Category
Category III Fund(2) I or II Fund shares
- AIM Cash Reserve
Shares of AIM Money
Market Fund
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category Fund months of initial
III Fund(1) purchase of Category
III Fund shares
- Class A - Class A shares of - No CDSC
shares of Category III Fund(2)
Category III - Class A shares of
Fund(1) AIM Tax-Exempt Cash
Fund
- AIM Cash Reserve
Shares of AIM Money
Market
|
(1) As of the close of business on October 30, 2002, only existing shareholders of Class A shares of a Category III Fund may purchase such shares.
(2) Beginning on February 17, 2003, Class A shares of a Category I, II or III Fund may not be exchanged for Class A shares of Category III Fund.
REDEMPTION OF CLASS B SHARES ACQUIRED BY EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $250,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
You may, with limited exceptions, redeem from an IRA account
by telephone. Redemptions from other types of retirement
accounts must be requested in writing.
|
MCF--10/02 A-6
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $250,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
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TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $250,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
REINSTATEMENT PRIVILEGES
You may, within 120 days after you sell shares (except Class R shares, Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class A shares and Class A3 shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), reinvest all or part of your redemption proceeds in Class A shares of any Category I or II AIM Fund at net asset value in an identically registered account.
You may, within 120 days after you sell some but not all of your Class A shares of a Category III Fund, reinvest all or part of your redemption proceeds in Class A shares of that same Category III Fund at net asset value in an identically registered account.
The reinvestment amount must meet the subsequent investment minimum as indicated in the section "Purchasing Shares".
If you paid an initial sales charge on any reinstated amount, you will receive credit on purchases of Class A shares of a Category I or II Fund.
If you paid a contingent deferred sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC if you later redeem that amount.
You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege.
A-7 MCF--10/02
REDEMPTIONS BY THE AIM FUNDS
If your account (Class A, Class A3, Class B and Class C shares only) has been open at least one year, you have not made an additional purchase in the account during the past six calendar months, and the value of your account falls below $500 for three consecutive months due to redemptions or exchanges (excluding retirement accounts), the AIM Funds have the right to redeem the account after giving you 60 days' prior written notice. You may avoid having your account redeemed during the notice period by bringing the account value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security or other tax ID number on your account application, the AIM Fund may, at its discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated under "Exchanges Not Permitted," you generally may exchange your shares for shares of the same class of another AIM Fund.
You may also exchange:
(1) Class A shares of an AIM Fund for AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of an AIM Fund (excluding AIM Limited Maturity Treasury Fund, AIM Tax-Exempt Cash Fund and AIM Tax-Free Intermediate Fund) for Class A3 shares of an AIM Fund;
(3) Class A3 shares of an AIM Fund for AIM Cash Reserve shares of AIM Money Market Fund;
(4) Class A3 shares of an AIM Fund for Class A shares of any AIM Fund (excluding AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund);
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class A3 shares of an AIM Fund;
(6) AIM Cash Reserve Shares of AIM Money Market Fund for Class A shares of any AIM Fund (excluding AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, effective February 17, 2003, and AIM Tax-Exempt Cash Fund).
You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange into shares that are subject to a CDSC, we will begin the holding period for purposes of calculating the CDSC on the date you made your initial purchase.
EXCHANGES NOT SUBJECT TO A SALES CHARGE
You will not pay an initial sales charge when exchanging:
(1) Class A shares with an initial sales charge (excluding Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
(a) Class A shares of another AIM Fund;
(b) AIM Cash Reserve Shares of AIM Money Market Fund; or
(c) Class A3 shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free Intermediate Fund.
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund with an initial sales charge for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher initial sales charges; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) Class A shares of an AIM Fund subject to an initial sales charge (excluding Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (excluding Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(4) Class A3 shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free Intermediate Fund for
(a) AIM Cash Reserve Shares of AIM Money Market Fund; or
(b) Class A shares of AIM Tax-Exempt Cash Fund.
You will not pay a CDSC or other sales charge when exchanging:
(1) Class A shares for other Class A shares;
(2) Class B shares for other Class B shares;
(3) Class C shares for other Class C shares; or
(4) Class R shares for other Class R shares.
EXCHANGES NOT PERMITTED
Certain classes of shares are not covered by the exchange privilege.
You may not exchange:
(1) Class A shares of a Category I or II Fund for Class A shares of a Category III Fund after February 16, 2003
MCF--10/02 A-8
(2) Class A shares of a Category III Fund for Class A shares of another Category III Fund after February 16, 2003
For shares purchased prior to November 15, 2001, you may not exchange:
(1) Class A shares of Category I or II Funds (i) subject to an initial sales charge or (ii) purchased at net asset value and subject to a contingent deferred sales charge (CDSC) for Class A shares of AIM Tax-Exempt Cash Fund;
(2) Class A shares of Category III Funds purchased at net asset value for Class A shares of a Category I or II Fund;
(3) AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund;
(4) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category I or II Funds that are subject to a CDSC; or
(5) on or after January 15, 2002, AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category III Funds that are subject to a CDSC.
For shares purchased on or after November 15, 2001, you may not exchange:
(1) Class A shares of Category I or II Funds (i) subject to an initial sales charge or (ii) purchased at net asset value and subject to a CDSC for Class A shares of AIM Tax-Exempt Cash Fund;
(2) Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of any other AIM Fund (i) subject to an initial sales charge or (ii) purchased at net asset value and subject to a CDSC or for AIM Cash Reserve Shares of AIM Money Market Fund; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund or for Class A shares of any AIM Fund that are subject to a CDSC, however, if you originally purchased Class A shares of a Category I or II Fund, and exchanged those shares for AIM Cash Reserve Shares of AIM Money Market Fund, you may further exchange the AIM Cash Reserve Shares for Class A shares of a Category I or II Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or terminate this privilege at any time. The AIM Fund or the distributor will provide you with notice of such modification or termination whenever it is required to do so by applicable law, but may impose changes at any time for emergency purposes.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
A-9 MCF--10/02
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
If you make an exchange involving Class B or Class C shares or Class R shares subject to a CDSC, the amount of time you held the original shares will be credited to the holding period of the Class B, Class C or Class R shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ALL OR ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- SUSPEND, CHANGE OR WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The AIM Funds value portfolio securities for which market quotations are readily available at market value. The AIM Funds' short-term investments are valued at amortized cost when the security has 60 days or less to maturity. AIM Money Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund and AIM Tax-Free Intermediate Fund value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the AIM Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset value will be subject to the judgment of the Board of Directors or Trustees or its designee instead of being determined by the market. Because some of the AIM Funds may invest in securities that are primarily listed on foreign exchanges that trade on days when the AIM Funds do not price their shares, the value of those funds' assets may change on days when you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good order. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. In addition, the preceding discussion concerning the taxability of fund dividends and distributions and of redemptions and exchanges of AIM Fund shares is inapplicable to investors that are generally exempt from federal income tax, such as retirement plans that are qualified under Section 401 of the Internal Revenue Code, individual retirement accounts (IRAs) and Roth IRAs. You should consult your tax advisor before investing.
MCF--10/02 A-10
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
--------------------------------------------------------
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a request
by e-mail or download
prospectuses, annual or
semiannual reports via
our website:
http://www.aimfunds.com
--------------------------------------------------------
|
You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
SEC 1940 Act file number: 811-1540 --------------------------------------- [AIM LOGO APPEARS HERE] www.aimfunds.com IEG-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
STATEMENT OF
ADDITIONAL INFORMATION
AIM FUNDS GROUP
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
THIS STATEMENT OF ADDITIONAL INFORMATION RELATES TO THE CLASS A, CLASS B, CLASS C AND CLASS R SHARES, AS APPLICABLE OF EACH PORTFOLIO (EACH A "FUND," COLLECTIVELY THE "FUNDS") OF AIM FUNDS GROUP LISTED BELOW. THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND IT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUSES FOR THE CLASS A, CLASS B, CLASS C AND CLASS R SHARES, AS APPLICABLE OF THE FUNDS LISTED BELOW. YOU MAY OBTAIN A COPY OF ANY PROSPECTUS FOR ANY FUND LISTED BELOW FROM AN AUTHORIZED DEALER OR BY WRITING TO:
A I M FUND SERVICES, INC.
P.O. BOX 4739
HOUSTON, TEXAS 77210-4739
OR BY CALLING (800) 347-4246
THIS STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER __, 2002, RELATES TO THE CLASS A, CLASS B AND CLASS C SHARES, AS APPLICABLE, OF THE FOLLOWING PROSPECTUSES:
FUND DATED
---- -----
AIM BASIC BALANCED FUND MAY 1, 2002
AIM EUROPEAN SMALL COMPANY FUND MAY 1, 2002
AIM GLOBAL UTILITIES FUND MAY 1, 2002
AIM INTERNATIONAL EMERGING GROWTH FUND DECEMBER , 2002
AIM MID CAP BASIC VALUE FUND MAY 1, 2002
AIM NEW TECHNOLOGY FUND MAY 1, 2002
AIM PREMIER EQUITY II FUND MAY 1, 2002 AS REVISED JULY 1, 2002
AIM SELECT EQUITY FUND MAY 1, 2002
AIM WORLDWIDE SPECTRUM FUND MAY 1, 2002
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THIS STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER __, 2002, ALSO RELATES TO THE CLASS A, CLASS B, CLASS C AND CLASS R SHARES OF THE FOLLOWING PROSPECTUSES:
FUND DATED
---- -----
AIM BALANCED FUND JUNE 3, 2002
AIM PREMIER EQUITY FUND JUNE 3, 2002 AS REVISED JULY 1, 2002
AIM SMALL CAP EQUITY FUND JUNE 3, 2002
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AIM FUNDS GROUP
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION ABOUT THE TRUST .............................................................................. 1
Fund History ............................................................................................ 1
Shares of Beneficial Interest ........................................................................... 1
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS ......................................................... 3
Classification .......................................................................................... 3
Investment Strategies and Risks ......................................................................... 3
Equity Investments ............................................................................. 7
Foreign Investments ............................................................................ 7
Debt Investments ............................................................................... 9
Other Investments ............................................................................. 13
Investment Techniques ......................................................................... 13
Derivatives ................................................................................... 18
Fund Policies .......................................................................................... 24
Temporary Defensive Positions .......................................................................... 27
Portfolio Turnover ..................................................................................... 27
MANAGEMENT OF THE TRUST ......................................................................................... 27
Board of Trustees ...................................................................................... 27
Management Information ................................................................................. 27
Trustee Ownership of Fund Shares .............................................................. 28
Factors Considered in Approving the Investment Advisory Agreement ............................. 28
Compensation ........................................................................................... 29
Retirement Plan for Trustees .................................................................. 29
Deferred Compensation Agreements .............................................................. 29
Purchase of Class a Shares of the Funds At Net Asset Value .................................... 30
Codes of Ethics ........................................................................................ 30
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES ............................................................. 30
INVESTMENT ADVISORY AND OTHER SERVICES .......................................................................... 31
Investment Advisor ..................................................................................... 31
Service Agreements ..................................................................................... 33
Other Service Providers ................................................................................ 33
BROKERAGE ALLOCATION AND OTHER PRACTICES ........................................................................ 34
Brokerage Transactions ................................................................................. 34
Commissions ............................................................................................ 35
Brokerage Selection .................................................................................... 35
Directed Brokerage (Research Services) ................................................................. 36
Regular Brokers or Dealers ............................................................................. 36
Allocation of Portfolio Transactions ................................................................... 36
Allocation of Initial Public Offering ("IPO") Transactions ............................................. 36
PURCHASE, REDEMPTION AND PRICING OF SHARES ...................................................................... 37
Purchase and Redemption of Shares ...................................................................... 37
Offering Price ......................................................................................... 53
Redemption in Kind ..................................................................................... 54
Backup Withholding ..................................................................................... 54
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS ........................................................................ 55
Dividends and Distributions ............................................................................ 55
Tax Matters ............................................................................................ 56
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PAGE
DISTRIBUTION OF SECURITIES ...................................................................................... 62
Distribution Plans ..................................................................................... 62
Distributor ............................................................................................ 64
APPENDICES:
RATINGS OF DEBT SECURITIES ..................................................................................... A-1
TRUSTEES AND OFFICERS .......................................................................................... B-1
TRUSTEE COMPENSATION TABLE ..................................................................................... C-1
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES ............................................................ D-1
MANAGEMENT FEES ................................................................................................ E-1
ADMINISTRATIVE SERVICES FEES ................................................................................... F-1
BROKERAGE COMMISSIONS .......................................................................................... G-1
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF SECURITIES OF REGULAR BROKERS OR DEALERS ............... H-1
AMOUNTS PAID TO A I M DISTRIBUTORS, INC. PURSUANT TO DISTRIBUTION PLANS ........................................ I-1
ALLOCATION OF ACTUAL FEES PAID PURSUANT TO DISTRIBUTION PLANS .................................................. J-1
TOTAL SALES CHARGES ............................................................................................ K-1
PERFORMANCE DATA ............................................................................................... L-1
FINANCIAL STATEMENTS ............................................................................................ FS
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GENERAL INFORMATION ABOUT THE TRUST
FUND HISTORY
AIM Funds Group (the "Trust") is a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company. The Trust currently consists of twelve separate portfolios: AIM Balanced Fund, AIM Basic Balanced Fund, AIM European Small Company Fund, AIM Global Utilities Fund, AIM International Emerging Growth Fund, AIM Mid Cap Basic Value Fund, AIM New Technology Fund, AIM Premier Equity Fund, AIM Premier Equity II Fund, AIM Select Equity Fund, AIM Small Cap Equity Fund, and AIM Worldwide Spectrum Fund (each a "Fund" and collectively, the "Funds"). Under the Amended and Restated Agreement and Declaration of Trust, dated May 15, 2002, as amended (the "Trust Agreement"), the Board of Trustees is authorized to create new series of shares without the necessity of a vote of shareholders of the Trust.
The Trust was originally organized on October 30, 1984 as a Massachusetts business trust. The Trust reorganized as a Delaware statutory trust on October 15, 1993. The following Funds were included in the reorganization: AIM Global Utilities Fund, AIM Select Equity Fund and AIM Premier Equity Fund. In addition, on October 15, 1993, AIM Balanced Fund acquired all the assets and assumed all of the liabilities of AIM Convertible Securities Fund, Inc., a Maryland corporation. All historical financial and other information contained in this Statement of Additional Information for periods prior to October 15, 1993 relating to these Funds (or a class thereof) is that of the predecessor funds (or the corresponding class thereof). Prior to May 1, 1995, AIM Global Utilities Fund was known as AIM Utilities Fund. Prior to July 13, 2001, AIM Select Equity Fund was known as AIM Select Growth Fund, and prior to May 1, 1998, such Fund was known as AIM Growth Fund. Each of the other Funds commenced operations as a series of the Trust. Prior to July 1, 2002, AIM Premier Equity Fund and AIM Premier Equity II Fund were known as AIM Value Fund and AIM Value II Fund, respectively.
Effective shortly after AIM Small Cap Equity Fund reaches $500 million
in assets, the Fund will be closed to new investors. The following types of
investors may continue to invest in the Fund if they are invested in the Fund on
the date the Fund discontinues sales to new investors and remain invested in the
Fund: existing shareholders of the Fund; existing shareholders of the Fund who
open other accounts in their name; retirement plans maintained pursuant to
Section 401 of the Internal Revenue Code ("the Code"); retirement plans
maintained pursuant to Section 403 of the Code, to the extent they are
maintained by organizations established under Section 501(c)(3) of the Code;
retirement plans maintained pursuant to Section 457 of the Code; non-qualified
deferred compensation plans maintained pursuant to Section 83 of the Code; and
Qualified Tuition Programs maintained pursuant to Section 529 of the Code.
Future investments in the Fund made by existing brokerage firm wrap programs
will be at the discretion of A I M Distributors, Inc. ("AIM Distributors"). The
following types of investors may open new accounts in the Fund, if approved by
AIM Distributors: retirement plans maintained pursuant to Section 401 of the
Code; retirement plans maintained pursuant to Section 403 of the Code, to the
extent they are maintained by organizations established under Section 501(c)(3)
of the Code; retirement plans maintained pursuant to Section 457 of the Code;
non-qualified deferred compensation plans maintained pursuant to Section 83 of
the Code; and Qualified Tuition Programs maintained pursuant to Section 529 of
the Code. Such plans and programs that are considering the Fund as an investment
option should contact AIM Distributors for approval.
SHARES OF BENEFICIAL INTEREST
Shares of beneficial interest of the Trust are redeemable at their net asset value (subject, in certain circumstances, to a contingent deferred sales charge) at the option of the shareholder or at the option of the Trust in certain circumstances.
The Trust allocates moneys and other property it receives from the issue or sale of shares of each of its series of shares, and all income, earnings and profits from such issuance and sales, subject
only to the rights of creditors, to the appropriate Fund. These assets constitute the underlying assets of each Fund, are segregated on the Trust's books of account, and are charged with the expenses of such Fund and its respective classes. The Trust allocates any general expenses of the Trust not readily identifiable as belonging to a particular Fund by or under the direction of the Board of Trustees, primarily on the basis of relative net assets, or other relevant factors.
Each share of each Fund represents an equal proportionate interest in that Fund with each other share and is entitled to such dividends and distributions out of the income belonging to such Fund as are declared by the Board. Each Fund, other than AIM Balanced Fund, AIM Premier Equity Fund and AIM Small Cap Equity Fund, offers three separate classes of shares: Class A shares, Class B shares and Class C shares. AIM Small Cap Equity Fund offers four separate classes of shares: Class A shares, Class B shares, Class C shares and Class R shares. Each of AIM Balanced Fund and AIM Premier Equity Fund offers five separate classes of shares: Class A shares, Class B shares, Class C shares, Class R shares and Institutional Class shares. This Statement of Additional Information relates solely to the Class A, Class B, Class C and Class R shares, if applicable, of the Funds. The Institutional Class shares of AIM Balanced Fund and AIM Premier Equity Fund are intended for use by certain eligible institutional investors. Shares of the Institutional Class of AIM Balanced Fund and AIM Premier Equity Fund are available for banks and trust companies acting in a fiduciary or similar capacity, bank and trust company common and collective trust funds, banks and trust companies investing for their own account, entities acting for the account of a public entity (e.g. Taft-Hartley funds, states, cities or government agencies), defined benefit plans, endowments, foundations, defined contribution plans offered pursuant to Sections 401, 457, 403(a), or 403(b) or (c) (defined contribution plans offered pursuant to Section 403(b) must be sponsored by a Section 501(c)(3) organization), and platform sponsor with which AIM Distributors has entered into an agreement.
Each class of shares represents interests in the same portfolio of investments. Differing sales charges and expenses will result in differing net asset values and dividends and distributions. Upon any liquidation of the Trust, shareholders of each class are entitled to share pro rata in the net assets belonging to the applicable Fund allocable to such class available for distribution after satisfaction of outstanding liabilities of the Fund allocable to such class.
Each share of a Fund generally has the same voting, dividend, liquidation and other rights; however, each class of shares of a fund is subject to different sales loads, conversion features, exchange privileges and class-specific expenses. Only shareholders of a specific class may vote on matters relating to that class' distribution plan.
Because Class B shares automatically convert to Class A shares at month-end eight years after the date of purchase, the Fund's distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act requires that Class B shareholders must also approve any material increase in distribution fees submitted to Class A shareholders of that Fund. A pro rata portion of shares from reinvested dividends and distributions convert along with the Class B shares.
Except as specifically noted above, shareholders of each Fund are entitled to one vote per share (with proportionate voting for fractional shares), irrespective of the relative net asset value of the shares of a Fund. However, on matters affecting an individual Fund or class of shares, a separate vote of shareholders of that Fund or class is required. Shareholders of a Fund or class are not entitled to vote on any matter which does not affect that Fund or class but that requires a separate vote of another Fund or class. An example of a matter that would be voted on separately by shareholders of each Fund is the approval of the advisory agreement with A I M Advisors, Inc. ("AIM"), and an example of a matter that would be voted on separately by shareholders of each class of shares is approval of the distribution plans. When issued, shares of each Fund are fully paid and nonassessable, have no preemptive or subscription rights, and are freely transferable. Other than the automatic conversion of Class B shares to Class A shares, there are no conversion rights. Shares do not have cumulative voting rights, which means that in situations in which shareholders elect trustees, holders of more than 50% of the shares
voting for the election of trustees can elect all of the trustees of the Trust, and the holders of less than 50% of the shares voting for the election of trustees will not be able to elect any trustees.
Under Delaware law, shareholders of a Delaware statutory trust shall be entitled to the same limitations of liability extended to shareholders of private for-profit corporations. There is a remote possibility, however, that shareholders could, under certain circumstances, be held liable for the obligations of the Trust to the extent the courts of another state which does not recognize such limited liability were to apply the laws of such state to a controversy involving such obligations. The Trust Agreement disclaims shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Trust or the trustees to all parties, and each party thereto must expressly waive all rights of action directly against shareholders of the Trust. The Trust Agreement provides for indemnification out of the property of a Fund for all losses and expenses of any shareholder of such Fund held liable on account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss due to shareholder liability is limited to circumstances in which a Fund is unable to meet its obligations and the complaining party is not held to be bound by the disclaimer.
The trustees and officers of the Trust will not be liable for any act, omission or obligation of the Trust or any Trustee or officer; however, a trustee or officer is not protected against any liability to the Trust or to the shareholders to which a trustee or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office with the Trust ("Disabling Conduct"). The Trust Agreement provides for indemnification by the Trust of the trustees, the officers and employees or agents of the Trust, provided that such persons have not engaged in Disabling Conduct. The Trust Agreement also authorizes the purchase of liability insurance on behalf of trustees and officers.
SHARE CERTIFICATES. Shareholders of the Funds do not have the right to demand or require the Trust to issue share certificates, although the Trust in its sole discretion may issue them. A I M Fund Services, Inc. ("AFS") will not issue certificates for shares held in prototype retirement plans sponsored by AMVESCAP National Trust Company, an affiliate of AIM.
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS
CLASSIFICATION
The Trust is an open-end management investment company. Each of the Funds other than AIM European Small Company Fund, AIM Global Utilities Fund and AIM International Emerging Growth Fund is "diversified" for purposes of the 1940 Act.
INVESTMENT STRATEGIES AND RISKS
The table on the following pages identifies various securities and investment techniques used by AIM in managing The AIM Family of Funds--Registered Trademark--. The table has been marked to indicate those securities and investment techniques that AIM may use to manage a Fund. A Fund may not use all of these techniques at any one time. A Fund's transactions in a particular security or use of a particular technique is subject to limitations imposed by a Fund's investment objective, policies and restrictions described in that Fund's Prospectus and/or this Statement of Additional Information, as well as federal securities laws. The Funds' investment objectives, policies, strategies and practices are non-fundamental unless otherwise indicated. A more detailed description of the securities and investment techniques, as well as the risks associated with those securities and investment techniques that the Funds utilize, follows the table. The descriptions of the securities and investment techniques in this section supplement the discussion of principal investment strategies contained in each Fund's Prospectus; where a particular type of security or investment technique is not discussed in a Fund's Prospectus, that security or investment technique is not a principal investment strategy.
AIM FUNDS GROUP
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
----------------------------------------------------------------------------------------------------------------------------------
FUND AIM
----------------------- EUROPEAN AIM AIM AIM AIM AIM
SECURITY/ AIM AIM BASIC SMALL GLOBAL INTERNATIONAL AIM NEW PREMIER PREMIER SELECT
INVESTMENT BALANCED BALANCED COMPANY UTILITIES EMERGING TECHNOLOGY EQUITY EQUITY II EQUITY
TECHNIQUE FUND FUND FUND FUND GROWTH FUND FUND FUND FUND FUND
----------------------- -------- --------- -------- --------- ------------- ---------- ------- --------- ------
EQUITY INVESTMENTS
----------------------------------------------------------------------------------------------------------------------------------
Common Stock X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------------
Preferred Stock X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------------
Convertible
Securities X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------------
Alternative Entity
Securities X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------------
FOREIGN INVESTMENTS
----------------------------------------------------------------------------------------------------------------------------------
Foreign Securities X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------------
Foreign Government
Obligations X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------------
Foreign Exchange
Transactions X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------------
DEBT INVESTMENTS
----------------------------------------------------------------------------------------------------------------------------------
U.S. Government
Obligations X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------------
Mortgage-Backed
and Asset-Backed
Securities X X
----------------------------------------------------------------------------------------------------------------------------------
Collateralized
Mortgage
Obligations X
----------------------------------------------------------------------------------------------------------------------------------
Investment Grade
Corporate Debt
Obligations X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------------
Liquid Assets X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------------
Junk Bonds X
----------------------------------------------------------------------------------------------------------------------------------
AIM FUNDS GROUP
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
-------------------------------------------------
FUND AIM
----------------------- SMALL
SECURITY/ CAP
INVESTMENT EQUITY AIM WORLDWIDE
TECHNIQUE FUND SPECTRUM FUND
----------------------- ------ --------------
EQUITY INVESTMENTS
-------------------------------------------------
Common Stock X X
-------------------------------------------------
Preferred Stock X X
-------------------------------------------------
Convertible
Securities X X
-------------------------------------------------
Alternative Entity
Securities X X
-------------------------------------------------
FOREIGN INVESTMENTS
-------------------------------------------------
Foreign Securities X X
-------------------------------------------------
Foreign Government
Obligations X X
-------------------------------------------------
Foreign Exchange
Transactions X X
-------------------------------------------------
DEBT INVESTMENTS
-------------------------------------------------
U.S. Government
Obligations X X
-------------------------------------------------
Mortgage-Backed
and Asset-Backed
Securities
-------------------------------------------------
Collateralized
Mortgage
Obligations
-------------------------------------------------
Investment Grade
Corporate Debt
Obligations X X
-------------------------------------------------
Liquid Assets X X
-------------------------------------------------
Junk Bonds
-------------------------------------------------
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AIM FUNDS GROUP
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
---------------------------------------------------------------------------------------------------------------------------------
FUND AIM
----------------------- EUROPEAN AIM AIM AIM AIM AIM
SECURITY/ AIM AIM BASIC SMALL GLOBAL INTERNATIONAL AIM NEW PREMIER PREMIER SELECT
INVESTMENT BALANCED BALANCED COMPANY UTILITIES EMERGING TECHNOLOGY EQUITY EQUITY II EQUITY
TECHNIQUE FUND FUND FUND FUND GROWTH FUND FUND FUND FUND FUND
----------------------- -------- --------- -------- --------- ------------- ---------- ------- --------- ------
OTHER INVESTMENTS
---------------------------------------------------------------------------------------------------------------------------------
REITs X X X X X X X X X
---------------------------------------------------------------------------------------------------------------------------------
Other Investment
Companies X X X X X X X X X
---------------------------------------------------------------------------------------------------------------------------------
Defaulted Securities
---------------------------------------------------------------------------------------------------------------------------------
Municipal Forward
Contracts
---------------------------------------------------------------------------------------------------------------------------------
Variable or Floating
Rate Instruments
---------------------------------------------------------------------------------------------------------------------------------
Indexed Securities
---------------------------------------------------------------------------------------------------------------------------------
Zero-Coupon and
Pay-in-Kind
Securities
---------------------------------------------------------------------------------------------------------------------------------
Synthetic Municipal
Instruments
---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT TECHNIQUES
---------------------------------------------------------------------------------------------------------------------------------
Delayed Delivery
Transactions X X X X X X X X X
---------------------------------------------------------------------------------------------------------------------------------
When-Issued Securities X X X X X X X X X
---------------------------------------------------------------------------------------------------------------------------------
Short Sales X X X X X X X X X
---------------------------------------------------------------------------------------------------------------------------------
Margin Transactions
---------------------------------------------------------------------------------------------------------------------------------
Swap Agreements X X X X X X X X X
---------------------------------------------------------------------------------------------------------------------------------
Interfund Loans X X X X X X X X X
---------------------------------------------------------------------------------------------------------------------------------
Borrowing X X X X X X X X X
---------------------------------------------------------------------------------------------------------------------------------
Lending Portfolio
Securities X X X X X X X X X
---------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements X X X X X X X X X
---------------------------------------------------------------------------------------------------------------------------------
AIM FUNDS GROUP
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
-------------------------------------------------
FUND AIM
----------------------- SMALL
SECURITY/ CAP
INVESTMENT EQUITY AIM WORLDWIDE
TECHNIQUE FUND SPECTRUM FUND
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OTHER INVESTMENTS
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REITs X X
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Other Investment
Companies X X
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Defaulted Securities
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Municipal Forward
Contracts
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Variable or Floating
Rate Instruments
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Indexed Securities
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Zero-Coupon and
Pay-in-Kind
Securities
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Synthetic Municipal
Instruments
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INVESTMENT TECHNIQUES
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Delayed Delivery
Transactions X X
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When-Issued Securities X X
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Short Sales X X
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Margin Transactions
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Swap Agreements X X
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Interfund Loans X X
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Borrowing X X
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Lending Portfolio
Securities X X
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Repurchase Agreements X X
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AIM FUNDS GROUP
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
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FUND AIM
----------------------- EUROPEAN AIM AIM AIM AIM AIM
SECURITY/ AIM AIM BASIC SMALL GLOBAL INTERNATIONAL AIM NEW PREMIER PREMIER SELECT
INVESTMENT BALANCED BALANCED COMPANY UTILITIES EMERGING TECHNOLOGY EQUITY EQUITY II EQUITY
TECHNIQUE FUND FUND FUND FUND GROWTH FUND FUND FUND FUND FUND
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Reverse Repurchase
Agreements X X X X X X X X X
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Dollar Rolls X X
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Illiquid Securities X X X X X X X X X
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Rule 144A Securities X X X X X X X X X
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Unseasoned Issuers X X X X X X X X X
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Portfolio Transactions
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Sale of Money
Market Securities
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Standby Commitments
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DERIVATIVES
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Equity-Linked
Derivatives X X X X X X X X X
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Put Options X X X X X X X X X
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Call Options X X X X X X X X X
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Straddles X X X X X X X X X
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Warrants X X X X X X X X X
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Futures Contracts
and Options on
Futures Contracts X X X X X X X X X
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Forward Currency
Contracts X X X X X X X X X
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Cover X X X X X X X X X
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AIM FUNDS GROUP
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
-------------------------------------------------
FUND AIM
----------------------- SMALL
SECURITY/ CAP
INVESTMENT EQUITY AIM WORLDWIDE
TECHNIQUE FUND SPECTRUM FUND
----------------------- ------ --------------
Reverse Repurchase
Agreements X X
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Dollar Rolls
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Illiquid Securities X X
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Rule 144A Securities X X
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Unseasoned Issuers X X
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Portfolio Transactions
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Sale of Money
Market Securities
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Standby Commitments
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DERIVATIVES
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Equity-Linked
Derivatives X X
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Put Options X X
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Call Options X X
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Straddles X X
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Warrants X X
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Futures Contracts
and Options on
Futures Contracts X X
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Forward Currency
Contracts X X
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Cover X X
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Equity Investments
COMMON STOCK. Common stock is issued by companies principally to raise cash for business purposes and represents a residual interest in the issuing company. A Fund participates in the success or failure of any company in which it holds stock. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
PREFERRED STOCK. Preferred stock, unlike common stock, often offers a stated dividend rate payable from a corporation's earnings. If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of preferred stocks to decline. Preferred stock may have mandatory sinking fund provisions, as well as call/redemption provisions prior to maturity, a negative feature when interest rates decline. Dividends on some preferred stock may be "cumulative," requiring all or a portion of prior unpaid dividends to be paid before dividends are paid on the issuer's common stock. Preferred stock also generally has a preference over common stock on the distribution of a corporation's assets in the event of liquidation of the corporation, and may be "participating," which means that it may be entitled to a dividend exceeding the stated dividend in certain cases. In some cases an issuer may offer auction rate preferred stock, which means that the interest to be paid is set by auction and will often be reset at stated intervals. The rights of preferred stocks on the distribution of a corporation's assets in the event of a liquidation are generally subordinate to the rights associated with a corporation's debt securities.
CONVERTIBLE SECURITIES. Convertible securities include bonds, debentures, notes, preferred stocks and other securities that may be converted into a prescribed amount of common stock or other equity securities at a specified price and time. The holder of convertible securities is entitled to receive interest paid or accrued on debt, or dividends paid or accrued on preferred stock, until the security matures or is converted.
The value of a convertible security depends on interest rates, the yield of similar nonconvertible securities, the financial strength of the issuer and the seniority of the security in the issuer's capital structure. Convertible securities may be illiquid, and may be required to convert at a time and at a price that is unfavorable to the Fund.
The Funds will invest in a convertible debt security based primarily on the characteristics of the equity security into which it converts, and without regard to the credit rating of the convertible security (even if the credit rating is below investment grade). To the extent that a Fund invests in convertible debt securities with credit ratings below investment grade, such securities may have a higher likelihood of default, although this may be somewhat offset by the convertibility feature. See also "Junk Bonds" below.
ALTERNATIVE ENTITY SECURITIES. Companies that are formed as limited partnerships, limited liability companies, business trusts or other non-corporate entities may issue equity securities that are similar to common or preferred stock of corporations.
Foreign Investments
FOREIGN SECURITIES. Foreign securities are equity or debt securities issued by issuers outside the United States, and include securities in the form of American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or other securities representing underlying securities of foreign issuers. Depositary Receipts are typically issued by a bank or trust company and evidence ownership of underlying securities issued by foreign corporations.
Each Fund may invest up to 25% of its total assets (at least 65% for AIM International Emerging Growth Fund, at least 80% of net assets for AIM European Small Company Fund and up to 80% of total assets for AIM Global Utilities Fund and AIM Worldwide Spectrum Fund) in foreign securities.
Investments by a Fund in foreign securities, whether denominated in U.S. dollars or foreign currencies, may entail all of the risks set forth below. Investments by a Fund in ADRs, EDRs or similar securities also may entail some or all of the risks described below.
Currency Risk. The value of the Funds' foreign investments will be affected by changes in currency exchange rates. The U.S. dollar value of a foreign security decreases when the value of the U.S. dollar rises against the foreign currency in which the security is denominated, and increases when the value of the U.S. dollar falls against such currency.
Political and Economic Risk. The economies of many of the countries in which the Funds may invest may not be as developed as the United States' economy and may be subject to significantly different forces. Political or social instability, expropriation or confiscatory taxation, and limitations on the removal of funds or other assets could also adversely affect the value of the Funds' investments.
Regulatory Risk. Foreign companies are not registered with the Securities and Exchange Commission ("SEC") and are generally not subject to the regulatory controls imposed on United States issuers and, as a consequence, there is generally less publicly available information about foreign securities than is available about domestic securities. Foreign companies are not subject to uniform accounting, auditing and financial reporting standards, corporate governance practices and requirements comparable to those applicable to domestic companies. Income from foreign securities owned by the Funds may be reduced by a withholding tax at the source, which tax would reduce dividend income payable to the Funds' shareholders.
Market Risk. The securities markets in many of the countries in which the Funds invest will have substantially less trading volume than the major United States markets. As a result, the securities of some foreign companies may be less liquid and experience more price volatility than comparable domestic securities. Increased custodian costs as well as administrative costs (such as the need to use foreign custodians) may be associated with the maintenance of assets in foreign jurisdictions. There is generally less government regulation and supervision of foreign stock exchanges, brokers and issuers which may make it difficult to enforce contractual obligations. In addition, transaction costs in foreign securities markets are likely to be higher, since brokerage commission rates in foreign countries are likely to be higher than in the United States.
On January 1, 1999, certain members of the European Economic and Monetary Union ("EMU"), established a common European currency known as the "euro" and each member's local currency became a denomination of the euro. Each participating country (currently, Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain) has replaced its local currency with the euro effective January 1, 2002. The replacement of currencies with the euro may cause market disruptions and adversely affect the value of securities held by a Fund.
Risks of Developing Countries. AIM European Small Company Fund, AIM Global Utilities Fund, AIM International Emerging Growth Fund and AIM Worldwide Spectrum Fund may invest up to 20% and AIM Balanced Fund, AIM Basic Balanced Fund, AIM Mid Cap Basic Value Fund, AIM New Technology Fund, AIM Premier Equity Fund, AIM Premier Equity II Fund, AIM Select Equity Fund and AIM Small Cap Equity Fund may invest up to 5% of their total assets in securities of companies domiciled in developing countries. Investments in developing countries present risks greater than, and in addition to, those presented by investments in foreign issuers in general. A number of developing countries restrict, to varying degrees, foreign investment in stocks. Repatriation of investment income, capital, and the proceeds of sales by foreign investors may require governmental registration and/or approval in some developing countries. A number of the currencies of developing countries have experienced significant declines against the U.S. dollar in recent years, and devaluation may occur subsequent to investments in these currencies by the Funds. Inflation and rapid fluctuations in inflation rates have had and may continue to have negative effects on the economies and securities markets of certain emerging market countries. Many of the developing securities markets are relatively small or less diverse, have low trading volumes, suffer periods of relative illiquidity, and are characterized by significant price volatility. There is a risk in developing countries that a future economic or political crisis could lead to price controls, forced
mergers of companies, expropriation or confiscatory taxation, seizure, nationalization, or creation of government monopolies, any of which may have a detrimental effect on a Fund's investments.
FOREIGN GOVERNMENT OBLIGATIONS. Debt securities issued by foreign governments are often, but not always, supported by the full faith and credit of the foreign governments, or their subdivisions, agencies or instrumentalities, that issue them. These securities involve the risks discussed above with respect to foreign securities. Additionally, the issuer of the debt or the governmental authorities that control repayment of the debt may be unwilling or unable to pay interest or repay principal when due. Political or economic changes or the balance of trade may affect a country's willingness or ability to service its debt obligations. Periods of economic uncertainty may result in the volatility of market prices of sovereign debt obligations, especially debt obligations issued by the governments of developing countries. Foreign government obligations of developing countries, and some structures of emerging market debt securities, both of which are generally below investment grade, are sometimes referred to as "Brady Bonds".
FOREIGN EXCHANGE TRANSACTIONS. Foreign exchange transactions include direct purchases of futures contracts with respect to foreign currency, and contractual agreements to purchase or sell a specified currency at a specified future date (up to one year) at a price set at the time of the contract. Such contractual commitments may be forward contracts entered into directly with another party or exchange traded futures contracts.
Each Fund has authority to deal in foreign exchange between currencies of the different countries in which it will invest as a hedge against possible variations in the foreign exchange rates between those currencies. A Fund may commit the same percentage of its total assets to foreign exchange hedges as it can invest in foreign securities.
The Funds may utilize either specific transactions ("transaction hedging") or portfolio positions ("position hedging") to hedge foreign currency exposure through foreign exchange transactions. Transaction hedging is the purchase or sale of foreign currency with respect to specific receivables or payables of a Fund accruing in connection with the purchase or sale of its portfolio securities, the sale and redemption of shares of the Fund, or the payment of dividends and distributions by the Fund. Position hedging is the purchase or sale of foreign currency with respect to portfolio security positions (or underlying portfolio security positions, such as in an ADR) denominated or quoted in a foreign currency. Additionally, foreign exchange transactions may involve some of the risks of investments in foreign securities.
Debt Investments
U.S. GOVERNMENT OBLIGATIONS. Obligations issued or guaranteed by the U.S. Government, its agencies and instrumentalities include bills, notes and bonds issued by the U.S. Treasury, as well as "stripped" or "zero coupon" U.S. Treasury obligations representing future interest or principal payments on U.S. Treasury notes or bonds. Stripped securities are sold at a discount to their "face value," and may exhibit greater price volatility than interest-bearing securities since investors receive no payment until maturity. Obligations of certain agencies and instrumentalities of the U.S. Government, such as the Government National Mortgage Association ("GNMA"), are supported by the full faith and credit of the U.S. Treasury; others, such as those of the Federal National Mortgage Association ("FNMA"), are supported by the right of the issuer to borrow from the U.S. Treasury; others, such as those of the Student Loan Marketing Association ("SLMA"), are supported by the discretionary authority of the U.S. Government to purchase the agency's obligations; still others, though issued by an instrumentality chartered by the U.S. Government, like the Federal Farm Credit Bureau ("FFCB"), are supported only by the credit of the instrumentality. The U.S. Government may choose not to provide financial support to U.S. Government-sponsored agencies or instrumentalities if it is not legally obligated to do so.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. Mortgage-backed securities are mortgage-related securities issued or guaranteed by the U.S. Government, its agencies and instrumentalities, or
issued by nongovernment entities. Mortgage-related securities represent pools of mortgage loans assembled for sale to investors by various government agencies such as GNMA and government-related organizations such as FNMA and the Federal Home Loan Mortgage Corporation ("FHLMC"), as well as by nongovernment issuers such as commercial banks, savings and loan institutions, mortgage bankers and private mortgage insurance companies. Although certain mortgage-related securities are guaranteed by a third party or otherwise similarly secured, the market value of the security, which may fluctuate, is not so secured.
There are a number of important differences among the agencies and instrumentalities of the U.S. Government that issue mortgage-related securities and among the securities they issue. Mortgage-related securities issued by GNMA include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as to the timely payment of principal and interest. That guarantee is backed by the full faith and credit of the U.S. Treasury. GNMA is a corporation wholly owned by the U.S. Government within the Department of Housing and Urban Development. Mortgage-related securities issued by FNMA include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes") and are guaranteed as to payment of principal and interest by FNMA itself and backed by a line of credit with the U.S. Treasury. FNMA is a government-sponsored entity wholly owned by public stockholders. Mortgage-related securities issued by FHLMC include FHLMC Mortgage Participation Certificates (also known as "Freddie Macs") guaranteed as to payment of principal and interest by FHLMC itself and backed by a line of credit with the U.S. Treasury. FHLMC is a government-sponsored entity wholly owned by public stockholders.
Other asset-backed securities are structured like mortgage-backed securities, but instead of mortgage loans or interests in mortgage loans, the underlying assets may include such items as motor vehicle installment sales or installment loan contracts, leases of various types of real and personal property, and receivables from credit card agreements. Regular payments received in respect of such securities include both interest and principal. Asset-backed securities typically have no U.S. Government backing. Additionally, the ability of an issuer of asset-backed securities to enforce its security interest in the underlying assets may be limited.
If a Fund purchases a mortgage-backed or other asset-backed security at a premium, that portion may be lost if there is a decline in the market value of the security whether resulting from changes in interest rates or prepayments in the underlying collateral. As with other interest-bearing securities, the prices of such securities are inversely affected by changes in interest rates. However, though the value of a mortgage-backed or other asset-backed security may decline when interest rates rise, the converse is not necessarily true, since in periods of declining interest rates the mortgages and loans underlying the securities are prone to prepayment, thereby shortening the average life of the security and shortening the period of time over which income at the higher rate is received. When interest rates are rising, though, the rate of prepayment tends to decrease, thereby lengthening the period of time over which income at the lower rate is received. For these and other reasons, a mortgage-backed or other asset-backed security's average maturity may be shortened or lengthened as a result of interest rate fluctuations and, therefore, it is not possible to predict accurately the security's return.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). AIM Balanced Fund may invest in CMOs. The Fund can also invest in mortgage-backed bonds and asset-backed securities. A CMO is a hybrid between a mortgage-backed bond and a mortgage pass-through security. Similar to a bond, interest and prepaid principal is paid, in most cases, semiannually. CMOs may be collateralized by whole mortgage loans, but are more typically collateralized by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or FNMA, and their income streams.
CMOs are structured into multiple classes, each bearing a different stated maturity. Actual maturity and average life will depend upon the prepayment experience of the collateral. CMOs provide for a modified form of call protection through a de facto breakdown of the underlying pool of mortgages according to how quickly the loans are repaid. Monthly payment of principal received from the pool of underlying mortgages, including prepayments, is first returned to investors holding the shortest maturity class. Investors holding the longer maturity classes receive principal only after the first class has been
retired. An investor is partially guarded against a sooner than desired return of principal because of the sequential payments.
In a typical CMO transaction, a corporation ("issuer") issues multiple series (e.g., A, B, C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase mortgages or mortgage pass-through certificates ("Collateral"). The Collateral is pledged to a third party trustee as security for the Bonds. Principal and interest payments from the Collateral are used to pay principal on the Bonds in the order A, B, C, Z. The Series A, B, and C Bonds all bear current interest. Interest on Series Z Bond is accrued and added to principal and a like amount is paid as principal on the Series A, B, or C Bond currently being paid off. When the Series A, B, and C Bonds are paid in full, interest and principal on the Series Z Bond begins to be paid currently. With some CMOs, the issuer serves as a conduit to allow loan originators (primarily builders or savings and loan associations) to borrow against their loan portfolios.
CMOs that are issued or guaranteed by the U.S. government or by any of its agencies or instrumentalities will be considered U.S. government securities by the Funds, while other CMOs, even if collateralized by U.S. government securities, will have the same status as other privately issued securities for purposes of applying a Fund's diversification tests.
FHLMC CMOs. FHLMC CMOs are debt obligations of FHLMC issued in multiple classes having different maturity dates which are secured by the pledge of a pool of conventional mortgage loans purchased by FHLMC. Unlike FHLMC PCs, payments of principal and interest on the CMOs are made semiannually, as opposed to monthly. The amount of principal payable on each semiannual payment date is determined in accordance with FHLMC's mandatory sinking fund schedule, which, in turn, is equal to approximately 100% of FHA prepayment experience applied to the mortgage collateral pool. All sinking fund payments in the CMOs are allocated to the retirement of the individual classes of bonds in the order of their stated maturities. Payment of principal on the mortgage loans in the collateral pool in excess of the amount of FHLMC's minimum sinking fund obligation for any payment date are paid to the holders of the CMOs as additional sinking fund payments. Because of the "pass-through" nature of all principal payments received on the collateral pool in excess of FHLMC's minimum sinking fund requirement, the rate at which principal of the CMOs is actually repaid is likely to be such that each class of bonds will be retired in advance of its scheduled maturity date.
If collection of principal (including prepayments) on the mortgage loans during any semiannual payment period is not sufficient to meet FHLMC's minimum sinking fund obligation on the next sinking fund payment date, FHLMC agrees to make up the deficiency from its general funds.
Risks of Mortgage-Related Securities. Investment in mortgage-backed securities poses several risks, including prepayment, market, and credit risk. Prepayment risk reflects the risk that borrowers may prepay their mortgages faster than expected, thereby affecting the investment's average life and perhaps its yield. Whether or not a mortgage loan is prepaid is almost entirely controlled by the borrower. Borrowers are most likely to exercise prepayment options at the time when it is least advantageous to investors, generally prepaying mortgages as interest rates fall, and slowing payments as interest rates rise. Besides the effect of prevailing interest rates, the rate of prepayment and refinancing of mortgages may also be affected by home value appreciation, ease of the refinancing process and local economic conditions.
Market risk reflects the risk that the price of the security may fluctuate over time. The price of mortgage-backed securities may be particularly sensitive to prevailing interest rates, the length of time the security is expected to be outstanding, and the liquidity of the issue. In a period of unstable interest rates, there may be decreased demand for certain types of mortgage-backed securities, and a Fund invested in such securities wishing to sell them may find it difficult to find a buyer, which may in turn decrease the price at which they may be sold.
Credit risk reflects the risk that a Fund may not receive all or part of its principal because the issuer or credit enhancer has defaulted on its obligations. Obligations issued by U.S. government-related entities are guaranteed as to the payment of principal and interest, but are not backed by the full faith and
credit of the U.S. government. The performance of private label mortgage-backed securities, issued by private institutions, is based on the financial health of those institutions. With respect to GNMA certificates, although GNMA guarantees timely payment even if homeowners delay or default, tracking the "pass-through" payments may, at times, be difficult.
INVESTMENT GRADE CORPORATE DEBT OBLIGATIONS. Each Fund may invest in U.S. dollar-denominated debt obligations issued or guaranteed by U.S. corporations or U.S. commercial banks, U.S. dollar-denominated obligations of foreign issuers and debt obligations of foreign issuers denominated in foreign currencies. Such debt obligations include, among others, bonds, notes, debentures and variable rate demand notes. In choosing corporate debt securities on behalf of a Fund, its investment adviser may consider (i) general economic and financial conditions; (ii) the specific issuer's (a) business and management, (b) cash flow, (c) earnings coverage of interest and dividends, (d) ability to operate under adverse economic conditions, (e) fair market value of assets, and (f) in the case of foreign issuers, unique political, economic or social conditions applicable to such issuer's country; and, (iii) other considerations deemed appropriate.
LIQUID ASSETS. For cash management purposes, the Funds may hold a portion of their assets in cash or cash equivalents, including shares of affiliated money market funds. Cash equivalents include money market instruments (such as certificates of deposit, time deposits, bankers' acceptances from U.S. or foreign banks, and repurchase agreements), shares of affiliated money market funds or high-quality debt obligations (such as U.S. Government obligations, commercial paper, master notes and other short-term corporate instruments, participation interests in corporate loans, and municipal obligations).
JUNK BONDS. Junk bonds are lower-rated or non-rated debt securities. Junk bonds are considered speculative with respect to their capacity to pay interest and repay principal in accordance with the terms of the obligation. While generally providing greater income and opportunity for gain, non-investment grade debt securities are subject to greater risks than higher-rated securities.
Companies that issue junk bonds are often highly leveraged, and may not have more traditional methods of financing available to them. During an economic downturn or recession, highly leveraged issuers of high yield securities may experience financial stress, and may not have sufficient revenues to meet their interest payment obligations. Economic downturns tend to disrupt the market for junk bonds, lowering their values, and increasing their price volatility. The risk of issuer default is higher with respect to junk bonds because such issues are generally unsecured and are often subordinated to other creditors of the issuer.
The credit rating of a junk bond does not necessarily address its market value risk, and ratings may from time to time change to reflect developments regarding the issuer's financial condition. The lower the rating of a junk bond, the more speculative its characteristics.
AIM Global Utilities Fund may have difficulty selling certain junk bonds because they may have a thin trading market. The lack of a liquid secondary market may have an adverse effect on the market price and the Fund's ability to dispose of particular issues and may also make it more difficult for the Fund to obtain accurate market quotations of valuing these assets. In the event the Fund experiences an unexpected level of net redemptions, the Fund could be forced to sell its junk bonds at an unfavorable price. Prices of junk bonds have been found to be less sensitive to fluctuations in interest rates, and more sensitive to adverse economic changes and individual corporate developments than those of higher-rated debt securities.
Descriptions of debt securities ratings are found in Appendix A.
Other Investments
REAL ESTATE INVESTMENT TRUSTS ("REITS"). REITs are trusts that sell equity or debt securities to investors and use the proceeds to invest in real estate or interests therein. A REIT may focus on particular projects, such as apartment complexes, or geographic regions, such as the southeastern United States, or both.
To the extent consistent with their respective investment objectives and policies, each Fund may invest up to 15% of its total assets in equity and/or debt securities issued by REITs.
To the extent that a Fund has the ability to invest in REITs, the Fund could conceivably own real estate directly as a result of a default on the securities it owns. A Fund, therefore, may be subject to certain risks associated with the direct ownership of real estate including difficulties in valuing and trading real estate, declines in the value of real estate, risks related to general and local economic conditions, adverse changes in the climate for real estate, environmental liability risks, increases in property taxes and operating expenses, changes in zoning laws, casualty or condemnation losses, limitations on rents, changes in neighborhood values, the appeal of properties to tenants, and increases in interest rates.
In addition to the risks described above, equity REITs may be affected by any changes in the value of the underlying property owned by the trusts, while mortgage REITs may be affected by the quality of any credit extended. Equity and mortgage REITs are dependent upon management skill, are not diversified, and are therefore subject to the risk of financing single or a limited number of projects. Such trusts are also subject to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the possibility of failing to maintain an exemption from the 1940 Act. Changes in interest rates may also affect the value of debt securities held by a Fund. By investing in REITs indirectly through a Fund, a shareholder will bear not only his/her proportionate share of the expenses of the Fund, but also, indirectly, similar expenses of the REITs.
OTHER INVESTMENT COMPANIES. With respect to a Fund's purchase of shares of another investment company, including Affiliated Money Market Funds (defined below), the Fund will indirectly bear its proportionate share of the advisory fees and other operating expenses of such investment company. The Funds have obtained an exemptive order from the SEC allowing them to invest in money market funds that have AIM or an affiliate of AIM as an investment advisor (the "Affiliated Money Market Funds"), provided that investments in Affiliated Money Market Funds do not exceed 25% of the total assets of the investing Fund.
The following restrictions apply to investments in other investment companies other than Affiliated Money Market Funds: (i) a Fund may not purchase more than 3% of the total outstanding voting stock of another investment company; (ii) a Fund may not invest more than 5% of its total assets in securities issued by another investment company; and (iii) a Fund may not invest more than 10% of its total assets in securities issued by other investment companies.
Investment Techniques
DELAYED DELIVERY TRANSACTIONS. Delayed delivery transactions, also referred to as forward commitments, involve commitments by a Fund to dealers or issuers to acquire or sell securities at a specified future date beyond the customary settlement for such securities. These commitments may fix the payment price and interest rate to be received or paid on the investment. A Fund may purchase securities on a delayed delivery basis to the extent it can anticipate having available cash on settlement date. Delayed delivery agreements will not be used as a speculative or leveraging technique.
Investment in securities on a delayed delivery basis may increase a Fund's exposure to market fluctuation and may increase the possibility that the Fund will incur short-term gains subject to federal taxation or short-term losses if the Fund must engage in portfolio transactions in order to honor a delayed delivery commitment. Until the settlement date, a Fund will segregate liquid assets of a dollar value
sufficient at all times to make payment for the delayed delivery transactions. Such segregated liquid assets will be marked-to-market daily, and the amount segregated will be increased if necessary to maintain adequate coverage of the delayed delivery commitments. No additional delayed delivery agreements or when-issued commitments (as described below) will be made by a Fund if, as a result, more than 25% of the Fund's total assets would become so committed.
The delayed delivery securities, which will not begin to accrue interest or dividends until the settlement date, will be recorded as an asset of a Fund and will be subject to the risk of market fluctuation. The purchase price of the delayed delivery securities is a liability of a Fund until settlement. Absent extraordinary circumstances, a Fund will not sell or otherwise transfer the delayed delivery basis securities prior to settlement.
A Fund may enter into buy/sell back transactions (a form of delayed delivery agreement). In a buy/sell back transaction, a Fund enters a trade to sell securities at one price and simultaneously enters a trade to buy the same securities at another price for settlement at a future date.
WHEN-ISSUED SECURITIES. Purchasing securities on a "when-issued" basis means that the date for delivery of and payment for the securities is not fixed at the date of purchase, but is set after the securities are issued. The payment obligation and, if applicable, the interest rate that will be received on the securities are fixed at the time the buyer enters into the commitment. A Fund will only make commitments to purchase such securities with the intention of actually acquiring such securities, but the Fund may sell these securities before the settlement date if it is deemed advisable.
Securities purchased on a when-issued basis and the securities held in a Fund's portfolio are subject to changes in market value based upon the public's perception of the creditworthiness of the issuer and, if applicable, changes in the level of interest rates. Therefore, if a Fund is to remain substantially fully invested at the same time that it has purchased securities on a when-issued basis, there will be a possibility that the market value of the Fund's assets will fluctuate to a greater degree. Furthermore, when the time comes for the Fund to meet its obligations under when-issued commitments, the Fund will do so by using then available cash flow, by sale of the segregated liquid assets, by sale of other securities or, although it would not normally expect to do so, by directing the sale of the when-issued securities themselves (which may have a market value greater or less than the Fund's payment obligation).
Investment in securities on a when-issued basis may increase a Fund's exposure to market fluctuation and may increase the possibility that the Fund will incur short-term gains subject to federal taxation or short-term losses if the Fund must sell another security in order to honor a when-issued commitment. If a Fund purchases a when-issued security, the Fund's custodian bank will segregate liquid assets in an amount equal to the when-issued commitment. If the market value of such segregated assets declines, additional liquid assets will be segregated on a daily basis so that the market value of the segregated assets will equal the amount of the Fund's when-issued commitments. No additional delayed delivery agreements (as described above) or when-issued commitments will be made by a Fund if, as a result, more than 25% of the Fund's total assets would become so committed.
SHORT SALES. In a short sale, a Fund does not immediately deliver the securities sold and does not receive the proceeds from the sale. A Fund is said to have a short position in the securities sold until it delivers the securities sold, at which time it receives the proceeds of the sale. A Fund will make a short sale, as a hedge, when it believes that the price of a security may decline, causing a decline in the value of a security owned by the Fund or a security convertible into or exchangeable for such security, or when the Fund does not want to sell the security it owns, because it wishes to defer recognition of gain or loss for federal income tax purposes. In such case, any future losses in a Fund's long position should be reduced by a gain in the short position. Conversely, any gain in the long position should be reduced by a loss in the short position. The extent to which such gains or losses are reduced will depend upon the amount of the security sold short relative to the amount a Fund owns, either directly or indirectly, and, in the case where the Fund owns convertible securities, changes in the conversion premium. In determining the number of shares to be sold short against a Fund's position in a convertible security, the anticipated
fluctuation in the conversion premium is considered. A Fund may also make short sales to generate additional income from the investment of the cash proceeds of short sales.
A Fund will only make short sales "against the box," meaning that at all times when a short position is open, the Fund owns an equal amount of such securities or securities convertible into or exchangeable, without payment of any further consideration, for securities of the same issue as, and equal in amount to, the securities sold short. To secure its obligation to deliver the securities sold short, a Fund will segregate with its custodian an equal amount to the securities sold short or securities convertible into or exchangeable for such securities. A Fund may pledge no more than 10% of its total assets as collateral for short sales against the box.
MARGIN TRANSACTIONS. None of the Funds will purchase any security on margin, except that each Fund may obtain such short-term credits as may be necessary for the clearance of purchases and sales of portfolio securities. The payment by a Fund of initial or variation margin in connection with futures or related options transactions will not be considered the purchase of a security on margin.
SWAP AGREEMENTS. Each Fund may enter into interest rate, index and currency exchange rate swap agreements for purposes of attempting to obtain a particular desired return at a lower cost to the Fund than if it had invested directly in an instrument that yielded that desired return. Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard "swap" transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or "swapped" between the parties are calculated with respect to a "notional amount," i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a "basket" of securities representing a particular index. Commonly used swap agreements include: (i) interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or "cap"; (ii) interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified level, or "floor"; and (iii) interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels.
The "notional amount" of the swap agreement is only a fictitious basis on which to calculate the obligations that the parties to a swap agreement have agreed to exchange. Most swap agreements entered into by a Fund would calculate the obligations on a "net basis." Consequently, a Fund's obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the "net amount"). Obligations under a swap agreement will be accrued daily (offset against amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by segregating liquid assets to avoid any potential leveraging of the Fund. A Fund will not enter into a swap agreement with any single party if the net amount owed to or to be received under existing contracts with that party would exceed 5% of the Fund's total assets. For a discussion of the tax considerations relating to swap agreements, see "Dividends, Distributions and Tax Matters - Swap Agreements."
INTERFUND LOANS. Each Fund may lend uninvested cash up to 15% of its net assets to other AIM Funds and each Fund may borrow from other AIM Funds to the extent permitted under such Fund's investment restrictions. During temporary or emergency periods, the percentage of a Fund's net assets that may be loaned to other AIM Funds may be increased as permitted by the SEC. If any interfund loans are outstanding, a Fund cannot make any additional investments. If a Fund has borrowed from other AIM Funds and has aggregate borrowings from all sources that exceed 10% of such Fund's total assets, such Fund will secure all of its loans from other AIM Funds. The ability of a Fund to lend its securities to other AIM Funds is subject to certain other terms and conditions.
BORROWING. Each Fund may borrow money to a limited extent for temporary or emergency purposes. If there are unusually heavy redemptions because of changes in interest rates or for any other
reason, a Fund may have to sell a portion of its investment portfolio at a time when it may be disadvantageous to do so. Selling fund securities under these circumstances may result in a lower net asset value per share or decreased dividend income, or both. The Trust believes that, in the event of abnormally heavy redemption requests, the Fund's borrowing ability would help to mitigate any such effects and could make the forced sale of their portfolio securities less likely.
LENDING PORTFOLIO SECURITIES. The Funds may each lend their portfolio securities (principally to broker-dealers) where such loans are callable at any time and are continuously secured by segregated collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash, letters of credit, or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Each Fund may lend portfolio securities to the extent of one-third of its total assets.
The Fund would continue to receive the income on loaned securities and would, at the same time, earn interest on the loan collateral or on the investment of any cash collateral. A Fund will not have the right to vote securities while they are being lent, but it can call a loan in anticipation of an important vote. Any cash collateral pursuant to these loans would be invested in short-term money market instruments or Affiliated Money Market Funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned increases and the collateral is not increased accordingly or in the event of default by the borrower. The Fund could also experience delays and costs in gaining access to the collateral.
REPURCHASE AGREEMENTS. Repurchase agreements are agreements under which a Fund acquires ownership of a security from a broker-dealer or bank that agrees to repurchase the security at a mutually agreed upon time and price (which is higher than the purchase price), thereby determining the yield during the Fund's holding period. A Fund may, however, enter into a "continuing contract" or "open" repurchase agreement under which the seller is under a continuing obligation to repurchase the underlying obligation from the Fund on demand and the effective interest rate is negotiated on a daily basis. Each of the Funds may engage in repurchase agreement transactions involving the types of securities in which it is permitted to invest.
If the seller of a repurchase agreement fails to repurchase the security in accordance with the terms of the agreement, a Fund might incur expenses in enforcing its rights, and could experience losses, including a decline in the value of the underlying security and loss of income. The securities underlying a repurchase agreement will be marked to market every business day so that the value of such securities is at least equal to the investment value of the repurchase agreement, including any accrued interest thereon.
The Funds have obtained an exemptive order from the SEC allowing them to invest their cash balances in joint accounts for the purpose of investing in repurchase agreements with maturities not to exceed 60 days, and in certain other money market instruments with remaining maturities not to exceed 90 days. Repurchase agreements are considered loans by a Fund under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS. Reverse repurchase agreements are
agreements that involve the sale of securities held by a Fund to financial
institutions such as banks and broker-dealers, with an agreement that the Fund
will repurchase the securities at an agreed upon price and date. A Fund may
employ reverse repurchase agreements (i) for temporary emergency purposes, such
as to meet unanticipated net redemptions so as to avoid liquidating other
portfolio securities during unfavorable market conditions; (ii) to cover
short-term cash requirements resulting from the timing of trade settlements; or
(iii) to take advantage of market situations where the interest income to be
earned from the investment of the proceeds of the transaction is greater than
the interest expense of the transaction. At the time it enters into a reverse
repurchase agreement, a Fund will segregate liquid assets having a dollar value
equal to the repurchase price, and will subsequently continually monitor the
account to ensure that such equivalent value is maintained at all times. Reverse
repurchase agreements involve the risk that the market value of securities to be
purchased by the Fund may decline below the price at which it is obligated to
repurchase the securities, or that the other party may default on its
obligation, so that the
Fund is delayed or prevented from completing the transaction. Reverse repurchase agreements are considered borrowings by a Fund under the 1940 Act.
DOLLAR ROLLS. A dollar roll involves the sale by a Fund of a mortgage security to a financial institution such as a broker-dealer or a bank, with an agreement to repurchase a substantially similar (i.e., same type, coupon and maturity) security at an agreed upon price and date. The mortgage securities that are purchased will bear the same interest rate as those sold, but will generally be collateralized by different pools of mortgages with different prepayment histories. During the period between the sale and repurchase, a Fund will not be entitled to receive interest and principal payments on the securities sold. Proceeds of the sale will be invested in short-term instruments, and the income from these investments, together with any additional fee income received on the sale, could generate income for a Fund exceeding the yield on the sold security.
Dollar roll transactions involve the risk that the market value of the securities retained by the Fund may decline below the price of the securities that the Fund has sold but is obligated to repurchase under the agreement. In the event the buyer of securities under a dollar roll transaction files for bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligation to repurchase the securities. At the time the Fund enters into a dollar roll, it will segregate liquid assets having a dollar value equal to the repurchase price, and will monitor the account to ensure that such equivalent value is maintained. The Fund typically enters into dollar roll transactions to enhance the Fund's return either on an income or total return basis or to manage pre-payment risk. Dollar rolls are considered borrowings by a Fund under the 1940 Act.
ILLIQUID SECURITIES. Illiquid securities are securities that cannot be disposed of within seven days in the normal course of business at the price at which they are valued. Illiquid securities may include securities that are subject to restrictions on resale because they have not been registered under the Securities Act of 1933 (the "1933 Act"). Restricted securities may, in certain circumstances, be resold pursuant to Rule 144A, and thus may or may not constitute illiquid securities.
Each Fund may invest up to 15% of its net assets in securities that are illiquid. Limitations on the resale of restricted securities may have an adverse effect on their marketability, which may prevent a Fund from disposing of them promptly at reasonable prices. A Fund may have to bear the expense of registering such securities for resale, and the risk of substantial delays in effecting such registrations.
RULE 144A SECURITIES. Rule 144A securities are securities which, while
privately placed, are eligible for purchase and resale pursuant to Rule 144A
under the 1933 Act. This Rule permits certain qualified institutional buyers,
such as the Funds, to trade in privately placed securities even though such
securities are not registered under the 1933 Act. AIM, under the supervision of
the Board of Trustees, will consider whether securities purchased under Rule
144A are illiquid and thus subject to the Funds' restriction on investment in
illiquid securities. Determination of whether a Rule 144A security is liquid or
not is a question of fact. In making this determination AIM will consider the
trading markets for the specific security taking into account the unregistered
nature of a Rule 144A security. In addition, AIM could consider the (i)
frequency of trades and quotes; (ii) number of dealers and potential purchasers;
(iii) dealer undertakings to make a market; and (iv) nature of the security and
of market place trades (for example, the time needed to dispose of the security,
the method of soliciting offers and the mechanics of transfer). AIM will also
monitor the liquidity of Rule 144A securities and, if as a result of changed
conditions, AIM determines that a Rule 144A security is no longer liquid, AIM
will review a Fund's holdings of illiquid securities to determine what, if any,
action is required to assure that such Fund complies with its restriction on
investment in illiquid securities. Investing in Rule 144A securities could
increase the amount of each Fund's investments in illiquid securities if
qualified institutional buyers are unwilling to purchase such securities.
UNSEASONED ISSUERS. Investments in the equity securities of companies having less than three years' continuous operations (including operations of any predecessor) involve more risk than
investments in the securities of more established companies because unseasoned issuers have only a brief operating history and may have more limited markets and financial resources. As a result, securities of unseasoned issuers tend to be more volatile than securities of more established companies.
Derivatives
The Funds may each invest in forward currency contracts, futures contracts, options on securities, options on indices, options on currencies, and options on futures contracts to attempt to hedge against the overall level of investment and currency risk normally associated with each Fund's investments. The Funds may also invest in equity-linked derivative products designed to replicate the composition and performance of particular indices. These instruments are often referred to as "derivatives," which may be defined as financial instruments whose performance is derived, at least in part, from the performance of another asset (such as a security, currency or an index of securities).
EQUITY-LINKED DERIVATIVES. Equity-Linked Derivatives are interests in a securities portfolio designed to replicate the composition and performance of a particular index. Equity-Linked Derivatives are exchange traded. The performance results of Equity-Linked Derivatives will not replicate exactly the performance of the pertinent index due to transaction and other expenses, including fees to service providers, borne by the Equity-Linked Derivatives. Examples of such products include S&P Depositary Receipts ("SPDRs"), World Equity Benchmark Series ("WEBs"), NASDAQ 100 tracking shares ("QQQs"), Dow Jones Industrial Average Instruments ("DIAMONDS") and Optimised Portfolios As Listed Securities ("OPALS"). Investments in Equity-Linked Derivatives involve the same risks associated with a direct investment in the types of securities included in the indices such products are designed to track. There can be no assurance that the trading price of the Equity-Linked Derivatives will equal the underlying value of the basket of securities purchased to replicate a particular index or that such basket will replicate the index. Investments in Equity-Linked Derivatives may constitute investments in other investment companies and, therefore, a Fund may be subject to the same investment restrictions with Equity-Linked Derivatives as with other investment companies. See "Other Investment Companies."
PUT AND CALL OPTIONS. A call option gives the purchaser the right to buy the underlying security, contract or foreign currency at the stated exercise price at any time prior to the expiration of the option (or on a specified date if the option is a European style option), regardless of the market price or exchange rate of the security, contract or foreign currency, as the case may be at the time of exercise. If the purchaser exercises the call option, the writer of a call option is obligated to sell the underlying security, contract or foreign currency. A put option gives the purchaser the right to /\ sell /\ the underlying security, contract or foreign currency at the stated exercise price at any time prior to the expiration date of the option (or on a specified date if the option is a European style option), regardless of the market price or exchange rate of the security, contract or foreign currency, as the case may be at the time of exercise. If the purchaser exercises the put option, the writer of a put option is obligated to buy the underlying security, contract or foreign currency. The premium paid to the writer is consideration for undertaking the obligations under the option contract. Until an option expires or is offset, the option is said to be "open." When an option expires or is offset, the option is said to be "closed."
A Fund will not write (sell) options if, immediately after such sale, the aggregate value of securities or obligations underlying the outstanding options exceeds 20% of the Fund's total assets. A Fund will not purchase options if, at any time of the investment, the aggregate premiums paid for the options will exceed 5% of the Fund's total assets.
Pursuant to federal securities rules and regulations, if a Fund writes options it may be required to set aside assets to reduce the risks associated with writing those options. This process is described in more detail below in the section "Cover."
Writing Options. A Fund may write put and call options in an attempt to realize, through the receipt of premiums, a greater current return than would be realized on the underlying security, contract, or foreign currency alone. In return for the premium received for writing a call option, the Fund foregoes
the opportunity for profit from a price increase in the underlying security, contract, or foreign currency above the exercise price so long as the option remains open, but retains the risk of loss should the price of the security, contract, or foreign currency decline. In return for the premium received for writing a put option, the Fund assumes the risk that the price of the underlying security, contract, or foreign currency will decline below the exercise price, in which case the put would be exercised and the Fund would suffer a loss.
If an option that a Fund has written expires, it will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the market value of the underlying security, contract or currency during the option period. If the call option is exercised, a Fund will realize a gain or loss from the sale of the underlying security, contract or currency, which will be increased or offset by the premium received. A Fund would write a put option at an exercise price that, reduced by the premium received on the option, reflects the price it is willing to pay for the underlying security, contract or currency. The obligation imposed upon the writer of an option is terminated upon the expiration of the option, or such earlier time at which a Fund effects a closing purchase transaction by purchasing an option (put or call as the case may be) identical to that previously sold.
Writing call options can serve as a limited hedge because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. Closing transactions may be effected in order to realize a profit on an outstanding call option, to prevent an underlying security, contract or currency from being called or to permit the sale of the underlying security, contract or currency. Furthermore, effecting a closing transaction will permit a Fund to write another call option on the underlying security, contract or currency with either a different exercise price or expiration date, or both.
Purchasing Options. A Fund may purchase a call option for the purpose of acquiring the underlying security, contract or currency for its portfolio. Utilized in this fashion, the purchase of call options would enable a Fund to acquire the security, contract or currency at the exercise price of the call option plus the premium paid. So long as it holds such a call option, rather than the underlying security or currency itself, the Fund is partially protected from any unexpected increase in the market price of the underlying security, contract or currency. If the market price does not exceed the exercise price, the Fund could purchase the security on the open market and could allow the call option to expire, incurring a loss only to the extent of the premium paid for the option. Each of the Funds may also purchase call options on underlying securities, contracts or currencies against which it has written other call options. For example, where a Fund has written a call option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a call option with a different exercise strike and/or expiration date that would eliminate some or all of the risk associated with the written call. Used in combinations, these strategies are commonly referred to as "call spreads."
A Fund may purchase a put option on an underlying security, contract or currency ("protective put") owned by the Fund in order to protect against an anticipated decline in the value of the security, contract or currency. Such hedge protection is provided only during the life of the put option. The premium paid for the put option and any transaction costs would reduce any profit realized when the security, contract or currency is delivered upon the exercise of the put option. Conversely, if the underlying security, contract or currency does not decline in value, the option may expire worthless and the premium paid for the protective put would be lost. A Fund may also purchase put options on underlying securities, contracts or currencies against which it has written other put options. For example, where a Fund has written a put option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a put option with a different exercise price and/or expiration date that would eliminate some or all of the risk associated with the written put. Used in combinations, these strategies are commonly referred to as "put spreads." Likewise, a Fund may write call options on underlying securities, contracts or currencies against which it has purchased protective put options. This strategy is commonly referred to as a "collar."
Over-The-Counter Options. Options may be either listed on an exchange or traded in over-the-counter ("OTC") markets. Listed options are third-party contracts (i.e., performance of the
obligations of the purchaser and seller is guaranteed by the exchange or clearing corporation) and have standardized strike prices and expiration dates. OTC options are two-party contracts with negotiated strike prices and expiration dates. A Fund will not purchase an OTC option unless it believes that daily valuations for such options are readily obtainable. OTC options differ from exchange-traded options in that OTC options are transacted with dealers directly and not through a clearing corporation (which guarantees performance). Consequently, there is a risk of non-performance by the dealer. Since no exchange is involved, OTC options are valued on the basis of an average of the last bid prices obtained from dealers, unless a quotation from only one dealer is available, in which case only that dealer's price will be used. In the case of OTC options, there can be no assurance that a liquid secondary market will exist for any particular option at any specific time. Because purchased OTC options in certain cases may be difficult to dispose of in a timely manner, the Fund may be required to treat some or all of these options (i.e., the market value) as illiquid securities. Although a Fund will enter into OTC options only with dealers that are expected to be capable of entering into closing transactions with it, there is no assurance that the Fund will in fact be able to close out an OTC option position at a favorable price prior to expiration. In the event of insolvency of the dealer, a Fund might be unable to close out an OTC option position at any time prior to its expiration.
Index Options. Index options (or options on securities indices) are similar in many respects to options on securities, except that an index option gives the holder the right to receive, upon exercise, cash instead of securities, if the closing level of the securities index upon which the option is based is greater than, in the case of a call, or less than, in the case of a put, the exercise price of the option. The amount of cash is equal to the difference between the closing price of the index and the exercise price of the call or put times a specified multiple (the "multiplier"), which determines the total dollar value for each point of such difference.
The risks of investment in index options may be greater than options on securities. Because index options are settled in cash, when a Fund writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring and holding the underlying securities. A Fund can offset some of the risk of writing a call index option position by holding a diversified portfolio of securities similar to those on which the underlying index is based. However, the Fund cannot, as a practical matter, acquire and hold a portfolio containing exactly the same securities as underlie the index and, as a result, bears a risk that the value of the securities held will not be perfectly correlated with the value of the index.
Pursuant to federal securities rules and regulations, if a Fund writes index options it may be required to set aside assets to reduce the risks associated with writing those options. This process is described in more detail below in the section "Cover."
STRADDLES. The Fund, for hedging purposes, may write straddles (combinations of put and call options on the same underlying security) to adjust the risk and return characteristics of the Fund's overall position. A possible combined position would involve writing a covered call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written covered call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out.
WARRANTS. Warrants are, in effect, longer-term call options. They give the holder the right to purchase a given number of shares of a particular company at specified prices within certain periods of time. The purchaser of a warrant expects that the market price of the security will exceed the purchase price of the warrant plus the exercise price of the warrant, thus giving him a profit. Since the market price may never exceed the exercise price before the expiration date of the warrant, the purchaser of the warrant risks the loss of the entire purchase price of the warrant. Warrants generally trade in the open market and may be sold rather than exercised. Warrants are sometimes sold in unit form with other securities of an issuer. Units of warrants and common stock may be employed in financing young, unseasoned companies. The purchase price of a warrant varies with the exercise price of the warrant, the current market value of the underlying security, the life of the warrant and various other investment factors.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. A Futures Contract is a two party agreement to buy or sell a specified amount of a specified security or currency (or delivery of a cash settlement price, in the case of an index future) for a specified price at a designated date, time and place (collectively, "Futures Contracts"). A stock index Futures Contract provides for the delivery, at a designated date, time and place, of an amount of cash equal to a specified dollar amount times the difference between the stock index value at the close of trading on the contract and the price agreed upon in the Futures Contract; no physical delivery of stocks comprising the index is made. Brokerage fees are incurred when a Futures Contract is bought or sold, and margin deposits must be maintained at all times when a Futures Contract is outstanding.
A Fund will enter into Futures Contracts for hedging purposes only; that is, Futures Contracts will be sold to protect against a decline in the price of securities or currencies that the Fund owns, or Futures Contracts will be purchased to protect the Fund against an increase in the price of securities or currencies it has committed to purchase or expects to purchase. A Fund's hedging may include sales of Futures Contracts as an offset against the effect of expected increases in interest rates, and decreases in currency exchange rates and stock prices, and purchases of Futures Contracts as an offset against the effect of expected declines in interest rates, and increases in currency exchange rates or stock prices.
The Funds will only enter into Futures Contracts that are traded (either domestically or internationally) on futures exchanges and are standardized as to maturity date and underlying financial instrument. Futures exchanges and trading thereon in the United States are regulated under the Commodity Exchange Act and by the Commodity Futures Trading Commission ("CFTC"). Foreign futures exchanges and trading thereon are not regulated by the CFTC and are not subject to the same regulatory controls. For a further discussion of the risks associated with investments in foreign securities, see "Foreign Investments" in this Statement of Additional Information.
Closing out an open Futures Contract is effected by entering into an offsetting Futures Contract for the same aggregate amount of the identical financial instrument or currency and the same delivery date. There can be no assurance, however, that a Fund will be able to enter into an offsetting transaction with respect to a particular Futures Contract at a particular time. If a Fund is not able to enter into an offsetting transaction, it will continue to be required to maintain the margin deposits on the Futures Contract.
"Margin" with respect to Futures Contracts is the amount of funds that must be deposited by a Fund in order to initiate Futures Contracts trading and maintain its open positions in Futures Contracts. A margin deposit made when the Futures Contract is entered ("initial margin") is intended to ensure the Fund's performance under the Futures Contract. The margin required for a particular Futures Contract is set by the exchange on which the Futures Contract is traded and may be significantly modified from time to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures commission merchant through which a Fund entered into the Futures Contract will be made on a daily basis as the price of the underlying security, currency or index fluctuates making the Futures Contract more or less valuable, a process known as marking-to-market.
If a Fund were unable to liquidate a Futures Contract or an option on a Futures Contract position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Fund would continue to be subject to market risk with respect to the position. In addition, except in the case of purchased options, the Fund would continue to be required to make daily variation margin payments and might be required to maintain the position being hedged by the Futures Contract or option or to maintain cash or securities in a segregated account.
Options on Futures Contracts. Options on Futures Contracts are similar to options on securities or currencies except that options on Futures Contracts give the purchaser the right, in return for the premium paid, to assume a position in a Futures Contract (a long position if the option is a call and a short position if the option is a put) at a specified exercise price at any time during the period of the
option. Upon exercise of the option, the delivery of the Futures Contract position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writer's Futures Contract margin account.
Limitations on Futures Contracts and Options on Futures Contracts and on Certain Options on Currencies. To the extent that a Fund enters into Futures Contracts, options on Futures Contracts and options on foreign currencies traded on a CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums required to establish those positions (excluding the amount by which options are "in-the-money") will not exceed 5% of the total assets of the Fund, after taking into account unrealized profits and unrealized losses on any contracts it has entered into. This guideline may be modified by the Board, without a shareholder vote. This limitation does not limit the percentage of the Fund's assets at risk to 5%.
Pursuant to federal securities rules and regulations, a Fund's use of Futures Contracts and options on Futures Contracts may require that Fund to set aside assets to reduce the risks associated with using Futures Contracts and options on Futures Contracts. This process is described in more detail below in the section "Cover."
FORWARD CURRENCY CONTRACTS. A forward currency contract is an obligation, usually arranged with a commercial bank or other currency dealer, to purchase or sell a currency against another currency at a future date and price as agreed upon by the parties. A Fund either may accept or make delivery of the currency at the maturity of the forward currency contract. A Fund may also, if its contra party agrees prior to maturity, enter into a closing transaction involving the purchase or sale of an offsetting contract. Forward currency contracts are traded over-the-counter, and not on organized commodities or securities exchanges. As a result, it may be more difficult to value such contracts, and it may be difficult to enter into closing transactions.
Each of the Funds may engage in forward currency transactions in anticipation of, or to protect itself against, fluctuations in exchange rates. A Fund may enter into forward currency contracts with respect to a specific purchase or sale of a security, or with respect to its portfolio positions generally. When a Fund purchases a security denominated in a foreign currency for settlement in the near future, it may immediately purchase in the forward market the currency needed to pay for and settle the purchase. By entering into a forward currency contract with respect to the specific purchase or sale of a security denominated in a foreign currency, the Fund can secure an exchange rate between the trade and settlement dates for that purchase or sale transaction. This practice is sometimes referred to as "transaction hedging." Position hedging is the purchase or sale of foreign currency with respect to portfolio security positions denominated or quoted in a foreign currency.
The cost to a Fund of engaging in forward currency contracts varies with factors such as the currencies involved, the length of the contract period and the market conditions then prevailing. Because forward currency contracts are usually entered into on a principal basis, no fees or commissions are involved. The use of forward currency contracts does not eliminate fluctuations in the prices of the underlying securities a Fund owns or intends to acquire, but it does establish a rate of exchange in advance. In addition, while forward currency contract sales limit the risk of loss due to a decline in the value of the hedged currencies, they also limit any potential gain that might result should the value of the currencies increase.
Pursuant to federal securities rules and regulations, a Fund's use of forward currency contracts may require that Fund to set aside assets to reduce the risks associated with using forward currency contracts. This process is described in more detail below in the section "Cover."
COVER. Transactions using forward currency contracts, futures contracts
and options (other than options purchased by a Fund) expose a Fund to an
obligation to another party. A Fund will not enter into any such transactions
unless it owns either (1) an offsetting ("covered") position in securities,
currencies, or other options, forward currency contracts or futures contracts or
(2) cash, liquid assets and/or short-term debt securities with a value
sufficient at all times to cover its potential obligations not covered as
provided in (1) above. Each Fund will comply with SEC guidelines regarding cover for these instruments and, if the guidelines so require, set aside cash or liquid securities. To the extent that a futures contract, forward currency contract or option is deemed to be illiquid, the assets used to "cover" the Fund's obligation will also be treated as illiquid for purposes of determining the Fund's maximum allowable investment in illiquid securities.
Even though options purchased by the Funds do not expose the Funds to an obligation to another party, but rather provide the Funds with a right to exercise, the Funds intend to "cover" the cost of any such exercise. To the extent that a purchased option is deemed illiquid, a Fund will treat the market value of the option (i.e., the amount at risk to the Fund) as illiquid, but will not treat the assets used as cover on such transactions as illiquid.
Assets used as cover cannot be sold while the position in the corresponding forward currency contract, futures contract or option is open, unless they are replaced with other appropriate assets. If a large portion of a Fund's assets is used for cover or otherwise set aside, it could affect portfolio management or the Fund's ability to meet redemption requests or other current obligations.
GENERAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES. The use by the Funds of options, futures contracts and forward currency contracts involves special considerations and risks, as described below. Risks pertaining to particular strategies are described in the sections that follow.
(1) Successful use of hedging transactions depends upon AIM's ability to correctly predict the direction of changes in the value of the applicable markets and securities, contracts and/or currencies. While AIM is experienced in the use of these instruments, there can be no assurance that any particular hedging strategy will succeed.
(2) There might be imperfect correlation, or even no correlation, between the price movements of an instrument (such as an option contract) and the price movements of the investments being hedged. For example, if a "protective put" is used to hedge a potential decline in a security and the security does decline in price, the put option's increased value may not completely offset the loss in the underlying security. Such a lack of correlation might occur due to factors unrelated to the value of the investments being hedged, such as changing interest rates, market liquidity, and speculative or other pressures on the markets in which the hedging instrument is traded.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly or partially offsetting the negative effect of unfavorable price movements in the investments being hedged. However, hedging strategies can also reduce opportunity for gain by offsetting the positive effect of favorable price movements in the hedged investments.
(4) There is no assurance that a liquid secondary market will exist for any particular option, futures contract or option thereon or forward currency contract at any particular time.
(5) As described above, a Fund might be required to maintain assets as "cover," maintain segregated accounts or make margin payments when it takes positions in instruments involving obligations to third parties. If a Fund were unable to close out its positions in such instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expired or matured. The requirements might impair the Fund's ability to sell a portfolio security or make an investment at a time when it would otherwise be favorable to do so, or require that the Fund sell a portfolio security at a disadvantageous time.
(6) There is no assurance that a Fund will use hedging transactions. For example, if a Fund determines that the cost of hedging will exceed the potential benefit to the Fund, the Fund will not enter into such transaction.
FUND POLICIES
FUNDAMENTAL RESTRICTIONS. Each Fund is subject to the following investment restrictions, which may be changed only by a vote of such Fund's outstanding shares, except that AIM European Small Company Fund and AIM International Emerging Growth Fund are not subject to restriction (1) and AIM Global Utilities Fund is not subject to restrictions (1) or (4). Fundamental restrictions may be changed only by a vote of the lesser of (i) 67% or more of the Fund's shares present at a meeting if the holders of more than 50% of the outstanding shares are present in person or represented by proxy, or (ii) more than 50% of the Fund's outstanding shares. Any investment restriction that involves a maximum or minimum percentage of securities or assets (other than with respect to borrowing) shall not be considered to be violated unless an excess over or a deficiency under the percentage occurs immediately after, and is caused by, an acquisition or disposition of securities or utilization of assets by the Fund.
(1) The Fund is a "diversified company" as defined in the 1940 Act. The Fund will not purchase the securities of any issuer if, as a result, the Fund would fail to be a diversified company within the meaning of the 1940 Act, and the rules and regulations promulgated thereunder, as such statute, rules and regulations are amended from time to time or are interpreted from time to time by the SEC staff (collectively, the "1940 Act Laws and Interpretations") or except to the extent that the Fund may be permitted to do so by exemptive order or similar relief (collectively, with the 1940 Act Laws and Interpretations, the "1940 Act Laws, Interpretations and Exemptions"). In complying with this restriction, however, the Fund may purchase securities of other investment companies to the extent permitted by the 1940 Act Laws, Interpretations and Exemptions.
(2) The Fund may not borrow money or issue senior securities, except as permitted by the 1940 Act Laws, Interpretations and Exemptions.
(3) The Fund may not underwrite the securities of other issuers. This restriction does not prevent the Fund from engaging in transactions involving the acquisition, disposition or resale of its portfolio securities, regardless of whether the Fund may be considered to be an underwriter under the 1933 Act.
(4) The Fund will not make investments that will result in the concentration (as that term may be defined or interpreted by the 1940 Act Laws, Interpretations and Exemptions) of its investments in the securities of issuers primarily engaged in the same industry. This restriction does not limit the Fund's investments in (i) obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, or (ii) tax-exempt obligations issued by governments or political subdivisions of governments. In complying with this restriction, the Fund will not consider a bank-issued guaranty or financial guaranty insurance as a separate security.
(5) (5)The Fund may not purchase real estate or sell real estate unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from investing in issuers that invest, deal, or otherwise engage in transactions in real estate or interests therein, or investing in securities that are secured by real estate or interests therein.
(6) The Fund may not purchase physical commodities or sell physical commodities unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from engaging in transactions involving futures contracts and options thereon or investing in securities that are secured by physical commodities.
(7) The Fund may not make personal loans or loans of its assets to persons who control or are under common control with the Fund, except to the extent permitted by 1940 Act Laws, Interpretations and Exemptions. This restriction does not prevent the Fund from, among other things, purchasing debt obligations, entering into repurchase agreements, loaning its assets to broker-dealers or institutional investors, or investing in loans, including assignments and participation interests.
(8) The Fund may, notwithstanding any other fundamental investment policy or limitation, invest all of its assets in the securities of a single open-end management investment company with substantially the same fundamental investment objectives, policies and restrictions as the Fund.
AIM Global Utilities Fund will concentrate (as such term may be defined or interpreted by the 1940 Act Laws, Interpretations and Exemptions) its investments in the securities of domestic and foreign public utility companies.
For purposes of AIM Global Utilities Fund's fundamental restriction regarding industry concentration, public utility companies shall consist of companies that produce or supply electricity, natural gas, water, sanitary services, and telephone, cable, satellite, telegraph or other communication or information transmission services, as well as developing utility technology companies and holding companies which derive at least 40% of their revenues from utility-related activities.
The investment restrictions set forth above provide each of the Funds with the ability to operate under new interpretations of the 1940 Act or pursuant to exemptive relief from the SEC without receiving prior shareholder approval of the change. Even though each of the Funds has this flexibility, the Board of Trustees has adopted non-fundamental restrictions for each of the Funds relating to certain of these restrictions which the Advisor must follow in managing the Funds. Any changes to these non-fundamental restrictions, which are set forth below, require the approval of the Board of Trustees.
NON-FUNDAMENTAL RESTRICTIONS. The following non-fundamental investment restrictions apply to each of the Funds, except AIM European Small Company Fund and AIM International Emerging Growth Fund are not subject to restriction (1) and AIM Global Utilities Fund is not subject to restrictions (1) or (3). They may be changed for any Fund without approval of that Fund's voting securities.
(1) In complying with the fundamental restriction regarding issuer diversification, the Fund will not, with respect to 75% of its total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities), if, as a result, (i) more than 5% of the Fund's total assets would be invested in the securities of that issuer, or (ii) the Fund would hold more than 10% of the outstanding voting securities of that issuer. The Fund may (i) purchase securities of other investment companies as permitted by Section 12(d)(1) of the 1940 Act and (ii) invest its assets in securities of other money market funds and lend money to other investment companies or their series portfolios that have AIM or an affiliate of AIM as an investment advisor (an "AIM Advised Fund"), subject to the terms and conditions of any exemptive orders issued by the SEC.
(2) In complying with the fundamental restriction regarding borrowing money and issuing senior securities, the Fund may borrow money in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings). The Fund may borrow from banks, broker-dealers or an AIM Advised Fund. The Fund may not borrow for leveraging, but may borrow for temporary or emergency purposes, in anticipation of or in response to adverse market conditions, or for cash management purposes. The Fund may not purchase additional securities when any borrowings from banks exceed 5% of the Fund's total assets or when any borrowings from an AIM Advised Fund are outstanding.
(3) In complying with the fundamental restriction regarding industry concentration, the Fund may invest up to 25% of its total assets in the securities of issuers whose principal business activities are in the same industry.
(4) In complying with the fundamental restriction with regard to making loans, the Fund may lend up to 33 1/3% of its total assets and may lend money to an AIM Advised Fund, on such terms and conditions as the SEC may require in an exemptive order.
(5) Notwithstanding the fundamental restriction with regard to investing all assets in an open-end fund, the Fund may not invest all of its assets in the securities of a single open-end management investment company with the same fundamental investment objectives, policies and restrictions as the Fund.
ADDITIONAL NON-FUNDAMENTAL POLICIES. As non-fundamental policies:
(6) AIM European Small Company Fund normally invests at least 80% of its assets in securities of European small companies. For purposes of the foregoing sentence, "assets" means net assets, plus the amount of any borrowings for investment purposes. The Fund will provide written notice to its shareholders prior to any change to this policy, as required by the 1940 Act Laws, Interpretations and Exemptions.
(7) AIM Global Utilities Fund normally invests at least 80% of its assets in securities of domestic and foreign public utility companies. For purposes of the foregoing sentence, "assets" means net assets, plus the amount of any borrowings for investment purposes. The Fund will provide written notice to its shareholders prior to any change to this policy, as required by the 1940 Act Laws, Interpretations and Exemptions.
(8) AIM New Technology Fund normally invests at least 80% of its assets in securities of technology and science companies that the portfolio managers believe are likely to benefit from new or innovative products, services or processes. For purposes of the foregoing sentence, "assets" means net assets, plus the amount of any borrowings for investment purposes. The Fund will provide written notice to its shareholders prior to any change to this policy, as required by the 1940 Act Laws, Interpretations and Exemptions.
(9) AIM Small Cap Equity Fund normally invests at least 80% of its assets in equity securities, including convertible securities, of small-capitalization companies. For purposes of the foregoing sentence, "assets" means net assets, plus the amount of any borrowings for investment purposes. The Fund will provide written notice to its shareholders prior to any change to this policy, as required by the 1940 Act Laws, Interpretations and Exemptions.
(10) AIM Mid Cap Basic Value Fund normally invests at least 80% of its assets in securities of mid-capitalization companies that offer potential for capital growth. For purposes of the foregoing sentence, "assets" means net assets, plus the amount of any borrowings for investment purposes. The Fund will provide written notice to its shareholders prior to any change to this policy, as required by the 1940 Act Laws, Interpretations and Exemptions.
(11) AIM Select Equity Fund normally invests at least 80% of its assets in equity securities, including convertible securities, with prospects for above-average market returns, without regard to market capitalization. For purposes of the foregoing sentence, "assets" means net assets, plus the amount of any borrowings for investment purposes. The Fund will provide written notice to its shareholders prior to any change to this policy, as required by the 1940 Act Laws, Interpretations and Exemptions.
(12) AIM Premier Equity Fund normally invests at least 80% of its assets in equity securities, including convertible securities. For purposes of the foregoing sentence, "assets" means net assets, plus the amount of any borrowings for investment purposes. The Fund will provide written notice to its shareholders prior to any change to this policy, as required by the 1940 Act Laws, Interpretations and Exemptions.
(13) AIM Premier Equity II Fund normally invests at least 80% of its assets in equity securities, including convertible securities. For purposes of the foregoing sentence, "assets" means net assets, plus the amount of any borrowings for investment purposes. The Fund will provide written notice to its shareholders prior to any change to this policy, as required by the 1940 Act Laws, Interpretations and Exemptions.
TEMPORARY DEFENSIVE POSITIONS
In anticipation of or in response to adverse market or other conditions, or atypical circumstances such as unusually large cash inflows or redemptions, the Funds may temporarily hold all or a portion of their assets in cash, cash equivalents or high-quality debt instruments. Each of the Funds may also invest up to 25% of its total assets in Affiliated Money Market Funds for these purposes.
PORTFOLIO TURNOVER
The variation in the portfolio turnover rate for AIM Global Utilities Fund for the fiscal year 2001 as compared to the prior year was due to the Fund repositioning a significant portion of its assets from investments in telecommunications-related companies to investments in electric utilities and energy-producing companies.
The variation in the portfolio turnover rate for AIM Select Equity Fund for the fiscal year 2001 as compared to the prior year was due to a change in the Fund's investment strategies that occurred during 2001.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The overall management of the business and affairs of the Funds and the Trust is vested in the Board of Trustees. The Board of Trustees approves all significant agreements between the Trust, on behalf of one or more of the Funds, and persons or companies furnishing services to the Funds. The day-to-day operations of each Fund are delegated to the officers of the Trust and to AIM, subject always to the objective(s), restrictions and policies of the applicable Fund and to the general supervision of the Board of Trustees. Certain trustees and officers of the Trust are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the parent corporation of AIM. All of the Trust's executive officers hold similar offices with some or all of the other AIM Funds.
MANAGEMENT INFORMATION
The trustees and officers of the Trust, and their principal occupations during at least the last five years and certain other information concerning them is set forth in Appendix B.
The standing committees of the Board of Trustees are the Audit Committee, the Investments Committee, the Valuation Committee and the Committee on Directors/Trustees.
The members of the Audit Committee are Frank S. Bayley, Bruce L. Crockett, Albert R. Dowden (Vice Chair), Edward K. Dunn, Jr. (Chair), Jack M. Fields, Lewis F. Pennock and Louis S. Sklar, Dr. Prema Mathai-Davis and Ruth H. Quigley. The Audit Committee is responsible for: (i) the appointment, compensation and oversight of independent accountants for each Fund and the evaluation of such accountants' performance, costs and financial stability; (ii) with AIM, reviewing and coordinating audit plans prepared by the Funds' independent accountants and management's internal audit staff; and (iii) reviewing financial statements contained in periodic reports to shareholders with the Funds' independent accountants and management. During the fiscal year ended December 31, 2001, the Audit Committee held nine meetings.
The members of the Investments Committee are Messrs. Bayley, Crockett, Dowden, Dunn, Fields, Carl Frischling, Pennock and Sklar (Chair), Dr. Mathai-Davis (Vice Chair) and Miss Quigley. The Investments Committee is responsible for: (i) overseeing AIM's investment-related compliance systems and procedures to ensure their continued adequacy; and (ii) considering and acting, on an interim basis between meetings of the full Board, on investment-related matters requiring Board consideration,
including dividends and distributions, brokerage policies and pricing matters. During the fiscal year ended December 31, 2001, the Investments Committee held six meetings.
The members of the Valuation Committee are Messrs. Dunn and Pennock
(Chair), and Miss Quigley (Vice Chair). The Valuation Committee is responsible
for: (i) periodically reviewing AIM's Procedures for Valuing Securities
("Procedures"), and making any recommendations to AIM with respect thereto; (ii)
reviewing proposed changes to the Procedures recommended by AIM from time to
time; (iii) periodically reviewing information provided by AIM regarding
industry developments in connection with valuation; (iv) periodically reviewing
information from AIM regarding fair value and liquidity determinations made
pursuant to the Procedures, and making recommendations to the full Board in
connection therewith (whether such information is provided only to the Committee
or to the Committee and the full Board simultaneously); and (v) if requested by
AIM, assisting AIM's internal valuation committee and/or the full Board in
resolving particular valuation anomalies. During the fiscal year ended December
31, 2001, the Valuation Committee held no meetings.
The members of the Committee on Directors/Trustees are Messrs. Bayley, Crockett (Chair), Dowden, Dunn, Fields (Vice Chair), Pennock and Sklar, Dr. Mathai-Davis and Miss Quigley. The Committee on Directors/Trustees is responsible for: (i) considering and nominating individuals to stand for election as disinterested trustees as long as the Fund relies on certain rules under the 1940 Act; (ii) reviewing from time to time the compensation payable to the disinterested trustees; and (iii) making recommendations to the Board regarding matters related to compensation, including deferred compensation plans and retirement plans for the disinterested trustees. During the fiscal year ended December 31, 2001, the Committee on Directors/Trustees held six meetings.
The Committee on Directors/Trustees will consider nominees recommended
by a shareholder to serve as trustees, provided: (i) that such person is a
shareholder of record at the time he or she submits such names and is entitled
to vote at the meeting of shareholders at which trustees will be elected; and
(ii) that the Committee on Directors/Trustees or the Board, as applicable, shall
make the final determination of persons to be nominated.
Trustee Ownership of Fund Shares
The dollar range of equity securities beneficially owned by each trustee (i) in the Funds and (ii) on an aggregate basis, in all registered investment companies overseen by the trustee within the AIM Funds complex, is set forth in Appendix B.
Factors Considered in Approving the Investment Advisory Agreement
The advisory agreement with AIM was re-approved for each Fund by the Trust's Board at a meeting held on May 14-15, 2002. In evaluating the fairness and reasonableness of the advisory agreement, the Board of Trustees considered a variety of factors for each Fund, including: the requirements of each Fund for investment supervisory and administrative services; the quality of AIM's services, including a review of each Fund's investment performance and AIM's investment personnel; the size of the fees in relationship to the extent and quality of the investment advisory services rendered; fees charged to AIM's other clients; fees charged by competitive investment advisors; the size of the fees in light of services provided other than investment advisory services; the expenses borne by each Fund as a percentage of its assets and relationship to contractual limitations; any fee waivers (or payments of Fund expenses) by AIM; AIM's profitability; the benefits received by AIM from its relationship to each Fund, including soft dollar arrangements, and the extent to which each Fund shares in those benefits; the organizational capabilities and financial condition of AIM and conditions and trends prevailing in the economy, the securities markets and the mutual fund industry; and the historical relationship between each Fund and AIM.
In considering the above factors, the Board also took into account the fact that uninvested cash and cash collateral from securities lending arrangements (collectively, "cash balances") of each Fund may be invested in money market funds advised by AIM pursuant to the terms of an exemptive order. The
Board found that each Fund may realize certain benefits upon investing cash balances in AIM advised money market funds, including a higher net return, increased liquidity, increased diversification or decreased transaction costs. The Board also found that each Fund will not receive reduced services if it invests its cash balances in such money market funds. The Board further determined that the proposed securities lending program and related procedures with respect to each of the lending Funds is in the best interests of each lending Fund and its respective shareholders. The Board therefore concluded that the investment of cash collateral received in connection with the securities lending program in the money market funds according to the procedures is in the best interests of each lending Fund and its respective shareholders.
After consideration of these factors, the Board found that: (i) the services provided to each Fund and its shareholders were adequate; (ii) the agreements were fair and reasonable under the circumstances; and (iii) the fees payable under the agreements would have been obtained through arm's length negotiations. The Board therefore concluded that each Fund's advisory agreement was in the best interests of such Fund and its shareholders and continued the agreement for an additional year.
COMPENSATION
Each trustee who is not affiliated with AIM is compensated for his or her services according to a fee schedule which recognizes the fact that such trustee also serves as a director or trustee of other AIM Funds. Each such trustee receives a fee, allocated among the AIM Funds for which he or she serves as a director or trustee, which consists of an annual retainer component and a meeting fee component.
Information regarding compensation paid or accrued for each trustee of the Trust who was not affiliated with AIM during the year ended December 31, 2001 is found in Appendix C.
Retirement Plan For Trustees
The Trustees have adopted a retirement plan for the trustees of the Trust who are not affiliated with AIM. The retirement plan includes a retirement policy as well as retirement benefits for the non-AIM affiliated trustees.
The retirement policy permits each non-AIM-affiliated trustee to serve until December 31 of the year in which the trustee turns 72. A majority of the trustees may extend from time to time the retirement date of a trustee.
Annual retirement benefits are available to each non-AIM-affiliated
trustee of the Trust and/or the other AIM Funds (each, a "Covered Fund") who has
at least five years of credited service as a trustee (including service to a
predecessor fund) for a Covered Fund. The retirement benefits will equal 75% of
the trustee's annual retainer paid or accrued by any Covered Fund to such
trustee during the twelve-month period prior to retirement, including the amount
of any retainer deferred under a separate deferred compensation agreement
between the Covered Fund and the trustee. The annual retirement benefits are
payable in quarterly installments for a number of years equal to the lesser of
(i) ten or (ii) the number of such trustee's credited years of service. A death
benefit is also available under the plan that provides a surviving spouse with a
quarterly installment of 50% of a deceased trustee's retirement benefits for the
same length of time that the trustee would have received based on his or her
service. A trustee must have attained the age of 65 (55 in the event of death or
disability) to receive any retirement benefit.
Deferred Compensation Agreements
Messrs. Dunn, Fields, Frischling and Sklar and Dr. Mathai-Davis (for purposes of this paragraph only, the "Deferring Trustees") have each executed a Deferred Compensation Agreement (collectively, the "Compensation Agreements"). Pursuant to the Compensation Agreements, the Deferring Trustees have the option to elect to defer receipt of up to 100% of their compensation payable by the Trust, and
such amounts are placed into a deferral account. Currently, the Deferring Trustees have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested. Distributions from the Deferring Trustees' deferral accounts will be paid in cash, generally in equal quarterly installments over a period of up to ten (10) years (depending on the Compensation Agreement) beginning on the date selected under the Compensation Agreement. The Trust's Board of Trustees, in its sole discretion, may accelerate or extend the distribution of such deferral accounts after the Deferring Trustee's retirement benefits commence under the Plan. The Board, in its sole discretion, also may accelerate or extend the distribution of such deferral accounts after the Deferring Trustee's termination of service as a trustee of the Trust. If a Deferring Trustee dies prior to the distribution of amounts in his or her deferral account, the balance of the deferral account will be distributed to his or her designated beneficiary. The Compensation Agreements are not funded and, with respect to the payments of amounts held in the deferral accounts, the Deferring Trustees have the status of unsecured creditors of the Trust and of each other AIM Fund from which they are deferring compensation.
Purchase of Class A Shares of the Funds at Net Asset Value
The trustees and other affiliated persons of the Trust may purchase
Class A shares of the Funds without paying an initial sales charge. AIM
Distributors permits such purchases because there is a reduced sales effort
involved in sales to such purchasers, thereby resulting in relatively low
expenses of distribution. For a complete description of the persons who will not
pay an initial sales charge on purchases of Class A shares of the Funds, see
"Purchase, Redemption and Pricing of Shares - Purchase and Redemption of Shares
- Purchases of Class A Shares and AIM Cash Reserve Shares of AIM Money Market
Fund - Purchases of Class A Shares at Net Asset Value."
CODES OF ETHICS
AIM, the Trust and AIM Distributors have each adopted a Code of Ethics governing, as applicable, personal trading activities of all Directors/Trustees, officers of the Trust, persons who, in connection with their regular functions, play a role in the recommendation of any purchase or sale of a security by any of the Funds or obtain information pertaining to such purchase or sale, and certain other employees. The Codes of Ethics are intended to prohibit conflicts of interest with the Trust that may arise from personal trading. Personal trading, including personal trading involving securities that may be purchased or held by a Fund, is permitted by persons covered under the relevant Codes subject to certain restrictions; however those persons are generally required to pre-clear all security transactions with the Compliance Officer or his designee and to report all transactions on a regular basis.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Information about the ownership of each class of each Fund's shares by beneficial or record owners of such Fund and by trustees and officers as a group is found in Appendix D. A shareholder who owns beneficially 25% or more of the outstanding shares of a Fund is presumed to "control" that Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISOR
AIM, the Funds' investment advisor, was organized in 1976, and along with its subsidiaries, manages or advises over 175 investment portfolios encompassing a broad range of investment objectives. AIM is a direct, wholly owned subsidiary of AIM Management, a holding company that has been engaged in the financial services business since 1976. AIM Management is an indirect, wholly owned subsidiary of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent global investment management group. Certain of the directors and officers of AIM are also executive officers of the Trust and their affiliations are shown under "Management Information" herein.
As investment advisor, AIM supervises all aspects of the Funds' operations and provides investment advisory services to the Funds. AIM obtains and evaluates economic, statistical and financial information to formulate and implement investment programs for the Funds.
AIM is also responsible for furnishing to the Funds, at AIM's expense, the services of persons believed to be competent to perform all supervisory and administrative services required by the Funds, in the judgment of the trustees, to conduct their respective businesses effectively, as well as the offices, equipment and other facilities necessary for their operations. Such functions include the maintenance of each Fund's accounts and records, and the preparation of all requisite corporate documents such as tax returns and reports to the SEC and shareholders.
The Master Investment Advisory Agreement provides that each Fund will pay or cause to be paid all expenses of such Fund not assumed by AIM, including, without limitation: brokerage commissions, taxes, legal, auditing or governmental fees, the cost of preparing share certificates, custodian, transfer and shareholder service agent costs, expenses of issue, sale, redemption, and repurchase of shares, expenses of registering and qualifying shares for sale, expenses relating to trustee and shareholder meetings, the cost of preparing and distributing reports and notices to shareholders, the fees and other expenses incurred by the Trust on behalf of each Fund in connection with membership in investment company organizations, and the cost of printing copies of prospectuses and statements of additional information distributed to the Funds' shareholders.
AIM, at its own expense, furnishes to the Trust office space and facilities. AIM furnishes to the Trust all personnel for managing the affairs of the Trust and each of its series of shares.
Pursuant to its advisory agreement with the Trust, AIM receives a monthly fee from each Fund calculated at the following annual rates, based on the average daily net assets of each Fund during the year:
FUND NAME NET ASSETS ANNUAL RATE
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AIM Balanced Fund First $150 million 0.75%
Amount over $150 million 0.50%
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AIM Basic Balanced Fund First $1 billion 0.65%
Next $4 billion 0.60%
Amount over $5 billion 0.55%
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AIM European Small Company Fund All Assets 0.95%
AIM International Emerging Growth Fund
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FUND NAME NET ASSETS ANNUAL RATE
--------- ---------- -----------
AIM Global Utilities Fund First $200 million 0.60%
Next $300 million 0.50%
Next $500 million 0.40%
Amount over $1 billion 0.30%
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AIM Mid Cap Basic Value Fund First $1 billion 0.80%
Next $4 billion 0.75%
Over $5 billion 0.70%
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AIM Select Equity Fund First $150 million 0.80%
AIM Premier Equity Fund* Amount over $150 million 0.625%
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AIM New Technology Fund All Assets 1.00%
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AIM Small Cap Equity Fund All Assets 0.85%
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AIM Premier Equity II Fund All Assets 0.75%
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AIM Worldwide Spectrum Fund First $1 billion 0.85%
Amount over $1 billion 0.80%
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* See currently effective fee schedule below.
AIM may from time to time waive or reduce its fee. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, AIM will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Fund.
AIM has voluntarily agreed to waive advisory fees payable by AIM Premier Equity Fund in an amount equal to 0.025% for each $5 billion increment in net assets over $5 billion, up to a maximum waiver of 0.175% on net assets in excess of $35 billion.
AIM has voluntarily agreed, effective July 1, 2002, to waive a portion of advisory fees payable by each Fund. The amount of the waiver will equal 25% of the advisory fee AIM receives from the Affiliated Money Market Funds as a result of each Fund's investment of uninvested cash in an Affiliated Money Market Fund. See "Other Investments - Other Investment Companies."
AIM has contractually agreed, effective July 1, 2002 through June 30, 2003, to waive fees and/or reimburse expenses (excluding interest, taxes, dividends on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) for AIM European Small Company Fund, AIM International Emerging Growth Fund, AIM New Technology Fund and AIM Worldwide Spectrum Fund for Class A, Class B and Class C shares to the extent necessary to limit the Total Annual Fund Operating Expenses of Class A to 2.00% (e.g., if AIM waives 0.10% of Class A expenses, AIM will also waive 0.10% of Class B and Class C expenses). Such contractual fee waivers or reductions are set forth in the Fee Table to the Fund's Prospectus and may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Fund.
The management fees payable by each Fund, the amounts waived by AIM and the net fees paid by each Fund for the last three fiscal years ended December 31, 2001, are found in Appendix E.
SECURITIES LENDING ARRANGEMENTS. If a Fund engages in securities lending, AIM will provide the Fund investment advisory services and related administrative services. The advisory agreement describes the administrative services to be rendered by AIM if a Fund engages in securities lending activities, as well as the compensation AIM may receive for such administrative services. Services to be provided include: (a) overseeing participation in the securities lending program to ensure compliance with all applicable regulatory and investment guidelines; (b) assisting the securities lending agent or principal (the agent) in determining which specific securities are available for loan; (c) monitoring the agent to ensure that securities loans are effected in accordance with AIM's instructions and with procedures adopted by the Board; (d) preparing appropriate periodic reports for, and seeking appropriate approvals from, the Board with respect to securities lending activities; (e) responding to agent inquiries; and (f) performing such other duties as may be necessary.
AIM's compensation for advisory services rendered in connection with securities lending is included in the advisory fee schedule. As compensation for the related administrative services AIM will provide, a lending Fund will pay AIM a fee equal to 25% of the net monthly interest or fee income retained or paid to the Fund from such activities. AIM currently intends to waive such fee, and has agreed to seek Board approval prior to its receipt of all or a portion of such fee.
SERVICE AGREEMENTS
ADMINISTRATIVE SERVICES AGREEMENT. AIM and the Trust have entered into a Master Administrative Services Agreement ("Administrative Services Agreement") pursuant to which AIM may perform or arrange for the provision of certain accounting and other administrative services to each Fund which are not required to be performed by AIM under the advisory agreement. The Administrative Services Agreement provides that it will remain in effect and continue from year to year only if such continuance is specifically approved at least annually by the Trust's Board of Trustees, including the independent trustees, by votes cast in person at a meeting called for such purpose. Under the Administrative Services Agreement, AIM is entitled to receive from the Funds reimbursement of its costs or such reasonable compensation as may be approved by the Board of Trustees. Currently, AIM is reimbursed for the services of the Trust's principal financial officer and her staff, and any expenses related to fund accounting services.
Administrative services fees paid to AIM by each Fund for the last three fiscal years ended December 31, 2001, are found in Appendix F.
OTHER SERVICE PROVIDERS
TRANSFER AGENT. A I M Fund Services, Inc. ("AFS"), 11 Greenway Plaza, Suite 100, Houston, Texas 77046, a registered transfer agent and wholly owned subsidiary of AIM, acts as transfer and dividend disbursing agent for the Funds.
The Transfer Agency and Service Agreement between the Trust and AFS provides that AFS will perform certain shareholder services for the Funds. The Transfer Agency and Service Agreement provides that AFS will receive a per account fee plus out-of-pocket expenses to process orders for purchases, redemptions and exchanges of shares; prepare and transmit payments for dividends and distributions declared by the Funds; maintain shareholder accounts and provide shareholders with information regarding the Funds and their accounts. AFS may impose certain copying charges for requests for copies of shareholder account statements and other historical account information older than the current year and the immediately preceding year.
In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), 800 Scudders Mill Road, Plainsboro, New Jersey 08536 has entered into an agreement with the Trust (and certain other
AIM Funds), PFPC Inc. (formerly known as First Data Investor Service Group) and Financial Data Services, Inc., pursuant to which MLPF&S is paid a per account fee to perform certain shareholder sub-accounting services for its customers who beneficially own shares of the Fund(s).
CUSTODIAN. State Street Bank and Trust Company (the "Custodian"), 225 Franklin Street, Boston, Massachusetts 02110, is custodian of all securities and cash of the Funds. Chase Bank of Texas, N.A., 712 Main, Houston, Texas 77002, serves as sub-custodian for retail purchases. The Bank of New York, 100 Church Street, New York, New York 10286, also serves as sub-custodian to facilitate cash management.
The Custodian is authorized to establish separate accounts in foreign countries and to cause foreign securities owned by the Funds to be held outside the United States in branches of U.S. banks and, to the extent permitted by applicable regulations, in certain foreign banks and securities depositories. AIM is responsible for selecting eligible foreign securities depositories and for assessing the risks associated with investing in foreign countries, including the risk of using eligible foreign securities depositories in a country; the Custodian is responsible for monitoring eligible foreign securities depositories.
Under its contract with the Trust, the Custodian maintains the portfolio securities of the Funds, administers the purchases and sales of portfolio securities, collects interest and dividends and other distributions made on the securities held in the portfolios of the Funds and performs other ministerial duties. These services do not include any supervisory function over management or provide any protection against any possible depreciation of assets.
AUDITORS. The Funds' independent public accountants are responsible for auditing the financial statements of the Funds. The Board of Trustees has selected PricewaterhouseCoopers LLP, 1201 Louisiana, Suite 2900, Houston, Texas 77002, as the independent public accountants to audit the financial statements of the Funds.
COUNSEL TO THE TRUST. Legal matters for the Trust have been passed upon by Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania 19103.
BROKERAGE ALLOCATION AND OTHER PRACTICES
BROKERAGE TRANSACTIONS
AIM makes decisions to buy and sell securities for each Fund, selects broker-dealers, effects the Funds' investment portfolio transactions, allocates brokerage fees in such transactions and, where applicable, negotiates commissions and spreads on transactions. AIM's primary consideration in effecting a security transaction is to obtain the most favorable execution of the order, which includes the best price on the security and a low commission rate. While AIM seeks reasonably competitive commission rates, the Funds may not pay the lowest commission or spread available. See "Brokerage Selection" below.
Some of the securities in which the Funds invest are traded in over-the-counter markets. Portfolio transactions placed in such markets may be effected at either net prices without commissions, but which include compensation to the broker-dealer in the form of a mark up or mark down, or on an agency basis, which involves the payment of negotiated brokerage commissions.
Traditionally, commission rates have not been negotiated on stock markets outside the United States. Although in recent years many overseas stock markets have adopted a system of negotiated rates, a number of markets maintain an established schedule of minimum commission rates.
Brokerage commissions paid by each of the Funds during the last three fiscal years ended December 31, 2001 are found in Appendix G.
COMMISSIONS
During the last three fiscal years ended December 31, 2001, none of the Funds paid brokerage commissions to brokers affiliated with the Funds, AIM, AIM Distributors, or any affiliates of such entities.
The Funds may engage in certain principal and agency transactions with banks and their affiliates that own 5% or more of the outstanding voting securities of an AIM Fund, provided the conditions of an exemptive order received by the AIM Funds from the SEC are met. In addition, a Fund may purchase or sell a security from or to another AIM Fund or account (and may invest in Affiliated Money Market Funds) provided the Funds follow procedures adopted by the Boards of Directors/Trustees of the various AIM Funds, including the Trust. These inter-fund transactions do not generate brokerage commissions but may result in custodial fees or taxes or other related expenses.
BROKERAGE SELECTION
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under certain circumstances, lawfully may cause an account to pay a higher commission than the lowest available. Under Section 28(e)(1), AIM must make a good faith determination that the commissions paid are "reasonable in relation to the value of the brokerage and research services provided ... viewed in terms of either that particular transaction or [AIM's] overall responsibilities with respect to the accounts as to which [it] exercises investment discretion." The services provided by the broker also must lawfully and appropriately assist AIM in the performance of its investment decision-making responsibilities. Accordingly, in recognition of research services provided to it, a Fund may pay a broker higher commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own research (and the research of its affiliates), and may include the following types of information: statistical and background information on the U.S. and foreign economies, industry groups and individual companies; forecasts and interpretations with respect to the U.S. and foreign economies, securities, markets, specific industry groups and individual companies; information on federal, state, local and foreign political developments; portfolio management strategies; performance information on securities, indexes and investment accounts; information concerning prices of securities; and information supplied by specialized services to AIM and to the Trust's trustees with respect to the performance, investment activities, and fees and expenses of other mutual funds. Broker-dealers may communicate such information electronically, orally, in written form or on computer software. Research services may also include the providing of electronic communications of trade information and the providing of custody services, as well as the providing of equipment used to communicate research information and the providing of specialized consultations with AIM personnel with respect to computerized systems and data furnished to AIM as a component of other research services, the arranging of meetings with management of companies, and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the broker-dealers used by AIM tend to follow a broader universe of securities and other matters than AIM's staff can follow. In addition, the research provides AIM with a diverse perspective on financial markets. Research services provided to AIM by broker-dealers are available for the benefit of all accounts managed or advised by AIM or by its affiliates. Some broker-dealers may indicate that the provision of research services is dependent upon the generation of certain specified levels of commissions and underwriting concessions by AIM's clients, including the Funds. However, the Funds are not under any obligation to deal with any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the broker-dealer providing them. In other cases, the research services may be obtainable from alternative sources in return for cash payments. AIM believes that the research services are beneficial in supplementing AIM's research and analysis and that they improve the quality of AIM's investment advice. The advisory fee paid by the
Funds is not reduced because AIM receives such services. However, to the extent that AIM would have purchased research services had they not been provided by broker-dealers, the expenses to AIM could be considered to have been reduced accordingly.
AIM may determine target levels of commission business with various brokers on behalf of its clients (including the Funds) over a certain time period. The target levels will be based upon the following factors, among others: (1) the execution services provided by the broker; (2) the research services provided by the broker; and (3) the broker's interest in mutual funds in general and in the Funds and other mutual funds advised by AIM or A I M Capital Management, Inc. (collectively, the "AIM Funds") in particular, including sales of the Funds and of the other AIM Funds. In connection with (3) above, the Funds' trades may be executed directly by dealers that sell shares of the AIM Funds or by other broker-dealers with which such dealers have clearing arrangements, consistent with obtaining best execution. AIM will not use a specific formula in connection with any of these considerations to determine the target levels.
DIRECTED BROKERAGE (RESEARCH SERVICES)
Directed brokerage (research services) paid by each of the Funds during the last fiscal year ended December 31, 2001 are found in Appendix H.
REGULAR BROKERS OR DEALERS
Information concerning the Funds' acquisition of securities of their regular brokers or dealers during the last fiscal year ended December 31, 2001 is found in Appendix H.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage numerous other investment accounts. Some of these accounts may have investment objectives similar to the Funds. Occasionally, identical securities will be appropriate for investment by one of the Funds and by another Fund or one or more of these investment accounts. However, the position of each account in the same securities and the length of time that each account may hold its investment in the same securities may vary. The timing and amount of purchase by each account will also be determined by its cash position. If the purchase or sale of securities is consistent with the investment policies of the Fund(s) and one or more of these accounts, and is considered at or about the same time, AIM will fairly allocate transactions in such securities among the Fund(s) and these accounts. AIM may combine such transactions, in accordance with applicable laws and regulations, to obtain the most favorable execution. Simultaneous transactions could, however, adversely affect a Fund's ability to obtain or dispose of the full amount of a security which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the various investment accounts advised by AIM results in transactions which could have an adverse effect on the price or amount of securities available to a Fund. In making such allocations, AIM considers the investment objectives and policies of its advisory clients, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment, the size of investment commitments generally held, and the judgments of the persons responsible for recommending the investment. This procedure would apply to transactions in both equity and fixed income securities.
ALLOCATION OF INITIAL PUBLIC OFFERING ("IPO") TRANSACTIONS
Certain of the AIM Funds or other accounts managed by AIM may become interested in participating in IPOs. Purchases of IPOs by one AIM Fund or account may also be considered for purchase by one or more other AIM Funds or accounts. It shall be AIM's practice to specifically combine or otherwise bunch indications of interest for IPOs for all AIM Funds and accounts participating in purchase transactions for that IPO, and to allocate such transactions in accordance with the following procedures:
AIM will determine the eligibility of each AIM Fund and account that seeks to participate in a particular IPO by reviewing a number of factors, including suitability of the investment with the AIM Fund's or account's investment objective, policies and strategies, the liquidity of the AIM Fund or account if such investment is purchased, and whether the portfolio manager intends to hold the security as a long-term investment. The allocation of securities issued in IPOs will be made to eligible AIM Funds and accounts in a manner designed to be fair and equitable for the eligible AIM Funds and accounts, and so that there is equal allocation of IPOs over the longer term. Where multiple funds or accounts are eligible, rotational participation may occur, based on the extent to which an AIM Fund or account has participated in previous IPOs as well as the size of the AIM Fund or account. Each eligible AIM Fund and account will be placed in one of four tiers, depending upon each AIM Fund's or account's asset level. The AIM Funds and accounts in the tier containing funds and accounts with the smallest asset levels will participate first, each receiving a 40 basis point allocation (rounded to the nearest share round lot that approximates 40 basis points) (the "Allocation"), based on that AIM Fund's or account's net assets. This process continues until all of the AIM Funds and accounts in the four tiers receive their Allocations, or until the shares are all allocated. Should securities remain after this process, eligible AIM Funds and accounts will receive their Allocations on a straight pro rata basis. In addition, Incubator Funds, as described in AIM's Incubator and New Fund Investment Policy, will each be limited to a 40 basis point allocation only. Such allocations will be allocated to the nearest share round lot that approximates 40 basis points.
When any AIM Funds and/or accounts with substantially identical investment objectives and policies participate in IPOs, they will do so in amounts that are substantially proportionate to each other. In these cases, the net assets of the largest participating AIM Fund will be used to determine in which tier, as described in the paragraph above, such group of AIM Funds or accounts will be placed. If no AIM Fund is participating, then the net assets of the largest account will be used to determine tier placement. The price per share of securities purchased in such IPO transactions will be the same for each AIM Fund and account.
PURCHASE, REDEMPTION AND PRICING OF SHARES
PURCHASE AND REDEMPTION OF SHARES
Purchases of Class A Shares, Class A3 Shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund and AIM Cash Reserve Shares of AIM Money Market Fund
INITIAL SALES CHARGES. Each AIM Fund (other than AIM Tax-Exempt Cash Fund and AIM Money Market Fund) is grouped into one of three categories to determine the applicable initial sales charge for its Class A Shares. The sales charge is used to compensate AIM Distributors and participating dealers for their expenses incurred in connection with the distribution of the Funds' shares. You may also be charged a transaction or other fee by the financial institution managing your account.
Class A Shares of AIM Tax-Exempt Cash Fund, Class A3 Shares of AIM Limited Maturity Treasury and AIM Tax-Free Intermediate Fund and AIM Cash Reserve Shares of AIM Money Market Fund are sold without an initial sales charge.
CATEGORY I FUNDS
AIM Aggressive Growth Fund AIM European Growth Fund AIM Asia Pacific Growth Fund AIM European Small Company Fund AIM Basic Value Fund AIM Global Utilities Fund AIM Blue Chip Fund AIM International Emerging Growth Fund AIM Capital Development Fund AIM International Growth Fund AIM Charter Fund AIM International Core Equity Fund AIM Constellation Fund AIM Large Cap Basic Value Fund AIM Dent Demographic Trends Fund AIM Large Cap Core Equity Fund AIM Emerging Growth Fund AIM Large Cap Growth Fund |
AIM Libra Fund AIM Premier Equity Fund AIM Mid Cap Basic Value Fund AIM Premier Equity II Fund AIM Mid Cap Core Equity Fund AIM Select Equity Fund AIM Mid Cap Growth Fund AIM Small Cap Equity Fund AIM New Technology Fund AIM Small Cap Growth Fund AIM Opportunities I Fund AIM Weingarten Fund AIM Opportunities II Fund AIM Worldwide Spectrum Fund AIM Opportunities III Fund |
Dealer
Investor's Sales Charge Concession
------------------------ ----------
As a As a As a
Percentage Percentage Percentage
of the Public of the Net of Public
Amount of Investment in Offering Amount Offering
Single Transaction(1) Price Invested Price
------------------------- ------------- ---------- ----------
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
|
(1) AIM Opportunities Fund I will not accept any single purchase in excess of $250,000.
CATEGORY II FUNDS
AIM Balanced Fund AIM Global Trends Fund
AIM Basic Balanced Fund AIM High Income Municipal Fund
AIM Developing Markets Fund AIM High Yield Fund
AIM Global Aggressive Growth Fund AIM High Yield Fund II
AIM Global Energy Fund AIM Income Fund
AIM Global Financial Services Fund AIM Intermediate Government Fund
AIM Global Growth Fund AIM Municipal Bond Fund
AIM Global Health Care Fund AIM Real Estate Fund
AIM Global Income Fund AIM Strategic Income Fund
AIM Global Science and AIM Total Return Bond Fund
Technology Fund
|
Dealer
Investor's Sales Charge Concession
------------------------- ----------
As a As a As a
Percentage Percentage Percentage
of the Public of the Net of Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
----------------------- ------------- ----------- ----------
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
|
CATEGORY III FUNDS
AIM Limited Maturity Treasury Fund
AIM Tax-Free Intermediate Fund
Dealer
Investor's Sales Charge Concession
------------------------- ----------
As a As a As a
Percentage Percentage Percentage
of the Public of the Net of Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
----------------------- ------------- ----------- ----------
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
|
Beginning on October 31, 2002 Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund will be closed to new investors. Current investors must maintain a share balance in order to continue to make incremental purchases.
LARGE PURCHASES OF CLASS A SHARES. Investors who purchase $1,000,000 or more of Class A Shares of Category I, II or III Funds do not pay an initial sales charge. In addition, investors who currently own Class A shares of Category I, II, or III Funds and make additional purchases that result in account balances of $1,000,000 or more do not pay an initial sales charge on the additional purchases. The additional purchases, as well as initial purchases of $1,000,000 or more, are referred to as Large Purchases ("Large Purchases"). If an investor makes a Large Purchase of Class A shares of a Category I or II Fund, however, the shares generally will be subject to a 1.00 % contingent deferred sales charge (CDSC) if the investor redeems those shares within 18 months after purchase. Large Purchases of Class A shares of Category III Funds made on or after November 15, 2001 and through October 30, 2002 will be subject to a 0.25% CDSC if the investor redeems those shares within 12 months after purchase.
AIM Distributors may pay a dealer concession and/or advance a service fee on Large Purchases, as set forth below. Exchanges between the AIM Funds may affect total compensation paid.
For Large Purchases of Class A shares of Category I or II Funds by investors other than qualified retirement plans, AIM Distributors may make the following payments to dealers and institutions that are dealers of record:
PERCENT OF SUCH PURCHASES
If an investor made a Large Purchase of Class A shares of a Category III Fund on and after November 15, 2001 and through October 30, 2002 and exchanges those shares for Class A shares of a Category I or II Fund, AIM Distributors will pay an additional dealer concession of 0.75% upon exchange.
If an investor makes a Large Purchase of Class A shares of a Category I or II Fund on and after November 15, 2001 and exchanges those shares for Class A shares of a Category III Fund, AIM
Distributors will not pay any additional dealer compensation upon the exchange. Beginning February 17, 2003, Class A shares of a Category I or II Fund may not be exchanged for Class A shares of a Category III Fund.
If an investor makes a Large Purchase of Class A3 shares of a Category III Fund on and after October 31, 2002 and exchanges those shares for Class A shares of a Category I or II Fund, AIM Distributors will pay 1.00% of such purchase as dealer compensation upon the exchange. The Class A shares of the Category I or II Fund received in exchange generally will be subject to a 1.00% CDSC if the investor redeems such shares within 18 months from the date of exchange.
If an investor makes a Large Purchase of Class A shares of a Category III Fund and exchanges those shares for Class A shares of another Category III Fund, AIM Distributors will not pay any additional dealer concession upon the exchange. Beginning February 17, 2003, Class A shares of a Category III Fund may not be exchanged for Class A shares of another Category III Fund.
Effective November 1, 2002, for purchases of Class A shares of Category I and II Funds, AIM Distributors may make the following payments to investment dealers or other financial service firms for sales of such shares at net asset value to qualified retirement plans provided the applicable dealer or financial service firm is able to establish that the qualified retirement plan's purchase of such Class A shares is a new investment (as defined below):
PERCENT OF SUCH PURCHASES
A "new investment" means a purchase payment consisting of funds that represent a new investment in the AIM Funds, rather than funds that represent the proceeds of one or more exchanges of shares that involved shares of an AIM Fund or funds that represent the proceeds of one or more retirement plan loan repayments that involved shares of an AIM Fund. If AIM Distributors pays a dealer concession in connection with a qualified retirement plan's Large Purchase of Class A shares, such shares will be subject to a CDSC of 1.00% of net assets for 12 months, commencing on the date the qualified retirement plan first deposits money in the AIM Fund account. If the applicable dealer of record is unable to establish that a plan's Large Purchase of Class A shares is a new investment, AIM Distributors will not pay a dealer concession in connection with such Large Purchase and such Class A shares will not be subject to a CDSC.
PURCHASERS QUALIFYING FOR REDUCTIONS IN INITIAL SALES CHARGES. As shown in the tables above, purchases of certain amounts of AIM Fund shares may reduce the initial sales charges. These reductions are available to purchasers that meet the qualifications listed below. We will refer to purchasers that meet these qualifications as "Qualified Purchasers."
INDIVIDUALS
o an individual (including his or her spouse or domestic partner, and children);
o any trust established exclusively for the benefit of an individual;
o a pension, profit-sharing, or other benefit plan established exclusively for the benefit of an individual, such as:
a. an IRA;
b. a Roth IRA;
c. a single-participant money-purchase/profit-sharing plan; and
d. an individual participant in a 403(b) Plan (unless the 403(b) plan itself qualifies as the purchaser, as discussed below).
403(b) PLANS
o A 403(b) plan, the employer/sponsor of which is an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), if:
a. the employer/sponsor must submit contributions for all participating employees in a single contribution transmittal (i.e., the Funds will not accept contributions submitted with respect to individual participants);
b. each transmittal must be accompanied by a single check or wire transfer; and
c. all new participants must be added to the 403(b) plan by submitting an application on behalf of each new participant with the contribution transmittal.
TRUSTEES AND FIDUCIARIES
o a trustee or fiduciary purchasing for a single trust, estate or single fiduciary account;
o a trustee or fiduciary purchasing for a pension, profit-sharing or other employee benefit trust created pursuant to a plan qualified under Section 401 of the Code; and
o a trustee or fiduciary purchasing for a 457 plan, even if more than one beneficiary or participant is involved.
LINKED EMPLOYEE PLANS
o Linked Employee Plans where the employer has notified AIM Distributors in writing that all of its related employee accounts should be linked, such as:
a. Simplified Employee Pension (SEP) Plans;
b. Salary Reduction and other Elective Simplified Employee Pension account (SAR-SEP) Plans; and
c. Savings Incentive Match Plans for Employees IRA (SIMPLE IRA).
OTHER GROUPS
o any other organized group of persons, whether incorporated or not, provided that:
a. the organization has been in existence for at least six months; and
b. the organization has some purpose other than the purchase at a discount of redeemable securities of a registered investment company.
HOW TO QUALIFY FOR REDUCTIONS IN INITIAL SALES CHARGES. The following sections discuss different ways that a purchaser can qualify for a reduction in the initial sales charges for purchases of Class A shares of the AIM Funds.
LETTERS OF INTENT
A Qualified Purchaser may pay reduced initial sales charges by:
o indicating on the account application that he or she intends to provide a Letter of Intent ("LOI"); and
o fulfilling the conditions of that LOI.
The LOI confirms the total investment in shares of the AIM Funds that the Qualified Purchaser intends to make within the next 13 months. By marking the LOI section on the account application and by signing the account application, the Qualified Purchaser indicates that he or she understands and agrees to the terms of the LOI and is bound by the provisions described below:
Calculating the Initial Sales Charge
o Each purchase of fund shares normally subject to an initial sales charge made during the 13-month period will be made at the public offering price applicable to a single transaction of the total dollar amount indicated by the LOI (to determine what the applicable public offering price is, look as the sales charge table in the section on "Initial Sales Charges" above).
o It is the purchaser's responsibility at the time of purchase to specify the account numbers that should be considered in determining the appropriate sales charge.
o The offering price may be further reduced as described below under "Rights of Accumulation" if the Transfer Agent is advised of all other accounts at the time of the investment.
o Shares acquired through reinvestment of dividends and capital gains distributions will not be applied to the LOI.
Calculating the Number of Shares to be Purchased
o Purchases made within 90 days before signing an LOI will be applied toward completion of the LOI. The LOI effective date will be the date of the first purchase within the 90-day period.
o Purchases made more than 90 days before signing an LOI will be applied toward the completion of the LOI based on the value of the shares purchased that is calculated at the public offering price on the effective date of the LOI.
o If a purchaser meets the original obligation at any time during the 13-month period, he or she may revise the intended investment amount upward by submitting a written and signed request. This revision will not change the original expiration date.
o The Transfer Agent will process necessary adjustments upon the expiration or completion date of the LOI.
Fulfilling the Intended Investment
o By signing an LOI, a purchaser is not making a binding commitment to purchase additional shares, but if purchases made within the 13-month period do not total the amount specified, the purchaser will have to pay the increased amount of sales charge.
o To assure compliance with the provisions of the 1940 Act, the Transfer Agent will escrow in the form of shares an appropriate dollar amount (computed to the nearest full share) out of the initial purchase (or subsequent purchases if necessary). All dividends and any capital gain distributions
on the escrowed shares will be credited to the purchaser. All shares purchased, including those escrowed, will be registered in the purchaser's name. If the total investment specified under this LOI is completed within the 13-month period, the escrowed shares will be promptly released.
o If the intended investment is not completed, the purchaser will pay the Transfer Agent the difference between the sales charge on the specified amount and the sales charge on the amount actually purchased. If the purchaser does not pay such difference within 20 days of the expiration date, he or she irrevocably constitutes and appoints the Transfer Agent as his attorney to surrender for redemption any or all shares, to make up such difference within 60 days of the expiration date.
Canceling the LOI
o If at any time before completing the LOI Program, the purchaser wishes to cancel the agreement, he or she must give written notice to AIM Distributors.
o If at any time before completing the LOI Program the purchaser requests the Transfer Agent to liquidate or transfer beneficial ownership of his total shares, the LOI will be automatically canceled. If the total amount purchased is less than the amount specified in the LOI, the Transfer Agent will redeem an appropriate number of escrowed shares equal to the difference between the sales charge actually paid and the sales charge that would have been paid if the total purchases had been made at a single time.
Other Persons Eligible for the LOI Privilege
The LOI privilege is also available to holders of the Connecticut General Guaranteed Account, established for tax qualified group annuities, for contracts purchased on or before June 30, 1992.
LOIs and Contingent Deferred Sales Charges
If an investor entered into an LOI to purchase $1,000,000 or more of Class A shares of a Category III Fund on and after November 15, 2001 and through October 30, 2002, such shares will be subject to a 12-month, 0.25% CDSC. Purchases of Class A shares of a Category III Fund made pursuant to an LOI to purchase $1,000,000 or more of shares entered into prior to November 15, 2001 or after October 30, 2002 will not be subject to this CDSC. All LOIs to purchase $1,000,000 or more of Class A shares of Category I and II Funds are subject to an 18-month, 1% CDSC.
RIGHTS OF ACCUMULATION
A Qualified Purchaser may also qualify for reduced initial sales charges based upon his or her existing investment in shares of any of the AIM Funds at the time of the proposed purchase. To determine whether or not a reduced initial sales charge applies to a proposed purchase, AIM Distributors takes into account not only the money which is invested upon such proposed purchase, but also the value of all shares of the AIM Funds owned by such purchaser, calculated at their then current public offering price.
If a purchaser qualifies for a reduced sales charge, the reduced sales charge applies to the total amount of money being invested, even if only a portion of that amount exceeds the breakpoint for the reduced sales charge. For example, if a purchaser already owns qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest an additional $20,000 in a fund with a maximum initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will apply to the full $20,000 purchase and not just to the $15,000 in excess of the $25,000 breakpoint.
To qualify for obtaining the discount applicable to a particular purchase, the purchaser or his dealer must furnish the Transfer Agent with a list of the account numbers and the names in which such accounts of the purchaser are registered at the time the purchase is made.
Rights of Accumulation are also available to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
If an investor's new purchase of Class A shares of a Category I or II Fund is at net asset value, the newly purchased shares will be subject to a CDSC if the investor redeems them prior to the end of the 18 month holding period (12 months for Category III Fund shares). For new purchases of Class A shares of Category III Funds at net asset value made on and after November 15, 2001 and through October 30, 2002, the newly purchased shares will be subject to a CDSC if the investor redeems them prior to the end of the 12 month holding period.
OTHER REQUIREMENTS FOR REDUCTIONS IN INITIAL SALES CHARGES. As discussed above, investors or dealers seeking to qualify orders for a reduced initial sales charge must identify such orders and, if necessary, support their qualification for the reduced charge. AIM Distributors reserves the right to determine whether any purchaser is entitled to the reduced sales charge based on the definition of a Qualified Purchaser listed above. No person or entity may distribute shares of the AIM Funds without payment of the applicable sales charge other than to Qualified Purchasers.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, Class A3 shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, AIM Cash Reserve Shares of AIM Money Market Fund, and Class B and Class C shares of AIM Floating Rate Fund will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges.
PURCHASES OF CLASS A SHARES AT NET ASSET VALUE. AIM Distributors permits certain categories of persons to purchase Class A shares of AIM Funds without paying an initial sales charge. These are typically categories of persons whose transactions involve little expense, such as:
o Persons who have a relationship with the funds or with AIM and its affiliates, and are therefore familiar with the funds, and who place unsolicited orders directly with AIM Distributors; or
o Programs for purchase that involve little expense because of the size of the transaction and shareholder records required.
AIM Distributors believes that it is appropriate and in the Funds' best interests that such persons, and certain other persons whose purchases result in relatively low expenses of distribution, be permitted to purchase shares through AIM Distributors without payment of a sales charge.
Accordingly, the following purchasers will not pay initial sales charges on purchases of Class A shares because there is a reduced sales effort involved in sales to these purchasers:
o AIM Management and its affiliates, or their clients;
o Any current or retired officer, director or employee (and members of their immediate family) of AIM Management, its affiliates or The AIM Family of Funds,--Registered Trademark-- and any foundation, trust or employee benefit plan established exclusively for the benefit of, or by, such persons;
o Any current or retired officer, director, or employee (and members of their immediate family), of PFPC Inc. (formerly known as First Data Investor Services Group);
o Sales representatives and employees (and members of their immediate family) of selling group members of financial institutions that have arrangements with such selling group members;
o Purchases through approved fee-based programs;
o Employee benefit plans that are Qualified Purchasers, as defined above, and non-qualified plans offered in conjunction with those employee benefit plans, provided that:
a. the initial investment in the plan(s) is at least $1 million;
b. the sponsor signs a $1 million LOI;
c. the employer-sponsored plan has at least 100 eligible employees; or
d. all plan transactions are executed through a single omnibus account per Fund and the financial institution or service organization has entered into the appropriate agreement with the distributor.
Section 403(b) plans sponsored by public educational institutions are not eligible for a sales charge exception based on the aggregate investment made by the plan or the number of eligible employees. Purchases of AIM Opportunities I Fund by such plans are subject to initial sales charges;
o Shareholders of record of Advisor Class shares of AIM International Growth Fund or AIM Worldwide Growth Fund on February 12, 1999 who have continuously owned shares of the AIM Funds;
o Shareholders of record or discretionary advised clients of any investment advisor holding shares of AIM Weingarten Fund or AIM Constellation Fund on September 8, 1986, or of AIM Charter Fund on November 17, 1986, who have continuously owned shares having a market value of at least $500 and who purchase additional shares of the same Fund;
o Unitholders of G/SET series unit investment trusts investing proceeds from such trusts in shares of AIM Weingarten Fund or AIM Constellation Fund; provided, however, prior to the termination date of the trusts, a unitholder may invest proceeds from the redemption or repurchase of his units only when the investment in shares of AIM Weingarten Fund and AIM Constellation Fund is effected within 30 days of the redemption or repurchase;
o A shareholder of a fund that merges or consolidates with an AIM Fund or that sells its assets to an AIM Fund in exchange for shares of an AIM Fund;
o Shareholders of the GT Global funds as of April 30, 1987 who since that date continually have owned shares of one or more of these funds;
o Certain former AMA Investment Advisers' shareholders who became shareholders of the AIM Global Health Care Fund in October 1989, and who have continuously held shares in the GT Global funds since that time;
o Shareholders of record of Advisor Class shares of an AIM Fund on February 11, 2000 who have continuously owned shares of that AIM Fund, and who purchase additional shares of that AIM Fund;
o Qualified Tuition Programs created and maintained in accordance with
Section 529 of the Code; and
o Participants in select brokerage programs for defined contribution plans and rollover IRAs (including rollover IRAs which accept annual IRA contributions) who purchase shares through an electronic brokerage platform offered by entities with which AIM Distributors has entered into a written agreement.
As used above, immediate family includes an individual and his or her spouse or domestic partner, children, parents and parents of spouse or domestic partner.
In addition, an investor may acquire shares of any of the AIM Funds at net asset value in connection with:
o the reinvestment of dividends and distributions from a Fund;
o exchanges of shares of certain Funds;
o use of the reinstatement privilege; or
o a merger, consolidation or acquisition of assets of a Fund.
PAYMENTS TO DEALERS. AIM Distributors may elect to re-allow the entire initial sales charge to dealers for all sales with respect to which orders are placed with AIM Distributors during a particular period. Dealers to whom substantially the entire sales charge is re-allowed may be deemed to be "underwriters" as that term is defined under the 1933 Act.
In addition to, or instead of, amounts paid to dealers as a sales commission, AIM Distributors may, from time to time, at its expense or as an expense for which it may be compensated under a distribution plan, if applicable, pay a bonus or other consideration or incentive to dealers. The total amount of such additional bonus payments or other consideration shall not exceed 0.25% of the public offering price of the shares sold or of average daily net assets of the AIM Fund attributable to that particular dealer. At the option of the dealer, such incentives may take the form of payment for travel expenses, including lodging, incurred in connection with trips taken by qualifying registered representatives and their families to places within or outside the United States. Any such bonus or incentive programs will not change the price paid by investors for the purchase of the applicable AIM Fund's shares or the amount that any particular AIM Fund will receive as proceeds from such sales. Dealers may not use sales of the AIM Funds' shares to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any state.
Purchases of Class B Shares
Class B shares are sold at net asset value, and are not subject to an initial sales charge. Instead, investors may pay a contingent deferred sales charge if they redeem their shares within six years after purchase. See the Prospectus for additional information regarding contingent deferred sales charges. AIM Distributors may pay sales commissions to dealers and institutions who sell Class B shares of the AIM Funds at the time of such sales. Payments will equal 4.00% of the purchase price and will consist of a sales commission equal to 3.75% plus an advance of the first year service fee of 0.25%.
Purchases of Class C Shares
Class C shares are sold at net asset value, and are not subject to an initial sales charge. Instead, investors may pay a contingent deferred sales charge (CDSC) if they redeem their shares within the first year after purchase (no CDSC applies to Class C shares of AIM Short Term Bond Fund unless you exchange shares of another AIM Fund that are subject to a CDSC into Short Term Bond Fund. See the Prospectus for additional information regarding this CDSC. AIM Distributors may pay sales commissions to dealers and institutions who sell Class C shares of the AIM Funds (except for Class C shares of AIM Short Term Bond Fund) at the time of such sales. Payments will equal 1.00% of the purchase price and will consist of a sales commission of 0.75% plus an advance of the first year service fee of 0.25. These commissions are not paid on sales to investors exempt from the CDSC, including shareholders of record of AIM Advisor Funds, Inc. on April 30, 1995, who purchase additional shares in any of the Funds on or after May 1, 1995, and in circumstances where AIM Distributors grants an exemption on particular transactions.
AIM Distributors may pay dealers and institutions who sell Class C shares of AIM Short Term Bond Fund an annual fee of 0.50% of average daily net assets. These payments will consist of an asset-based fee of 0.25% and a service fee of 0.25% and will commence immediately.
Purchases of Class R Shares
Class R shares are sold at net asset value, and are not subject to an initial sales charge. If AIM Distributors pays a concession to the dealer of record, however, the Class R shares are subject to a 0.75% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the retirement plan's initial purchase. For purchases of Class R shares of Category I or II Funds, AIM Distributors may make the following payments to dealers of record:
PERCENT OF SUCH PURCHASES
In order to receive such payments, the dealer of record must sign an agreement with AIM Distributors and meet certain requirements.
Exchanges
TERMS AND CONDITIONS OF EXCHANGES. Normally, shares of an AIM Fund to be acquired by exchange are purchased at their net asset value or applicable offering price, as the case may be, determined on the date that such request is received, but under unusual market conditions such purchases may be delayed for up to five business days if it is determined that a fund would be materially disadvantaged by an immediate transfer of the proceeds of the exchange. If a shareholder is exchanging into a fund paying daily dividends, and the release of the exchange proceeds is delayed for the foregoing five-day period, such shareholder will not begin to accrue dividends until the sixth business day after the exchange.
EXCHANGES BY TELEPHONE. AIM Distributors has made arrangements with certain dealers and investment advisory firms to accept telephone instructions to exchange shares between any of the AIM Funds. AIM Distributors reserves the right to impose conditions on dealers or investment advisors who make telephone exchanges of shares of the funds, including the condition that any such dealer or investment advisor enter into an agreement (which contains additional conditions with respect to exchanges of shares) with AIM Distributors. To exchange shares by telephone, a shareholder, dealer or investment advisor who has satisfied the foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach AFS by telephone, he may also request exchanges by fax, telegraph or use overnight courier services to expedite exchanges by mail, which will be effective on the business day received by AFS as long as such request is received prior to the close of the customary trading session of the NYSE. AFS and AIM Distributors may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction.
Redemptions
GENERAL. Shares of the AIM Funds may be redeemed directly through AIM Distributors or through any dealer who has entered into an agreement with AIM Distributors. In addition to the Funds' obligation to redeem shares, AIM Distributors may also repurchase shares as an accommodation to shareholders. To effect a repurchase, those dealers who have executed Selected Dealer Agreements with AIM Distributors must phone orders to the order desk of the Funds at (800) 959-4246 and guarantee
delivery of all required documents in good order. A repurchase is effected at the net asset value per share of the applicable Fund next determined after the repurchase order is received. Such an arrangement is subject to timely receipt by AFS, the Funds' transfer agent, of all required documents in good order. If such documents are not received within a reasonable time after the order is placed, the order is subject to cancellation. While there is no charge imposed by a Fund or by AIM Distributors (other than any applicable contingent deferred sales charge) when shares are redeemed or repurchased, dealers may charge a fair service fee for handling the transaction.
SUSPENSION OF REDEMPTIONS. The right of redemption may be suspended or the date of payment postponed when (a) trading on the New York Stock Exchange ("NYSE") is restricted, as determined by applicable rules and regulations of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension, or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of a Fund not reasonably practicable.
REDEMPTIONS BY TELEPHONE. By signing an account application form, an investor appoints AFS as his true and lawful attorney-in-fact to surrender for redemption any and all unissued shares held by AFS in the designated account(s), present or future, with full power of substitution in the premises. AFS and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption. An investor acknowledges by signing the form that he understands and agrees that AFS and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone redemption requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transactions. AFS reserves the right to cease to act as attorney-in-fact subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone redemption privilege at any time without notice. An investor may elect not to have this privilege by marking the appropriate box on the application. Then any redemptions must be effected in writing by the investor.
SYSTEMATIC WITHDRAWAL PLAN. A Systematic Withdrawal Plan permits a shareholder of an AIM Fund to withdraw on a regular basis at least $50 per withdrawal. Under a Systematic Withdrawal Plan, all shares are to be held by AFS and all dividends and distributions are reinvested in shares of the applicable AIM Fund by AFS. To provide funds for payments made under the Systematic Withdrawal Plan, AFS redeems sufficient full and fractional shares at their net asset value in effect at the time of each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since such payments are funded by the redemption of shares, they may result in a return of capital and in capital gains or losses, rather than in ordinary income. Because sales charges are imposed on additional purchases of shares (other than Class B, Class C, or Class R shares of the Funds), it is disadvantageous to effect such purchases while a Systematic Withdrawal Plan is in effect.
Each AIM Fund bears its share of the cost of operating the Systematic Withdrawal Plan.
Contingent Deferred Sales Charges Imposed upon Redemption of Shares
A CDSC may be imposed upon the redemption of Large Purchases of Class A Shares of Category I and II Funds, or upon the redemption of Class B shares or Class C shares (no CDSC applies to Class C shares of AIM Short Term Bond Fund unless you exchange shares of another AIM Fund that are subject to a CDSC into AIM Short Term Bond Fund) and, in certain circumstances, upon the redemption of Class R shares. On and after November 15, 2001 and through October 30, 2002 a CDSC also may be imposed upon the redemption of Large Purchases of Class A shares of Category III Funds. See the Prospectus for additional information regarding CDSCs.
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS FOR LARGE PURCHASES OF CLASS A SHARES. An investor who has made a Large Purchase of Class A shares of a Category I, II, or III Fund will not be subject to a CDSC upon the redemption of those shares in the following situations:
o Redemptions of shares of Category I or II Funds held more than 18 months;
o Redemptions of shares of Category III Funds purchased prior to November 15, 2001 or after October 30, 2002;
o Redemptions of shares of Category III Funds purchased on or after November 15, 2001 and through October 30, 2002 and held for more than 12 months;
o Redemptions from employee benefit plans designated as Qualified Purchasers, as defined above, where the redemptions are in connection with employee terminations or withdrawals, provided the total amount invested in the plan is at least $1,000,000; the sponsor signs a $1 million LOI; or the employer-sponsored plan has at least 100 eligible employees; provided, however, that 403(b) plans sponsored by public educational institutions shall qualify for the CDSC waiver on the basis of the value of each plan participant's aggregate investment in the AIM Funds, and not on the aggregate investment made by the plan or on the number of eligible employees;
o Redemptions from private foundations or endowment funds;
o Redemption of shares by the investor where the investor's dealer waives the amounts otherwise payable to it by the distributor and notifies the distributor prior to the time of investment;
o Redemptions of shares of Category I, II or III Funds or AIM Cash Reserve Shares of AIM Money Market Fund acquired by exchange from Class A shares of a Category I or II Fund, unless the shares acquired by exchange (on or after November 15, 2001 and through October 30, 2002 with respect to Category III Funds) are redeemed within 18 months of the original purchase of the exchange of Category I or II Fund shares;
o Redemptions of shares of Category III Funds, shares of AIM Tax-Exempt Cash Fund or AIM Cash Reserve Shares of AIM Money Market Fund acquired by exchange from Class A shares of a Category III Fund purchased prior to November 15, 2001;
o Redemptions of shares of Category I or II Funds acquired by exchange from Class A shares of a Category III Fund purchased on and after November 15, 2001 and through October 30, 2002, unless the shares acquired by exchange are redeemed within 18 months of the original purchase of the exchanged Category III Fund shares;
o Redemptions of shares of Category III Funds, shares of AIM Tax-Exempt Cash Fund or AIM Cash Reserve Shares of AIM Money Market Fund acquired by exchange from Class A shares of a Category III Fund purchased on and after November 15, 2001 (and through October 30, 2002 with respect to Category III Funds), unless the shares acquired by exchange are redeemed within 12 months of the original purchase of the exchanged Category III Fund shares; and
o Redemptions of shares of Category I or II Funds acquired by exchange on and after November 15, 2001 from AIM Cash Reserve Shares of AIM Money Market Fund if the AIM Cash Reserve Shares were acquired by exchange from a Category I or II Fund, unless the Category I or II Fund shares acquired by exchange are redeemed within 18 months of the original purchase of the exchanged Category I or II Funds shares.
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS FOR CLASS B AND C SHARES. Investors who purchased former GT Global funds Class B shares before June 1, 1998 are subject to the following waivers from the CDSC otherwise due upon redemption:
o Total or partial redemptions resulting from a distribution following retirement in the case of a tax-qualified employer-sponsored retirement;
o Minimum required distributions made in connection with an IRA, Keogh Plan or custodial account under Section 403(b) of the Code or other retirement plan following attainment of age 70 1/2;
o Redemptions pursuant to distributions from a tax-qualified employer-sponsored retirement plan, which is invested in the former GT Global funds, which are permitted to be made without penalty pursuant to the Code, other than tax-free rollovers or transfers of assets, and the proceeds of which are reinvested in the former GT Global funds;
o Redemptions made in connection with participant-directed exchanges between options in an employer-sponsored benefit plan;
o Redemptions made for the purpose of providing cash to fund a loan to a participant in a tax-qualified retirement plan;
o Redemptions made in connection with a distribution from any retirement plan or account that is permitted in accordance with the provisions of Section 72(t)(2) of the Code, and the regulations promulgated thereunder;
o Redemptions made in connection with a distribution from a
qualified profit-sharing or stock bonus plan described in
Section 401(k) of the Code to a participant or beneficiary
under Section 401(k)(2)(B)(IV) of the Code upon hardship of
the covered employee (determined pursuant to Treasury
Regulation Section 1.401(k)-1(d)(2));
o Redemptions made by or for the benefit of certain states, counties or cities, or any instrumentalities, departments or authorities thereof where such entities are prohibited or limited by applicable law from paying a sales charge or commission.
CDSCs will not apply to the following redemptions of Class B or Class C shares, as applicable:
o Additional purchases of Class C shares of AIM International Core Equity Fund (formerly known as AIM International Value Fund) and AIM Real Estate Fund by shareholders of record on April 30, 1995, of these Funds, except that shareholders whose broker-dealers maintain a single omnibus account with AFS on behalf of those shareholders, perform sub-accounting functions with respect to those shareholders, and are unable to segregate shareholders of record prior to April 30, 1995, from shareholders whose accounts were opened after that date will be subject to a CDSC on all purchases made after March 1, 1996;
o Redemptions following the death or post-purchase disability of
(1) any registered shareholders on an account or (2) a settlor
of a living trust, of shares held in the account at the time
of death or initial determination of post-purchase disability;
o Certain distributions from individual retirement accounts,
Section 403(b) retirement plans, Section 457 deferred
compensation plans and Section 401 qualified plans, where
redemptions result from (i) required minimum distributions to
plan participants or beneficiaries who are age 70 1/2 or
older, and only with respect to that portion of such
distributions that does not exceed 12% annually of the participant's or beneficiary's account value in a particular AIM Fund; (ii) in kind transfers of assets where the participant or beneficiary notifies the distributor of the transfer no later than the time the transfer occurs; (iii) tax-free rollovers or transfers of assets to another plan of the type described above invested in Class B or Class C shares of one or more of the AIM Funds; (iv) tax-free returns of excess contributions or returns of excess deferral amounts; and (v) distributions on the death or disability (as defined in the Internal Revenue Code of 1986, as amended) of the participant or beneficiary;
o Amounts from a Systematic Withdrawal Plan of up to an annual amount of 12% of the account value on a per fund basis, at the time the withdrawal plan is established, provided the investor reinvests his dividends;
o Liquidation by the Fund when the account value falls below the minimum required account size of $500;
o Investment account(s) of AIM;
o Class C shares where the investor's dealer of record notifies the distributor prior to the time of investment that the dealer waives the upfront payment otherwise payable to him;
o Redemptions of Class C shares, where such redemptions are in connection with employee terminations or withdrawals from (i) a pension, profit-sharing or other employee benefit trust created pursuant to a plan qualified under Section 401 of the Code; and (ii) a 457 plan, even if more than one beneficiary or participant is involved;
o Redemptions of Class C shares of an AIM Fund other than AIM Short Term Bond Fund if you received such Class C shares by exchanging Class C shares of AIM Short Term Bond Fund; and
o Redemptions of Class C shares of AIM Short Term Bond Fund unless you received such Class C shares by exchanging Class C shares of another AIM Fund and the original purchase was subject to a CDSC.
CDSCs will not apply to the following redemptions of Class R shares:
o Class R shares where the retirement plan's dealer of record notifies the distributor prior to the time of investment that the dealer waives the upfront payment otherwise payable to him;
o Redemptions, if you are a participant in a retirement plan and your plan redeems, at any time, less than all of the Class R shares held through such plan that would otherwise be subject to a CDSC; and
o Redemptions, if you are a participant in a retirement plan and your plan redeems, after having held them for more than one year from the date of the plan's initial purchase, all of the Class R shares held through such plan that would otherwise be subject to a CDSC.
General Information Regarding Purchases, Exchanges and Redemptions
GOOD ORDER. Purchase, exchange and redemption orders must be received in good order. To be in good order, an investor must supply AFS with all required information and documentation, including signature guarantees when required. In addition, if a purchase of shares is made by check, the check must be received in good order. This means that the check must be properly completed and signed, and legible to AFS in its sole discretion.
TIMING OF PURCHASE ORDERS. It is the responsibility of the dealer or other financial intermediary to ensure that all orders are transmitted on a timely basis to AFS. Any loss resulting from the failure of the dealer or financial intermediary or financial intermediary's failure to submit an order within the prescribed time frame will be borne by that dealer or financial intermediary. If a check used to purchase shares does not clear, or if any investment order must be canceled due to nonpayment, the investor will be responsible for any resulting loss to an AIM Fund or to AIM Distributors
SIGNATURE GUARANTEES. In addition to those circumstances listed in the "Shareholder Information" section of each Fund's prospectus, signature guarantees are required in the following situations: (1) requests to transfer the registration of shares to another owner; (2) telephone exchange and telephone redemption authorization forms; (3) changes in previously designated wiring or electronic funds transfer instructions; and (4) written redemptions or exchanges of shares previously reported as lost, whether or not the redemption amount is under $250,000 or the proceeds are to be sent to the address of record. AIM Funds may waive or modify any signature guarantee requirements at any time.
Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that such institution or organization qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the SEC, and further provided that such guarantor institution is listed in one of the reference guides contained in AFS' current Signature Guarantee Standards and Procedures, such as certain domestic banks, credit unions, securities dealers, or securities exchanges. AFS will also accept signatures with either: (1) a signature guaranteed with a medallion stamp of the STAMP Program, or (2) a signature guaranteed with a medallion stamp of the NYSE Medallion Signature Program, provided that in either event, the amount of the transaction involved does not exceed the surety coverage amount indicated on the medallion. For information regarding whether a particular institution or organization qualifies as an "eligible guarantor institution," an investor should contact the Client Services Department of AFS.
TRANSACTIONS BY TELEPHONE. By signing an account application form, an investor appoints AFS as his true and lawful attorney-in-fact to surrender for redemption any and all unissued shares held by AFS in the designated account(s), or in any other account with any of the AIM Funds, present or future, which has the identical registration as the designated account(s), with full power of substitution in the premises. AFS and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption proceeds to be applied to purchase shares in any one or more of the AIM Funds, provided that such fund is available for sale and provided that the registration and mailing address of the shares to be purchased are identical to the registration of the shares being redeemed. An investor acknowledges by signing the form that he understands and agrees that AFS and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone exchange requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transactions. AFS reserves the right to modify or terminate the telephone exchange privilege at any time without notice. An investor may elect not to have this privilege by marking the appropriate box on the application. Then any exchanges must be effected in writing by the investor.
INTERNET TRANSACTIONS. An investor may effect transactions in his account through the internet by selecting the AIM Internet Connect option on his completed account application form or completing an AIM Internet Connect Authorization Form. By signing either form the investor acknowledges and agrees that AFS and AIM Distributors will not be liable for any loss, expense or cost arising out of any internet transaction effected in accordance with the instructions set forth in the forms if they reasonably believe such request to be genuine. Procedures for verification of internet transactions include requests for confirmation of the shareholder's personal identification number and mailing of confirmations promptly after the transactions. The investor also acknowledges that (1) if he no longer wants the AIM Internet
Connect option, he will notify AFS in writing, and (2) the AIM Internet Connect option may be terminated at any time by the AIM Funds.
OFFERING PRICE
The following formula may be used to determine the public offering price per Class A share of an investor's investment:
Net Asset Value / (1 - Sales Charge as % of Offering Price ) = Offering Price.
For example, at the close of business on December 31, 2001, AIM Premier Equity Fund - Class A shares had a net asset value per share of $10.87. The offering price, assuming an initial sales charge of 5.50%, therefore was $11.50
Calculation of Net Asset Value
Each Fund determines its net asset value per share once daily as of the close of the customary trading session of the NYSE (generally 4:00 p.m. Eastern time) on each business day of the Fund. In the event the NYSE closes early (i.e., before 4:00 p.m. Eastern time) on a particular day, each Fund determines its net asset value per share as of the close of the NYSE on such day. For purposes of determining net asset value per share, the Fund will generally use futures and options contract closing prices which are available fifteen (15) minutes after the close of the customary trading session of the NYSE. The Funds determine net asset value per share by dividing the value of a Fund's securities, cash and other assets (including interest accrued but not collected) attributable to a particular class, less all its liabilities (including accrued expenses and dividends payable) attributable to that class, by the total number of shares outstanding of that class. Determination of a Fund's net asset value per share is made in accordance with generally accepted accounting principles.
Each security (excluding convertible bonds) held by a Fund 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 traded in the over-the-counter market (but not including securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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; option contracts are valued at the mean between the closing bid and asked prices on the exchange where the contracts are principally traded; futures contracts are valued at final settlement price quotations from the primary exchange on which they are traded. Debt securities (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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, coupon rate, maturity, type of issue, individual trading characteristics and other market data.
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 ask 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 Trust's officers in a manner specifically authorized by the Board of Trustees. Short-term investments are valued at amortized cost when the security has 60 days or less to maturity.
Foreign securities are converted into U.S. dollars using exchange rates as of the close of the 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 customary trading session of the NYSE. The values of such securities used in computing the net asset value of each Fund's shares are determined as of the close of the respective markets. Occasionally,
events affecting the values of such securities may occur between the times at which such values are determined and the close of the customary trading session of the NYSE which will not be reflected in the computation of a Fund's net asset value. If a development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as of the close of the applicable market, may be adjusted to reflect the fair value of the affected securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
Fund securities primarily traded in foreign markets may be traded in such markets on days which are not business days of the Fund. Because the net asset value per share of each Fund is determined only on business days of the Fund, the net asset value per share of a Fund may be significantly affected on days when an investor cannot exchange or redeem shares of the Fund.
REDEMPTION IN KIND
AIM intends to redeem all shares of the Funds in cash. It is possible that future conditions may make it undesirable for a Fund to pay for redeemed shares in cash. In such cases, the Fund may make payment in securities or other property. If the Fund has made an election under Rule 18f-1 under the 1940 Act, the Fund is obligated to redeem for cash all shares presented to such Fund for redemption by any one shareholder in an amount up to the lesser of $250,000 or 1% of that Fund's net assets in any 90-day period. Securities delivered in payment of redemptions are valued at the same value assigned to them in computing the applicable Fund's net asset value per share. Shareholders receiving such securities are likely to incur brokerage costs on their subsequent sales of such securities.
BACKUP WITHHOLDING
Accounts submitted without a correct, certified taxpayer identification number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8 (for non-resident aliens) or Form W-9 (certifying exempt status) accompanying the registration information will generally be subject to backup withholding.
Each AIM Fund, and other payers, generally must withhold as of January 1, 2002, 30% of redemption payments and reportable dividends (whether paid or accrued) in the case of any shareholder who fails to provide the Fund with a taxpayer identification number ("TIN") and a certification that he is not subject to backup withholding; however, the backup withholding rate decreases in phases to 28% for distributions made in the year 2006 and thereafter.
An investor is subject to backup withholding if:
1. the investor fails to furnish a correct TIN to the Fund, or
2. the IRS notifies the Fund that the investor furnished an incorrect TIN, or
3. the investor or the Fund is notified by the IRS that the investor is subject to backup withholding because the investor failed to report all of the interest and dividends on such investor's tax return (for reportable interest and dividends only), or
4. the investor fails to certify to the Fund that the investor is not subject to backup withholding under (3) above (for reportable interest and dividend accounts opened after 1983 only), or
5. the investor does not certify his TIN. This applies only to non-exempt mutual fund accounts opened after 1983.
Interest and dividend payments are subject to backup withholding in all five situations discussed above. Redemption proceeds and long-term gain distributions are subject to backup withholding only if (1), (2) or (5) above applies.
Certain payees and payments are exempt from backup withholding and information reporting. AIM or AFS will not provide Form 1099 to those payees.
Investors should contact the IRS if they have any questions concerning withholding.
IRS PENALTIES - Investors who do not supply the AIM Funds with a correct TIN will be subject to a $50 penalty imposed by the IRS unless such failure is due to reasonable cause and not willful neglect. If an investor falsifies information on this form or makes any other false statement resulting in no backup withholding on an account which should be subject to backup withholding, such investor may be subject to a $500 penalty imposed by the IRS and to certain criminal penalties including fines and/or imprisonment.
NONRESIDENT ALIENS - Nonresident alien individuals and foreign entities are not subject to the backup withholding previously discussed, but must certify their foreign status by attaching IRS Form W-8 to their application. Form W-8 generally remains in effect for a period starting on the date the Form is signed and ending on the last day of the third succeeding calendar year. Such shareholders may, however, be subject to federal income tax withholding at a 30% rate on ordinary income dividends and other distributions. Under applicable treaty law, residents of treaty countries may qualify for a reduced rate of withholding or a withholding exemption.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
It is the present policy of the Fund to declare and pay annually net investment income dividends and capital gain distributions, except for AIM Balanced Fund, AIM Basic Balanced Fund and AIM Global Utilities Fund. It is the Fund's intention to distribute substantially all of its net investment income and realized net capital gains by the end of each taxable year. In determining the amount of capital gains, if any, available for distribution, capital gains will be offset against available net capital loss, if any, carried forward from previous fiscal periods. All dividends and distributions will be automatically reinvested in additional shares of the same class of each Fund unless the shareholder has requested in writing to receive such dividends and distributions in cash or that they be invested in shares of another AIM Fund, subject to the terms and conditions set forth in the Prospectus under the caption "Special Plans - Automatic Dividend Investment." Such dividends and distributions will be reinvested at the net asset value per share determined on the ex-dividend date. If a shareholder's account does not have any shares in it on a dividend or capital gain distribution payment date, the dividend or distribution will be paid in cash whether or not the shareholder has elected to have such dividends or distributions reinvested.
It is the present policy of the AIM Balanced Fund, AIM Basic Balanced Fund and AIM Global Utilities Fund to declare and pay quarterly net investment income dividends and declare and pay annually capital gain distributions.
A dividend or distribution paid by a fund which does not declare dividends daily has the effect of reducing the net asset value per share on the ex-dividend date by the amount of the dividend or distribution. Therefore, a dividend or distribution declared shortly after a purchase of shares by an investor would represent, in substance, a return of capital to the shareholder with respect to such shares even though it would be subject to income taxes.
Dividends on Class B and Class C shares are expected to be lower than those for Class A shares because of higher distribution fees paid by Class B and Class C shares. Dividends on Class R shares may be lower than those for Class A shares, depending on whether the Class R shares pay higher distribution fees than those for Class A shares. Other class-specific expenses may also affect dividends on shares of those classes. Expenses attributable to a particular class ("Class Expenses") include distribution plan expenses, which must be allocated to the class for which they are incurred. Other expenses may be allocated as Class Expenses, consistent with applicable legal principals under the 1940 Act and the Code.
TAX MATTERS
The following is only a summary of certain additional tax considerations generally affecting the Funds and their shareholders that are not described in the Prospectus. No attempt is made to present a detailed explanation of the tax treatment of each Fund or its shareholders, and the discussion here and in the Prospectus is not intended as a substitute for careful tax planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY. Each Fund has elected to be taxed under Subchapter M of the Code as a regulated investment company and intends to maintain its qualification as such in each of its taxable years. As a regulated investment company, each Fund is not subject to federal income tax on the portion of its net investment income (i.e., taxable interest, dividends and other taxable ordinary income, net of expenses) and capital gain net income (i.e., the excess of capital gains over capital losses) that it distributes to shareholders, provided that it distributes (i) at least 90% of its investment company taxable income (i.e., net investment income, net foreign currency ordinary gain or loss and the excess of net short-term capital gain over net long-term capital loss) and (ii) at least 90% of the excess of its tax-exempt interest income under Code Section 103(a) over its deductions disallowed under Code Sections 265 and 171(a)(2) for the taxable year (the "Distribution Requirement"), and satisfies certain other requirements of the Code that are described below. Distributions by a Fund made during the taxable year or, under specified circumstances, within twelve months after the close of the taxable year, will be considered distributions of income and gains of the taxable year and can therefore satisfy the Distribution Requirement.
Each Fund may use "equalization accounting" in determining the portion of its net investment income and capital gain net income that has been distributed. A Fund that elects to use equalization accounting will allocate a portion of its realized investment income and capital gain to redemptions of Fund shares and will reduce the amount of such income and gain that it distributes in cash. However, each Fund intends to make cash distributions for each taxable year in an aggregate amount that is sufficient to satisfy the Distribution Requirement without taking into account its use of equalization accounting. The Internal Revenue Service has not published any guidance concerning the methods to be used in allocating investment income and capital gain to redemptions of shares. In the event that the Internal Revenue Service determines that a Fund is using an improper method of allocation and has underdistributed its net investment income and capital gain net income for any taxable year, such Fund may be liable for additional federal income tax.
In addition to satisfying the Distribution Requirement, a regulated investment company must derive at least 90% of its gross income from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies (to the extent such currency gains are directly related to the regulated investment company's principal business of investing in stock or securities) and other income (including, but not limited to, gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies (the "Income Requirement").
In addition to satisfying the requirements described above, each Fund must satisfy an asset diversification test in order to qualify as a regulated investment company (the "Asset Diversification Test"). Under this test, at the close of each quarter of each Fund's taxable year, at least 50% of the value of the Fund's assets must consist of cash and cash items, U.S. Government securities, securities of other regulated investment companies, and securities of other issuers, as to which the Fund has not invested more than 5% of the value of the Fund's total assets in securities of such issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of such issuer, and no more than 25% of the value of its total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses.
For purposes of the Asset Diversification Test, the IRS has ruled that the issuer of a purchased listed call option on stock is the issuer of the stock underlying the option. The IRS has also informally ruled that, in general, the issuers of purchased or written call and put options on securities, of long and
short positions on futures contracts on securities and of options on such future contracts are the issuers of the securities underlying such financial instruments where the instruments are traded on an exchange.
Where the writer of a listed call option owns the underlying securities, the IRS has ruled that the Asset Diversification Test will be applied solely to such securities and not to the value of the option itself. With respect to options on securities indexes, futures contracts on securities indexes and options on such futures contracts, the IRS has informally ruled that the issuers of such options and futures contracts are the separate entities whose securities are listed on the index, in proportion to the weighing of securities in the computation of the index. It is unclear under present law who should be treated as the issuer of forward foreign currency exchange contracts, of options on foreign currencies, or of foreign currency futures and related options. It has been suggested that the issuer in each case may be the foreign central bank or the foreign government backing the particular currency. Due to this uncertainty and because the Funds may not rely on informal rulings of the IRS, the Funds may find it necessary to seek a ruling from the IRS as to the application of the Asset Diversification Test to certain of the foregoing types of financial instruments or to limit its holdings of some or all such instruments in order to stay within the limits of such test.
If for any taxable year a Fund does not qualify as a regulated investment company, all of its taxable income (including its net capital gain) will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions will be taxable as ordinary dividends to the extent of such Fund's current and accumulated earnings and profits. Such distributions generally will be eligible for the dividends received deduction in the case of corporate shareholders.
DETERMINATION OF TAXABLE INCOME OF A REGULATED INVESTMENT COMPANY. In general, gain or loss recognized by a Fund on the disposition of an asset will be a capital gain or loss. However, gain recognized on the disposition of a debt obligation purchased by a Fund at a market discount (generally, at a price less than its principal amount) will be treated as ordinary income to the extent of the portion of the market discount which accrued during the period of time the Fund held the debt obligation unless the Fund made an election to accrue market discount into income. If a Fund purchases a debt obligation that was originally issued at a discount, the Fund is generally required to include in gross income each year the portion of the original issue discount which accrues during such year. In addition, under the rules of Code Section 988, gain or loss recognized on the disposition of a debt obligation denominated in a foreign currency or an option with respect thereto (but only to the extent attributable to changes in foreign currency exchange rates), and gain or loss recognized on the disposition of a foreign currency forward contract or of foreign currency itself, will generally be treated as ordinary income or loss.
Certain hedging transactions that may be engaged in by certain of the Funds (such as short sales "against the box") may be subject to special tax treatment as "constructive sales" under Section 1259 of the Code if a Fund holds certain "appreciated financial positions" (defined generally as any interest (including a futures or forward contract, short sale or option) with respect to stock, certain debt instruments, or partnership interests if there would be a gain were such interest sold, assigned, or otherwise terminated at its fair market value). Upon entering into a constructive sales transaction with respect to an appreciated financial position, a Fund will generally be deemed to have constructively sold such appreciated financial position and will recognize gain as if such position were sold, assigned, or otherwise terminated at its fair market value on the date of such constructive sale (and will take into account any gain for the taxable year which includes such date).
Some of the forward foreign currency exchange contracts, options and
futures contracts that certain of the Funds may enter into will be subject to
special tax treatment as "Section 1256 contracts." Section 1256 contracts that a
Fund holds are treated as if they are sold for their fair market value on the
last business day of the taxable year, regardless of whether a taxpayer's
obligations (or rights) under such contracts have terminated (by delivery,
exercise, entering into a closing transaction or otherwise) as of such date. Any
gain or loss recognized as a consequence of the year-end deemed disposition of
Section 1256 contracts is combined with any other gain or loss that was
previously recognized upon the termination of Section 1256 contracts during that
taxable year. The net amount of such gain or loss for the entire taxable year
(including gain or loss arising as a consequence of the year-end deemed sale of
such contracts) is deemed to be 60% long-term and 40% short-term gain or loss. However, in the case of Section 1256 contracts that are forward foreign currency exchange contracts, the net gain or loss is separately determined and (as discussed above) generally treated as ordinary income or loss. If such a future or option is held as an offsetting position and can be considered a straddle under Section 1092 of the Code, such a straddle will constitute a mixed straddle. A mixed straddle will be subject to both Section 1256 and Section 1092 unless certain elections are made by the Fund.
Other hedging transactions in which the Funds may engage may result in "straddles" or "conversion transactions" for U.S. federal income tax purposes. The straddle and conversion transaction rules may affect the character of gains (or in the case of the straddle rules, losses) realized by the Funds. In addition, losses realized by the Funds on positions that are part of a straddle may be deferred under the straddle rules, rather than being taken into account in calculating the taxable income for the taxable year in which the losses are realized. Because only a few regulations implementing the straddle rules and the conversion transaction rules have been promulgated, the tax consequences to the Funds of hedging transactions are not entirely clear. The hedging transactions may increase the amount of short-term capital gain realized by the Funds (and, if they are conversion transactions, the amount of ordinary income) which is taxed as ordinary income when distributed to shareholders.
Because application of any of the foregoing rules governing Section 1256 contracts, constructive sales, straddle and conversion transactions may affect the character of gains or losses, defer losses and/or accelerate the recognition of gains or losses from the affected investment or straddle positions, the taxable income of a Fund may exceed its book income. Accordingly, the amount which must be distributed to shareholders and which will be taxed to shareholders as ordinary income or long-term capital gain may also differ from the book income of the Fund and may be increased or decreased as compared to a fund that did not engage in such transactions.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES. A 4% non-deductible excise tax is imposed on a regulated investment company that fails to distribute in each calendar year an amount equal to 98% of ordinary taxable income for the calendar year and 98% of capital gain net income (excess of capital gains over capital losses) for the one-year period ended on October 31 of such calendar year (or, at the election of a regulated investment company having a taxable year ending November 30 or December 31, for its taxable year (a "taxable year election")). The balance of such income must be distributed during the next calendar year. For the foregoing purposes, a regulated investment company is treated as having distributed any amount on which it is subject to income tax for any taxable year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year and (2) exclude
Section 988 foreign currency gains and losses incurred after October 31 (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
Each Fund generally intends to make sufficient distributions or deemed distributions of its ordinary taxable income and capital gain net income prior to the end of each calendar year to avoid liability for the excise tax. However, in the event that the Internal Revenue Service determines that a Fund is using an improper method of allocation for purposes of equalization accounting (as discussed above), such Fund may be liable for excise tax. Moreover, investors should note that a Fund may in certain circumstances be required to liquidate portfolio investments to make sufficient distributions to avoid excise tax liability. In addition, under certain circumstances, a Fund may elect to pay a minimal amount of excise tax.
PFIC INVESTMENTS. Those Funds that are permitted to invest in foreign equity securities may invest in stocks of foreign companies that are classified under the Code as passive foreign investment companies ("PFICs"). In general, a foreign company is classified as a PFIC if at least one-half of its assets constitute investment-type assets or 75% or more of its gross income is investment-type income.
The application of the PFIC rules may affect, among other things, the character of gain, the amount of gain or loss and the timing of the recognition of income with respect to PFIC stock, as well as subject the Funds themselves to tax on certain income from PFIC stock. For these reasons the amount that must be distributed to shareholders, and which will be taxed to shareholders as ordinary income or long-term capital gain, may be increased or decreased substantially as compared to a fund that did not invest in PFIC stock.
SWAP AGREEMENTS. Each Fund may enter into swap agreements. The rules governing the tax aspects of swap agreements are in a developing stage and are not entirely clear in certain respects. Accordingly, while a Fund intends to account for such transactions in a manner deemed to be appropriate, the IRS might not accept such treatment. If it did not, the status of a Fund as a regulated investment company might be affected. Each Fund intends to monitor developments in this area. Certain requirements that must be met under the Code in order for a Fund to qualify as a regulated investment company may limit the extent to which the Fund will be able to engage in swap agreements.
FUND DISTRIBUTIONS. Each Fund anticipates distributing substantially all of its investment company taxable income for each taxable year. Such distributions will be taxable to shareholders as ordinary income and treated as dividends for federal income tax purposes, but they will qualify for the 70% dividends received deduction for corporations only to the extent discussed below.
A Fund may either retain or distribute to shareholders its net capital gain (net long-term capital gain over net short-term capital loss) for each taxable year. Each Fund currently intends to distribute any such amounts. If net capital gain is distributed and designated as a capital gain dividend, it will be taxable to shareholders as long-term capital gain (currently taxable at a maximum rate of 20% for noncorporate shareholders) regardless of the length of time the shareholder has held his shares or whether such gain was recognized by the Fund prior to the date on which the shareholder acquired his shares. Conversely, if a Fund elects to retain its net capital gain, the Fund will be taxed thereon (except to the extent of any available capital loss carry forwards) at the 35% corporate tax rate. If a Fund elects to retain its net capital gain, it is expected that the Fund also will elect to have shareholders treated as if each received a distribution of its pro rata share of such gain, with the result that each shareholder will be required to report its pro rata share of such gain on its tax return as long-term capital gain, will receive a refundable tax credit for its pro rata share of tax paid by the Fund on the gain, and will increase the tax basis for its shares by an amount equal to the deemed distribution less the tax credit.
Ordinary income dividends paid by a Fund with respect to a taxable year will qualify for the 70% dividends received deduction generally available to corporations (other than corporations, such as "S" corporations, which are not eligible for the deduction because of their special characteristics and other than for purposes of special taxes such as the accumulated earnings tax and the personal holding company tax) to the extent of the amount of qualifying dividends received by the Fund from domestic corporations for the taxable year. However, the alternative minimum tax applicable to corporations may reduce the value of the dividends received deduction.
Alternative minimum tax ("AMT") is imposed in addition to, but only to the extent it exceeds, the regular tax and is computed at a maximum rate of 28% for non-corporate taxpayers and 20% for corporate taxpayers on the excess of the taxpayer's alternative minimum taxable income ("AMTI") over an exemption amount. The corporate dividends received deduction is not itself an item of tax preference that must be added back to taxable income or is otherwise disallowed in determining a corporation's AMTI. However, corporate shareholders will generally be required to take the full amount of any dividend received from the Fund into account (without a dividend received deduction) in determining their adjusted current earnings, which are used in computing an additional corporate preference item (i.e., 75% of the excess of a corporate taxpayer's adjusted current earnings over its AMTI (determined without regard to this item and the AMTI net operating loss deduction)) that is includable in AMTI. However, certain small corporations are wholly exempt from the AMT.
Distributions by a Fund that do not constitute earnings and profits will be treated as a return of capital to the extent of (and in reduction of) the shareholder's tax basis in his shares; any excess will be treated as gain from the sale of his shares.
Distributions by a Fund will be treated in the manner described above regardless of whether such distributions are paid in cash or reinvested in additional shares of the Fund (or of another Fund). Shareholders receiving a distribution in the form of additional shares will be treated as receiving a distribution in an amount equal to the fair market value of the shares received, determined as of the reinvestment date.
Ordinarily, shareholders are required to take distributions by a Fund into account in the year in which the distributions are made. However, dividends declared in October, November or December of any year and payable to shareholders of record on a specified date in such a month will be deemed to have been received by the shareholders (and made by the Fund) on December 31 of such calendar year if such dividends are actually paid in January of the following year. Shareholders will be advised annually as to the U.S. federal income tax consequences of distributions made (or deemed made) during the year in accordance with the guidance that has been provided by the IRS.
If the net asset value of shares is reduced below a shareholder's cost as a result of a distribution by a Fund, such distribution generally will be taxable even though it represents a return of invested capital. Investors should be careful to consider the tax implications of buying shares of a Fund just prior to a distribution. The price of shares purchased at this time may reflect the amount of the forthcoming distribution. Those purchasing just prior to a distribution will receive a distribution which generally will be taxable to them.
SALE OR REDEMPTION OF SHARES. A shareholder will recognize gain or loss
on the sale or redemption of shares of a Fund in an amount equal to the
difference between the proceeds of the sale or redemption and the shareholder's
adjusted tax basis in the shares. All or a portion of any loss so recognized may
be deferred if the shareholder purchases other shares of the Fund within thirty
(30) days before or after the sale or redemption. In general, any gain or loss
arising from (or treated as arising from) the sale or redemption of shares of a
Fund will be considered capital gain or loss and will be long-term capital gain
or loss if the shares were held for longer than one year. Currently, any
long-term capital gain recognized by a non-corporate shareholder will be subject
to tax at a maximum rate of 20%. However, any capital loss arising from the sale
or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of the amount of capital gain dividends
received on such shares. Capital losses in any year are deductible only to the
extent of capital gains plus, in the case of a non-corporate taxpayer, $3,000 of
ordinary income.
If a shareholder (a) incurs a sales load in acquiring shares of a Fund,
(b) disposes of such shares less than 91 days after they are acquired, and (c)
subsequently acquires shares of the Fund or another fund at a reduced sales load
pursuant to a right to reinvest at such reduced sales load acquired in
connection with the acquisition of the shares disposed of, then the sales load
on the shares disposed of (to the extent of the reduction in the sales load on
the shares subsequently acquired) shall not be taken into account in determining
gain or loss on the shares disposed of, but shall be treated as incurred on the
acquisition of the shares subsequently acquired. The wash sale rules may also
limit the amount of loss that may be taken into account.
BACKUP WITHHOLDING. The Funds may be required to withhold, as of January 1, 2002, 30% of distributions and/or redemption payments; however, this rate is reduced in phases to 28% for distributions made in the year 2006 and thereafter. For more information refer to "Purchase, Redemption and Pricing of Shares - Backup Withholding".
FOREIGN SHAREHOLDERS. Taxation of a shareholder who, as to the United States, is a nonresident alien individual, foreign trust or estate, foreign corporation, or foreign partnership ("foreign shareholder"), depends on whether the income from a Fund is "effectively connected" with a U.S. trade
or business carried on by such shareholder. If the income from a Fund is not effectively connected with a U.S. trade or business carried on by a foreign shareholder, distributions (other than distributions of long-term capital gain) will be subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount of the distribution. Such a foreign shareholder would generally be exempt from U.S. federal income tax on gain realized on the redemption of shares of a Fund, capital gain dividends and amounts retained by a Fund that are designated as undistributed net capital gain.
If the income from a Fund is effectively connected with a U.S. trade or business carried on by a foreign shareholder, then ordinary income dividends, capital gain dividends and any gains realized upon the sale or redemption of shares of the Fund will be subject to U.S. federal income tax at the rates applicable to U.S. citizens or domestic corporations.
In the case of foreign non-corporate shareholders, a Fund may be required to withhold U.S. federal income tax at a rate of 30% on distributions made on or after January 1, 2002 that are otherwise exempt from withholding tax (or taxable at a reduced treaty rate) unless such shareholders furnish the Fund with proper notification of their foreign status; however, this rate is reduced in phases to 28% for distributions made in the year 2006 and thereafter.
Foreign shareholders may be subject to U.S. withholding tax at a rate of 30% on the income resulting from a Fund's election to treat any foreign income tax paid by it as paid by its shareholders, but may not be able to claim a credit or deduction with respect to the withholding tax for the foreign tax treated as having been paid by them.
Foreign persons who file a United States tax return to obtain a U.S. tax refund and who are not eligible to obtain a social security number must apply to the IRS for an individual taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form W-7 and accompanying instructions, please contact your tax advisor or the IRS.
Transfers by gift of shares of a Fund by a foreign shareholder who is a nonresident alien individual will not be subject to U.S. federal gift tax. An individual who, at the time of death, is a foreign shareholder will nevertheless be subject to U.S. federal estate tax with respect to shares at the graduated rates applicable to U.S. citizens and residents, unless a treaty exception applies. In the absence of a treaty, there is a $13,000 statutory estate tax credit.
The tax consequences to a foreign shareholder entitled to claim the benefits of an applicable tax treaty may be different from those described herein. Foreign shareholders are urged to consult their own tax advisers with respect to the particular tax consequences to them of an investment in a Fund, including the applicability of foreign tax.
FOREIGN INCOME TAX. Investment income received by each Fund from sources within foreign countries may be subject to foreign income tax withheld at the source. The United States has entered into tax treaties with many foreign countries which entitle the Funds to a reduced rate of, or exemption from, tax on such income. It is impossible to determine the effective rate of foreign tax in advance since the amount of a Fund's assets to be invested in various countries is not known.
If more than 50% of the value of a Fund's total assets at the close of each taxable year consists of the stock or securities of foreign corporations, the Fund may elect to "pass through" to the Fund's shareholders the amount of foreign income tax paid by the Fund (the "Foreign Tax Election"). Pursuant to the Foreign Tax Election, shareholders will be required (i) to include in gross income, even though not actually received, their respective pro-rata shares of the foreign income tax paid by the Fund that are attributable to any distributions they receive; and (ii) either to deduct their pro-rata share of foreign tax in computing their taxable income, or to use it (subject to various Code limitations) as a foreign tax credit against Federal income tax (but not both). No deduction for foreign tax may be claimed by a non-corporate shareholder who does not itemize deductions or who is subject to alternative minimum tax.
Unless certain requirements are met, a credit for foreign tax is
subject to the limitation that it may not exceed the shareholder's U.S. tax
(determined without regard to the availability of the credit)
attributable to the shareholder's foreign source taxable income. In determining the source and character of distributions received from a Fund for this purpose, shareholders will be required to allocate Fund distributions according to the source of the income realized by the Fund. Each Fund's gain from the sale of stock and securities and certain currency fluctuation gain and loss will generally be treated as derived from U.S. sources. In addition, the limitation on the foreign tax credit is applied separately to foreign source "passive" income, such as dividend income. Pursuant to the Taxpayer Relief Act of 1997, individuals who have no more than $300 ($600 for married persons filing jointly) of creditable foreign tax included on Form 1099 and whose foreign source income is all "qualified passive income" may elect each year to be exempt from the foreign tax credit limitation and will be able to claim a foreign tax credit without filing Form 1116 with its corresponding requirement to report income and tax by country. Moreover, no foreign tax credit will be allowable to any shareholder who has not held his shares of the Fund for at least 16 days during the 30-day period beginning 15 days before the day such shares become ex-dividend with respect to any Fund distribution to which foreign income taxes are attributed (taking into account certain holding period reduction requirements of the Code). Because of these limitations, shareholders may be unable to claim a credit for the full amount of their proportionate shares of the foreign income tax paid by a Fund.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS. The foregoing general discussion of U.S. federal income tax consequences is based on the Code and the regulations issued thereunder as in effect on the date of this Statement of Additional Information. Future legislative or administrative changes or court decisions may significantly change the conclusions expressed herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation for dividends from income and capital gain dividends from regulated investment companies may differ from the rules for U.S. federal income taxation described above. Distributions may also be subject to additional state, local and foreign taxes depending on each shareholder's particular situation. Non-U.S. shareholders may be subject to U.S. tax rules that differ significantly from those summarized above. Shareholders are urged to consult their tax advisers as to the consequences of these and other state and local tax rules affecting investment in the Funds.
DISTRIBUTION OF SECURITIES
DISTRIBUTION PLANS
The Trust has adopted distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to each Fund's Class A shares, Class B shares, Class C shares and, if applicable, Class R shares (collectively the "Plans"). Each Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate, shown immediately below, of the Fund's average daily net assets of the applicable class.
FUND CLASS A CLASS B CLASS C CLASS R ---- ------- ------- ------- ------- AIM Balanced Fund 0.25% 1.00% 1.00% 0.50% AIM Basic Balanced Fund 0.35 1.00 1.00 N/A AIM European Small Company Fund 0.35 1.00 1.00 N/A AIM Global Utilities Fund 0.25 1.00 1.00 N/A AIM International Emerging Growth Fund 0.35 1.00 1.00 N/A AIM Mid Cap Basic Value Fund 0.35 1.00 1.00 N/A AIM New Technology Fund 0.35 1.00 1.00 N/A AIM Premier Equity Fund 0.25 1.00 1.00 0.50 AIM Premier Equity II Fund 0.35 1.00 1.00 N/A AIM Select Equity Fund 0.25 1.00 1.00 N/A AIM Small Cap Equity Fund 0.35 1.00 1.00 0.50 AIM Worldwide Spectrum Fund 0.35 1.00 1.00 N/A |
All of the Plans compensate AIM Distributors for the purpose of financing any activity which is primarily intended to result in the sale of shares of the Funds. Such activities include, but are not limited to, the following: printing of prospectuses and statements of additional information and reports for other than existing shareholders; overhead; preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers and other institutions such as asset-based sales charges or as payments of service fees under shareholder service arrangements; and costs of administering each Plan.
Amounts payable by a Fund under the Plans need not be directly related to the expenses actually incurred by AIM Distributors on behalf of each Fund. The Plans do not obligate the Funds to reimburse AIM Distributors for the actual expenses AIM Distributors may incur in fulfilling its obligations under the Plans. Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM Distributors at any given time, the Funds will not be obligated to pay more than that fee. If AIM Distributors' expenses are less than the fee it receives, AIM Distributors will retain the full amount of the fee.
AIM Distributors may from time to time waive or reduce any portion of its 12b-1 fee for Class A shares, Class C shares and Class R shares. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, AIM Distributors will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM Distributors and the Fund.
The Funds may pay a service fee of 0.25% of the average daily net assets of the Class A, Class B, Class C or Class R shares attributable to the customers of selected dealers and financial institutions to such dealers and financial institutions, including AIM Distributors, acting as principal, who furnish continuing personal shareholder services to their customers who purchase and own the applicable class of shares of the Fund. Under the terms of a shareholder service agreement, such personal shareholder services include responding to customer inquiries and providing customers with information about their investments. Any amounts not paid as a service fee under each Plan would constitute an asset-based sales charge.
Under a Shareholder Service Agreement, a Fund agrees to pay periodically fees to selected dealers and other institutions who render the foregoing services to their customers. The fees payable under a Shareholder Service Agreement will be calculated at the end of each payment period for each business day of the Funds during such period at the annual rate specified in each agreement based on the average daily net asset value of the Funds' shares purchased or acquired through exchange. Fees shall be paid only to those selected dealers or other institutions who are dealers or institutions of record at the close of business on the last business day of the applicable payment period for the account in which such Fund's shares are held.
Selected dealers and other institutions entitled to receive compensation for selling Fund shares may receive different compensation for selling shares of one particular class over another. Under the Plans, certain financial institutions which have entered into service agreements and which sell shares of the Funds on an agency basis, may receive payments from the Funds pursuant to the respective Plans. AIM Distributors does not act as principal, but rather as agent for the Funds, in making dealer incentive and shareholder servicing payments to dealers and other financial institutions under the Plans. These payments are an obligation of the Funds and not of AIM Distributors.
Payments pursuant to the Plans are subject to any applicable limitations imposed by rules of the National Association of Securities Dealers, Inc. ("NASD").
See Appendix I for a list of the amounts paid by each class of shares of each Fund to AIM Distributors pursuant to the Plans for the year, or period, ended December 31, 2001 and Appendix J for an estimate by category of the allocation of actual fees paid by each class of shares of each Fund pursuant to its respective distribution plan for the year or period ended December 31, 2001.
As required by Rule 12b-1, the Plans and related forms of Shareholder Service Agreements were approved by the Board of Trustees, including a majority of the trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust and who have no direct or indirect financial interest in the operation of the Plans or in any agreements related to the Plans (the "Rule 12b-1 Trustees"). In approving the Plans in accordance with the requirements of Rule 12b-1, the trustees considered various factors and determined that there is a reasonable likelihood that the Plans would benefit each class of the Funds and its respective shareholders.
The anticipated benefits that may result from the Plans with respect to each Fund and/or the classes of each Fund and its shareholders include but are not limited to the following: (1) rapid account access; (2) relatively predictable flow of cash; and (3) a well-developed, dependable network of shareholder service agents to help to curb sharp fluctuations in rates of redemptions and sales, thereby reducing the chance that an unanticipated increase in net redemptions could adversely affect the performance of each Fund.
Unless terminated earlier in accordance with their terms, the Plans continue from year to year as long as such continuance is specifically approved, in person, at least annually by the Board of Trustees, including a majority of the Rule 12b-1 Trustees. A Plan may be terminated as to any Fund or class by the vote of a majority of the Rule 12b-1 Trustees or, with respect to a particular class, by the vote of a majority of the outstanding voting securities of that class.
Any change in the Plans that would increase materially the distribution expenses paid by the applicable class requires shareholder approval; otherwise, the Plans may be amended by the trustees, including a majority of the Rule 12b-1 Trustees, by votes cast in person at a meeting called for the purpose of voting upon such amendment. As long as the Plans are in effect, the selection or nomination of the Independent Trustees is committed to the discretion of the Independent Trustees.
The Class B Plan obligates Class B shares to continue to make payments to AIM Distributors following termination of the Class B shares Distribution Agreement with respect to Class B shares sold by or attributable to the distribution efforts of AIM Distributors or its predecessors, unless there has been a complete termination of the Class B Plan (as defined in such Plan) and the Class B Plan expressly authorizes AIM Distributors to assign, transfer or pledge its rights to payments pursuant to the Class B Plan.
DISTRIBUTOR
The Trust has entered into master distribution agreements, as amended, relating to the Funds (the "Distribution Agreements") with AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of AIM, pursuant to which AIM Distributors acts as the distributor of shares of the Funds. The address of AIM Distributors is P.O. Box 4739, Houston, Texas 77210-4739. Certain trustees and officers of the Trust are affiliated with AIM Distributors. See "Management of the Trust."
The Distribution Agreements provide AIM Distributors with the exclusive right to distribute shares of the Funds on a continuous basis directly and through institutions with whom AIM Distributors has entered into selected dealer agreements. AIM Distributors has not undertaken to sell any specified number of shares of any classes of the Funds.
AIM Distributors expects to pay sales commissions from its own resources to dealers and institutions who sell Class B and Class C shares of the Funds at the time of such sales.
Payments with respect to Class B shares will equal 4.00% of the purchase price of the Class B shares sold by the dealer or institution, and will consist of a sales commission equal to 3.75% of the purchase price of the Class B shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. The portion of the payments to AIM Distributors under the Class B Plan which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of such sales commissions plus financing costs. In the future, if multiple distributors serve a Fund, each such distributor (or its assignee or transferee) would receive a share of the payments under the Class B Plan based on the portion of the Fund's Class B shares sold by or attributable to the distribution efforts of that distributor.
AIM Distributors may pay sales commissions to dealers and institutions who sell Class C shares of the AIM Funds at the time of such sales. Payments with respect to Class C shares will equal 1.00% of the purchase price of the Class C shares sold by the dealer or institution, and will consist of a sales commission of 0.75% of the purchase price of the Class C shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. AIM Distributors will retain all payments received by it relating to Class C shares for the first year after they are purchased. The portion of the payments to AIM Distributors under the Class A, Class C and Class R Plan attributable to Class C shares which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of the sales commissions to dealers plus financing costs, if any. After the first full year, AIM Distributors will make quarterly payments to dealers and institutions based on the average net asset value of Class C shares which are attributable to shareholders for whom the dealers and institutions are designated as dealers of record. These payments will consist of an asset-based sales charge of 0.75% and a service fee of 0.25%.
AIM Distributors may pay dealers and institutions who sell Class R shares an annual fee of 0.50% of average daily net assets. These payments will consist of an asset-based fee of 0.25% and a service fee of 0.25% and will commence either on the thirteenth month after the first purchase, on accounts on which a dealer concession was paid, or immediately, on accounts on which a dealer concession was not paid. If AIM Distributors pays a dealer concession, it will retain all payments received by it relating to Class R shares for the first year after they are purchased. AIM Distributors will make quarterly payments to dealers and institutions based on the average net asset value of Class R shares which are attributable to shareholders for whom the dealers and institutions are designated as dealers of record.
The Trust (on behalf of any class of any Fund) or AIM Distributors may terminate the Distribution Agreements on sixty (60) days' written notice without penalty. The Distribution Agreements will terminate automatically in the event of their assignment. In the event the Class B shares Distribution Agreement is terminated, AIM Distributors would continue to receive payments of asset-based distribution fees in respect of the outstanding Class B shares attributable to the distribution efforts of AIM Distributors or its predecessors; provided, however that a complete termination of the Class B Plan (as defined in such Plan) would terminate all payments to AIM Distributors. Termination of the Class B Plan or the Distribution Agreement for Class B shares would not affect the obligation of Class B shareholders to pay contingent deferred sales charges.
Total sales charges (front end and contingent deferred sales charges) paid in connection with the sale of shares of each class of each Fund, if applicable, for the last three fiscal years ending December 31, 2001 are found in Appendix K.
CALCULATION OF PERFORMANCE DATA
Although performance data may be useful to prospective investors when comparing a Fund's performance with other funds and other potential investments, investors should note that the methods of computing performance of other potential investments are not necessarily comparable to the methods employed by a Fund.
Average Annual Total Return Quotation
The standard formula for calculating average annual total return is as follows:
n P(1+T) = ERV
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable
maximum sales load is deducted at the beginning of the
one, five, or ten year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment
at the end of the one, five, or ten year periods (or
fractional portion of such period).
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The average annual total returns for each Fund, with respect to its Class A, Class B and Class C shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are found in Appendix L.
Total returns quoted in advertising reflect all aspects of a Fund's return, including the effect of reinvesting dividends and capital gain distributions, and any change in the Fund's net asset value per share over the period. Cumulative total return reflects the performance of a Fund over a stated period of time. Average annual total returns are calculated by determining the growth or decline in value of a hypothetical investment in a Fund over a stated period of time, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period.
Each Fund's total return is calculated in accordance with a standardized formula for computation of annualized total return. Standardized total return for: (1) Class A shares reflects the deduction of a Fund's maximum front-end sales charge at the time of purchase; (2) Class B and Class C shares reflects the deduction of the maximum applicable CDSC on a redemption of shares held for the period; and (3) Class R shares does not reflect a deduction of any sales charge since that class is generally sold and redeemed at net asset value.
A Fund's total return shows its overall change in value, including changes in share price and assuming all the Fund's dividends and capital gain distributions are reinvested. A cumulative total return reflects the Fund's performance over a stated period of time. An average annual total return reflects the hypothetical compounded annual rate of return that would have produced the same cumulative total return if the Fund's performance had been constant over the entire period. Because average annual returns tend to even out variations in the Fund's return, investors should recognize that such returns are not the same as actual year-by-year results. To illustrate the components of overall performance, a Fund may separate its cumulative and average annual returns into income results and capital gains or losses.
Alternative Total Return Quotations
Standard total return quotes may be accompanied by total return figures calculated by alternative methods. For example, average annual total return may be calculated without assuming payment of the full sales load according to the following formula:
n P(1+U) =ERV
Where P = a hypothetical initial payment of $1,000.
U = average annual total return assuming payment of only a
stated portion of, or none of, the applicable maximum
sales load at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment
at the end of the stated period.
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Cumulative total return across a stated period may be calculated as follows:
P(1+V)=ERV
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all of, a
stated portion of, or none of, the applicable maximum
sales load at the beginning of the stated period.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the stated period.
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The cumulative total returns for each Fund, with respect to its Class A, Class B and Class C shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are found in Appendix L.
Blended Average Annual Total Return Quotations and Blended Alternative Total Return
AIM Balanced Fund, AIM Premier Equity Fund and AIM Small Cap Equity Fund may use a restated or a blended performance calculation to derive certain performance data shown in this Statement of Additional Information and in the Funds' advertisements and other sales material. If the Funds' Class R shares were not offered to the public during the performance period covered, the performance data shown will be the restated historical performance of the Funds' Class A shares at net asset value, adjusted to reflect the higher Rule 12b-1 fees applicable to the Class R shares. If the Funds' Class R shares were offered to the public only during a portion of the performance period covered, the performance data shown will be the blended returns of the historical performance of the Funds' Class R shares since their inception and the restated historical performance of the Funds' Class A shares (for periods prior to inception of the Class R shares) at net asset value, adjusted to reflect the higher Rule 12b-1 fees applicable to the Class R shares. If the Funds' Class R shares were offered to the public during the entire performance period covered, the performance data shown will be the historical performance of the Funds' Class R shares.
A restated or blended performance calculation may be used to derive (i) the Funds' standardized average annual total returns over one, five and ten years (or since inception if less than ten years), and (ii) the Funds' non-standardized cumulative total returns over a stated period.
Blended average annual total returns and blended cumulative total returns for each Fund, with respect to its Class R shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are found in Appendix L.
Average Annual Total Return (After Taxes on Distributions) Quotation
A Fund's average annual total return (after taxes on distributions) shows its overall change in value, including changes in share price and assuming all the Fund's dividends and capital gain distributions are reinvested. It reflects the deduction of federal income taxes on distributions, but not on redemption proceeds. Average annual total returns (after taxes on distributions) are calculated by determining the after-tax growth or decline in value of a hypothetical investment in a Fund over a stated period of time, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. Because average annual total returns (after taxes on distributions) tend to even out variations in the Fund's return, investors should recognize that such returns are not the same as actual year-by-year results. To illustrate the components of overall performance, a Fund may separate its average annual total returns (after taxes on distributions) into income results and capital gains or losses.
The standard formula for calculating average annual total return (after taxes on distributions) is:
n
P(1+T) = ATV
D
Where P = a hypothetical initial payment of $1,000;
T = average annual total return (after taxes on
distributions);
n = number of years; and
ATV = ending value of a hypothetical $1,000 payment made at
D the beginning of the one, five, or ten year periods
(or since inception, if applicable) at the end of the
one, five, or ten year periods (or since inception,
if applicable), after taxes on fund distributions but
not after taxes on redemption.
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Standardized average annual total return (after taxes on distributions) for: (1) Class A shares reflects the deduction of a Fund's maximum front-end sales charge at the time of purchase; (2) Class B and Class C shares reflect the deduction of the maximum applicable CDSC on a redemption of shares held for the period; and (3) Class R shares does not reflect a deduction of any sales charge since that class is generally sold and redeemed at net asset value.
The after-tax returns assume all distributions by a Fund, less the taxes due on such distributions, are reinvested at the price calculated as stated in the prospectus on the reinvestment dates during the period. Taxes on a Fund's distributions are calculated by applying to each component of the distribution (e.g., ordinary income and long-term capital gain) the highest corresponding individual marginal federal income tax rates in effect on the reinvestment date. The taxable amount and tax character of each distribution is as specified by the Fund on the dividend declaration date, but reflects any subsequent recharacterizations of distributions. The effect of applicable tax credits, such as the foreign tax credit, are also taken into account. The calculations only reflect federal taxes, and thus do not reflect state and local taxes or the impact of the federal alternative minimum tax.
The average annual total returns (after taxes on distributions) for each Fund, with respect to its Class A, Class B and Class C shares for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are found in Appendix L.
Average Annual Total Return (After Taxes on Distributions and Sale of Fund Shares) Quotation
A Fund's average annual total return (after taxes on distributions and sale of Fund shares) shows its overall change in value, including changes in share price and assuming all the Fund's dividends and capital gain distributions are reinvested. It reflects the deduction of federal income taxes on both distributions and proceeds. Average annual total returns (after taxes on distributions and redemption) are calculated by determining the after-tax growth or decline in value of a hypothetical investment in a Fund over a stated period of time, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. Because average annual total returns (after taxes on distributions and redemption) tend to even out variations in the Fund's return, investors should recognize that such returns are not the same as actual year-by-year results. To illustrate the components of overall performance, a Fund may separate its average annual total returns (after taxes on distributions and redemption) into income results and capital gains or losses.
The standard formula for calculating average annual total return (after taxes on distributions and redemption) is:
n
P(1+T) = ATV
DR
Where P = a hypothetical initial payment of $1,000;
T = average annual total return (after taxes on
distributions and redemption);
n = number of years; and
ATV = ending value of a hypothetical $1,000 payment made at
DR the beginning of the one, five, or ten year periods
(or since inception, if applicable) at the end of the
one, five, or ten year periods (or since inception,
if applicable), after taxes on fund distributions and
redemption.
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Standardized average annual total return (after taxes on distributions and redemption) for: (1) Class A shares reflects the deduction of a Fund's maximum front-end sales charge at the time of purchase; (2) Class B and Class C shares reflects the deduction of the maximum applicable CDSC on a redemption of shares held for the period; and (3) Class R shares does not reflect a deduction of any sales charge since that class is generally sold and redeemed at net asset value.
The after-tax returns assume all distributions by a Fund, less the taxes due on such distributions, are reinvested at the price calculated as stated in the prospectus on the reinvestment dates during the period. Taxes due on a Fund's distributions are calculated by applying to each component of the distribution (e.g., ordinary income and long-term capital gain) the highest corresponding individual marginal federal income tax rates in effect on the reinvestment date. The taxable amount and tax character of each distribution is as specified by the Fund on the dividend declaration date, but reflects any subsequent recharacterizations of distributions. The effect of applicable tax credits, such as the foreign tax credit, are also taken into account. The calculations only reflect federal taxes, and thus do not reflect state and local taxes or the impact of the federal alternative minimum tax.
The ending values for each period assume a complete liquidation of all shares. The ending values for each period are determined by subtracting capital gains taxes resulting from the sale of Fund shares and adding the tax benefit from capital losses resulting from the sale of Fund shares. The capital gain or loss upon sale of Fund shares is calculated by subtracting the tax basis from the proceeds. Capital gains taxes (or the benefit resulting from tax losses) are calculated using the highest federal individual capital gains tax rate for gains of the appropriate character (e.g., ordinary income or long-term) in effect on the date of the sale of Fund shares and in accordance with federal tax law applicable on that date. The calculations assume that a shareholder may deduct all capital losses in full.
The basis of shares acquired through the $1,000 initial investment are tracked separately from subsequent purchases through reinvested distributions. The basis for a reinvested distribution is the distribution net of taxes paid on the distribution. Tax basis is adjusted for any distributions representing returns of capital and for any other tax basis adjustments that would apply to an individual taxpayer.
The amount and character (i.e., short-term or long-term) of capital gain or loss upon sale of Fund shares is determined separately for shares acquired through the $1,000 initial investment and each subsequent purchase through reinvested distributions. The tax character is determined by the length of the measurement period in the case of the initial $1,000 investment and the length of the period between reinvestment and the end of the measurement period in the case of reinvested distributions.
The average annual total returns (after taxes on distributions and redemption) for each Fund, with respect to its Class A, Class B and Class C shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are found in Appendix L.
Yield Quotation
Yield is a function of the type and quality of a Fund's investments, the maturity of the securities held in a Fund's portfolio and the operating expense ratio of the Fund. Yield is computed in accordance with standardized formulas described below and can be expected to fluctuate from time to time and is not necessarily indicative of future results. Accordingly, yield information may not provide a basis for comparison with investments which pay a fixed rate of interest for a stated period of time.
A Fund also may quote its distribution rate, which expresses the historical amount of income the Fund paid as dividends to its shareholders as a percentage of the Fund's offering price.
Income calculated for purposes of calculating a Fund's yield differs from income as determined for other accounting purposes. Because of the different accounting methods used, and because of the compounding assumed in yield calculations, the yield quoted for a Fund may differ from the rate of distributions from the Fund paid over the same period or the rate of income reported in the Fund's financial statements.
The standard formula for calculating yield for each Fund is as follows:
Where a = dividends and interest earned during a stated 30-day
period. For purposes of this calculation, dividends are
accrued rather than recorded on the ex-dividend date.
Interest earned under this formula must generally be
calculated based on the yield to maturity of each
obligation (or, if more appropriate, based on yield
to call date).
b = expenses accrued during period (net of reimbursements).
c = the average daily number of shares outstanding during
the period that were certified to receive dividends.
d = the maximum offering price per share on the last day of
the period.
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The yield and distribution rates for the AIM Balanced Fund, AIM Basic Balanced Fund and AIM Global Utilities Fund are found in Appendix L.
Performance Information
All advertisements of the Funds will disclose the maximum sales charge (including deferred sales charges) imposed on purchases of a Fund's shares. If any advertised performance data does not reflect the maximum sales charge (if any), such advertisement will disclose that the sales charge has not been deducted in computing the performance data, and that, if reflected, the maximum sales charge would reduce the performance quoted. Further information regarding each Fund's performance is contained in that Fund's annual report to shareholders, which is available upon request and without charge.
From time to time, AIM or its affiliates may waive all or a portion of their fees and/or assume certain expenses of any Fund. Fee waivers or reductions or commitments to reduce expenses will have the effect of increasing that Fund's yield and total return.
Certain Funds may participate in the initial public offering (IPO) market in some market cycles. Because of these Funds' small asset bases, any investment the Funds may make in IPOs may significantly increase these Funds' total returns. As the Funds' assets grow, the impact of IPO investments will decline, which may decrease the Funds' total returns.
The performance of each Fund will vary from time to time and past results are not necessarily indicative of future results.
Total return and yield figures for the Funds are neither fixed nor guaranteed. The Funds may provide performance information in reports, sales literature and advertisements. The Funds may also,
from time to time, quote information about the Funds published or aired by publications or other media entities which contain articles or segments relating to investment results or other data about one or more of the Funds. The following is a list of such publications or media entities:
Advertising Age Forbes Nation's Business Barron's Fortune New York Times Best's Review Hartford Courant Pension World Broker World Inc. Pensions & Investments Business Week Institutional Investor Personal Investor Changing Times Insurance Forum Philadelphia Inquirer Christian Science Monitor Insurance Week USA Today Consumer Reports Investor's Business Daily U.S. News & World Report Economist Journal of the American Wall Street Journal FACS of the Week Society of CLU & ChFC Washington Post Financial Planning Kiplinger Letter CNN Financial Product News Money CNBC Financial Services Week Mutual Fund Forecaster PBS Financial World |
Each Fund may also compare its performance to performance data of similar mutual funds as published by the following services:
Bank Rate Monitor Stanger Donoghue's Weisenberger Mutual Fund Values (Morningstar) Lipper, Inc. |
Each Fund's performance may also be compared in advertising to the performance of comparative benchmarks such as the following:
Lipper Balanced Fund Index Russell 2000--Registered Trademark-- Index Lipper European Fund Index Russell 3000--Registered Trademark-- Index Lipper Global Fund Index Russell 3000 Growth Index Lipper Utilities Fund Index Russell Mid Cap--Trademark-- Index Lipper International Fund Index Lehman Aggregate Bond Index Lipper Multi Cap Core Fund Index Dow Jones Global Utilities Index Lipper Multi Cap Growth Fund Index MSCI All Country World Index Lipper Science & Technology Fund Index MSCI EAFE Index Lipper Small Cap Core Fund Index MSCI Europe Index Lipper Small Cap Growth Fund Index PSE Tech 100 Index Lipper Large Cap Core Fund Index Standard & Poor's 500 Index Russell 1000-- Registered Trademark-- Index Wilshire 5000 Index Russell 1000 Value Index NASDAQ Index |
Each Fund may also compare its performance to rates on Certificates of Deposit and other fixed rate investments such as the following:
10 year Treasury Notes
90 day Treasury Bills
Advertising for the Funds may from time to time include discussions of general economic conditions and interest rates. Advertising for such Funds may also include references to the use of those Funds as part of an individual's overall retirement investment program. From time to time, sales literature and/or advertisements for any of the Funds may disclose: (i) the largest holdings in the Funds' portfolios; (ii) certain selling group members; (iii) certain institutional shareholders; (iv) measurements of risk, including standard deviation, Beta and Sharpe ratios; and/or (v) capitalization and sector analyses of holdings in the Funds' portfolios.
From time to time, the Funds' sales literature and/or advertisements may discuss generic topics pertaining to the mutual fund industry. This includes, but is not limited to, literature addressing general information about mutual funds, discussions regarding investment styles, such as the growth, value or GARP (growth at a reasonable price) styles of investing, variable annuities, dollar-cost averaging, stocks, bonds, money markets, certificates of deposit, retirement, retirement plans, asset allocation, tax-free investing, college planning and inflation.
APPENDIX A
RATINGS OF DEBT SECURITIES
The following is a description of the factors underlying the debt ratings of Moody's, S&P and Fitch:
MOODY'S BOND RATINGS
Moody's describes its ratings for corporate bonds as follows:
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt-edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. These are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than the Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa in its corporate bond rating system. The modifier 1 indicates that the security ranks in
the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.
MOODY'S MUNICIPAL BOND RATINGS
Aaa: Bonds rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.
B: Bonds rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
Caa: Bonds rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.
Ca: Bonds rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.
Note: Bonds in the Aa group which Moody's believes possess the strongest investment attributes are designated by the symbol Aa1.
Note: Also, Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa to B. The modifier indicates that the issue ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic category.
MOODY'S DUAL RATINGS
In the case of securities with a demand feature, two ratings are assigned: one representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the other representing an evaluation of the degree of risk associated with the demand feature.
MOODY'S SHORT-TERM LOAN RATINGS
Moody's ratings for state and municipal short-term obligations will be designated Moody's Investment Grade or (MIG). Such ratings recognize the differences between short-term credit risk and long-term risk. Factors affecting the liquidity of the borrower and short-term cyclical elements are critical in short-term ratings, while other factors of major importance in bond risk, long-term secular trends for example, may be less important over the short run.
A short-term rating may also be assigned on an issue having a demand feature variable rate demand obligation (VRDO). Such ratings will be designated as VMIG or, if the demand feature is not rated, as NR. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. Additionally, investors should be alert to the fact that the source of payment may be limited to the external liquidity with no or limited legal recourse to the issuer in the event the demand is not met.
A VMIG rating may also be assigned to commercial paper programs. Such programs are characterized as having variable short-term maturities but having neither a variable rate nor demand feature.
Moody's short-term ratings are designated Moody's Investment Grade as MIG 1 or VMIG 1 through MIG 4 or VMIG 4.
Gradations of investment quality are indicated by rating symbols, with each symbol representing a group in which the quality characteristics are broadly the same.
MIG 1/VMIG 1: This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2: This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group.
MIG 3/VMIG 3: This designation denotes favorable quality. All security elements are accounted for but there is lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established.
MIG 4/VMIG 4: This designation denotes adequate quality. Protection commonly regarded as required of an investment security is present and although not distinctly or predominantly speculative, there is specific risk.
MOODY'S COMMERCIAL PAPER RATINGS
Moody's commercial paper ratings are opinions of the ability of issuers to repay punctually promissory obligations not having an original maturity in excess of nine months.
PRIME-1: Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
leading market positions in well-established industries; high rates of return on
funds employed; conservative capitalization structures with moderate reliance on
debt and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal
cash generation; and well-established access to a range of financial markets and assured sources of alternate liquidity.
PRIME-2: Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.
PRIME-3: Issuers rated Prime-3 (or related supported institutions) have an acceptable capacity for repayment of short-term promissory obligations. The effects of industry characteristics and market composition may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and the requirement for relatively high financial leverage. Adequate alternate liquidity is maintained.
NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.
Note: A Moody's commercial paper rating may also be assigned as an evaluation of the demand feature of a short-term or long-term security with a put option.
S&P BOND RATINGS
S&P describes its ratings for corporate bonds as follows:
AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in a small degree.
A: Debt rated A has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories.
BB-B-CCC-CC-C: Debt rated BB, B, CCC, CC and C is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal. BB indicates the lowest degree of speculation and C the highest. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or large exposure to adverse conditions.
S&P MUNICIPAL BOND RATINGS
An S&P municipal bond rating is a current assessment of the creditworthiness of an obligor with respect to a specific obligation. This assessment may take into consideration obligors such as guarantors, insurers, or lessees.
The ratings are based, in varying degrees, on the following considerations: likelihood of default - capacity and willingness of the obligor as to the timely payment of interest and repayment of principal in accordance with the terms of the obligation; nature of and provisions of the obligation; and protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in a small degree.
Note: Ratings within the AA and A major rating categories may be modified by the addition of a plus (+) sign or minus (-) sign to show relative standing.
S&P DUAL RATINGS
S&P assigns "dual" ratings to all debt issues that have a put option or demand feature as part of their structure.
The first rating addresses the likelihood of repayment of principal and interest as due, and the second rating addresses only the demand feature. The long-term debt rating symbols are used for bonds to denote the long-term maturity and the commercial paper rating symbols for the put option (for example, AAA/A-1+). With short-term demand debt, the note rating symbols are used with the commercial paper rating symbols (for example, SP-1+/A-1+).
S&P MUNICIPAL NOTE RATINGS
An S&P note rating reflects the liquidity factors and market-access risks unique to notes. Notes maturing in three years or less will likely receive a note rating. Notes maturing beyond three years will most likely receive a long-term debt rating. The following criteria will be used in making that assessment: amortization schedule (the larger the final maturity relative to other maturities, the more likely the issue will be treated as a note); and source of payment (the more the issue depends on the market for its refinancing, the more likely it is to be treated as a note).
Note rating symbols and definitions are as follows:
SP-1: Strong capacity to pay principal and interest. Issues determined to possess very strong characteristics are given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.
SP-3: Speculative capacity to pay principal and interest.
S&P COMMERCIAL PAPER RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days.
Rating categories are as follows:
A-1: This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation.
A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.
A-3: Issues carrying this designation have adequate capacity for timely payment. They are, however, more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations.
B: Issues with this rating are regarded as having only speculative capacity for timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.
D: Debt with this rating is in payment default. The D rating category is used when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired, unless it is believed that such payments will be made during such grace period.
FITCH INVESTMENT GRADE BOND RATINGS
Fitch investment grade bond ratings provide a guide to investors in determining the credit risk associated with a particular security. The ratings represent Fitch's assessment of the issuer's ability to meet the obligations of a specific debt issue in a timely manner.
The rating takes into consideration special features of the issue, its relationship to other obligations of the issuer, the current and prospective financial condition and operating performance of the issuer and any guarantor, as well as the economic and political environment that might affect the issuer's future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be provided by insurance policies or financial guaranties unless otherwise indicated.
Bonds carrying the same rating are of similar but not necessarily identical credit quality since the rating categories do not fully reflect small differences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature of taxability of payments made in respect of any security.
Fitch ratings are based on information obtained from issuers, other obligors, underwriters, their experts, and other sources Fitch believes to be reliable. Fitch does not audit or verify the truth or accuracy of such information. Ratings may be changed, suspended, or withdrawn as a result of changes in, or the unavailability of, information or for other reasons.
AAA: Bonds considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong ability to pay interest and repay principal, which is unlikely to be affected by reasonably foreseeable events.
AA: Bonds considered to be investment grade and of very high credit quality. The obligor's ability to pay interest and repay principal is very strong, although not quite as strong as bonds rated "AAA." Because bonds rated in the "AAA" and "AA" categories are not significantly vulnerable to foreseeable future developments, short-term debt of these issuers is generally rated "F-1+."
A: Bonds considered to be investment grade and of high credit quality. The obligor's ability to pay interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse impact on these bonds and, therefore, impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings.
PLUS (+) MINUS (-): Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the "AAA" category.
NR: Indicates that Fitch does not rate the specific issue.
CONDITIONAL: A conditional rating is premised on the successful completion of a project or the occurrence of a specific event.
SUSPENDED: A rating is suspended when Fitch deems the amount of information available from the issuer to be inadequate for rating purposes.
WITHDRAWN: A rating will be withdrawn when an issue matures or is called or refinanced, and, at Fitch's discretion, when an issuer fails to furnish proper and timely information.
FITCHALERT: Ratings are placed on FitchAlert to notify investors of an occurrence that is likely to result in a rating change and the likely direction of such change. These are designated as "Positive," indicating a potential upgrade, "Negative," for potential downgrade, or "Evolving," where ratings may be raised or lowered. FitchAlert is relatively short-term, and should be resolved within 12 months.
RATINGS OUTLOOK
An outlook is used to describe the most likely direction of any rating change over the intermediate term. It is described as "Positive" or "Negative." The absence of a designation indicates a stable outlook.
FITCH SPECULATIVE GRADE BOND RATINGS
Fitch speculative grade bond ratings provide a guide to investors in determining the credit risk associated with a particular security. The ratings ("BB" to "C") represent Fitch's assessment of the likelihood of timely payment of principal and interest in accordance with the terms of obligation for bond issues not in default. For defaulted bonds, the rating ("DDD" to "D") is an assessment of the ultimate recovery value through reorganization of liquidation.
The rating takes into consideration special features of the issue, its relationship to other obligations of the issuer or possible recovery value in bankruptcy, the current and prospective financial condition and operating performance of the issuer and any guarantor, as well as the economic and political environment that might affect the issuer's future financial strength.
Bonds that have the same rating are of similar but not necessarily identical credit quality since rating categories cannot fully reflect the differences in degrees of credit risk.
BB: Bonds are considered speculative. The obligor's ability to pay interest and repay principal may be affected over time by adverse economic changes. However, business and financial alternatives can be identified, which could assist the obligor in satisfying its debt service requirements.
B: Bonds are considered highly speculative. While bonds in this class are currently meeting debt service requirements, the probability of continued timely payment of principal and interest reflects the obligor's limited margin of safety and the need for reasonable business and economic activity throughout the life of the issue.
CCC: Bonds have certain identifiable characteristics that, if not remedied, may lead to default. The ability to meet obligations requires an advantageous business and economic environment.
CC: Bonds are minimally protected. Default in payment of interest and/or principal seems probable over time.
C: Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D: Bonds are in default on interest and/or principal payments. Such bonds are extremely speculative and should be valued on the basis of their ultimate recovery value in liquidation or reorganization of the obligor. "DDD" represents the highest potential for recovery on these bonds, and "D" represents the lowest potential for recovery.
PLUS (+) MINUS (-): Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the "DDD," "DD," or "D" categories.
FITCH SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on demand or have original maturities of generally up to three years, including commercial paper, certificates of deposit, medium-term notes, and municipal and investment notes.
The short-term rating places greater emphasis than a long-term rating on the existence of liquidity necessary to meet the issuer's obligations in a timely manner.
Fitch short-term ratings are as follows:
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment.
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than issues rated "F-1+."
F-2: Good Credit Quality. Issues assigned this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as for issues assigned "F-1+" and "F-1" ratings.
F-3: Fair Credit Quality. Issues assigned this rating have characteristics suggesting that the degree of assurance for timely payment is adequate, however, near-term adverse changes could cause these securities to be rated below investment grade.
F-S: Weak Credit Quality. Issues assigned this rating have characteristics suggesting a minimal degree of assurance for timely payment and are vulnerable to near-term adverse changes in financial and economic conditions.
D: Default. Issues assigned this rating are in actual or imminent payment default.
LOC: The symbol LOC indicates that the rating is based on a letter of credit issued by a commercial bank.
APPENDIX B
TRUSTEES AND OFFICERS
As of December 31, 2001
---------------------------------------------------------------------------------------------------------------------
TRUSTEE
NAME, YEAR OF BIRTH AND AND/OR OTHER
POSITION(S) HELD WITH THE TRUST OFFICER PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS DIRECTORSHIP(S)
SINCE HELD BY TRUSTEE
---------------------------------------------------------------------------------------------------------------------
INTERESTED PERSON
---------------------------------------------------------------------------------------------------------------------
Robert H. Graham(1) -- 1946 1992 Chairman, President and Chief Executive Officer, None
Trustee, Chairman and President A I M Management Group Inc. (financial services
holding company); Chairman and President, A I M
Advisors, Inc. (registered investment advisor);
Director and Senior Vice President, A I M
Capital Management, Inc. (registered investment
advisor); Chairman, A I M Distributors, Inc.
(registered broker dealer), A I M Fund Services,
Inc., (registered transfer agent), and Fund
Management Company (registered broker dealer);
and Director and Vice Chairman, AMVESCAP PLC
(parent of AIM and a global investment
management firm)
---------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
---------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2001 Of Counsel, law firm of Baker & McKenzie Badgley Funds, Inc.
Trustee (registered
investment company)
---------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 1987 Chairman, Crockett Technology Associates ACE Limited
Trustee (technology consulting company) (insurance
company); and
Captaris, Inc.
(unified messaging
provider)
---------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2000 Chairman, Cortland Trust, Inc. (registered None
Trustee investment company) and DHJ Media, Inc.;
Director, Magellan Insurance
Company; Member of Advisory Board
of Rotary Power International
(designer, manufacturer, and seller
of rotary power engines); formerly,
Director, President and CEO, Volvo
Group North America, Inc. and
director of various affiliated
Volvo companies
---------------------------------------------------------------------------------------------------------------------
|
(1) Mr. Graham is considered an interested person of the Trust because he is an officer and a director of the advisor to, and a director of the principal underwriter of, the Trust.
---------------------------------------------------------------------------------------------------------------------
TRUSTEE
NAME, YEAR OF BIRTH AND AND/OR OTHER
POSITION(S) HELD WITH THE TRUST OFFICER PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS DIRECTORSHIP(S)
SINCE HELD BY TRUSTEE
---------------------------------------------------------------------------------------------------------------------
INTERESTED PERSON
---------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
---------------------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. -- 1935 1998 Formerly, Chairman, Mercantile Mortgage Corp.; None
Trustee Vice Chairman, President and Chief Operating
Officer, Mercantile-Safe Deposit & Trust Co.;
and President, Mercantile Bankshares Corp.
---------------------------------------------------------------------------------------------------------------------
1997 Chief Executive Officer, Twenty First Century Administaff
Jack M. Fields -- 1952 Group, Inc. (government affairs company)
Trustee
---------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 1993 Partner, law firm of Kramer Levin Naftalis and Cortland Trust,
Trustee Frankel LLP Inc. (registered
investment company)
---------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 1998 Formerly, Chief Executive Officer, YWCA of the None
Trustee USA
---------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 1992 Partner, law firm of Pennock & Cooper None
Trustee
---------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2001 Retired None
Trustee
---------------------------------------------------------------------------------------------------------------------
Louis S. Sklar -- 1939 1993 Executive Vice President, Development and None
Trustee Operations, Hines Interests Limited Partnership
(real estate development company)
---------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
---------------------------------------------------------------------------------------------------------------------
Gary T. Crum -- 1947 1992 Director and President, A I M Capital N/A
Senior Vice President Management, Inc.; Director and Executive Vice
President, A I M Management Group Inc.; Director
and Senior Vice President, A I M Advisors, Inc.;
and Director, A I M Distributors, Inc. and
AMVESCAP PLC
---------------------------------------------------------------------------------------------------------------------
|
---------------------------------------------------------------------------------------------------------------------
TRUSTEE
NAME, YEAR OF BIRTH AND AND/OR OTHER
POSITION(S) HELD WITH THE TRUST OFFICER PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS DIRECTORSHIP(S)
SINCE HELD BY TRUSTEE
---------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
---------------------------------------------------------------------------------------------------------------------
Carol F. Relihan -- 1954 1992 Director, Senior Vice President, General Counsel N/A
Senior Vice President and and Secretary, A I M Advisors, Inc. and A I M
Secretary Management Group Inc.; Director, Vice President
and General Counsel, Fund Management Company;
and Vice President, A I M Fund Services, Inc.,
A I M Capital Management, Inc. and A I M
Distributors, Inc.
---------------------------------------------------------------------------------------------------------------------
Robert G. Alley -- 1948 1992 Senior Vice President, A I M Capital Management, N/A
Vice President Inc.; and Vice President, A I M Advisors, Inc.
---------------------------------------------------------------------------------------------------------------------
Stuart W. Coco -- 1955 1992 Senior Vice President, A I M Capital Management, N/A
Vice President Inc.; and Vice President, A I M Advisors, Inc.
---------------------------------------------------------------------------------------------------------------------
Melville B. Cox -- 1943 1992 Vice President and Chief Compliance Officer, N/A
Vice President A I M Advisors, Inc. and A I M Capital
Management, Inc.; and Vice President, A I M Fund
Services, Inc.
---------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 1992 Senior Vice President, A I M Capital Management, N/A
Vice President Inc.; Director and President, Fund Management
Company; and Vice President, A I M Advisors, Inc.
---------------------------------------------------------------------------------------------------------------------
Edgar M. Larsen -- 1940 1999 Vice President, A I M Advisors, Inc. and A I M N/A
Vice President Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------
Dana R. Sutton -- 1959 1992 Vice President and Fund Treasurer, A I M N/A
Vice President and Advisors, Inc.
Treasurer
---------------------------------------------------------------------------------------------------------------------
|
TRUSTEE OWNERSHIP OF FUND SHARES AS OF DECEMBER 31, 2001
--------------------------------------------------------------------------------------------------------------------
NAME OF TRUSTEE DOLLAR RANGE OF EQUITY SECURITIES AGGREGATE DOLLAR RANGE OF EQUITY
PER FUND SECURITIES IN ALL REGISTERED
INVESTMENT COMPANIES OVERSEEN BY
TRUSTEE IN THE AIM FAMILY OF
FUNDS--Registered Trademark--
--------------------------------------------------------------------------------------------------------------------
Robert H. Graham Balanced Over $100,000 Over $100,000
Basic Balanced Over $100,000
Premier Equity Over $100,000
--------------------------------------------------------------------------------------------------------------------
Frank S. Bayley - 0 - $10,001 - $50,000
--------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett Select Equity $1 - $10,000 $1 - $10,000
Premier Equity $1 - $10,000
--------------------------------------------------------------------------------------------------------------------
Owen Daly II(1) Balanced Over $100,000 Over $100,000(2)
European Small Company $10,001 - $50,000
New Technology $10,001 - $50,000
Select Equity $10,001 - $50,000
Small Cap Equity $50,001 - $100,000
--------------------------------------------------------------------------------------------------------------------
Albert R. Dowden Small Cap Equity $10,001 - $50,000 Over $100,000
--------------------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. - 0 - Over $100,000(2)
--------------------------------------------------------------------------------------------------------------------
Jack M. Fields Premier Equity $50,001 - $100,000 Over $100,000(2)
--------------------------------------------------------------------------------------------------------------------
Carl Frischling Balanced $50,001 - $100,000 Over $100,000(2)
Premier Equity Over $100,000
--------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis - 0 - Over $100,000(2)
--------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock Balanced $10,001 - $50,000 $10,001 - $50,000
--------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -0- $1 -$10,000
--------------------------------------------------------------------------------------------------------------------
Louis S. Sklar - 0 - Over $100,000(2)
--------------------------------------------------------------------------------------------------------------------
|
(1) Mr. Daly retired as a trustee on December 31, 2001.
(2) Includes the total amount of compensation deferred by the trustee at his or her election pursuant to a deferred compensation plan. Such deferred compensation is placed in a deferral account and deemed to be invested in one or more of the AIM Funds.
APPENDIX C
TRUSTEE COMPENSATION TABLE
Set forth below is information regarding compensation paid or accrued for each trustee of the Trust who was not affiliated with AIM during the year ended December 31, 2001:
=================================================================================================================
RETIREMENT ESTIMATED
AGGREGATE BENEFITS ANNUAL TOTAL
COMPENSATION FROM ACCRUED BENEFITS COMPENSATION
THE BY ALL UPON FROM ALL AIM
DIRECTOR TRUST(1) AIM FUNDS(2) RETIREMENT(3) FUNDS(4)(5)
-----------------------------------------------------------------------------------------------------------------
Frank S. Bayley(6) $4,839 -0- $75,000 $112,000
-----------------------------------------------------------------------------------------------------------------
Bruce L. Crockett 20,374 $36,312 75,000 126,500
-----------------------------------------------------------------------------------------------------------------
Owen Daly II(7) 20,374 33,318 75,000 126,500
-----------------------------------------------------------------------------------------------------------------
Albert R. Dowden 20,374 3,193 75,000 126,500
-----------------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. 20,374 8,174 75,000 126,500
-----------------------------------------------------------------------------------------------------------------
Jack M. Fields 20,300 19,015 75,000 126,000
-----------------------------------------------------------------------------------------------------------------
Carl Frischling(8) 20,300 54,394 75,000 126,000
-----------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis 20,374 21,056 75,000 126,500
-----------------------------------------------------------------------------------------------------------------
Lewis F. Pennock 20,374 37,044 75,000 126,500
-----------------------------------------------------------------------------------------------------------------
Ruth H. Quigley(6) 4,913 -0- 75,000 112,500
-----------------------------------------------------------------------------------------------------------------
Louis S. Sklar 19,770 53,911 75,000 123,000
=================================================================================================================
|
(1) The total amount of compensation deferred by all trustees of the Trust during the fiscal year ended December 31, 2001, including earnings, was $126,176.
(2) During the fiscal year ended December 31, 2001, the total amount of expenses allocated to the Trust in respect of such retirement benefits was $53,483.
(3) Amounts shown assume each trustee serves until his or her normal retirement date.
(4) All trustees currently serve as directors or trustees of sixteen registered investment companies advised by AIM.
(5) During the fiscal year ended December 31, 2001, the Trust received reimbursement for compensation paid to the trustees of $5,400. During the year ended December 31, 2001, all AIM Funds received reimbursement of total compensation paid to trustees of $31,500.
(6) Mr. Bayley and Miss Quigley were elected to serve as trustees on September 28, 2001.
(7) Mr. Daly was a trustee until December 31, 2001, when he retired.
(8) During the fiscal year ended December 31, 2001, the Trust paid $91,630 in legal fees to Kramer Levin Naftalis & Frankel LLP for services rendered by such firm as counsel to the independent trustees of the Trust. Mr. Frischling is a partner of such firm.
APPENDIX D
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Trust, the names and addresses of the record and beneficial holders of 5% or more of the outstanding shares of each class of the Trust's equity securities and the percentage of the outstanding shares held by such holders are set forth below. Unless otherwise indicated below, the Trust has no knowledge as to whether all or any portion of the shares owned of record are also owned beneficially.
A shareholder who owns beneficially 25% or more of the outstanding securities of a Fund is presumed to "control" that Fund as defined in the 1940 Act. Such control may affect the voting rights of other shareholders.
All information listed below is as of October 16, 2002.
AIM BALANCED FUND
--------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
SHARES SHARES SHARES SHARES SHARES
--------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
PRINCIPAL HOLDER OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
RECORD RECORD RECORD RECORD RECORD
--------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
ATTN: Fund Administration 9.14% 8.60% 15.52% -- --
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
--------------------------------------------------------------------------------------------------------------------------------
American Express Trust Co.
FBO American Express Trust
Retirement Service Plans 7.95% -- -- -- --
1200 Northstar
West PO Box 534
Minneapolis, MN 55440-0534
--------------------------------------------------------------------------------------------------------------------------------
AIM Advisors, Inc.(1)
ATTN: David Hessel -- -- -- -- 100.00%
11 Greenway Plaza, Ste 1919
Houston, TX 77046
--------------------------------------------------------------------------------------------------------------------------------
|
(1) Owned of record and beneficially.
--------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
SHARES SHARES SHARES SHARES SHARES
--------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
PRINCIPAL HOLDER OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
RECORD RECORD RECORD RECORD RECORD
--------------------------------------------------------------------------------------------------------------------------------
Branch Banking Trust TTEE
FBO W. E. Stanley Co. Inc. OMNIBUS Daily
Trading -- -- -- 73.22% --
434 Fayetteville St., 4th Floor
Raleigh, NC 27601
--------------------------------------------------------------------------------------------------------------------------------
Airbrush Images Inc. 401k Plan
Daniel E. Henrichs TTEE -- -- -- 8.76% --
850 N. FM 3080
Conroe, TX 77303
--------------------------------------------------------------------------------------------------------------------------------
-- -- -- 5.44% --
APB025 Logan Bank Trust Co
401k Plan TTEE Eddie Canterbury
PO Box 505
Warrendale, PA 15086
--------------------------------------------------------------------------------------------------------------------------------
|
AIM BASIC BALANCED FUND
-----------------------------------------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-----------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
-----------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
ATTN: Fund Administration -- -- 8.53%
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
-----------------------------------------------------------------------------------------------------------------------
|
AIM EUROPEAN SMALL COMPANY FUND
-----------------------------------------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-----------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
-----------------------------------------------------------------------------------------------------------------------
Charles T. Bauer(1)
C/O AIM Management Group, Inc. 14.25% -- --
11 Greenway Plaza, Ste 100
Houston, TX 77046
-----------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
ATTN: Fund Administration -- 8.09% 14.05%
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
-----------------------------------------------------------------------------------------------------------------------
|
AIM GLOBAL UTILITIES FUND
-----------------------------------------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-----------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
-----------------------------------------------------------------------------------------------------------------------
Charles Schwab & Co. Inc.
Reinvestment Account 12.16% -- --
101 Montgomery St.
San Francisco, CA 94104
-----------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
ATTN: Fund Administration -- -- 11.66%
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
-----------------------------------------------------------------------------------------------------------------------
|
(1) Owned of record and beneficially.
AIM INTERNATIONAL EMERGING GROWTH FUND
-----------------------------------------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-----------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
-----------------------------------------------------------------------------------------------------------------------
Robert Michael Kippes(1)
Kelly F. Kippes JTTEN 22.85% -- --
20402 Lakeland Falls Dr.
Cypress, TX 77429
-----------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
ATTN: Fund Administration 7.64% 12.92% 19.84%
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
-----------------------------------------------------------------------------------------------------------------------
|
AIM MID CAP BASIC VALUE FUND
-----------------------------------------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-----------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
-----------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
ATTN: Fund Administration 11.49% 9.22% 10.18%
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
-----------------------------------------------------------------------------------------------------------------------
|
AIM NEW TECHNOLOGY FUND
-----------------------------------------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-----------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
-----------------------------------------------------------------------------------------------------------------------
-- -- -- --
-----------------------------------------------------------------------------------------------------------------------
|
(1) Owned of record and beneficially.
AIM PREMIER EQUITY FUND
---------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
SHARES SHARES SHARES SHARES SHARES
---------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
PRINCIPAL HOLDER OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
RECORD RECORD RECORD RECORD RECORD
---------------------------------------------------------------------------------------------------------------------------------
Tulsa & Co.
PO Box 3688 -- -- -- -- 77.27%
Tulsa, OK 74101-3688
---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
ATTN: Fund Administration 10.07% 9.88% 21.63 -- 19.36%
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
---------------------------------------------------------------------------------------------------------------------------------
APB025 Logan Bank Trust Co.
401k Plan TTEE Eddie Canterbury -- -- -- 41.50% --
PO Box 505
Warrendale, PA 15086
---------------------------------------------------------------------------------------------------------------------------------
Airbrush Images Inc 401k Plan
Daniel E. Henrichs TTEE -- -- -- 22.40% --
850 N FM 3083
Conroe, TX 77303
---------------------------------------------------------------------------------------------------------------------------------
Delaney Clinic Professional Assoc Inc PSP
Dr. Lucio Margallo TTEE
FBO Lucio Margallo II -- -- -- 10.86% --
1115 East 5th
Mitchell, SD 57301
---------------------------------------------------------------------------------------------------------------------------------
Sierra Conveyor Co Inc 401k PSP
Marjorie J or Daniel Watson TTEES
FBO Brian Schyberg DTD 07/01/94 -- -- -- 8.45% --
PO Box 1382
Roseville, CA 95678
---------------------------------------------------------------------------------------------------------------------------------
|
---------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
SHARES SHARES SHARES SHARES SHARES
---------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
PRINCIPAL HOLDER OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
RECORD RECORD RECORD RECORD RECORD
---------------------------------------------------------------------------------------------------------------------------------
Roy F. Rodgers Solo 401k PSP
Roy F. Rodgers TTEE FBO
Roy F. Rodgers -- -- -- -- 5.44%
692 Spann Road
Ward, SC 29166
---------------------------------------------------------------------------------------------------------------------------------
|
AIM PREMIER EQUITY II FUND
-------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED PERCENTAGE OWNED PERCENTAGE OWNED OF
PRINCIPAL HOLDER OF OF RECORD
RECORD RECORD
-------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
ATTN: Fund Administration 8.96% 12.68% 20.60%
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
-------------------------------------------------------------------------------------------------------------------------------
|
AIM SELECT EQUITY FUND
-------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------------------------------------------------------------------------------------------------------------------------
PERCENTAGE OWNED PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF OF
PRINCIPAL HOLDER RECORD RECORD RECORD
-------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
ATTN: Fund Administration 5.45% 9.68% 11.85%
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
-------------------------------------------------------------------------------------------------------------------------------
|
AIM SMALL CAP EQUITY FUND
-----------------------------------------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES
-----------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE PERCENTAGE PERCENTAGE OWNED PERCENTAGE OWNED OF
PRINCIPAL HOLDER OWNED OF OWNED OF OF RECORD
RECORD RECORD RECORD
-----------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
ATTN: Fund Administration 12.74% 8.57% 25.95% --
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
-----------------------------------------------------------------------------------------------------------------------
AIM Advisors, Inc.(1)
ATTN: David Hessel -- -- -- 20.62%
11 Greenway Plaza, Ste. 1919
Houston, TX 77046
-----------------------------------------------------------------------------------------------------------------------
SI Howard Glass Company Inc PSP
Earl R. Farmer, Jr. TTEE FBO
Kenneth Borski -- -- -- 11.32%
379 SW Cutoff
Worcester, MA 01604-2713
-----------------------------------------------------------------------------------------------------------------------
Dianne L. Simmons Solo 401k
Dianne L. Simmons TTEE FBO
Dianne L. Simmons -- -- -- 9.87%
4046 River Ridge Chase SE
Marietta, GA 30067-4768
-----------------------------------------------------------------------------------------------------------------------
ANTC Cust 403B
USD 497 FBO
Joyce F. Deslavo -- -- -- 8.39%
4206 W. 13th Street
Lawrence, KS 66049
-----------------------------------------------------------------------------------------------------------------------
SI Howard Glass Company Inc PSP
Earl R. Farmer, Jr. TTEE FBO
Sandra Hamilton -- -- -- 7.54%
379 SW Cutoff
Worcester, MA 01604-2713
-----------------------------------------------------------------------------------------------------------------------
SI Howard Glass Company Inc 401k Plan
Earl R. Farmer, Jr. TTEE FBO
Joan Cooney -- -- -- 5.28%
379 SW Cutoff
Worcester, MA 01604-2713
-----------------------------------------------------------------------------------------------------------------------
|
(1) Owned of record and beneficially.
AIM WORLDWIDE SPECTRUM FUND
-----------------------------------------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-----------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
-----------------------------------------------------------------------------------------------------------------------
Joel Dobberpuhl and Holly
Dobberpuhl TIC(1) 31.33% -- --
1710 Lawrence Road
Franklin, TN 37069-1700
-----------------------------------------------------------------------------------------------------------------------
Morgan Keegan & Company, Inc
FBO Joyce M. Kelso & Jerry A. Kelso
JTWROS -- -- 8.56%
270 River Trace Drive
Marion, AR 72364
-----------------------------------------------------------------------------------------------------------------------
|
MANAGEMENT OWNERSHIP
As of October 16, 2002, the trustees and officers as a group owned less than 1% of the outstanding shares of each class of each Fund, except that the trustees and officers as a group owned 1.00% of Class A shares of AIM European Small Company Fund and 1.63% of Class A shares of AIM New Technology Fund.
(1) Owned of record and beneficially.
APPENDIX E
MANAGEMENT FEES
For the last three fiscal years ended December 31, the management fees payable by each Fund, the amounts waived by AIM and the net fees paid by each Fund were as follows:
--------------------------------------------------------------------------------------------------------------------------------
FUND NAME 2001 2000
---- ----
--------------------------------------------------------------------------------------------------------------------------------
MANAGEMENT FEE MANAGEMENT NET MANAGEMENT MANAGEMENT MANAGEMENT NET MANAGEMENT
PAYABLE FEE WAIVERS FEE PAID FEE PAYABLE FEE WAIVERS FEE PAID
--------------------------------------------------------------------------------------------------------------------------------
AIM Balanced $20,891,477 $19,008 $20,872,469 $19,294,478 $ -0- $19,294,478
Fund
--------------------------------------------------------------------------------------------------------------------------------
AIM Basic 29,174 29,174 -0- N/A N/A N/A
Balanced Fund(1)
--------------------------------------------------------------------------------------------------------------------------------
AIM European 107,157 107,157 -0- 27,495 27,495 -0-
Small Company Fund(2)
--------------------------------------------------------------------------------------------------------------------------------
AIM Global 2,017,671 1,934 2,015,737 2,457,103 -0- 2,457,103
Utilities Fund
--------------------------------------------------------------------------------------------------------------------------------
AIM International
Emerging Growth 96,010 96,010 -0- 20,500 20,500 -0-
Fund(2)
--------------------------------------------------------------------------------------------------------------------------------
AIM Mid Cap Basic 22 22 -0- N/A N/A N/A
Value Fund(3)
--------------------------------------------------------------------------------------------------------------------------------
AIM New 662,429 357,926 304,503 169,735 126,575 43,160
Technology Fund(2)
--------------------------------------------------------------------------------------------------------------------------------
AIM Premier Equity 133,647,827 8,961,757 124,686,070 178,352,446 11,485,909 166,866,537
Fund
--------------------------------------------------------------------------------------------------------------------------------
AIM Premier Equity
II Fund(2) 1,259,835 42,306 1,217,529 184,046 146,253 37,793
--------------------------------------------------------------------------------------------------------------------------------
AIM Select 6,487,014 3,800 6,483,214 8,431,513 -0- 8,431,513
Equity Fund
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------
FUND NAME 1999
----
--------------------------------------------------------------------------
MANAGEMENT MANAGEMENT NET MANAGEMENT
FEE PAYABLE FEE WAIVERS FEE PAID
--------------------------------------------------------------------------
AIM Balanced $13,624,208 $ -0- $13,624,208
Fund
--------------------------------------------------------------------------
AIM Basic N/A N/A N/A
Balanced Fund(1)
--------------------------------------------------------------------------
AIM European N/A N/A N/A
Small Company Fund(2)
--------------------------------------------------------------------------
AIM Global 1,802,726 -0- 1,802,726
Utilities Fund
--------------------------------------------------------------------------
AIM International
Emerging Growth N/A N/A N/A
Fund(2)
--------------------------------------------------------------------------
AIM Mid Cap Basic N/A N/A N/A
Value Fund(3)
--------------------------------------------------------------------------
AIM New N/A N/A N/A
Technology Fund(2)
--------------------------------------------------------------------------
AIM Premier Equity 141,196,457 5,137,356 136,059,101
Fund
--------------------------------------------------------------------------
AIM Premier Equity
II N/A N/A N/A
Fund(2)
--------------------------------------------------------------------------
AIM Select 5,507,389 -0- 5,507,389
Equity Fund
--------------------------------------------------------------------------
|
--------------------------------------------------------------------------------------------------------------------------------
FUND NAME 2001 2000
---- ----
--------------------------------------------------------------------------------------------------------------------------------
MANAGEMENT FEE MANAGEMENT NET MANAGEMENT MANAGEMENT MANAGEMENT NET MANAGEMENT
PAYABLE FEE WAIVERS FEE PAID FEE PAYABLE FEE WAIVERS FEE PAID
--------------------------------------------------------------------------------------------------------------------------------
AIM Small Cap 997,232 714 996,518 89,083 89,083 -0-
Equity Fund(2)
--------------------------------------------------------------------------------------------------------------------------------
AIM Worldwide 69,914 69,914 -0- 69 69 -0-
Spectrum Fund(4)
--------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------
FUND NAME 1999
----
---------------------------------------------------------------------------
MANAGEMENT MANAGEMENT FEE NET MANAGEMENT
FEE PAYABLE WAIVERS FEE PAID
---------------------------------------------------------------------------
AIM Small Cap N/A N/A N/A
Equity Fund(2)
---------------------------------------------------------------------------
AIM Worldwide N/A N/A N/A
Spectrum Fund(4)
---------------------------------------------------------------------------
|
(1) Commenced operations on September 28, 2001
(2) Commenced operations on August 31, 2000
(3) Commenced operations on December 31, 2001
(4) Commenced operations on December 29, 2000
APPENDIX F
ADMINISTRATIVE SERVICES FEES
The Funds paid AIM the following amounts for administrative services for the last three fiscal years ended December 31:
----------------------------------------------------------------------------------------------------------------------
FUND NAME 2001 2000 1999
---- ---- ----
----------------------------------------------------------------------------------------------------------------------
AIM Balanced Fund $316,318 $219,636 $158,046
----------------------------------------------------------------------------------------------------------------------
AIM Basic Balanced 12,603 N/A N/A
Fund(1)
----------------------------------------------------------------------------------------------------------------------
AIM European Small 50,000 16,667 N/A
Company Fund(2)
----------------------------------------------------------------------------------------------------------------------
AIM Global Utilities 92,707 111,177 8,999
Fund
----------------------------------------------------------------------------------------------------------------------
AIM International
Emerging Growth 50,000 16,667 N/A
Fund(2)
----------------------------------------------------------------------------------------------------------------------
AIM Mid Cap Basic 137 N/A N/A
Value Fund(3)
----------------------------------------------------------------------------------------------------------------------
AIM New Technology 50,000 16,667 N/A
Fund(2)
----------------------------------------------------------------------------------------------------------------------
AIM Premier Equity Fund 833,469 959,833 631,457
----------------------------------------------------------------------------------------------------------------------
AIM Premier Equity II Fund(2) 50,000 16,,667 N/A
----------------------------------------------------------------------------------------------------------------------
AIM Select Equity Fund 148,860 144,211 110,205
----------------------------------------------------------------------------------------------------------------------
50,000 16,667 N/A
AIM Small Cap Equity Fund(2)
----------------------------------------------------------------------------------------------------------------------
50,000 410 N/A
AIM Worldwide
Spectrum Fund(4)
----------------------------------------------------------------------------------------------------------------------
|
(1) Commenced operations on September 28, 2001
(2) Commenced operations on August 31, 2000
(3) Commenced operations on December 31, 2001
(4) Commenced operations on December 29, 2000
APPENDIX G
BROKERAGE COMMISSIONS
Brokerage commissions(1) paid by each of the Funds listed below during the last three fiscal years were as follows:
FUND 2001 2000 1999
---- ------------ ------------ ------------
AIM Balanced Fund(2) $ 2,814,996 $ 1,892,019 $ 1,595,462
AIM Basic Balanced Fund(3) 332,231 N/A N/A
AIM European Small Company Fund(4) 69,600 38,807 N/A
AIM Global Utilities Fund(5) 263,422 593,061 198,511
AIM International Emerging Growth Fund(4) 67,561 27,889 N/A
AIM Mid Cap Basic Value Fund(6) N/A N/A N/A
AIM New Technology Fund(4) 137,043 10,477 N/A
AIM Premier Equity Fund(7) 19,870,430 34,775,189 23,804,242
AIM Premier Equity II Fund(4) 231,409 57,425 N/A
AIM Select Equity Fund(8) 2,341,424 1,152,944 592,091
AIM Small Cap Equity Fund(4) 493,853 65,567 N/A
AIM Worldwide Spectrum Fund(9) 29,817 N/A N/A
|
(1) Disclosure regarding brokerage commissions is limited to commissions paid on agency trades and designated as such on the trade confirm.
(2) The variation in brokerage commissions paid by the AIM Balanced Fund for the fiscal year ended December 31, 2001, as compared to the prior fiscal year was due to a significant fluctuation in asset levels.
(3) Commenced operations on September 28, 2001.
(4) Commenced operations on August 31, 2000.
(5) The variation in brokerage commission paid by the AIM Global Utilities Fund for the fiscal year ended December 31, 2000, as compared to the two prior fiscal years, was due to a significant fluctuation in asset levels, increased portfolio turnover and an increase in transactions on which commissions were paid.
(6) Commenced operations on December 31, 2001.
(7) The variation in brokerage commission paid by the AIM Premier Equity Fund for the fiscal year ended December 31, 2000, as compared to the two prior fiscal years, was due to a significant fluctuation in asset levels, large cash inflows and an increase in transactions on which commissions were paid.
(8) The variation in brokerage commission paid by the AIM Select Equity Fund for the fiscal year ended December 31, 2000, as compared to the two prior fiscal years, was due to a significant increase in assets of the fund.
(9) Commenced operations on December 29, 2000.
APPENDIX H
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF
SECURITIES OF REGULAR BROKERS OR DEALERS
During the last fiscal year ended December 31, 2001, each Fund allocated the following amount of transactions to broker-dealers that provided AIM with certain research, statistics and other information:
Related
Fund Transactions Brokerage Commissions
---- ------------ ---------------------
AIM Balanced Fund $ 190,962,040 $ 239,220
AIM Basic Balanced Fund N/A N/A
AIM European Small Company Fund 271,339 457
AIM Global Utilities Fund 12,268,708 20,325
AIM International Emerging Growth Fund 121,720 243
AIM Mid Cap Basic Value Fund(1) N/A N/A
AIM New Technology Fund 11,536,993 12,730
AIM Premier Equity Fund 2,297,060,048 2,668,509
AIM Premier Equity II Fund 10,278,589 15,793
AIM Select Equity Fund 220,518,143 276,629
AIM Small Cap Equity Fund 11,559,784 21,470
AIM Worldwide Spectrum Fund 440,920 510
|
(1) Commenced operations on December 31, 2001.
During the last fiscal year ended December 31, 2001, the Funds held securities issued by the following companies, which are "regular" brokers or dealers of one of more of the Funds identified below:
Fund/Issuer Security Market Value
----------- -------- ------------
AIM Balanced Fund
Goldman Sachs Group, Inc. (The) Common Stock $ 21,295,400
Merrill Lynch & Co., Inc. Common Stock 34,034,360
Morgan Stanley Dean Witter & Co. Common Stock 24,926,864
Bear Stearns Cos. Inc. Bonds/Notes 4,676,293
Lehman Brothers Holdings Inc. Bonds/Notes 6,501,967
Morgan Stanley Dean Witter & Co. Bonds/Notes 7,182,964
AIM Basic Balanced Fund
Morgan Stanley Dean Witter & Co. Common Stock 223,760
Lehman Brothers Holdings, Inc. Bonds/Notes 21,837
AIM Select Equity Fund
Lehman Brothers Holdings Inc. Common Stock 6,199,040
Merrill Lynch & Co., Inc. Common Stock 8,234,960
AIM Premier Equity Fund
Morgan Stanley Dean Witter & Co. Common Stock 391,580,000
AIM Premier Equity II Fund
Lehman Brothers Holdings Inc. Common Stock 1,837,000
Morgan Stanley Dean Witter & Co. Common Stock 1,342,560
|
APPENDIX I
AMOUNTS PAID TO A I M DISTRIBUTORS, INC. PURSUANT TO DISTRIBUTION PLANS
A list of amounts paid by each class of shares to AIM Distributors pursuant to the Plans for the fiscal year or period ended December 31, 2001 follows:
CLASS A CLASS B CLASS C
FUND SHARES SHARES SHARES
---- ----------- ------------ -----------
AIM Balanced Fund(2) $ 6,103,678 $ 12,597,477 $ 4,020,765
AIM Basic Balanced Fund(1) 5,240 22,783 7,127
AIM European Small Company Fund 26,996 24,901 10,764
AIM Global Utilities Fund 543,963 1,309,131 150,360
AIM International Emerging Growth Fund 19,636 19,061 25,899
AIM Mid Cap Basic Value Fund 4 8 8
AIM New Technology Fund 129,174 197,761 95,599
AIM Premier Equity Fund(2) 24,169,158 105,895,470 10,844,420
AIM Premier Equity II Fund 224,258 712,565 326,478
AIM Select Equity Fund 1,072,072 5,043,700 627,234
AIM Small Cap Equity Fund(2) 216,534 382,833 171,712
AIM Worldwide Spectrum Fund 21,849 11,226 8,599
|
(1) Commenced operations on September 28, 2001.
(2) Information on Class R shares is not reflected in the table since Class R shares commenced operations on June 3, 2002.
APPENDIX J
ALLOCATION OF ACTUAL FEES PAID PURSUANT TO DISTRIBUTION PLANS
An estimate by category of the allocation of actual fees paid by Class A Shares of the Funds during the year ended December 31, 2001, follows:
PRINTING & UNDERWRITERS DEALERS
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION
----------- ----------- ----------- ------------ -----------
AIM Balanced Fund(3) $ 0 $ 0 $ 0 $ 6,103,678 $ 0
AIM Basic Balanced Fund(1) 565 77 0 0 4,598
AIM European Small Company Fund 4,628 0 1,543 0 20,825
AIM Global Utilities Fund 18,119 1,575 6,127 0 518,142
AIM International Emerging Growth Fund 5,610 0 0 0 14,026
AIM Mid Cap Basic Value Fund(2) N/A N/A N/A N/A N/A
AIM New Technology Fund 8,982 800 3,557 0 115,835
AIM Premier Equity Fund(3) 0 0 0 0 24,169,158
AIM Premier Equity II Fund 23,022 1,955 7,602 0 191,679
AIM Select Equity Fund 0 0 0 0 1,072,072
AIM Small Cap Equity Fund(3) 19,547 1,934 5,585 0 189,468
AIM Worldwide Spectrum Fund 2,066 204 568 0 19,011
|
An estimate by category of the allocation of actual fees paid by Class B Shares of the Funds during the year ended December 31, 2001, follows:
PRINTING & UNDERWRITERS DEALERS
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION
----------- ----------- ----------- ------------ -----------
AIM Balanced Fund(3) $ 249,000 $ 22,346 $ 83,355 $ 9,448,108 $ 2,794,668
AIM Basic Balanced Fund(1) 881 120 334 17,087 4,361
AIM European Small Company Fund 3,596 0 0 18,676 2,629
AIM Global Utilities Fund 21,638 1,784 8,107 981,848 295,754
AIM International Emerging Growth Fund 1,953 429 0 14,295 2,384
AIM Mid Cap Basic Value Fund(2) N/A N/A N/A N/A N/A
AIM New Technology Fund 13,377 1,038 4,325 148,321 30,700
AIM Premier Equity Fund(3) 1,038,490 93,636 347,603 79,421,602 24,994,139
AIM Premier Equity II Fund 32,152 2,607 11,586 534,424 131,796
AIM Select Equity Fund 86,226 7,774 29,640 3,782,775 1,137,285
AIM Small Cap Equity Fund(3) 21,069 1,789 6,957 287,125 65,893
AIM Worldwide Spectrum Fund 1,565 0 0 8,420 1,241
|
An estimate by category of the allocation of actual fees paid by Class C shares of the Funds during the year ended December 31, 2001, follows:
PRINTING & UNDERWRITERS DEALERS
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION
----------- ----------- ----------- ------------ -----------
AIM Balanced Fund(3) $ 108,680 $ 9,979 $ 35,987 $ 802,417 $ 3,063,702
AIM Basic Balanced Fund(1) 0 0 0 3,037 4,090
AIM European Small Company Fund 0 0 0 5,194 5,570
AIM Global Utilities Fund 5,016 0 2,508 45,147 97,689
AIM International Emerging Growth Fund 1,509 149 829 8,147 15,265
AIM Mid Cap Basic Value Fund(2) N/A N/A N/A N/A N/A
AIM New Technology Fund 7,072 699 2,590 50,506 34,732
AIM Premier Equity Fund(3) 269,253 24,465 89,843 1,986,915 8,473,944
AIM Premier Equity II Fund 22,821 2,093 6,643 154,458 140,463
AIM Select Equity Fund 29,303 2,520 10,183 213,852 371,376
AIM Small Cap Equity Fund(3) 9,757 965 3,829 75,820 81,341
AIM Worldwide Spectrum Fund 1,166 256 0 4,267 2,910
|
(1) Commenced operations on September 28, 2001.
(2) Commenced operations on December 31, 2001.
(3) Information on Class R shares is not reflected in the table since Class R shares commenced operations on June 3, 2002.
APPENDIX K
TOTAL SALES CHARGES
The following chart reflects the total sales charges paid in connection with the sale of Class A shares of each Fund and the amount retained by AIM Distributors for the last three fiscal years ending December 31:
2001 2000 1999
---- ---- ----
SALES AMOUNT SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED CHARGES RETAINED
----------- ----------- ----------- ----------- ----------- -----------
AIM Balanced Fund(5) $ 3,691,146 $ 640,756 $ 7,582,977 $ 1,348,605 $ 4,738,340 $ 823,856
AIM Basic Balanced Fund(1) 112,507 19,234 N/A N/A N/A N/A
AIM European Small Company Fund(2) 28,534 4,738 127,183 18,828 N/A N/A
AIM Global Utilities Fund 427,191 69,443 1,102,169 174,240 363,844 56,996
AIM International Emerging Growth Fund(2) 26,026 4,181 52,378 8,538 N/A N/A
AIM Mid Cap Basic Value Fund(3) N/A N/A N/A N/A N/A N/A
AIM New Technology Fund(2) 478,515 76,755 895,102 142,151 N/A N/A
AIM Premier Equity Fund(5) 13,060,057 2,026,998 44,597,613 6,912,097 47,407,647 7,218,373
AIM Premier Equity II Fund(2) 606,814 95,063 838,943 130,652 N/A N/A
AIM Select Equity Fund 1,293,861 205,791 3,195,845 511,968 1,100,704 176,131
AIM Small Cap Equity Fund(2),(5) 819,222 129,827 421,500 66,008 N/A N/A
AIM Worldwide Spectrum Fund(4) 60,376 10,936 -0- -0- N/A N/A
|
(1) Commenced operations on September 28, 2001
(2) Commenced operations on August 31, 2000
(3) Commenced operations on December 29, 2000
(4) Commenced operations on December 29, 2000
(5) Information on Class R shares is not reflected in the table since Class R shares commenced operations on June 3, 2002
The following chart reflects the contingent deferred sales charges paid by Class A, Class B, Class C and Class R shareholders and retained by AIM Distributors for the last three fiscal years ended December 31:
2001 2000 1999
---- ---- ----
AIM Balanced Fund(5) $139,887 $ 284,148 $ 150,341
AIM Basic Balanced Fund(1) 84 N/A N/A
AIM European Small Company Fund(2) 17,064 47 N/A
AIM Global Utilities Fund 9,778 16,641 67,367
AIM International Emerging Growth Fund(2) 29,308 364 N/A
AIM Mid Cap Basic Value Fund(3) N/A N/A N/A
AIM New Technology Fund(2) 11,820 16,403 N/A
AIM Premier Equity Fund(5) 502,677 1,003,943 1,053,955
AIM Premier Equity II Fund(2) 25,998 1,234 N/A
AIM Select Equity Fund 32,135 32,980 75,951
AIM Small Cap Equity Fund(2),(5) 39,954 541 N/A
AIM Worldwide Spectrum Fund(4) 2,126 -0- N/A
|
(1) Commenced operations on September 28, 2001
(2) Commenced operations on August 31, 2000
(3) Commenced operations on December 31, 2001
(4) Commenced operations on December 29, 2000
(5) Information on Class R shares is not reflected in the table since Class R shares commenced operations on June 3, 2002
APPENDIX L
PERFORMANCE DATA
AVERAGE ANNUAL TOTAL RETURNS
The average annual total returns (including sales load) for each Fund, with respect to its Class A shares, for the one, five and ten year periods (or since inception if less than ten years ended June 30, 2002 are as follows:
PERIODS ENDED
JUNE 30, 2002
-------------
SINCE INCEPTION
CLASS A SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- ------ ------- -------- --------- ---------
AIM Balanced Fund -19.89% 1.39% 9.28% -- 03/31/78
AIM Basic Balanced Fund N/A N/A N/A N/A 09/28/01
AIM European Small Company Fund 8.62% N/A N/A -12.06% 08/31/00
AIM Global Utilities Fund -34.38% -0.41% 5.34% -- 01/19/88
AIM International Emerging Growth Fund 9.49% N/A N/A -13.76% 08/31/00
AIM Mid Cap Basic Value Fund N/A N/A N/A N/A 12/31/01
AIM New Technology Fund -45.96% N/A N/A -53.46% 08/31/00
AIM Premier Equity Fund -31.28% 0.21% 10.02% -- 05/01/84
AIM Premier Equity II Fund -33.00% N/A N/A -28.16% 08/31/00
AIM Select Equity Fund 27.50% 2.28% 8.05% -- 12/04/67
AIM Small Cap Equity Fund -5.60% N/A N/A -2.01% 08/31/00
AIM Worldwide Spectrum Fund -4.39% N/A N/A -6.52% 12/29/00
|
The average annual total returns (including maximum applicable contingent deferred sales charge) for each Fund, with respect to its Class B shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are as follows:
PERIODS ENDED
JUNE 30, 2002
-------------
SINCE INCEPTION
CLASS B SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- ------ ------- -------- --------- ---------
AIM Balanced Fund -20.63% 1.23% N/A 6.51% 10/18/93
AIM Basic Balanced Fund N/A N/A N/A N/A 09/28/01
AIM European Small Company Fund 9.13% N/A N/A -11.85% 08/31/00
AIM Global Utilities Fund -34.47% -0.34% N/A 3.06% 09/01/93
AIM International Emerging Growth Fund 10.15% N/A N/A -13.55% 08/31/00
AIM Mid Cap Basic Value Fund N/A N/A N/A N/A 12/31/01
AIM New Technology Fund -46.22% N/A N/A -53.45% 08/31/00
AIM Premier Equity Fund -31.34% 0.30% N/A 7.30% 10/18/93
AIM Premier Equity II Fund -33.04% N/A N/A -28.00% 08/31/00
AIM Select Equity Fund -27.68% 2.34% N/A 7.34% 09/01/93
AIM Small Cap Equity Fund -5.84% N/A N/A -1.82% 08/31/00
AIM Worldwide Spectrum Fund -4.46% N/A N/A -6.14% 12/29/00
|
The average annual total returns (including maximum applicable contingent deferred sales charge) for each Fund, with respect to its Class C shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are as follows:
PERIODS ENDED
JUNE 30, 2002
-------------
SINCE INCEPTION
CLASS C SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- ------ ------- -------- --------- ---------
AIM Balanced Fund -17.32% N/A N/A 0.36% 08/04/97
AIM Basic Balanced Fund N/A N/A N/A N/A 09/28/01
AIM European Small Company Fund 13.13% N/A N/A -9.87% 08/31/00
AIM Global Utilities Fund -31.81% N/A N/A -0.58% 08/04/97
AIM International Emerging Growth Fund 14.17% N/A N/A -11.66% 08/31/00
AIM Mid Cap Basic Value Fund N/A N/A N/A N/A 12/31/01
AIM New Technology Fund -43.74% N/A N/A -52.30% 08/31/00
AIM Premier Equity Fund -28.52% N/A N/A -0.68% 08/04/97
AIM Premier Equity II Fund -30.35% N/A N/A -26.45% 08/31/00
AIM Select Equity Fund -24.67% N/A N/A 0.65% 08/04/97
AIM Small Cap Equity Fund -1.88% N/A N/A 0.38% 08/31/00
AIM Worldwide Spectrum Fund -0.57% N/A N/A -3.56% 12/29/00
|
The average annual total returns (not including the 0.75% contingent deferred sales charge that may be imposed on a total redemption of retirement plan assets within the first year) for each Fund, with respect to its Class R shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are as follows:
PERIODS ENDED
JUNE 30, 2002*
-------------
SINCE INCEPTION
CLASS R SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE**
-------------- ------ ------- -------- --------- ---------
AIM Balanced Fund -16.11% 2.13% 9.54% -- 03/31/78
AIM Premier Equity Fund -27.47% 1.10% 10.37% -- 05/01/84
AIM Small Cap Equity Fund -0.28% N/A N/A 0.92% 08/31/00
|
* The returns shown for these periods are the blended returns of the historical performance of the Funds' Class R shares since June 3, 2002 and the restated historical performance of the Funds' Class A shares (for periods prior to June 3, 2002) at net asset value, adjusted to reflect the higher Rule 12b-1 fees applicable to the Class R shares.
** The inception date shown in the table is that of the Funds' Class A shares. The inception date of the Funds' Class R shares is June 3, 2002.
CUMULATIVE TOTAL RETURNS
The cumulative total returns (including sales load) for each Fund, with respect to its Class A shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are as follows:
PERIODS ENDED
JUNE 30, 2002
-------------
SINCE INCEPTION
CLASS C SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- ------ ------- -------- --------- ---------
AIM Balanced Fund -19.89% 7.16% 142.95% -- 03/31/78
AIM Basic Balanced Fund N/A N/A N/A -2.29% 09/28/01
AIM European Small Company Fund 8.62% N/A N/A -20.96% 08/31/00
AIM Global Utilities Fund -34.38% -2.01% 68.28% -- 01/19/88
AIM International Emerging Growth Fund 9.49% N/A N/A -23.73% 08/31/00
AIM Mid Cap Basic Value Fund N/A N/A N/A -8.98% 12/31/01
AIM New Technology Fund -45.96% N/A N/A -75.33% 08/31/00
AIM Premier Equity Fund -31.28% 1.05% 159.86% -- 05/01/84
AIM Premier Equity II Fund -33.00% N/A N/A -45.41% 08/31/00
AIM Select Equity Fund -27.50% 11.94% 116.91% -- 12/04/67
AIM Small Cap Equity Fund -5.60% N/A N/A -3.64% 08/31/00
AIM Worldwide Spectrum Fund -4.39% N/A N/A -9.63% 12/29/00
|
The cumulative total returns (including maximum applicable contingent deferred sales charge) for each Fund, with respect to its Class B shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are as follows:
PERIODS ENDED
JUNE 30, 2002
-------------
SINCE INCEPTION
CLASS B SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- ------ ------- -------- --------- ---------
AIM Balanced Fund -20.63% 6.31% N/A 73.15% 10/18/93
AIM Basic Balanced Fund N/A N/A N/A -2.81% 09/28/01
AIM European Small Company Fund 9.13% N/A N/A -20.62% 08/31/00
AIM Global Utilities Fund -34.47% -1.70% N/A 30.45% 09/01/93
AIM International Emerging Growth Fund 10.15% N/A N/A -23.39% 08/31/00
AIM Mid Cap Basic Value Fund N/A N/A N/A -8.80% 12/31/01
AIM New Technology Fund -46.22% N/A N/A -75.33% 08/31/00
AIM Premier Equity Fund -31.34% 1.50% N/A 84.61% 10/18/93
AIM Premier Equity II Fund -33.04% N/A N/A -45.19% 08/31/00
AIM Select Equity Fund -27.68% 12.25% N/A 86.88% 09/01/93
AIM Small Cap Equity Fund -5.84% N/A N/A -3.30% 08/31/00
AIM Worldwide Spectrum Fund -4.46% N/A N/A -9.08% 12/29/00
|
The cumulative total returns (including maximum applicable contingent deferred sales charge) for each Fund, with respect to its Class C shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are as follows:
PERIODS ENDED
JUNE 30, 2002
-------------
SINCE INCEPTION
CLASS C SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- ------ ------- -------- --------- ---------
AIM Balanced Fund -17.32% N/A N/A 1.76% 08/04/97
AIM Basic Balanced Fund N/A N/A N/A 1.19% 09/28/01
AIM European Small Company Fund 13.13% N/A N/A -17.32% 08/31/00
AIM Global Utilities Fund -31.81% N/A N/A -2.81% 08/04/97
AIM International Emerging Growth Fund 14.17% N/A N/A -20.30% 08/31/00
AIM Mid Cap Basic Value Fund N/A N/A N/A -4.96% 12/31/01
AIM New Technology Fund -43.74% N/A N/A -74.20% 08/31/00
AIM Premier Equity Fund -28.52% N/A N/A -3.29% 08/04/97
AIM Premier Equity II Fund -30.35% N/A N/A -43.01% 08/31/00
AIM Select Equity Fund -24.67% N/A N/A 3.23% 08/04/97
AIM Small Cap Equity Fund -1.88% N/A N/A 0.70% 08/31/00
AIM Worldwide Spectrum Fund -0.57% N/A N/A -5.29% 12/29/00
|
The cumulative total returns (not including the 0.75% contingent deferred sales charge that may be imposed on a total redemption of retirement plan assets within the first year) for each Fund, with respect to its Class R shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are as follows:
PERIODS ENDED
JUNE 30, 2002
-------------
SINCE INCEPTION
CLASS C SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- ------ ------- -------- --------- ---------
AIM Balanced Fund -16.11% 11.12% 148.82% -- 03/31/78
AIM Premier Equity Fund -27.47% 5.62% 168.33% -- 05/01/84
AIM Small Cap Equity Fund -0.28% N/A N/A 1.68% 08/31/00
|
* The returns shown for these periods are the blended returns of the historical performance of the Funds' Class R shares since June 3, 2002 and the restated historical performance of the Funds' Class A shares (for periods prior to June 3, 2002) at net asset value, adjusted to reflect the higher Rule 12b-1 fees applicable to the Class R shares.
** The inception date shown in the table is that of the Funds' Class R shares. The inception date of the Funds' Class R shares is June 3, 2002.
AVERAGE ANNUAL TOTAL RETURNS (AFTER TAXES ON DISTRIBUTIONS)
The average annual total returns (after taxes on distributions and including sales load) for each Fund, with respect to its Class A shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are as follows:
PERIODS ENDED
JUNE 30, 2002
-------------
SINCE INCEPTION
CLASS A SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- ------ ------- -------- --------- ---------
AIM Balanced Fund -20.67% 0.12% 7.97% -- 03/31/78
AIM Basic Balanced Fund N/A N/A N/A N/A 09/28/01
AIM European Small Company Fund 8.62% N/A N/A -12.16 08/31/00
AIM Global Utilities Fund -35.12% -2.25% 3.30% -- 01/19/88
AIM International Emerging Growth Fund 9.28% N/A N/A -13.85% 08/31/00
AIM Mid Cap Basic Value Fund N/A N/A N/A N/A 12/31/01
AIM New Technology Fund -45.96% N/A N/A -53.46% 08/31/00
AIM Premier Equity Fund -31.30% -1.49% 8.11% -- 05/01/84
AIM Premier Equity II Fund -33.04% N/A N/A -28.20% 08/31/00
AIM Select Equity Fund -27.51% 0.93% 6.01% -- 12/04/67
AIM Small Cap Equity Fund -5.62% N/A N/A -2.02% 08/31/00
AIM Worldwide Spectrum Fund -4.40% N/A N/A -6.53% 12/29/00
|
The average annual total returns (after taxes on distributions and including maximum applicable contingent deferred sales charge) for each Fund, with respect to its Class B shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are as follows:
PERIODS ENDED
JUNE 30, 2002
-------------
SINCE INCEPTION
CLASS B SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- ------ ------- -------- --------- ---------
AIM Balanced Fund -21.19% 0.24% N/A 5.44% 10/18/93
AIM Basic Balanced Fund N/A N/A N/A N/A 09/28/01
AIM European Small Company Fund 9.13% N/A N/A -11.92% 08/31/00
AIM Global Utilities Fund -35.03% -1.93% N/A 1.48% 09/01/93
AIM International Emerging Growth Fund 10.15% N/A N/A -13.55% 08/31/00
AIM Mid Cap Basic Value Fund N/A N/A N/A N/A 12/31/01
AIM New Technology Fund -46.22% N/A N/A -53.45% 08/31/00
AIM Premier Equity Fund -31.37% -1.45% N/A 5.61% 10/18/93
AIM Premier Equity II Fund -33.05% N/A N/A -28.03% 08/31/00
AIM Select Equity Fund -27.70% 0.89% N/A 5.57% 09/01/93
AIM Small Cap Equity Fund -5.84% N/A N/A -1.82% 08/31/00
AIM Worldwide Spectrum Fund -4.46% N/A N/A -6.15% 12/29/00
|
The average annual total returns (after taxes on distributions and including maximum applicable contingent deferred sales charge) for each Fund, with respect to its Class C shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are as follows:
PERIODS ENDED
JUNE 30, 2002
-------------
SINCE INCEPTION
CLASS C SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- ------ ------- -------- --------- ---------
AIM Balanced Fund -17.89% N/A N/A -0.63% 08/04/97
AIM Basic Balanced Fund N/A N/A N/A N/A 09/28/01
AIM European Small Company Fund 13.13% N/A N/A -9.94% 08/31/00
AIM Global Utilities Fund -32.36% N/A N/A -2.16% 08/04/97
AIM International Emerging Growth Fund 14.17% N/A N/A -11.66% 08/31/00
AIM Mid Cap Basic Value Fund N/A N/A N/A N/A 12/31/01
AIM New Technology Fund -43.74% N/A N/A -52.30% 08/31/00
AIM Premier Equity Fund -28.54% N/A N/A -2.42% 08/04/97
AIM Premier Equity II Fund -30.36% N/A N/A -26.48% 08/31/00
AIM Select Equity Fund -24.68% N/A N/A -0.78% 08/04/97
AIM Small Cap Equity Fund -1.88% N/A N/A 0.38% 08/31/00
AIM Worldwide Spectrum Fund -0.57% N/A N/A -3.56% 12/29/00
|
AVERAGE ANNUAL TOTAL RETURNS (AFTER TAXES ON DISTRIBUTIONS AND REDEMPTION)
The average annual total returns (after taxes on distributions and redemption and including sales load) for each Fund, with respect to its Class A shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are as follows:
PERIODS ENDED
JUNE 30, 2002
-------------
SINCE INCEPTION
CLASS A SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- ------ ------- -------- --------- ---------
AIM Balanced Fund -12.19% 0.61% 7.21% -- 03/31/78
AIM Basic Balanced Fund N/A N/A N/A -1.40% 09/28/01
AIM European Small Company Fund 5.29% N/A N/A -9.59% 08/31/00
AIM Global Utilities Fund -20.92% -0.53% 3.70% -- 01/19/88
AIM International Emerging Growth Fund 5.80% N/A N/A -10.91% 08/31/00
AIM Mid Cap Basic Value Fund N/A N/A N/A -5.51% 12/31/01
AIM New Technology Fund -28.22% N/A N/A -39.61% 08/31/00
AIM Premier Equity Fund -19.18% 0.10% 7.92% -- 05/01/84
AIM Premier Equity II Fund -20.26% N/A N/A -21.87% 08/31/00
AIM Select Equity Fund -16.87% 1.94% 6.10% -- 12/04/67
AIM Small Cap Equity Fund -3.44% N/A N/A -1.61% 08/31/00
AIM Worldwide Spectrum Fund -2.70% N/A N/A -5.20% 12/29/00
|
The average annual total returns (after taxes on distributions and redemption and including maximum applicable contingent deferred sales charge) for each Fund, with respect to its Class B shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are as follows:
PERIODS ENDED
JUNE 30, 2002
-------------
SINCE INCEPTION
CLASS B SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- ------ ------- -------- --------- ---------
AIM Balanced Fund -12.65% 0.62% N/A 4.91% 10/18/93
AIM Basic Balanced Fund N/A N/A N/A -1.72% 09/28/01
AIM European Small Company Fund 5.60% N/A N/A -9.41% 08/31/00
AIM Global Utilities Fund -20.98% -0.36% N/A 2.06% 09/01/93
AIM International Emerging Growth Fund 6.23% N/A N/A -10.70% 08/31/00
AIM Mid Cap Basic Value Fund N/A N/A N/A -5.40% 12/31/01
AIM New Technology Fund -28.38% N/A N/A -39.61% 08/31/00
AIM Premier Equity Fund -19.22% 0.21% N/A 5.74% 10/18/93
AIM Premier Equity II Fund -20.29% N/A N/A -21.75% 08/31/00
AIM Select Equity Fund -16.98% 2.03% N/A 5.72% 09/01/93
AIM Small Cap Equity Fund -3.59% N/A N/A -1.45% 08/31/00
AIM Worldwide Spectrum Fund -2.74% N/A N/A -4.90% 12/29/00
|
The average annual total returns (after taxes on distributions and redemption and including maximum applicable contingent deferred sales charge) for each Fund, with respect to its Class C shares, for the one, five and ten year periods (or since inception if less than ten years) ended June 30, 2002 are as follows:
PERIODS ENDED
JUNE 30, 2002
-------------
SINCE INCEPTION
CLASS C SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- ------ ------- -------- --------- ---------
AIM Balanced Fund -10.62% N/A N/A -0.08% 08/04/97
AIM Basic Balanced Fund N/A N/A N/A 0.73% 09/28/01
AIM European Small Company Fund 8.06% N/A N/A -7.86% 08/31/00
AIM Global Utilities Fund -19.34% N/A N/A -0.54% 08/04/97
AIM International Emerging Growth Fund 8.70% N/A N/A -9.23% 08/31/00
AIM Mid Cap Basic Value Fund N/A N/A N/A -3.05% 12/31/01
AIM New Technology Fund -26.86% N/A N/A -38.86% 08/31/00
AIM Premier Equity Fund -17.49% N/A N/A -0.57% 08/04/97
AIM Premier Equity II Fund -18.63% N/A N/A -20.59% 08/31/00
AIM Select Equity Fund -15.13% N/A N/A 0.66% 08/04/97
AIM Small Cap Equity Fund -1.15% N/A N/A 0.31% 08/31/00
AIM Worldwide Spectrum Fund -0.35% N/A N/A -2.84% 12/29/00
|
Yields
The yields for each of the named Funds are as follows:
30 DAYS ENDED
JUNE 30, 2002
-------------
CLASS A CLASS B CLASS C
------- ------- -------
AIM Balanced Fund* 2.03% 1.37% 1.37%
AIM Basic Balanced Fund 1.14% 0.55% 0.55%
AIM Global Utilities Fund 2.84% 2.25% 2.25%
|
Distribution Rates
The distribution rates at offering price for each of the named Funds are as follows:
Class A Class B Class C
------- ------- -------
AIM Balanced Fund* 2.27% 1.59% 1.59%
AIM Basic Balanced Fund 1.01% 0.41% 0.41%
AIM Global Utilities Fund 2.47% 1.69% 1.69%
|
* Information on Class R shares is not reflected in the table since Class R shares commenced operations on June 3, 2002.
FINANCIAL STATEMENTS
Pursuant to Rule 3-03(d) of Regulation S-X unaudited financials for the period ended June 30, 2002, for Registrant's portfolios have been included in addition to the portfolios' audited financials for the period ended December 31, 2001. Such financials reflect all adjustments which are of a normal recurring nature and which are, in the opinion of management, necessary to a fair statement of the results for the periods presented.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
AIM Balanced Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Balanced Fund (one of the funds constituting AIM Funds Group; hereafter referred to as the "Fund") at December 31, 2001, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2001 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights for each of the periods ended on or before December 31, 1999 were audited by other independent accountants whose report, dated February 14, 2000, expressed an unqualified opinion thereon.
/s/ PRICEWATERHOUSECOOPERS LLP February 14, 2002 Houston, Texas |
FS-1
SCHEDULE OF INVESTMENTS
December 31, 2001
PRINCIPAL MARKET
AMOUNT VALUE
BONDS & NOTES-29.27%
ALTERNATIVE CARRIERS-0.35%
Intermedia Communications Inc., Series B, Sr.
Unsec. Notes, 9.50%, 03/01/09 $ 5,475,000 $ 5,844,562
---------------------------------------------------------------------------
Sr. Unsec. Notes, 8.60%, 06/01/08 7,675,000 7,809,312
===========================================================================
13,653,874
===========================================================================
AUTOMOBILE MANUFACTURERS-0.18%
Ford Holdings, Inc., Unsec. Gtd. Unsub. Deb.,
9.30%, 03/01/30 6,000,000 6,554,460
---------------------------------------------------------------------------
Ford Motor Co., Unsec. Bonds, 6.50%, 08/01/18 850,000 753,406
===========================================================================
7,307,866
===========================================================================
BANKS-3.34%
Bank of America Corp., Sub. Notes, 9.38%,
09/15/09 7,851,000 9,191,951
---------------------------------------------------------------------------
Bank United-Series A, Medium Term Notes,
8.00%, 03/15/09 8,890,000 9,575,330
---------------------------------------------------------------------------
BankBoston N.A., Unsec. Sub. Notes, 7.00%,
09/15/07 5,750,000 6,132,375
---------------------------------------------------------------------------
Bayerische Landesbank Girozentrale, Unsec.
Sub. Notes, 6.38%, 10/15/05 650,000 678,307
---------------------------------------------------------------------------
BB&T Corp., RAPS Sub. Notes, 6.38%, 06/30/05 7,245,000 7,459,524
---------------------------------------------------------------------------
Dresdner Bank New York, Unsec. Sub. Deb.,
7.25%, 09/15/15 9,232,000 9,652,979
---------------------------------------------------------------------------
Firstar Bank N.A., Unsec. Sub. Notes, 7.13%,
12/01/09 8,200,000 8,592,698
---------------------------------------------------------------------------
Midland Bank PLC (United Kingdom), Unsec.
Putable Sub. Yankee Notes, 7.65%, 05/01/25 3,825,000 4,044,402
---------------------------------------------------------------------------
NBD Bank N.A. Michigan, Unsec. Putable Sub.
Deb., 8.25%, 11/01/24 16,150,000 18,612,390
---------------------------------------------------------------------------
Regions Financial Corp., Putable Sub. Notes,
7.75%, 09/15/24 6,300,000 6,567,120
---------------------------------------------------------------------------
Southtrust Bank, N.A., Sub. Notes, 6.13%,
01/09/28 8,600,000 8,365,822
---------------------------------------------------------------------------
St. Paul Bancorp, Inc., Sr. Unsec. Unsub.
Notes, 7.13%, 02/15/04 5,500,000 5,736,830
---------------------------------------------------------------------------
Suntrust Bank, Sub. Notes, 6.38%, 04/01/11 5,515,000 5,563,256
---------------------------------------------------------------------------
Swiss Bank Corp.-NY, Sub. Notes, 7.38%,
06/15/17 6,065,000 6,408,704
---------------------------------------------------------------------------
U.S. Bancorp, Unsec. Putable Sub. Deb.,
7.50%, 06/01/26 10,000,000 10,769,500
---------------------------------------------------------------------------
Wachovia Corp.,
Unsec. Putable Sub. Deb., 6.55%, 10/15/35 9,680,000 10,106,114
---------------------------------------------------------------------------
Unsec. Putable Sub. Deb., 7.50%, 04/15/35 3,300,000 3,521,826
---------------------------------------------------------------------------
Unsec. Sub. Notes, 6.25%, 08/04/08 800,000 811,544
===========================================================================
131,790,672
===========================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
BROADCASTING & CABLE TV-3.06%
AT&T Corp.-Liberty Media Corp., Sr. Unsec.
Notes, 7.88%, 07/15/09 $ 8,550,000 $ 8,721,598
---------------------------------------------------------------------------
Comcast Cable Communications, Unsec. Notes,
8.88%, 05/01/17 6,545,000 7,460,122
---------------------------------------------------------------------------
Continental Cablevision, Inc., Sr. Deb.,
9.50%, 08/01/13 14,000,000 15,983,660
---------------------------------------------------------------------------
Cox Enterprises, Inc., Notes, 8.00%, 02/15/07
(Acquired 02/16/00-03/23/00; Cost
$6,279,912)(a) 6,300,000 6,777,792
---------------------------------------------------------------------------
Lenfest Communications, Inc., Sr. Unsec. Sub.
Notes, 8.25%, 02/15/08 2,550,000 2,701,954
---------------------------------------------------------------------------
Shaw Communications Inc. (Canada), Sr. Unsec.
Unsub. Yankee Notes, 8.25%, 04/11/10 4,095,000 4,334,025
---------------------------------------------------------------------------
TCA Cable TV, Inc., Sr. Unsec. Deb., 6.53%,
02/01/28 4,350,000 4,442,133
---------------------------------------------------------------------------
TCI Communications, Inc., Sr. Unsec. Deb.,
8.75%, 08/01/15 2,100,000 2,335,683
---------------------------------------------------------------------------
Tele-Communications, Inc., Sr. Deb., 9.80%,
02/01/12 16,650,000 19,934,379
---------------------------------------------------------------------------
Time Warner Inc., Notes,
Notes, 8.18%, 08/15/07 6,965,000 7,796,551
---------------------------------------------------------------------------
Sr. Unsec. Gtd. Deb., 7.57%, 02/01/24 8,440,000 8,601,879
---------------------------------------------------------------------------
Unsec. Deb., 8.05%, 01/15/16 16,545,000 18,724,473
---------------------------------------------------------------------------
Unsec. Deb., 9.15%, 02/01/23 6,000,000 7,144,080
---------------------------------------------------------------------------
Turner Broadcasting System, Inc.-Class A, Sr.
Notes, 8.38%, 07/01/13 5,100,000 5,673,291
===========================================================================
120,631,620
===========================================================================
CASINOS & GAMING-0.08%
MGM Mirage Inc., Sr. Unsec. Gtd. Notes,
8.50%, 09/15/10 3,000,000 3,083,790
===========================================================================
COMPUTER HARDWARE-0.05%
Candescent Technologies Corp.,
Sr. Conv. Unsec. Gtd. Sub. Deb., 8.00%,
05/01/03 (Acquired 03/07/00-04/19/01;
Cost $2,933,500)(a)(b)(c) 5,275,000 448,375
---------------------------------------------------------------------------
Sr. Conv. Unsec. Gtd. Sub. Deb., 8.00%,
05/01/03 (Acquired 04/17/98-04/19/01;
Cost $16,289,250)(a)(b)(c) 19,737,000 1,677,645
===========================================================================
2,126,020
===========================================================================
CONSUMER FINANCE-1.94%
Capital One Financial Corp., Unsec. Notes,
7.25%, 05/01/06 10,020,000 9,718,198
---------------------------------------------------------------------------
CitiFinancial Credit Co.,
Putable Notes, 6.63%, 06/01/15 3,125,000 3,180,469
---------------------------------------------------------------------------
Unsec. Putable Notes, 7.88%, 02/01/25 5,865,000 6,376,428
---------------------------------------------------------------------------
Ford Motor Credit Co.,
Notes, 7.88%, 06/15/10 13,215,000 13,467,274
---------------------------------------------------------------------------
Unsec. Notes, 6.88%, 02/01/06 5,100,000 5,096,583
---------------------------------------------------------------------------
Unsec. Notes, 7.38%, 10/28/09 7,305,000 7,228,371
---------------------------------------------------------------------------
|
FS-2
PRINCIPAL MARKET
AMOUNT VALUE
CONSUMER FINANCE-(CONTINUED)
General Motors Acceptance Corp., Bonds,
8.00%, 11/01/31 $11,640,000 $ 11,765,130
---------------------------------------------------------------------------
Putable Notes, 9.00%, 10/15/02 4,175,000 4,343,461
---------------------------------------------------------------------------
Unsec. Unsub. Notes, 7.75%, 01/19/10 750,000 777,412
---------------------------------------------------------------------------
Household Finance Corp., Unsec. Notes, 8.00%,
07/15/10 13,280,000 14,409,597
===========================================================================
76,362,923
===========================================================================
DISTILLERS & VINTNERS-0.11%
Grand Metropolitan Investment Corp, Gtd.
Putable Bonds, 7.45%, 04/15/35 4,000,000 4,280,600
===========================================================================
DIVERSIFIED FINANCIAL SERVICES-3.69%
AIG SunAmerica Global Financing VI, Sr. Sec.
Notes, 6.30%, 05/10/11 (Acquired 05/24/01;
Cost $7,151,739)(a) 7,225,000 7,366,899
---------------------------------------------------------------------------
AIG SunAmerica Global Financing VII, Notes,
5.85%, 08/01/08 (Acquired 08/21/01-
08/22/01; Cost $13,141,722)(a) 13,115,000 13,267,265
---------------------------------------------------------------------------
Associates Corp. of North America, Sr. Deb.,
6.95%, 11/01/18 18,815,000 19,557,628
---------------------------------------------------------------------------
Auburn Hills Trust, Gtd. Deb., 12.00%,
05/01/20 7,805,000 10,868,775
---------------------------------------------------------------------------
Bear Stearns Cos., Inc., Notes, 7.80%,
08/15/07 4,350,000 4,676,293
---------------------------------------------------------------------------
Citigroup Inc., Unsec. Sub. Notes, 7.25%,
10/01/10 1,570,000 1,675,834
---------------------------------------------------------------------------
FMR Corp., Bonds, 7.57%, 06/15/29 (Acquired
04/10/01-09/28/01; Cost $9,029,603)(a) 8,605,000 9,297,272
---------------------------------------------------------------------------
General Electric Capital Corp., Gtd. Sub.
Notes, 8.13%, 05/15/12 6,425,000 7,374,101
---------------------------------------------------------------------------
Heller Financial, Inc., Unsec. Notes, 7.38%,
11/01/09 23,150,000 25,362,214
---------------------------------------------------------------------------
Lehman Brothers Holdings Inc., Sr. Bonds,
7.88%, 08/15/10 5,955,000 6,501,967
---------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co., Unsec.
Unsub. Bonds, 6.75%, 04/15/11 6,950,000 7,182,964
---------------------------------------------------------------------------
National Rural Utilities Cooperative Finance
Corp., Sr. Notes, 6.00%, 05/15/06 7,100,000 7,226,167
---------------------------------------------------------------------------
Pinnacle Partners, Sr. Notes, 8.83%, 08/15/04
(Acquired 08/02/00; Cost $7,000,000)(a) 7,000,000 7,160,580
---------------------------------------------------------------------------
Qwest Capital Funding Inc.,
Gtd. Unsec. Notes, 7.63%, 08/03/21 9,000,000 8,469,540
---------------------------------------------------------------------------
Unsec. Gtd. Notes, 6.88%, 07/15/28 435,000 362,746
---------------------------------------------------------------------------
Tyco Capital Corp. (The) (Bermuda),
Notes, 6.50%, 02/07/06 2,160,000 2,236,205
---------------------------------------------------------------------------
Sr. Medium Term Notes, 5.91%, 11/23/05 6,800,000 6,904,856
===========================================================================
145,491,306
===========================================================================
ELECTRIC UTILITIES-3.54%
Arizona Public Service Co., Unsec. Notes,
6.25%, 01/15/05 5,000,000 5,065,050
---------------------------------------------------------------------------
CE Generation LLC, Sr. Sec. Sub. Notes,
7.42%, 12/15/18 7,351,500 6,491,595
---------------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
ELECTRIC UTILITIES-(CONTINUED)
CILCORP, Inc., Sr. Unsec. Bonds, 9.38%,
10/15/29 $ 9,000,000 $ 8,899,470
---------------------------------------------------------------------------
Cleveland Electric Illuminating Co. (The),
First Mortgage Bonds, 6.86%, 10/01/08 6,080,000 6,086,566
---------------------------------------------------------------------------
Series D, Sec. Notes, 7.88%, 11/01/17 7,300,000 7,501,699
---------------------------------------------------------------------------
CMS Panhandle Holding Co., Sr. Notes, 6.13%,
03/15/04 6,600,000 6,663,162
---------------------------------------------------------------------------
Commonwealth Edison Co.,
Series 92, First Mortgage Bonds, 7.63%,
04/15/13 4,000,000 4,223,200
---------------------------------------------------------------------------
Series 94, First Mortgage Notes, 7.50%,
07/01/13 9,300,000 9,772,998
---------------------------------------------------------------------------
Dominion Resources, Inc.-Series A, Sr. Unsec.
Unsub. Notes, 8.13%, 06/15/10 450,000 493,960
---------------------------------------------------------------------------
El Paso Electric Co.,
Series D, Sec. First Mortgage Bonds, 8.90%,
02/01/06 13,570,000 14,700,245
---------------------------------------------------------------------------
Series E, Sec. First Mortgage Bonds, 9.40%,
05/01/11 5,438,000 5,766,999
---------------------------------------------------------------------------
Empire District Electric Co. (The), Sr.
Notes, 7.70%, 11/15/04 8,550,000 9,129,262
---------------------------------------------------------------------------
Indiana Michigan Power Co.-Series C, Sr.
Unsec. Notes, 6.13%, 12/15/06 5,700,000 5,657,820
---------------------------------------------------------------------------
Kincaid Generation LLC, Sec. Bonds, 7.33%,
06/15/20 (Acquired 04/30/98; Cost
$3,346,223)(a) 3,337,978 3,110,495
---------------------------------------------------------------------------
Mirant Corp., Sr. Notes, 7.90%, 07/15/09
(Acquired 02/11/00-09/28/01; Cost
$4,071,299)(a) 4,105,000 3,663,713
---------------------------------------------------------------------------
Niagara Mohawk Holdings Inc., First Mortgage
Notes, 7.75%, 05/15/06 3,700,000 3,956,040
---------------------------------------------------------------------------
Niagara Mohawk Power Corp.-Series H, Sr.
Unsec. Disc. Notes, 8.50%, 07/01/10(d) 11,900,000 10,891,951
---------------------------------------------------------------------------
NRG Energy, Inc., Sr. Unsec. Notes, 7.75%,
04/01/11 8,450,000 8,129,576
---------------------------------------------------------------------------
Panhandle Eastern Pipe Line, Notes, 7.88%,
08/15/04 1,500,000 1,565,535
---------------------------------------------------------------------------
Public Service Company of New Mexico- Series
A, Sr. Unsec. Notes, 7.10%, 08/01/05 7,850,000 8,072,626
---------------------------------------------------------------------------
Sutton Bridge Financing Ltd. (United
Kingdom), Gtd. Euro Bonds, 8.63%,
06/30/22(e) GBP 3,000,000 4,649,059
---------------------------------------------------------------------------
Texas-New Mexico Power Co., Sr. Sec. Notes,
6.25%, 01/15/09 5,800,000 5,252,190
===========================================================================
139,743,211
===========================================================================
GAS UTILITIES-0.84%
National Fuel Gas Co.-Series D, Medium Term
Notes, 6.30%, 05/27/08 8,600,000 8,405,726
---------------------------------------------------------------------------
Northern Border Partners, L.P., Sr. Unsec.
Gtd. Notes, 7.10%, 03/15/11 3,500,000 3,408,720
---------------------------------------------------------------------------
Nova Gas Transmission Ltd. (Canada), Yankee
Deb., 8.50%, 12/15/12 5,015,000 5,607,372
---------------------------------------------------------------------------
ONEOK, Inc., Unsec. Notes, 7.75%, 08/15/06 3,100,000 3,321,340
---------------------------------------------------------------------------
|
FS-3
PRINCIPAL MARKET
AMOUNT VALUE
GAS UTILITIES-(CONTINUED)
Tennessee Gas Pipeline Co., Unsec. Deb.,
7.63%, 04/01/37 $11,000,000 $ 10,341,870
---------------------------------------------------------------------------
Westcoast Energy Inc. (Canada)-Series V,
Unsec. Deb., 6.45%, 12/18/06(e) CAD 3,000,000 1,987,114
===========================================================================
33,072,142
===========================================================================
INDUSTRIAL CONGLOMERATES-0.03%
Vodafone Finance B.V. (Netherlands), Unsec.
Unsub. Gtd. Euro Bonds, 4.75%,
05/27/09(e) EUR 1,300,000 1,100,895
===========================================================================
INTEGRATED OIL & GAS-1.02%
El Paso CGP Co., Sr. Putable Unsec. Deb.,
6.70%, 02/15/27 18,900,000 18,830,637
---------------------------------------------------------------------------
Occidental Petroleum Corp., Sr. Unsec. Notes,
7.38%, 11/15/08 7,360,000 7,653,885
---------------------------------------------------------------------------
7.65%, 02/15/06 2,635,000 2,807,276
---------------------------------------------------------------------------
Petro-Canada (Canada), Yankee Deb., 9.25%,
10/15/21 9,300,000 11,153,211
===========================================================================
40,445,009
===========================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.73%
AT&T Canada Inc. (Canada),
Sr. Disc. Yankee Notes, 9.95%, 06/15/08(d) 6,000,000 2,955,000
---------------------------------------------------------------------------
Sr. Unsec. Sub. Yankee Notes, 7.63%,
03/15/05 10,100,000 6,527,125
---------------------------------------------------------------------------
Sr. Unsec. Unsub. Notes, 7.15%,
09/23/04(e) CAD 1,200,000 491,958
---------------------------------------------------------------------------
Sr. Unsec. Yankee Notes, 7.65%, 09/15/06 5,200,000 3,308,500
---------------------------------------------------------------------------
MCI Communications Corp., Sr. Unsec. Putable
Deb., 7.13%, 06/15/27 3,650,000 3,792,898
---------------------------------------------------------------------------
Olivetti International Finance N.V.-Series E
(Netherlands), Gtd. Medium Term Euro Notes,
6.13%, 07/30/09(e) EUR 3,210,000 2,787,268
---------------------------------------------------------------------------
Sprint Corp., Deb., 9.00%, 10/15/19 2,200,000 2,352,570
---------------------------------------------------------------------------
Teleglobe Canada Inc. (Canada), Unsec. Deb.,
8.35%, 06/20/03(e) CAD 1,000,000 575,867
---------------------------------------------------------------------------
TELUS Corp. (Canada), Yankee Notes, 8.00%,
06/01/11 5,385,000 5,694,691
---------------------------------------------------------------------------
WorldCom, Inc.-WorldCom Group, Notes, 8.00%,
05/15/06 345,000 368,774
===========================================================================
28,854,651
===========================================================================
LIFE & HEALTH INSURANCE-1.32%
American General Corp.,
Sr. Notes, 6.63%, 02/15/29 7,030,000 6,941,492
---------------------------------------------------------------------------
Unsec. Notes, 7.50%, 07/15/25 4,395,000 4,804,966
---------------------------------------------------------------------------
American General Finance Corp.,
Sr. Putable Notes, 8.45%, 10/15/09 14,860,000 16,794,178
---------------------------------------------------------------------------
Sr. Unsec. Putable Notes, 8.13%, 08/15/09 7,205,000 7,987,823
---------------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
LIFE & HEALTH INSURANCE-(CONTINUED)
Prudential Funding, LLC, Medium Term Notes,
6.60%, 05/15/08 (Acquired 05/09/01; Cost
$2,097,564)(a) $ 2,100,000 $ 2,133,180
---------------------------------------------------------------------------
Sun Canada Financial Co., Gtd. Sub. Bonds,
6.63%, 12/15/07 (Acquired 10/14/99; Cost
$1,402,095)(a) 1,500,000 1,472,793
---------------------------------------------------------------------------
Torchmark Corp., Notes,
7.38%, 08/01/13 3,000,000 2,998,260
---------------------------------------------------------------------------
7.88%, 05/15/23 9,200,000 9,145,628
===========================================================================
52,278,320
===========================================================================
MANAGED HEALTH CARE-0.26%
Wellpoint Health Networks Inc., Sr. Unsec.
Notes, 6.38%, 06/15/06 10,000,000 10,177,600
===========================================================================
MULTI-UTILITIES-0.76%
Dynegy-Roseton Danskamme, Gtd. Pass Through
Ctfs., 7.67%, 11/08/16 11,500,000 9,401,250
---------------------------------------------------------------------------
UtiliCorp United Inc., Sr. Unsec. Putable
Notes, 6.70%, 10/15/06 6,350,000 6,382,766
---------------------------------------------------------------------------
Williams Cos., Inc. (The), Sr. Unsec. PATS,
6.75%, 01/15/06 5,525,000 5,530,194
---------------------------------------------------------------------------
Williams Gas Pipeline Central Inc., Sr.
Notes, 7.38%, 11/15/06 (Acquired 02/15/01;
Cost $8,572,240)(a) 8,300,000 8,562,944
===========================================================================
29,877,154
===========================================================================
OIL & GAS-0.18%
Canadian Oil Sands Ltd., (Canada) Sr. Notes,
7.90%, 09/01/21 (Acquired 08/17/01; Cost
$7,162,659)(a) 7,175,000 7,171,484
===========================================================================
OIL & GAS DRILLING-0.29%
Global Marine Inc., Sr. Unsec. Notes, 7.13%,
09/01/07 11,100,000 11,440,104
===========================================================================
OIL & GAS EQUIPMENT & SERVICES-0.71%
Dynegy Holdings Inc., Sr. Unsec. Unsub.
Notes, 6.88%, 04/01/11 6,160,000 5,128,200
---------------------------------------------------------------------------
Kinder Morgan Energy Partners, L.P., Sr.
Unsec. Notes, 6.30%, 02/01/09 8,400,000 8,230,404
---------------------------------------------------------------------------
Kinder Morgan, Inc., Unsec. Putable Deb.,
7.35%, 08/01/26 7,800,000 8,318,154
---------------------------------------------------------------------------
National-Oilwell, Inc., Sr. Unsec. Notes,
6.50%, 03/15/11 2,750,000 2,689,088
---------------------------------------------------------------------------
Smith International, Inc., Notes, 6.75%,
02/15/11 3,750,000 3,649,088
===========================================================================
28,014,934
===========================================================================
OIL & GAS EXPLORATION & PRODUCTION-1.39%
Anadarko Petroleum Corp., Unsec. Putable
Deb., 7.73%, 09/15/26 8,250,000 8,706,225
---------------------------------------------------------------------------
Anderson Exploration Ltd. (Canada), Unsec.
Sub. Yankee Notes, 6.75%, 03/15/11 7,075,000 6,850,793
---------------------------------------------------------------------------
Canadian Natural Resources Ltd. (Canada),
Unsec. Yankee Notes, 6.70%, 07/15/11 6,850,000 6,696,081
---------------------------------------------------------------------------
|
FS-4
PRINCIPAL MARKET
AMOUNT VALUE
OIL & GAS EXPLORATION & PRODUCTION-(CONTINUED)
Devon Financing Corp., Unsec. Gtd. Deb.,
7.88%, 09/30/31 (Acquired 09/28/01-
11/01/01; Cost $12,389,639)(a) $12,265,000 $ 12,448,852
---------------------------------------------------------------------------
Louis Dreyfus Natural Gas Corp., Unsec.
Notes, 6.88%, 12/01/07 6,470,000 6,578,308
---------------------------------------------------------------------------
Nexen Inc. (Canada), Unsec. Unsub. Yankee
Notes, 7.40%, 05/01/28 10,400,000 9,675,016
---------------------------------------------------------------------------
Noble Affiliates Inc., Sr. Unsec. Deb.,
7.25%, 08/01/97 2,600,000 2,212,756
---------------------------------------------------------------------------
Talisman Energy Inc. (Canada), Unsec. Unsub.
Yankee Deb., 7.13%, 06/01/07 1,500,000 1,539,945
===========================================================================
54,707,976
===========================================================================
OIL & GAS REFINING & MARKETING-0.55%
Petroleos Mexicanos (Mexico), Series P,
Unsec. Putable Unsub. Yankee Notes, 9.50%,
09/15/27 14,025,000 15,157,519
---------------------------------------------------------------------------
Sr. Unsec. Gtd. Yankee Bonds, 9.38%,
12/02/08 6,295,000 6,716,765
===========================================================================
21,874,284
===========================================================================
PACKAGED FOODS-0.35%
ConAgra, Inc., Sr. Unsec. Putable Notes,
7.13%, 10/01/26 12,755,000 13,667,110
===========================================================================
PHARMACEUTICALS-0.37%
Johnson & Johnson, Unsec. Deb., 6.95%,
09/01/29 5,080,000 5,414,264
---------------------------------------------------------------------------
Merck & Co., Inc., Unsec. Deb.,
5.95%, 12/01/28 4,255,000 4,023,017
---------------------------------------------------------------------------
6.40%, 03/01/28 5,080,000 5,094,783
===========================================================================
14,532,064
===========================================================================
PROPERTY & CASUALTY INSURANCE-0.91%
Allstate Financial Global Funding, Notes,
6.50%, 06/14/11 (Acquired 06/07/01; Cost
$11,297,688)(a) 11,315,000 11,476,578
---------------------------------------------------------------------------
Florida Windstorm Underwriting Association-
Series 1999A, Sr. Sec. Notes, 7.13%,
02/25/19 (Acquired 04/25/01-05/03/01; Cost
$14,660,688)(a) 14,635,000 14,970,727
---------------------------------------------------------------------------
Terra Nova Insurance (United Kingdom)
Holding, Sr. Unsec. Gtd. Yankee Notes,
7.00%, 05/15/08 2,350,000 2,089,197
---------------------------------------------------------------------------
7.20%, 08/15/07 7,000,000 6,461,840
---------------------------------------------------------------------------
Travelers Property Casualty Corp., Sr. Unsec.
Notes, 6.75%, 11/15/06 700,000 732,725
===========================================================================
35,731,067
===========================================================================
PUBLISHING & PRINTING-0.70%
News America Holdings, Inc.,
Notes, 8.45%, 08/01/34 3,325,000 3,582,122
---------------------------------------------------------------------------
Sr. Gtd. Deb., 9.25%, 02/01/13 8,250,000 9,498,555
---------------------------------------------------------------------------
Sr. Unsec. Gtd. Putable Bonds, 7.43%,
10/01/26 4,950,000 5,165,375
---------------------------------------------------------------------------
Unsec. Deb., 7.75%, 01/20/24 9,450,000 9,303,242
===========================================================================
27,549,294
===========================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
RAILROADS-0.56%
Consolidated Rail Corp., Deb., 9.75%,
06/15/20 $ 9,300,000 $ 11,508,006
---------------------------------------------------------------------------
Norfolk Southern Corp., Notes, 7.05%,
05/01/37 10,000,000 10,582,300
===========================================================================
22,090,306
===========================================================================
REAL ESTATE INVESTMENT TRUSTS-0.38%
ERP Operating L.P., Unsec. Notes, 7.13%,
10/15/17 3,250,000 3,047,590
---------------------------------------------------------------------------
Spieker Properties LP, Unsec. Deb., 7.50%,
10/01/27 7,800,000 7,489,950
---------------------------------------------------------------------------
Spieker Properties, Inc., Unsec. Unsub. Deb.,
7.35%, 12/01/17 4,600,000 4,439,644
===========================================================================
14,977,184
===========================================================================
REINSURANCE-0.43%
GE Global Insurance Holdings Corp., Unsec.
Notes, 7.75%, 06/15/30 15,225,000 17,112,291
===========================================================================
SOVEREIGN DEBT-0.52%
British Columbia (Province of) (Canada),
Unsec. Unsub. Yankee Notes, 5.38%, 10/29/08 2,750,000 2,740,045
---------------------------------------------------------------------------
Hydro-Quebec-Series B (Canada), Gtd. Medium
Term Yankee Notes, 8.62%, 12/15/11 5,000,000 5,948,350
---------------------------------------------------------------------------
Manitoba (Province of) (Canada)- Series EM,
Unsec. Unsub. Yankee Notes, 7.50%, 02/22/10 700,000 790,653
---------------------------------------------------------------------------
Ontario (Province of) (Canada), Sr. Unsec.
Unsub. Notes, 5.50%, 10/01/08 5,800,000 5,822,910
---------------------------------------------------------------------------
Quebec (Province of) (Canada), Yankee Deb.,
7.50%, 07/15/23 4,810,000 5,323,997
===========================================================================
20,625,955
===========================================================================
TELECOMMUNICATIONS EQUIPMENT-0.59%
Nortel Networks Corp. (Canada), Sr. Conv.
Unsec. Gtd. Yankee Notes, 4.25%, 09/01/08
(Acquired 08/09/01-08/15/01; Cost
$24,152,979)(a) 24,000,000 23,220,000
===========================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.04%
Bell Mobility Cellular Inc. (Canada), Unsec.
Deb., 6.55%, 06/02/08(e) CAN 2,500,000 1,615,827
===========================================================================
Bonds & Notes (Cost $1,170,346,448) 1,154,607,533
===========================================================================
SHARES
STOCKS & OTHER EQUITY INTERESTS-56.24%
ADVERTISING-2.55%
Interpublic Group of Cos., Inc. (The) 810,000 23,927,400
---------------------------------------------------------------------------
Lamar Advertising Co.(f) 908,000 38,444,720
---------------------------------------------------------------------------
Omnicom Group Inc. 426,000 38,063,100
===========================================================================
100,435,220
===========================================================================
AEROSPACE & DEFENSE-0.62%
United Technologies Corp. 379,600 24,533,548
===========================================================================
|
FS-5
MARKET
SHARES VALUE
BANKS-1.74%
Bank of New York Co., Inc. (The) 603,000 $ 24,602,400
---------------------------------------------------------------------------
Mellon Financial Corp. 397,300 14,946,426
---------------------------------------------------------------------------
PNC Financial Services Group 516,700 29,038,540
===========================================================================
68,587,366
===========================================================================
BIOTECHNOLOGY-1.00%
Genzyme Corp.(f) 660,700 39,549,502
===========================================================================
BROADCASTING & CABLE TV-1.84%
Clear Channel Communications, Inc.(f) 450,000 22,909,500
---------------------------------------------------------------------------
Hispanic Broadcasting Corp.(f) 615,800 15,702,900
---------------------------------------------------------------------------
Univision Communications Inc.-Class A(f) 842,600 34,091,596
===========================================================================
72,703,996
===========================================================================
COMPUTER STORAGE & PERIPHERALS-0.28%
EMC Corp.(f) 827,000 11,114,880
===========================================================================
CONSTRUCTION & ENGINEERING-0.47%
Quanta Services, Inc.(f) 1,210,000 18,670,300
===========================================================================
DATA PROCESSING SERVICES-1.03%
Concord EFS, Inc.(f) 626,400 20,533,392
---------------------------------------------------------------------------
DST Systems, Inc.(f) 402,000 20,039,700
===========================================================================
40,573,092
===========================================================================
DIVERSIFIED FINANCIAL SERVICES-6.38%
American Express Co. 306,000 10,921,140
---------------------------------------------------------------------------
Citigroup Inc. 1,421,433 71,753,938
---------------------------------------------------------------------------
Fannie Mae 251,800 20,018,100
---------------------------------------------------------------------------
Freddie Mac 325,900 21,313,860
---------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 229,600 21,295,400
---------------------------------------------------------------------------
J.P. Morgan Chase & Co. 430,300 15,641,405
---------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 653,000 34,034,360
---------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 445,600 24,926,864
---------------------------------------------------------------------------
State Street Corp. 297,900 15,565,275
---------------------------------------------------------------------------
Waddell & Reed Financial, Inc.-Class A 499,000 16,067,800
===========================================================================
251,538,142
===========================================================================
ELECTRIC UTILITIES-1.10%
AES Corp. (The)(f) 541,000 8,845,350
---------------------------------------------------------------------------
Calpine Corp.(f) 896,000 15,043,840
---------------------------------------------------------------------------
Duke Energy Corp. 358,000 14,055,080
---------------------------------------------------------------------------
Mirant Corp.(f) 331,390 5,308,868
===========================================================================
43,253,138
===========================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-0.43%
Sanmina-SCI Corp.(f) 852,700 16,968,730
===========================================================================
FOOD RETAIL-0.51%
Safeway Inc.(f) 477,500 19,935,625
===========================================================================
GAS UTILITIES-0.35%
El Paso Corp. 314,000 14,007,540
===========================================================================
|
MARKET
SHARES VALUE
GENERAL MERCHANDISE STORES-2.49%
BJ's Wholesale Club, Inc.(f) 415,600 $ 18,327,960
---------------------------------------------------------------------------
Target Corp. 1,011,300 41,513,865
---------------------------------------------------------------------------
Wal-Mart Stores, Inc. 669,000 38,500,950
===========================================================================
98,342,775
===========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-0.52%
Cardinal Health, Inc. 319,500 20,658,870
===========================================================================
HEALTH CARE EQUIPMENT-0.83%
Baxter International Inc. 610,800 32,757,204
===========================================================================
HEALTH CARE FACILITIES-1.13%
HCA Inc. 576,000 22,199,040
---------------------------------------------------------------------------
Tenet Healthcare Corp.(f) 381,000 22,372,320
===========================================================================
44,571,360
===========================================================================
HOME IMPROVEMENT RETAIL-1.56%
Home Depot, Inc. (The) 728,300 37,150,583
---------------------------------------------------------------------------
Lowe's Cos., Inc. 527,300 24,471,993
===========================================================================
61,622,576
===========================================================================
HOTELS-0.00%
Wyndham International, Inc. Voting Trust
(Acquired 08/27/99-12/04/01; Cost
$275,189)(a)(c) 3,167 103,233
===========================================================================
INDUSTRIAL CONGLOMERATES-3.01%
General Electric Co. 1,820,800 72,977,664
---------------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 775,700 45,688,730
===========================================================================
118,666,394
===========================================================================
INSURANCE BROKERS-0.84%
Marsh & McLennan Cos., Inc. 307,800 33,073,110
===========================================================================
INTEGRATED OIL & GAS-1.67%
ChevronTexaco Corp. 282,400 25,305,864
---------------------------------------------------------------------------
Exxon Mobil Corp. 687,900 27,034,470
---------------------------------------------------------------------------
TotalFinaElf S.A. (France) 93,700 13,402,539
===========================================================================
65,742,873
===========================================================================
INTEGRATED TELECOMMUNICATION SERVICES-3.28%
BellSouth Corp. 737,300 28,127,995
---------------------------------------------------------------------------
Cypress Communications, Inc. Voting Trust
(Acquired 01/05/00; Cost $45,180)(a)(c)(f) 1,070 1,284
---------------------------------------------------------------------------
Qwest Communications International Inc. 725,040 10,244,815
---------------------------------------------------------------------------
SBC Communications Inc. 850,700 33,321,919
---------------------------------------------------------------------------
Telecom Italia S.p.A. (Italy) 2,642,300 14,137,626
---------------------------------------------------------------------------
Telefonica, S.A. (Spain)(f) 1,296,993 17,383,600
---------------------------------------------------------------------------
Verizon Communications Inc. 552,900 26,240,634
===========================================================================
129,457,873
===========================================================================
INTERNET SOFTWARE & SERVICES-0.89%
Check Point Software Technologies Ltd.
(Israel)(f) 621,000 24,771,690
---------------------------------------------------------------------------
|
FS-6
MARKET
SHARES VALUE
INTERNET SOFTWARE & SERVICES-(CONTINUED)
VeriSign, Inc.(f) 272,500 $ 10,365,900
===========================================================================
35,137,590
===========================================================================
IT CONSULTING & SERVICES-0.66%
SunGard Data Systems Inc.(f) 896,100 25,924,173
===========================================================================
LIFE & HEALTH INSURANCE-0.97%
AFLAC, Inc. 531,500 13,053,640
---------------------------------------------------------------------------
Prudential Financial, Inc.(f) 270,900 8,991,171
---------------------------------------------------------------------------
Sun Life Financial Services of Canada
(Canada) 756,800 16,143,101
===========================================================================
38,187,912
===========================================================================
MANAGED HEALTH CARE-0.32%
Anthem, Inc.(f) 253,300 12,538,350
===========================================================================
MOVIES & ENTERTAINMENT-1.40%
AOL Time Warner Inc.(f) 647,300 20,778,330
---------------------------------------------------------------------------
Viacom Inc.-Class B(f) 783,659 34,598,545
===========================================================================
55,376,875
===========================================================================
MULTI-LINE INSURANCE-1.82%
American International Group, Inc. 554,960 44,063,824
---------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 439,000 27,582,370
===========================================================================
71,646,194
===========================================================================
MULTI-UTILITIES-0.58%
Dynegy Inc.-Class A 321,000 8,185,500
---------------------------------------------------------------------------
Williams Cos., Inc. (The) 575,000 14,674,000
===========================================================================
22,859,500
===========================================================================
NETWORKING EQUIPMENT-0.77%
Cisco Systems, Inc.(f) 1,671,200 30,265,432
===========================================================================
OIL & GAS EXPLORATION & PRODUCTION-1.45%
Anadarko Petroleum Corp. 189,000 10,744,650
---------------------------------------------------------------------------
Apache Corp. 235,400 11,741,752
---------------------------------------------------------------------------
EOG Resources, Inc. 299,600 11,717,356
---------------------------------------------------------------------------
Kerr-McGee Corp. 156,700 8,587,160
---------------------------------------------------------------------------
Kerr-McGee Corp.-$1.83 Pfd. DECS 390,000 14,478,750
===========================================================================
57,269,668
===========================================================================
PACKAGED FOODS-0.41%
Kraft Foods, Inc.-Class A 480,700 16,358,221
===========================================================================
PHARMACEUTICALS-6.27%
Abbott Laboratories 564,000 31,443,000
---------------------------------------------------------------------------
Allergan, Inc. 324,000 24,316,200
---------------------------------------------------------------------------
American Home Products Corp. 306,600 18,812,976
---------------------------------------------------------------------------
|
MARKET
SHARES VALUE
PHARMACEUTICALS-(CONTINUED)
Bristol-Myers Squibb Co. 377,000 $ 19,227,000
---------------------------------------------------------------------------
Johnson & Johnson 598,200 35,353,620
---------------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(f) 314,800 20,332,932
---------------------------------------------------------------------------
Merck & Co., Inc. 409,800 24,096,240
---------------------------------------------------------------------------
Pfizer Inc. 1,057,100 42,125,435
---------------------------------------------------------------------------
Pharmacia Corp. 745,900 31,812,635
===========================================================================
247,520,038
===========================================================================
PROPERTY & CASUALTY INSURANCE-0.50%
MGIC Investment Corp. 322,000 19,873,840
===========================================================================
SEMICONDUCTOR EQUIPMENT-0.27%
Applied Materials, Inc.(f) 270,000 10,827,000
===========================================================================
SEMICONDUCTORS-2.23%
Analog Devices, Inc.(f) 688,300 30,553,637
---------------------------------------------------------------------------
Intel Corp. 1,146,700 36,063,715
---------------------------------------------------------------------------
Texas Instruments Inc. 760,700 21,299,600
===========================================================================
87,916,952
===========================================================================
SPECIALTY STORES-0.89%
Bed Bath & Beyond Inc.(f) 1,032,500 35,001,750
===========================================================================
SYSTEMS SOFTWARE-1.56%
Microsoft Corp.(f) 605,900 40,152,993
---------------------------------------------------------------------------
Oracle Corp.(f) 1,536,800 21,223,208
===========================================================================
61,376,201
===========================================================================
TELECOMMUNICATIONS EQUIPMENT-0.98%
Comverse Technology, Inc.(f) 614,000 13,735,180
---------------------------------------------------------------------------
JDS Uniphase Corp.(f) 664,520 5,801,260
---------------------------------------------------------------------------
Nokia Oyj-ADR (Finland) 775,000 19,010,750
===========================================================================
38,547,190
===========================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.64%
NTT DoCoMo, Inc. (Japan) (Acquired
06/14/00-12/01/00; Cost $23,665,238)(a) 844 9,871,345
---------------------------------------------------------------------------
Vodafone Group PLC (United Kingdom) 5,907,285 15,460,310
===========================================================================
25,331,655
===========================================================================
Total Stocks & Other Equity Interests
(Cost $2,055,551,650) 2,218,825,888
===========================================================================
PRINCIPAL
AMOUNT
U.S. TREASURY SECURITIES-3.92%
U.S. TREASURY NOTES-3.19%
6.75%, 05/15/05 $24,900,000 27,088,959
---------------------------------------------------------------------------
|
FS-7
PRINCIPAL MARKET
AMOUNT VALUE
U.S. TREASURY NOTES-(CONTINUED)
6.50%, 08/15/05 to 10/15/06(g) $27,700,000 $ 30,127,160
---------------------------------------------------------------------------
6.88%, 05/15/06 2,700,000 2,976,264
---------------------------------------------------------------------------
6.13%, 08/15/07(g) 6,150,000 6,618,261
---------------------------------------------------------------------------
5.75%, 08/15/10 39,375,000 41,352,412
---------------------------------------------------------------------------
5.00%, 08/15/11 17,455,000 17,414,679
===========================================================================
125,577,735
===========================================================================
U.S. TREASURY BONDS-0.68%
6.13%, 11/15/27 to 08/15/29 25,425,000 26,943,296
===========================================================================
U.S. TREASURY STRIPS-0.05%
5.81%, 05/15/20(h) 5,900,000 1,981,751
===========================================================================
Total U.S. Treasury Securities (Cost
$151,041,811) 154,502,782
===========================================================================
U.S. GOVERNMENT AGENCY SECURITIES-5.06%
FEDERAL HOME LOAN BANK-0.04%
Unsec. Bonds,
5.13%, 03/06/06 1,670,000 1,698,473
===========================================================================
FEDERAL HOME LOAN MORTGAGE CORP.
(FHLMC)-1.59%
Jr. Unsec. Sub. Notes,
5.88%, 03/21/11 9,000,000 8,922,240
---------------------------------------------------------------------------
Pass Through Ctfs.,
6.50%, 08/01/03 to 05/01/29 29,234 29,616
---------------------------------------------------------------------------
6.00%, 06/01/29 459,132 452,819
---------------------------------------------------------------------------
7.00%, 07/01/29 to 09/01/31 17,226,585 17,566,363
---------------------------------------------------------------------------
Pass Through Ctfs.-TBA,
6.00%, 02/01/31(i) 7,550,000 7,566,516
---------------------------------------------------------------------------
6.50%, 02/01/32(i) 3,290,000 3,297,197
---------------------------------------------------------------------------
Unsec. Notes,
6.88%, 01/15/05 1,910,000 2,059,572
---------------------------------------------------------------------------
5.50%, 09/15/11 9,410,000 9,231,492
---------------------------------------------------------------------------
Unsec. Sub. Notes,
6.38%, 08/01/11 13,605,000 13,542,825
===========================================================================
62,668,640
===========================================================================
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA)-2.79%
FNMA Grantor Trust-Series 2000-T7, Class A1,
Pass Through Ctfs.,
7.50%, 02/25/41 1,824,714 1,893,450
---------------------------------------------------------------------------
Pass Through Ctfs.,
8.50%, 03/01/10 to 02/01/28 10,842,972 11,685,217
---------------------------------------------------------------------------
6.50%, 04/01/14 to 07/01/16 14,797,246 15,107,941
---------------------------------------------------------------------------
7.50%, 02/01/16 to 07/01/31 10,503,748 10,866,394
---------------------------------------------------------------------------
7.00%, 07/01/16 to 12/01/31 4,733,651 4,880,064
---------------------------------------------------------------------------
6.50%, 10/01/16 2,361,388 2,409,707
---------------------------------------------------------------------------
8.00%, 12/01/23 7,931,323 8,414,579
---------------------------------------------------------------------------
6.00%, 05/01/31 12,423,636 12,163,485
---------------------------------------------------------------------------
Pass Through Ctfs.-TBA,
6.50%, 02/01/32(i) 14,860,000 14,878,575
---------------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)-(CONTINUED)
Unsec. Notes,
5.13%, 02/13/04 $ 1,915,000 $ 1,971,110
---------------------------------------------------------------------------
7.00%, 07/15/05 2,310,000 2,510,693
---------------------------------------------------------------------------
6.38%, 06/15/09 7,040,000 7,418,963
---------------------------------------------------------------------------
Unsec. Notes,
6.00%, 05/15/11 2,569,000 2,612,622
---------------------------------------------------------------------------
Unsec. Sub. Notes,
5.50%, 05/02/06 12,800,000 13,120,000
===========================================================================
109,932,800
===========================================================================
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA)-0.64%
Pass Through Ctfs.,
6.50%, 10/15/08 to 07/15/31 10,864,207 10,929,456
---------------------------------------------------------------------------
7.00%, 10/15/08 to 02/15/31 7,644,013 7,831,348
---------------------------------------------------------------------------
6.00%, 11/15/08 531,546 545,499
---------------------------------------------------------------------------
8.00%, 11/15/30 to 01/20/31 910,481 951,147
---------------------------------------------------------------------------
7.50%, 12/20/30 to 01/15/31 5,021,990 5,193,808
===========================================================================
25,451,258
===========================================================================
Total U.S. Government Agency Securities
(Cost $198,038,769) 199,751,171
===========================================================================
ASSET-BACKED SECURITIES-1.99%
AIRLINES-0.60%
American Airlines, Inc.-Class A2, Series
2001-01, Pass Through Ctfs., 6.82%,
05/23/11 (Acquired 06/28/01; Cost
$5,806,974)(a) 5,713,501 5,319,326
---------------------------------------------------------------------------
American Airlines, Inc.-Series 87-A,
Equipment Trust Ctfs., 9.90%, 01/15/11 2,955,000 2,916,792
---------------------------------------------------------------------------
Northwest Airlines Inc.-Series 971B, Pass
Through Ctfs., 7.25%, 01/02/12 3,964,736 3,294,438
---------------------------------------------------------------------------
United Air Lines, Inc.-Series 002-Class A2,
Sec. Pass Through Ctfs., 7.19%, 04/01/11 11,090,000 9,276,674
---------------------------------------------------------------------------
United Air Lines, Inc.-Series 95A2, Pass
Through Ctfs., 9.56%, 10/19/18 3,750,000 2,923,988
===========================================================================
23,731,218
===========================================================================
AUTOMOBILE MANUFACTURERS-0.11%
DaimlerChrysler N.A. Holding Corp., Gtd. Rocs
Series CHR-1998-1, Collateral Trust,
6.50%, 08/01/18 4,537,216 4,272,492
===========================================================================
BANKS-0.27%
Premium Asset Trust-Series 2001-6, Sec.
Notes, 5.25%, 07/19/04 (Acquired 07/11/01;
Cost $10,546,061)(a) 10,560,000 10,764,494
===========================================================================
DIVERSIFIED FINANCIAL SERVICES-0.53%
Citicorp Lease-Class A2, Series 1999-1, Pass
Through Ctfs., 8.04%, 12/15/19 (Acquired
06/01/00-01/25/01; Cost $19,745,712)(a) 19,600,000 21,072,352
===========================================================================
ELECTRIC UTILITIES-0.48%
Beaver Valley II Funding Corp., SLOBS, Deb.,
9.00%, 06/01/17 12,500,000 13,850,875
---------------------------------------------------------------------------
|
FS-8
PRINCIPAL MARKET
AMOUNT VALUE
ELECTRIC UTILITIES-(CONTINUED)
Indiana Michigan Power Co.-Series F, SLOBS,
9.82%, 12/07/22 $ 4,468,421 $ 4,885,102
===========================================================================
18,735,977
===========================================================================
Total Asset-Backed Securities (Cost
$81,071,384) 78,576,533
===========================================================================
MARKET
SHARES VALUE
MONEY MARKET FUNDS-4.46%
STIC Liquid Assets Portfolio(j) 87,922,818 $ 87,922,818
---------------------------------------------------------------------------
|
MARKET
SHARES VALUE
STIC Prime Portfolio(j) 87,922,818 $ 87,922,818
===========================================================================
Total Money Market Funds (Cost
$175,845,636) 175,845,636
===========================================================================
TOTAL INVESTMENTS-100.94% (Cost
$3,831,895,698) 3,982,109,543
===========================================================================
OTHER ASSETS LESS LIABILITIES-(0.94%) (37,010,204)
===========================================================================
NET ASSETS-100.00% $3,945,099,339
___________________________________________________________________________
===========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt CAD - Canadian Dollars Conv. - Convertible Ctfs. - Certificates Deb. - Debentures DECS - Dividend Enhanced Convertible Stock Disc. - Discounted EUR - Euro GBP - British Pound Sterling Gtd. - Guaranteed PATS - Putable Asset Term Securities Pfd. - Preferred RAPS - Redeemable and Putable Securities Sec. - Secured SLOBS - Secured Lease Obligation Securities Sr. - Senior STRIPS - Separately Traded Registered Interest and Principal Security Sub. - Subordinated TBA - To Be Announced Unsec. - Unsecured Unsub. - Unsubordinated |
Notes to Schedule of Investments:
(a) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The aggregate market value of these securities at
12/31/01 was $181,358,628, which represented 4.60% of the Fund's net
assets.
(b) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(d) Discounted bond at issue. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(e) Foreign denominated security. Par value is denominated in currency
indicated.
(f) Non-income producing security.
(g) A portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 11.
(h) STRIPS are traded on a discount basis. In such cases, the interest rate
shown represents the rate of discount paid or received at the time of
purchase by the Fund.
(i) Security purchased on forward commitment basis. These securities are
subject to dollar roll transactions. See Note 1 Section B.
(j) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-9
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2001
ASSETS:
Investments, at market value (cost
$3,831,895,698)* $3,982,109,543
-------------------------------------------------------------
Foreign currencies, at value (cost $102,344) 109,040
-------------------------------------------------------------
Receivables for:
Investments sold 3,114,675
-------------------------------------------------------------
Fund shares sold 5,815,017
-------------------------------------------------------------
Dividends and interest 29,025,782
-------------------------------------------------------------
Principal paydowns 1,995
-------------------------------------------------------------
Investment for deferred compensation plan 115,083
-------------------------------------------------------------
Collateral for securities loaned 381,254,853
-------------------------------------------------------------
Other assets 68,678
=============================================================
Total assets 4,401,614,666
=============================================================
LIABILITIES:
Payables for:
Investments purchased 25,459,428
-------------------------------------------------------------
Fund shares reacquired 39,209,359
-------------------------------------------------------------
Amount due custodian 3,231,814
-------------------------------------------------------------
Deferred compensation plan 115,082
-------------------------------------------------------------
Collateral upon return of securities loaned 381,254,853
-------------------------------------------------------------
Variation margin 1,487,225
-------------------------------------------------------------
Accrued distribution fees 3,840,731
-------------------------------------------------------------
Accrued trustees' fees 2,190
-------------------------------------------------------------
Accrued transfer agent fees 1,473,994
-------------------------------------------------------------
Accrued operating expenses 440,651
=============================================================
Total liabilities 456,515,327
=============================================================
Net assets applicable to shares outstanding $3,945,099,339
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $2,284,776,256
_____________________________________________________________
=============================================================
Class B $1,176,678,875
_____________________________________________________________
=============================================================
Class C $ 483,644,208
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 88,090,151
_____________________________________________________________
=============================================================
Class B 45,470,732
_____________________________________________________________
=============================================================
Class C 18,662,292
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 25.94
-------------------------------------------------------------
Offering price per share:
(Net asset value of $25.94 divided by
95.25%) $ 27.23
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 25.88
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 25.92
_____________________________________________________________
=============================================================
|
* At December 31, 2001, securities with an aggregate market value of $369,006,749 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended December 31, 2001
INVESTMENT INCOME:
Interest $ 115,900,232
------------------------------------------------------------
Dividends (net of foreign withholding tax of
$174,279) 18,723,340
------------------------------------------------------------
Dividends from affiliated money market funds 12,083,546
------------------------------------------------------------
Security lending income 1,456,640
============================================================
Total investment income 148,163,758
============================================================
EXPENSES:
Advisory fees 20,891,477
------------------------------------------------------------
Administrative services fees 316,318
------------------------------------------------------------
Custodian fees 377,960
------------------------------------------------------------
Distribution fees -- Class A 6,103,678
------------------------------------------------------------
Distribution fees -- Class B 12,597,477
------------------------------------------------------------
Distribution fees -- Class C 4,020,765
------------------------------------------------------------
Transfer agent fees -- Class A 5,209,102
------------------------------------------------------------
Transfer agent fees -- Class B 2,609,327
------------------------------------------------------------
Transfer agent fees -- Class C 832,825
------------------------------------------------------------
Trustees' fees 25,717
------------------------------------------------------------
Other 975,214
============================================================
Total expenses 53,959,860
============================================================
Less: Fees waived (19,008)
------------------------------------------------------------
Expenses paid indirectly (60,431)
============================================================
Net expenses 53,880,421
============================================================
Net investment income 94,283,337
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
FOREIGN CURRENCY CONTRACTS, FUTURES
CONTRACTS AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (196,882,994)
------------------------------------------------------------
Foreign currencies 278,005
------------------------------------------------------------
Foreign currency contracts 40,485
------------------------------------------------------------
Futures contracts (95,970,910)
------------------------------------------------------------
Option contracts written 2,476,744
============================================================
(290,058,670)
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (330,187,275)
------------------------------------------------------------
Foreign currencies (29,233)
------------------------------------------------------------
Foreign currency contracts 217,630
------------------------------------------------------------
Futures contracts 10,088,027
============================================================
(319,910,851)
============================================================
Net gain (loss) from investment securities,
foreign currencies, foreign currency
contracts, futures contracts and option
contracts (609,969,521)
============================================================
Net increase (decrease) in net assets
resulting from operations $(515,686,184)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-10
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2001 and 2000
2001 2000
-------------- --------------
OPERATIONS:
Net investment income $ 94,283,337 $ 93,697,007
----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, foreign currency contracts, futures
contracts and option contracts (290,058,670) 8,037,010
----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies, foreign
currency contracts and futures contracts (319,910,851) (315,446,121)
==============================================================================================
Net increase (decrease) in net assets resulting from
operations (515,686,184) (213,712,104)
==============================================================================================
Distributions to shareholders from net investment income:
Class A (65,286,370) (54,663,293)
----------------------------------------------------------------------------------------------
Class B (24,128,931) (22,292,342)
----------------------------------------------------------------------------------------------
Class C (8,269,309) (5,320,796)
----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A -- (39,511,188)
----------------------------------------------------------------------------------------------
Class B -- (21,396,291)
----------------------------------------------------------------------------------------------
Class C -- (5,732,223)
----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 149,008,588 922,806,014
----------------------------------------------------------------------------------------------
Class B 11,560,034 291,069,331
----------------------------------------------------------------------------------------------
Class C 165,927,647 196,576,584
==============================================================================================
Net increase (decrease) in net assets (286,874,525) 1,047,823,692
==============================================================================================
NET ASSETS:
Beginning of year 4,231,973,864 3,184,150,172
==============================================================================================
End of year $3,945,099,339 $4,231,973,864
______________________________________________________________________________________________
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $4,131,589,736 $3,809,280,125
----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (3,258,853) 1,041,061
----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, foreign currency
contracts, futures contracts and option contracts (333,416,566) (36,532,402)
----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, foreign currency contracts and futures
contracts 150,185,022 458,185,080
==============================================================================================
$3,945,099,339 $4,231,973,864
______________________________________________________________________________________________
==============================================================================================
|
See Notes to Financial Statements.
FS-11
NOTES TO FINANCIAL STATEMENTS
December 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Balanced Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of twelve separate portfolios, each
having an unlimited number of shares of beneficial interest. 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 as high a total return as possible, consistent with preservation
of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 as of the close of the customary trading session 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/ event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. Premiums and discounts are amortized and/or accreted for financial reporting purposes.
On December 31, 2001, undistributed net investment income (loss) was increased by $2,709,385, undistributed net realized gains (losses) decreased by $6,825,494 and paid in capital increased by $4,116,109 as a result of foreign currency gain/loss reclassifications, bond premium catchup reclassifications and other reclassifications. Net assets of the Fund were unaffected by the reclassifications discussed above.
The Fund may engage in dollar roll transactions with respect to mortgage backed securities issued by GNMA, FNMA and FHLMC. In a dollar roll transaction, the Fund sells a mortgage backed security held in the Fund to a financial institution such as a bank or broker-dealer, and simultaneously agrees to repurchase a substantially similar security (same type, coupon and maturity) from the institution at a later date at an agreed upon price. The mortgage backed securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different prepayment histories. During the period between the sale and repurchase, the Fund will not be entitled to receive interest and principal payments on securities sold. Proceeds of
FS-12
the sale will be invested in short-term instruments, and the income from these investments, together with any additional fee income received on the sale, could generate income for the Fund exceeding the yield on the security sold.
Dollar roll transactions involve the risk that the market value of the securities retained by the Fund may decline below the price of the securities that the Fund has sold but is obligated to repurchase under the agreement. In the event the buyer of securities in a dollar roll transaction files for bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligation to repurchase the securities.
C. Distributions -- Distributions from income are declared and paid quarterly and are recorded on ex-dividend date. 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 from 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 had a capital loss carryforward of $294,839,562 which expires December 31, 2009. As of December 31, 2001 the Fund has a post-October capital loss deferral of $33,763,389 which will be recognized in the following tax year.
E. 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 the 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.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. Futures Contracts -- The Fund may purchase or sell futures contracts as a hedge against changes in market conditions. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities as collateral for the account of the broker (the Fund's agent in acquiring the futures position). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by "marking to market" on a daily basis to reflect the market value of the contracts at the end of each day's trading. Variation margin payments are made or received depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund's basis in the contract. Risks include the possibility of an illiquid market and that a change in value of the contracts may not correlate with changes in the value of the securities being hedged.
H. Covered Call Options -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded 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 written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received.
I. Put Options -- The Fund may purchase put options. By purchasing a put option, the Fund obtains the right (but not the obligation) to sell the option's underlying instrument at a fixed strike price. In return for this right, the Fund pays an option premium. The option's underlying instrument may be a security or a futures contract. Put options may be used by the Fund to hedge securities it owns by locking in a minimum price at which the Fund can sell. If security prices fall, the put option could be exercised to offset all or a portion of the Fund's resulting losses. At the same time, because the maximum the Fund has at risk is the cost of the option, purchasing put options does not eliminate the potential for the Fund to profit from an increase in the value of the securities hedged.
J. Expenses -- Distribution expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-CHANGE IN ACCOUNTING PRINCIPLE
As required, effective January 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premiums on debt securities.
FS-13
Prior to January 1, 2001, the Fund did not amortize premiums on debt securities.
The cumulative effect of this accounting change had no impact on total net
assets of the Fund, but resulted in a $3,608,026 reduction in the cost of
securities and a corresponding $3,608,026 increase in net unrealized gains and
losses, based on securities held by the Fund on January 1, 2001.
The effect of this change in 2001 was to decrease net investment income by
$3,126,156, increase net unrealized gains and losses by $1,771,427, increase net
realized gains and losses by $1,354,729. As a result, the net investment income
per share was decreased by $0.02, the net realized and unrealized gains and
losses per share was increased by $0.02 and the ratio of net investment income
to average net assets was decreased by 0.07%.
NOTE 3-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.75% of the first
$150 million of the Fund's average daily net assets, plus 0.50% of the Fund's
average daily net assets in excess of $150 million. Effective July 1, 2001, AIM
has voluntarily agreed to waive advisory fees of the Fund in the amount of 25%
of the advisory fee AIM receives from the affiliated money market fund of which
the Fund has invested. For the year ended December 31, 2001, AIM waived fees of
$19,008.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 2001, AIM was
paid $316,318 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 2001, AFS
was paid $2,696,880 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 and Class C shares of the Fund. The Trust 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
0.25% 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. 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. For the year ended December 31,
2001, the Class A, Class B and Class C shares paid AIM Distributors $6,103,678,
$12,597,477 and $4,020,765, respectively, as compensation under the Plans.
AIM Distributors received commissions of $640,756 from sales of the Class A
shares of the Fund during the year ended December 31, 2001. 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, 2001,
AIM Distributors received $139,887 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 2001, the Fund paid legal fees of $12,542
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 4-INDIRECT EXPENSES
For the year ended December 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $56,310 and reductions in custodian fees of $4,121 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $60,431.
NOTE 5-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 6-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. 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,
2001, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 7-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's total assets. Such loans are secured by collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Cash collateral pursuant to these loans is invested in short-term money market instruments or affiliated money market funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. It is the Fund's policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day. Therefore, the value
FS-14
of the collateral may be temporarily less than the value of the securities on
loan.
At December 31, 2001, securities with an aggregate value of $369,006,749 were
on loan to brokers. The loans were secured by cash collateral of $381,254,853,
received by the Fund and subsequently invested in affiliated money market funds
as follows: $190,627,426 in STIC Liquid Assets Portfolio and $190,627,427 in
STIC Prime Portfolio. For the year ended December 31, 2001, the Fund received
fees of $1,456,640 for securities lending.
NOTE 8-TAX COMPONENTS OF CAPITAL AND DISTRIBUTIONS TO SHAREHOLDERS
The tax character of distributions paid during 2001 and 2000 was a follows:
2001 2000
----------- ------------
Distributions paid from:
Ordinary income $97,684,610 $ 82,276,431
-----------------------------------------------------------
Long-term capital gain -- 66,639,702
===========================================================
$97,684,610 $148,916,133
___________________________________________________________
===========================================================
|
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Undistributed ordinary income $ 86,177
---------------------------------------------------------
Capital loss carryforward (294,839,562)
---------------------------------------------------------
Unrealized appreciation $ 108,262,988
=========================================================
$(186,490,397)
_________________________________________________________
=========================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales, the deferral of capital losses incurred after October 31, the realization for tax purposes of unrealized gains on certain forward foreign currency contracts and futures contracts and other deferrals.
NOTE 9-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, 2001 was
$3,216,405,904 and $2,783,916,331, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $377,282,297 ---------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (235,070,286) ========================================================== Net unrealized appreciation of investment securities $142,212,011 __________________________________________________________ ========================================================== Cost of investments for tax purposes is $3,839,897,532. |
NOTE 10-CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2001 are summarized as follows:
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
Beginning of year -- $ --
----------------------------------------------------------
Written 12,174 2,934,645
----------------------------------------------------------
Closed (4,440) (1,134,738)
----------------------------------------------------------
Exercised (1,194) (193,421)
----------------------------------------------------------
Expired (6,540) (1,606,486)
----------------------------------------------------------
End of year -- $ --
__________________________________________________________
==========================================================
|
NOTE 11-FUTURES CONTRACTS
On December 31, 2001, $13,150,000 principal amount of U.S. Treasury obligations were pledged as collateral to cover margin requirements for open futures contracts. Open futures contracts as of December 31, 2001 were as follows:
NO. OF MONTH/ UNREALIZED
CONTRACT CONTRACTS COMMITMENT MARKET VALUE DEPRECIATION
-------- --------- ------------- ------------ ------------
S&P 500 Index 589 March-02/long $169,219,700 $(30,952)
______________________________________________________________________________
==============================================================================
|
FS-15
NOTE 12-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2001 and 2000 were as follows:
2001 2000
---------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- --------------
Sold:
Class A 34,040,614 $ 943,182,575 44,686,844 $1,459,628,858
---------------------------------------------------------------------------------------------------------------------------
Class B 7,919,458 219,495,395 13,281,625 433,100,994
---------------------------------------------------------------------------------------------------------------------------
Class C 3,739,954 104,510,027 7,345,840 240,137,040
===========================================================================================================================
Issued as reinvestment of dividends:
Class A 2,389,321 61,645,850 2,771,578 87,115,195
---------------------------------------------------------------------------------------------------------------------------
Class B 842,160 21,707,525 1,260,443 39,350,153
---------------------------------------------------------------------------------------------------------------------------
Class C 287,483 7,300,252 313,857 9,736,859
===========================================================================================================================
Issued in connection with acquisitions:*
Class A 469,333 11,718,242 -- --
---------------------------------------------------------------------------------------------------------------------------
Class B 270,207 6,757,868 -- --
---------------------------------------------------------------------------------------------------------------------------
Class C 7,202,124 179,904,999 -- --
===========================================================================================================================
Reacquired:
Class A (32,130,426) (867,538,079) (19,211,948) (623,938,039)
---------------------------------------------------------------------------------------------------------------------------
Class B (8,836,782) (236,400,754) (5,548,847) (181,381,816)
---------------------------------------------------------------------------------------------------------------------------
Class C (4,731,502) (125,787,631) (1,639,854) (53,297,315)
===========================================================================================================================
11,461,944 $ 326,496,269 43,259,538 $1,410,451,929
___________________________________________________________________________________________________________________________
===========================================================================================================================
|
* As of the close of business on September 08, 2001, the Fund acquired all of the net assets of AIM Advisor Flex Fund pursuant to a plan of reorganization approved by AIM Advisor Flex Fund shareholders on August 17, 2001. The acquisition was accomplished by a tax-free exchange of 7,941,664 shares of the Fund for 16,429,881 shares of AIM Advisor Flex Fund outstanding as of the close of business on September 8, 2001. AIM Advisor Flex Fund net assets at that date of $198,381,109 including $8,302,767 of unrealized appreciation, were combined with those of the Fund. The aggregate net assets of the Fund immediately before the acquisition were $3,725,556,722.
FS-16
NOTE 13-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
2001(a) 2000(a) 1999(a) 1998(a) 1997
---------- ---------- ---------- ---------- --------
Net asset value, beginning of period $ 30.10 $ 32.69 $ 28.23 $ 25.78 $ 21.84
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.71(b) 0.92 0.82 0.71 0.60
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.14) (2.23) 4.46 2.45 4.66
=================================================================================================================================
Total from investment operations (3.43) (1.31) 5.28 3.16 5.26
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.73) (0.79) (0.82) (0.65) (0.55)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.49) -- (0.06) (0.77)
=================================================================================================================================
Total distributions (0.73) (1.28) (0.82) (0.71) (1.32)
=================================================================================================================================
Net asset value, end of period $ 25.94 $ 30.10 $ 32.69 $ 28.23 $ 25.78
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (11.36)% (4.18)% 19.04% 12.46% 24.41%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,284,776 $2,507,641 $1,800,350 $1,318,230 $683,633
=================================================================================================================================
Ratio of expenses to average net assets 1.01%(d) 0.96% 0.94% 0.95% 0.98%
=================================================================================================================================
Ratio of net investment income to average net assets 2.60%(b)(d) 2.80% 2.81% 2.81% 2.48%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 73% 55% 65% 43% 66%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premiums on debt securities. Had the Fund not amortized premiums
on debt securities, the net investment income per share would have been
$0.73 and the ratio of net investment income to average net assets would
have been 2.67%. In accordance with the AICPA Audit and Accounting Guide
for Investment Companies, per share and ratios for periods prior to January
1, 2001 have not been restated to reflect this change in presentation.
(c) Does not include sales charges.
(d) Ratios are based on average daily net assets of $2,441,471,059.
CLASS B
------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
2001(a) 2000(a) 1999(a) 1998(a) 1997
---------- ---------- ---------- -------- --------
Net asset value, beginning of period $ 30.01 $ 32.61 $ 28.18 $ 25.75 $ 21.83
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.50(b) 0.66 0.58 0.42 0.38
--------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.11) (2.23) 4.45 2.51 4.68
================================================================================================================================
Total from investment operations (3.61) (1.57) 5.03 2.93 5.06
================================================================================================================================
Less distributions:
Dividends from net investment income (0.52) (0.54) (0.60) (0.44) (0.37)
--------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.49) -- (0.06) (0.77)
================================================================================================================================
Total distributions (0.52) (1.03) (0.60) (0.50) (1.14)
================================================================================================================================
Net asset value, end of period $ 25.88 $ 30.01 $ 32.61 $ 28.18 $ 25.75
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(c) (12.01)% (4.93)% 18.08% 11.53% 23.42%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,176,679 $1,358,823 $1,183,215 $894,165 $486,506
================================================================================================================================
Ratio of expenses to average net assets 1.76%(d) 1.73% 1.75% 1.76% 1.79%
================================================================================================================================
Ratio of net investment income to average net assets 1.86%(b)(d) 2.03% 2.00% 2.00% 1.67%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate 73% 55% 65% 43% 66%
________________________________________________________________________________________________________________________________
================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premiums on debt securities. Had the Fund not amortized premiums
on debt securities, the net investment income per share would have been
$0.52 and the ratio of net investment income to average net assets would
have been 1.93%. In accordance with the AICPA Audit and Accounting Guide
for Investment Companies, per share and ratios for periods prior to January
1, 2001 have not been restated to reflect this change in presentation.
(c) Does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $1,259,747,718.
FS-17
NOTE 13-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
------------------------------------------------------------------
AUGUST 4, 1997
(DATE SALES
COMMENCED)
YEAR ENDED DECEMBER 31, TO
------------------------------------------------ DECEMBER 31,
2001(a) 2000(a) 1999(a) 1998(a) 1997
-------- -------- -------- -------- --------------
Net asset value, beginning of period $ 30.05 $ 32.65 $ 28.21 $ 25.76 $25.55
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.50(b) 0.66 0.58 0.42 0.16
--------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.11) (2.23) 4.46 2.53 1.01
================================================================================================================================
Total from investment operations (3.61) (1.57) 5.04 2.95 1.17
================================================================================================================================
Less distributions:
Dividends from net investment income (0.52) (0.54) (0.60) (0.44) (0.19)
--------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.49) -- (0.06) (0.77)
================================================================================================================================
Total distributions (0.52) (1.03) (0.60) (0.50) (0.96)
================================================================================================================================
Net asset value, end of period $ 25.92 $ 30.05 $ 32.65 $ 28.21 $25.76
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(c) (11.99)% (4.93)% 18.09% 11.60% 4.67%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $483,644 $365,510 $200,585 $114,163 $9,394
================================================================================================================================
Ratio of expenses to average net assets 1.76%(d) 1.73% 1.75% 1.73% 1.78%(e)
================================================================================================================================
Ratio of net investment income to average net assets 1.85%(b)(d) 2.03% 2.00% 2.03% 1.68%(e)
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate 73% 55% 65% 43% 66%
________________________________________________________________________________________________________________________________
================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premiums on debt securities. Had the Fund not amortized premiums
on debt securities, the net investment income per share would have been
$0.52 and the ratio of net investment income to average net assets would
have been 1.92%. In accordance with the AICPA Audit and Accounting Guide
for Investment Companies, per share and ratios for periods prior to January
1, 2001 have not been restated to reflect this change in presentation.
(c) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(d) Ratios are based on average daily net assets of $402,076,552.
(e) Annualized.
FS-18
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
AIM Basic Balanced Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Basic Balanced Fund (one of the funds constituting AIM Funds Group; hereafter referred to as the "Fund") at December 31, 2001, and the results of its operations, the changes in its net assets and the financial highlights for the period indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at December 31, 2001 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP February 14, 2002 Houston, Texas |
FS-19
SCHEDULE OF INVESTMENTS
December 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-61.95%
ADVERTISING-1.67%
Interpublic Group of Cos., Inc. (The) 18,100 $ 534,674
======================================================================
ALUMINUM-1.01%
Alcoa Inc. 9,100 323,505
======================================================================
APPAREL RETAIL-1.70%
Gap, Inc. (The) 39,000 543,660
======================================================================
BANKS-6.00%
Bank of America Corp. 10,300 648,385
----------------------------------------------------------------------
Bank One Corp. 16,000 624,800
----------------------------------------------------------------------
FleetBoston Financial Corp. 17,700 646,050
======================================================================
1,919,235
======================================================================
BUILDING PRODUCTS-2.01%
American Standard Cos. Inc.(a) 9,400 641,362
======================================================================
CONSTRUCTION & FARM MACHINERY-1.35%
Deere & Co. 9,900 432,234
======================================================================
CONSUMER ELECTRONICS-1.07%
Koninklijke (Royal) Philips Electronics
N.V.-ADR (Netherlands) 11,800 343,498
======================================================================
DATA PROCESSING SERVICES-3.55%
Ceridian Corp.(a) 33,000 618,750
----------------------------------------------------------------------
First Data Corp. 6,600 517,770
======================================================================
1,136,520
======================================================================
DIVERSIFIED CHEMICALS-1.30%
Du Pont (E. I.) de Nemours & Co. 9,800 416,598
======================================================================
DIVERSIFIED COMMERCIAL SERVICES-1.97%
H&R Block, Inc. 14,100 630,270
======================================================================
DIVERSIFIED FINANCIAL SERVICES-6.59%
American Express Co. 13,300 474,677
----------------------------------------------------------------------
Citigroup Inc. 9,900 499,752
----------------------------------------------------------------------
Freddie Mac 6,000 392,400
----------------------------------------------------------------------
J.P. Morgan Chase & Co. 11,200 407,120
----------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 4,000 223,760
----------------------------------------------------------------------
Stilwell Financial, Inc. 4,000 108,880
======================================================================
2,106,589
======================================================================
ELECTRIC UTILITIES-1.17%
PG&E Corp. 19,400 373,256
======================================================================
ENVIRONMENTAL SERVICES-2.22%
Waste Management, Inc. 22,200 708,402
======================================================================
|
MARKET
SHARES VALUE
FOOD RETAIL-1.95%
Kroger Co. (The)(a) 29,900 $ 624,013
======================================================================
GENERAL MERCHANDISE STORES-1.37%
Target Corp. 10,700 439,235
======================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-1.04%
McKesson Corp. 8,900 332,860
======================================================================
HOTELS-0.97%
Starwood Hotels & Resorts Worldwide, Inc. 10,400 310,440
======================================================================
HOUSEHOLD APPLIANCES-1.72%
Black & Decker Corp. (The) 14,600 550,858
======================================================================
INDUSTRIAL CONGLOMERATES-2.88%
Textron, Inc. 6,300 261,198
----------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 11,200 659,680
======================================================================
920,878
======================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.80%
AT&T Corp. 14,100 255,774
======================================================================
IT CONSULTING & SERVICES-1.05%
Electronic Data Systems Corp. 4,900 335,895
======================================================================
LIFE & HEALTH INSURANCE-1.94%
Prudential Financial, Inc.(a) 5,100 169,269
----------------------------------------------------------------------
UnumProvident Corp. 17,000 450,670
======================================================================
619,939
======================================================================
MANAGED HEALTH CARE-3.14%
Anthem, Inc.(a) 6,000 297,000
----------------------------------------------------------------------
CIGNA Corp. 3,900 361,335
----------------------------------------------------------------------
UnitedHealth Group Inc. 4,900 346,773
======================================================================
1,005,108
======================================================================
MOVIES & ENTERTAINMENT-1.29%
Walt Disney Co. (The) 19,900 412,328
======================================================================
OIL & GAS DRILLING-3.93%
Cooper Cameron Corp.(a) 10,800 435,888
----------------------------------------------------------------------
Pride International, Inc.(a) 20,600 311,060
----------------------------------------------------------------------
Transocean Sedco Forex Inc. 15,100 510,682
======================================================================
1,257,630
======================================================================
OIL & GAS EQUIPMENT & SERVICES-1.46%
Schlumberger Ltd. 8,500 467,075
======================================================================
PAPER PRODUCTS-0.87%
International Paper Co. 6,900 278,415
======================================================================
|
FS-20
MARKET
SHARES VALUE
PROPERTY & CASUALTY INSURANCE-1.63%
XL Capital Ltd.-Class A (Bermuda) 5,700 $ 520,752
======================================================================
REINSURANCE-0.98%
PartnerRe Ltd. (Bermuda) 5,800 313,200
======================================================================
SEMICONDUCTOR EQUIPMENT-0.80%
Applied Materials, Inc.(a) 6,400 256,640
======================================================================
SYSTEMS SOFTWARE-1.62%
Computer Associates International, Inc. 15,000 517,350
======================================================================
TELECOMMUNICATIONS EQUIPMENT-0.90%
Motorola, Inc. 19,100 286,882
======================================================================
Total Common Stocks & Other Equity
Interests (Cost $18,480,683) 19,815,075
======================================================================
PRINCIPAL
AMOUNT
U.S. DOLLAR DENOMINATED BONDS & NOTES-8.54%
BANKS-0.84%
Bank of America Corp., Sub. Notes, 9.38%,
09/15/09 $ 50,000 58,540
----------------------------------------------------------------------
Dresdner Bank New York, Unsec. Sub. Deb.,
7.25%, 09/15/15 100,000 104,560
----------------------------------------------------------------------
Firstar Bank N.A., Unsec. Sub. Notes, 7.13%,
12/01/09 100,000 104,789
======================================================================
267,889
======================================================================
BROADCASTING & CABLE TV-1.76%
Comcast Cable Communications, Unsec. Notes,
8.88%, 05/01/17 100,000 113,982
----------------------------------------------------------------------
Shaw Communications Inc. (Canada), Sr. Unsec.
Unsub. Yankee Notes, 8.25%, 04/11/10 175,000 185,215
----------------------------------------------------------------------
Time Warner Inc.,
Notes, 8.18%, 08/15/07 35,000 39,179
----------------------------------------------------------------------
Unsec. Deb., 8.05%, 01/15/16 150,000 169,759
----------------------------------------------------------------------
Turner Broadcasting System, Inc.-Class A, Sr.
Notes, 8.38%, 07/01/13 50,000 55,621
======================================================================
563,756
======================================================================
CONSUMER FINANCE-0.38%
Ford Motor Credit Co., Notes, 7.88%, 06/15/10 10,000 10,191
----------------------------------------------------------------------
General Motors Acceptance Corp., Bonds,
8.00%, 11/01/31 60,000 60,645
----------------------------------------------------------------------
Household Finance Corp., Unsec. Notes, 8.00%,
07/15/10 45,000 48,828
======================================================================
119,664
======================================================================
DIVERSIFIED FINANCIAL SERVICES-2.27%
AIG SunAmerica Global Financing VII, Notes,
5.85%, 08/01/08 (Acquired 09/28/01; Cost
$20,452)(b) 20,000 20,232
----------------------------------------------------------------------
Associates Corp. of North America, Sr. Deb.,
6.95%, 11/01/18 160,000 166,315
----------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
DIVERSIFIED FINANCIAL SERVICES-(CONTINUED)
FMR Corp., Bonds, 7.57%, 06/15/29 (Acquired
09/28/01; Cost $26,939)(b) $ 25,000 $ 27,011
----------------------------------------------------------------------
Heller Financial, Inc., Unsec. Notes, 7.38%,
11/01/09 400,000 438,224
----------------------------------------------------------------------
Lehman Brothers Holdings Inc., Sr. Bonds,
7.88%, 08/15/10 20,000 21,837
----------------------------------------------------------------------
Qwest Capital Funding Inc., Gtd. Unsec.
Notes, 7.63%, 08/03/21 40,000 37,642
----------------------------------------------------------------------
Tyco Capital Corp. (The) (Bermuda), Notes,
6.50%, 02/07/06 15,000 15,529
======================================================================
726,790
======================================================================
ELECTRIC UTILITIES-0.30%
Indiana Michigan Power Co. -- Series C, Sr.
Unsec. Notes, 6.13%, 12/15/06 80,000 79,408
----------------------------------------------------------------------
Mirant Corp., Sr. Notes, 7.90%, 07/15/09
(Acquired 09/28/01; Cost $20,700)(b) 20,000 17,850
======================================================================
97,258
======================================================================
INTEGRATED OIL & GAS-0.10%
Occidental Petroleum Corp., Sr. Unsec. Notes,
7.38%, 11/15/08 30,000 31,198
======================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.28%
TELUS Corp. (Canada), Yankee Notes, 8.00%,
06/01/11 85,000 89,888
======================================================================
LIFE & HEALTH INSURANCE-0.68%
American General Corp.,
Sr. Notes, 6.63%, 02/15/29 120,000 118,489
----------------------------------------------------------------------
Unsec. Notes, 7.50%, 07/15/25 50,000 54,664
----------------------------------------------------------------------
American General Finance Corp., Sr. Unsec.
Putable Notes, 8.13%, 08/15/09 40,000 44,346
======================================================================
217,499
======================================================================
OIL & GAS EXPLORATION & PRODUCTION-0.57%
Devon Financing Corp., Unsec. Gtd. Deb.,
7.88%, 09/30/31 (Acquired
09/28/01-11/01/01; Cost $81,054)(b) 80,000 81,199
----------------------------------------------------------------------
Louis Dreyfus Natural Gas Corp., Unsec.
Notes, 6.88%, 12/01/07 100,000 101,674
======================================================================
182,873
======================================================================
PHARMACEUTICALS-0.66%
Johnson & Johnson, Unsec. Deb., 6.95%,
09/01/29 70,000 74,606
----------------------------------------------------------------------
Merck & Co., Inc., Unsec. Deb.,
5.95%, 12/01/28 70,000 66,184
----------------------------------------------------------------------
6.40%, 03/01/28 70,000 70,204
======================================================================
210,994
======================================================================
|
FS-21
PRINCIPAL MARKET
AMOUNT VALUE
REINSURANCE-0.70%
GE Global Insurance Holdings Corp., Unsec.
Notes, 7.75%, 06/15/30 $ 200,000 $ 224,792
======================================================================
Total U.S. Dollar Denominated Non-
Convertible Bonds & Notes (Cost
$2,794,579) 2,732,601
======================================================================
U.S. GOVERNMENT AGENCY SECURITIES-19.13%
FEDERAL HOME LOAN BANK-0.64%
Unsec. Bonds,
5.13%, 03/06/06 200,000 203,410
======================================================================
FEDERAL HOME LOAN MORTGAGE CORP.
(FHLMC)-2.18%
Pass Through Ctfs.,
7.00%, 09/01/31 208,682 212,725
----------------------------------------------------------------------
Pass Through Ctfs.,
7.00%, 07/01/29 110,618 112,864
----------------------------------------------------------------------
Pass Through Ctfs.-TBA,
6.50%, 02/01/32(c) 370,000 370,809
======================================================================
696,398
======================================================================
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA)-16.00%
Pass Through Ctfs.,
6.50%, 10/01/16 282,660 288,452
----------------------------------------------------------------------
7.00%, 12/01/31 420,000 428,530
----------------------------------------------------------------------
Pass Through Ctfs.-TBA,
6.50%, 02/01/32(c) 800,000 801,000
----------------------------------------------------------------------
Unsec. Medium Term Notes,
6.87%, 07/17/07 2,250,000 2,397,578
----------------------------------------------------------------------
Unsec. Notes,
6.38%, 06/15/09 890,000 937,909
----------------------------------------------------------------------
Unsec. Notes,
6.00%, 05/15/11 260,000 264,415
======================================================================
5,117,884
======================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA)-0.31%
Pass Through Ctfs.-TBA,
6.50%, 02/01/32(c) $ 100,000 $ 100,469
======================================================================
Total U.S. Government Agency Securities
(Cost $6,208,747) 6,118,161
======================================================================
U.S. TREASURY SECURITIES-3.59%
U.S. TREASURY NOTES-3.28%
6.88%, 05/15/06 345,000 380,300
----------------------------------------------------------------------
5.75%, 08/15/10 175,000 183,788
----------------------------------------------------------------------
5.00%, 08/15/11 485,000 483,880
======================================================================
1,047,968
======================================================================
U.S. TREASURY BONDS-0.31%
6.13%, 08/15/29 95,000 100,804
======================================================================
Total U.S. Treasury Securities (Cost
$1,181,951) 1,148,772
======================================================================
SHARES
MONEY MARKET FUNDS-14.44%
STIC Liquid Assets Portfolio(d) 2,309,834 2,309,834
----------------------------------------------------------------------
STIC Prime Portfolio(d) 2,309,834 2,309,834
======================================================================
Total Money Market Funds (Cost
$4,619,668) 4,619,668
======================================================================
TOTAL INVESTMENTS-107.65% (Cost $33,285,628) 34,434,277
======================================================================
OTHER ASSETS LESS LIABILITIES-(7.65%) (2,446,644)
======================================================================
NET ASSETS-100.00% $31,987,633
______________________________________________________________________
======================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Ctfs. - Certificates Deb. - Debentures Gtd. - Guaranteed Sr. - Senior Sub. - Subordinated TBA - To Be Announced Unsec. - Unsecured Unsub. - Unsubordinated |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The aggregate market value of these securities at
12/31/01 was $146,292, which represented 0.46% of the Fund's net assets.
(c) Security purchased on forward commitment basis. These securities are
subject to dollar roll transactions. See Note 1 Section B.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-22
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2001
ASSETS:
Investments, at market value (cost $33,285,628) $34,434,277
------------------------------------------------------------
Receivables for:
Investments sold 255,231
------------------------------------------------------------
Fund shares sold 878,060
------------------------------------------------------------
Dividends and interest 176,475
------------------------------------------------------------
Investment for deferred compensation plan 1,093
------------------------------------------------------------
Other assets 15,446
============================================================
Total assets 35,760,582
============================================================
LIABILITIES:
Payables for:
Investments purchased 3,675,641
------------------------------------------------------------
Fund shares reacquired 18,911
------------------------------------------------------------
Deferred compensation plan 1,093
------------------------------------------------------------
Accrued distribution fees 26,516
------------------------------------------------------------
Accrued transfer agent fees 2,418
------------------------------------------------------------
Accrued operating expenses 48,370
============================================================
Total liabilities 3,772,949
============================================================
Net assets applicable to shares outstanding $31,987,633
============================================================
NET ASSETS:
Class A $10,752,672
____________________________________________________________
============================================================
Class B $16,067,349
____________________________________________________________
============================================================
Class C $ 5,167,612
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 1,000,690
____________________________________________________________
============================================================
Class B 1,495,156
____________________________________________________________
============================================================
Class C 480,819
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 10.75
------------------------------------------------------------
Offering price per share:
(Net asset value of $10.75 divided by
95.25%) $ 11.29
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 10.75
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 10.75
____________________________________________________________
============================================================
|
STATEMENT OF OPERATIONS
For the period September 28, 2001 (Date operations
commenced) through December 31, 2001
INVESTMENT INCOME:
Interest $ 60,552
------------------------------------------------------------
Dividends 42,408
------------------------------------------------------------
Dividends from affiliated money market funds 13,417
============================================================
Total investment income 116,377
============================================================
EXPENSES:
Advisory fees 29,174
------------------------------------------------------------
Administrative services fees 12,603
------------------------------------------------------------
Custodian fees 12,168
------------------------------------------------------------
Distribution fees -- Class A 5,240
------------------------------------------------------------
Distribution fees -- Class B 22,783
------------------------------------------------------------
Distribution fees -- Class C 7,127
------------------------------------------------------------
Transfer agent fees -- Class A 2,069
------------------------------------------------------------
Transfer agent fees -- Class B 3,043
------------------------------------------------------------
Transfer agent fees -- Class C 952
------------------------------------------------------------
Trustees' fees 1,983
------------------------------------------------------------
Printing 17,644
------------------------------------------------------------
Professional fees 31,670
------------------------------------------------------------
Other 2,574
============================================================
Total expenses 149,030
============================================================
Less: Fees waived and expenses reimbursed (65,504)
------------------------------------------------------------
Expenses paid indirectly (17)
============================================================
Net expenses 83,509
============================================================
Net investment income 32,868
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (124,267)
============================================================
Change in net unrealized appreciation of
investment securities 1,148,649
============================================================
Net gain from investment securities 1,024,382
============================================================
Net increase in net assets resulting from
operations $1,057,250
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-23
STATEMENT OF CHANGES IN NET ASSETS
For the period September 28, 2001 (Date operations commenced) through December
31, 2001
2001
-----------
OPERATIONS:
Net investment income $ 32,868
---------------------------------------------------------------------------
Net realized gain (loss) from investment securities (124,267)
---------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 1,148,649
===========================================================================
Net increase in net assets resulting from operations 1,057,250
===========================================================================
Distributions to shareholders from net investment income:
Class A (37,235)
---------------------------------------------------------------------------
Class B (33,889)
---------------------------------------------------------------------------
Class C (8,848)
---------------------------------------------------------------------------
Share transactions-net:
Class A 10,423,697
---------------------------------------------------------------------------
Class B 15,589,686
---------------------------------------------------------------------------
Class C 4,996,972
===========================================================================
Net increase in net assets 31,987,633
===========================================================================
NET ASSETS:
Beginning of period --
===========================================================================
End of period $31,987,633
___________________________________________________________________________
===========================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $30,950,108
---------------------------------------------------------------------------
Undistributed net investment income 13,143
---------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (124,267)
---------------------------------------------------------------------------
Unrealized appreciation of investment securities 1,148,649
===========================================================================
$31,987,633
___________________________________________________________________________
===========================================================================
|
See Notes to Financial Statements.
FS-24
NOTES TO FINANCIAL STATEMENTS
December 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Basic Balanced Fund (the "Fund") is a series portfolio of AIM Funds Group
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of twelve separate portfolios,
each having an unlimited number of shares of beneficial interest. 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 long-term growth of capital and current
income. The Fund commenced operations on September 28, 2001.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session 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 as of the
close of the customary trading session 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 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 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 the
customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Occasionally, events affecting the values of such foreign securities
may occur between the times at which the particular foreign market closes and
the close of the customary trading session of the NYSE which would not be
reflected in the computation of the Fund's net asset value. If a development/
event is so significant that there is a reasonably high degree of certainty
as to both the effect and the degree of effect that the development/event has
actually caused that closing price to no longer reflect actual value, the
closing prices, as determined at the close of the applicable foreign market,
may be adjusted to reflect the fair value of the affected foreign securities
as of the close of the NYSE as determined in good faith by or under the
supervision of the Board of Trustees.
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 on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date. Bond premiums and
discounts are amortized and/or accreted for financial reporting purposes.
On December 31, 2001, undistributed net investment income was increased by
$60,247 and shares of beneficial interest decreased by $60,247 as a result of
nondeductible organizational expenses. Net assets of the Fund were unaffected
by the reclassifications discussed above.
The Fund may engage in dollar roll transactions with respect to mortgage
backed securities issued by GNMA, FNMA and FHLMC. In a dollar roll
transaction, the Fund sells a mortgage backed security held in the Fund to a
financial institution such as a bank or broker-dealer, and simultaneously
agrees to repurchase a substantially similar security (same type, coupon and
maturity) from the institution at a later date at an agreed upon price. The
mortgage backed securities that are repurchased will bear the same interest
rate as those sold, but generally will be collateralized by different pools
of mortgages with different prepayment histories. During the period between
the sale and repurchase, the Fund will not be entitled to receive interest
and principal payments on securities sold. Proceeds of the sale will be
invested in short-term instruments, and the
FS-25
income from these investments, together with any additional fee income
received on the sale, could generate income for the Fund exceeding the yield
on the security sold.
Dollar roll transactions involve the risk that the market value of the
securities retained by the Fund may decline below the price of the securities
that the Fund has sold but is obligated to repurchase under the agreement. In
the event the buyer of securities in a dollar roll transaction files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale
of the securities may be restricted pending a determination by the other
party, or its trustee or receiver, whether to enforce the Fund's obligation
to repurchase the securities.
C. Distributions -- Distributions from income are declared and paid quarterly and are recorded on ex-dividend date. 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 from 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 had a capital loss carryforward of $1,094 which expires December 31, 2009. As of December 31, 2001 the Fund has a post-October capital loss deferral of $123,172 which will be recognized in the following tax year.
E. 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 the 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.
F. Expenses -- Distribution expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.65% of the first $1
billion of the Fund's average daily net assets, plus 0.60% of the Fund's average
daily net assets on the next $4 billion, plus 0.55% of the Fund's average daily
net assets in excess of $5 billion. AIM voluntarily agreed to waive advisory
fees of the Fund in the amount of 25% of the advisory fee AIM receives from the
affiliated money market fund of which the Fund has invested. For the period
September 28, 2001 (date operations commenced) through December 31, 2001, AIM
waived fees of $29,174 and reimbursed fees of $36,330.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the period September 28, 2001 (date
operations commenced) through December 31, 2001, AIM was paid $12,603 for such
services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the period September 28, 2001 (date
operations commenced) through December 31, 2001, AFS was paid $3,020 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 and Class C shares of the Fund. The Trust 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. 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. For the period September 28, 2001
(date operations commenced) through December 31, 2001, the Class A, Class B and
Class C shares paid AIM Distributors $5,240, $22,783 and $7,127, respectively,
as compensation under the Plans.
AIM Distributors received commissions of $19,234 from sales of the Class A
shares of the Fund for the period September 28, 2001 (date operations commenced)
through December 31, 2001. 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. For the same period, AIM Distributors received $84 in contingent
deferred sales charges imposed on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
The law firm of Kramer, Levin, Naftalis & Frankel LLP, of which a trustee is a
member, is counsel to the Board of Trustees. During the period September 28,
2001 (date operations commenced) through December 31, 2001, the Fund paid legal
no expenses with respect to this firm.
FS-26
NOTE 3-INDIRECT EXPENSES
For the period September 28, 2001 (date operations commenced) through December 31, 2001, the Fund received reductions in custodian fees of $17 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $17.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests 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 is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. 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 period September 28, 2001
(date operations commenced) through December 31, 2001, 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. The commitment fee is allocated among the funds based on their
respective average net assets for the period.
NOTE 6-DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 was as follows:
2001
-------
Distributions paid from ordinary income $79,972
________________________________________________________
========================================================
|
As of December 31, 2001, the components of distributable earnings on a tax basis were as follows:
Undistributed ordinary income $ 14,235
---------------------------------------------------------
Capital loss carryforward (1,094)
---------------------------------------------------------
Unrealized appreciation 1,024,384
=========================================================
$1,037,525
_________________________________________________________
=========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral losses on wash sales, the tax deferral of capital losses incurred after October 31, and other deferrals.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the period September 28, 2001 (date
operations commenced) through December 31, 2001 was $27,497,032 and $788,507,
respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $1,477,196 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (328,547) ========================================================= Net unrealized appreciation of investment securities $1,148,649 _________________________________________________________ ========================================================= Investments have the same cost for tax and financial statement purposes. |
FS-27
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the period September 28, 2001 (date operations commenced) through December 31, 2001 were as follows:
2001
------------------------
SHARES AMOUNT
--------- -----------
Sold:
Class A 1,014,635 $10,570,925
--------------------------------------------------------------------------------------
Class B 1,510,274 15,749,795
--------------------------------------------------------------------------------------
Class C 511,202 5,323,113
======================================================================================
Issued as reinvestment of dividends:
Class A 3,464 36,336
--------------------------------------------------------------------------------------
Class B 2,340 24,543
--------------------------------------------------------------------------------------
Class C 810 8,499
======================================================================================
Reacquired:
Class A (17,409) (183,564)
--------------------------------------------------------------------------------------
Class B (17,458) (184,652)
--------------------------------------------------------------------------------------
Class C (31,193) (334,640)
======================================================================================
2,976,665 $31,010,355
______________________________________________________________________________________
======================================================================================
|
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the period indicated.
CLASS A
------------------
SEPTEMBER 28, 2001
(DATE OPERATIONS
COMMENCED) TO
DECEMBER 31,
2001(a)
------------------
Net asset value, beginning of period $ 10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.03
--------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.76
================================================================================
Total from investment operations 0.79
================================================================================
Less distributions from net investment income (0.04)
================================================================================
Net asset value, end of period $ 10.75
________________________________________________________________________________
================================================================================
Total return(b) 7.94%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $10,753
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.43%(c)
--------------------------------------------------------------------------------
Without fee waivers 2.89%(c)
================================================================================
Ratio of net investment income to average net assets 1.16%(c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate 7%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) 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 $5,752,659.
FS-28
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
------------------
SEPTEMBER 28, 2001
(DATE OPERATIONS
COMMENCED) TO
DECEMBER 31,
2001(a)
------------------
Net asset value, beginning of period $ 10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01
--------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.77
================================================================================
Total from investment operations 0.78
================================================================================
Less distributions from net investment income (0.03)
================================================================================
Net asset value, end of period $ 10.75
________________________________________________________________________________
================================================================================
Total return(b) 7.76%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $16,067
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.08%(c)
--------------------------------------------------------------------------------
Without fee waivers 3.54%(c)
================================================================================
Ratio of net investment income to average net assets 0.52%(c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate 7%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average net assets of $8,753,540.
CLASS C
------------------
SEPTEMBER 28, 2001
(DATE OPERATIONS
COMMENCED) TO
DECEMBER 31,
2001(a)
------------------
Net asset value, beginning of period $10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01
--------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.77
================================================================================
Total from investment operations 0.78
================================================================================
Less distributions from net investment income (0.03)
================================================================================
Net asset value, end of period $10.75
________________________________________________________________________________
================================================================================
Total return(b) 7.76%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $5,168
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.08%(c)
--------------------------------------------------------------------------------
Without fee waivers 3.54%(c)
================================================================================
Ratio of net investment income to average net assets 0.52%(c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate 7%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average net assets of $2,738,134.
FS-29
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of AIM European
Small Company Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM European Small Company Fund (one of the funds constituting AIM Funds Group; hereafter referred to as the "Fund") at December 31, 2001, and the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2001 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP February 14, 2002 Houston, Texas |
FS-30
SCHEDULE OF INVESTMENTS
December 31, 2001
MARKET
SHARES VALUE
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-93.92%
AUSTRIA-0.76%
Gericom A.G. (Computer Hardware) 2,900 $ 79,393
====================================================================
BELGIUM-2.18%
Omega Pharma S.A. (Health Care Supplies) 5,000 226,727
====================================================================
DENMARK-0.49%
Radiometer A/S-Class B (Health Care
Equipment)(a) 1,600 50,410
====================================================================
FINLAND-4.39%
Hartwall Oyj ABP (Brewers)(a) 11,300 230,758
--------------------------------------------------------------------
Instrumentarium Corp.-Class B (Health Care
Equipment) 3,200 134,119
--------------------------------------------------------------------
Lassila & Tikanoja PLC (Diversified
Commercial Services) 2,000 32,103
--------------------------------------------------------------------
Vacon Oyj (Electrical Components & Equipment)
(Acquired 12/08/00; Cost $44,783)(b) 7,200 59,070
====================================================================
456,050
====================================================================
FRANCE-18.53%
AES Laboratoire Groupe (Health Care
Equipment) 1,300 132,737
--------------------------------------------------------------------
Beneteau (Leisure Products) 350 27,201
--------------------------------------------------------------------
Bigben Interactive (Distributors) 4,400 170,877
--------------------------------------------------------------------
Bonduelle SCA (Packaged Foods) 3,450 144,290
--------------------------------------------------------------------
Brime Technologies (Diversified Commercial
Services)(a) 3,400 104,602
--------------------------------------------------------------------
Eurofins Scientific (Diversified Commercial
Services)(a) 6,200 90,397
--------------------------------------------------------------------
Ioltech (Health Care Equipment)(a) 1,300 147,228
--------------------------------------------------------------------
Marionnaud Parfumeries (Specialty Stores)(a) 4,080 197,926
--------------------------------------------------------------------
MEDIDEP S.A. (Health Care Facilities)(a) 16,600 320,486
--------------------------------------------------------------------
Neopost S.A. (Office Electronics)(a) 3,300 96,288
--------------------------------------------------------------------
Penauille Polyservices (Diversified
Commercial Services) 1,500 52,836
--------------------------------------------------------------------
Rodriguez Group (Specialty Stores) 1,000 57,072
--------------------------------------------------------------------
Silicon-On-Insulator Technologies (SOITEC)
(Electronic Equipment & Instruments)(a) 11,170 221,629
--------------------------------------------------------------------
UBI Soft Entertainment S.A. (Application
Software)(a) 4,850 162,187
====================================================================
1,925,756
====================================================================
GERMANY-8.40%
FJA A.G. (Electronic Equipment & Instruments) 1,980 90,049
--------------------------------------------------------------------
IPC Archtec A.G. (Computer Hardware)(a) 1,700 53,590
--------------------------------------------------------------------
Puma A.G. (Footwear) 8,300 251,652
--------------------------------------------------------------------
Stada Arzneimittel A.G. (Pharmaceuticals) 7,200 252,009
--------------------------------------------------------------------
Suess MicroTec A.G. (Semiconductor
Equipment)(a) 3,000 84,003
--------------------------------------------------------------------
|
MARKET
SHARES VALUE
GERMANY-(CONTINUED)
Wedeco A.G. Water Technology (Water
Utilities)(a) 4,600 $ 141,521
====================================================================
872,824
====================================================================
GREECE-0.97%
Folli-Follie (Apparel & Accessories) 5,700 100,338
====================================================================
IRELAND-7.35%
Anglo Irish Bank Corp. PLC (Banks) 46,000 178,439
--------------------------------------------------------------------
Grafton Group PLC (Trading Companies &
Distributors) 60,700 175,920
--------------------------------------------------------------------
ICON PLC-ADR (Health Care Distributors &
Services)(a) 4,700 140,107
--------------------------------------------------------------------
IFG Group PLC (Diversified Financial
Services) 32,000 95,596
--------------------------------------------------------------------
Riverdeep Group PLC-ADR (Internet Software &
Services)(a) 6,500 109,265
--------------------------------------------------------------------
United Drug PLC (Pharmaceuticals) 4,900 64,670
====================================================================
763,997
====================================================================
ITALY-4.04%
Merloni Elettrodomestici S.p.A. (Household
Appliances)(a) 25,500 134,164
--------------------------------------------------------------------
Recordati S.p.A (Pharmaceuticals) 9,600 191,591
--------------------------------------------------------------------
Tod's S.p.A. (Apparel & Accessories)(a) 2,300 94,347
====================================================================
420,102
====================================================================
NETHERLANDS-3.49%
ASM International N.V. (Semiconductor
Equipment)(a) 4,100 79,522
--------------------------------------------------------------------
Heijmans N.V. (Construction & Engineering) 5,504 101,943
--------------------------------------------------------------------
Teleplan International N.V. (Marine)(a) 5,200 78,367
--------------------------------------------------------------------
Van der Moolen Holding N.V. (Diversified
Financial Services) 3,570 102,669
====================================================================
362,501
====================================================================
NORWAY-1.27%
Tandberg A.S.A. (Electronic Equipment &
Instruments)(a) 5,900 131,857
====================================================================
PORTUGAL-0.59%
Ibersol-SGPS, S.A. (Restaurants) 18,300 61,196
====================================================================
SPAIN-2.78%
Aurea Concesiones des Infrastructuras
S.A./concesionaria del Estado S.A.
(Highways & Railtracks) 2,670 54,548
--------------------------------------------------------------------
Azkoyen S.A. (Industrial Machinery) 17,400 145,234
--------------------------------------------------------------------
Prosegur, CIA de Seguridad S.A. (Diversified
Commercial Services) 6,600 89,107
====================================================================
288,889
====================================================================
|
FS-31
MARKET
SHARES VALUE
SWEDEN-11.54%
Axfood A.B. (Food Retail)(a) 11,800 $ 132,731
--------------------------------------------------------------------
Biacore International A.B. (Health Care
Equipment)(a) 2,550 82,999
--------------------------------------------------------------------
Clas Ohlson A.B.-Class B (Specialty Stores) 15,400 215,979
--------------------------------------------------------------------
Elekta A.B.-Class B (Health Care
Equipment)(a) 21,800 177,390
--------------------------------------------------------------------
Getinge Industrier A.B.-Class B (Health Care
Equipment) 4,700 77,389
--------------------------------------------------------------------
Munters A.B. (Industrial Machinery) 4,500 75,173
--------------------------------------------------------------------
Nobel Biocare (Health Care Supplies) 1,400 58,635
--------------------------------------------------------------------
Perbio Science A.B. (Pharmaceuticals)(a) 12,500 204,027
--------------------------------------------------------------------
Q-Med A.B. (Biotechnology)(a) 4,200 69,960
--------------------------------------------------------------------
Swedish Match A.B. (Tobacco) 19,700 104,668
====================================================================
1,198,951
====================================================================
SWITZERLAND-0.38%
Converium Holding A.G. (Reinsurance)(a) 800 38,938
====================================================================
UNITED KINGDOM-26.76%
Alexon Group PLC (Apparel & Accessories) 59,400 151,351
--------------------------------------------------------------------
Amey PLC (Diversified Commercial Services) 12,900 69,842
--------------------------------------------------------------------
Anite Group PLC (IT Consulting & Services)(a) 46,500 116,112
--------------------------------------------------------------------
Biotrace International PLC (Health Care
Equipment)(a) 26,300 52,745
--------------------------------------------------------------------
Chemring Group PLC (Aerospace & Defense) 38,900 206,730
--------------------------------------------------------------------
Chloride Group PLC (Electrical Components &
Equipment) 60,000 61,152
--------------------------------------------------------------------
Electronics Boutique PLC (Computer &
Electronics Retail) 124,700 248,742
--------------------------------------------------------------------
Enterprise Inns PLC (Restaurants) 22,300 202,605
--------------------------------------------------------------------
Fitness First PLC (Diversified Commercial
Services)(a) 17,700 121,898
--------------------------------------------------------------------
|
MARKET
SHARES VALUE
UNITED KINGDOM-(CONTINUED)
Geest PLC (Agricultural Products) 14,900 $ 160,055
--------------------------------------------------------------------
Innovation Group (The) PLC (Application
Software) 14,800 78,653
--------------------------------------------------------------------
iSOFT Group PLC (Application Software)
(Acquired 06/22/01; Cost $213,827)(b) 62,900 238,114
--------------------------------------------------------------------
Jardine Lloyd Thompson Group PLC (Insurance
Brokers) 10,400 93,099
--------------------------------------------------------------------
JJB Sports PLC (Apparel Retail) 20,000 133,952
--------------------------------------------------------------------
John David Sports PLC (Apparel Retail) 20,010 88,715
--------------------------------------------------------------------
Luminar PLC (Restaurants) 14,100 171,833
--------------------------------------------------------------------
Nestor Healthcare Group PLC (Employment
Services) (Acquired 08/03/01-11/26/01; Cost
$157,784)(b) 22,500 178,542
--------------------------------------------------------------------
PHS Group PLC (Diversified Commercial
Services) 59,020 76,480
--------------------------------------------------------------------
PizzaExpress PLC (Restaurants) 8,600 111,693
--------------------------------------------------------------------
Reliance Security Group PLC (Diversified
Commercial Services) 5,300 50,159
--------------------------------------------------------------------
Torex PLC (IT Consulting & Services) 9,100 96,987
--------------------------------------------------------------------
Vosper Thornycroft Holdings PLC (Aerospace &
Defense) 3,100 70,638
====================================================================
2,780,097
====================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $8,824,931) 9,758,026
====================================================================
MONEY MARKET FUNDS-5.44%
STIC Liquid Assets Portfolio(c) 282,749 282,749
--------------------------------------------------------------------
STIC Prime Portfolio(c) 282,749 282,749
====================================================================
Total Money Market Funds (Cost $565,498) 565,498
====================================================================
TOTAL INVESTMENTS-99.36% (Cost $9,390,429) 10,323,524
====================================================================
OTHER ASSETS LESS LIABILITIES-0.64% 66,520
====================================================================
NET ASSETS-100.00% $10,390,044
____________________________________________________________________
====================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The aggregate market value of these securities at
12/31/01 was $475,726, which represented 4.58% of the Fund's net assets.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-32
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2001
ASSETS:
Investments, at market value (cost $9,390,429) $10,323,524
------------------------------------------------------------
Foreign currencies, at value (cost $136,370) 139,154
------------------------------------------------------------
Receivables for:
Fund shares sold 80,257
------------------------------------------------------------
Dividends 16,803
------------------------------------------------------------
Investment for deferred compensation plan 9,077
------------------------------------------------------------
Other assets 13,463
============================================================
Total assets 10,582,278
============================================================
LIABILITIES:
Payables for:
Investments purchased 48,573
------------------------------------------------------------
Fund shares reacquired 82,106
------------------------------------------------------------
Deferred compensation plan 9,077
------------------------------------------------------------
Accrued distribution fees 9,168
------------------------------------------------------------
Accrued transfer agent fees 4,699
------------------------------------------------------------
Accrued operating expenses 38,611
============================================================
Total liabilities 192,234
============================================================
Net assets applicable to shares outstanding $10,390,044
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 6,969,094
____________________________________________________________
============================================================
Class B $ 2,330,075
____________________________________________________________
============================================================
Class C $ 1,090,875
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 968,808
____________________________________________________________
============================================================
Class B 326,082
____________________________________________________________
============================================================
Class C 152,752
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 7.19
------------------------------------------------------------
Offering price per share:
(Net asset value of $7.19 divided by
94.50%) $ 7.61
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 7.15
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 7.14
____________________________________________________________
============================================================
|
STATEMENT OF OPERATIONS
For the year ended December 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$15,183) $ 130,234
------------------------------------------------------------
Dividends from affiliated money market funds 27,499
------------------------------------------------------------
Interest 633
============================================================
Total investment income 158,366
============================================================
EXPENSES:
Advisory fees 107,157
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 89,340
------------------------------------------------------------
Distribution fees -- Class A 26,996
------------------------------------------------------------
Distribution fees -- Class B 24,901
------------------------------------------------------------
Distribution fees -- Class C 10,764
------------------------------------------------------------
Interest 1,142
------------------------------------------------------------
Transfer agent fees -- Class A 26,707
------------------------------------------------------------
Transfer agent fees -- Class B 10,040
------------------------------------------------------------
Transfer agent fees -- Class C 4,340
------------------------------------------------------------
Trustees' fees 8,277
------------------------------------------------------------
Registration and filing fees 110,195
------------------------------------------------------------
Professional fees 47,989
------------------------------------------------------------
Other 32,161
============================================================
Total expenses 550,009
============================================================
Less: Fees waived and expenses reimbursed (297,969)
------------------------------------------------------------
Expenses paid indirectly (131)
============================================================
Net expenses 251,909
============================================================
Net investment income (loss) (93,543)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities (3,820,862)
------------------------------------------------------------
Foreign currencies 5,135
============================================================
(3,815,727)
============================================================
Change in net unrealized appreciation of:
Investment securities 694,312
------------------------------------------------------------
Foreign currencies 3,378
============================================================
697,690
============================================================
Net gain (loss) from investment securities and
foreign currencies (3,118,037)
============================================================
Net increase (decrease) in net assets resulting
from operations $(3,211,580)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-33
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2001 and the period August 31, 2000 (date
operations commenced) through December 31, 2000
2001 2000
----------- -----------
OPERATIONS:
Net investment income (loss) $ (93,543) $ (43,238)
----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (3,815,727) (588,978)
----------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 697,690 238,944
========================================================================================
Net increase (decrease) in net assets resulting from
operations (3,211,580) (393,272)
========================================================================================
Distributions to shareholders from net investment income:
Class A -- (38,008)
----------------------------------------------------------------------------------------
Class B -- (9,040)
----------------------------------------------------------------------------------------
Class C -- (3,158)
----------------------------------------------------------------------------------------
Share transactions-net:
Class A 647,205 8,921,798
----------------------------------------------------------------------------------------
Class B 168,698 2,932,808
----------------------------------------------------------------------------------------
Class C 256,409 1,118,184
========================================================================================
Net increase (decrease) in net assets (2,139,268) 12,529,312
========================================================================================
NET ASSETS:
Beginning of year 12,529,312 --
========================================================================================
End of year $10,390,044 $12,529,312
________________________________________________________________________________________
========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $13,916,138 $12,962,197
----------------------------------------------------------------------------------------
Undistributed net investment income (loss) (9,077) (39,040)
----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (4,453,651) (632,789)
----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 936,634 238,944
========================================================================================
$10,390,044 $12,529,312
________________________________________________________________________________________
========================================================================================
|
See Notes to Financial Statements.
FS-34
NOTES TO FINANCIAL STATEMENTS
December 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM European Small Company Fund (the "Fund") is a series portfolio of AIM Funds
Group (the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of twelve separate portfolios,
each having an unlimited number of shares of beneficial interest. 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 long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 as of the close of the customary trading session 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/ event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date.
On December 31, 2001, undistributed net investment income (loss) was increased by $123,506, undistributed net realized gains (losses) decreased by $5,135 and shares of beneficial interest decreased by $118,371 as a result of differing book/tax treatment of foreign currency transactions, net operating loss and other reclassifications. Net assets of the Fund were unaffected by the reclassifications discussed above.
C. Distributions -- Distributions from income and 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 from 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.
FS-35
The Fund's capital loss carryforward of $4,147,930 is broken down by expiration date as follows:
CAPITAL LOSS CARRYFORWARD EXPIRATION ------------ ---------- $ 220,935 December 31, 2008 ------------------------------- 3,926,995 December 31, 2009 =============================== $4,147,930 ______________________________ =============================== |
As of December 31, 2001, the Fund has a post-October capital loss deferral of $241,078, which will be recognized in the following tax year.
E. 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 the 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.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. Expenses -- Distribution expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the Fund's
average daily net assets. Effective July 1, 2001, AIM has voluntarily agreed to
waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM
receives from the affiliated money market fund of which the Fund has invested.
For the year ended December 31, 2001, AIM waived fees of $107,157 and reimbursed
expenses of $190,812.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 2001, AIM was
paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 2001, AFS
was paid $24,914 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 and Class C shares of the Fund. The Trust 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. 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. For the year ended December 31,
2001, the Class A, Class B and Class C shares paid AIM Distributors $26,996,
$24,901 and $10,764, respectively, as compensation under the Plans.
AIM Distributors received commissions of $4,738 from sales of the Class A
shares of the Fund during the year ended December 31, 2001. 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, 2001,
AIM Distributors received $17,064 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 2001, the Fund paid legal fees of $3,529
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the year ended December 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $131 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $131.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests 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 is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its
FS-36
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, 2001, 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. The commitment fee is allocated among the funds based on their respective average net assets for the period.
NOTE 6-DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
------ -------
Distribution paid from ordinary income $ -- $50,206
_________________________________________________________
=========================================================
|
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Capital loss carryforward $(4,147,930)
---------------------------------------------------------
Unrealized appreciation 621,836
=========================================================
$(3,526,094)
_________________________________________________________
=========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of capital losses incurred after October 31, and other deferrals.
NOTE 7-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, 2001 was
$17,527,664 and $16,015,249, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $958,986 -------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (90,533) ======================================================== Net unrealized appreciation of investment securities $868,453 ________________________________________________________ ======================================================== Cost of investments for tax purposes is $9,455,071. |
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the year ended December 31, 2001 and the period August 31, 2000 (date operations commenced) through December 31, 2000:
2001 2000
-------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ --------- -----------
Sold:
Class A 1,443,910 $ 10,877,574 1,020,627 $ 9,668,343
--------------------------------------------------------------------------------------------------------------------
Class B 87,474 690,405 314,840 2,969,953
--------------------------------------------------------------------------------------------------------------------
Class C 275,312 2,057,628 119,558 1,140,988
====================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 4,177 37,222
--------------------------------------------------------------------------------------------------------------------
Class B -- -- 1,014 9,037
--------------------------------------------------------------------------------------------------------------------
Class C -- -- 353 3,141
====================================================================================================================
Reacquired:
Class A (1,413,403) (10,230,369) (86,503) (783,767)
--------------------------------------------------------------------------------------------------------------------
Class B (72,117) (521,707) (5,129) (46,182)
--------------------------------------------------------------------------------------------------------------------
Class C (239,549) (1,801,219) (2,922) (25,945)
====================================================================================================================
81,627 $ 1,072,312 1,366,015 $12,972,790
____________________________________________________________________________________________________________________
====================================================================================================================
|
FS-37
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------
AUGUST 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2001(a) 2000(a)
------------ ----------------
Net asset value, beginning of period $ 9.17 $10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05) (0.04)
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.93) (0.74)
==============================================================================================
Total from investment operations (1.98) (0.78)
==============================================================================================
Less dividends from net investment income -- (0.05)
==============================================================================================
Net asset value, end of period $ 7.19 $ 9.17
______________________________________________________________________________________________
==============================================================================================
Total return(b) (21.59)% (7.84)%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 6,969 $8,606
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.01%(c) 2.07%(d)
----------------------------------------------------------------------------------------------
Without fee waivers 4.65%(c) 6.28%(d)
==============================================================================================
Ratio of net investment income (loss) to average net assets (0.61)%(c) (1.28)%(d)
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 152% 25%
______________________________________________________________________________________________
==============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average daily net assets of $7,713,136.
(d) Annualized.
CLASS B
--------------------------------
AUGUST 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2001(a) 2000(a)
------------ ----------------
Net asset value, beginning of period $ 9.17 $10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10) (0.06)
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.92) (0.74)
==============================================================================================
Total from investment operations (2.02) (0.80)
==============================================================================================
Less dividends from net investment income -- (0.03)
==============================================================================================
Net asset value, end of period $ 7.15 $ 9.17
______________________________________________________________________________________________
==============================================================================================
Total return(b) (22.03)% (7.99)%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 2,330 $2,851
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.71%(c) 2.77%(d)
----------------------------------------------------------------------------------------------
Without fee waivers 5.36%(c) 6.98%(d)
==============================================================================================
Ratio of net investment income (loss) to average net assets (1.31)%(c) (1.98)%(d)
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 152% 25%
______________________________________________________________________________________________
==============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $2,490,126.
(d) Annualized.
FS-38
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
--------------------------------
AUGUST 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2001(a) 2000(a)
------------ ----------------
Net asset value, beginning of period $ 9.17 $10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10) (0.06)
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.93) (0.74)
==============================================================================================
Total from investment operations (2.03) (0.80)
==============================================================================================
Less dividends from net investment income -- (0.03)
==============================================================================================
Net asset value, end of period $ 7.14 $ 9.17
______________________________________________________________________________________________
==============================================================================================
Total return(b) (22.14)% (7.99)%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,091 $1,073
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.71%(c) 2.77%(d)
----------------------------------------------------------------------------------------------
Without fee waivers 5.36%(c) 6.98%(d)
==============================================================================================
Ratio of net investment income (loss) to average net assets (1.31)%(c) (1.98)%(d)
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 152% 25%
______________________________________________________________________________________________
==============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $1,076,384.
(d) Annualized.
FS-39
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
AIM Global Utilities Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Global Utilities Fund (one of the funds constituting AIM Funds Group; hereafter referred to as the "Fund") at December 31, 2001, and the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2001 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights for each of the periods ended on or before December 31, 1999 were audited by other independent accountants whose report, dated February 14, 2000, expressed an unqualified opinion thereon.
/s/ PRICEWATERHOUSECOOPERS LLP February 14, 2002 Houston, Texas |
FS-40
SCHEDULE OF INVESTMENTS
December 31, 2001
MARKET
SHARES VALUE
DOMESTIC STOCKS-72.19%
BROADCASTING & CABLE TV-1.22%
Univision Communications Inc.-Class A(a) 84,100 $ 3,402,686
=========================================================================
CONSTRUCTION & ENGINEERING-0.97%
Quanta Services, Inc.(a) 175,300 2,704,879
=========================================================================
DIVERSIFIED METALS & MINING-0.62%
Peabody Energy Corp. 61,000 1,719,590
=========================================================================
ELECTRIC UTILITIES-35.41%
AES Corp. (The)(a) 62,800 1,026,780
-------------------------------------------------------------------------
Allegheny Energy, Inc. 286,000 10,358,920
-------------------------------------------------------------------------
Calpine Corp.(a) 132,000 2,216,280
-------------------------------------------------------------------------
Constellation Energy Group, Inc. 114,000 3,026,700
-------------------------------------------------------------------------
DTE Energy Co. 172,000 7,213,680
-------------------------------------------------------------------------
Duke Energy Corp. 192,000 7,537,920
-------------------------------------------------------------------------
Edison International(a) 51,000 770,100
-------------------------------------------------------------------------
Exelon Corp. 68,500 3,279,780
-------------------------------------------------------------------------
FirstEnergy Corp. 100,000 3,498,000
-------------------------------------------------------------------------
FPL Group, Inc. 175,000 9,870,000
-------------------------------------------------------------------------
Mirant Corp.(a) 193,850 3,105,477
-------------------------------------------------------------------------
Mirant Trust I-Series A, $3.13 Conv. Pfd. 30,600 1,243,890
-------------------------------------------------------------------------
Niagara Mohawk Holdings Inc.(a) 510,300 9,047,619
-------------------------------------------------------------------------
NRG Energy, Inc.(a) 192,300 2,980,650
-------------------------------------------------------------------------
PG&E Corp. 72,000 1,385,280
-------------------------------------------------------------------------
Pinnacle West Capital Corp. 273,600 11,450,160
-------------------------------------------------------------------------
PPL Corp. 83,000 2,892,550
-------------------------------------------------------------------------
Public Service Enterprise Group Inc. 67,000 2,826,730
-------------------------------------------------------------------------
Reliant Energy, Inc. 163,000 4,322,760
-------------------------------------------------------------------------
Reliant Resources, Inc.(a) 56,000 924,560
-------------------------------------------------------------------------
Southern Co. (The) 122,500 3,105,375
-------------------------------------------------------------------------
Xcel Energy, Inc. 226,000 6,269,240
=========================================================================
98,352,451
=========================================================================
GAS UTILITIES-8.24%
El Paso Corp. 72,900 3,252,069
-------------------------------------------------------------------------
El Paso Energy Cap Trust I-$2.38 Conv. Pfd. 74,500 4,162,687
-------------------------------------------------------------------------
KeySpan Corp. 75,000 2,598,750
-------------------------------------------------------------------------
NiSource Inc. 431,000 9,938,860
-------------------------------------------------------------------------
Sempra Energy 119,000 2,921,450
=========================================================================
22,873,816
=========================================================================
|
MARKET
SHARES VALUE
HEAVY ELECTRICAL EQUIPMENT-0.52%
Active Power, Inc.(a) 65,500 $ 445,400
-------------------------------------------------------------------------
Global Power Equipment Group Inc.(a) 66,000 993,300
=========================================================================
1,438,700
=========================================================================
INDUSTRIAL CONGLOMERATES-1.87%
General Electric Co. 129,600 5,194,368
=========================================================================
INTEGRATED OIL & GAS-1.12%
ChevronTexaco Corp. 34,800 3,118,428
=========================================================================
INTEGRATED TELECOMMUNICATION SERVICES-10.87%
BellSouth Corp. 211,000 8,049,650
-------------------------------------------------------------------------
Qwest Communications International Inc. 152,100 2,149,173
-------------------------------------------------------------------------
SBC Communications Inc. 366,693 14,363,365
-------------------------------------------------------------------------
Verizon Communications Inc. 118,462 5,622,207
=========================================================================
30,184,395
=========================================================================
MOVIES & ENTERTAINMENT-0.60%
Viacom Inc.-Class B(a) 38,000 1,677,700
=========================================================================
MULTI-UTILITIES-8.21%
Aquila, Inc.(a) 104,200 1,781,820
-------------------------------------------------------------------------
Dynegy Inc.-Class A 272,000 6,936,000
-------------------------------------------------------------------------
Energy East Corp. 475,200 9,024,048
-------------------------------------------------------------------------
Williams Cos., Inc. (The) 198,700 5,070,824
=========================================================================
22,812,692
=========================================================================
NETWORKING EQUIPMENT-0.51%
Cisco Systems, Inc.(a) 77,700 1,407,147
=========================================================================
OIL & GAS EXPLORATION & PRODUCTION-1.14%
Anadarko Petroleum Corp. 19,500 1,108,575
-------------------------------------------------------------------------
Apache Corp. 41,250 2,057,550
=========================================================================
3,166,125
=========================================================================
TELECOMMUNICATIONS EQUIPMENT-0.60%
Comverse Technology, Inc.(a) 35,000 782,950
-------------------------------------------------------------------------
JDS Uniphase Corp.(a) 99,900 872,127
=========================================================================
1,655,077
=========================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.29%
MediaOne Group, Inc.-$3.04 Conv. Pfd. 29,200 792,780
=========================================================================
Total Domestic Stocks (Cost $182,713,948) 200,500,834
=========================================================================
|
FS-41
MARKET
SHARES VALUE
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-13.48%
BRAZIL-1.05%
Companhia Paranaense de Energia-Copel-ADR
(Electric Utilities) 370,000 $ 2,904,500
=========================================================================
CANADA-0.44%
Westcoast Energy Inc. (Gas Utilities) 46,300 1,223,709
=========================================================================
FINLAND-0.73%
Nokia Oyj-ADR (Telecommunications Equipment) 83,100 2,038,443
=========================================================================
FRANCE-1.66%
Suez S.A. (Multi-Utilities) 124,500 3,774,778
-------------------------------------------------------------------------
TotalFinaElf S.A. (Integrated Oil & Gas) 5,800 829,613
=========================================================================
4,604,391
=========================================================================
GERMANY-0.95%
E.On A.G. (Electric Utilities) 50,560 2,633,074
=========================================================================
GREECE-0.32%
Public Power Corp.-GDR (Electric Utilities)
(Acquired 12/10/01; Cost $923,391)(a)(b) 81,800 875,342
=========================================================================
ITALY-1.92%
ACEA S.p.A. (Multi-Utilities)(c) 388,800 2,641,948
-------------------------------------------------------------------------
Snam Rete Gas S.p.A. (Gas Utilities)(a)(c) 210,200 556,714
-------------------------------------------------------------------------
Telecom Italia S.p.A. (Integrated
Telecommunication Services) 400,400 2,142,340
=========================================================================
5,341,002
=========================================================================
JAPAN-0.75%
NTT DoCoMo, Inc. (Wireless Telecommunication
Services) 179 2,093,567
=========================================================================
SPAIN-3.00%
Endesa, S.A. (Electric Utilities) 227,000 3,556,647
-------------------------------------------------------------------------
Telefonica, S.A. (Integrated
Telecommunication Services)(a) 355,838 4,769,298
=========================================================================
8,325,945
=========================================================================
UNITED KINGDOM-2.66%
Kelda Group PLC (Water Utilities) 538,407 2,782,918
-------------------------------------------------------------------------
National Grid Group PLC (Electric Utilities) 131,526 819,628
-------------------------------------------------------------------------
United Utilities PLC (Multi-Utilities) 151,936 1,361,602
-------------------------------------------------------------------------
Vodafone Group PLC (Wireless
Telecommunication Services) 930,665 2,435,699
=========================================================================
7,399,847
=========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $41,540,128) 37,439,820
=========================================================================
|
MARKET
SHARES VALUE
PRINCIPAL MARKET
AMOUNT VALUE
U.S. DOLLAR DENOMINATED BONDS & NOTES-5.49%
COMPUTER HARDWARE-0.15%
Candescent Technologies Corp., Sr. Conv.
Unsec. Gtd. Sub. Deb., 8.00%, 05/01/03
(Acquired 04/19/01; Cost $34,200)(b)(d)(e) $ 190,000 $ 16,150
-------------------------------------------------------------------------
Candescent Technologies Corp., Sr. Conv.
Unsec. Gtd. Sub. Deb., 8.00%, 05/01/03
(Acquired 04/17/98-04/19/01; Cost
$4,522,130)(b)(d)(e) 4,676,000 397,460
=========================================================================
413,610
=========================================================================
ELECTRIC UTILITIES-1.84%
Mirant Corp., Sr. Notes, 7.90%, 07/15/09
(Acquired 10/16/00; Cost $5,422,184)(b) 5,730,000 5,114,025
=========================================================================
GAS UTILITIES-1.67%
Limestone Electron Trust, Sr. Notes, 8.63%,
03/15/03 (Acquired 03/15/00; Cost
$4,550,000)(b) 4,550,000 4,632,901
=========================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.70%
AT&T Corp., Unsec. Notes, 7.75%, 03/01/07 1,850,000 1,945,127
=========================================================================
MULTI-UTILITIES-0.40%
Dynegy Inc., Sr. Unsec. Deb., 7.13%, 05/15/18 1,400,000 1,097,250
=========================================================================
TELECOMMUNICATIONS EQUIPMENT-0.73%
Nortel Networks Corp., Sr. Conv. Unsec. Gtd.
Yankee Notes, 4.25%, 09/01/08 (Acquired
08/09/01-08/15/01; Cost $2,108,799)(b) 2,100,000 2,031,750
=========================================================================
Total U.S. Dollar Denominated Bonds &
Notes (Cost $19,968,460) 15,234,663
=========================================================================
PRINCIPAL
AMOUNT(f)
oew
NON-U.S. DOLLAR DENOMINATED BONDS &
NOTES-2.20%
CANADA-0.50%
Teleglobe Canada Inc. (Integrated
Telecommunication Services), Unsec. Deb.
8.35%, 06/20/03 CAD 2,400,000 1,382,081
=========================================================================
UNITED KINGDOM-1.70%
National Grid Co. PLC (Electric Utilities),
Conv. Bonds, 4.25%, 02/17/08 (Acquired
02/05/98; Cost $4,574,700)(b) GBP 2,760,000 4,729,266
=========================================================================
Total Non-U.S. Dollar Denominated Bonds &
Notes (Cost $6,366,071) 6,111,347
=========================================================================
|
FS-42
MARKET
SHARES VALUE
MARKET
SHARES VALUE
MONEY MARKET FUNDS-7.26%
STIC Liquid Assets Portfolio(g) 10,073,857 $ 10,073,857
-------------------------------------------------------------------------
STIC Prime Portfolio(g) 10,073,857 10,073,857
=========================================================================
Total Money Market Funds (Cost
$20,147,714) 20,147,714
=========================================================================
TOTAL INVESTMENTS-100.62% (Cost $270,736,321) 279,434,378
=========================================================================
OTHER ASSETS LESS LIABILITIES-(0.62%) (1,708,814)
=========================================================================
NET ASSETS-100.00% $277,725,564
_________________________________________________________________________
=========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt CAD - Canadian Dollars Conv. - Convertible Deb. - Debentures GBP - British Pound Sterling GDR - Global Depositary Receipt Gtd. - Guaranteed Pfd. - Preferred Sr. - Senior Sub. - Subordinated Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The aggregate market value of these securities at
12/31/01 was $17,796,894, which represented 6.41% of the Fund's net assets.
(c) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended.
(d) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(e) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(f) Foreign denominated security. Par value is denominated in currency
indicated.
(g) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-43
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2001
ASSETS:
Investments, at market value (cost
$270,736,321)* $279,434,378
------------------------------------------------------------
Foreign currencies, at value (cost $63,696) 63,222
------------------------------------------------------------
Receivables for:
Fund shares sold 955,353
------------------------------------------------------------
Dividends and interest 936,407
------------------------------------------------------------
Investment for deferred compensation plan 47,160
------------------------------------------------------------
Collateral for securities loaned 43,287,594
------------------------------------------------------------
Other assets 19,288
============================================================
Total assets 324,743,402
============================================================
LIABILITIES:
Payables for:
Investments purchased 2,400,240
------------------------------------------------------------
Fund shares reacquired 869,228
------------------------------------------------------------
Dividends 1,884
------------------------------------------------------------
Deferred compensation plan 47,160
------------------------------------------------------------
Collateral upon return of securities loaned 43,287,594
------------------------------------------------------------
Accrued distribution fees 259,570
------------------------------------------------------------
Accrued transfer agent fees 83,917
------------------------------------------------------------
Accrued operating expenses 68,245
============================================================
Total liabilities 47,017,838
============================================================
Net assets applicable to shares outstanding $277,725,564
____________________________________________________________
============================================================
NET ASSETS:
Class A $171,431,993
____________________________________________________________
============================================================
Class B $ 94,614,911
____________________________________________________________
============================================================
Class C $ 11,678,660
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 10,960,466
____________________________________________________________
============================================================
Class B 6,065,482
____________________________________________________________
============================================================
Class C 748,962
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 15.64
------------------------------------------------------------
Offering price per share:
(Net asset value of $15.64 divided
by 94.50%) $ 16.55
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 15.60
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 15.59
____________________________________________________________
============================================================
|
* At December 31, 2001, securities with an aggregate market value of $41,953,857 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended December 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$132,965) $ 6,989,312
------------------------------------------------------------
Dividends from affiliated money market funds 1,152,539
------------------------------------------------------------
Interest 1,505,757
------------------------------------------------------------
Security lending income 111,495
============================================================
Total investment income 9,759,103
============================================================
EXPENSES:
Advisory fees 2,017,671
------------------------------------------------------------
Administrative services fees 92,707
------------------------------------------------------------
Custodian fees 88,988
------------------------------------------------------------
Distribution fees -- Class A 543,963
------------------------------------------------------------
Distribution fees -- Class B 1,309,131
------------------------------------------------------------
Distribution fees -- Class C 150,360
------------------------------------------------------------
Transfer agent fees -- Class A 446,210
------------------------------------------------------------
Transfer agent fees -- Class B 278,443
------------------------------------------------------------
Transfer agent fees -- Class C 31,981
------------------------------------------------------------
Trustees' fees 9,188
------------------------------------------------------------
Other 219,507
============================================================
Total expenses 5,188,149
============================================================
Less: Fees waived (1,934)
------------------------------------------------------------
Expenses paid indirectly (5,313)
============================================================
Net expenses 5,180,902
============================================================
Net investment income 4,578,201
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (27,084,087)
------------------------------------------------------------
Foreign currencies (101,277)
------------------------------------------------------------
Option contracts written 226,433
============================================================
(26,958,931)
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (100,091,630)
------------------------------------------------------------
Foreign currencies (5,794)
============================================================
(100,097,424)
============================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (127,056,355)
============================================================
Net increase (decrease) in net assets
resulting from operations $(122,478,154)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-44
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2001 and 2000
2001 2000
------------- ------------
OPERATIONS:
Net investment income $ 4,578,201 $ 4,203,120
-------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (26,958,931) 45,142,732
-------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, and foreign currencies (100,097,424) (68,125,918)
===========================================================================================
Net increase (decrease) in net assets resulting from
operations (122,478,154) (18,780,066)
===========================================================================================
Distributions to shareholders from net investment income:
Class A (3,297,866) (2,905,816)
-------------------------------------------------------------------------------------------
Class B (987,904) (587,054)
-------------------------------------------------------------------------------------------
Class C (115,036) (56,822)
-------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (1,890,557) (28,679,886)
-------------------------------------------------------------------------------------------
Class B (1,101,351) (17,296,532)
-------------------------------------------------------------------------------------------
Class C (130,115) (1,858,159)
-------------------------------------------------------------------------------------------
Share transactions-net:
Class A (18,046,172) 70,873,896
-------------------------------------------------------------------------------------------
Class B (19,327,801) 43,074,650
-------------------------------------------------------------------------------------------
Class C (646,339) 14,197,274
===========================================================================================
Net increase (decrease) in net assets (168,021,295) 57,981,485
===========================================================================================
NET ASSETS:
Beginning of year 445,746,859 387,765,374
===========================================================================================
End of year $ 277,725,564 $445,746,859
___________________________________________________________________________________________
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 295,785,459 $333,805,771
-------------------------------------------------------------------------------------------
Undistributed net investment income 116,903 126,568
-------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (26,875,713) 3,125,318
-------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 8,698,915 108,689,202
===========================================================================================
$ 277,725,564 $445,746,859
___________________________________________________________________________________________
===========================================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Utilities Fund (the "Fund") is a series portfolio of AIM Funds Group
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of twelve separate portfolios,
each having an unlimited number of shares of beneficial interest. 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.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A
FS-45
security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 as of the close of the customary trading session 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/ event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes.
On December 31, 2001, undistributed net investment income was decreased and undistributed net realized gains increased by $79,923 as a result of foreign currency reclassifications, distribution reclassifications, differing book/tax treatment of bond premium amortization, and other reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income are declared and paid quarterly and are recorded on ex-dividend date. 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 from 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 $16,817,392 as of December 31, 2001 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2009. As of December 31, 2001 the fund has a post-October capital loss deferral of $10,017,714 which will be recognized in the following tax year.
E. 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 the 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.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. Covered Call Options -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded as an asset and an equivalent liability. The amount of the liability is subsequently "marked-to-market" to reflect the
FS-46
current market value of the option written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received.
H. Expenses -- Distribution expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-CHANGE IN ACCOUNTING PRINCIPLE
As required, effective January 1, 2001, the Fund adopted the provisions of the
AICPA Audit and Accounting Guide for Investment Companies and began amortizing
premiums on debt securities. Prior to January 1, 2001, the Fund did not amortize
premiums on debt securities. The cumulative effect of this accounting change had
no impact on total net assets of the Fund, but resulted in a $107,137 reduction
in the cost of securities and a corresponding $107,137 increase in net
unrealized gains and losses, based on securities held by the Fund on January 1,
2001.
The effect of this change in 2001 was to decrease net investment income by
$14,448, increase net unrealized gains and losses by $13,095 and increase net
realized gains and losses by $1,353. As a result, the net investment income per
share decreased by $0.01, the net realized and unrealized gains and losses per
share increased by $0.01 and the ratio of net investment income to average net
assets decreased by 0.04%.
NOTE 3-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at an annual rate of 0.60% on the first
$200 million of the Fund's average daily net assets, plus 0.50% on the next $300
million of the Fund's average daily net assets, plus 0.40% on the next $500
million of the Fund's average daily net assets, plus 0.30% on the Fund's average
daily net assets in excess of $1 billion. AIM has voluntarily agreed to waive
advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives
from the affiliated money market fund of which the Fund has invested. For the
year ended December 31, 2001, AIM waived fees of $1,934.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 2001, AIM was
paid $92,707 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 2001, AFS
was paid $401,224 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 and Class C shares of the Fund. The Trust 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
0.25% 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. 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. For the year ended December 31,
2001, the Class A, Class B and Class C shares paid AIM Distributors $543,963,
$1,309,131 and $150,360, respectively, as compensation under the Plans.
AIM Distributors received commissions of $69,443 from sales of the Class A
shares of the Fund during the year ended December 31, 2001. 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, 2001,
AIM Distributors received $9,778 in contingent deferred sales charges imposed on
redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 2001, the Fund paid legal fees of $5,426
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 4-INDIRECT EXPENSES
For the year ended December 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $5,233 and reductions in custodian fees of $80 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $5,313.
NOTE 5-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 6-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. 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
FS-47
AIM which are parties to the line of credit may borrow on a first come, first served basis. During the year ended December 31, 2001, 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. The commitment fee is allocated among the funds based on their respective average net assets for the period.
NOTE 7-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day. Therefore, the
value of the collateral may be temporarily less than the value of the securities
on loan.
At December 31, 2001, securities with an aggregate value of $41,953,857 were
on loan to brokers. The loans were secured by cash collateral of $43,287,594
received by the Fund and subsequently invested in affiliated money market funds
as follows: $21,643,797 in STIC Liquid Assets Portfolio and $21,643,797 in STIC
Prime Portfolio. For the year ended December 31, 2001, the Fund received fees of
$111,495 for securities lending.
NOTE 8-DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
---------- -----------
Distributions paid from:
Ordinary income $4,851,946 $29,323,123
-----------------------------------------------------------
Long-term capital gain 2,670,883 22,061,146
===========================================================
$7,522,829 $51,384,269
___________________________________________________________
===========================================================
|
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Undistributed ordinary income $ 250,637
---------------------------------------------------------
Capital loss carryover (16,817,392)
---------------------------------------------------------
Unrealized depreciation (1,493,140)
=========================================================
$(18,059,895)
_________________________________________________________
=========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of capital losses incurred after October 31, and other deferrals.
NOTE 9-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, 2001 was
$64,203,976 and $104,225,654, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $ 39,756,018 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (31,175,217) ========================================================= Net unrealized appreciation of investment securities $ 8,580,801 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $270,853,577. |
NOTE 10-CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2001 are summarized as follows:
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
Beginning of year -- $ --
---------------------------------------------------------
Written 336 226,433
---------------------------------------------------------
Expired (336) (226,433)
=========================================================
End of year -- $ --
_________________________________________________________
=========================================================
|
FS-48
NOTE 11-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2001 and 2000 were as follows:
2001 2000
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold:
Class A 1,794,576 $ 34,716,035 3,794,538 $106,076,315
----------------------------------------------------------------------------------------------------------------------
Class B 859,987 17,105,311 1,986,260 53,880,447
----------------------------------------------------------------------------------------------------------------------
Class C 226,533 4,463,280 558,391 15,179,433
======================================================================================================================
Issued as reinvestment of dividends:
Class A 283,142 4,686,155 1,299,861 29,276,481
----------------------------------------------------------------------------------------------------------------------
Class B 111,990 1,793,582 717,979 15,980,083
----------------------------------------------------------------------------------------------------------------------
Class C 12,912 207,366 81,046 1,800,992
======================================================================================================================
Reacquired:
Class A (3,018,253) (57,448,362) (2,334,702) (64,478,900)
----------------------------------------------------------------------------------------------------------------------
Class B (2,091,008) (38,226,694) (998,532) (26,785,880)
----------------------------------------------------------------------------------------------------------------------
Class C (282,906) (5,316,985) (104,539) (2,783,151)
======================================================================================================================
(2,103,027) $(38,020,312) 5,000,302 $128,145,820
______________________________________________________________________________________________________________________
======================================================================================================================
|
NOTE 12-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
2001(A) 2000(A) 1999(A) 1998 1997
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 22.45 $ 26.08 $ 21.01 $ 19.26 $ 16.01
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.29(b) 0.33 0.38 0.48 0.47
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.63) (1.00) 6.60 2.53 3.26
========================================================================================================================
Total from investment operations (6.34) (0.67) 6.98 3.01 3.73
========================================================================================================================
Less distributions:
Dividends from net investment income (0.29) (0.28) (0.35) (0.46) (0.47)
------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.18) (2.68) (1.56) (0.80) (0.01)
========================================================================================================================
Total distributions (0.47) (2.96) (1.91) (1.26) (0.48)
========================================================================================================================
Net asset value, end of period $ 15.64 $ 22.45 $ 26.08 $ 21.01 $ 19.26
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(c) (28.33)% (2.54)% 34.15% 16.01% 23.70%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $171,432 $267,200 $238,432 $196,665 $179,456
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets 1.12%(d) 1.03% 1.10% 1.06% 1.13%
========================================================================================================================
Ratio of net investment income to average net assets 1.53%(b)(d) 1.23% 1.69% 2.39% 2.79%
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate 19% 52% 37% 38% 26%
________________________________________________________________________________________________________________________
========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premiums on debt securities. Had the Fund not amortized premiums
on debt securities, the net investment income per share would have been
$0.30 and the ratio of net investment income to average net assets would
have been 1.57%. In accordance with the AICPA Audit and Accounting Guide
for Investment Companies, per share and ratios for periods prior to January
1, 2001 have not been restated to reflect this change in presentation.
(c) Does not include sales charges.
(d) Ratios are based on average daily net assets of $217,585,019.
FS-49
CLASS B
--------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
2001(A) 2000(A) 1999(A) 1998 1997
------- -------- -------- -------- -------
Net asset value, beginning of period $22.38 $ 26.03 $ 20.98 $ 19.24 $ 16.01
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.15(b) 0.13 0.21 0.33 0.34
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.60) (1.01) 6.59 2.53 3.25
======================================================================================================================
Total from investment operations (6.45) (0.88) 6.80 2.86 3.59
======================================================================================================================
Less distributions:
Dividends from net investment income (0.15) (0.09) (0.19) (0.32) (0.35)
----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.18) (2.68) (1.56) (0.80) (0.01)
======================================================================================================================
Total distributions (0.33) (2.77) (1.75) (1.12) (0.36)
======================================================================================================================
Net asset value, end of period $15.60 $ 22.38 $ 26.03 $ 20.98 $ 19.24
______________________________________________________________________________________________________________________
======================================================================================================================
Total return(c) (28.87)% (3.28)% 33.16% 15.14% 22.74%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $94,615 $160,820 $142,632 $111,866 $94,227
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets 1.88%(d) 1.80% 1.84% 1.81% 1.91%
======================================================================================================================
Ratio of net investment income to average net assets 0.78%(b)(d) 0.46% 0.95% 1.64% 2.01%
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate 19% 52% 37% 38% 26%
______________________________________________________________________________________________________________________
======================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premiums on debt securities. Had the Fund not amortized premiums
on debt securities, the net investment income per share would have been the
same and the ratio of net investment income to average net assets would
have been 0.81%. In accordance with the AICPA Audit and Accounting Guide
for Investment Companies, per share and ratios for periods prior to January
1, 2001 have not been restated to reflect this change in presentation.
(c) Does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $130,913,088.
CLASS C
-----------------------------------------------------------
AUGUST 4, 1997
(DATE SALES
YEAR ENDED DECEMBER 31, COMMENCED) TO
----------------------------------------- DECEMBER 31,
2001(A) 2000(A) 1999(A) 1998 1997
------- ------- ------- ------ --------------
Net asset value, beginning of period $22.37 $26.02 $20.97 $19.24 $ 17.67
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.15(b) 0.13 0.21 0.33 0.13
-------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.60) (1.01) 6.59 2.52 1.58
=========================================================================================================================
Total from investment operations (6.45) (0.88) 6.80 2.85 1.71
=========================================================================================================================
Less distributions:
Dividends from net investment income (0.15) (0.09) (0.19) (0.32) (0.13)
-------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.18) (2.68) (1.56) (0.80) (0.01)
=========================================================================================================================
Total distributions (0.33) (2.77) (1.75) (1.12) (0.14)
=========================================================================================================================
Net asset value, end of period $15.59 $22.37 $26.02 $20.97 $ 19.24
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(c) (28.88)% (3.28)% 33.18% 15.09% 9.74%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $11,679 $17,727 $6,702 $2,994 $ 1,183
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets 1.88%(d) 1.80% 1.84% 1.81% 1.90%(e)
=========================================================================================================================
Ratio of net investment income to average net assets 0.78%(b)(d) 0.46% 0.95% 1.64% 2.02%(e)
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate 19% 52% 37% 38% 26%
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premiums on debt securities. Had the Fund not amortized premiums
on debt securities, the net investment income per share would have been the
same and the ratio of net investment income to average net assets would
have been 0.81%. In accordance with the AICPA Audit and Accounting Guide
for Investment Companies, per share and ratios for periods prior to January
1, 2001 have not been restated to reflect this change in presentation.
(c) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(d) Ratios are based on average daily net assets of $15,035,993.
(e) Annualized.
FS-50
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
AIM International Emerging Growth Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM International Emerging Growth Fund (one of the funds constituting AIM Funds Group; hereafter referred to as the "Fund") at December 31, 2001, and the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2001 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP February 14, 2002 Houston, Texas |
FS-51
SCHEDULE OF INVESTMENTS
December 31, 2001
MARKET
SHARES VALUE
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-93.86%
AUSTRALIA-5.59%
Billabong International Ltd. (Movies &
Entertainment) 17,100 $ 73,204
-------------------------------------------------------------------
Computershare Ltd. (Data Processing Services) 33,500 90,359
-------------------------------------------------------------------
CSL Ltd. (Pharmaceuticals)(a) 5,100 134,149
-------------------------------------------------------------------
ERG Ltd. (Electronic Equipment & Instruments) 91,000 25,568
-------------------------------------------------------------------
Ramsay Health Care Ltd. (Health Care
Facilities) 27,600 64,576
-------------------------------------------------------------------
Securenet Ltd. (Internet Software &
Services)(b) 36,700 25,685
-------------------------------------------------------------------
Toll Holdings Ltd. (Trucking) 9,500 135,114
===================================================================
548,655
===================================================================
AUSTRIA-0.78%
Gericom A.G. (Computer Hardware) 2,800 76,655
===================================================================
BELGIUM-2.54%
Omega Pharma S.A. (Health Care Supplies) 5,500 249,400
===================================================================
CANADA-25.68%
A.L.I Technologies Inc. (Health Care
Distributors & Services)(b) 19,000 226,816
-------------------------------------------------------------------
Alimentation Couche-Tard Inc.-Class B (Food
Retail)(b) 13,600 219,347
-------------------------------------------------------------------
BW Technologies Ltd. (Electronic Equipment &
Instruments)(b) 9,900 104,001
-------------------------------------------------------------------
Cognicase Inc. (Application Software)(b) 21,800 139,708
-------------------------------------------------------------------
Connors Bros. Income Fund (Food Distributors) 13,500 101,360
-------------------------------------------------------------------
CoolBrands International, Inc.
(Restaurants)(b) 29,200 64,212
-------------------------------------------------------------------
Dynacare Inc. (Health Care Distributors &
Services)(b) 5,100 86,139
-------------------------------------------------------------------
FirstService Corp. (Diversified Commercial
Services)(b) 7,700 217,367
-------------------------------------------------------------------
Forzani Group Ltd. (The)-Class A (Specialty
Stores)(b) 30,200 290,312
-------------------------------------------------------------------
Genesis Microchip Inc. (Semiconductors)(b) 2,000 132,240
-------------------------------------------------------------------
Northside Group Inc. (Construction & Farm
Machinery)(b) 12,500 62,437
-------------------------------------------------------------------
Paladin Labs, Inc. (Pharmaceuticals)(b) 12,400 63,885
-------------------------------------------------------------------
PanGeo Pharma Inc. (Pharmaceuticals)(b) 79,200 149,284
-------------------------------------------------------------------
Reitmans (Canada) Ltd.-Class A (Apparel
Retail) 9,800 138,540
-------------------------------------------------------------------
Richelieu Hardware Ltd. (Distributors)(b) 23,400 147,022
-------------------------------------------------------------------
SEAMARK Asset Management Ltd. (Diversified
Financial Services)(a) 12,200 142,190
-------------------------------------------------------------------
SNC-Lavalin Group Inc. (Construction &
Engineering) 6,300 114,394
-------------------------------------------------------------------
Vincor International Inc. (Brewers)(a)(b) 7,900 118,877
===================================================================
2,518,131
===================================================================
|
MARKET
SHARES VALUE
CHINA-1.85%
AsiaInfo Holdings, Inc. (Internet Software &
Services)(b) 6,400 $ 111,488
-------------------------------------------------------------------
Travelsky Technology Ltd. (Diversified
Commercial Services)(a)(b) 91,000 70,013
===================================================================
181,501
===================================================================
FINLAND-3.88%
Hartwall Oyj ABP (Brewers) 9,900 202,169
-------------------------------------------------------------------
Instrumentarium Corp.-Class B (Health Care
Equipment) 3,000 125,737
-------------------------------------------------------------------
Vacon Oyj (Electrical Components &
Equipment)(a) 6,400 52,506
===================================================================
380,412
===================================================================
FRANCE-10.05%
AES Laboratoire Groupe (Health Care
Equipment) 1,200 122,526
-------------------------------------------------------------------
Brime Technologies (Diversified Commercial
Services)(b) 3,100 95,373
-------------------------------------------------------------------
Marionnaud Parfumeries (Specialty Stores)(b) 3,600 174,640
-------------------------------------------------------------------
MEDIDEP S.A. (Health Care Facilities)(b) 13,140 253,686
-------------------------------------------------------------------
Silicon-On-Insulator Technologies (SOITEC)
(Electronic Equipment & Instruments)(b) 10,355 205,458
-------------------------------------------------------------------
UBI Soft Entertainment S.A. (Application
Software)(b) 4,000 133,763
===================================================================
985,446
===================================================================
GERMANY-4.61%
FJA A.G. (Electronic Equipment & Instruments) 1,850 84,137
-------------------------------------------------------------------
Stada Arzneimittel A.G. (Pharmaceuticals) 5,100 178,506
-------------------------------------------------------------------
Suess MicroTec A.G. (Semiconductor
Equipment)(b) 2,800 78,403
-------------------------------------------------------------------
Wedeco A.G. Water Technology (Water
Utilities)(b) 3,600 110,755
===================================================================
451,801
===================================================================
GREECE-0.92%
Folli-Follie (Apparel & Accessories) 5,100 89,776
===================================================================
HONG KONG-5.72%
Asia Satellite Telecommunications Holdings
Ltd. (Alternative Carriers) 29,000 47,413
-------------------------------------------------------------------
Clear Media Ltd. (Advertising)(a)(b) 152,000 111,098
-------------------------------------------------------------------
Convenience Retail Asia Ltd. (Food
Retail)(a)(b) 184,000 59,576
-------------------------------------------------------------------
Denway Motors Ltd. (Automobile Manufacturers) 146,400 45,524
-------------------------------------------------------------------
Global Bio-chem Technology Co. Ltd.
(Agricultural Products) 276,000 96,442
-------------------------------------------------------------------
Texwinca Holdings Ltd. (Textiles) 228,000 108,906
-------------------------------------------------------------------
Tingyi (Cayman Islands) Holding Corp.
(Packaged Foods) 548,000 92,054
===================================================================
561,013
===================================================================
|
FS-52
MARKET
SHARES VALUE
INDIA-1.26%
Dr. Reddy's Laboratories Ltd.-ADR
(Pharmaceuticals) 3,200 $ 60,640
-------------------------------------------------------------------
Satyam Computer Services Ltd.-ADR (IT
Consulting & Services) 5,700 62,586
===================================================================
123,226
===================================================================
IRELAND-4.57%
Anglo Irish Bank Corp. PLC (Banks) 41,200 159,819
-------------------------------------------------------------------
ICON PLC-ADR (Health Care Distributors &
Services)(b) 3,100 92,411
-------------------------------------------------------------------
IFG Group PLC (Diversified Financial
Services) 38,600 115,312
-------------------------------------------------------------------
Riverdeep Group PLC-ADR (Internet Software &
Services)(b) 4,800 80,688
===================================================================
448,230
===================================================================
ISRAEL-4.70%
ECtel Ltd. (Telecommunications Equipment)(b) 10,200 176,664
-------------------------------------------------------------------
Lumenis Ltd. (Health Care Equipment)(b) 2,100 41,370
-------------------------------------------------------------------
Taro Pharmaceutical Industries Ltd.
(Pharmaceuticals)(b) 3,820 152,609
-------------------------------------------------------------------
TTI Team Telecom International Ltd.
(Application Software)(b) 3,600 90,072
===================================================================
460,715
===================================================================
JAPAN-1.52%
Bellsystem24, Inc. (Diversified Commercial
Services) 400 148,857
===================================================================
NETHERLANDS-0.79%
ASM International N.V. (Semiconductor
Equipment)(b) 4,000 77,582
===================================================================
NEW ZEALAND-0.83%
Fisher & Paykel Healthcare Corp. Ltd.-ADR
(Health Care Equipment)(b) 2,900 81,635
===================================================================
SINGAPORE-0.52%
Sembcorp Logistics Ltd. (Marine Ports &
Services) 52,000 50,691
===================================================================
SWEDEN-4.08%
Biacore International A.B. (Health Care
Equipment)(b) 2,410 78,442
-------------------------------------------------------------------
|
MARKET
SHARES VALUE
SWEDEN-(CONTINUED)
Elekta A.B.-Class B (Health Care
Equipment)(b) 21,100 $ 171,694
-------------------------------------------------------------------
Nobel Biocare (Health Care Supplies) 2,000 83,765
-------------------------------------------------------------------
Q-Med A.B. (Biotechnology)(b) 4,000 66,629
===================================================================
400,530
===================================================================
SWITZERLAND-0.35%
Converium Holding A.G. (Reinsurance)(b) 700 34,071
===================================================================
UNITED KINGDOM-13.62%
Biotrace International PLC (Health Care
Equipment)(b) 37,000 74,203
-------------------------------------------------------------------
Chemring Group PLC (Aerospace & Defense) 26,500 140,832
-------------------------------------------------------------------
Chloride Group PLC (Electrical Components &
Equipment) 55,000 56,056
-------------------------------------------------------------------
Electronics Boutique PLC (Computer &
Electronics Retail) 120,600 240,563
-------------------------------------------------------------------
Geest PLC (Agricultural Products) 9,900 106,345
-------------------------------------------------------------------
Innovation Group (The) PLC (Application
Software) 14,100 74,933
-------------------------------------------------------------------
iSOFT Group PLC (Application Software)(a) 46,300 175,273
-------------------------------------------------------------------
John David Sports PLC (Apparel Retail) 17,200 76,257
-------------------------------------------------------------------
Man Group PLC (Diversified Financial
Services) 13,400 232,564
-------------------------------------------------------------------
PHS Group PLC (Diversified Commercial
Services) 37,880 49,086
-------------------------------------------------------------------
Torex PLC (IT Consulting & Services) 10,300 109,777
===================================================================
1,335,889
===================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $7,837,495) 9,204,216
===================================================================
MONEY MARKET FUNDS-5.89%
STIC Liquid Assets Portfolio(c) 288,573 288,573
-------------------------------------------------------------------
STIC Prime Portfolio(c) 288,573 288,573
===================================================================
Total Money Market Funds (Cost $577,146) 577,146
===================================================================
TOTAL INVESTMENTS-99.75% (Cost $8,414,641) 9,781,362
===================================================================
OTHER ASSETS LESS LIABILITIES-0.25% 24,372
===================================================================
NET ASSETS-100.00% $9,805,734
___________________________________________________________________
===================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended.
(b) Non-income producing security.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-53
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2001
ASSETS:
Investments, at market value (cost $8,414,641) $9,781,362
------------------------------------------------------------
Foreign currencies, at value (cost $147,455) 148,790
------------------------------------------------------------
Receivables for:
Fund shares sold 6,009
------------------------------------------------------------
Dividends 10,004
------------------------------------------------------------
Investment for deferred compensation plan 9,076
------------------------------------------------------------
Due from advisor 8,558
------------------------------------------------------------
Other assets 13,831
============================================================
Total assets 9,977,630
============================================================
LIABILITIES:
Payables for:
Investments purchased 53,637
------------------------------------------------------------
Fund shares reacquired 51,774
------------------------------------------------------------
Deferred compensation plan 9,076
------------------------------------------------------------
Accrued distribution fees 8,605
------------------------------------------------------------
Accrued transfer agent fees 5,372
------------------------------------------------------------
Accrued operating expenses 43,432
============================================================
Total liabilities 171,896
============================================================
Net assets applicable to shares outstanding $9,805,734
____________________________________________________________
============================================================
NET ASSETS:
Class A $5,202,143
____________________________________________________________
============================================================
Class B $2,016,073
____________________________________________________________
============================================================
Class C $2,587,518
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 732,800
____________________________________________________________
============================================================
Class B 285,132
____________________________________________________________
============================================================
Class C 366,162
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 7.10
------------------------------------------------------------
Offering price per share:
(Net asset value of $7.10 divided by 94.50%) $ 7.51
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 7.07
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 7.07
____________________________________________________________
============================================================
|
STATEMENT OF OPERATIONS
For the year ended December 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$7,548) $ 70,067
------------------------------------------------------------
Dividends from affiliated money market funds 20,377
------------------------------------------------------------
Interest 183
============================================================
Total investment income 90,627
============================================================
EXPENSES:
Advisory fees 96,010
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 70,226
------------------------------------------------------------
Distribution fees -- Class A 19,636
------------------------------------------------------------
Distribution fees -- Class B 19,061
------------------------------------------------------------
Distribution fees -- Class C 25,899
------------------------------------------------------------
Interest 1,622
------------------------------------------------------------
Transfer agent fees -- Class A 20,462
------------------------------------------------------------
Transfer agent fees -- Class B 8,029
------------------------------------------------------------
Transfer agent fees -- Class C 10,910
------------------------------------------------------------
Trustees' fees 8,355
------------------------------------------------------------
Registration and filing fees 83,403
------------------------------------------------------------
Professional Fees 49,410
------------------------------------------------------------
Other 28,110
============================================================
Total expenses 491,133
============================================================
Less: Fees waived and expenses reimbursed (255,424)
------------------------------------------------------------
Expenses paid indirectly (142)
============================================================
Net expenses 235,567
============================================================
Net investment income (loss) (144,940)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities (3,434,001)
------------------------------------------------------------
Foreign currencies 7,533
============================================================
(3,426,468)
============================================================
Change in net unrealized appreciation of:
Investment securities 2,123,974
------------------------------------------------------------
Foreign currencies 3,212
============================================================
2,127,186
============================================================
Net gain (loss) from investment securities and
foreign currencies (1,299,282)
============================================================
Net increase (decrease) in net assets resulting
from operations $(1,444,222)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-54
STATEMENT OF CHANGES IN NET ASSETS
For the year ended December 31, 2001 and the period August 31, 2000 (date
operations commenced)
through December 31, 2001
2001 2000
----------- -----------
OPERATIONS:
Net investment income (loss) $ (144,940) $ (29,949)
----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (3,426,468) (500,456)
----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies 2,127,186 (759,305)
========================================================================================
Net increase (decrease) in net assets resulting from
operations (1,444,222) (1,289,710)
========================================================================================
Distributions to shareholders from net investment income:
Class A (23,732) --
----------------------------------------------------------------------------------------
Share transactions-net:
Class A 479,977 6,385,964
----------------------------------------------------------------------------------------
Class B 279,960 2,274,262
----------------------------------------------------------------------------------------
Class C 247,353 2,895,882
========================================================================================
Net increase (decrease) in net assets (460,664) 10,266,398
========================================================================================
NET ASSETS:
Beginning of year 10,266,398 --
========================================================================================
End of year $ 9,805,734 $10,266,398
________________________________________________________________________________________
========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $12,397,467 $11,550,792
----------------------------------------------------------------------------------------
Undistributed net investment income (loss) (9,076) (8,552)
----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (3,950,538) (516,537)
----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies 1,367,881 (759,305)
========================================================================================
$ 9,805,734 $10,266,398
________________________________________________________________________________________
========================================================================================
|
See Notes to Financial Statements.
FS-55
NOTES TO FINANCIAL STATEMENTS
December 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM International Emerging Growth Fund (the "Fund") is a series portfolio of AIM
Funds Group (the "Fund"). The Trust is a Delaware business trust registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of twelve separate
portfolios, each having an unlimited number of shares of beneficial interest.
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 long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 as of the close of the customary trading session 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/ event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date.
On December 31, 2001, undistributed net investment income was increased by $168,148, undistributed net realized gains decreased by $7,533 and shares of beneficial interest decreased by $160,615 as a result of differing book/tax treatment of foreign currency transactions, net operating loss, and other reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and 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 from 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.
FS-56
The Fund's capital loss carryforward of $3,760,460 is broken down by expiration date as follows:
CAPITAL LOSS CARRYFORWARD EXPIRATION ------------ ---------- $ 161,713 December 31, 2008 ------------------------------- 3,598,747 December 31, 2009 =============================== $3,760,460 ______________________________ =============================== |
As of December 31, 2001 the fund has a post-October capital loss deferral of $140,458 which will be recognized in the following tax year.
E. 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 the 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.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. Expenses -- Distribution expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. (AIM). Under the terms of the investment advisory agreement, the
Fund pays an advisory fee to AIM at the annual rate of 0.95% of the Fund's
average daily net assets. Effective July 1, 2001, AIM has voluntarily agreed to
waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM
receives from the affiliated money market fund of which the Fund has invested.
For the year ended December 31, 2001, AIM waived fees of $96,010 and reimbursed
expenses of $159,414.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 2001, AIM was
paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. (AIM) a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 2001, AFS
was paid $21,921 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 and Class C shares of the Fund. The Trust 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. 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. For the year ended December 31,
2001, the Class A, Class B and Class C shares paid AIM Distributors $19,636,
$19,061 and $25,899, respectively, as compensation under the Plans.
AIM Distributors received commissions of $4,181 from sales of the Class A
shares of the Fund during the year ended December 31, 2001. 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, 2001,
AIM Distributors received $29,308 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 2001, the Fund paid legal fees of $3,527
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the year ended December 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $140 and reductions in custodian fees of $2 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $142.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an interested person of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
FS-57
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. 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,
2001, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6-DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
------- ----
Distributions paid from:
Ordinary income $23,732 $--
________________________________________________________
========================================================
|
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Capital loss carryforward $(3,760,460)
---------------------------------------------------------
Unrealized appreciation 1,168,727
=========================================================
$(2,591,733)
_________________________________________________________
=========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of capital losses incurred after October 31, and other deferrals.
NOTE 7-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, 2001 was $15,428,239 and $13,891,979, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $1,694,217 -------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (377,115) ========================================================================== Net unrealized appreciation of investment securities $1,317,102 __________________________________________________________________________ ========================================================================== Cost of investments for tax purposes is $8,464,260 |
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the year ended December 31, 2001 and the period August 31, 2000 (date operations commenced) through December 31, 2000:
2001 2000
----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- -----------
Sold:
Class A 993,758 $ 7,031,221 745,389 $ 6,717,335
-----------------------------------------------------------------------------------------------------------------
Class B 109,838 803,969 271,186 2,438,175
-----------------------------------------------------------------------------------------------------------------
Class C 515,389 3,642,409 339,960 2,953,136
=================================================================================================================
Issued as reinvestment of dividends:
Class A 3,265 22,694 -- --
=================================================================================================================
Reacquired:
Class A (970,367) (6,573,938) (39,245) (331,371)
-----------------------------------------------------------------------------------------------------------------
Class B (75,401) (524,009) (20,491) (163,913)
-----------------------------------------------------------------------------------------------------------------
Class C (482,373) (3,395,056) (6,814) (57,254)
=================================================================================================================
94,109 $ 1,007,290 1,289,985 $11,556,108
_________________________________________________________________________________________________________________
=================================================================================================================
|
FS-58
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------
AUGUST 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2001(a) 2000(a)
------------ ----------------
Net asset value, beginning of period $ 7.97 $ 10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08) (0.03)
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.76) (2.00)
==============================================================================================
Total from investment operations (0.84) (2.03)
==============================================================================================
Less dividends from net investment income (0.03) --
==============================================================================================
Net asset value, end of period $ 7.10 $ 7.97
______________________________________________________________________________________________
==============================================================================================
Total return(b) (10.48)% (20.30)%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 5,202 $ 5,625
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers and expense reimbursements 2.02%(c) 2.11%(d)
----------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 4.55%(c) 6.83%(d)
==============================================================================================
Ratio of expenses to average net assets (excluding interest
expense):
With fee waivers and expense reimbursements 2.00%(c) 2.11%(d)
----------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 4.53%(c) 6.83%(d)
==============================================================================================
Ratio of net investment income (loss) to average net assets (1.12)%(c) (1.09)%(d)
==============================================================================================
Ratio of interest expense to average net assets 0.02%(c) --
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 145% 30%
______________________________________________________________________________________________
==============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average daily net assets of $5,610,302.
(d) Annualized.
FS-59
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
--------------------------------
AUGUST 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2001(a) 2000(a)
------------ ----------------
Net asset value, beginning of period $ 7.95 $ 10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13) (0.05)
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.75) (2.00)
==============================================================================================
Total from investment operations (0.88) (2.05)
==============================================================================================
Net asset value, end of period $ 7.07 $ 7.95
______________________________________________________________________________________________
==============================================================================================
Total return(b) (11.07)% (20.50)%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 2,016 $ 1,992
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers and expense reimbursements 2.72%(c) 2.81%(d)
----------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 5.25%(c) 7.53%(d)
==============================================================================================
Ratio of expenses to average net assets (excluding interest
expense):
With fee waivers and expense reimbursements 2.70%(c) 2.81%(d)
----------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 5.23%(c) 7.53%(d)
==============================================================================================
Ratio of net investment income (loss) to average net assets (1.83)%(c) (1.79)%(d)
==============================================================================================
Ratio of interest expense to average net assets 0.02%(c) --
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 145% 30%
______________________________________________________________________________________________
==============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $1,906,058.
(d) Annualized.
FS-60
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
--------------------------------
AUGUST 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2001(a) 2000(a)
------------ ----------------
Net asset value, beginning of period $ 7.95 $ 10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13) (0.05)
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.75) (2.00)
==============================================================================================
Total from investment operations (0.88) (2.05)
==============================================================================================
Net asset value, end of period $ 7.07 $ 7.95
______________________________________________________________________________________________
==============================================================================================
Total return(b) (11.07)% (20.50)%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 2,588 $ 2,649
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers and expense reimbursements 2.72%(c) 2.81%(d)
----------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 5.25%(c) 7.53%(d)
==============================================================================================
Ratio of expenses to average net assets (excluding interest
expense):
With fee waivers and expense reimbursements 2.70%(c) 2.81%(d)
----------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 5.23%(c) 7.53%(d)
==============================================================================================
Ratio of net investment income (loss) to average net assets (1.83)%(c) (1.79)%(d)
==============================================================================================
Ratio of interest expense to average net assets 0.02%(c) --
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 145% 30%
______________________________________________________________________________________________
==============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $2,589,920.
(d) Annualized.
FS-61
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of AIM Mid Cap
Basic Value Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Mid Cap Basic Value Fund (one of the funds constituting AIM Funds Group; hereafter referred to as the "Fund") at December 31, 2001, and the results of its operations, the changes in its net assets and the financial highlights for the period indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at December 31, 2001 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP February 14, 2002 Houston, Texas |
FS-62
SCHEDULE OF INVESTMENTS
December 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-94.39%
ADVERTISING-2.60%
Interpublic Group of Cos., Inc. (The) 880 $ 25,995
======================================================================
APPAREL RETAIL-6.33%
Abercrombie & Fitch Co.-Class A(a) 500 13,265
----------------------------------------------------------------------
AnnTaylor Stores Corp.(a) 300 10,500
----------------------------------------------------------------------
Gap, Inc. (The) 1,500 20,910
----------------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 900 18,585
======================================================================
63,260
======================================================================
AUTO PARTS & EQUIPMENT-1.36%
Visteon Corp. 900 13,536
======================================================================
BANKS-7.04%
AmSouth Bancorporation 1,000 18,900
----------------------------------------------------------------------
Cullen/Frost Bankers, Inc. 900 27,792
----------------------------------------------------------------------
Zions Bancorp 450 23,661
======================================================================
70,353
======================================================================
BUILDING PRODUCTS-2.53%
American Standard Cos. Inc.(a) 370 25,245
======================================================================
CONSUMER FINANCE-1.86%
AmeriCredit Corp.(a) 590 18,614
======================================================================
DATA PROCESSING SERVICES-4.12%
Ceridian Corp.(a) 1,400 26,250
----------------------------------------------------------------------
DST Systems, Inc.(a) 300 14,955
======================================================================
41,205
======================================================================
DIVERSIFIED COMMERCIAL SERVICES-1.86%
IMS Health Inc. 950 18,534
======================================================================
DIVERSIFIED FINANCIAL SERVICES-2.87%
Stilwell Financial, Inc. 700 19,054
----------------------------------------------------------------------
Waddell & Reed Financial, Inc.-Class A 300 9,660
======================================================================
28,714
======================================================================
DIVERSIFIED METALS & MINING-1.48%
Arch Coal, Inc. 650 14,755
======================================================================
ELECTRIC UTILITIES-3.84%
PG&E Corp. 1,000 19,240
----------------------------------------------------------------------
PPL Corp. 550 19,168
======================================================================
38,408
======================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-1.61%
Rockwell International Corp. 900 16,074
======================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-3.48%
Cognex Corp.(a) 700 17,927
----------------------------------------------------------------------
|
MARKET
SHARES VALUE
ELECTRONIC EQUIPMENT & INSTRUMENTS-(CONTINUED)
Amphenol Corp.-Class A(a) 350 $ 16,818
======================================================================
34,745
======================================================================
EMPLOYMENT SERVICES-3.74%
Korn/Ferry International(a) 2,000 21,300
----------------------------------------------------------------------
Robert Half International Inc.(a) 600 16,020
======================================================================
37,320
======================================================================
FOOD RETAIL-2.09%
Kroger Co. (The)(a) 1,000 20,870
======================================================================
FOREST PRODUCTS-1.61%
Louisiana-Pacific Corp. 1,900 16,036
======================================================================
HEALTH CARE SUPPLIES-2.15%
Bausch & Lomb, Inc. 570 21,466
======================================================================
HOTELS-1.79%
Starwood Hotels & Resorts Worldwide, Inc. 600 17,910
======================================================================
HOUSEHOLD APPLIANCES-2.19%
Black & Decker Corp. (The) 580 21,883
======================================================================
INDUSTRIAL CONGLOMERATES-1.87%
Textron, Inc. 450 18,657
======================================================================
INDUSTRIAL MACHINERY-3.39%
Kennametal Inc. 400 16,108
----------------------------------------------------------------------
SPX Corp.(a) 130 17,797
======================================================================
33,905
======================================================================
IT CONSULTING & SERVICES-1.57%
Acxiom Corp. 900 15,723
======================================================================
LEISURE PRODUCTS-2.18%
Brunswick Corp. 1,000 21,760
======================================================================
LIFE & HEALTH INSURANCE-4.54%
Nationwide Financial Services, Inc.-Class A 550 22,803
----------------------------------------------------------------------
UnumProvident Corp. 850 22,534
======================================================================
45,337
======================================================================
MANAGED HEALTH CARE-3.86%
Aetna Inc. 570 18,804
----------------------------------------------------------------------
Anthem, Inc.(a) 400 19,800
======================================================================
38,604
======================================================================
MULTI-LINE INSURANCE-0.98%
American Financial Group, Inc. 400 9,820
======================================================================
OIL & GAS DRILLING-5.18%
Cooper Cameron Corp.(a) 450 18,162
----------------------------------------------------------------------
Nabors Industries, Inc.(a) 450 15,449
----------------------------------------------------------------------
|
FS-63
MARKET
SHARES VALUE
OIL & GAS DRILLING-(CONTINUED)
Pride International, Inc.(a) 1,200 $ 18,120
======================================================================
51,731
======================================================================
OIL & GAS EQUIPMENT & SERVICES-2.15%
Smith International, Inc.(a) 400 21,448
======================================================================
OIL & GAS REFINING & MARKETING-1.14%
Valero Energy Corp. 300 11,436
======================================================================
PROPERTY & CASUALTY INSURANCE-3.53%
ACE Ltd. (Bermuda) 450 18,068
----------------------------------------------------------------------
Radian Group Inc. 400 17,180
======================================================================
35,248
======================================================================
RESTAURANTS-2.06%
Outback Steakhouse, Inc.(a) 600 20,550
======================================================================
SEMICONDUCTORS-4.29%
Integrated Device Technology, Inc.(a) 400 10,636
----------------------------------------------------------------------
Lattice Semiconductor Corp.(a) 800 16,456
----------------------------------------------------------------------
LSI Logic Corp.(a) 1,000 15,780
======================================================================
42,872
======================================================================
|
MARKET
SHARES VALUE
SPECIALTY CHEMICALS-1.46%
Great Lakes Chemical Corp. 600 $ 14,568
======================================================================
SYSTEMS SOFTWARE-1.64%
BMC Software, Inc.(a) 1,000 16,370
======================================================================
Total Common Stocks & Other Equity
Interests (Cost $943,966) 942,952
======================================================================
PRINCIPAL
AMOUNT
U.S. GOVERNMENT AGENCY SECURITIES-100.10%
FEDERAL HOME LOAN MORTGAGE CORP.
(FHLMC)-100.10%
Disc. Notes,
2.46%, 11/01/01 (Cost $999,959)(b) $1,000,000 999,959
======================================================================
TOTAL INVESTMENTS-194.49% (Cost $1,943,925) 1,942,911
======================================================================
OTHER ASSETS LESS LIABILITIES-(94.49%) (943,944)
======================================================================
NET ASSETS-100.00% $ 998,967
______________________________________________________________________
======================================================================
|
Investment Abbreviations:
Disc. - Discounted |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The interest rate shown represents the rate of discount paid or received at
the time of purchase by the Fund.
See Notes to Financial Statements.
FS-64
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2001
ASSETS:
Investments, at market value (cost $1,943,925) $1,942,911
------------------------------------------------------------
Cash 81
------------------------------------------------------------
Receivables due from advisor 5,416
============================================================
Total assets 1,948,408
============================================================
LIABILITIES:
Payables for investments purchased 943,965
------------------------------------------------------------
Accrued operating expenses 5,476
============================================================
Total liabilities 949,441
============================================================
Net assets applicable to shares outstanding $ 998,967
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 399,591
____________________________________________________________
============================================================
Class B $ 299,688
____________________________________________________________
============================================================
Class C $ 299,688
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 40,000
____________________________________________________________
============================================================
Class B 30,000
____________________________________________________________
============================================================
Class C 30,000
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 9.99
------------------------------------------------------------
Offering price per share:
(Net asset value of $9.99 divided by 94.50%) $ 10.57
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 9.99
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 9.99
____________________________________________________________
============================================================
|
STATEMENT OF OPERATIONS
December 31, 2001 (date operations commenced)
INVESTMENT INCOME:
Interest 41
===========================================================
EXPENSES:
Advisory fees 22
-----------------------------------------------------------
Administrative services fees 137
-----------------------------------------------------------
Custodian fees 250
-----------------------------------------------------------
Transfer agent fees 47
-----------------------------------------------------------
Distribution fees -- Class A 4
-----------------------------------------------------------
Distribution fees -- Class B 8
-----------------------------------------------------------
Distribution fees -- Class C 8
-----------------------------------------------------------
Printing 3,000
-----------------------------------------------------------
Professional Fees 2,000
===========================================================
Total expenses 5,476
===========================================================
Less: Fees waived and expenses reimbursed (5,416)
-----------------------------------------------------------
Net expenses 60
===========================================================
Net investment income (loss) (19)
===========================================================
Change in net unrealized appreciation
(depreciation) of investment securities (1,014)
===========================================================
Net increase (decrease) in net assets resulting
from operations $(1,033)
___________________________________________________________
===========================================================
|
See Notes to Financial Statements.
FS-65
STATEMENT OF CHANGES IN NET ASSETS
December 31, 2001 (date operations commenced)
2001
--------
OPERATIONS:
Net investment income (loss) $ (19)
------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (1,014)
========================================================================
Net increase (decrease) in net assets resulting from
operations (1,033)
========================================================================
Share transactions-net:
Class A 400,000
------------------------------------------------------------------------
Class B 300,000
------------------------------------------------------------------------
Class C 300,000
========================================================================
Net increase in net assets 998,967
========================================================================
NET ASSETS:
Beginning of year $ --
========================================================================
End of year $998,967
________________________________________________________________________
========================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $999,981
------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (1,014)
========================================================================
$998,967
________________________________________________________________________
========================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Mid Cap Basic Value Fund (the "Fund") is a series portfolio of AIM Funds
Group (the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of twelve separate portfolios,
each having an unlimited number of shares of beneficial interest. 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 long-term growth of capital. The Fund
commenced operations on December 31, 2001.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 as of the close of the customary trading session 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 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 at amortized cost which approximates market value. For
FS-66
purposes of determining net asset value per share, futures and option contracts generally will be valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/ event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. Premiums and discounts are amortized and/or accreted for financial reporting purposes.
On December 31, 2001, undistributed net investment income was increased by $19 and shares of beneficial interest was decreased by $19 as a result of net operating loss reclassifications. Net assets of the Fund were unaffected by the reclassifications discussed above.
C. Distributions -- Distributions from income and 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 from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
E. 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 the 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.
F. Expenses -- Distribution expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.80% of the first $1
billion of the Fund's average daily net assets, plus 0.75% of the next $4
billion of the Fund's average daily net assets, plus 0.70% of the Fund's average
daily net assets in excess of $5 billion. AIM has voluntarily agreed to waive
advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives
from the affiliated money market fund of which the Fund has invested. On
December 31, 2001 (date operations commenced), AIM waived fees of $22 and
reimbursed expenses of $5,394.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. On December 31, 2001 (date operations
commenced), AIM was paid $137 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. On December 31, 2001 (date operations
commenced) the Fund paid no expenses to AIM 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 and Class C shares of the Fund. The Trust 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
0.25% 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. 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. On December 31, 2001 (date
operations commenced), the Class A, Class B and Class C shares paid AIM
Distributors $4, $8 and $8, respectively, as compensation under the Plans.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
The law firm of Kramer, Levin, Naftalis & Frankel LLP, of which a trustee is a
member, is counsel to the Board of Trustees. For December 31, 2001 (date
operations commenced), the Fund paid no expenses with respect to this firm.
FS-67
NOTE 3-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 4-TAX COMPONENTS OF CAPITAL
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Unrealized appreciation (depreciation) $(1,014) ________________________________________________________ ======================================================== |
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund December 31, 2001 (date operations commenced) was
$943,966 and $0, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 2001 is as follows:
Aggregate unrealized (depreciation) of investment securities $(1,014) ======================================================== Net unrealized appreciation (depreciation) of investment securities $(1,014) ________________________________________________________ ======================================================== Investments have the same costs for tax and financial statement purposes. |
NOTE 6-SHARE INFORMATION
Changes in shares outstanding on December 31, 2001 (date operations commenced) were as follows:
SHARES AMOUNT
------- ----------
Sold:
Class A 40,000 $ 400,000
-----------------------------------------------------------------------------------
Class B 30,000 300,000
-----------------------------------------------------------------------------------
Class C 30,000 300,000
===================================================================================
100,000 $1,000,000
___________________________________________________________________________________
===================================================================================
|
NOTE 7-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the period indicated.
CLASS A
-----------------
DECEMBER 31, 2001
(DATE OPERATIONS
COMMENCED)
-----------------
Net asset value, beginning of period $ 10.00
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.00
-------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.01)
===============================================================================
Total from investment operations (0.01)
===============================================================================
Net asset value, end of period $ 9.99
_______________________________________________________________________________
===============================================================================
Total return(a) (0.10)%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 400
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average net assets:
With fee waivers 1.80%(b)
-------------------------------------------------------------------------------
Without fee waivers 199.49%(b)
===============================================================================
Ratio of net investment income (loss) to average net assets (0.31)%(b)
_______________________________________________________________________________
===============================================================================
|
(a) Does not include sales charges and is not annualized for periods less than
one year.
(b) Ratios are annualized and based on average daily net assets of $400,000.
FS-68
NOTE 7-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
-----------------
DECEMBER 31, 2001
(DATE OPERATIONS
COMMENCED)
-----------------
Net asset value, beginning of period $ 10.00
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.00
-------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.01)
===============================================================================
Total from investment operations (0.01)
===============================================================================
Net asset value, end of period $ 9.99
_______________________________________________________________________________
===============================================================================
Total return(a) (0.10)%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 300
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average net assets:
With fee waivers 2.45%(b)
-------------------------------------------------------------------------------
Without fee waivers 200.14%(b)
===============================================================================
Ratio of net investment income (loss) to average net assets (0.96)%(b)
_______________________________________________________________________________
===============================================================================
|
(a) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $300,000.
CLASS C
-----------------
DECEMBER 31, 2001
(DATE OPERATIONS
COMMENCED)
-----------------
Net asset value, beginning of period $ 10.00
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.00
-------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.01)
===============================================================================
Total from investment operations (0.01)
===============================================================================
Net asset value, end of period $ 9.99
_______________________________________________________________________________
===============================================================================
Total return(a) (0.10)%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 300
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average net assets:
With fee waivers 2.45%(b)
-------------------------------------------------------------------------------
Without fee waivers 200.14%(b)
===============================================================================
Ratio of net investment income (loss) to average net assets (0.96)%(b)
_______________________________________________________________________________
===============================================================================
|
(a) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $300,000.
FS-69
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
AIM New Technology Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM New Technology Fund (one of the funds constituting AIM Funds Group; hereafter referred to as the "Fund") at December 31, 2001, and the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated are in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2001 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP February 14, 2002 Houston, Texas |
FS-70
SCHEDULE OF INVESTMENTS
December 31, 2001
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS-84.51%
AEROSPACE & DEFENSE-2.91%
Alliant Techsystems Inc.(a) 6,700 $ 517,240
----------------------------------------------------------------------
Engineered Support Systems, Inc. 20,700 708,147
----------------------------------------------------------------------
L-3 Communications Holdings, Inc.(a) 9,600 864,000
======================================================================
2,089,387
======================================================================
APPLICATION SOFTWARE-11.73%
Activision, Inc.(a) 22,300 580,023
----------------------------------------------------------------------
BEA Systems, Inc.(a) 20,400 314,364
----------------------------------------------------------------------
Cadence Design Systems, Inc.(a) 38,500 843,920
----------------------------------------------------------------------
Cerner Corp.(a) 8,900 444,377
----------------------------------------------------------------------
Fair, Issac and Co., Inc. 5,800 365,516
----------------------------------------------------------------------
Intuit Inc.(a) 22,900 979,204
----------------------------------------------------------------------
Kronos, Inc.(a) 30,200 1,461,076
----------------------------------------------------------------------
National Instruments Corp.(a) 5,600 209,776
----------------------------------------------------------------------
Numerical Technologies, Inc.(a) 22,500 792,000
----------------------------------------------------------------------
PeopleSoft, Inc.(a) 54,600 2,194,920
----------------------------------------------------------------------
SERENA Software, Inc.(a) 11,300 245,662
======================================================================
8,430,838
======================================================================
BIOTECHNOLOGY-7.42%
Cephalon, Inc.(a) 10,600 801,201
----------------------------------------------------------------------
Genzyme Corp.(a) 5,900 353,174
----------------------------------------------------------------------
Gilead Sciences, Inc.(a) 10,200 670,344
----------------------------------------------------------------------
Harvard Bioscience, Inc.(a) 40,900 406,546
----------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 29,700 2,047,221
----------------------------------------------------------------------
Invitrogen Corp.(a) 11,200 693,616
----------------------------------------------------------------------
OraSure Technologies, Inc.(a) 15,000 182,250
----------------------------------------------------------------------
Tanox, Inc.(a) 9,600 177,624
======================================================================
5,331,976
======================================================================
COMPUTER & ELECTRONICS RETAIL-1.19%
CDW Computer Centers, Inc.(a) 15,900 853,989
======================================================================
COMPUTER HARDWARE-1.04%
Dell Computer Corp.(a) 27,500 747,450
======================================================================
COMPUTER STORAGE & PERIPHERALS-1.39%
Network Appliance, Inc.(a) 20,000 437,400
----------------------------------------------------------------------
Storage Technology Corp.(a) 17,000 351,390
----------------------------------------------------------------------
Western Digital Corp.(a) 34,000 213,180
======================================================================
1,001,970
======================================================================
DATA PROCESSING SERVICES-1.65%
Concord EFS, Inc.(a) 36,200 1,186,636
======================================================================
MARKET
SHARES VALUE
ELECTRONIC EQUIPMENT & INSTRUMENTS-2.11%
Itron, Inc.(a) 25,100 760,530
----------------------------------------------------------------------
OSI Systems, Inc.(a) 16,800 $ 306,432
----------------------------------------------------------------------
Sanmina-SCI Corp.(a) 22,600 449,740
======================================================================
1,516,702
======================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-1.45%
Accredo Health, Inc.(a) 17,100 678,870
----------------------------------------------------------------------
IMPATH Inc.(a) 8,200 364,982
======================================================================
1,043,852
======================================================================
HEALTH CARE EQUIPMENT-4.11%
Bruker Daltonics, Inc.(a) 23,000 376,050
----------------------------------------------------------------------
Cholestech Corp.(a) 8,300 164,423
----------------------------------------------------------------------
Closure Medical Corp.(a) 10,200 238,272
----------------------------------------------------------------------
Cytyc Corp.(a) 27,400 715,140
----------------------------------------------------------------------
Endocare, Inc.(a) 43,400 778,162
----------------------------------------------------------------------
Integra LifeSciences Holdings(a) 5,000 131,700
----------------------------------------------------------------------
Respironics, Inc.(a) 10,000 346,400
----------------------------------------------------------------------
Urologix, Inc.(a) 10,300 206,515
======================================================================
2,956,662
======================================================================
HEALTH CARE SUPPLIES-0.51%
ICU Medical, Inc.(a) 8,200 364,900
======================================================================
INTEGRATED TELECOMMUNICATION SERVICES-1.31%
Intrado Inc.(a) 35,000 938,000
======================================================================
INTERNET RETAIL-1.02%
eBay Inc.(a) 11,000 735,900
======================================================================
INTERNET SOFTWARE & SERVICES-8.42%
Internet Security Systems, Inc.(a) 21,000 673,260
----------------------------------------------------------------------
McAfee.com Corp.(a) 20,900 708,719
----------------------------------------------------------------------
PEC Solutions, Inc.(a) 11,400 428,754
----------------------------------------------------------------------
Retek Inc.(a) 22,200 663,114
----------------------------------------------------------------------
SonicWALL, Inc.(a) 60,300 1,172,232
----------------------------------------------------------------------
VeriSign, Inc.(a) 29,700 1,129,788
----------------------------------------------------------------------
WebEx Communications, Inc.(a) 28,700 713,195
----------------------------------------------------------------------
Websense, Inc.(a) 17,500 561,225
======================================================================
6,050,287
======================================================================
IT CONSULTING & SERVICES-1.03%
Affiliated Computer Services, Inc.-Class A(a) 7,000 742,910
======================================================================
NETWORKING EQUIPMENT-4.57%
Cisco Systems, Inc.(a) 27,900 505,269
----------------------------------------------------------------------
Emulex Corp.(a) 32,900 1,299,879
----------------------------------------------------------------------
McDATA Corp.-Class A(a) 44,200 1,082,900
----------------------------------------------------------------------
|
FS-71
MARKET
SHARES VALUE
NETWORKING EQUIPMENT-(CONTINUED)
NetScreen Technologies, Inc.(a) 18,000 $ 398,340
======================================================================
3,286,388
======================================================================
PHARMACEUTICALS-0.58%
PRAECIS Pharmaceutical Inc.(a) 72,100 419,622
======================================================================
SEMICONDUCTOR EQUIPMENT-1.39%
KLA-Tencor Corp.(a) 6,400 317,184
----------------------------------------------------------------------
Kulicke & Soffa Industries, Inc.(a) 11,000 188,650
----------------------------------------------------------------------
Novellus Systems, Inc.(a) 12,500 493,125
======================================================================
998,959
======================================================================
SEMICONDUCTORS-18.06%
Alpha Industries, Inc.(a) 32,000 697,600
----------------------------------------------------------------------
Analog Devices, Inc.(a) 27,600 1,225,164
----------------------------------------------------------------------
Broadcom Corp.-Class A(a) 11,200 458,976
----------------------------------------------------------------------
Elantec Semiconductor, Inc.(a) 27,900 1,071,360
----------------------------------------------------------------------
ESS Technology, Inc.(a) 33,600 714,336
----------------------------------------------------------------------
Integrated Circuit Systems, Inc.(a) 72,000 1,626,480
----------------------------------------------------------------------
Intersil Corp.-Class A(a) 16,800 541,800
----------------------------------------------------------------------
Microchip Technology Inc.(a) 26,900 1,042,106
----------------------------------------------------------------------
Microsemi Corp.(a) 43,900 1,303,830
----------------------------------------------------------------------
NVIDIA Corp.(a) 22,400 1,498,560
----------------------------------------------------------------------
QLogic Corp.(a) 13,200 587,532
----------------------------------------------------------------------
RF Micro Devices, Inc.(a) 51,400 988,422
----------------------------------------------------------------------
Semtech Corp.(a) 34,300 1,224,167
======================================================================
12,980,333
======================================================================
SPECIALTY STORES-0.57%
Blockbuster Inc.-Class A 16,100 405,720
======================================================================
SYSTEMS SOFTWARE-6.72%
Borland Software Corp.(a) 33,500 524,610
----------------------------------------------------------------------
Microsoft Corp.(a) 11,100 735,597
----------------------------------------------------------------------
Network Associates, Inc.(a) 52,500 1,357,125
----------------------------------------------------------------------
Symantec Corp.(a) 10,900 722,997
----------------------------------------------------------------------
VERITAS Software Corp.(a) 33,300 1,492,506
======================================================================
4,832,835
======================================================================
TELECOMMUNICATIONS EQUIPMENT-4.27%
Polycom, Inc.(a) 27,600 949,440
----------------------------------------------------------------------
QUALCOMM Inc.(a) 14,000 707,000
----------------------------------------------------------------------
|
MARKET
SHARES VALUE
TELECOMMUNICATIONS EQUIPMENT-(CONTINUED)
UTStarcom, Inc.(a) 49,600 $ 1,413,600
======================================================================
3,070,040
======================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.06%
Metro One Telecommunications, Inc.(a) 25,100 759,275
======================================================================
Total Domestic Common Stocks (Cost
$53,899,519) 60,744,631
======================================================================
FOREIGN STOCKS & OTHER EQUITY INTERESTS-9.52%
BERMUDA-1.17%
Marvell Technology Group Ltd.
(Semiconductors)(a) 23,400 838,188
======================================================================
CANADA-5.67%
Biovail Corp. (Pharmaceuticals)(a) 13,100 736,875
----------------------------------------------------------------------
Celestica Inc. (Electronic Equipment &
Instruments)(a) 17,500 706,825
----------------------------------------------------------------------
Genesis Microchip Inc. (Semiconductors)(a) 30,200 1,996,824
----------------------------------------------------------------------
Optimal Robotics Corp.-Class A (Electronic
Equipment & Instruments)(a) 18,000 638,100
======================================================================
4,078,624
======================================================================
CHINA-0.46%
AsiaInfo Holdings, Inc. (Internet Software &
Services)(a) 19,000 330,980
======================================================================
ISRAEL-0.58%
Check Point Software Technologies Ltd.
(Internet Software & Services)(a) 10,500 418,845
======================================================================
TAIWAN-1.64%
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR (Semiconductors) 68,800 1,181,296
======================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $4,987,859) 6,847,933
======================================================================
MONEY MARKET FUNDS-5.86%
STIC Liquid Assets Portfolio(b) 2,105,256 2,105,256
----------------------------------------------------------------------
STIC Prime Portfolio(b) 2,105,256 2,105,256
======================================================================
Total Money Market Funds (Cost
$4,210,512) 4,210,512
======================================================================
TOTAL INVESTMENTS-99.89% (Cost $63,097,890) 71,803,076
======================================================================
OTHER ASSETS LESS LIABILITIES-0.11% 76,427
======================================================================
NET ASSETS-100.00% $71,879,503
______________________________________________________________________
======================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-72
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2001
ASSETS:
Investments, at market value (cost $63,097,890) $71,803,076
------------------------------------------------------------
Receivables for:
Investments sold 1,195,679
------------------------------------------------------------
Fund shares sold 1,178,156
------------------------------------------------------------
Dividends 5,567
------------------------------------------------------------
Investment for deferred compensation plan 9,249
------------------------------------------------------------
Other assets 15,731
============================================================
Total assets 74,207,458
============================================================
LIABILITIES:
Payables for:
Investments purchased 609,611
------------------------------------------------------------
Fund shares reacquired 1,557,931
------------------------------------------------------------
Deferred compensation plan 9,249
------------------------------------------------------------
Accrued distribution fees 69,470
------------------------------------------------------------
Accrued transfer agent fees 43,850
------------------------------------------------------------
Accrued operating expenses 37,844
============================================================
Total liabilities 2,327,955
============================================================
Net assets applicable to shares outstanding $71,879,503
____________________________________________________________
============================================================
NET ASSETS:
Class A $40,097,050
____________________________________________________________
============================================================
Class B $21,317,573
____________________________________________________________
============================================================
Class C $10,464,880
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 10,432,232
____________________________________________________________
============================================================
Class B 5,595,466
____________________________________________________________
============================================================
Class C 2,745,032
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 3.84
------------------------------------------------------------
Offering price per share:
(Net asset value of $3.84 divided by
94.50%) $ 4.06
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 3.81
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 3.81
____________________________________________________________
============================================================
|
STATEMENT OF OPERATIONS
For the year ended December 31, 2001
INVESTMENT INCOME:
Dividends $ 7,025
------------------------------------------------------------
Dividends from affiliated money market funds 212,535
------------------------------------------------------------
Interest 39
============================================================
Total investment income 219,599
============================================================
EXPENSES:
Advisory fees 662,429
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 31,486
------------------------------------------------------------
Distribution fees -- Class A 129,174
------------------------------------------------------------
Distribution fees -- Class B 197,761
------------------------------------------------------------
Distribution fees -- Class C 95,599
------------------------------------------------------------
Transfer agent fees -- Class A 216,105
------------------------------------------------------------
Transfer agent fees -- Class B 115,097
------------------------------------------------------------
Transfer agent fees -- Class C 55,639
------------------------------------------------------------
Trustees' fees 8,720
------------------------------------------------------------
Registration and filing fees 119,636
------------------------------------------------------------
Other 97,664
============================================================
Total expenses 1,779,310
============================================================
Less: Fees waived (357,926)
------------------------------------------------------------
Expenses paid indirectly (2,145)
============================================================
Net expenses 1,419,239
============================================================
Net investment income (loss) (1,199,640)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (57,065,660)
------------------------------------------------------------
Option contracts written 26,423
============================================================
(57,039,237)
============================================================
Change in net unrealized appreciation of
investment securities 19,156,038
============================================================
Net gain (loss) from investment securities and
option contracts (37,883,199)
============================================================
Net increase (decrease) in net assets
resulting from operations $(39,082,839)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-73
STATEMENT OF CHANGES IN NET ASSETS
For the year ended December 31, 2001 and the period August 31, 2000 (date
operations commenced) through December 31, 2000
2001 2000
------------ ------------
OPERATIONS:
Net investment income (loss) $ (1,199,640) $ (160,198)
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
option contracts (57,039,237) (11,533,886)
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities 19,156,038 (10,450,852)
==========================================================================================
Net increase (decrease) in net assets resulting from
operations (39,082,839) (22,144,936)
==========================================================================================
Share transactions-net:
Class A 18,653,815 56,708,694
------------------------------------------------------------------------------------------
Class B 11,339,309 27,020,002
------------------------------------------------------------------------------------------
Class C 5,592,841 13,792,617
==========================================================================================
Net increase (decrease) in net assets (3,496,874) 75,376,377
==========================================================================================
NET ASSETS:
Beginning of year 75,376,377 --
==========================================================================================
End of year $ 71,879,503 $ 75,376,377
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $131,756,854 $ 97,390,471
------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (9,414) (29,356)
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and option contracts (68,573,123) (11,533,886)
------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities 8,705,186 (10,450,852)
==========================================================================================
$ 71,879,503 $ 75,376,377
__________________________________________________________________________________________
==========================================================================================
|
See Notes to Financial Statements.
FS-74
NOTES TO FINANCIAL STATEMENTS
December 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM New Technology Fund (the "Fund") is a series portfolio of AIM Funds Group
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of twelve separate portfolios,
each having an unlimited number of shares of beneficial interest. 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 long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 as of the close of the customary trading session 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/ event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date.
On December 31, 2001, undistributed net investment income was increased by $1,219,582 and shares of beneficial interest was decreased by $1,219,582 as a result of differing book/tax treatment of net operating loss and nondeductible stock issuance costs reclassifications. Net assets of the Fund were unaffected by the reclassifications discussed above.
C. Distributions -- Distributions from income and 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 from 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.
FS-75
The Fund's capital loss carryforward of $66,633,491 is broken down by expiration date as follows:
CAPITAL LOSS CARRYFORWARD EXPIRATION ------------ ---------- $ 1,713,194 December 31, 2008 ------------------------------------------- 64,920,297 December 31, 2009 =========================================== $66,633,491 ___________________________________________ =========================================== |
As of December 31, 2001, the Fund has a post-October capital loss deferral of $674,470, which will be recognized in the following tax year.
E. Covered Call Options -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded 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 written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received.
F. Expenses -- Distribution expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 1.00% of the Fund's
average daily net assets. Effective July 1, 2001, AIM has voluntarily agreed to
waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM
receives from the affiliated money market fund of which the Fund has invested.
For the year ended December 31, 2001, AIM waived fees of $357,926.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 2001, AIM was
paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 2001, AFS
was paid $227,983 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 and Class C shares of the Fund. The Trust 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. 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. For the year ended December 31,
2001, the Class A, Class B and Class C shares paid AIM Distributors $129,174,
$197,761 and $95,599, respectively, as compensation under the Plans.
AIM Distributors received commissions of $76,755 from sales of the Class A
shares of the Fund during the year ended December 31, 2001. 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, 2001,
AIM Distributors received $11,820 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 2001, the Fund paid legal fees of $3,165
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the year ended December 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $874 and reductions in custodian fees of $1,271 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $2,145.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests 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 is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. 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,
2001, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
FS-76
NOTES 6-DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Capital loss carryforward $(66,633,491)
---------------------------------------------------------
Unrealized appreciation 6,756,140
=========================================================
$(59,877,351)
_________________________________________________________
=========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of capital losses incurred after October 31, and other deferrals.
NOTE 7-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, 2001 was
$171,838,145 and $132,767,768, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $12,098,334 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (4,658,310) ========================================================= Net unrealized appreciation of investment securities $ 7,440,024 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $64,363,052. |
NOTE 8-CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2001 are summarized as follows:
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
Beginning of year -- $ --
------------------------------------------------------------------------------------
Written 1,605 519,705
------------------------------------------------------------------------------------
Closed (1,183) (380,134)
------------------------------------------------------------------------------------
Exercised (352) (118,408)
------------------------------------------------------------------------------------
Expired (70) (21,163)
====================================================================================
End of year -- $ --
____________________________________________________________________________________
====================================================================================
|
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the year ended December 31, 2001 and the period August 31, 2000 (date operations commenced) through December 31, 2000:
2001 2000
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -----------
Sold:
Class A 10,000,780 $ 42,952,707 7,406,952 $63,371,172
---------------------------------------------------------------------------------------------------------------------
Class B 4,015,952 17,550,457 3,305,594 28,031,799
---------------------------------------------------------------------------------------------------------------------
Class C 2,552,966 10,916,402 1,784,951 15,613,560
=====================================================================================================================
Reacquired:
Class A (6,054,184) (24,298,892) (921,316) (6,662,478)
---------------------------------------------------------------------------------------------------------------------
Class B (1,587,360) (6,211,148) (138,720) (1,011,797)
---------------------------------------------------------------------------------------------------------------------
Class C (1,346,193) (5,323,561) (246,692) (1,820,943)
=====================================================================================================================
7,581,961 $ 35,585,965 11,190,769 $97,521,313
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
FS-77
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------
AUGUST 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2001(a) 2000(a)
------------ ----------------
Net asset value, beginning of period $ 6.74 $ 10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06) (0.02)
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.84) (3.24)
==============================================================================================
Total from investment operations (2.90) (3.26)
==============================================================================================
Net asset value, end of period $ 3.84 $ 6.74
______________________________________________________________________________________________
==============================================================================================
Total return(b) (43.03)% (32.60)%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $40,097 $43,732
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.86%(c) 1.72%(d)
----------------------------------------------------------------------------------------------
Without fee waivers 2.40%(c) 2.47%(d)
==============================================================================================
Ratio of net investment income (loss) to average net assets (1.52)%(c) (0.66)%(d)
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 215% 54%
______________________________________________________________________________________________
==============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charge and is not annualized for periods less than
one year.
(c) Ratios are based on average daily net assets of $36,906,921.
(d) Annualized.
CLASS B
--------------------------------
AUGUST 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2001(a) 2000(a)
------------ ----------------
Net asset value, beginning of period $ 6.72 $ 10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09) (0.04)
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.82) (3.24)
==============================================================================================
Total from investment operations (2.91) (3.28)
==============================================================================================
Net asset value, end of period $ 3.81 $ 6.72
______________________________________________________________________________________________
==============================================================================================
Total return(b) (43.30)% (32.80)%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $21,318 $21,296
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.51%(c) 2.41%(d)
----------------------------------------------------------------------------------------------
Without fee waivers 3.05%(c) 3.16%(d)
==============================================================================================
Ratio of net investment income (loss) to average net assets (2.17)%(c) (1.36)%(d)
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 215% 54%
______________________________________________________________________________________________
==============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charge and is not annualized for
periods less than one year.
(c) Ratios are based on average daily net assets of $19,776,096.
(d) Annualized.
FS-78
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
--------------------------------
AUGUST 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2001(a) 2000(a)
------------ ----------------
Net asset value, beginning of period $ 6.73 $ 10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09) (0.04)
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.83) (3.23)
==============================================================================================
Total from investment operations (2.92) (3.27)
==============================================================================================
Net asset value, end of period $ 3.81 $ 6.73
______________________________________________________________________________________________
==============================================================================================
Total return(b) (43.39)% (32.70)%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $10,465 $10,349
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers 2.51%(c) 2.41%(d)
----------------------------------------------------------------------------------------------
Without fee waivers 3.05%(c) 3.16%(d)
==============================================================================================
Ratio of net investment income (loss) to average net assets (2.17)%(c) (1.35)%(d)
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 215% 54%
______________________________________________________________________________________________
==============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charge and is not annualized for
periods less than one year.
(c) Ratios are based on average daily net assets of $9,559,894.
(d) Annualized.
FS-79
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
AIM Select Equity Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Select Equity Fund, formerly known as the AIM Select Growth Fund, (one of the funds constituting AIM Funds Group; hereafter referred to as the "Fund") at December 31, 2001, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2001 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights for each of the periods ended on or before December 31, 1999 were audited by other independent accountants whose report, dated February 14, 2000, expressed an unqualified opinion thereon.
/s/ PRICEWATERHOUSECOOPERS LLP February 14, 2002 Houston, Texas |
FS-80
SCHEDULE OF INVESTMENTS
December 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-97.52%
ADVERTISING-1.96%
Interpublic Group of Cos., Inc. (The) 235,000 $ 6,941,900
------------------------------------------------------------------------
Lamar Advertising Co.(a) 248,000 10,500,320
========================================================================
17,442,220
========================================================================
AIRLINES-0.45%
AirTran Holdings, Inc.(a) 600,000 3,960,000
========================================================================
ALUMINUM-1.66%
Alcoa Inc. 415,000 14,753,250
========================================================================
APPAREL RETAIL-1.94%
Gap, Inc. (The) 735,000 10,245,900
------------------------------------------------------------------------
Ross Stores, Inc. 216,400 6,942,112
========================================================================
17,188,012
========================================================================
APPLICATION SOFTWARE-3.08%
Amdocs Ltd. (United Kingdom)(a) 178,000 6,046,660
------------------------------------------------------------------------
National Instruments Corp.(a) 316,000 11,837,360
------------------------------------------------------------------------
PeopleSoft, Inc.(a) 126,000 5,065,200
------------------------------------------------------------------------
Secure Computing Corp.(a) 214,500 4,407,975
========================================================================
27,357,195
========================================================================
BANKS-2.55%
Bank of America Corp. 359,100 22,605,345
========================================================================
BIOTECHNOLOGY-0.66%
Gilead Sciences, Inc.(a) 89,500 5,881,940
========================================================================
BROADCASTING & CABLE TV-4.54%
Charter Communications, Inc.-Class A(a) 350,000 5,750,500
------------------------------------------------------------------------
Clear Channel Communications, Inc.(a) 100,000 5,091,000
------------------------------------------------------------------------
Comcast Corp.-Class A(a) 241,000 8,676,000
------------------------------------------------------------------------
Cox Communications, Inc.-Class A(a) 215,000 9,010,650
------------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 276,000 7,038,000
------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 117,000 4,733,820
========================================================================
40,299,970
========================================================================
BUILDING PRODUCTS-3.80%
American Standard Cos. Inc.(a) 266,000 18,149,180
------------------------------------------------------------------------
Masco Corp. 636,000 15,582,000
========================================================================
33,731,180
========================================================================
|
MARKET
SHARES VALUE
COMPUTER STORAGE & PERIPHERALS-0.50%
Electronics for Imaging, Inc.(a) 196,900 $ 4,392,839
========================================================================
CONSUMER ELECTRONICS-1.37%
Koninklijke (Royal) Philips Electronics
N.V.-ADR (Netherlands) 416,207 12,115,786
========================================================================
CONSUMER FINANCE-0.64%
AmeriCredit Corp.(a) 181,100 5,713,705
========================================================================
DATA PROCESSING SERVICES-6.12%
BISYS Group, Inc. (The)(a) 218,000 13,949,820
------------------------------------------------------------------------
Ceridian Corp.(a) 994,500 18,646,875
------------------------------------------------------------------------
First Data Corp. 163,000 12,787,350
------------------------------------------------------------------------
Fiserv, Inc.(a) 211,912 8,968,116
========================================================================
54,352,161
========================================================================
DIVERSIFIED COMMERCIAL SERVICES-2.85%
Equifax Inc. 117,000 2,825,550
------------------------------------------------------------------------
H&R Block, Inc. 502,000 22,439,400
========================================================================
25,264,950
========================================================================
DIVERSIFIED FINANCIAL SERVICES-8.50%
American Capital Strategies, Ltd. 199,600 5,658,660
------------------------------------------------------------------------
Citigroup Inc. 438,500 22,135,480
------------------------------------------------------------------------
Freddie Mac 259,860 16,994,844
------------------------------------------------------------------------
J.P. Morgan Chase & Co. 446,000 16,212,100
------------------------------------------------------------------------
Lehman Brothers Holdings Inc. 92,800 6,199,040
------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 158,000 8,234,960
========================================================================
75,435,084
========================================================================
DRUG RETAIL-0.50%
Walgreen Co. 133,000 4,476,780
========================================================================
ELECTRIC UTILITIES-2.56%
Duke Energy Corp. 115,000 4,514,900
------------------------------------------------------------------------
Orion Power Holdings, Inc.(a) 164,000 4,280,400
------------------------------------------------------------------------
PG&E Corp. 722,000 13,891,280
========================================================================
22,686,580
========================================================================
ENVIRONMENTAL SERVICES-3.26%
Tetra Tech, Inc. 471,750 9,392,542
------------------------------------------------------------------------
Waste Management, Inc. 614,000 19,592,740
========================================================================
28,985,282
========================================================================
|
FS-81
MARKET
SHARES VALUE
FOOD RETAIL-1.59%
Kroger Co. (The)(a) 675,000 $ 14,087,250
========================================================================
GENERAL MERCHANDISE STORES-1.62%
Target Corp. 350,000 14,367,500
========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-4.79%
Express Scripts, Inc.(a) 240,000 11,222,400
------------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 100,000 8,085,000
------------------------------------------------------------------------
McKesson Corp. 368,000 13,763,200
------------------------------------------------------------------------
Quest Diagnostics Inc.(a) 132,000 9,465,720
========================================================================
42,536,320
========================================================================
HEALTH CARE EQUIPMENT-0.26%
Bruker Daltonics, Inc.(a) 140,000 2,289,000
========================================================================
HEALTH CARE FACILITIES-3.92%
Community Health Systems, Inc.(a) 150,000 3,825,000
------------------------------------------------------------------------
HCA Inc. 150,000 5,781,000
------------------------------------------------------------------------
Health Management Associates, Inc.-Class A(a) 249,800 4,596,320
------------------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 193,600 6,590,144
------------------------------------------------------------------------
Province Healthcare Co.(a) 150,000 4,629,000
------------------------------------------------------------------------
Universal Health Services, Inc.-Class B(a) 220,000 9,411,600
========================================================================
34,833,064
========================================================================
INDUSTRIAL CONGLOMERATES-3.47%
General Electric Co. 318,000 12,745,440
------------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 306,000 18,023,400
========================================================================
30,768,840
========================================================================
INSURANCE BROKERS-0.98%
Marsh & McLennan Cos., Inc. 81,000 8,703,450
========================================================================
IT CONSULTING & SERVICES-0.96%
Affiliated Computer Services, Inc.-Class A(a) 80,500 8,543,465
========================================================================
LEISURE PRODUCTS-1.52%
Mattel, Inc. 784,000 13,484,800
========================================================================
LIFE & HEALTH INSURANCE-1.74%
AFLAC, Inc. 273,500 6,717,160
------------------------------------------------------------------------
UnumProvident Corp. 328,000 8,695,280
========================================================================
15,412,440
========================================================================
MANAGED HEALTH CARE-2.02%
CIGNA Corp. 50,000 4,632,500
------------------------------------------------------------------------
UnitedHealth Group Inc. 188,200 13,318,914
========================================================================
17,951,414
========================================================================
|
MARKET
SHARES VALUE
MOVIES & ENTERTAINMENT-2.76%
AOL Time Warner Inc.(a) 424,500 $ 13,626,450
------------------------------------------------------------------------
Macrovision Corp.(a) 175,000 6,163,500
------------------------------------------------------------------------
Viacom Inc.-Class B(a) 107,300 4,737,295
========================================================================
24,527,245
========================================================================
MULTI-LINE INSURANCE-0.58%
American International Group, Inc. 65,000 5,161,000
========================================================================
MULTI-UTILITIES-0.28%
Dynegy Inc.-Class A 97,000 2,473,500
========================================================================
NETWORKING EQUIPMENT-0.56%
Cisco Systems, Inc.(a) 275,000 4,980,250
========================================================================
OIL & GAS DRILLING-3.92%
ENSCO International Inc. 528,600 13,135,710
------------------------------------------------------------------------
Noble Drilling Corp.(a) 180,000 6,127,200
------------------------------------------------------------------------
Transocean Sedco Forex Inc. 459,210 15,530,482
========================================================================
34,793,392
========================================================================
OIL & GAS EXPLORATION & PRODUCTION-0.37%
Apache Corp. 66,220 3,303,054
========================================================================
PAPER PRODUCTS-1.50%
International Paper Co. 331,000 13,355,850
========================================================================
PHARMACEUTICALS-2.47%
Allergan, Inc. 63,000 4,728,150
------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 77,000 6,310,150
------------------------------------------------------------------------
Pfizer Inc. 122,700 4,889,595
------------------------------------------------------------------------
Taro Pharmaceutical Industries Ltd.
(Israel)(a) 150,000 5,992,500
========================================================================
21,920,395
========================================================================
PROPERTY & CASUALTY INSURANCE-2.41%
Radian Group Inc. 141,000 6,055,950
------------------------------------------------------------------------
XL Capital Ltd.-Class A (Bermuda) 168,000 15,348,480
========================================================================
21,404,430
========================================================================
REINSURANCE-0.60%
Everest Re Group, Ltd. (Bermuda) 75,000 5,302,500
========================================================================
RESTAURANTS-0.97%
Jack in the Box Inc.(a) 313,400 8,631,036
========================================================================
SEMICONDUCTOR EQUIPMENT-2.47%
Applied Materials, Inc.(a) 300,000 12,030,000
------------------------------------------------------------------------
KLA-Tencor Corp.(a) 200,000 9,912,000
========================================================================
21,942,000
========================================================================
|
FS-82
MARKET
SHARES VALUE
SEMICONDUCTORS-1.68%
Intel Corp. 75,000 $ 2,358,750
------------------------------------------------------------------------
Microsemi Corp.(a) 50,000 1,485,000
------------------------------------------------------------------------
Texas Instruments Inc. 250,000 7,000,000
------------------------------------------------------------------------
Zoran Corp.(a) 125,000 4,080,000
========================================================================
14,923,750
========================================================================
SOFT DRINKS-0.94%
PepsiCo, Inc. 172,000 8,374,680
========================================================================
SYSTEMS SOFTWARE-3.88%
BMC Software, Inc.(a) 384,000 6,286,080
------------------------------------------------------------------------
Computer Associates International, Inc. 452,000 15,589,480
------------------------------------------------------------------------
Microsoft Corp.(a) 190,000 12,591,300
========================================================================
34,466,860
========================================================================
TELECOMMUNICATIONS EQUIPMENT-1.44%
UTStarcom, Inc.(a) 450,000 12,825,000
========================================================================
|
MARKET
SHARES VALUE
WIRELESS TELECOMMUNICATION SERVICES-0.88%
Nextel Communications, Inc.-Class A(a) 367,000 $ 4,022,320
------------------------------------------------------------------------
Nextel Partners, Inc.-Class A(a) 319,000 3,828,000
========================================================================
7,850,320
========================================================================
Total Common Stocks & Other Equity
Interests (Cost $807,597,431) 865,855,084
========================================================================
MONEY MARKET FUNDS-4.47%
STIC Liquid Assets Portfolio(b) 19,855,197 19,855,197
------------------------------------------------------------------------
STIC Prime Portfolio(b) 19,855,197 19,855,197
========================================================================
Total Money Market Funds (Cost
$39,710,394) 39,710,394
========================================================================
TOTAL INVESTMENTS-101.99% (Cost $847,307,825) 905,565,478
========================================================================
OTHER ASSETS LESS LIABILITIES-(1.99%) (17,672,917)
========================================================================
NET ASSETS-100.00% $887,892,561
________________________________________________________________________
========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-83
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2001
ASSETS:
Investments, at market value (cost
$847,307,825)* $905,565,478
------------------------------------------------------------
Receivables for:
Fund shares sold 964,687
------------------------------------------------------------
Dividends 292,975
------------------------------------------------------------
Investment for deferred compensation plan 80,091
------------------------------------------------------------
Collateral for securities loaned 20,804,775
------------------------------------------------------------
Other assets 31,279
============================================================
Total assets 927,739,285
============================================================
LIABILITIES:
Payables for:
Investments purchased 13,953,069
------------------------------------------------------------
Fund shares reacquired 3,662,953
------------------------------------------------------------
Deferred compensation plan 80,091
------------------------------------------------------------
Collateral upon return of securities loaned 20,804,775
------------------------------------------------------------
Accrued distribution fees 865,944
------------------------------------------------------------
Accrued transfer agent fees 367,879
------------------------------------------------------------
Accrued operating expenses 112,013
============================================================
Total liabilities 39,846,724
============================================================
Net assets applicable to shares outstanding $887,892,561
____________________________________________________________
============================================================
NET ASSETS:
Class A $396,778,567
____________________________________________________________
============================================================
Class B $432,002,178
____________________________________________________________
============================================================
Class C $ 59,111,816
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 23,333,935
____________________________________________________________
============================================================
Class B 27,803,405
____________________________________________________________
============================================================
Class C 3,808,999
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 17.00
------------------------------------------------------------
Offering price per share:
(Net asset value of $17.00 divided by
94.50%) $ 17.99
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 15.54
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 15.52
____________________________________________________________
============================================================
|
* At December 31, 2001, securities with an aggregate market value of $20,581,875 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended December 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$13,367) $ 5,035,831
------------------------------------------------------------
Dividends from affiliated money market funds 2,791,822
------------------------------------------------------------
Interest 63,141
------------------------------------------------------------
Security lending income 29,769
============================================================
Total investment income 7,920,563
============================================================
EXPENSES:
Advisory fees 6,487,014
------------------------------------------------------------
Administrative services fees 148,860
------------------------------------------------------------
Custodian fees 112,232
------------------------------------------------------------
Distribution fees -- Class A 1,072,072
------------------------------------------------------------
Distribution fees -- Class B 5,043,700
------------------------------------------------------------
Distribution fees -- Class C 627,234
------------------------------------------------------------
Transfer agent fees -- Class A 1,145,962
------------------------------------------------------------
Transfer agent fees -- Class B 1,399,499
------------------------------------------------------------
Transfer agent fees -- Class C 174,042
------------------------------------------------------------
Trustees' fees 12,193
------------------------------------------------------------
Other 490,699
============================================================
Total expenses 16,713,507
============================================================
Less: Fees waived (3,800)
------------------------------------------------------------
Expenses paid indirectly (20,878)
============================================================
Net expenses 16,688,829
============================================================
Net investment income (loss) (8,768,266)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (63,074,168)
============================================================
Change in net unrealized appreciation
(depreciation) of investment securities (268,042,127)
============================================================
Net gain (loss) from investment securities (331,116,295)
============================================================
Net increase (decrease) in net assets
resulting from operations $(339,884,561)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-84
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2001 and 2000
2001 2000
-------------- --------------
OPERATIONS:
Net investment income (loss) $ (8,768,266) $ (6,192,102)
----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
futures contracts (63,074,168) 153,404,957
----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (268,042,127) (209,245,233)
==============================================================================================
Net increase (decrease) in net assets resulting from
operations (339,884,561) (62,032,378)
==============================================================================================
Distributions to shareholders from net realized gains:
Class A (302,937) (59,353,657)
----------------------------------------------------------------------------------------------
Class B (357,522) (80,285,223)
----------------------------------------------------------------------------------------------
Class C (50,347) (8,275,783)
----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 6,643,157 150,959,050
----------------------------------------------------------------------------------------------
Class B (51,890,759) 181,653,821
----------------------------------------------------------------------------------------------
Class C 8,259,467 63,351,899
==============================================================================================
Net increase (decrease) in net assets (377,583,502) 186,017,729
==============================================================================================
NET ASSETS:
Beginning of year 1,265,476,063 1,079,458,334
==============================================================================================
End of year $ 887,892,561 $1,265,476,063
______________________________________________________________________________________________
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 899,675,016 $ 945,455,716
----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (102,880) (101,758)
----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and futures contracts (69,937,228) (6,177,675)
----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 58,257,653 326,299,780
==============================================================================================
$ 887,892,561 $1,265,476,063
______________________________________________________________________________________________
==============================================================================================
|
See Notes to Financial Statements.
FS-85
NOTES TO FINANCIAL STATEMENTS
December 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Select Equity Fund, formerly AIM Select Growth Fund, (the "Fund") is a
series portfolio of AIM Funds Group (the "Trust"). The Trust is a Delaware
business trust registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end series management investment company consisting
of twelve separate portfolios, each having an unlimited number of shares of
beneficial interest. 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 long-term growth
of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 as of the close of the customary trading session 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/ event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date.
On December 31, 2001, undistributed net investment income was increased by $8,767,144, undistributed net realized gains increased by $25,421 and shares of beneficial interest decreased by $8,792,565 as a result of net operating loss reclassifications and other reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and 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 from 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 as capital loss carryforward of $47,261,707 as of December 31, 2001 which may be carried forward to offset
FS-86
future taxable gains, if any, which expires, if not previously utilized, in the year 2009. As of December 31, 2001 the Fund has a post-October capital loss deferral of $22,675,519 which will be recognized in the following tax year.
E. Futures Contracts -- The Fund may purchase or sell futures contracts as a hedge against changes in market conditions. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities as collateral for the account of the broker (the Fund's agent in acquiring the futures position). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by "marking to market" on a daily basis to reflect the market value of the contracts at the end of each day's trading. Variation margin payments are made or received depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund's basis in the contract. Risks include the possibility of an illiquid market and that a change in value of the contracts may not correlate with changes in the value of the securities being hedged.
F. Expenses -- Distribution expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.80% of the first
$150 million of the Fund's average daily net assets, plus 0.625% of the Fund's
average daily net assets in excess of $150 million. Effective July 1, 2001, AIM
has voluntarily agreed to waive advisory fees of the Fund in the amount of 25%
of the advisory fee AIM receives from the affiliated money market fund of which
the Fund has invested. For the year ended December 31, 2001, AIM waived fees of
$3,800.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 2001, AIM was
paid $148,860 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 2001, AFS
was paid $1,418,948 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 and Class C shares of the Fund. The Trust 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
0.25% 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. 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. For the year ended December 31,
2001, the Class A, Class B and Class C shares paid AIM Distributors $1,072,072,
$5,043,700 and $627,234, respectively, as compensation under the Plans.
AIM Distributors received commissions of $205,791 from sales of the Class A
shares of the Fund during the year ended December 31, 2001. 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, 2001,
AIM Distributors received $32,135 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 2001, the Fund paid legal fees of $6,615
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the year ended December 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $14,056 and reductions in custodian fees of $6,822 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $20,878.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests 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 is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. 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,
2001, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
FS-87
NOTE 6-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day. Therefore, the
value of the collateral may be temporarily less than the value of the securities
on loan.
At December 31, 2001, securities with an aggregate value of $20,581,875 were
on loan to brokers. The loans were secured by cash collateral of $20,804,775
received by the Fund and subsequently invested in STIC Liquid Assets Portfolio,
an affiliated money market fund. For the year ended December 31, 2001, the Fund
received fees of $29,769 for securities lending.
NOTE 7-DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
-------- ------------
Distributions paid from
long-term capital gain $710,806 $147,914,663
__________________________________________________________
==========================================================
|
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Capital loss carryforward $(47,261,707)
---------------------------------------------------------
Unrealized appreciation 35,479,252
=========================================================
$(11,782,455)
_________________________________________________________
=========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of capital losses incurred after October 31, and other deferrals.
NOTE 8-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, 2001 was
$1,115,924,913 and $1,113,910,482, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $126,221,248 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (67,963,595) ========================================================= Net unrealized appreciation of investment securities $ 58,257,653 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $847,307,825. |
FS-88
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2001 and 2000 were as follows:
2001 2000
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
Sold:
Class A 6,672,144 $ 124,637,977 6,779,004 $ 198,529,121
------------------------------------------------------------------------------------------------------------------------
Class B 4,452,066 77,747,707 7,978,650 219,786,359
------------------------------------------------------------------------------------------------------------------------
Class C 1,686,037 28,895,794 2,377,973 64,756,969
========================================================================================================================
Issued as reinvestment of dividends:
Class A 17,383 291,047 2,458,664 56,574,104
------------------------------------------------------------------------------------------------------------------------
Class B 21,814 329,884 3,538,127 74,996,759
------------------------------------------------------------------------------------------------------------------------
Class C 3,040 46,562 377,111 7,983,463
========================================================================================================================
Reacquired:
Class A (6,609,149) (118,285,867) (3,586,000) (104,144,175)
------------------------------------------------------------------------------------------------------------------------
Class B (8,062,270) (129,968,351) (4,240,494) (113,129,297)
------------------------------------------------------------------------------------------------------------------------
Class C (1,300,657) (20,682,889) (364,164) (9,388,533)
========================================================================================================================
(3,119,592) $ (36,988,136) 15,318,871 $ 395,964,770
________________________________________________________________________________________________________________________
========================================================================================================================
|
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
2001(a) 2000(a) 1999 1998 1997(a)
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 22.88 $ 26.23 $ 19.35 $ 15.67 $ 14.78
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08) (0.01) (0.06) (0.04) 0.01
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.79) (0.44) 8.00 4.24 2.82
========================================================================================================================
Total from investment operations (5.87) (0.45) 7.94 4.20 2.83
========================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.01)
------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.01) (2.90) (1.06) (0.52) (1.93)
========================================================================================================================
Total distributions (0.01) (2.90) (1.06) (0.52) (1.94)
========================================================================================================================
Net asset value, end of period $ 17.00 $ 22.88 $ 26.23 $ 19.35 $ 15.67
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(b) (25.64)% (1.77)% 41.48% 27.09% 19.54%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $396,779 $532,042 $461,628 $320,143 $266,168
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets 1.24%(c) 1.07% 1.09% 1.11% 1.13%
========================================================================================================================
Ratio of net investment income (loss) to average net assets (0.45)%(c) (0.02)% (0.31)% (0.22)% 0.04%
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate 117% 56% 31% 68% 110%
________________________________________________________________________________________________________________________
========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges.
(c) Ratios are based on average daily net assets of $428,828,804.
FS-89
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
2001(a) 2000(a) 1999(a) 1998 1997(a)
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 21.07 $ 24.57 $ 18.33 $ 14.98 $ 14.32
---------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.20) (0.22) (0.23) (0.17) (0.13)
---------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (5.32) (0.38) 7.53 4.04 2.72
=========================================================================================================
Total from investment operations (5.52) (0.60) 7.30 3.87 2.59
=========================================================================================================
Less distributions from net realized gains (0.01) (2.90) (1.06) (0.52) (1.93)
=========================================================================================================
Net asset value, end of period $ 15.54 $ 21.07 $ 24.57 $ 18.33 $ 14.98
_________________________________________________________________________________________________________
=========================================================================================================
Total return(b) (26.19)% (2.50)% 40.29% 26.13% 18.50%
_________________________________________________________________________________________________________
=========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $432,002 $661,445 $592,555 $428,002 $356,186
_________________________________________________________________________________________________________
=========================================================================================================
Ratio of expenses to average net assets 2.00%(c) 1.84% 1.90% 1.93% 1.99%
=========================================================================================================
Ratio of net investment income (loss) to
average net assets (1.21)%(c) (0.80)% (1.12)% (1.04)% (0.82)%
_________________________________________________________________________________________________________
=========================================================================================================
Portfolio turnover rate 117% 56% 31% 68% 110%
_________________________________________________________________________________________________________
=========================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $504,370,050.
CLASS C
--------------------------------------------------------------
AUGUST 4, 1997
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) TO
------------------------------------------ DECEMBER 31,
2001(a) 2000(a) 1999(a) 1998(a) 1997(a)
------- ------- ------- ------- ----------------
Net asset value, beginning of period $ 21.05 $ 24.55 $ 18.32 $ 14.98 $17.65
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.20) (0.22) (0.23) (0.17) (0.04)
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.32) (0.38) 7.52 4.03 (0.70)
============================================================================================================================
Total from investment operations (5.52) (0.60) 7.29 3.86 (0.74)
============================================================================================================================
Less distributions from net realized gains (0.01) (2.90) (1.06) (0.52) (1.93)
============================================================================================================================
Net asset value, end of period $ 15.52 $ 21.05 $ 24.55 $ 18.32 $14.98
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) (26.21)% (2.50)% 40.26% 26.07% (3.86)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $59,112 $71,989 $25,275 $ 8,501 $1,189
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 2.00%(c) 1.84% 1.90% 1.93% 1.95%(d)
============================================================================================================================
Ratio of net investment income (loss) to average net assets (1.21)%(c) (0.80)% (1.12)% (1.04)% (0.77)%(d)
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 117% 56% 31% 68% 110%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $62,723,395.
(d) Annualized.
FS-90
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
AIM Small Cap Equity Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Small Cap Equity Fund (one of the funds constituting AIM Funds Group; hereafter referred to as the "Fund") at December 31, 2001, and the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2001 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP February 14, 2002 Houston, Texas |
FS-91
SCHEDULE OF INVESTMENTS
December 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-93.84%
AEROSPACE & DEFENSE-1.06%
United Defense Industries, Inc.(a) 100,000 $ 2,105,000
=======================================================================
AIR FREIGHT & COURIERS-0.70%
UTI Worldwide, Inc. 70,800 1,385,556
=======================================================================
AIRLINES-0.52%
AirTran Holdings, Inc.(a) 156,000 1,029,600
=======================================================================
APPAREL RETAIL-2.23%
Abercrombie & Fitch Co.-Class A(a) 69,500 1,843,835
-----------------------------------------------------------------------
Genesco Inc.(a) 57,200 1,187,472
-----------------------------------------------------------------------
Ross Stores, Inc. 43,400 1,392,272
=======================================================================
4,423,579
=======================================================================
APPLICATION SOFTWARE-4.20%
Eclipsys Corp.(a) 97,600 1,634,800
-----------------------------------------------------------------------
MSC.Software Corp.(a) 73,000 1,138,800
-----------------------------------------------------------------------
National Instruments Corp.(a) 45,900 1,719,414
-----------------------------------------------------------------------
PLATO Learning, Inc.(a) 74,000 1,229,140
-----------------------------------------------------------------------
Renaissance Learning, Inc.(a) 48,000 1,462,560
-----------------------------------------------------------------------
Secure Computing Corp.(a) 56,400 1,159,020
=======================================================================
8,343,734
=======================================================================
AUTO PARTS & EQUIPMENT-0.76%
Tower Automotive, Inc.(a) 168,400 1,520,652
=======================================================================
BANKS-0.48%
TCF Financial Corp. 20,100 964,398
=======================================================================
BIOTECHNOLOGY-0.49%
Transkaryotic Therapies, Inc.(a) 23,000 984,400
=======================================================================
BROADCASTING & CABLE TV-3.36%
Cox Radio, Inc.-Class A(a) 27,300 695,604
-----------------------------------------------------------------------
Entercom Communications Corp.(a) 22,200 1,110,000
-----------------------------------------------------------------------
Entravision Communications Corp.-Class A(a) 140,700 1,681,365
-----------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 46,600 1,188,300
-----------------------------------------------------------------------
Mediacom Communications Corp.(a) 110,000 2,008,600
=======================================================================
6,683,869
=======================================================================
CATALOG RETAIL-2.30%
Insight Enterprises, Inc.(a) 96,250 2,367,750
-----------------------------------------------------------------------
J. Jill Group Inc.(a) 102,600 2,208,978
=======================================================================
4,576,728
=======================================================================
COMPUTER STORAGE & PERIPHERALS-0.76%
Electronics for Imaging, Inc.(a) 67,400 1,503,694
=======================================================================
|
MARKET
SHARES VALUE
CONSTRUCTION & ENGINEERING-0.72%
Granite Construction Inc. 59,600 $ 1,435,168
=======================================================================
CONSTRUCTION & FARM MACHINERY-1.68%
AGCO Corp.(a) 100,000 1,578,000
-----------------------------------------------------------------------
Terex Corp.(a) 100,000 1,754,000
=======================================================================
3,332,000
=======================================================================
CONSTRUCTION MATERIALS-1.04%
Florida Rock Industries, Inc. 56,300 2,059,454
=======================================================================
CONSUMER FINANCE-3.31%
AmeriCredit Corp.(a) 76,600 2,416,730
-----------------------------------------------------------------------
Metris Cos. Inc. 80,100 2,059,371
-----------------------------------------------------------------------
New Century Financial Corp. 103,000 1,393,590
-----------------------------------------------------------------------
Saxon Capital Acquisition Corp. (Acquired
07/27/01; Cost $707,000)(a)(b) 70,000 708,750
=======================================================================
6,578,441
=======================================================================
DATA PROCESSING SERVICES-0.88%
Alliance Data Systems Corp.(a) 91,600 1,754,140
=======================================================================
DIVERSIFIED COMMERCIAL SERVICES-5.59%
Edison Schools Inc.(a) 103,560 2,034,954
-----------------------------------------------------------------------
Iron Mountain Inc.(a) 18,000 788,400
-----------------------------------------------------------------------
NCO Group, Inc.(a) 95,600 2,189,240
-----------------------------------------------------------------------
Pre-Paid Legal Services, Inc.(a) 90,800 1,988,520
-----------------------------------------------------------------------
Profit Recovery Group International, Inc.
(The)(a) 252,800 2,060,320
-----------------------------------------------------------------------
Sylvan Learning Systems, Inc.(a) 92,600 2,043,682
=======================================================================
11,105,116
=======================================================================
DIVERSIFIED FINANCIAL SERVICES-2.55%
Affiliated Managers Group, Inc.(a) 27,200 1,917,056
-----------------------------------------------------------------------
American Capital Strategies, Ltd. 46,700 1,323,945
-----------------------------------------------------------------------
W.P. Stewart & Co., Ltd. (Bermuda) 70,000 1,834,000
=======================================================================
5,075,001
=======================================================================
DIVERSIFIED METALS & MINING-0.35%
Massey Energy Co. 33,500 694,455
=======================================================================
DRUG RETAIL-0.65%
Duane Reade Inc.(a) 42,600 1,292,910
=======================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-0.69%
Wilson Greatbatch Technologies, Inc.(a) 38,000 1,371,800
=======================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-5.85%
Amphenol Corp.-Class A(a) 31,400 1,508,770
-----------------------------------------------------------------------
CTS Corp. 80,500 1,279,950
-----------------------------------------------------------------------
DSP Group, Inc.(a) 67,600 1,572,376
-----------------------------------------------------------------------
Garmin Ltd. (Cayman Islands)(a) 87,500 1,865,500
-----------------------------------------------------------------------
|
FS-92
MARKET
SHARES VALUE
ELECTRONIC EQUIPMENT & INSTRUMENTS-(CONTINUED)
Technitrol, Inc. 59,000 $ 1,629,580
-----------------------------------------------------------------------
Tektronix, Inc.(a) 76,000 1,959,280
-----------------------------------------------------------------------
Varian Inc.(a) 55,800 1,810,152
=======================================================================
11,625,608
=======================================================================
ENVIRONMENTAL SERVICES-0.76%
Tetra Tech, Inc. 76,000 1,513,160
=======================================================================
FOOD RETAIL-0.85%
Casey's General Stores, Inc. 112,800 1,680,720
=======================================================================
GENERAL MERCHANDISE STORES-0.80%
Tuesday Morning Corp.(a) 88,300 1,597,347
=======================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-4.34%
Apria Healthcare Group Inc.(a) 59,100 1,476,909
-----------------------------------------------------------------------
D & K Healthcare Resources, Inc. 26,000 1,480,700
-----------------------------------------------------------------------
First Horizon Pharmaceutical Corp.(a) 23,900 702,421
-----------------------------------------------------------------------
Genesis Health Ventures, Inc.(a) 65,100 1,399,650
-----------------------------------------------------------------------
MAXIMUS, Inc.(a) 44,000 1,850,640
-----------------------------------------------------------------------
Option Care, Inc.(a) 88,100 1,722,355
=======================================================================
8,632,675
=======================================================================
HEALTH CARE EQUIPMENT-1.35%
Apogent Technologies Inc.(a) 56,300 1,452,540
-----------------------------------------------------------------------
CardioDynamics International Corp.(a) 185,000 1,222,850
=======================================================================
2,675,390
=======================================================================
HEALTH CARE FACILITIES-2.13%
LifePoint Hospitals, Inc.(a) 40,200 1,368,408
-----------------------------------------------------------------------
U.S. Physical Therapy, Inc.(a) 55,600 898,496
-----------------------------------------------------------------------
VCA Antech, Inc.(a) 162,500 1,969,500
=======================================================================
4,236,404
=======================================================================
HOUSEHOLD APPLIANCES-0.93%
Snap-on Inc. 54,800 1,844,568
=======================================================================
HOUSEHOLD PRODUCTS-0.76%
Dial Corp. (The) 88,000 1,509,200
=======================================================================
INDUSTRIAL MACHINERY-0.92%
Flowserve Corp.(a) 69,100 1,838,751
=======================================================================
INSURANCE BROKERS-0.57%
Willis Group Holdings Ltd. (United
Kingdom)(a) 48,300 1,137,465
=======================================================================
INTERNET SOFTWARE & SERVICES-2.02%
Hotel Reservations Network, Inc.-Class A(a) 39,700 1,826,200
-----------------------------------------------------------------------
Quovadx, Inc.(a) 119,500 1,093,425
-----------------------------------------------------------------------
Stellent, Inc.(a) 37,200 1,099,632
=======================================================================
4,019,257
=======================================================================
IT CONSULTING & SERVICES-1.96%
Tier Technologies, Inc.-Class B(a) 100,000 2,156,000
-----------------------------------------------------------------------
|
MARKET
SHARES VALUE
IT CONSULTING & SERVICES-(CONTINUED)
Titan Corp. (The)(a) 69,500 $ 1,734,025
=======================================================================
3,890,025
=======================================================================
LEISURE PRODUCTS-1.02%
Direct Focus, Inc.(a) 64,800 2,021,760
=======================================================================
LIFE & HEALTH INSURANCE-0.43%
Phoenix Cos., Inc. (The)(a) 45,700 845,450
=======================================================================
MANAGED HEALTH CARE-1.60%
Centene Corp.(a) 61,500 1,349,925
-----------------------------------------------------------------------
Orthodontic Centers of America, Inc.(a) 59,700 1,820,850
=======================================================================
3,170,775
=======================================================================
MOVIES & ENTERTAINMENT-1.16%
Alliance Atlantis Communications Inc.-Class B
(Canada)(a) 105,000 1,186,629
-----------------------------------------------------------------------
Championship Auto Racing Teams, Inc.(a) 69,000 1,110,210
=======================================================================
2,296,839
=======================================================================
MULTI-UTILITIES-0.98%
MDU Resources Group, Inc. 69,300 1,950,795
=======================================================================
MUTUAL FUNDS-0.97%
MCG Capital Corp.(a) 108,400 1,929,520
=======================================================================
NETWORKING EQUIPMENT-0.64%
Lantronix, Inc.(a) 200,000 1,264,000
=======================================================================
OFFICE ELECTRONICS-0.88%
IKON Office Solutions, Inc. 149,200 1,744,148
=======================================================================
OIL & GAS DRILLING-0.97%
Pride International, Inc.(a) 128,100 1,934,310
=======================================================================
OIL & GAS EQUIPMENT & SERVICES-1.64%
Core Laboratories N.V. (Netherlands)(a) 110,500 1,549,210
-----------------------------------------------------------------------
Key Energy Services, Inc.(a) 185,800 1,709,360
=======================================================================
3,258,570
=======================================================================
OIL & GAS EXPLORATION & PRODUCTION-1.80%
Forest Oil Corp.(a) 50,450 1,423,194
-----------------------------------------------------------------------
XTO Energy, Inc. 123,400 2,159,500
=======================================================================
3,582,694
=======================================================================
PACKAGED FOODS-1.43%
Hain Celestial Group, Inc.(a) 67,000 1,839,820
-----------------------------------------------------------------------
Suprema Specialties, Inc.(a) 100,000 1,000,000
=======================================================================
2,839,820
=======================================================================
PHARMACEUTICALS-0.46%
ICN Pharmaceuticals, Inc. 27,100 907,850
=======================================================================
PROPERTY & CASUALTY INSURANCE-2.10%
PMA Capital Corp.-Class A 100,000 1,930,000
-----------------------------------------------------------------------
Vesta Insurance Group, Inc. 94,200 753,600
-----------------------------------------------------------------------
|
FS-93
MARKET
SHARES VALUE
PROPERTY & CASUALTY INSURANCE-(CONTINUED)
W. R. Berkley Corp. 27,800 $ 1,492,860
=======================================================================
4,176,460
=======================================================================
RAILROADS-1.07%
Genesee & Wyoming Inc.-Class A(a) 65,000 2,122,250
=======================================================================
REAL ESTATE INVESTMENT TRUSTS-4.30%
America First Mortgage Investments, Inc. 150,000 1,312,500
-----------------------------------------------------------------------
Annaly Mortgage Management Inc. 111,000 1,776,000
-----------------------------------------------------------------------
Anworth Mortgage Asset Corp. 200,000 1,820,000
-----------------------------------------------------------------------
CarrAmerica Realty Corp. 65,900 1,983,590
-----------------------------------------------------------------------
FBR Asset Investment Corp. 59,100 1,660,710
=======================================================================
8,552,800
=======================================================================
REINSURANCE-1.45%
Annuity and Life Reassurance Holdings, Ltd.
(Bermuda) 68,700 1,725,057
-----------------------------------------------------------------------
PartnerRe Ltd. (Bermuda) 21,400 1,155,600
=======================================================================
2,880,657
=======================================================================
RESTAURANTS-3.40%
AFC Enterprises, Inc.(a) 75,000 2,129,250
-----------------------------------------------------------------------
Jack in the Box Inc.(a) 43,700 1,203,498
-----------------------------------------------------------------------
P.F. Chang's China Bistro, Inc.(a) 30,500 1,442,650
-----------------------------------------------------------------------
Sonic Corp.(a) 54,900 1,976,400
=======================================================================
6,751,798
=======================================================================
SEMICONDUCTOR EQUIPMENT-1.53%
Brooks Automation, Inc.(a) 46,500 1,891,155
-----------------------------------------------------------------------
Varian Semiconductor Equipment Associates,
Inc.(a) 33,500 1,158,765
=======================================================================
3,049,920
=======================================================================
SEMICONDUCTORS-1.86%
Alpha Industries, Inc.(a) 26,500 577,700
-----------------------------------------------------------------------
|
MARKET
SHARES VALUE
SEMICONDUCTORS-(CONTINUED)
Fairchild Semiconductor Corp.-Class A(a) 72,500 $ 2,044,500
-----------------------------------------------------------------------
Semtech Corp.(a) 30,000 1,070,700
=======================================================================
3,692,900
=======================================================================
SPECIALTY CHEMICALS-0.79%
International Flavors & Fragrances Inc. 52,600 1,562,746
=======================================================================
SPECIALTY STORES-3.12%
Foot Locker, Inc.(a) 49,400 773,110
-----------------------------------------------------------------------
Rent-A-Center, Inc.(a) 49,700 1,668,429
-----------------------------------------------------------------------
Sonic Automotive, Inc.(a) 78,400 1,837,696
-----------------------------------------------------------------------
United Rentals, Inc.(a) 84,400 1,915,880
=======================================================================
6,195,115
=======================================================================
SYSTEMS SOFTWARE-1.77%
Borland Software Corp.(a) 58,200 911,412
-----------------------------------------------------------------------
Moldflow Corp.(a) 59,900 857,768
-----------------------------------------------------------------------
Wind River Systems, Inc.(a) 97,500 1,746,225
=======================================================================
3,515,405
=======================================================================
TRUCKING-0.91%
Landstar System, Inc.(a) 24,900 1,805,499
=======================================================================
Total Common Stocks & Other Equity
Interests (Cost $162,529,896) 186,472,346
=======================================================================
MONEY MARKET FUNDS-5.95%
STIC Liquid Assets Portfolio(c) 5,912,747 5,912,747
-----------------------------------------------------------------------
STIC Prime Portfolio(c) 5,912,747 5,912,747
=======================================================================
Total Money Market Funds (Cost
$11,825,494) 11,825,494
=======================================================================
TOTAL INVESTMENTS-99.79% (Cost $174,355,390) 198,297,840
=======================================================================
OTHER ASSETS LESS LIABILITIES-0.21% 408,709
=======================================================================
NET ASSETS-100.00% $198,706,549
_______________________________________________________________________
=======================================================================
|
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The market value of this security at 12/31/01 represented
0.36% of the Fund's net assets.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-94
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2001
ASSETS:
Investments, at market value (cost
$174,355,390) $198,297,840
------------------------------------------------------------
Receivables for:
Fund shares sold 3,396,993
------------------------------------------------------------
Dividends 259,676
------------------------------------------------------------
Investment for deferred compensation plan 9,333
------------------------------------------------------------
Other assets 15,561
============================================================
Total assets 201,979,403
============================================================
LIABILITIES:
Payables for:
Investments purchased 2,027,702
------------------------------------------------------------
Fund shares reacquired 947,361
------------------------------------------------------------
Deferred compensation plan 9,333
------------------------------------------------------------
Accrued distribution fees 177,845
------------------------------------------------------------
Accrued transfer agent fees 59,085
------------------------------------------------------------
Accrued operating expenses 51,528
============================================================
Total liabilities 3,272,854
============================================================
Net assets applicable to shares outstanding $198,706,549
____________________________________________________________
============================================================
NET ASSETS:
Class A $105,146,051
____________________________________________________________
============================================================
Class B $ 64,012,241
____________________________________________________________
============================================================
Class C $ 29,548,257
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 10,316,603
____________________________________________________________
============================================================
Class B 6,334,462
____________________________________________________________
============================================================
Class C 2,924,367
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 10.19
------------------------------------------------------------
Offering price per share:
(Net asset value of $10.19 divided by
94.50%) $ 10.78
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 10.11
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 10.10
____________________________________________________________
============================================================
|
STATEMENT OF OPERATIONS
For the year ended December 31, 2001
INVESTMENT INCOME:
Dividends $ 1,047,706
------------------------------------------------------------
Dividends from affiliated money market funds 369,276
------------------------------------------------------------
Interest 39
============================================================
Total investment income 1,417,021
============================================================
EXPENSES:
Advisory fees 997,232
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 38,112
------------------------------------------------------------
Distribution fees -- Class A 216,534
------------------------------------------------------------
Distribution fees -- Class B 382,833
------------------------------------------------------------
Distribution fees -- Class C 171,712
------------------------------------------------------------
Transfer agent fees -- Class A 184,325
------------------------------------------------------------
Transfer agent fees -- Class B 118,756
------------------------------------------------------------
Transfer agent fees -- Class C 53,266
------------------------------------------------------------
Trustees' fees 8,725
------------------------------------------------------------
Registration and filing fees 132,293
------------------------------------------------------------
Other 101,128
============================================================
Total expenses 2,454,916
============================================================
Less: Fees waived (714)
------------------------------------------------------------
Expenses paid indirectly (1,858)
============================================================
Net expenses 2,452,344
============================================================
Net investment income (loss) (1,035,323)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES AND
OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (6,252,879)
------------------------------------------------------------
Foreign currencies 560
------------------------------------------------------------
Option contracts written 3,570
============================================================
(6,248,749)
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 21,878,546
------------------------------------------------------------
Option contracts written (3,677)
============================================================
21,874,869
============================================================
Net gain from investment securities, foreign
currencies and option contracts 15,626,120
============================================================
Net increase in net assets resulting from
operations $14,590,797
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-95
STATEMENT OF CHANGES IN NET ASSETS
For the year ended December 31, 2001 and the period August 31, 2000
(date operations commenced) through December 31, 2000
2001 2000
------------ -----------
OPERATIONS:
Net investment income (loss) $ (1,035,323) $ (42,970)
-----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and option
contracts (6,248,749) (3,388,953)
-----------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, and option contracts 21,874,869 2,067,581
=========================================================================================
Net increase (decrease) in net assets resulting from
operations 14,590,797 (1,364,342)
=========================================================================================
Distributions to shareholders from net investment income:
Class A (45,876) --
-----------------------------------------------------------------------------------------
Share transactions-net:
Class A 64,401,893 33,716,692
-----------------------------------------------------------------------------------------
Class B 43,327,916 16,719,812
-----------------------------------------------------------------------------------------
Class C 18,212,944 9,146,713
=========================================================================================
Net increase in net assets 140,487,674 58,218,875
=========================================================================================
NET ASSETS:
Beginning of year 58,218,875 --
=========================================================================================
End of year $198,706,549 $58,218,875
_________________________________________________________________________________________
=========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $184,411,918 $59,572,581
-----------------------------------------------------------------------------------------
Undistributed net investment income (loss) (9,556) (32,334)
-----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures contracts and
option contracts (9,638,263) (3,388,953)
-----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
option contracts 23,942,450 2,067,581
=========================================================================================
$198,706,549 $58,218,875
_________________________________________________________________________________________
=========================================================================================
|
See Notes to Financial Statements.
FS-96
NOTES TO FINANCIAL STATEMENTS
December 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Small Cap Equity Fund (the "Fund") is a series portfolio of AIM Funds Group
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of twelve separate portfolios,
each having an unlimited number of shares of beneficial interest. 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 long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 as of the close of the customary trading session 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/ event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date.
On December 31, 2001, undistributed net investment income (loss) was increased by $1,103,977, undistributed net realized gains (losses) decreased by $561 and shares of beneficial interest decreased by $1,103,416 as a result of differing book/tax treatment of foreign currency transactions, net operating loss, nondeductible stock issuance costs and other reclassifications. Net assets of the Fund were unaffected by the reclassifications discussed above.
C. Distributions -- Distributions from income and 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 from 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.
FS-97
The Fund's capital loss carryforward of $9,014,563 is broken down by expiration date as follows:
CAPITAL LOSS CARRYFORWARD EXPIRATION ------------ ---------- $ 700,372 December 31, 2008 -------------------------------- 8,314,191 December 31, 2009 ================================ $9,014,563 ________________________________ ================================ |
As of December 31, 2001, the Fund has a post-October capital loss deferral of $231,927 which will be recognized in the following tax year.
E. 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 the 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.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. Covered Call Options -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded 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 written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received.
H. Expenses -- Distribution expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.85% of the Fund's
average daily net assets. Effective July 1, 2001, AIM voluntarily agreed to
waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM
receives from the affiliated money market fund of which the Fund has invested.
For the year ended December 31, 2001, AIM waived fees of $714.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 2001, AIM was
paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 2001, AFS
was paid $186,757 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 and Class C shares of the Fund. The Trust 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. 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. For the year ended December 31,
2001, the Class A, Class B and Class C shares paid AIM Distributors $216,534,
$382,833 and $171,712, respectively, as compensation under the Plans.
AIM Distributors received commissions of $129,827 from sales of the Class A
shares of the Fund during the year ended December 31, 2001. 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, 2001,
AIM Distributors received $39,954 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 2001, the Fund paid legal fees of $4,503
for services rendered by Kramer, Levin, Naftalis &
FS-98
Frankel LLP as counsel to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the year ended December 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $1,341 and reductions in custodian fees of $517 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $1,858.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests 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 is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. 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,
2001, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6-DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
------- ------
Distribution paid from ordinary income $45,876 $ --
__________________________________________________________
==========================================================
|
As of December 31, 2001, the components of distributable earnings on a tax basis were as follows:
Capital loss carryforward $(9,014,563)
---------------------------------------------------------
Unrealized appreciation 23,309,194
=========================================================
$14,294,631
_________________________________________________________
=========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of capital losses incurred after October 31, and other deferrals.
NOTE 7-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, 2001 was
$251,361,454 and $134,509,390, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $26,840,387 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (3,271,359) ========================================================= Net unrealized appreciation of investment securities $23,569,028 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $174,728,812. |
NOTE 8-CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2001 are summarized as follows:
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
Beginning of year 47 $ 8,084
---------------------------------------------------------
Written 683 324,300
---------------------------------------------------------
Closed (500) (129,496)
---------------------------------------------------------
Exercised (120) (172,314)
---------------------------------------------------------
Expired (110) (30,574)
=========================================================
End of year -- $ --
_________________________________________________________
=========================================================
|
FS-99
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the year ended December 31, 2001 and the period August 31, 2000 (date operations commenced) through December 31, 2000 were as follows:
2001 2000
-------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ --------- -----------
Sold:
Class A 9,399,572 $ 88,163,980 3,707,242 $35,554,951
--------------------------------------------------------------------------------------------------------------------
Class B 5,648,744 52,902,323 1,851,798 17,580,252
--------------------------------------------------------------------------------------------------------------------
Class C 3,099,967 29,048,663 1,021,221 9,654,027
====================================================================================================================
Issued as reinvestment of dividends:
Class A 3,879 37,431 -- --
====================================================================================================================
Reacquired:
Class A (2,593,418) (23,799,518) (200,672) (1,838,259)
--------------------------------------------------------------------------------------------------------------------
Class B (1,069,688) (9,574,407) (96,392) (860,440)
--------------------------------------------------------------------------------------------------------------------
Class C (1,142,623) (10,835,719) (54,198) (507,314)
====================================================================================================================
13,346,433 $125,942,753 6,228,999 $59,583,217
____________________________________________________________________________________________________________________
====================================================================================================================
|
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
----------------------------------
AUGUST 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2001(a) 2000(a)
------------ ----------------
Net asset value, beginning of period $ 9.36 $ 10.00
------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05) --
------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.88 (0.64)
================================================================================================
Total from investment operations 0.83 (0.64)
================================================================================================
Less dividends from net investment income 0.00 --
================================================================================================
Net asset value, end of period $ 10.19 $ 9.36
________________________________________________________________________________________________
================================================================================================
Total return(b) 8.92% (6.40)%
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $105,146 $32,805
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.78%(c) 1.78%(d)
------------------------------------------------------------------------------------------------
Without fee waivers 1.78%(c) 2.72%(d)
================================================================================================
Ratio of net investment income (loss) to average net assets (0.57)%(c) (0.12)%(d)
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate 123% 49%
________________________________________________________________________________________________
================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average daily net assets of $61,866,906.
(d) Annualized.
FS-100
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
----------------------------------
AUGUST 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2001(a) 2000(a)
------------ ----------------
Net asset value, beginning of period $ 9.33 $ 10.00
------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11) (0.03)
------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.89 (0.64)
================================================================================================
Total from investment operations 0.78 (0.67)
================================================================================================
Net asset value, end of period $ 10.11 $ 9.33
________________________________________________________________________________________________
================================================================================================
Total return(b) 8.36% (6.70)%
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $64,012 $16,385
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.44%(c) 2.49%(d)
------------------------------------------------------------------------------------------------
Without fee waivers 2.44%(c) 3.43%(d)
================================================================================================
Ratio of net investment income (loss) to average net assets (1.23)%(c) (0.83)%(d)
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate 123% 49%
________________________________________________________________________________________________
================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $38,283,298.
(d) Annualized.
CLASS C
--------------------------------
AUGUST 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2001(a) 2000(a)
------------ ----------------
Net asset value, beginning of period $ 9.34 $10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11) (0.03)
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.87 (0.63)
==============================================================================================
Total from investment operations 0.76 (0.66)
==============================================================================================
Net asset value, end of period $ 10.10 $ 9.34
______________________________________________________________________________________________
==============================================================================================
Total return(b) 8.14% (6.60)%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $29,548 $9,028
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.44%(c) 2.49%(d)
----------------------------------------------------------------------------------------------
Without fee waivers 2.44%(c) 3.43%(d)
==============================================================================================
Ratio of net investment income (loss) to average net assets (1.23)%(c) (0.83)%(d)
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 123% 49%
______________________________________________________________________________________________
==============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $17,171,230.
(d) Annualized.
FS-101
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
AIM Value Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Value Fund (one of the funds constituting AIM Funds Group; hereafter referred to as the "Fund") at December 31, 2001, and the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2001 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights for each of the periods ended on or before December 31, 1999 were audited by other independent accountants whose report, dated February 14, 2000, expressed an unqualified opinion thereon.
/s/ PRICEWATERHOUSECOOPERS LLP February 14, 2002 Houston, Texas |
FS-102
SCHEDULE OF INVESTMENTS
December 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-94.51%
ADVERTISING-3.05%
Omnicom Group Inc. 6,350,000 $ 567,372,500
=============================================================================
APPLICATION SOFTWARE-1.38%
Amdocs Ltd. (United Kingdom)(a) 4,131,700 140,353,849
-----------------------------------------------------------------------------
PeopleSoft, Inc.(a) 2,914,800 117,174,960
=============================================================================
257,528,809
=============================================================================
BANKS-1.58%
Bank of New York Co., Inc. (The) 7,199,500 293,739,600
=============================================================================
BROADCASTING & CABLE TV-6.14%
Comcast Corp.-Class A(a) 12,000,000 432,000,000
-----------------------------------------------------------------------------
Cox Communications, Inc.-Class A(a) 17,000,000 712,470,000
=============================================================================
1,144,470,000
=============================================================================
COMPUTER & ELECTRONICS RETAIL-1.41%
Best Buy Co., Inc.(a) 3,525,600 262,586,688
=============================================================================
COMPUTER HARDWARE-2.11%
International Business Machines Corp. 3,250,000 393,120,000
=============================================================================
CONSUMER FINANCE-0.26%
Household International, Inc. 850,000 49,249,000
=============================================================================
DATA PROCESSING SERVICES-5.80%
Automatic Data Processing, Inc. 4,700,000 276,830,000
-----------------------------------------------------------------------------
First Data Corp. 10,250,000 804,112,500
=============================================================================
1,080,942,500
=============================================================================
DIVERSIFIED FINANCIAL SERVICES-12.23%
American Express Co. 2,750,000 98,147,500
-----------------------------------------------------------------------------
Citigroup Inc. 11,750,000 593,140,000
-----------------------------------------------------------------------------
Fannie Mae 4,500,000 357,750,000
-----------------------------------------------------------------------------
Freddie Mac 7,250,000 474,150,000
-----------------------------------------------------------------------------
J.P. Morgan Chase & Co. 10,000,000 363,500,000
-----------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 7,000,000 391,580,000
=============================================================================
2,278,267,500
=============================================================================
DRUG RETAIL-1.26%
Walgreen Co. 7,000,000 235,620,000
=============================================================================
ELECTRIC UTILITIES-1.33%
Duke Energy Corp. 4,671,400 183,399,164
-----------------------------------------------------------------------------
Mirant Corp.(a) 4,000,000 64,080,000
=============================================================================
247,479,164
=============================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.84%
Celestica Inc. (Canada)(a) 8,500,000 343,315,000
=============================================================================
|
MARKET
SHARES VALUE
ENVIRONMENTAL SERVICES-0.56%
Waste Management, Inc. 3,250,000 $ 103,707,500
=============================================================================
FOOD RETAIL-2.34%
Kroger Co. (The)(a) 7,400,000 154,438,000
-----------------------------------------------------------------------------
Safeway Inc.(a) 6,750,000 281,812,500
=============================================================================
436,250,500
=============================================================================
FOOTWEAR-0.65%
NIKE, Inc.-Class B 2,150,000 120,916,000
=============================================================================
GENERAL MERCHANDISE STORES-3.61%
Target Corp. 16,396,100 673,059,905
=============================================================================
HEALTH CARE EQUIPMENT-1.58%
Baxter International Inc. 5,500,000 294,965,000
=============================================================================
HEALTH CARE FACILITIES-1.97%
HCA Inc. 9,500,000 366,130,000
=============================================================================
HOUSEHOLD PRODUCTS-0.96%
Kimberly-Clark Corp. 3,000,000 179,400,000
=============================================================================
INDUSTRIAL CONGLOMERATES-5.63%
General Electric Co. 15,500,000 621,240,000
-----------------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 7,265,000 427,908,500
=============================================================================
1,049,148,500
=============================================================================
INTEGRATED OIL & GAS-5.51%
BP PLC-ADR (United Kingdom) 9,000,000 418,590,000
-----------------------------------------------------------------------------
ChevronTexaco Corp. 2,725,000 244,187,250
-----------------------------------------------------------------------------
Exxon Mobil Corp. 9,250,000 363,525,000
=============================================================================
1,026,302,250
=============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.71%
AT&T Corp. 5,406,900 98,081,166
-----------------------------------------------------------------------------
Qwest Communications International Inc. 2,363,000 33,389,190
=============================================================================
131,470,356
=============================================================================
INTERNET SOFTWARE & SERVICES-0.37%
Check Point Software Technologies Ltd.
(Israel)(a) 1,734,000 69,169,260
=============================================================================
MANAGED HEALTH CARE-3.11%
CIGNA Corp. 1,100,000 101,915,000
-----------------------------------------------------------------------------
UnitedHealth Group Inc. 6,750,000 477,697,500
=============================================================================
579,612,500
=============================================================================
MOVIES & ENTERTAINMENT-2.28%
AOL Time Warner Inc.(a) 13,250,000 425,325,000
=============================================================================
|
FS-103
MARKET
SHARES VALUE
MULTI-LINE INSURANCE-4.50%
American International Group, Inc. 8,750,000 $ 694,750,000
-----------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 2,300,000 144,509,000
=============================================================================
839,259,000
=============================================================================
MULTI-UTILITIES-1.50%
Dynegy Inc.-Class A 3,310,000 84,405,000
-----------------------------------------------------------------------------
Williams Cos., Inc. (The) 7,625,000 194,590,000
=============================================================================
278,995,000
=============================================================================
NETWORKING EQUIPMENT-0.68%
Cisco Systems, Inc.(a) 7,000,000 126,770,000
=============================================================================
OIL & GAS DRILLING-0.54%
Transocean Sedco Forex Inc. 3,000,000 101,460,000
=============================================================================
OIL & GAS EQUIPMENT & SERVICES-0.69%
Baker Hughes Inc. 3,500,000 127,645,000
=============================================================================
PHARMACEUTICALS-8.47%
Abbott Laboratories 3,750,000 209,062,500
-----------------------------------------------------------------------------
Allergan, Inc. 700,000 52,535,000
-----------------------------------------------------------------------------
Bristol-Myers Squibb Co. 5,500,000 280,500,000
-----------------------------------------------------------------------------
Johnson & Johnson 6,100,000 360,510,000
-----------------------------------------------------------------------------
Pfizer Inc. 13,750,000 547,937,500
-----------------------------------------------------------------------------
Schering-Plough Corp. 3,580,400 128,214,124
=============================================================================
1,578,759,124
=============================================================================
SEMICONDUCTOR EQUIPMENT-0.59%
Applied Materials, Inc.(a) 2,000,000 80,200,000
-----------------------------------------------------------------------------
Teradyne, Inc.(a) 1,000,000 30,140,000
=============================================================================
110,340,000
=============================================================================
SEMICONDUCTORS-1.87%
Analog Devices, Inc.(a) 7,832,900 347,702,431
=============================================================================
|
MARKET
SHARES VALUE
SOFT DRINKS-1.28%
PepsiCo, Inc. 4,900,000 $ 238,581,000
=============================================================================
SYSTEMS SOFTWARE-3.26%
Microsoft Corp.(a) 7,500,000 497,025,000
-----------------------------------------------------------------------------
Oracle Corp.(a) 8,000,000 110,480,000
=============================================================================
607,505,000
=============================================================================
TELECOMMUNICATIONS EQUIPMENT-0.82%
Nokia Oyj-ADR (Finland) 6,200,000 152,086,000
=============================================================================
WIRELESS TELECOMMUNICATION SERVICES-2.64%
Nextel Communications, Inc.-Class A(a) 16,000,000 175,360,000
-----------------------------------------------------------------------------
Sprint Corp. (PCS Group)(a) 13,000,000 317,330,000
=============================================================================
492,690,000
=============================================================================
Total Common Stocks & Other Equity
Interests (Cost $16,074,880,269) 17,610,940,087
=============================================================================
PRINCIPAL
AMOUNT
U.S. TREASURY BILLS-0.27%
1.73%, 03/21/02 (Cost $49,821,153)(b) $50,000,000(c) 49,831,500
=============================================================================
SHARES
MONEY MARKET FUNDS-5.83%
STIC Liquid Assets Portfolio(d) 543,212,543 543,212,543
-----------------------------------------------------------------------------
STIC Prime Portfolio(d) 543,212,543 543,212,543
=============================================================================
Total Money Market Funds (Cost
$1,086,425,086) 1,086,425,086
=============================================================================
TOTAL INVESTMENTS-100.61% (Cost
$17,211,126,508) 18,747,196,673
=============================================================================
OTHER ASSETS LESS LIABILITIES-(0.61%) (114,306,892)
=============================================================================
NET ASSETS-100.00% $18,632,889,781
_____________________________________________________________________________
=============================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security traded on a discount basis. The interest rate shown represents the
rate of discount at issue.
(c) A portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 9.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-104
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2001
ASSETS:
Investments, at market value (cost
$17,211,126,508)* $18,747,196,673
-------------------------------------------------------------
Receivables for:
Foreign currency contracts closed 59,148
-------------------------------------------------------------
Investments sold 18,029,129
-------------------------------------------------------------
Fund shares sold 12,001,351
-------------------------------------------------------------
Dividends 13,382,777
-------------------------------------------------------------
Foreign currency contracts outstanding 225,622
-------------------------------------------------------------
Investment for deferred compensation plan 351,580
-------------------------------------------------------------
Collateral for securities loaned 306,480,800
=============================================================
Total assets 19,097,727,080
=============================================================
LIABILITIES:
Payables for:
Investments purchased 36,630,618
-------------------------------------------------------------
Fund shares reacquired 94,076,582
-------------------------------------------------------------
Deferred compensation plan 351,580
-------------------------------------------------------------
Collateral upon return of securities
loaned 306,480,800
-------------------------------------------------------------
Variation margin 1,941,819
-------------------------------------------------------------
Accrued distribution fees 18,920,140
-------------------------------------------------------------
Accrued trustees' fees 2,225
-------------------------------------------------------------
Accrued transfer agent fees 4,806,271
-------------------------------------------------------------
Accrued operating expenses 1,627,264
=============================================================
Total liabilities 464,837,299
=============================================================
Net assets applicable to shares outstanding $18,632,889,781
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $ 8,502,698,600
_____________________________________________________________
=============================================================
Class B $ 9,186,979,708
_____________________________________________________________
=============================================================
Class C $ 943,211,473
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 782,185,557
_____________________________________________________________
=============================================================
Class B 891,921,284
_____________________________________________________________
=============================================================
Class C 91,519,712
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 10.87
-------------------------------------------------------------
Offering price per share:
(Net asset value of $10.87 divided by
94.50%) $ 11.50
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 10.30
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 10.31
_____________________________________________________________
=============================================================
|
* At December 31, 2001, securities with an aggregate market value of $298,716,122 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended December 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$1,456,867) $ 148,613,119
-------------------------------------------------------------
Dividends from affiliated money market funds 72,431,045
-------------------------------------------------------------
Interest 2,373,669
-------------------------------------------------------------
Security lending income 520,323
=============================================================
Total investment income 223,938,156
=============================================================
EXPENSES:
Advisory fees 133,647,827
-------------------------------------------------------------
Administrative services fees 833,469
-------------------------------------------------------------
Custodian fees 1,018,061
-------------------------------------------------------------
Distribution fees -- Class A 24,169,158
-------------------------------------------------------------
Distribution fees -- Class B 105,895,470
-------------------------------------------------------------
Distribution fees -- Class C 10,844,420
-------------------------------------------------------------
Transfer agent fees -- Class A 20,064,494
-------------------------------------------------------------
Transfer agent fees -- Class B 22,786,011
-------------------------------------------------------------
Transfer agent fees -- Class C 2,333,443
-------------------------------------------------------------
Trustees' fees 93,658
-------------------------------------------------------------
Other 6,018,404
=============================================================
Total expenses 327,704,415
=============================================================
Less: Fees waived (8,961,757)
-------------------------------------------------------------
Expenses paid indirectly (300,621)
=============================================================
Net expenses 318,442,037
=============================================================
Net investment income (loss) (94,503,881)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCY
CONTRACTS, FUTURES CONTRACTS AND OPTION
CONTRACTS:
Net realized gain (loss) from:
Investment securities (1,667,834,047)
-------------------------------------------------------------
Foreign currency contracts 5,801,409
-------------------------------------------------------------
Futures contracts (194,734,701)
-------------------------------------------------------------
Option contracts written 48,068,160
=============================================================
(1,808,699,179)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (1,374,928,457)
-------------------------------------------------------------
Foreign currency contracts 30,399,250
-------------------------------------------------------------
Futures contracts 14,725,637
-------------------------------------------------------------
Option contracts written (49,439,506)
=============================================================
(1,379,243,076)
=============================================================
Net gain (loss) from investment securities,
foreign currency contracts, futures
contracts and option contracts (3,187,942,255)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(3,282,446,136)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-105
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2001 and 2000
2001 2000
--------------- ---------------
OPERATIONS:
Net investment income (loss) $ (94,503,881) $ (153,822,863)
------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currency contracts, futures contracts and option
contracts (1,808,699,179) 1,802,222,254
------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currency contracts,
futures contracts and option contracts (1,379,243,076) (6,293,440,690)
================================================================================================
Net increase (decrease) in net assets resulting from
operations (3,282,446,136) (4,645,041,299)
================================================================================================
Distributions to shareholders from net realized gains:
Class A (11,567,785) (1,074,794,698)
------------------------------------------------------------------------------------------------
Class B (13,103,850) (1,247,299,950)
------------------------------------------------------------------------------------------------
Class C (1,340,169) (126,240,715)
------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (1,265,245,616) 1,670,331,026
------------------------------------------------------------------------------------------------
Class B (1,623,452,392) 1,786,995,772
------------------------------------------------------------------------------------------------
Class C (147,015,896) 774,093,169
================================================================================================
Net increase (decrease) in net assets (6,344,171,844) (2,861,956,695)
================================================================================================
NET ASSETS:
Beginning of year 24,977,061,625 27,839,018,320
================================================================================================
End of year $18,632,889,781 $24,977,061,625
________________________________________________________________________________________________
================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $18,906,290,031 $22,036,509,303
------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (837,038) (751,164)
------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currency contracts, futures
contracts and option contracts (1,812,776,568) 21,847,054
------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currency contracts, futures contracts and option
contracts 1,540,213,356 2,919,456,432
================================================================================================
$18,632,889,781 $24,977,061,625
________________________________________________________________________________________________
================================================================================================
|
See Notes to Financial Statements.
FS-106
NOTES TO FINANCIAL STATEMENTS
December 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Value Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of twelve separate portfolios, each
having an unlimited number of shares of beneficial interest. 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 long-term growth of capital. Income is a secondary objective.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 -- Securities, including restricted
securities, are valued according to the following policy. A security listed
or traded on an exchange (except convertible bonds) is valued at its last
sales price as of the close of the customary trading session 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 as of the close of the customary trading session 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 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 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 the
customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Occasionally, events affecting the values of such foreign securities
may occur between the times at which the particular foreign market closes and
the close of the customary trading session of the NYSE which would not be
reflected in the computation of the Fund's net asset value. If a development/
event is so significant that there is a reasonably high degree of certainty
as to both the effect and the degree of effect that the development/event has
actually caused that closing price to no longer reflect actual value, the
closing prices, as determined at the close of the applicable foreign market,
may be adjusted to reflect the fair value of the affected foreign securities
as of the close of the NYSE as determined in good faith by or under the
supervision of the Board of Trustees.
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 on the accrual basis from
settlement date. Dividend income is recorded on the ex-dividend date.
On December 31, 2001, undistributed net investment income was increased by
$94,418,007, undistributed net realized gains increased by $87,361 and shares
of beneficial interest decreased by $94,505,368 as a result of net operating
loss reclassifications, foreign currency reclassifications and other
reclassifications. Net assets of the Fund were unaffected by the
reclassifications discussed above.
C. Distributions -- Distributions from income and 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 from 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 $1,670,556,615 as of December
31, 2001 which may be carried forward to
FS-107
offset future taxable gains, if any, which expires, if not previously utilized, in the year 2009. As of December 31, 2001 the fund has a post-October capital loss deferral of $103,779,442 which will be recognized in the following tax year.
E. 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 the 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.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
Outstanding foreign currency contracts at December 31, 2001 were as follows:
CONTRACT TO UNREALIZED
SETTLEMENT -------------------------- APPRECIATION
DATE CURRENCY DELIVER RECEIVE VALUE (DEPRECIATION)
---------- -------- ----------- ------------ ------------ --------------
02/28/02 CAD 438,750,000 $276,641,943 $275,563,529 $1,078,414
---------------------------------------------------------------------------------
02/28/02 EUR 140,300,000 123,970,996 124,823,788 (852,792)
=================================================================================
$400,612,939 $400,387,317 $ 225,622
_________________________________________________________________________________
=================================================================================
|
G. Covered Call Options -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded 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 written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received.
H. Futures Contracts -- The Fund may purchase or sell futures contracts as a hedge against changes in market conditions. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities as collateral for the account of the broker (the Fund's agent in acquiring the futures position). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by "marking to market" on a daily basis to reflect the market value of the contracts at the end of each day's trading. Variation margin payments are made or received depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund's basis in the contract. Risks include the possibility of an illiquid market and that a change in value of the contracts may not correlate with changes in the value of the securities being hedged.
I. Expenses -- Distribution expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.80% of the first
$150 million of the Fund's average daily net assets, plus 0.625% of the Fund's
average daily net assets in excess of $150 million. Effective July 1, 2000, AIM
has agreed to waive advisory fees payable by the Fund to AIM at the annual rate
of 0.025% for each $5 billion increment in net assets over $5 billion, up to a
maximum waiver of 0.175% on net assets in excess of $35 billion. AIM has
voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of
the advisory fee AIM receives from the affiliated money market fund of which the
Fund has invested. For the year ended December 31, 2001, AIM waived fees of
$8,961,757.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 2001, AIM was
paid $833,469 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 2001, AFS
was paid $22,072,135 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 and Class C shares of the Fund. The Trust 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
0.25% of the Fund's average daily net assets of Class A shares
FS-108
and 1.00% of the average daily net assets of Class B and C shares. Of these
amounts, the Fund may pay a service fee of 0.25% of the average daily net assets
of the Class A, 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.
For the year ended December 31, 2001, the Class A, Class B and Class C shares
paid AIM Distributors $24,169,158, $105,895,470 and $10,844,420, respectively,
as compensation under the Plans.
AIM Distributors received commissions of $2,026,998 from sales of the Class A
shares of the Fund during the year ended December 31, 2001. 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, 2001,
AIM Distributors received $502,677 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 2001, the Fund paid legal fees of $44,446
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the year ended December 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $300,621 which resulted in a reduction of the Fund's total expenses of $300,621.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests 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 is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. 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,
2001, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day. Therefore, the
value of the collateral may be temporarily less than the value of the securities
on loan.
At December 31, 2001, securities with an aggregate value of $298,716,122 were
on loan to brokers. The loans were secured by cash collateral of $306,480,800
received by the Fund and subsequently invested in the affiliated money market
fund STIC Liquid Assets Portfolio. For the year ended December 31, 2001, the
Fund received fees of $520,323 for securities lending.
NOTE 7-DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
----------- --------------
Distributions paid from:
Ordinary income $ -- $ 146,286,027
------------------------------------------------------------
Long-term capital gain 26,011,804 2,302,049,336
============================================================
$26,011,804 $2,448,335,363
____________________________________________________________
============================================================
|
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Capital loss carryforward $(1,670,556,615)
----------------------------------------------------------
Unrealized appreciation 1,397,156,365
==========================================================
$ (273,400,250)
__________________________________________________________
==========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of capital losses incurred after October 31, the realization for tax purposes of unrealized gains on certain forward foreign currency contracts and futures contracts, and other deferrals.
FS-109
NOTE 8-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, 2001 was
$7,489,205,596 and $9,521,891,583, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $ 3,087,431,580 ---------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (1,585,658,734) ========================================================== Net unrealized appreciation of investment securities $ 1,501,772,846 __________________________________________________________ ========================================================== Cost of investments for tax purposes is $17,245,423,827. |
NOTE 9-FUTURES CONTRACTS
On December 31, 2001, $19,103,864 principal amount of U.S. Treasury obligations were pledged as collateral to cover margin requirements for open futures contracts. Open futures contracts as of December 31, 2001 were as follows:
NO. OF MONTH/ UNREALIZED
CONTRACT CONTRACTS COMMITMENT MARKET VALUE APPRECIATION
-------- --------- ----------- ------------ ------------
S&P 500 Index 750 Mar-02/Long $215,475,000 $3,917,569
_____________________________________________________________________
=====================================================================
|
NOTE 10-CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2001 are summarized as follows:
CALL OPTION CONTRACTS
-------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ------------
Beginning of year 86,390 $ 76,053,069
---------------------------------------------------------------------------------------
Closed (17,000) (10,569,566)
---------------------------------------------------------------------------------------
Exercised (32,000) (26,673,189)
---------------------------------------------------------------------------------------
Expired (37,390) (38,810,314)
=======================================================================================
End of year -- $ --
_______________________________________________________________________________________
=======================================================================================
|
NOTE 11-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2001 and 2000 were as follows:
2001 2000
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
Sold:
Class A 99,493,160 $ 1,142,786,605 630,010,408 $ 3,156,759,316
-----------------------------------------------------------------------------------------------------------------------------
Class B 53,393,062 589,020,838 703,853,509 2,552,273,834
-----------------------------------------------------------------------------------------------------------------------------
Class C 14,110,226 155,875,910 87,455,815 904,931,025
=============================================================================================================================
Issued as reinvestment of dividends:
Class A 1,047,730 11,046,064 83,714,399 1,028,837,590
-----------------------------------------------------------------------------------------------------------------------------
Class B 1,221,981 12,181,662 99,085,297 1,163,271,351
-----------------------------------------------------------------------------------------------------------------------------
Class C 126,038 1,257,875 10,150,935 119,273,711
=============================================================================================================================
Reacquired:
Class A (215,650,396) (2,419,078,285) (75,280,734) (2,515,265,880)
-----------------------------------------------------------------------------------------------------------------------------
Class B (208,566,724) (2,224,654,892) (60,835,163) (1,928,549,413)
-----------------------------------------------------------------------------------------------------------------------------
Class C (28,342,494) (304,149,681) (10,212,288) (250,111,567)
=============================================================================================================================
(283,167,417) $(3,035,713,904) 1,467,942,178 $ 4,231,419,967
_____________________________________________________________________________________________________________________________
=============================================================================================================================
|
FS-110
NOTE 12-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
2001 2000(a)(b) 1999(a) 1998(a) 1997(a)
---------- ----------- ----------- ---------- ----------
Net asset value, beginning of period $ 12.51 $ 16.28 $ 13.40 $ 10.81 $ 9.72
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) -- (0.04) (0.01) 0.03 0.05
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.63) (2.42) 3.97 3.46 2.26
=================================================================================================================================
Total from investment operations (1.63) (2.46) 3.96 3.49 2.31
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.03) (0.01)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.01) (1.31) (1.08) (0.87) (1.21)
=================================================================================================================================
Total distributions (0.01) (1.31) (1.08) (0.90) (1.22)
=================================================================================================================================
Net asset value, end of period $ 10.87 $ 12.51 $ 16.28 $ 13.40 $ 10.81
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (12.99)% (14.95)% 29.95% 32.76% 23.95%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $8,502,699 $11,223,504 $12,640,073 $8,823,094 $6,745,253
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.08%(d) 1.00% 1.00% 1.00% 1.04%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.12%(d) 1.04% 1.02% 1.02% 1.06%
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.03)%(d) (0.11)% (0.09)% 0.26% 0.57%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 38% 67% 66% 113% 137%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information and shares have been restated to reflect a 3 for 1
stock split, effected in the form of a 200% stock dividend on November 10,
2000.
(b) Calculated using average shares outstanding.
(c) Does not include sales charges.
(d) Ratios are based on average daily net assets of $9,667,663,277.
CLASS B
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
2001 2000(a)(b) 1999(a)(b) 1998(a) 1997(a)
---------- ----------- ----------- ---------- ----------
Net asset value, beginning of period $ 11.94 $ 15.73 $ 13.08 $ 10.63 $ 9.64
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09) (0.31) (0.13) (0.06) (0.02)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.54) (2.17) 3.86 3.38 2.22
=================================================================================================================================
Total from investment operations (1.63) (2.48) 3.73 3.32 2.20
=================================================================================================================================
Less distributions from net realized gains: (0.01) (1.31) (1.08) (0.87) (1.21)
=================================================================================================================================
Net asset value, end of period $ 10.30 $ 11.94 $ 15.73 $ 13.08 $ 10.63
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (13.61)% (15.65)% 28.94% 31.70% 22.96%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $9,186,980 $12,491,366 $14,338,087 $9,680,068 $6,831,796
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.84%(d) 1.77% 1.79% 1.80% 1.85%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.88%(d) 1.81% 1.81% 1.82% 1.87%
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.79)%(d) (0.89)% (0.88)% (0.54)% (0.24)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 38% 67% 66% 113% 137%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information and shares have been restated to reflect a 3 for 1
stock split, effected in the form of a 200% stock dividend on November 10,
2000.
(b) Calculated using average shares outstanding.
(c) Does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $10,589,546,984.
FS-111
NOTE 12-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
----------------------------------------------------------------------
AUGUST 4, 1997
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED)
-------------------------------------------------- TO DECEMBER 31,
2001 2000(a)(b) 1999(a)(b) 1998(a)(b) 1997(a)
-------- ---------- ---------- ---------- ----------------
Net asset value, beginning of period $ 11.95 $ 15.74 $ 13.09 $ 10.63 $ 11.86
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09) (0.31) (0.13) (0.06) --
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.54) (2.17) 3.86 3.39 (0.02)
=================================================================================================================================
Total from investment operations (1.63) (2.48) 3.73 3.33 (0.02)
=================================================================================================================================
Less distributions from net realized gains: (0.01) (1.31) (1.08) (0.87) (1.21)
=================================================================================================================================
Net asset value, end of period $ 10.31 $ 11.95 $ 15.74 $ 13.09 $ 10.63
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (13.60)% (15.62)% 28.92% 31.72% (0.08)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $943,211 $1,262,192 $860,859 $212,095 $32,900
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.84%(d) 1.77% 1.79% 1.80% 1.84%(e)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.88%(d) 1.81% 1.81% 1.82% 1.86%(e)
=================================================================================================================================
Ratio of net investment loss to average net assets (0.79)%(d) (0.88)% (0.88)% (0.54)% (0.23)%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 38% 67% 66% 113% 137%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information and shares have been restated to reflect a 3 for 1
stock split, effected in the form of a 200% stock dividend on November 10,
2000.
(b) Calculated using average shares outstanding.
(c) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(d) Ratios are based on average daily net assets of $1,084,442,024.
(e) Annualized.
FS-112
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
AIM Value II Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Value II Fund (one of the funds constituting AIM Funds Group; hereafter referred to as the "Fund") at December 31, 2001, and the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2001 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP February 14, 2002 Houston, Texas |
FS-113
SCHEDULE OF INVESTMENTS
December 31, 2001
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS-72.28%
ADVERTISING-2.56%
Omnicom Group Inc. 44,400 $ 3,967,140
========================================================================
APPAREL & ACCESSORIES-1.16%
Coach, Inc.(a) 46,000 1,793,080
========================================================================
APPAREL RETAIL-0.74%
Abercrombie & Fitch Co.-Class A(a) 43,000 1,140,790
========================================================================
APPLICATION SOFTWARE-2.45%
Cadence Design Systems, Inc.(a) 100,000 2,192,000
------------------------------------------------------------------------
PeopleSoft, Inc.(a) 40,000 1,608,000
========================================================================
3,800,000
========================================================================
BANKS-1.55%
Bank of New York Co., Inc. (The) 59,000 2,407,200
========================================================================
BROADCASTING & CABLE TV-4.31%
Charter Communications, Inc.-Class A(a) 142,000 2,333,060
------------------------------------------------------------------------
Comcast Corp.-Class A(a) 49,000 1,764,000
------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 64,000 2,589,440
========================================================================
6,686,500
========================================================================
COMPUTER & ELECTRONICS RETAIL-0.90%
CDW Computer Centers, Inc.(a) 26,000 1,396,460
========================================================================
COMPUTER HARDWARE-1.01%
International Business Machines Corp. 13,000 1,572,480
========================================================================
CONSTRUCTION & ENGINEERING-1.99%
Jacobs Engineering Group Inc.(a) 32,500 2,145,000
------------------------------------------------------------------------
Shaw Group Inc. (The)(a) 40,000 940,000
========================================================================
3,085,000
========================================================================
CONSUMER FINANCE-1.22%
Capital One Financial Corp. 35,000 1,888,250
========================================================================
DATA PROCESSING SERVICES-7.08%
BISYS Group, Inc. (The)(a) 58,000 3,711,420
------------------------------------------------------------------------
Concord EFS, Inc.(a) 126,000 4,130,280
------------------------------------------------------------------------
First Data Corp. 40,100 3,145,845
========================================================================
10,987,545
========================================================================
DIVERSIFIED FINANCIAL SERVICES-9.37%
Ambac Financial Group, Inc. 48,500 2,806,210
------------------------------------------------------------------------
Citigroup Inc. 81,000 4,088,880
------------------------------------------------------------------------
Fannie Mae 29,000 2,305,500
------------------------------------------------------------------------
Freddie Mac 33,000 2,158,200
------------------------------------------------------------------------
Lehman Brothers Holdings Inc. 27,500 1,837,000
------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 24,000 1,342,560
========================================================================
14,538,350
========================================================================
|
MARKET
SHARES VALUE
ELECTRIC UTILITIES-2.79%
Calpine Corp.(a) 42,000 $ 705,180
------------------------------------------------------------------------
Duke Energy Corp. 65,000 2,551,900
------------------------------------------------------------------------
Reliant Resources, Inc.(a) 64,900 1,071,499
========================================================================
4,328,579
========================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.00%
Waters Corp.(a) 40,000 1,550,000
========================================================================
GENERAL MERCHANDISE STORES-3.19%
BJ's Wholesale Club, Inc.(a) 37,000 1,631,700
------------------------------------------------------------------------
Target Corp. 81,000 3,325,050
========================================================================
4,956,750
========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-2.13%
Quest Diagnostics Inc.(a) 46,000 3,298,660
========================================================================
HEALTH CARE EQUIPMENT-3.11%
Baxter International Inc. 74,000 3,968,620
------------------------------------------------------------------------
Biomet, Inc.(a) 28,000 865,200
========================================================================
4,833,820
========================================================================
HEALTH CARE FACILITIES-3.49%
HCA Inc. 77,000 2,967,580
------------------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 72,000 2,450,880
========================================================================
5,418,460
========================================================================
HOTELS-0.58%
Royal Caribbean Cruises Ltd. 56,000 907,200
========================================================================
INDUSTRIAL CONGLOMERATES-2.16%
General Electric Co. 83,800 3,358,704
========================================================================
IT CONSULTING & SERVICES-1.16%
Affiliated Computer Services, Inc.-Class A(a) 17,000 1,804,210
========================================================================
LIFE & HEALTH INSURANCE-0.51%
AFLAC, Inc. 32,000 785,920
========================================================================
MANAGED HEALTH CARE-1.43%
Wellpoint Health Networks Inc.(a) 19,000 2,220,150
========================================================================
MULTI-UTILITIES-1.02%
Dynegy Inc.-Class A 62,000 1,581,000
========================================================================
NETWORKING EQUIPMENT-0.53%
NetScreen Technologies, Inc.(a) 37,500 829,875
========================================================================
OIL & GAS DRILLING-2.00%
ENSCO International Inc. 94,000 2,335,900
------------------------------------------------------------------------
GlobalSantaFe Corp. 27,000 770,040
========================================================================
3,105,940
========================================================================
|
FS-114
MARKET
SHARES VALUE
OIL & GAS EQUIPMENT & SERVICES-2.90%
Baker Hughes Inc. 24,000 $ 875,280
------------------------------------------------------------------------
BJ Services Co.(a) 48,000 1,557,600
------------------------------------------------------------------------
Weatherford International, Inc.(a) 55,500 2,067,930
========================================================================
4,500,810
========================================================================
PHARMACEUTICALS-4.35%
Allergan, Inc. 28,800 2,161,440
------------------------------------------------------------------------
King Pharmaceuticals, Inc.(a) 38,000 1,600,940
------------------------------------------------------------------------
Pfizer Inc. 75,000 2,988,750
========================================================================
6,751,130
========================================================================
SEMICONDUCTORS-1.27%
Microchip Technology Inc.(a) 51,000 1,975,740
========================================================================
SYSTEMS SOFTWARE-1.03%
Microsoft Corp.(a) 24,000 1,590,480
========================================================================
WIRELESS TELECOMMUNICATION SERVICES-3.29%
Nextel Communications, Inc.-Class A(a) 61,000 668,560
------------------------------------------------------------------------
Nextel Partners, Inc.-Class A(a) 97,600 1,171,200
------------------------------------------------------------------------
Sprint Corp. (PCS Group)(a) 134,000 3,270,940
========================================================================
5,110,700
========================================================================
Total Domestic Common Stocks (Cost
$108,308,372) 112,170,923
========================================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-19.00%
BERMUDA-7.68%
ACE Ltd. (Property & Casualty Insurance) 40,000 1,606,000
------------------------------------------------------------------------
Everest Re Group, Ltd. (Reinsurance) 67,500 4,772,250
------------------------------------------------------------------------
Tyco International Ltd. (Industrial
Conglomerates) 94,000 5,536,600
========================================================================
11,914,850
========================================================================
CANADA-2.75%
Biovail Corp. (Pharmaceuticals)(a) 31,000 1,743,750
------------------------------------------------------------------------
Celestica Inc. (Electronic Equipment &
Instruments)(a) 62,500 2,524,375
========================================================================
4,268,125
========================================================================
|
MARKET
SHARES VALUE
FINLAND-0.61%
Nokia Oyj-ADR (Telecommunications Equipment) 39,000 $ 956,670
========================================================================
IRELAND-1.48%
Elan Corp. PLC-ADR (Pharmaceuticals)(a) 51,000 2,298,060
========================================================================
ISRAEL-1.03%
Check Point Software Technologies Ltd.
(Internet Software & Services)(a) 40,000 1,595,600
========================================================================
NETHERLANDS-0.98%
ASM Lithography Holding N.V.-New York Shares
(Semiconductor Equipment)(a) 89,000 1,517,450
========================================================================
SINGAPORE-0.84%
Flextronics International Ltd. (Electronic
Equipment & Instruments)(a) 54,200 1,300,258
========================================================================
UNITED KINGDOM-3.63%
Amdocs Ltd. (Application Software)(a) 60,000 2,038,200
------------------------------------------------------------------------
BP PLC-ADR (Integrated Oil & Gas) 36,700 1,706,917
------------------------------------------------------------------------
Willis Group Holdings Ltd. (Insurance
Brokers)(a) 80,000 1,884,000
========================================================================
5,629,117
========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $32,761,602) 29,480,130
========================================================================
PRINCIPAL
AMOUNT
U.S. TREASURY BILLS-1.28%
1.73%, 03/21/02 (Cost $1,992,846)(b) $2,000,000(c) 1,993,260
========================================================================
SHARES
MONEY MARKET FUNDS-7.71%
STIC Liquid Assets Portfolio(d) 5,987,063 5,987,063
------------------------------------------------------------------------
STIC Prime Portfolio(d) 5,987,063 5,987,063
========================================================================
Total Money Market Funds (Cost
$11,974,126) 11,974,126
========================================================================
TOTAL INVESTMENTS-100.27% (Cost $155,036,946) 155,618,439
========================================================================
OTHER ASSETS LESS LIABILITIES-(0.27%) (426,727)
========================================================================
NET ASSETS-100.00% $155,191,712
________________________________________________________________________
========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security traded on a discount basis. The interest rate shown represents the
rate of discount at issue.
(c) A portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 10.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-115
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2001
ASSETS:
Investments, at market value (cost
$155,036,946)* $155,618,439
------------------------------------------------------------
Receivables for:
Fund shares sold 742,143
------------------------------------------------------------
Dividends 100,811
------------------------------------------------------------
Investment for deferred compensation plan 9,519
------------------------------------------------------------
Collateral for securities loaned 16,268,246
------------------------------------------------------------
Other assets 17,838
============================================================
Total assets 172,756,996
============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 974,020
------------------------------------------------------------
Deferred compensation plan 9,519
------------------------------------------------------------
Collateral upon return of securities loaned 16,268,246
------------------------------------------------------------
Variation margin 55,550
------------------------------------------------------------
Accrued distribution fees 161,907
------------------------------------------------------------
Accrued transfer agent fees 48,542
------------------------------------------------------------
Accrued operating expenses 47,500
============================================================
Total liabilities 17,565,284
============================================================
Net assets applicable to shares outstanding $155,191,712
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 57,591,216
____________________________________________________________
============================================================
Class B $ 67,570,903
____________________________________________________________
============================================================
Class C $ 30,029,593
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 8,157,416
____________________________________________________________
============================================================
Class B 9,646,845
____________________________________________________________
============================================================
Class C 4,287,544
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 7.06
------------------------------------------------------------
Offering price per share:
(Net asset value of $7.06 divided by
94.50%) $ 7.47
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 7.00
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 7.00
____________________________________________________________
============================================================
|
* At December 31, 2001, securities with an aggregate market value of $15,577,615 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended December 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$1,484) $ 629,979
------------------------------------------------------------
Dividends from affiliated money market funds 869,078
------------------------------------------------------------
Interest 68,243
------------------------------------------------------------
Security lending income 29,928
============================================================
Total investment income 1,597,228
============================================================
EXPENSES:
Advisory fees 1,259,835
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 39,234
------------------------------------------------------------
Distribution fees -- Class A 224,258
------------------------------------------------------------
Distribution fees -- Class B 712,565
------------------------------------------------------------
Distribution fees -- Class C 326,478
------------------------------------------------------------
Transfer agent fees -- Class A 160,181
------------------------------------------------------------
Transfer agent fees -- Class B 187,023
------------------------------------------------------------
Transfer agent fees -- Class C 85,689
------------------------------------------------------------
Trustees' fees 9,085
------------------------------------------------------------
Other 223,146
============================================================
Total expenses 3,277,494
============================================================
Less: Fees waived (42,306)
------------------------------------------------------------
Expenses paid indirectly (6,155)
============================================================
Net expenses 3,229,033
============================================================
Net investment income (loss) (1,631,805)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FUTURES CONTRACTS AND
OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (41,579,790)
------------------------------------------------------------
Futures contracts (1,210,326)
------------------------------------------------------------
Option contracts written 128,996
============================================================
(42,661,120)
============================================================
Change in net unrealized appreciation of:
Investment securities 6,527,347
------------------------------------------------------------
Futures contracts 267,180
============================================================
6,794,527
============================================================
Net gain (loss) from investment securities,
futures contracts and option contracts (35,866,593)
============================================================
Net increase (decrease) in net assets
resulting from operations $(37,498,398)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-116
STATEMENT OF CHANGES IN NET ASSETS
For the year ended December 31, 2001 and the period August 31, 2000 (date
operations commenced) through December 31, 2000
2001 2000
------------ ------------
OPERATIONS:
Net investment income (loss) $ (1,631,805) $ (77,478)
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
futures contracts and option contracts (42,661,120) (2,436,640)
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, and futures contracts 6,794,527 (6,097,963)
==========================================================================================
Net increase (decrease) in net assets resulting from
operations (37,498,398) (8,612,081)
==========================================================================================
Distributions to shareholders from net investment income:
Class A (64,952) --
------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (16,203) (62,905)
------------------------------------------------------------------------------------------
Class B (19,267) (71,403)
------------------------------------------------------------------------------------------
Class C (8,700) (35,183)
------------------------------------------------------------------------------------------
Share transactions-net:
Class A 16,139,168 59,053,644
------------------------------------------------------------------------------------------
Class B 20,998,585 66,427,674
------------------------------------------------------------------------------------------
Class C 6,902,879 32,058,854
==========================================================================================
Net increase in net assets 6,433,112 148,758,600
==========================================================================================
NET ASSETS:
Beginning of year 148,758,600 --
==========================================================================================
End of year $155,191,712 $148,758,600
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $199,816,729 $157,528,805
------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (9,943) (26,778)
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, futures contracts and option contracts (45,311,638) (2,645,464)
------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and futures contracts 696,564 (6,097,963)
==========================================================================================
$155,191,712 $148,758,600
__________________________________________________________________________________________
==========================================================================================
|
See Notes to Financial Statements.
FS-117
NOTES TO FINANCIAL STATEMENTS
December 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Value II Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of twelve separate portfolios, each
having an unlimited number of shares of beneficial interest. 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 long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 as of the close of the customary trading session 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/ event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date.
On December 31, 2001, undistributed net investment income was increased by $1,713,592, undistributed net realized gains increased by $39,116 and shares of beneficial interest decreased by $1,752,708 as a result of nondeductible excise tax paid by the fund, reclassification of distributions, net operating loss and other reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and 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 from 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 $40,823,682 as of December 31, 2001 which may be carried forward to offset future taxable gains, if any, which expires, if not previously
FS-118
utilized, in the year 2009. As of December 31, 2001 the fund has a post-October capital loss deferral of $3,345,135 which will be recognized in the following tax year.
E. Futures Contracts -- The Fund may purchase or sell futures contracts as a hedge against changes in market conditions. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities as collateral for the account of the broker (the Fund's agent in acquiring the futures position). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by "marking to market" on a daily basis to reflect the market value of the contracts at the end of each day's trading. Variation margin payments are made or received depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund's basis in the contract. Risks include the possibility of an illiquid market and that a change in value of the contracts may not correlate with changes in the value of the securities being hedged.
F. Covered Call Options -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded 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 written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received.
G. Expenses -- Distribution expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.75% of the Fund's
average daily net assets. Effective July 1, 2001, AIM has voluntarily agreed to
waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM
receives from the affiliated money market fund of which the Fund has invested.
For the year ended December 31, 2001, AIM waived fees of $42,306.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 2001, AIM was
paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 2001, AFS
was paid $235,996 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 and Class C shares of the Fund. The Trust 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. 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. For the year ended December 31,
2001, the Class A, Class B and Class C shares paid AIM Distributors $224,258,
$712,565 and $326,478, respectively, as compensation under the Plans.
AIM Distributors received commissions of $95,063 from sales of the Class A
shares of the Fund during the year ended December 31, 2001. 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, 2001,
AIM Distributors received $25,998 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 2001, the Fund paid legal fees of $4,640
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the year ended December 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $2,287 and reductions in custodian fees of $3,868 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $6,155.
FS-119
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests 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 is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. 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,
2001, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day. Therefore, the
value of the collateral may be temporarily less than the value of the securities
on loan.
At December 31, 2001, securities with an aggregate value of $15,577,615 were
on loan to brokers. The loans were secured by cash collateral of $16,268,246
received by the Fund and invested subsequently in STIC Liquid Assets Portfolio,
an affiliated money market fund. For the year ended December 31, 2001, the Fund
received fees of $29,928 for securities lending.
NOTE 7-DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
-------- --------
Distributions paid from ordinary
income $109,122 $169,491
__________________________________________________________
==========================================================
|
As of December 31, 2001, the components of distributable earnings on a tax basis were as follows:
Capital loss carryforward $(40,823,682)
---------------------------------------------------------
Unrealized depreciation (3,801,335)
=========================================================
$(44,625,017)
_________________________________________________________
=========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of capital losses incurred after October 31, the realization for tax purposes of unrealized gains on certain futures contracts, and other deferrals.
NOTE 8-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, 2001 was
$145,514,084 and $97,079,619, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $ 13,369,508 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (13,815,764) ========================================================= Net unrealized appreciation (depreciation) of investment securities $ (446,256) _________________________________________________________ ========================================================= Cost of investments for tax purposes is $156,064,695. |
NOTE 9-CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2001 are summarized as follows:
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
Beginning of year -- $ --
---------------------------------------------------------
Written 250 128,996
---------------------------------------------------------
Expired (250) (128,996)
=========================================================
End of year -- $ --
_________________________________________________________
=========================================================
|
NOTE 10-FUTURES CONTRACTS
On December 31, 2001, $425,000 principal amount of U.S. Treasury obligations were pledged as collateral to cover margin requirements for open futures contracts. Open futures contracts as of December 31, 2001 were as follows:
NO. OF MONTH/ MARKET UNREALIZED
CONTRACT CONTRACTS COMMITMENT VALUE APPRECIATION
-------- --------- ------------ ---------- ------------
S&P 500 Index 22 Mar. 02/Long $6,320,600 $115,071
___________________________________________________________________________
===========================================================================
|
FS-120
NOTE 11-SHARE INFORMATION
Changes in shares outstanding during the year ended December 31, 2001 and the period August 31, 2000 (date operations commenced) through December 31, 2000:
2001 2000
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold:
Class A 5,985,549 $ 48,356,484 6,803,909 $ 62,419,096
---------------------------------------------------------------------------------------------------------------------
Class B 5,412,852 43,258,374 7,466,598 67,975,309
---------------------------------------------------------------------------------------------------------------------
Class C 2,272,059 18,177,771 3,674,621 33,162,044
=====================================================================================================================
Issued as reinvestment of dividends:
Class A 11,649 78,507 7,039 59,975
---------------------------------------------------------------------------------------------------------------------
Class B 2,749 18,379 8,075 68,635
---------------------------------------------------------------------------------------------------------------------
Class C 1,235 8,260 3,982 33,851
=====================================================================================================================
Reacquired:
Class A (4,256,465) (32,295,823) (394,265) (3,425,427)
---------------------------------------------------------------------------------------------------------------------
Class B (3,057,696) (22,278,168) (185,733) (1,616,270)
---------------------------------------------------------------------------------------------------------------------
Class C (1,532,565) (11,283,152) (131,788) (1,137,041)
=====================================================================================================================
4,839,367 $ 44,040,632 17,252,438 $157,540,172
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
NOTE 12-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------
YEAR ENDED AUGUST 31, 2000
DECEMBER 31, (DATE OPERATIONS
2001 COMMENCED) TO
------------ DECEMBER 31,
2000(a)
----------------
Net asset value, beginning of period $ 8.64 $ 10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) --
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.53) (1.35)
==============================================================================================
Total from investment operations (1.57) (1.35)
==============================================================================================
Less distributions:
Dividends from net investment income (0.01) --
----------------------------------------------------------------------------------------------
Distributions from net realized gains 0.00 (0.01)
----------------------------------------------------------------------------------------------
Total distributions (0.01) (0.01)
==============================================================================================
Net asset value, end of period $ 7.06 $ 8.64
______________________________________________________________________________________________
==============================================================================================
Total return(b) (18.17)% (13.49)%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $57,591 $55,409
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.52%(c) 1.40%(d)
----------------------------------------------------------------------------------------------
Without fee waivers 1.54%(c) 2.00%(d)
==============================================================================================
Ratio of net investment income (loss) to average net assets (0.56)%(c) 0.10%(d)
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 67% 13%
______________________________________________________________________________________________
==============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average daily net assets of $64,073,727.
(d) Annualized.
FS-121
NOTE 12-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
--------------------------------
YEAR ENDED AUGUST 31, 2000
DECEMBER 31, (DATE OPERATIONS
2001 COMMENCED) TO
------------ DECEMBER 31,
2000(a)
----------------
Net asset value, beginning of period $ 8.61 $ 10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09) (0.02)
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.52) (1.36)
==============================================================================================
Total from investment operations (1.61) (1.38)
==============================================================================================
Less distributions from net realized gains 0.00 (0.01)
==============================================================================================
Net asset value, end of period $ 7.00 $ 8.61
______________________________________________________________________________________________
==============================================================================================
Total return(b) (18.68)% (13.79)%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $67,571 $62,792
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.18%(c) 2.10%(d)
----------------------------------------------------------------------------------------------
Without fee waivers 2.20%(c) 2.70%(d)
==============================================================================================
Ratio of net investment income (loss) to average net assets (1.22)%(c) (0.60)%(d)
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 67% 13%
______________________________________________________________________________________________
==============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $71,256,489.
(d) Annualized.
CLASS C
--------------------------------
YEAR ENDED AUGUST 31, 2000
DECEMBER 31, (DATE OPERATIONS
2001 COMMENCED) TO
------------ DECEMBER 31,
2000(a)
----------------
Net asset value, beginning of period $ 8.62 $ 10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09) (0.02)
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.53) (1.35)
==============================================================================================
Total from investment operations (1.62) (1.37)
==============================================================================================
Less distributions from net realized gains 0.00 (0.01)
==============================================================================================
Net asset value, end of period $ 7.00 $ 8.62
______________________________________________________________________________________________
==============================================================================================
Total return(b) (18.77)% (13.69)%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $30,030 $30,557
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.18%(c) 2.10%(d)
----------------------------------------------------------------------------------------------
Without fee waivers 2.20%(c) 2.70%(d)
==============================================================================================
Ratio of net investment income (loss) to average net assets (1.22)%(c) (0.60)%(d)
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 67% 13%
______________________________________________________________________________________________
==============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $32,647,782.
(d) Annualized.
FS-122
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of AIM
Worldwide Spectrum Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Worldwide Spectrum Fund (one of the funds constituting AIM Funds Group; hereafter referred to as the "Fund") at December 31, 2001, and the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2001 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP February 14, 2002 Houston, Texas |
FS-123
SCHEDULE OF INVESTMENTS
December 31, 2001
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS-61.50%
AIRLINES-2.03%
Southwest Airlines Co. 15,000 $ 277,200
====================================================================
APPLICATION SOFTWARE-3.40%
Cadence Design Systems, Inc.(a) 7,000 153,440
--------------------------------------------------------------------
Manugistics Group, Inc.(a) 9,000 189,720
--------------------------------------------------------------------
PeopleSoft, Inc.(a) 3,000 120,600
====================================================================
463,760
====================================================================
AUTO PARTS & EQUIPMENT-0.89%
Johnson Controls, Inc. 1,500 121,125
====================================================================
BANKS-2.31%
Bank of America Corp. 5,000 314,750
====================================================================
BROADCASTING & CABLE TV-1.23%
Cox Communications, Inc.-Class A(a) 4,000 167,640
====================================================================
COMPUTER HARDWARE-4.35%
International Business Machines Corp. 1,600 193,536
--------------------------------------------------------------------
Sun Microsystems, Inc.(a) 32,500 401,050
====================================================================
594,586
====================================================================
CONSTRUCTION & ENGINEERING-2.72%
Jacobs Engineering Group Inc.(a) 3,500 231,000
--------------------------------------------------------------------
Shaw Group Inc. (The)(a) 6,000 141,000
====================================================================
372,000
====================================================================
DATA PROCESSING SERVICES-2.59%
Concord EFS, Inc.(a) 6,000 196,680
--------------------------------------------------------------------
First Data Corp. 2,000 156,900
====================================================================
353,580
====================================================================
DIVERSIFIED COMMERCIAL SERVICES-1.11%
H&R Block, Inc. 3,400 151,980
====================================================================
DIVERSIFIED FINANCIAL SERVICES-7.70%
Citigroup Inc. 8,500 429,080
--------------------------------------------------------------------
Fannie Mae 3,400 270,300
--------------------------------------------------------------------
Freddie Mac 2,600 170,040
--------------------------------------------------------------------
Gabelli Asset Management Inc.-Class A(a) 4,200 181,440
====================================================================
1,050,860
====================================================================
ELECTRIC UTILITIES-2.01%
Mirant Corp.(a) 17,100 273,942
====================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-0.70%
Thermo Electron Corp.(a) 4,000 95,440
====================================================================
GENERAL MERCHANDISE STORES-1.80%
Target Corp. 6,000 246,300
====================================================================
|
MARKET
SHARES VALUE
HEALTH CARE DISTRIBUTORS & SERVICES-2.49%
Laboratory Corp. of America Holdings(a) 4,200 $ 339,570
====================================================================
HEALTH CARE EQUIPMENT-1.03%
Baxter International Inc. 2,400 128,712
--------------------------------------------------------------------
Viasys Healthcare Inc.(a) 584 11,803
====================================================================
140,515
====================================================================
HEALTH CARE FACILITIES-2.12%
HCA Inc. 7,500 289,050
====================================================================
HOMEBUILDING-1.34%
NVR, Inc.(a) 900 183,600
====================================================================
HOTELS-1.14%
Starwood Hotels & Resorts Worldwide, Inc. 5,200 155,220
====================================================================
MANAGED HEALTH CARE-2.28%
UnitedHealth Group Inc. 4,400 311,388
====================================================================
MOVIES & ENTERTAINMENT-1.41%
AOL Time Warner Inc.(a) 6,000 192,600
====================================================================
MULTI-UTILITIES-1.49%
Dynegy Inc.-Class A 8,000 204,000
====================================================================
NETWORKING EQUIPMENT-1.05%
NetScreen Technologies, Inc.(a) 6,500 143,845
====================================================================
OIL & GAS DRILLING-3.25%
Nabors Industries, Inc.(a) 5,500 188,815
--------------------------------------------------------------------
Noble Drilling Corp.(a) 7,500 255,300
====================================================================
444,115
====================================================================
PHARMACEUTICALS-1.30%
Johnson & Johnson 3,000 177,300
====================================================================
SEMICONDUCTORS-1.42%
Microchip Technology Inc.(a) 5,000 193,700
====================================================================
SOFT DRINKS-1.07%
PepsiCo, Inc. 3,000 146,070
====================================================================
SYSTEMS SOFTWARE-3.64%
Microsoft Corp.(a) 7,500 497,025
====================================================================
TELECOMMUNICATIONS EQUIPMENT-1.48%
QUALCOMM Inc.(a) 4,000 202,000
====================================================================
WIRELESS TELECOMMUNICATION SERVICES-2.15%
Sprint Corp. (PCS Group)(a) 12,000 292,920
====================================================================
Total Domestic Common Stocks (Cost
$7,816,607) 8,396,081
====================================================================
|
FS-124
MARKET
SHARES VALUE
FOREIGN STOCKS-28.27%
BERMUDA-6.41%
Accenture Ltd.-Class A (IT Consulting &
Services)(a) 6,000 $ 161,520
--------------------------------------------------------------------
Everest Re Group, Ltd. (Reinsurance) 5,500 388,850
--------------------------------------------------------------------
Tyco International Ltd. (Industrial
Conglomerates) 5,500 323,950
====================================================================
874,320
====================================================================
CANADA-5.55%
Biovail Corp. (Pharmaceuticals)(a) 6,400 360,000
--------------------------------------------------------------------
Celestica Inc. (Electronic Equipment &
Instruments)(a) 4,200 169,638
--------------------------------------------------------------------
Talisman Energy Inc. (Oil & Gas Exploration &
Production) 6,000 228,072
====================================================================
757,710
====================================================================
FRANCE-1.64%
Sanofi-Synthelabo S.A. (Pharmaceuticals) 3,000 224,186
====================================================================
GERMANY-4.84%
Altana A.G. (Pharmaceuticals) 8,000 398,791
--------------------------------------------------------------------
Systeme, Anwendungen, Produkte in der
Datenvernabeitung (Application Software)(a) 2,000 262,549
====================================================================
661,340
====================================================================
|
MARKET
SHARES VALUE
IRELAND-2.48%
Ryanair Holdings PLC (Airlines)(a) 53,400 $ 338,098
====================================================================
ITALY-0.69%
Riunione Adriatica di Sicurta S.p.A
(Multi-Line Insurance) 8,000 94,383
====================================================================
UNITED KINGDOM-6.66%
ARM Holdings PLC (Semiconductors)(a) 28,000 146,357
--------------------------------------------------------------------
New Look Group PLC (Apparel Retail) 70,000 167,353
--------------------------------------------------------------------
Smith & Nephew PLC (Health Care Supplies) 36,169 218,547
--------------------------------------------------------------------
Willis Group Holdings Ltd. (Insurance
Brokers)(a) 16,000 376,800
====================================================================
909,057
====================================================================
Total Foreign Stocks (Cost $3,239,710) 3,859,094
====================================================================
MONEY MARKET FUNDS-7.55%
STIC Liquid Assets Portfolio(b) 515,048 515,048
--------------------------------------------------------------------
STIC Prime Portfolio(b) 515,048 515,048
====================================================================
Total Money Market Funds (Cost
$1,030,096) 1,030,096
====================================================================
TOTAL INVESTMENTS--97.32% (Cost $12,086,413) 13,285,271
====================================================================
OTHER ASSETS LESS LIABILITIES--2.68% 365,563
====================================================================
NET ASSETS-100.00% $13,650,834
____________________________________________________________________
====================================================================
|
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-125
WORLDWIDE SPECTRUM FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2001
ASSETS:
Investments, at market value (cost $12,086,413) $13,285,271
------------------------------------------------------------
Foreign currencies, at value (cost $46,947) 48,627
------------------------------------------------------------
Receivables for:
Fund shares sold 477,143
------------------------------------------------------------
Due from advisor 25,986
------------------------------------------------------------
Dividends 7,780
------------------------------------------------------------
Foreign currency contracts closed 1,313
------------------------------------------------------------
Investment for deferred compensation plan 5,790
------------------------------------------------------------
Other assets 21,339
============================================================
Total assets 13,873,249
============================================================
LIABILITIES:
Payables for:
Investments purchased 161,136
------------------------------------------------------------
Fund shares reacquired 1,360
------------------------------------------------------------
Foreign currency contracts outstanding 9,887
------------------------------------------------------------
Options written (premiums received $19,879) 2,100
------------------------------------------------------------
Deferred compensation plan 5,790
------------------------------------------------------------
Accrued distribution fees 11,156
------------------------------------------------------------
Accrued transfer agent fees 2,230
------------------------------------------------------------
Accrued operating expenses 28,756
============================================================
Total liabilities 222,415
============================================================
Net assets applicable to shares outstanding $13,650,834
============================================================
NET ASSETS:
Class A $ 8,725,382
____________________________________________________________
============================================================
Class B $ 3,613,018
____________________________________________________________
============================================================
Class C $ 1,312,434
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 886,102
____________________________________________________________
============================================================
Class B 369,011
____________________________________________________________
============================================================
Class C 134,028
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 9.85
------------------------------------------------------------
Offering price per share:
(Net asset value of $9.85 divided by
94.50%) $ 10.42
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 9.79
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 9.79
____________________________________________________________
============================================================
|
STATEMENT OF OPERATIONS
For the year ended December 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$3,388) $ 53,291
------------------------------------------------------------
Dividends from affiliated money market funds 19,098
------------------------------------------------------------
Interest 42,122
============================================================
Total investment income 114,511
============================================================
EXPENSES:
Advisory fees 69,914
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 10,860
------------------------------------------------------------
Distribution fees -- Class A 21,849
------------------------------------------------------------
Distribution fees -- Class B 11,226
------------------------------------------------------------
Distribution fees -- Class C 8,599
------------------------------------------------------------
Printing 19,385
------------------------------------------------------------
Professional fees 60,448
------------------------------------------------------------
Registration and filing 94,917
------------------------------------------------------------
Transfer agent fees -- Class A 11,536
------------------------------------------------------------
Transfer agent fees -- Class B 2,228
------------------------------------------------------------
Transfer agent fees -- Class C 1,707
------------------------------------------------------------
Trustees' fees 8,290
------------------------------------------------------------
Other 7,210
============================================================
Total expenses 378,169
============================================================
Less: Fees waived and expenses reimbursed (207,946)
------------------------------------------------------------
Expenses paid indirectly (96)
============================================================
Net expenses 170,127
============================================================
Net investment income (loss) (55,616)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
FOREIGN CURRENCY CONTRACTS, FUTURES CONTRACTS
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (1,162,298)
------------------------------------------------------------
Foreign currencies 591
------------------------------------------------------------
Foreign currency contracts (44,002)
------------------------------------------------------------
Futures contracts 26,574
------------------------------------------------------------
Option contracts written 15,021
============================================================
(1,164,114)
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 1,198,858
------------------------------------------------------------
Foreign currencies 1,356
------------------------------------------------------------
Foreign currency contracts (9,887)
------------------------------------------------------------
Option contracts written 17,779
============================================================
1,208,106
============================================================
Net gain from investment securities, foreign
currencies, foreign currency contracts,
futures contracts and option contracts 43,992
============================================================
Net increase (decrease) in net assets resulting
from operations $ (11,624)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-126
STATEMENT OF CHANGES IN NET ASSETS
For the year ended December 31, 2001 and for the period December 29, 2000
(Date operations commenced) to December 31, 2000.
2001 2000
----------- ----------
OPERATIONS:
Net investment income (loss) $ (55,616) $ 321
---------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, foreign currency contracts, futures
contracts and option contracts (1,164,114) --
---------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies, foreign currency
contracts and option contracts 1,208,106 --
=======================================================================================
Net increase (decrease) in net assets resulting from
operations (11,624) 321
=======================================================================================
Distributions to shareholders from net investment income:
Class A (673) --
---------------------------------------------------------------------------------------
Class B (285) --
---------------------------------------------------------------------------------------
Class C (94) --
---------------------------------------------------------------------------------------
Share transactions-net:
Class A 7,688,252 1,109,445
---------------------------------------------------------------------------------------
Class B 3,565,526 10
---------------------------------------------------------------------------------------
Class C 1,299,946 10
=======================================================================================
Net increase in net assets 12,541,048 1,109,786
=======================================================================================
NET ASSETS:
Beginning of year 1,109,786 --
=======================================================================================
End of year $13,650,834 $1,109,786
_______________________________________________________________________________________
=======================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $13,610,384 $1,106,465
---------------------------------------------------------------------------------------
Undistributed net investment income (loss) (2,951) 3,321
---------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, foreign currency
contracts, futures contracts and option contracts (1,164,705) --
---------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, foreign currency contracts and option
contracts 1,208,106 --
=======================================================================================
$13,650,834 $1,109,786
_______________________________________________________________________________________
=======================================================================================
|
See Notes to Financial Statements.
FS-127
WORLDWIDE SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Worldwide Spectrum Fund (the "Fund") is a series portfolio of AIM Funds
Group (the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of twelve separate portfolios,
each having an unlimited number of shares of beneficial interest. 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 long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 as of the close of the customary trading session 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/ event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date.
On December 31, 2001, undistributed net investment income was increased by $50,396, undistributed net realized gain was decreased by $591 and shares of beneficial interest decreased by $49,805 as a result of nondeductible organization/stock issue expenses, differing book/tax treatment of foreign currency transactions and other reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and 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 from 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.
FS-128
The Fund has a capital loss carryforward of $1,171,360 as of December 31, 2001 which may by carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2009.
E. 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 the 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.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
Outstanding foreign currency contracts at December 31, 2001 were as follows:
CONTRACT TO UNREALIZED
SETTLEMENT ---------------------- APPRECIATION
DATE CURRENCY DELIVER RECEIVE VALUE (DEPRECIATION)
---------- -------- --------- ---------- ---------- --------------
02/28/02 CAD 962,000 $ 605,737 $ 604,199 $ 1,538
---------------------------------------------------------------------------
02/28/02 EUR 1,168,000 1,034,788 1,039,160 (4,372)
---------------------------------------------------------------------------
02/28/02 GBP 263,000 374,565 381,618 (7,053)
===========================================================================
$2,015,090 $2,024,977 $(9,887)
___________________________________________________________________________
===========================================================================
|
G. Futures Contracts -- The Fund may purchase or sell futures contracts as a hedge against changes in market conditions. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities as collateral for the account of the broker (the Fund's agent in acquiring the futures position). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by "marking to market" on a daily basis to reflect the market value of the contracts at the end of each day's trading. Variation margin payments are made or received depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund's basis in the contract. Risks include the possibility of an illiquid market and that a change in value of the contracts may not correlate with changes in the value of the securities being hedged.
H. Covered Call Options -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded 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 written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received.
I. Expenses -- Distribution expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.85% of the first $1
billion of the Fund's average daily net assets, plus 0.80% of the Fund's average
daily net assets in excess of $1 billion. Effective July 1, 2001, AIM has
voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of
the advisory fee AIM receives from the affiliated money market fund of which the
Fund has invested. For the year ended December 31, 2001, AIM waived fees of
$69,914 and reimbursed expenses of $138,032.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 2001, AIM was
paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended December 31, 2001, AFS
was paid $8,549 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 and Class C shares of the Fund. The Trust 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. 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
FS-129
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. For the year ended December 31, 2001, the Class A,
Class B and Class C shares paid AIM Distributors $21,849, $11,226 and $8,599,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $10,936 from sales of the Class A
shares of the Fund during the year ended December 31, 2001. 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, 2001,
AIM Distributors received $2,126 in contingent deferred sales charges imposed on
redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 2001, the Fund paid legal fees of $3,237
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the year ended December 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $96 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $96.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests 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 is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. 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,
2001, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6-DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
------ -----
Distributions paid from ordinary income $1,052 $ --
_________________________________________________________
=========================================================
|
As of December 31, 2001, the components of distributable earnings on a tax basis were as follows:
Undistributed ordinary income $ 2,838
---------------------------------------------------------
Capital loss carryforward (1,171,360)
---------------------------------------------------------
Unrealized appreciation 1,208,972
=========================================================
$ 40,450
_________________________________________________________
=========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain forward foreign currency contracts and other deferrals.
NOTE 7-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, 2001 was
$23,544,142 and $11,325,528, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $1,570,416 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (374,789) ========================================================= Net unrealized appreciation of investment securities $1,195,627 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $12,089,644. |
NOTE 8-CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2001 are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
Beginning of year -- $ --
--------------------------------------------------------
Written 136 64,817
--------------------------------------------------------
Closed (15) (13,140)
--------------------------------------------------------
Exercised (75) (25,897)
--------------------------------------------------------
Expired (6) (5,901)
========================================================
End of year 40 $ 19,879
________________________________________________________
========================================================
|
Open call options written at December 31, 2001 were as follows:
DECEMBER 31,
CONTRACT STRIKE NUMBER OF PREMIUMS 2001 UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
----- -------- ------ --------- -------- ------------ ------------
Dynegy, Inc. Mar-02 $40 40 $19,879 $2,100 $17,779
____________________________________________________________________________________
====================================================================================
|
FS-130
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the year ended December 31, 2001 and the period December 29, 2000 (date operations commenced) through December 31, 2000 were as follows:
2001 2000
------------------------ ---------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ------- ----------
Sold:
Class A 872,405 $ 8,569,590 110,945 $1,109,445
---------------------------------------------------------------------------------------------------------------
Class B 389,269 3,753,828 1 10
---------------------------------------------------------------------------------------------------------------
Class C 183,610 1,766,611 1 10
===============================================================================================================
Issued as reinvestment of dividends:
Class A 70 670 -- --
---------------------------------------------------------------------------------------------------------------
Class B 29 277 -- --
---------------------------------------------------------------------------------------------------------------
Class C 9 90 -- --
===============================================================================================================
Reacquired:
Class A (97,318) (882,008) -- --
---------------------------------------------------------------------------------------------------------------
Class B (20,288) (188,579) -- --
---------------------------------------------------------------------------------------------------------------
Class C (49,592) (466,755) -- --
===============================================================================================================
1,278,194 $12,553,724 110,947 $1,109,465
_______________________________________________________________________________________________________________
===============================================================================================================
|
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
---------------------------------
DECEMBER 29, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2001(A) 2000
------------ -----------------
Net asset value, beginning of period $10.00 $10.00
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (0.05) --
-----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.10) --
===============================================================================================
Total from investment operations (0.15) --
===============================================================================================
Less distributions from net investment income (0.00) --
===============================================================================================
Net asset value, end of period $ 9.85 $10.00
_______________________________________________________________________________________________
===============================================================================================
Total return(b) (1.49)% --
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $8,725 $1,110
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.91%(c) 1.80%(d)
-----------------------------------------------------------------------------------------------
Without fee waivers 4.44%(c) 76.90%(d)
===============================================================================================
Ratio of net investment income (loss) to average net assets (0.52)%(c) 3.91%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate 168% --
_______________________________________________________________________________________________
===============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average daily net assets of $6,242,607.
(d) Annualized.
FS-131
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
---------------
JANUARY 2, 2001
(DATE SALES
COMMENCED) TO
DECEMBER 31,
2001(a)
---------------
Net asset value, beginning of period $10.00
-----------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11)
-----------------------------------------------------------------------------
Net losses on securities (both realized and unrealized) (0.10)
=============================================================================
Total from investment operations (0.21)
=============================================================================
Less distributions from net investment income (0.00)
=============================================================================
Net asset value, end of period $ 9.79
_____________________________________________________________________________
=============================================================================
Total return(b) (2.09)%
_____________________________________________________________________________
=============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $3,613
_____________________________________________________________________________
=============================================================================
Ratio of expenses to average net assets:
With fee waivers 2.57%(c)
-----------------------------------------------------------------------------
Without fee waivers 5.10%(c)
=============================================================================
Ratio of net investment income (loss) to average net assets (1.18)%(c)
_____________________________________________________________________________
=============================================================================
Portfolio turnover rate 168%
_____________________________________________________________________________
=============================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $1,125,683.
CLASS C
----------------
JANUARY 11, 2001
(DATE SALES
COMMENCED) TO
DECEMBER 31,
2001(a)
----------------
Net asset value, beginning of period $10.00
------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11)
------------------------------------------------------------------------------
Net losses on securities (both realized and unrealized) (0.10)
==============================================================================
Total from investment operations (0.21)
==============================================================================
Less distributions from net investment income (0.00)
==============================================================================
Net asset value, end of period $ 9.79
______________________________________________________________________________
==============================================================================
Total return(b) (2.09)%
______________________________________________________________________________
==============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,312
______________________________________________________________________________
==============================================================================
Ratio of expenses to average net assets:
With fee waivers 2.57%(c)
------------------------------------------------------------------------------
Without fee waivers 5.10%(c)
==============================================================================
Ratio of net investment income (loss) to average net assets (1.18)%(c)
______________________________________________________________________________
==============================================================================
Portfolio turnover rate 168%
______________________________________________________________________________
==============================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $884,117.
FS-132
JUNE 30, 2002
(UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
BONDS & NOTES-21.64%
AEROSPACE & DEFENSE-0.38%
Raytheon Co., Notes, 6.75%, 08/15/07 $ 11,565,000 $ 12,231,491
============================================================================
ALTERNATIVE CARRIERS-0.06%
Intermedia Communications Inc.- Series B, Sr.
Unsec. Notes, 9.50%, 03/01/09(a) 5,475,000 1,779,375
============================================================================
AUTOMOBILE MANUFACTURERS-0.40%
Ford Holdings, Inc., Unsec. Gtd. Unsub. Deb.,
9.30%, 03/01/30 6,000,000 6,421,440
----------------------------------------------------------------------------
General Motors Corp., Putable Deb., 8.80%,
03/01/21 5,965,000 6,503,818
============================================================================
12,925,258
============================================================================
BANKS-2.38%
Dresdner Funding Trust I, Notes, 8.15%,
06/30/31 (Acquired 05/09/02; Cost
$6,259,723)(b) 5,900,000 6,376,248
----------------------------------------------------------------------------
European Investment Bank (Luxembourg),
Sr. Unsub. Yankee Notes, 4.00%, 08/30/05 9,130,000 9,202,218
----------------------------------------------------------------------------
Yankee Notes, 4.63%, 03/01/07 6,750,000 6,837,817
----------------------------------------------------------------------------
Huntington National Bank, Sub. Notes, 6.60%,
06/15/18 4,180,000 3,969,370
----------------------------------------------------------------------------
Key Bank N. A., Sr. Notes, 4.10%, 06/30/05 14,910,000 14,909,254
----------------------------------------------------------------------------
Regions Financial Corp., Putable Sub. Notes,
7.75%, 09/15/04 6,300,000 6,910,344
----------------------------------------------------------------------------
St. Paul Bancorp, Inc., Sr. Unsec. Unsub.
Notes, 7.13%, 02/15/04 5,500,000 5,755,090
----------------------------------------------------------------------------
SunTrust Banks, Inc., Sr. Unsec. Deb., 6.00%,
01/15/28 6,595,000 6,668,270
----------------------------------------------------------------------------
Swiss Bank Corp.-NY, Sub. Notes, 7.38%,
06/15/17 2,590,000 2,816,651
----------------------------------------------------------------------------
U.S. Bank N.A., Sub. Notes, 6.30%, 02/04/14 6,505,000 6,589,045
----------------------------------------------------------------------------
Wachovia Corp.,
Unsec. Putable Sub. Deb., 6.55%, 10/15/35 5,780,000 6,158,995
----------------------------------------------------------------------------
Unsec. Sub. Notes, 6.25%, 08/04/08 800,000 832,112
============================================================================
77,025,414
============================================================================
BREWERS-0.16%
Anheuser-Busch Cos., Inc., Bonds, 6.50%,
02/01/43 5,125,000 5,072,469
============================================================================
BROADCASTING & CABLE TV-1.54%
Comcast Cable Communications, Unsec. Notes,
8.88%, 05/01/17 6,545,000 6,300,152
----------------------------------------------------------------------------
Continental Cablevision, Inc., Sr. Deb.,
9.50%, 08/01/13 10,200,000 10,549,248
----------------------------------------------------------------------------
Lenfest Communications, Inc., Sr. Unsec. Sub.
Notes, 8.25%, 02/15/08 2,550,000 2,479,594
----------------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
BROADCASTING & CABLE TV-(CONTINUED)
Shaw Communications Inc. (Canada), Sr. Unsec.
Unsub. Yankee Notes, 8.25%, 04/11/10 $ 70,000 $ 72,663
----------------------------------------------------------------------------
TCA Cable TV, Inc., Sr. Unsec. Deb., 6.53%,
02/01/28 4,350,000 4,138,894
----------------------------------------------------------------------------
TCI Communications, Inc.,
Sr. Unsec. Deb.,
8.75%, 08/01/15 2,100,000 2,186,940
----------------------------------------------------------------------------
7.88%, 02/15/26 5,835,000 5,365,341
----------------------------------------------------------------------------
Time Warner Inc.,
Sr. Unsec. Gtd. Deb, 6.88%, 06/15/18 6,860,000 5,820,916
----------------------------------------------------------------------------
Unsec. Notes, 7.75%, 06/15/05 7,375,000 7,552,369
----------------------------------------------------------------------------
Turner Broadcasting System, Inc.-Class A, Sr.
Notes, 8.38%, 07/01/13 5,100,000 5,193,228
============================================================================
49,659,345
============================================================================
COMPUTER HARDWARE-0.04%
Candescent Technologies Corp., Sr. Conv.
Unsec. Gtd. Sub. Deb., 8.00%, 05/01/03
(Acquired 04/17/98-04/19/01; Cost
$19,222,750)(a)(b)(c) 25,012,000 1,325,636
============================================================================
CONSUMER FINANCE-1.62%
CitiFinancial Credit Co.,
Putable Notes, 6.63%, 06/01/15 6,375,000 6,664,042
----------------------------------------------------------------------------
Unsec. Notes, 6.75%, 07/01/07 8,125,000 8,811,319
----------------------------------------------------------------------------
Unsec. Putable Notes, 7.88%, 02/01/05 5,865,000 6,553,258
----------------------------------------------------------------------------
Ford Motor Credit Co.,
Notes, 7.88%, 06/15/10 5,515,000 5,763,561
----------------------------------------------------------------------------
Unsec. Notes, 6.88%, 02/01/06 10,685,000 10,926,054
----------------------------------------------------------------------------
Unsec. Notes, 7.38%, 10/28/09 7,305,000 7,483,826
----------------------------------------------------------------------------
Household Finance Corp., Sr. Unsec. Notes,
8.00%, 07/15/10 5,780,000 6,210,148
============================================================================
52,412,208
============================================================================
DIVERSIFIED FINANCIAL SERVICES-3.00%
Auburn Hills Trust, Unsec. Gtd. Deb., 12.38%,
05/01/20 5,910,000 8,499,112
----------------------------------------------------------------------------
Bombardier Capital Ltd. (Canada), Yankee
Notes, 7.50%, 08/15/04 (Acquired 06/19/02;
Cost $8,485,261)(b) 7,970,000 8,325,860
----------------------------------------------------------------------------
CIT Group Inc. (The), Sr. Notes, 7.13%,
10/15/04 1,110,000 1,071,838
----------------------------------------------------------------------------
Citigroup Inc.,
Sr. Unsec. Notes, 4.13%, 06/30/05 7,080,000 7,134,728
----------------------------------------------------------------------------
Unsec. Sub. Notes, 6.63%, 06/15/32 10,850,000 10,518,858
----------------------------------------------------------------------------
Fidelity Investments, Bonds, 7.57%, 06/15/29
(Acquired 04/10/01-05/01/02; Cost
$8,643,518)(b) 8,200,000 8,777,034
----------------------------------------------------------------------------
|
FS-133
PRINCIPAL MARKET
AMOUNT VALUE
DIVERSIFIED FINANCIAL SERVICES-(CONTINUED)
General Electric Capital Corp., Gtd. Sub.
Notes, 8.13%, 05/15/12 $ 9,180,000 $ 10,461,253
----------------------------------------------------------------------------
General Motors Acceptance Corp., Medium Term
Notes, 5.25%, 05/16/05 6,470,000 6,523,377
----------------------------------------------------------------------------
Heller Financial, Inc., Unsec. Notes, 7.38%,
11/01/09 4,300,000 4,685,237
----------------------------------------------------------------------------
Jackson National Life Insurance Co., Sec.
Notes, 6.13%, 05/30/12 (Acquired 05/22/02;
Cost $9,352,328)(b) 9,380,000 9,473,425
----------------------------------------------------------------------------
Lehman Brothers Holdings Inc.,
Notes, 6.63%, 01/18/12 3,540,000 3,609,773
----------------------------------------------------------------------------
Sr. Bonds, 7.88%, 08/15/10 5,955,000 6,561,814
----------------------------------------------------------------------------
National Rural Utilities Cooperative Finance
Corp., Sr. Notes, 6.00%, 05/15/06 7,100,000 7,288,079
----------------------------------------------------------------------------
Prudential Funding, LLC, Medium Term Notes,
6.60%, 05/15/08 (Acquired 05/09/01; Cost
$2,097,564)(b) 2,100,000 2,203,047
----------------------------------------------------------------------------
Qwest Capital Funding Inc., Unsec. Gtd.
Notes, 7.63%, 08/03/21 4,000,000 1,940,000
============================================================================
97,073,435
============================================================================
ELECTRIC UTILITIES-4.36%
CILCORP, Inc., Sr. Unsec. Bonds, 9.38%,
10/15/29 9,000,000 10,340,010
----------------------------------------------------------------------------
Cleveland Electric Illuminating Co. (The),
First Mortgage Bonds, 6.86%, 10/01/08 6,080,000 6,293,712
----------------------------------------------------------------------------
Series D, Sec. Notes, 7.88%, 11/01/17 14,795,000 16,071,956
----------------------------------------------------------------------------
Dominion Resources, Inc.-Series A, Sr. Unsec.
Unsub. Notes, 8.13%, 06/15/10 450,000 498,825
----------------------------------------------------------------------------
El Paso Electric Co.
Series D, Sec. First Mortgage Bonds, 8.90%,
02/01/06 8,850,000 9,672,784
----------------------------------------------------------------------------
Series E, Sec. First Mortgage Bonds, 9.40%,
05/01/11 5,438,000 5,974,132
----------------------------------------------------------------------------
Empire District Electric Co. (The), Sr.
Notes, 7.70%, 11/15/04 8,000,000 8,572,800
----------------------------------------------------------------------------
Hydro-Quebec (Canada),
Gtd. Yankee Bonds, 9.40%, 02/01/21 8,445,000 11,240,042
----------------------------------------------------------------------------
Series B, Gtd. Medium Term Yankee Notes,
8.62%, 12/15/11 5,000,000 6,132,850
----------------------------------------------------------------------------
Indiana Michigan Power Co.
Series C, Sr. Unsec. Notes, 6.13%,
12/15/06 5,700,000 5,832,354
----------------------------------------------------------------------------
Series F, SLOBS, 9.82%, 12/07/22 4,467,333 4,898,162
----------------------------------------------------------------------------
Kincaid Generation LLC, Sec. Bonds, 7.33%,
06/15/20 (Acquired 04/30/98; Cost
$3,302,536)(b) 3,294,399 3,065,438
----------------------------------------------------------------------------
Niagara Mohawk Holdings Inc., First Mortgage
Notes, 7.75%, 05/15/06 3,700,000 4,013,797
----------------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
ELECTRIC UTILITIES-(CONTINUED)
Niagara Mohawk Power Corp.-Series H, Sr.
Unsec. Disc. Notes, 8.50%, 07/01/10(d) $ 8,550,000 $ 8,398,323
----------------------------------------------------------------------------
NRG Energy, Inc., Sr. Unsec. Notes,
7.63%, 02/01/06 (Acquired 02/14/02; Cost
$4,327,356)(b) 4,400,000 4,097,500
----------------------------------------------------------------------------
8.25%, 09/15/10 10,475,000 9,453,687
----------------------------------------------------------------------------
8.63%, 04/01/31 10,245,000 7,927,069
----------------------------------------------------------------------------
Public Service Company of New Mexico- Series
A, Sr. Unsec. Notes, 7.10%, 08/01/05 7,850,000 8,244,306
----------------------------------------------------------------------------
Sutton Bridge Financing Ltd. (United
Kingdom), Gtd. Euro Bonds, 8.63%,
06/30/22(e) GBP 3,000,000 4,909,987
----------------------------------------------------------------------------
Texas-New Mexico Power Co., Sr. Sec. Notes,
6.25%, 01/15/09 5,800,000 5,409,370
============================================================================
141,047,104
============================================================================
GAS UTILITIES-0.60%
El Paso Corp., Medium Term Notes, 8.05%,
10/15/30 7,750,000 7,272,678
----------------------------------------------------------------------------
ONEOK, Inc., Unsec. Notes, 7.75%, 08/15/06 3,100,000 3,355,502
----------------------------------------------------------------------------
Tennessee Gas Pipeline Co., Unsec. Deb.,
7.63%, 04/01/37 7,000,000 6,741,210
----------------------------------------------------------------------------
Westcoast Energy Inc.
(Canada)-Series V, Unsec. Deb., 6.45%,
12/18/06(e) CAD 3,000,000 2,069,238
============================================================================
19,438,628
============================================================================
INDUSTRIAL CONGLOMERATES-0.04%
Vodafone Finance B.V. (Netherlands), Unsec.
Unsub. Gtd. Euro Bonds, 4.75%,
05/27/09(e) EUR 1,300,000 1,192,014
============================================================================
INTEGRATED OIL & GAS-0.73%
El Paso CGP Co., Sr.
Unsec. Putable Deb., 6.70%, 02/15/27 18,900,000 18,749,745
----------------------------------------------------------------------------
Occidental Petroleum Corp., Sr. Unsec. Notes,
7.38%, 11/15/08 4,280,000 4,683,262
============================================================================
23,433,007
============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.16%
Olivetti International Finance
N.V.(Netherlands)-Series E, Gtd. Medium
Term Euro Disc. Notes, 6.13%,
07/30/09(e) EUR 3,210,000 3,099,304
----------------------------------------------------------------------------
Sprint Corp., Putable Deb., 9.00%, 10/15/19 2,200,000 2,222,902
============================================================================
5,322,206
============================================================================
|
FS-134
PRINCIPAL MARKET
AMOUNT VALUE
LIFE & HEALTH INSURANCE-1.02%
American General Finance Corp., Sr. Unsec.
Putable Notes, 8.13%, 08/15/09 $ 4,430,000 $ 4,940,938
----------------------------------------------------------------------------
American General Institute Capital- Series B,
Gtd. Notes, 8.13%, 03/15/46 (Acquired
02/07/02; Cost $6,848,842)(b) 6,070,000 6,950,939
----------------------------------------------------------------------------
John Hancock Global Funding II, Notes, 5.00%,
07/27/07 (Acquired 06/12/02; Cost
$7,046,123)(b) 7,050,000 7,063,184
----------------------------------------------------------------------------
Sun Canada Financial Co., Gtd. Sub. Bonds,
6.63%, 12/15/07 (Acquired 10/14/99; Cost
$1,402,095)(b) 1,500,000 1,582,088
----------------------------------------------------------------------------
Torchmark Corp., Notes,
7.38%, 08/01/13 3,000,000 3,160,980
----------------------------------------------------------------------------
7.88%, 05/15/23 9,200,000 9,377,008
============================================================================
33,075,137
============================================================================
MULTI-LINE INSURANCE-0.32%
AIG SunAmerica Global Financing IX, Sr.
Notes, 5.10%, 01/17/07 (Acquired 01/10/02;
Cost $7,033,242)(b) 7,040,000 7,147,360
----------------------------------------------------------------------------
AIG SunAmerica Global Financing VI, Sr. Sec.
Notes, 6.30%, 05/10/11 (Acquired 04/12/02;
Cost $2,977,583)(b) 2,950,000 3,037,763
============================================================================
10,185,123
============================================================================
MULTI-UTILITIES & UNREGULATED POWER-0.25%
Williams Cos., Inc. (The)-Series A, Sr.
Unsec. PATS, 6.75%, 01/15/06 5,525,000 4,330,219
----------------------------------------------------------------------------
Williams Gas Pipeline Central Inc., Sr.
Notes, 7.38%, 11/15/06 (Acquired 02/15/01;
Cost $3,924,640)(b) 3,800,000 3,676,272
============================================================================
8,006,491
============================================================================
OIL & GAS-0.22%
Canadian Oil Sands Ltd., (Canada) Sr. Yankee
Notes, 7.90%, 09/01/21 (Acquired 08/17/01;
Cost $7,162,659)(b) 7,175,000 7,221,135
============================================================================
OIL & GAS EQUIPMENT & SERVICES-0.20%
National-Oilwell, Inc., Sr. Unsec. Notes,
6.50%, 03/15/11 2,750,000 2,716,808
----------------------------------------------------------------------------
Smith International, Inc., Notes, 6.75%,
02/15/11 3,750,000 3,712,875
============================================================================
6,429,683
============================================================================
OIL & GAS EXPLORATION & PRODUCTION-1.62%
Anadarko Petroleum Corp., Unsec. Putable
Deb., 7.73%, 09/15/26 8,250,000 8,865,368
----------------------------------------------------------------------------
Anderson Exploration Ltd. (Canada), Unsec.
Sub. Yankee Notes, 6.75%, 03/15/11 7,075,000 7,178,861
----------------------------------------------------------------------------
Colorado Interstate Gas Co., Sr. Unsec. Deb.,
10.00%, 06/15/05 5,475,000 6,022,226
----------------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
OIL & GAS EXPLORATION & PRODUCTION-(CONTINUED)
Devon Energy Corp., Sr. Unsec. Deb., 7.95%,
04/15/32 $ 2,200,000 $ 2,377,298
----------------------------------------------------------------------------
Devon Financing Corp. ULC, Sr. Unsec. Gtd.
Unsub. Notes, 7.88%, 09/30/31 3,265,000 3,489,436
----------------------------------------------------------------------------
Louis Dreyfus Natural Gas Corp., Unsec.
Notes, 6.88%, 12/01/07 4,070,000 4,329,178
----------------------------------------------------------------------------
Nexen Inc. (Canada), Unsec. Yankee Notes,
7.40%, 05/01/28 4,965,000 4,784,224
----------------------------------------------------------------------------
Noble Energy, Inc., Sr. Unsec. Deb., 7.25%,
08/01/97 18,196,000 15,246,428
============================================================================
52,293,019
============================================================================
OIL & GAS REFINING, MARKETING &
TRANSPORTATION-0.69%
Petroleos Mexicanos (Mexico),
Series P, Unsec. Putable Unsub. Yankee
Notes, 9.50%, 03/15/06 7,125,000 7,768,031
----------------------------------------------------------------------------
Sr. Unsec. Gtd. Putable Yankee Bonds,
9.38%, 12/02/08 6,295,000 6,719,913
----------------------------------------------------------------------------
Transcontinental Gas Pipe Line Corp., Notes,
8.88%, 07/15/12 (Acquired 06/28/02; Cost
$7,903,575)(b) 8,100,000 7,920,261
============================================================================
22,408,205
============================================================================
PHARMACEUTICALS-0.16%
Merck & Co., Inc., Unsec. Deb., 6.40%,
03/01/28 5,080,000 5,097,882
============================================================================
PROPERTY & CASUALTY INSURANCE-0.90%
American Re Corp.-Series B, Sr. Unsec. Notes,
7.45%, 12/15/26 17,925,000 19,090,125
----------------------------------------------------------------------------
Markel Corp.,
Unsec. Gtd. Notes, 7.20%, 08/15/07 7,000,000 6,876,590
----------------------------------------------------------------------------
Unsec. Notes, 7.00%, 05/15/08 2,350,000 2,244,532
----------------------------------------------------------------------------
Travelers Property Casualty Corp., Sr. Unsec.
Notes, 6.75%, 11/15/06 700,000 741,440
============================================================================
28,952,687
============================================================================
PUBLISHING-0.22%
News America Holdings, Inc.,
Putable Notes, 8.45%, 08/01/06 1,825,000 1,962,769
----------------------------------------------------------------------------
Sr. Unsec. Gtd. Putable Bonds, 7.43%,
10/01/06 4,950,000 5,160,326
============================================================================
7,123,095
============================================================================
RAILROADS-0.17%
Norfolk Southern Corp., Notes, 7.05%,
05/01/37 5,250,000 5,546,625
============================================================================
REAL ESTATE INVESTMENT TRUSTS-0.33%
EOP Operating L.P.,
Sr. Unsec. Notes, 7.25%, 02/15/18 3,255,000 3,405,804
----------------------------------------------------------------------------
Unsec. Gtd. Notes, 6.75%, 02/15/12 2,205,000 2,260,015
----------------------------------------------------------------------------
|
FS-135
PRINCIPAL MARKET
AMOUNT VALUE
REAL ESTATE INVESTMENT TRUSTS-(CONTINUED)
Spieker Properties, Inc., Unsec. Unsub. Deb.,
7.35%, 12/01/17 $ 4,600,000 $ 4,855,254
============================================================================
10,521,073
============================================================================
SOVEREIGN DEBT-0.02%
Manitoba (Province of) (Canada)- Series EM,
Unsec. Unsub. Yankee Notes, 7.50%, 02/22/10 700,000 805,337
============================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.05%
Bell Mobility Cellular Inc. (Canada), Unsec.
Deb., 6.55%, 06/02/08(e) CAD 2,500,000 1,654,814
============================================================================
Total Bonds & Notes (Cost $719,490,508) 699,257,896
============================================================================
SHARES
STOCKS & OTHER EQUITY INTERESTS-54.57%
ADVERTISING-1.95%
Interpublic Group of Cos., Inc. (The) 823,000 20,377,480
----------------------------------------------------------------------------
Lamar Advertising Co.(f) 601,000 22,363,210
----------------------------------------------------------------------------
Omnicom Group Inc. 440,000 20,152,000
============================================================================
62,892,690
============================================================================
AEROSPACE & DEFENSE-1.73%
Honeywell International Inc. 752,000 26,492,960
----------------------------------------------------------------------------
United Technologies Corp. 432,600 29,373,540
============================================================================
55,866,500
============================================================================
APPAREL RETAIL-0.86%
Limited Brands 1,313,000 27,966,900
============================================================================
BANKS-2.08%
Bank of America Corp. 370,500 26,068,380
----------------------------------------------------------------------------
Bank of New York Co., Inc. (The) 503,000 16,976,250
----------------------------------------------------------------------------
Northern Trust Corp. 552,000 24,321,120
============================================================================
67,365,750
============================================================================
BIOTECHNOLOGY-0.18%
Genzyme Corp.(f) 298,813 5,749,162
============================================================================
BROADCASTING & CABLE TV-1.09%
Clear Channel Communications, Inc.(f) 388,000 12,423,760
----------------------------------------------------------------------------
Univision Communications Inc.-Class A(f) 722,000 22,670,800
============================================================================
35,094,560
============================================================================
BUILDING PRODUCTS-0.67%
Masco Corp. 803,000 21,769,330
============================================================================
COMPUTER HARDWARE-0.61%
International Business Machines Corp. 273,000 19,656,000
============================================================================
CONSTRUCTION & ENGINEERING-0.45%
Quanta Services, Inc.(f) 1,467,000 14,479,290
============================================================================
|
MARKET
SHARES VALUE
DATA PROCESSING SERVICES-1.50%
Concord EFS, Inc.(f) 591,400 $ 17,824,796
----------------------------------------------------------------------------
DST Systems, Inc.(f) 668,000 30,534,280
============================================================================
48,359,076
============================================================================
DIVERSIFIED FINANCIAL SERVICES-6.24%
American Express Co. 452,000 16,416,640
----------------------------------------------------------------------------
Citigroup Inc. 1,421,433 55,080,529
----------------------------------------------------------------------------
Fannie Mae 263,800 19,455,250
----------------------------------------------------------------------------
Freddie Mac 321,900 19,700,280
----------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 324,100 23,772,735
----------------------------------------------------------------------------
Lehman Brothers Holdings Inc. 329,000 20,569,080
----------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 682,000 27,621,000
----------------------------------------------------------------------------
Morgan Stanley 445,600 19,196,448
============================================================================
201,811,962
============================================================================
FOOD RETAIL-1.41%
Kroger Co. (The)(f) 1,274,000 25,352,600
----------------------------------------------------------------------------
Safeway Inc.(f) 695,500 20,301,645
============================================================================
45,654,245
============================================================================
GENERAL MERCHANDISE STORES-2.91%
BJ's Wholesale Club, Inc.(f) 663,600 25,548,600
----------------------------------------------------------------------------
Target Corp. 960,300 36,587,430
----------------------------------------------------------------------------
Wal-Mart Stores, Inc. 579,000 31,850,790
============================================================================
93,986,820
============================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-0.82%
Cardinal Health, Inc. 430,500 26,437,005
============================================================================
HEALTH CARE EQUIPMENT-0.69%
Baxter International Inc. 498,800 22,171,660
============================================================================
HEALTH CARE FACILITIES-1.33%
HCA Inc. 451,000 21,422,500
----------------------------------------------------------------------------
Tenet Healthcare Corp.(f) 303,000 21,679,650
============================================================================
43,102,150
============================================================================
HEALTH CARE SUPPLIES-0.74%
Alcon, Inc. (Switzerland)(f) 694,900 23,800,325
============================================================================
HOME IMPROVEMENT RETAIL-1.54%
Home Depot, Inc. (The) 620,300 22,783,619
----------------------------------------------------------------------------
Lowe's Cos., Inc. 597,300 27,117,420
============================================================================
49,901,039
============================================================================
HOUSEHOLD APPLIANCES-0.81%
Black & Decker Corp. (The) 541,000 26,076,200
============================================================================
HOUSEHOLD PRODUCTS-0.90%
Colgate-Palmolive Co. 583,000 29,179,150
============================================================================
INDUSTRIAL CONGLOMERATES-1.23%
General Electric Co. 1,369,800 39,792,690
============================================================================
|
FS-136
MARKET
SHARES VALUE
INSURANCE BROKERS-0.62%
Marsh & McLennan Cos., Inc. 209,100 $ 20,199,060
============================================================================
INTEGRATED OIL & GAS-2.10%
ChevronTexaco Corp. 237,400 21,009,900
----------------------------------------------------------------------------
Exxon Mobil Corp. 687,900 28,148,868
----------------------------------------------------------------------------
TotalFinaElf S.A. (France) 115,700 18,848,939
============================================================================
68,007,707
============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-1.01%
BellSouth Corp. 524,300 16,515,450
----------------------------------------------------------------------------
Verizon Communications Inc. 405,900 16,296,885
============================================================================
32,812,335
============================================================================
IT CONSULTING & SERVICES-0.84%
SunGard Data Systems Inc.(f) 1,025,100 27,144,648
============================================================================
LIFE & HEALTH INSURANCE-1.08%
Prudential Financial, Inc.(f) 500,900 16,710,024
----------------------------------------------------------------------------
Sun Life Financial Services of Canada
(Canada) 836,800 18,165,154
============================================================================
34,875,178
============================================================================
MANAGED HEALTH CARE-0.47%
Anthem, Inc.(f) 226,300 15,270,724
============================================================================
MOVIES & ENTERTAINMENT-1.30%
AOL Time Warner Inc.(f) 1,196,300 17,597,573
----------------------------------------------------------------------------
Viacom Inc.-Class B(f) 553,659 24,565,850
============================================================================
42,163,423
============================================================================
MULTI-LINE INSURANCE-1.76%
American International Group, Inc. 584,960 39,911,821
----------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 285,000 16,948,950
============================================================================
56,860,771
============================================================================
NETWORKING EQUIPMENT-0.74%
Cisco Systems, Inc.(f) 1,707,200 23,815,440
============================================================================
OIL & GAS DRILLING-0.52%
Noble Corp. (Cayman Islands)(f) 440,000 16,984,000
============================================================================
OIL & GAS EQUIPMENT & SERVICES-1.15%
Cooper Cameron Corp.(f) 765,000 37,041,300
============================================================================
OIL & GAS EXPLORATION & PRODUCTION-1.21%
Apache Corp. 362,400 20,830,752
----------------------------------------------------------------------------
Kerr-McGee Corp.-$1.83 Pfd. DECS 390,000 18,135,000
============================================================================
38,965,752
============================================================================
PACKAGED FOODS & MEATS-0.68%
Kraft Foods, Inc.-Class A 536,700 21,977,865
============================================================================
|
MARKET
SHARES VALUE
PERSONAL PRODUCTS-0.61%
Estee Lauder Cos. Inc. (The)-Class A 560,000 $ 19,712,000
============================================================================
PHARMACEUTICALS-3.89%
Abbott Laboratories 376,000 14,156,400
----------------------------------------------------------------------------
Johnson & Johnson 462,200 24,154,572
----------------------------------------------------------------------------
Merck & Co., Inc. 409,800 20,752,272
----------------------------------------------------------------------------
Pfizer Inc. 757,100 26,498,500
----------------------------------------------------------------------------
Pharmacia Corp. 636,900 23,851,905
----------------------------------------------------------------------------
Wyeth 318,600 16,312,320
============================================================================
125,725,969
============================================================================
PROPERTY & CASUALTY INSURANCE-0.81%
MGIC Investment Corp. 384,600 26,075,880
============================================================================
REAL ESTATE INVESTMENT TRUSTS-0.00%
Wyndham International, Inc. Voting Trust
(Acquired 08/27/99-06/15/02; Cost
$276,154)(b)(c) 3,284 33,260
============================================================================
SEMICONDUCTOR EQUIPMENT-0.95%
Applied Materials, Inc.(f) 795,000 15,120,900
----------------------------------------------------------------------------
Novellus Systems, Inc.(f) 454,000 15,436,000
============================================================================
30,556,900
============================================================================
SEMICONDUCTORS-2.17%
Analog Devices, Inc.(f) 688,300 20,442,510
----------------------------------------------------------------------------
Intel Corp. 873,700 15,962,499
----------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR (Taiwan) 1,210,000 15,730,000
----------------------------------------------------------------------------
Texas Instruments Inc. 760,700 18,028,590
============================================================================
70,163,599
============================================================================
SPECIALTY STORES-1.04%
Bed Bath & Beyond Inc.(f) 887,500 33,494,250
============================================================================
SYSTEMS SOFTWARE-1.38%
Microsoft Corp.(f) 548,900 30,024,830
----------------------------------------------------------------------------
Oracle Corp.(f) 1,536,800 14,553,496
============================================================================
44,578,326
============================================================================
TELECOMMUNICATIONS EQUIPMENT-0.50%
Nokia Oyj-ADR (Finland) 1,106,000 16,014,880
============================================================================
Total Stocks & Other Equity Interests
(Cost $1,743,277,864) 1,763,585,771
============================================================================
PRINCIPAL
AMOUNT
U.S. GOVERNMENT AGENCY SECURITIES-11.21%
FEDERAL HOME LOAN BANK-0.03%
Unsec. Bonds, 4.88%, 04/16/04 $ 820,000 847,888
============================================================================
|
FS-137
PRINCIPAL MARKET
AMOUNT VALUE
FEDERAL HOME LOAN MORTGAGE CORP.
(FHLMC)-3.14%
Jr. Unsec. Sub. Notes,
5.88%, 03/21/11 $ 7,350,000 $ 7,499,793
----------------------------------------------------------------------------
Pass Through Ctfs.,
6.50%, 08/01/03 to 05/01/32 1,887,795 1,942,824
----------------------------------------------------------------------------
6.00%, 04/01/17 to 05/01/32 17,941,537 18,311,945
----------------------------------------------------------------------------
8.00%, 01/01/27 3,172,572 3,396,619
----------------------------------------------------------------------------
7.00%, 07/01/29 to 06/01/32 25,154,077 26,088,906
----------------------------------------------------------------------------
7.50%, 12/01/30 to 03/01/32 4,570,248 4,803,544
----------------------------------------------------------------------------
Pass Through Ctfs., TBA,
6.00%, 08/01/32(g) 140,000 139,650
----------------------------------------------------------------------------
6.50%, 08/01/32(g) 29,265,000 29,850,300
----------------------------------------------------------------------------
Unsec. Notes,
5.50%, 09/15/11 9,410,000 9,524,143
============================================================================
101,557,724
============================================================================
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA)-6.08%
Pass Through Ctfs.,
8.50%, 03/01/10 to 02/01/28 9,020,257 9,741,795
----------------------------------------------------------------------------
6.50%, 04/01/14 to 05/01/29 17,325,314 18,001,456
----------------------------------------------------------------------------
7.50%, 11/01/15 to 02/25/41 12,683,810 13,351,378
----------------------------------------------------------------------------
7.00%, 12/01/15 to 05/01/32 27,805,627 28,910,217
----------------------------------------------------------------------------
6.00%, 01/01/17 835,314 853,323
----------------------------------------------------------------------------
8.00%, 08/01/21 to 10/01/30 6,624,870 7,097,650
----------------------------------------------------------------------------
Pass Through Ctfs., TBA,
6.00%, 08/01/32 33,376,000 33,271,700
----------------------------------------------------------------------------
6.50%, 08/01/32(g) 36,469,000 37,186,983
----------------------------------------------------------------------------
Unsec. Bonds,
6.63%, 11/15/30 955,000 1,012,462
----------------------------------------------------------------------------
Unsec. Notes,
5.13%, 02/13/04 1,915,000 1,985,185
----------------------------------------------------------------------------
7.00%, 07/15/05 2,310,000 2,525,916
----------------------------------------------------------------------------
5.25%, 06/15/06 920,000 956,377
----------------------------------------------------------------------------
6.38%, 06/15/09 5,340,000 5,781,992
----------------------------------------------------------------------------
6.00%, 05/15/11 3,464,000 3,632,454
----------------------------------------------------------------------------
6.20%, 06/13/17 8,950,000 8,975,597
----------------------------------------------------------------------------
Unsec. Sub. Notes,
5.50%, 05/02/06 12,800,000 13,426,560
----------------------------------------------------------------------------
4.75%, 01/02/07 9,550,000 9,724,956
============================================================================
196,436,001
============================================================================
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA)-1.96%
Pass Through Ctfs.,
6.50%, 10/15/08 to 06/15/32 18,247,535 18,669,698
----------------------------------------------------------------------------
6.00%, 11/15/08 to 06/15/32 7,198,638 7,228,590
----------------------------------------------------------------------------
8.00%, 08/15/22 to 01/20/31 3,269,788 3,511,399
----------------------------------------------------------------------------
8.50%, 11/15/24 to 02/15/25 448,067 485,307
----------------------------------------------------------------------------
7.50%, 11/15/30 to 05/15/32 8,409,465 8,882,433
----------------------------------------------------------------------------
7.00%, 02/15/31 to 05/15/32 22,049,696 22,949,575
----------------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA)-(CONTINUED)
Pass Through Ctfs., TBA,
6.00%, 06/01/32 $ 450,000 $ 449,016
----------------------------------------------------------------------------
6.50%, 06/01/32 350,000 357,109
----------------------------------------------------------------------------
7.00%, 06/01/32 300,000 311,438
----------------------------------------------------------------------------
7.50%, 06/01/32 442,000 466,034
============================================================================
63,310,599
============================================================================
Total U.S. Government Agency Securities
(Cost $356,250,055) 362,152,212
============================================================================
U.S. TREASURY SECURITIES-6.26%
U.S. TREASURY NOTES-5.36%
3.25%, 12/31/03 740,000 748,747
----------------------------------------------------------------------------
6.75%, 05/15/05 24,900,000 27,192,045
----------------------------------------------------------------------------
6.50%, 08/15/05 to 02/15/10 30,970,000 34,062,371
----------------------------------------------------------------------------
6.88%, 05/15/06 2,700,000 2,998,404
----------------------------------------------------------------------------
6.13%, 08/15/07(h) 42,330,000 46,164,251
----------------------------------------------------------------------------
4.75%, 11/15/08 35,885,000 36,548,873
----------------------------------------------------------------------------
5.75%, 08/15/10 10,300,000 11,024,708
----------------------------------------------------------------------------
5.00%, 08/15/11 14,125,000 14,324,869
============================================================================
173,064,268
============================================================================
U.S. TREASURY BONDS-0.84%
8.88%, 08/15/17 865,000 1,167,144
----------------------------------------------------------------------------
6.13%, 11/15/27 to 08/15/29(h) 24,575,000 26,098,153
============================================================================
27,265,297
============================================================================
U.S. TREASURY STRIPS-0.06%
3.71%, 05/15/20(i) 5,900,000 2,050,899
============================================================================
Total U.S. Treasury Securities (Cost
$194,909,792) 202,380,464
============================================================================
ASSET-BACKED SECURITIES-1.99%
AIRLINES-0.75%
American Airlines, Inc.
Class A-1, Series 2001-1, Pass Through
Ctfs., 6.98%, 05/23/21 5,363,719 5,281,477
----------------------------------------------------------------------------
Series 87-A, Equipment Trust Ctfs., 9.90%,
01/15/11 2,955,000 2,978,670
----------------------------------------------------------------------------
Continental Airlines, Inc.-Series 974A, Pass
Through Ctfs., 6.90%, 01/02/18 2,461,979 2,437,285
----------------------------------------------------------------------------
Northwest Airlines Inc.-Series 971B, Pass
Through Ctfs., 7.25%, 01/02/12 3,575,547 3,135,415
----------------------------------------------------------------------------
United Air Lines, Inc.-
Class A-2, Pass Through Ctfs., 7.73%,
07/01/10 5,790,000 5,413,824
----------------------------------------------------------------------------
Class A-2-Series 002, Sec. Pass Through
Ctfs., 7.19%, 04/01/11 5,541,001 5,065,306
============================================================================
24,311,977
============================================================================
AUTOMOBILE MANUFACTURERS-0.13%
DaimlerChrysler N.A. Holding Corp., Gtd. ROCS
Series CHR-1998-1, Collateral Trust, 6.50%,
08/01/18 4,462,235 4,279,261
============================================================================
|
FS-138
PRINCIPAL MARKET
AMOUNT VALUE
DIVERSIFIED FINANCIAL SERVICES-0.68%
Citicorp Lease,
Class A-1, Series 1999-1, Pass Through
Ctfs., 7.22%, 06/15/05 (Acquired 05/08/02;
Cost $4,365,718)(b) $ 4,140,672 $ 4,461,533
----------------------------------------------------------------------------
Class A-2, Series 1999-1, Pass Through
Ctfs., 8.04%, 12/15/19 (Acquired
06/01/00-07/14/00; Cost $5,832,841)(b) 5,900,000 6,472,477
----------------------------------------------------------------------------
Premium Asset Trust-Series 2001-6, Sec.
Notes, 5.25%, 07/19/04 (Acquired 07/11/01;
Cost $10,546,061)(b) 10,560,000 10,909,557
============================================================================
21,843,567
============================================================================
ELECTRIC UTILITIES-0.43%
Beaver Valley II Funding Corp., SLOBS, Deb.,
9.00%, 06/01/17 12,500,000 13,904,875
============================================================================
Total Asset-Backed Securities (Cost
$62,877,525) 64,339,680
============================================================================
SHARES
MONEY MARKET FUNDS-7.12%
STIC Liquid Assets Portfolio(j) 115,033,343 115,033,343
============================================================================
STIC Prime Portfolio(j) 115,033,343 115,033,343
============================================================================
Total Money Market Funds (Cost
$230,066,686) 230,066,686
============================================================================
TOTAL INVESTMENTS-102.79% (Cost $3,306,872,430) 3,321,782,709
============================================================================
OTHER ASSETS LESS LIABILITIES-(2.79%) (90,173,484)
============================================================================
NET ASSETS-100.00% $3,231,609,225
____________________________________________________________________________
============================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt CAD - Canadian Dollar Conv. - Convertible Ctfs. - Certificates Deb. - Debentures DECS - Dividend Enhanced Convertible Stock Disc. - Discounted EUR - Euro GBP - British Pound Sterling Gtd. - Guaranteed PATS - Putable Asset Term Securities Pfd. - Preferred ROCS - Receipts on Corporate Securities Trust Sec. - Secured SLOBS - Secured Lease Obligation Securities Sr. - Senior Sub. - Subordinated TBA - To Be Announced Unsec. - Unsecured Unsub. - Unsubordinated |
Notes to Schedule of Investments:
(a) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(b) Restricted securities. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The aggregate market value of these securities at 06/30/02
was $110,120,017, which represented 3.41% of the Fund's net assets.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(d) Discounted bond at issue. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(e) Foreign denominated security. Par value is denominated in currency
indicated.
(f) Non-income producing security.
(g) Security purchased on forward commitment basis. These securities are subject
to dollar roll transactions. See Note 1 Section B.
(h) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 10.
(i) STRIPS are traded on a discount basis. In such cases, the interest rate
shown represents the rate of discount paid or received at the time of
purchase by the Fund.
(j) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-139
JUNE 30, 2002
(UNAUDITED)
ASSETS: Investments, at market value (cost $3,306,872,430)* $3,321,782,709 ---------------------------------------------------------------------- Foreign currencies, at value (cost $3,002) 3,002 ---------------------------------------------------------------------- Receivables for: Investments sold 39,856,119 ---------------------------------------------------------------------- Fund shares sold 3,004,737 ---------------------------------------------------------------------- Dividends and interest 20,974,526 ---------------------------------------------------------------------- Principal paydowns 2,683 ---------------------------------------------------------------------- Investment for deferred compensation plan 118,318 ---------------------------------------------------------------------- Collateral for securities loaned 364,695,824 ---------------------------------------------------------------------- Other assets 119,681 ====================================================================== Total assets 3,750,557,599 ______________________________________________________________________ ====================================================================== LIABILITIES: Payables for: Investments purchased 130,223,551 ---------------------------------------------------------------------- Fund shares reacquired 18,482,008 ---------------------------------------------------------------------- Deferred compensation plan 118,318 ---------------------------------------------------------------------- Deferred interest income 12,808 ---------------------------------------------------------------------- Collateral upon return of securities loaned 364,695,824 ---------------------------------------------------------------------- Variation margin 494,000 ---------------------------------------------------------------------- Accrued distribution fees 3,379,067 ---------------------------------------------------------------------- Accrued transfer agent fees 1,243,974 ---------------------------------------------------------------------- Accrued operating expenses 298,824 ====================================================================== Total liabilities 518,948,374 ====================================================================== Net assets applicable to shares outstanding $3,231,609,225 ______________________________________________________________________ ====================================================================== NET ASSETS: Class A $1,886,669,721 ______________________________________________________________________ ====================================================================== Class B $ 958,378,487 ______________________________________________________________________ ====================================================================== Class C $ 386,542,499 ______________________________________________________________________ ====================================================================== Class R $ 9,624 ______________________________________________________________________ ====================================================================== Institutional Class $ 8,894 ______________________________________________________________________ ====================================================================== SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE: Class A 83,152,350 ______________________________________________________________________ ====================================================================== Class B 42,332,171 ______________________________________________________________________ ====================================================================== Class C 17,048,628 ______________________________________________________________________ ====================================================================== Class R 424 ______________________________________________________________________ ====================================================================== Institutional Class 392 ______________________________________________________________________ ====================================================================== Class A: Net asset value per share $ 22.69 ---------------------------------------------------------------------- Offering price per share: (Net asset value of $22.69 divided by 95.25%) $ 23.82 ______________________________________________________________________ ====================================================================== Class B: Net asset value and offering price per share $ 22.64 ______________________________________________________________________ ====================================================================== Class C: Net asset value and offering price per share $ 22.67 ______________________________________________________________________ ====================================================================== Class R: Net asset value and offering price per share $ 22.70 ______________________________________________________________________ ====================================================================== Institutional Class: Net asset value and offering price per share $ 22.69 ______________________________________________________________________ ====================================================================== |
* At June 30, 2002, securities with an aggregate market value of $358,431,862 were on loan to brokers.
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(UNAUDITED)
INVESTMENT INCOME:
Interest $ 44,496,535
---------------------------------------------------------------------
Dividends (net of foreign withholding tax of $175,656) 10,603,732
---------------------------------------------------------------------
Dividends from affiliated money market funds 2,525,677
---------------------------------------------------------------------
Security lending income 679,740
=====================================================================
Total investment income 58,305,684
=====================================================================
EXPENSES:
Advisory fees 9,337,688
---------------------------------------------------------------------
Administrative services fees 203,795
---------------------------------------------------------------------
Custodian fees 115,867
---------------------------------------------------------------------
Distribution fees -- Class A 2,659,645
---------------------------------------------------------------------
Distribution fees -- Class B 5,444,416
---------------------------------------------------------------------
Distribution fees -- Class C 2,220,430
---------------------------------------------------------------------
Distribution fees -- Class R 4
---------------------------------------------------------------------
Transfer agent fees 3,851,669
---------------------------------------------------------------------
Trustees' fees 11,989
---------------------------------------------------------------------
Other 322,115
=====================================================================
Total expenses 24,167,618
=====================================================================
Less: Fees waived (17,180)
---------------------------------------------------------------------
Expenses paid indirectly (23,711)
=====================================================================
Net expenses 24,126,727
=====================================================================
Net investment income 34,178,957
=====================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES, FUTURES CONTRACTS AND
OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (309,651,229)
---------------------------------------------------------------------
Foreign currencies 334,423
---------------------------------------------------------------------
Futures contracts (31,019,799)
---------------------------------------------------------------------
Option contracts written 232,920
=====================================================================
(340,103,685)
=====================================================================
Change in net unrealized appreciation (depreciation)
of:
Investment securities (135,303,566)
---------------------------------------------------------------------
Foreign currencies 74,887
---------------------------------------------------------------------
Futures contracts (893,609)
=====================================================================
(136,122,288)
=====================================================================
Net gain (loss) from investment securities, foreign
currencies, futures contracts and option contracts (476,225,973)
=====================================================================
Net increase (decrease) in net assets resulting from
operations $(442,047,016)
_____________________________________________________________________
=====================================================================
|
See Notes to Financial Statements.
FS-140
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND THE YEAR ENDED DECEMBER 31, 2001
(UNAUDITED)
JUNE 30, DECEMBER 31,
2002 2001
-------------- ---------------
OPERATIONS:
Net investment income $ 34,178,957 $ 94,283,337
-----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, foreign currency contracts, futures
contracts and option contracts (340,103,685) (290,058,670)
-----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies, foreign
currency contracts and futures contracts (136,122,288) (319,910,851)
===============================================================================================
Net increase (decrease) in net assets resulting from
operations (442,047,016) (515,686,184)
===============================================================================================
Distributions to shareholders from net investment income:
Class A (24,306,871) (65,286,370)
-----------------------------------------------------------------------------------------------
Class B (8,377,371) (24,128,931)
-----------------------------------------------------------------------------------------------
Class C (3,392,356) (8,269,309)
-----------------------------------------------------------------------------------------------
Class R (51) --
-----------------------------------------------------------------------------------------------
Institutional Class (119) --
-----------------------------------------------------------------------------------------------
Share transactions-net:
Class A (119,856,884) 149,008,588
-----------------------------------------------------------------------------------------------
Class B (76,059,569) 11,560,034
-----------------------------------------------------------------------------------------------
Class C (39,470,047) 165,927,647
-----------------------------------------------------------------------------------------------
Class R 10,051 --
-----------------------------------------------------------------------------------------------
Institutional Class 10,119 --
===============================================================================================
Net increase (decrease) in net assets (713,490,114) (286,874,525)
===============================================================================================
NET ASSETS:
Beginning of period 3,945,099,339 4,231,973,864
===============================================================================================
End of period $3,231,609,225 $3,945,099,339
_______________________________________________________________________________________________
===============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $3,896,223,406 $4,131,589,736
-----------------------------------------------------------------------------------------------
Undistributed net investment income (5,156,664) (3,258,853)
-----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, foreign currency
contracts, futures contracts and option contracts (673,520,251) (333,416,566)
-----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, foreign currency contracts and futures
contracts 14,062,734 150,185,022
===============================================================================================
$3,231,609,225 $3,945,099,339
_______________________________________________________________________________________________
===============================================================================================
|
JUNE 30, 2002
(UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Balanced Fund (the "Fund") is a series portfolio of AIM Funds Group (the "Trust"). The Trust is a Delaware business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of twelve separate portfolios, each having an unlimited number of shares of beneficial interest. The Fund currently offers five different classes of shares: Class A shares, Class B shares, Class C shares, Class R shares and the Institutional Class. 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.
FS-141
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 as high a total return as possible, consistent with preservation of capital.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. Premiums and discounts are amortized and/or accreted for financial reporting purposes.
The Fund may engage in dollar roll transactions with respect to mortgage backed securities issued by GNMA, FNMA and FHLMC. In a dollar roll transaction, the Fund sells a mortgage backed security held in the Fund to a financial institution such as a bank or broker-dealer, and simultaneously agrees to repurchase a substantially similar security (same type, coupon and maturity) from the institution at a later date at an agreed upon price. The mortgage backed securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different prepayment histories. During the period between the sale and repurchase, the Fund will not be entitled to receive interest and principal payments on securities sold. Proceeds of the sale will be invested in short-term instruments, and the income from these investments, together with any additional fee income received on the sale, could generate income for the Fund exceeding the yield on the security sold.
Dollar roll transactions involve the risk that the market value of the securities retained by the Fund may decline below the price of the securities that the Fund has sold but is obligated to repurchase under the agreement. In the event the buyer of securities in a dollar roll transaction files for bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligation to repurchase the securities.
C. DISTRIBUTIONS -- Distributions from income are declared and paid quarterly and are recorded on ex-dividend date. 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 from 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
FS-142
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 as of December 31, 2001 of $294,839,562 which expires December 31, 2009.
E. 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 the 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.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts as a hedge against changes in market conditions. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities as collateral for the account of the broker (the Fund's agent in acquiring the futures position). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by "marking to market" on a daily basis to reflect the market value of the contracts at the end of each day's trading. Variation margin payments are made or received depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund's basis in the contract. Risks include the possibility of an illiquid market and that a change in value of the contracts may not correlate with changes in the value of the securities being hedged.
H. COVERED CALL OPTIONS -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded 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 written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received.
I. PUT OPTIONS -- The Fund may purchase put options. By purchasing a put option, the Fund obtains the right (but not the obligation) to sell the option's underlying instrument at a fixed strike price. In return for this right, the Fund pays an option premium. The option's underlying instrument may be a security or a futures contract. Put options may be used by the Fund to hedge securities it owns by locking in a minimum price at which the Fund can sell. If security prices fall, the put option could be exercised to offset all or a portion of the Fund's resulting losses. At the same time, because the maximum the Fund has at risk is the cost of the option, purchasing put options does not eliminate the potential for the Fund to profit from an increase in the value of the securities hedged.
J. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of the first $150 million of the Fund's average daily net assets, plus 0.50% of the Fund's average daily net assets in excess of $150 million. AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market fund of which the Fund has invested. For the six months ended June 30, 2002, AIM waived fees of $17,180.
The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2002, AIM was paid $203,795 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the six months ended June 30, 2002, AFS retained $1,430,782 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, Class R and the Institutional Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
FS-143
Fund's Class A shares, Class B shares, Class C shares and Class R shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and C shares and 0.50% of the average daily net assets of Class R 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, Class C or Class R 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. For the six months ended June 30, 2002, the Class A, Class B, Class C and Class R shares paid AIM Distributors $2,659,645, $5,444,416, $2,220,430 and $4, respectively, as compensation under the Plans.
AIM Distributors retained commissions of $181,707 from sales of the Class A shares of the Fund during the six months ended June 30, 2002. 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 June 30, 2002, AIM Distributors retained $25,064, $1,599 and $20,073 in contingent deferred sales charges imposed on redemptions of Class A, Class B and Class C shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the six months ended June 30, 2002, the Fund paid legal fees of $4,123 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended June 30, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $23,068 and reductions in custodian fees of $643 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $23,711.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
NOTE 5--BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $500,000,000 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 six months ended June 30,
2002, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's total assets. Such loans are secured by collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Cash collateral pursuant to these loans is invested in short-term money market instruments or affiliated money market funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. It is the Fund's policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day. Therefore, the value of the collateral may be temporarily less than the value of the securities on loan.
At June 30, 2002, securities with an aggregate value of $358,431,862 were on loan to brokers. The loans were secured by cash collateral of $364,695,824, received by the Fund and subsequently invested in affiliated money market funds as follows: $182,347,912 in STIC Liquid Assets Portfolio and $182,347,912 in STIC Prime Portfolio. For the six months ended June 30, 2002, the Fund received fees of $679,740 for securities lending.
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
----------- ------------
Distributions paid from:
Ordinary income $97,684,610 $ 82,276,431
-------------------------------------------------------------
Long-term capital gain -- 66,639,702
=============================================================
$97,684,610 $148,916,133
_____________________________________________________________
=============================================================
|
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Undistributed ordinary income $ 86,177
-----------------------------------------------------------
Capital loss carryforward (294,839,562)
-----------------------------------------------------------
Unrealized appreciation 108,262,988
===========================================================
$(186,490,397)
___________________________________________________________
===========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the deferral of capital losses incurred after October 31, the realization for tax purposes of unrealized gains on certain forward foreign currency contracts and futures contracts and other deferrals.
FS-144
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the six months ended June 30, 2002 was $1,522,481,161 and $1,850,386,156, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of June 30, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 207,693,740 ----------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (197,264,184) =========================================================== Net unrealized appreciation of investment securities $ 10,429,556 ___________________________________________________________ =========================================================== Cost of investments for tax purposes is $3,311,353,153. |
NOTE 9--CALL OPTION CONTRACTS
Transactions in call options written during the six months ended June 30, 2002 are summarized as follows:
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
Beginning of period -- $ --
----------------------------------------------------------
Written 4,341 550,913
----------------------------------------------------------
Closed (2,110) (261,820)
----------------------------------------------------------
Exercised (2,231) (289,093)
==========================================================
End of period -- $ --
__________________________________________________________
==========================================================
|
NOTE 10--FUTURES CONTRACTS
On June 30, 2002, $23,650,000 principal amount of U.S. Treasury obligations were pledged as collateral to cover margin requirements for open futures contracts. Open futures contracts as of June 30, 2002 were as follows:
UNREALIZED
NO. OF MONTH/ MARKET APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
-------- --------- ------------- ------------ --------------
S&P 500 Index 1,040 Sept.-02/Long $257,426,000 $(924,561)
_______________________________________________________________________________________________________________________
=======================================================================================================================
|
NOTE 11--SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2002 and the year ended December 31, 2001 were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2002 DECEMBER 31, 2001
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
Sold:
Class A 10,703,833 $ 266,808,065 34,040,614 $ 943,182,575
--------------------------------------------------------------------------------------------------------------------------
Class B 2,279,392 56,683,355 7,919,458 219,495,395
--------------------------------------------------------------------------------------------------------------------------
Class C 1,076,262 26,869,279 3,739,954 104,510,027
--------------------------------------------------------------------------------------------------------------------------
Class R* 422 10,000 -- --
--------------------------------------------------------------------------------------------------------------------------
Institutional Class** 387 10,000 -- --
==========================================================================================================================
Issued as reinvestment of dividends:
Class A 933,262 22,712,836 2,389,321 61,645,850
--------------------------------------------------------------------------------------------------------------------------
Class B 306,095 7,435,064 842,160 21,707,525
--------------------------------------------------------------------------------------------------------------------------
Class C 120,109 2,927,895 287,483 7,300,252
--------------------------------------------------------------------------------------------------------------------------
Class R* 2 51 -- --
--------------------------------------------------------------------------------------------------------------------------
Institutional Class** 5 119 -- --
==========================================================================================================================
Issued in connection with acquisitions:***
Class A -- -- 469,333 11,718,242
--------------------------------------------------------------------------------------------------------------------------
Class B -- -- 270,207 6,757,868
--------------------------------------------------------------------------------------------------------------------------
Class C -- -- 7,202,124 179,904,999
==========================================================================================================================
Reacquired:
Class A (16,574,896) (409,377,785) (32,130,426) (867,538,079)
--------------------------------------------------------------------------------------------------------------------------
Class B (5,724,048) (140,177,988) (8,836,782) (236,400,754)
--------------------------------------------------------------------------------------------------------------------------
Class C (2,810,035) (69,267,221) (4,731,502) (125,787,631)
==========================================================================================================================
(9,689,210) $(235,366,330) 11,461,944 $ 326,496,269
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
* Class R shares commenced sales on June 3, 2002. ** Institutional Class shares commenced sales on March 15, 2002. *** As of the close of business on September 8, 2001, the Fund acquired all of the net assets of AIM Advisor Flex Fund pursuant to a plan of reorganization approved by AIM Advisor Flex Fund shareholders on August 17, 2001. The acquisition was accomplished by a tax-free exchange of 7,941,664 shares of the Fund for 16,429,881 shares of AIM Advisor Flex Fund outstanding as of the close of business on September 8, 2001. AIM Advisor Flex Fund net assets at that date of $198,381,109 including $8,302,767 of unrealized appreciation, were combined with those of the Fund. The aggregate net assets of the Fund immediately before the acquisition were $3,725,556,722.
FS-145
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
-----------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ----------------------------------------------------------------------------
2002 2001 2000 1999 1998 1997
--------------- ---------- ---------- ---------- ---------- --------
Net asset value, beginning of
period $ 25.94 $ 30.10 $ 32.69 $ 28.23 $ 25.78 $ 21.84
---------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.27 0.71(a)(b) 0.92(a) 0.82(a) 0.71(a) 0.60
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized
and unrealized) (3.23) (4.14) (2.23) 4.46 2.45 4.66
=================================================================================================================================
Total from investment
operations (2.96) (3.43) (1.31) 5.28 3.16 5.26
=================================================================================================================================
Less distributions:
Dividends from net investment
income (0.29) (0.73) (0.79) (0.82) (0.65) (0.55)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net
realized gains -- -- (0.49) -- (0.06) (0.77)
=================================================================================================================================
Total distributions (0.29) (0.73) (1.28) (0.82) (0.71) (1.32)
=================================================================================================================================
Net asset value, end of period $ 22.69 $ 25.94 $ 30.10 $ 32.69 $ 28.23 $ 25.78
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (11.50)% (11.36)% (4.18)% 19.04% 12.46% 24.41%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $1,886,670 $2,284,776 $2,507,641 $1,800,350 $1,318,230 $683,633
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets 1.01%(d) 1.01% 0.96% 0.94% 0.95% 0.98%
=================================================================================================================================
Ratio of net investment income
to average net assets 2.18%(d) 2.60%(b) 2.80% 2.81% 2.81% 2.48%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 45% 73% 55% 65% 43% 66%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premiums on debt securities. Had the Fund
not amortized premiums on debt securities, the net investment income per
share would have been $0.73 and the ratio of net investment income to
average net assets would have been 2.67%. In accordance with the AICPA
Audit and Accounting Guide for Investment Companies, per share and
ratios for periods prior to January 1, 2001 have not been restated to
reflect this change in presentation.
(c) Does not include sales charges and is not annualized for periods less
than one year.
(d) Ratios are annualized and based on average daily net assets of
$2,145,348,605.
FS-146
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
----------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, -----------------------------------------------------------------
2002 2001 2000 1999 1998 1997
---------- ---------- ---------- ---------- -------- --------
Net asset value, beginning of period $ 25.88 $ 30.01 $ 32.61 $ 28.18 $ 25.75 $ 21.83
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.18 0.50(a)(b) 0.66(a) 0.58(a) 0.42(a) 0.38
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (3.23) (4.11) (2.23) 4.45 2.51 4.68
=================================================================================================================================
Total from investment operations (3.05) (3.61) (1.57) 5.03 2.93 5.06
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.19) (0.52) (0.54) (0.60) (0.44) (0.37)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.49) -- (0.06) (0.77)
=================================================================================================================================
Total distributions (0.19) (0.52) (1.03) (0.60) (0.50) (1.14)
=================================================================================================================================
Net asset value, end of period $ 22.64 $ 25.88 $ 30.01 $ 32.61 $ 28.18 $ 25.75
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (11.83)% (12.01)% (4.93)% 18.08% 11.53% 23.42%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $958,378 $1,176,679 $1,358,823 $1,183,215 $894,165 $486,506
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.76%(d) 1.76% 1.73% 1.75% 1.76% 1.79%
=================================================================================================================================
Ratio of net investment income to average net
assets 1.43%(d) 1.86%(b) 2.03% 2.00% 2.00% 1.67%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 45% 73% 55% 65% 43% 66%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premiums on debt securities. Had the Fund
not amortized premiums on debt securities, the net investment income per
share would have been $0.52 and the ratio of net investment income to
average net assets would have been 1.93%. In accordance with the AICPA
Audit and Accounting Guide for Investment Companies, per share and
ratios for periods prior to January 1, 2001 have not been restated to
reflect this change in presentation.
(c) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$1,097,907,161.
FS-147
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
----------------------------------------------------------------------------------
AUGUST 4, 1997
SIX MONTHS (DATE SALES
ENDED YEAR ENDED DECEMBER 31, COMMENCED) TO
JUNE 30, ----------------------------------------------- DECEMBER 31,
2002 2001 2000 1999 1998 1997
---------- -------- -------- -------- -------- --------------
Net asset value, beginning of period $ 25.92 $ 30.05 $ 32.65 $ 28.21 $ 25.76 $25.55
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.18 0.50(a)(b) 0.66(a) 0.58(a) 0.42(a) 0.16
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (3.24) (4.11) (2.23) 4.46 2.53 1.01
=================================================================================================================================
Total from investment operations (3.06) (3.61) (1.57) 5.04 2.95 1.17
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.19) (0.52) (0.54) (0.60) (0.44) (0.19)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.49) -- (0.06) (0.77)
=================================================================================================================================
Total distributions (0.19) (0.52) (1.03) (0.60) (0.50) (0.96)
=================================================================================================================================
Net asset value, end of period $ 22.67 $ 25.92 $ 30.05 $ 32.65 $ 28.21 $25.76
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (11.85)% (11.99)% (4.93)% 18.09% 11.60% 4.67%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $386,542 $483,644 $365,510 $200,585 $114,163 $9,394
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.76%(d) 1.76% 1.73% 1.75% 1.73% 1.78%(e)
=================================================================================================================================
Ratio of net investment income to average net
assets 1.43%(d) 1.85%(b) 2.03% 2.00% 2.03% 1.68%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 45% 73% 55% 65% 43% 66%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premiums on debt securities. Had the Fund
not amortized premiums on debt securities, the net investment income per
share would have been $0.52 and the ratio of net investment income to
average net assets would have been 1.92%. In accordance with the AICPA
Audit and Accounting Guide for Investment Companies, per share and
ratios for periods prior to January 1, 2001 have not been restated to
reflect this change in presentation.
(c) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$447,766,195.
(e) Annualized.
FS-148
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
JUNE 30,
2002
-------------
Net asset value, beginning of period $23.73
---------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.03
---------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.94)
===========================================================================
Total from investment operations (0.91)
===========================================================================
Less distributions from net investment income (0.12)
===========================================================================
Net asset value, end of period $22.70
___________________________________________________________________________
===========================================================================
Total return(a) (3.84)%
___________________________________________________________________________
===========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 10
___________________________________________________________________________
===========================================================================
Ratio of expenses to average net assets 1.26%(b)
===========================================================================
Ratio of net investment income to average net assets 1.93%(b)
___________________________________________________________________________
===========================================================================
Portfolio turnover rate 45%
___________________________________________________________________________
===========================================================================
|
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $9,780.
INSTITUTIONAL CLASS
-------------------
MARCH 15, 2002
(DATE SALES
COMMENCED) TO JUNE
30,
2002
-------------------
Net asset value, beginning of period $ 25.81
---------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.17
---------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.98)
=================================================================================
Total from investment operations (2.81)
=================================================================================
Less distributions from net investment income (0.31)
=================================================================================
Net asset value, end of period $ 22.69
_________________________________________________________________________________
=================================================================================
Total return(a) (10.97)%
_________________________________________________________________________________
=================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 9
_________________________________________________________________________________
=================================================================================
Ratio of expenses to average net assets 0.65%(b)
=================================================================================
Ratio of net investment income to average net assets 2.54%(b)
_________________________________________________________________________________
=================================================================================
Portfolio turnover rate 45%
_________________________________________________________________________________
=================================================================================
|
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $9,501.
FS-149
JUNE 30, 2002
(UNAUDITED)
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-61.76%
ADVERTISING-2.60%
Interpublic Group of Cos., Inc. (The) 43,900 $ 1,086,964
-----------------------------------------------------------------------
Omnicom Group Inc. 14,300 654,940
=======================================================================
1,741,904
=======================================================================
ALUMINUM-0.99%
Alcoa Inc. 20,000 663,000
=======================================================================
APPAREL RETAIL-1.58%
Gap, Inc. (The) 74,400 1,056,480
=======================================================================
BANKS-4.97%
Bank of America Corp. 14,600 1,027,256
-----------------------------------------------------------------------
Bank of New York Co., Inc. (The) 6,800 229,500
-----------------------------------------------------------------------
Bank One Corp. 33,200 1,277,536
-----------------------------------------------------------------------
FleetBoston Financial Corp. 24,600 795,810
=======================================================================
3,330,102
=======================================================================
BUILDING PRODUCTS-2.18%
American Standard Cos. Inc.(a) 19,400 1,456,940
=======================================================================
CONSTRUCTION, FARM MACHINERY & HEAVY
TRUCKS-1.38%
Deere & Co. 19,300 924,470
=======================================================================
CONSUMER ELECTRONICS-1.13%
Koninklijke (Royal) Philips Electronics
N.V.-ADR (Netherlands) 27,500 759,000
=======================================================================
DATA PROCESSING SERVICES-2.89%
Ceridian Corp.(a) 67,800 1,286,844
-----------------------------------------------------------------------
First Data Corp. 17,500 651,000
=======================================================================
1,937,844
=======================================================================
DIVERSIFIED CHEMICALS-1.01%
Du Pont (E. I.) de Nemours & Co. 15,200 674,880
=======================================================================
DIVERSIFIED COMMERCIAL SERVICES-1.50%
H&R Block, Inc. 21,700 1,001,455
=======================================================================
DIVERSIFIED FINANCIAL SERVICES-7.60%
American Express Co. 24,000 871,680
-----------------------------------------------------------------------
Citigroup Inc. 21,800 844,750
-----------------------------------------------------------------------
Freddie Mac 7,300 446,760
-----------------------------------------------------------------------
J.P. Morgan Chase & Co. 35,200 1,193,984
-----------------------------------------------------------------------
Morgan Stanley 24,100 1,038,228
-----------------------------------------------------------------------
Stilwell Financial, Inc. 38,200 695,240
=======================================================================
5,090,642
=======================================================================
|
MARKET
SHARES VALUE
ELECTRIC UTILITIES-0.70%
PG&E Corp.(a) 26,400 $ 472,296
=======================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.24%
Waters Corp.(a) 31,100 830,370
=======================================================================
ENVIRONMENTAL SERVICES-1.96%
Waste Management, Inc. 50,300 1,310,315
=======================================================================
FOOD RETAIL-2.25%
Kroger Co. (The)(a) 57,100 1,136,290
-----------------------------------------------------------------------
Safeway Inc.(a) 12,800 373,632
=======================================================================
1,509,922
=======================================================================
GENERAL MERCHANDISE STORES-1.25%
Target Corp. 22,000 838,200
=======================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-0.57%
McKesson Corp. 11,700 382,590
=======================================================================
HOTELS, RESORTS & CRUISE LINES-0.70%
Starwood Hotels & Resorts Worldwide, Inc. 14,200 467,038
=======================================================================
HOUSEHOLD APPLIANCES-2.10%
Black & Decker Corp. (The) 29,200 1,407,440
=======================================================================
INDUSTRIAL CONGLOMERATES-3.34%
Textron, Inc. 24,900 1,167,810
-----------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 79,100 1,068,641
=======================================================================
2,236,451
=======================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.49%
AT&T Corp. 30,500 326,350
=======================================================================
LIFE & HEALTH INSURANCE-2.26%
Prudential Financial, Inc.(a) 16,300 543,768
-----------------------------------------------------------------------
UnumProvident Corp. 38,200 972,190
=======================================================================
1,515,958
=======================================================================
MANAGED HEALTH CARE-2.79%
Anthem, Inc.(a) 5,200 350,896
-----------------------------------------------------------------------
CIGNA Corp. 10,200 993,684
-----------------------------------------------------------------------
UnitedHealth Group Inc. 5,700 521,835
=======================================================================
1,866,415
=======================================================================
MOVIES & ENTERTAINMENT-1.28%
Walt Disney Co. (The) 45,400 858,060
=======================================================================
MULTI-UTILITIES & UNREGULATED POWER-0.48%
Reliant Resources, Inc.(a) 37,000 323,750
=======================================================================
|
FS-150
MARKET
SHARES VALUE
OIL & GAS DRILLING-3.08%
Pride International, Inc.(a) 76,000 $ 1,190,160
-----------------------------------------------------------------------
Transocean Inc. 28,000 872,200
=======================================================================
2,062,360
=======================================================================
OIL & GAS EQUIPMENT & SERVICES-2.44%
Cooper Cameron Corp.(a) 17,000 823,140
-----------------------------------------------------------------------
Schlumberger Ltd. 17,400 809,100
=======================================================================
1,632,240
=======================================================================
PAPER PRODUCTS-0.50%
International Paper Co. 7,700 335,566
=======================================================================
PHARMACEUTICALS-0.88%
Bristol-Myers Squibb Co. 22,900 588,530
=======================================================================
PROPERTY & CASUALTY INSURANCE-1.32%
ACE Ltd. (Bermuda) 21,900 692,040
-----------------------------------------------------------------------
Travelers Property Casualty Corp.-Class A(a) 10,800 191,160
=======================================================================
883,200
=======================================================================
REINSURANCE-0.72%
PartnerRe Ltd. (Bermuda) 9,900 484,605
=======================================================================
SEMICONDUCTOR EQUIPMENT-0.76%
Applied Materials, Inc.(a) 26,700 507,834
=======================================================================
SEMICONDUCTORS-0.40%
LSI Logic Corp.(a) 30,500 266,875
=======================================================================
SYSTEMS SOFTWARE-1.36%
Computer Associates International, Inc. 57,300 $ 910,497
=======================================================================
TELECOMMUNICATIONS EQUIPMENT-1.06%
Motorola, Inc. 49,200 709,464
=======================================================================
Total Common Stocks & Other Equity
Interests (Cost $43,376,847) 41,363,043
=======================================================================
|
PRINCIPAL
AMOUNT
BONDS & NOTES-13.08%
AEROSPACE & DEFENSE-0.32%
Raytheon Co., Notes, 6.75%, 08/15/07 $ 200,000 211,526
=======================================================================
AUTOMOBILE MANUFACTURERS-0.16%
General Motors Corp., Putable Deb., 8.80%,
03/01/21 100,000 109,033
=======================================================================
BANKS-1.90%
Dresdner Funding Trust I, Notes, 8.15%,
06/30/31 (Acquired 05/09/02; Cost
$53,049)(b) 50,000 54,036
-----------------------------------------------------------------------
European Investment Bank (Luxembourg),
Sr. Unsub. Yankee Notes, 4.00%, 08/30/05 300,000 302,373
-----------------------------------------------------------------------
Yankee Notes, 4.63%, 03/01/07 250,000 253,252
-----------------------------------------------------------------------
Huntington National Bank, Sub. Notes, 6.60%,
06/15/18 100,000 94,961
-----------------------------------------------------------------------
Key Bank N. A., Sr. Notes, 4.10%, 06/30/05 325,000 324,984
-----------------------------------------------------------------------
SunTrust Banks, Inc., Sr. Unsec. Deb. 6.00%,
01/15/28 40,000 40,444
-----------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
BANK - (CONTINUED)
U.S. Bank N.A., Sub. Notes, 6.30%, 02/04/14 $ 200,000 $ 202,584
=======================================================================
1,272,634
=======================================================================
BREWERS-0.15%
Anheuser-Busch Cos., Inc., Bonds, 6.50%,
02/01/43 100,000 98,975
=======================================================================
BROADCASTING & CABLE TV-0.80%
Comcast Cable Communications, Unsec. Notes,
8.88%, 05/01/17 100,000 96,259
-----------------------------------------------------------------------
TCI Communications, Inc., Sr. Unsec. Deb.,
7.88%, 02/15/26 120,000 110,341
-----------------------------------------------------------------------
Time Warner Inc.,
Sr. Unsec. Gtd. Deb, 6.88%, 06/15/18 150,000 127,279
-----------------------------------------------------------------------
Unsec. Notes, 7.75%, 06/15/05 150,000 153,607
-----------------------------------------------------------------------
Turner Broadcasting System, Inc.-Class A, Sr.
Notes, 8.38%, 07/01/13 50,000 50,914
=======================================================================
538,400
=======================================================================
CONSUMER FINANCE-1.27%
CitiFinancial Credit Co.,
Putable Notes, 6.63%, 06/01/15 100,000 104,534
-----------------------------------------------------------------------
Unsec. Notes, 6.75%, 07/01/07 150,000 162,670
-----------------------------------------------------------------------
Ford Motor Credit Co.,
Notes, 7.88%, 06/15/10 50,000 52,253
-----------------------------------------------------------------------
Unsec. Notes, 6.88%, 02/01/06 325,000 332,332
-----------------------------------------------------------------------
Household Finance Corp., Sr. Unsec. Notes,
8.00%, 07/15/10 185,000 198,768
=======================================================================
850,557
=======================================================================
DIVERSIFIED FINANCIAL SERVICES-3.50%
Auburn Hills Trust, Unsec. Gtd. Deb., 12.38%,
05/01/20 250,000 359,522
-----------------------------------------------------------------------
Bombardier Capital Ltd. (Canada), Yankee
Notes, 7.50%, 08/15/04 (Acquired 06/19/02;
Cost $159,698)(b) 150,000 156,697
-----------------------------------------------------------------------
CIT Group Inc. (The), Sr. Notes, 7.13%,
10/15/04 50,000 48,281
-----------------------------------------------------------------------
Citigroup Inc.,
Sr. Unsec. Notes, 4.13%, 06/30/05 125,000 125,966
-----------------------------------------------------------------------
Unsec. Sub. Notes, 6.63%, 06/15/32 325,000 315,081
-----------------------------------------------------------------------
Fidelity Investments, Bonds, 7.57%, 06/15/29
(Acquired 09/28/01-05/01/02; Cost
$102,340)(b) 95,000 101,685
-----------------------------------------------------------------------
General Electric Capital Corp., Gtd. Sub.
Notes, 8.13%, 05/15/12 200,000 227,914
-----------------------------------------------------------------------
General Motors Acceptance Corp., Medium Term
Notes, 5.25%, 05/16/05 150,000 151,238
-----------------------------------------------------------------------
Heller Financial, Inc., Unsec. Notes, 7.38%,
11/01/09 440,000 479,420
-----------------------------------------------------------------------
Jackson National Life Insurance Co., Sec.
Notes, 6.13%, 05/30/12 (Acquired 05/22/02;
Cost $249,263)(b) 250,000 252,490
-----------------------------------------------------------------------
|
FS-151
PRINCIPAL MARKET
AMOUNT VALUE
ELECTRIC UTILITIES-1.43%
Lehman Brothers Holdings Inc.,
Notes, 6.63%, 01/18/12 $ 100,000 $ 101,971
-----------------------------------------------------------------------
Sr. Bonds, 7.88%, 08/15/10 20,000 22,038
=======================================================================
2,342,303
=======================================================================
Cleveland Electric Illuminating Co. (The)-
Series D, Sec. Notes, 7.88%, 11/01/17 400,000 434,524
-----------------------------------------------------------------------
Hydro-Quebec (Canada), Gtd. Yankee Bonds,
9.40%, 02/01/21 75,000 99,823
-----------------------------------------------------------------------
Indiana Michigan Power Co.-Series C, Sr.
Unsec. Notes, 6.13%, 12/15/06 80,000 81,858
-----------------------------------------------------------------------
NRG Energy, Inc., Sr. Unsec. Notes,
7.63%, 02/01/06 (Acquired 02/14/02; Cost
$98,349)(b) 100,000 93,125
-----------------------------------------------------------------------
8.25%, 09/15/10 175,000 157,938
-----------------------------------------------------------------------
8.63%, 04/01/31 120,000 92,850
=======================================================================
960,118
=======================================================================
GAS UTILITIES-0.21%
El Paso Corp., Medium Term Notes, 8.05%,
10/15/30 150,000 140,762
=======================================================================
INTEGRATED OIL & GAS-0.08%
Occidental Petroleum Corp., Sr. Unsec. Notes,
7.38%, 11/15/08 50,000 54,711
=======================================================================
LIFE & HEALTH INSURANCE-0.36%
American General Finance Corp., Sr. Unsec.
Putable Notes, 8.13%, 08/15/09 40,000 44,564
-----------------------------------------------------------------------
American General Institute Capital-Series B,
Gtd. Notes, 8.13%, 03/15/46 (Acquired
02/07/02; Cost $67,699)(b) 60,000 68,708
-----------------------------------------------------------------------
John Hancock Global Funding II, Notes, 5.00%,
07/27/07 (Acquired 06/12/02; Cost
$124,931)(b) 125,000 125,234
=======================================================================
238,506
=======================================================================
MULTI-LINE INSURANCE-0.31%
AIG SunAmerica Global Financing IX, Sr.
Notes, 5.10%, 01/17/07 (Acquired 01/10/02;
Cost $49,952)(b) 50,000 50,763
-----------------------------------------------------------------------
AIG SunAmerica Global Financing VI, Sr. Sec.
Notes, 6.30%, 05/10/11 (Acquired 04/12/02;
Cost $151,403)(b) 150,000 154,463
=======================================================================
205,226
=======================================================================
OIL & GAS EXPLORATION & PRODUCTION-1.05%
Colorado Interstate Gas Co., Sr. Unsec. Deb.,
10.00%, 06/15/05 100,000 109,995
-----------------------------------------------------------------------
Devon Energy Corp., Sr. Unsec. Deb., 7.95%,
04/15/32 100,000 108,059
-----------------------------------------------------------------------
Devon Financing Corp. ULC, Sr. Unsec. Gtd.
Unsub. Notes, 7.88%, 09/30/31 120,000 128,249
-----------------------------------------------------------------------
Louis Dreyfus Natural Gas Corp., Unsec.
Notes, 6.88%, 12/01/07 100,000 106,368
-----------------------------------------------------------------------
Noble Energy, Inc., Sr. Unsec. Deb., 7.25%,
08/01/97 300,000 251,370
=======================================================================
704,041
=======================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
OIL & GAS REFINING, MARKETING &
TRANSPORTATION-0.73%
Transcontinental Gas Pipe Line Corp., Notes,
8.88%, 07/15/12 (Acquired 06/28/02; Cost
$487,875)(b) $ 500,000 $ 487,875
=======================================================================
PHARMACEUTICALS-0.10%
Merck & Co., Inc., Unsec. Deb., 6.40%,
03/01/28 70,000 70,246
=======================================================================
PROPERTY & CASUALTY INSURANCE-0.46%
American Re Corp.-Series B, Sr. Unsec. Notes,
7.45%, 12/15/26 290,000 308,850
=======================================================================
REAL ESTATE INVESTMENT TRUSTS-0.25%
EOP Operating L.P.,
Sr. Unsec. Notes, 7.25%, 02/15/18 100,000 104,633
-----------------------------------------------------------------------
Unsec. Gtd. Notes, 6.75%, 02/15/12 60,000 61,497
=======================================================================
166,130
=======================================================================
Total Bonds & Notes (Cost $8,847,329) 8,759,893
=======================================================================
ASSET-BACKED SECURITIES-0.70%
AIRLINES-0.51%
American Airlines, Inc.-Class A-1, Series
2001-1, Pass Through Ctfs. 6.98%, 05/23/21 215,410 212,106
-----------------------------------------------------------------------
Continental Airlines, Inc.,-Series 974A, Pass
Through Ctfs., 6.90%, 01/02/18 131,892 130,569
=======================================================================
342,675
=======================================================================
DIVERSIFIED FINANCIAL SERVICES-0.19%
Citicorp Lease-Class A-1, Series 1999-1, Pass
Through Ctfs., 7.22%, 06/15/05 (Acquired
05/08/02; Cost $123,558)(b) 117,189 126,270
=======================================================================
Total Asset-Backed Securities (Cost
$455,109) 468,945
=======================================================================
U.S. GOVERNMENT AGENCY SECURITIES-14.87%
FEDERAL HOME LOAN MORTGAGE CORP.
(FHLMC)-1.30%
Pass Through Ctfs.,
7.50%, 11/01/30 to 12/01/30 205,733 216,226
-----------------------------------------------------------------------
7.00%, 07/01/29 to 09/01/31 263,658 273,461
-----------------------------------------------------------------------
Pass Through Ctfs., TBA,
6.50%, 08/01/32(c) 370,000 377,400
=======================================================================
867,087
=======================================================================
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA)-11.57%
Pass Through Ctfs.,
7.50%, 11/01/15 to 05/01/32 119,914 126,112
-----------------------------------------------------------------------
7.00%, 02/01/16 to 02/01/32 534,175 555,039
-----------------------------------------------------------------------
6.50%, 10/01/16 254,938 264,543
-----------------------------------------------------------------------
6.00%, 05/01/17 347,491 354,983
-----------------------------------------------------------------------
8.00%, 10/01/30 131,247 139,367
-----------------------------------------------------------------------
|
FS-152
PRINCIPAL MARKET
AMOUNT VALUE
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)-(CONTINUED)
Pass Through Ctfs., TBA,
6.00%, 08/01/32(c) $ 725,000 $ 722,734
-----------------------------------------------------------------------
6.50%, 08/01/32(c) 1,095,000 1,116,558
-----------------------------------------------------------------------
7.00%, 08/01/32 33,000 34,176
-----------------------------------------------------------------------
Unsec. Medium Term Notes,
6.87%, 07/17/07 2,250,000 2,490,682
-----------------------------------------------------------------------
Unsec. Notes,
6.38%, 06/15/09 890,000 963,665
-----------------------------------------------------------------------
6.20%, 06/13/17 450,000 451,287
-----------------------------------------------------------------------
Unsec. Notes,
6.00%, 05/15/11 260,000 272,644
-----------------------------------------------------------------------
Unsec. Sub. Notes,
4.75%, 01/02/07 250,000 254,580
=======================================================================
7,746,370
=======================================================================
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA)-2.00%
Pass Through Ctfs.,
8.50%, 02/15/25 177,181 191,687
-----------------------------------------------------------------------
8.00%, 08/15/25 70,263 75,270
-----------------------------------------------------------------------
7.50%, 11/15/30 to 10/15/31 225,391 238,070
-----------------------------------------------------------------------
6.50%, 05/15/31 to 01/15/32 348,898 356,730
-----------------------------------------------------------------------
7.00%, 08/15/31 to 05/15/32 343,251 357,088
-----------------------------------------------------------------------
6.00%, 12/15/31 to 03/15/32 122,479 122,632
=======================================================================
1,341,477
=======================================================================
Total U.S. Government Agency Securities
(Cost $9,833,164) 9,954,934
=======================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
U.S. TREASURY SECURITIES- 4.94%
U.S. TREASURY BONDS-4.79%
6.88%, 05/15/06 $ 345,000 $ 383,129
-----------------------------------------------------------------------
6.13%, 08/15/07 70,000 76,341
-----------------------------------------------------------------------
4.75%, 11/15/08 1,720,000 1,751,820
-----------------------------------------------------------------------
6.50%, 02/15/10 450,000 503,208
-----------------------------------------------------------------------
5.00%, 08/15/11 485,000 491,863
=======================================================================
3,206,361
=======================================================================
U.S. TREASURY BONDS-0.15%
6.13%, 08/15/29 95,000 100,938
=======================================================================
Total U.S. Treasury Securities (Cost
$3,258,275) 3,307,299
=======================================================================
|
SHARES
MONEY MARKET FUNDS-9.40%
STIC Liquid Assets Portfolio(d) 3,148,614 3,148,614
-----------------------------------------------------------------------
STIC Prime Portfolio(d) 3,148,614 3,148,614
=======================================================================
Total Money Market Funds (Cost
$6,297,228) 6,297,228
=======================================================================
TOTAL INVESTMENTS-104.75% (Cost $72,067,952) 70,151,342
=======================================================================
OTHER ASSETS LESS LIABILITIES-(4.75%) (3,181,626)
=======================================================================
NET ASSETS-100.00% $66,969,716
_______________________________________________________________________
=======================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Ctfs. - Certificates Deb. - Debentures Gtd. - Guaranteed Sec. - Secured Sr. - Senior Sub. - Subordinated TBA - To Be Announced Unsec. - Unsecured Unsub. - Unsubordinated |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted securities. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The aggregate market value of these securities at 06/30/02
was $1,671,346, which represented 2.50% of the Fund's net assets.
(c) Security purchased on forward commitment basis. These securities are subject
to dollar roll transactions. See Note 1 Section B.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-153
ASSETS:
Investments, at market value (cost
$72,067,952) $70,151,342
-----------------------------------------------------------
Receivables for:
Investments sold 786,097
-----------------------------------------------------------
Fund shares sold 656,550
-----------------------------------------------------------
Dividends and interest 333,321
-----------------------------------------------------------
Investment for deferred compensation plan 2,323
-----------------------------------------------------------
Other assets 41,703
===========================================================
Total assets 71,971,336
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 4,774,097
-----------------------------------------------------------
Fund shares reacquired 106,194
-----------------------------------------------------------
Deferred compensation plan 2,323
-----------------------------------------------------------
Accrued distribution fees 73,087
-----------------------------------------------------------
Accrued transfer agent fees 13,358
-----------------------------------------------------------
Accrued operating expenses 32,561
===========================================================
Total liabilities 5,001,620
===========================================================
Net assets applicable to shares outstanding $66,969,716
___________________________________________________________
===========================================================
NET ASSETS:
Class A $24,550,099
___________________________________________________________
===========================================================
Class B $32,381,111
___________________________________________________________
===========================================================
Class C $10,038,506
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 2,415,703
___________________________________________________________
===========================================================
Class B 3,185,341
___________________________________________________________
===========================================================
Class C 987,311
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 10.16
-----------------------------------------------------------
Offering price per share:
(Net asset value of $10.16 divided
by 95.25%) $ 10.67
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 10.17
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 10.17
___________________________________________________________
===========================================================
|
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(UNAUDITED)
INVESTMENT INCOME:
Interest $ 427,581
-----------------------------------------------------------
Dividends (net of foreign withholding tax of
$789) 174,711
-----------------------------------------------------------
Dividends from affiliated money market funds 46,703
===========================================================
Total investment income 648,995
===========================================================
EXPENSES:
Advisory fees 160,910
-----------------------------------------------------------
Administrative services fees 24,795
-----------------------------------------------------------
Custodian fees 11,824
-----------------------------------------------------------
Distribution fees -- Class A 31,546
-----------------------------------------------------------
Distribution fees -- Class B 120,968
-----------------------------------------------------------
Distribution fees -- Class C 36,455
-----------------------------------------------------------
Transfer agent fees 55,425
-----------------------------------------------------------
Registration and filing fees 40,665
-----------------------------------------------------------
Trustees' fees 4,619
-----------------------------------------------------------
Other 28,122
===========================================================
Total expenses 515,329
===========================================================
Less: Fees waived (53,015)
-----------------------------------------------------------
Expenses paid indirectly (357)
===========================================================
Net expenses 461,957
===========================================================
Net investment income 187,038
===========================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (452,526)
===========================================================
Change in net unrealized appreciation
(depreciation) of investment securities (3,065,259)
===========================================================
Net gain (loss) from investment securities (3,517,785)
===========================================================
Net increase (decrease) in net assets
resulting from operations $(3,330,747)
___________________________________________________________
===========================================================
|
See Notes to Financial Statements.
FS-154
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND THE PERIOD SEPTEMBER 28, 2001 (DATE
OPERATIONS COMMENCED) THROUGH DECEMBER 31, 2001.
(UNAUDITED)
JUNE 30, DECEMBER 31,
2002 2001
----------- ------------
OPERATIONS:
Net investment income $ 187,038 $ 32,868
-----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (452,526) (124,267)
-----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (3,065,259) 1,148,649
=========================================================================================
Net increase (decrease) in net assets resulting from
operations (3,330,747) 1,057,250
=========================================================================================
Distributions to shareholders from net investment income:
Class A (119,532) (37,235)
-----------------------------------------------------------------------------------------
Class B (67,219) (33,889)
-----------------------------------------------------------------------------------------
Class C (19,894) (8,848)
-----------------------------------------------------------------------------------------
Share transactions-net:
Class A 15,105,990 10,423,697
-----------------------------------------------------------------------------------------
Class B 18,033,557 15,589,686
-----------------------------------------------------------------------------------------
Class C 5,379,928 4,996,972
=========================================================================================
Net increase in net assets 34,982,083 31,987,633
=========================================================================================
NET ASSETS:
Beginning of period 31,987,633 --
=========================================================================================
End of period $66,969,716 $31,987,633
_________________________________________________________________________________________
=========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $69,469,583 $30,950,108
-----------------------------------------------------------------------------------------
Undistributed net investment income (6,464) 13,143
-----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (576,793) (124,267)
-----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (1,916,610) 1,148,649
=========================================================================================
$66,969,716 $31,987,633
_________________________________________________________________________________________
=========================================================================================
|
See Notes to Financial Statements.
FS-155
JUNE 30, 2002
(UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Basic Balanced Fund (the "Fund") is a series portfolio of AIM Funds Group (the "Trust"). The Trust is a Delaware business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of twelve separate portfolios, each having an unlimited number of shares of beneficial interest. 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 long-term growth of capital and current income.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. Premiums and discounts are amortized and/or accreted for financial reporting purposes.
The Fund may engage in dollar roll transactions with respect to mortgage backed securities issued by GNMA, FNMA and FHLMC. In a dollar roll transaction, the Fund sells a mortgage backed security held in the Fund to a financial institution such as a bank or broker-dealer, and simultaneously agrees to repurchase a substantially similar security (same type, coupon and maturity) from the institution at a later date at an agreed upon price. The mortgage backed securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different prepayment histories. During the period between the sale and repurchase, the Fund will not be entitled to receive interest and principal payments on securities sold. Proceeds of the sale will be invested in short-term instruments, and the income from these investments, together with any additional fee
FS-156
income received on the sale, could generate income for the Fund exceeding the yield on the security sold.
Dollar roll transactions involve the risk that the market value of the securities retained by the Fund may decline below the price of the securities that the Fund has sold but is obligated to repurchase under the agreement. In the event the buyer of securities in a dollar roll transaction files for bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligation to repurchase the securities.
C. DISTRIBUTIONS -- Distributions from income are declared and paid quarterly and are recorded on ex-dividend date. 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 from 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 $1,094 as of December 31, 2001 which expires December 31, 2009.
E. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.65% of the first $1 billion of the Fund's average daily net assets, plus 0.60% of the Fund's average daily net assets on the next $4 billion, plus 0.55% of the Fund's average daily net assets in excess of $5 billion. Due to the Fund's small size, AIM has voluntarily agreed to waive a portion of its advisory fees. This waiver may be terminated at any time and AIM retains the ability to be reimbursed for such fees prior to the end of the fiscal year. AIM has also voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market fund of which the Fund has invested. For the six months ended June 30, 2002, AIM waived fees of $53,015.
The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2002, AIM was paid $24,795 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the six months ended June 30, 2002, AFS retained $29,940 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 and Class C shares of the Fund. The Trust 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. 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. For the six months ended June 30, 2002, the Class A, Class B and Class C shares paid AIM Distributors $31,546, $120,968 and $36,455, respectively, as compensation under the Plans.
AIM Distributors retained commissions of $41,650 from sales of the Class A shares of the Fund during the six months ended June 30, 2002. 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 June 30, 2002, AIM Distributors retained $1,726, $0 and $738 in contingent deferred sales charges imposed on redemptions of Class A, Class B and Class C shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the six months ended June 30, 2002, the Fund paid legal fees of $1,298 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended June 30, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $326 and reductions in custodian fees of $31 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $357.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
NOTE 5--BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $500,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are
FS-157
parties to the line of credit may borrow on a first come, first served basis. During the six months ended June 30, 2002, 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. The commitment fee is allocated among the funds based on their respective average net assets for the period.
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 was as follows:
2001
--------
Distributions paid from ordinary income $ 79,972
__________________________________________________________
==========================================================
|
As of December 31, 2001, the components of distributable earnings on a tax basis were as follows:
Undistributed ordinary income $ 14,235
-----------------------------------------------------------
Capital loss carryforward (1,094)
-----------------------------------------------------------
Unrealized appreciation 1,024,384
===========================================================
$1,037,525
___________________________________________________________
===========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of capital losses incurred after October 31, and other deferrals.
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 June 30, 2002 was $41,935,112 and $6,628,771, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of June 30, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 1,800,987 ----------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (3,717,597) =========================================================== Net unrealized appreciation (depreciation) of investment securities $(1,916,610) ___________________________________________________________ =========================================================== Investments have the same cost for tax and financial statement purposes. |
NOTE 8--SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2002 and the period September 28, 2001 (Date operations commenced) through were as follows:
SEPTEMBER 28, 2001
(DATE OPERATIONS
SIX MONTHS ENDED COMMENCED) TO
JUNE 30, 2002 DECEMBER 31, 2001
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
Sold:
Class A 1,703,937 $18,176,513 1,014,635 $10,570,925
------------------------------------------------------------------------------------------------------------------
Class B 2,173,024 23,140,962 1,510,274 15,749,795
------------------------------------------------------------------------------------------------------------------
Class C 854,578 9,138,104 511,202 5,323,113
==================================================================================================================
Issued as reinvestment of dividends:
Class A 10,727 113,657 3,464 36,336
------------------------------------------------------------------------------------------------------------------
Class B 5,100 54,157 2,340 24,543
------------------------------------------------------------------------------------------------------------------
Class C 1,755 18,682 810 8,499
==================================================================================================================
Reacquired:
Class A (299,651) (3,184,180) (17,409) (183,564)
------------------------------------------------------------------------------------------------------------------
Class B (487,939) (5,161,562) (17,458) (184,652)
------------------------------------------------------------------------------------------------------------------
Class C (349,841) (3,776,858) (31,193) (34,640)
==================================================================================================================
3,611,690 $38,519,475 2,976,665 $31,310,355
__________________________________________________________________________________________________________________
==================================================================================================================
|
FS-158
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
------------------------------------
SEPTEMBER 28, 2001
(DATE OPERATIONS
SIX MONTHS COMMENCED) TO
ENDED JUNE 30, DECEMBER 31,
2002 2001
-------------- ------------------
Net asset value, beginning of period $ 10.75 $ 10.00
----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.06(a) 0.03(a)
----------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.59) 0.76
====================================================================================================
Total from investment operations (0.53) 0.79
====================================================================================================
Less distributions from net investment income (0.06) (0.04)
====================================================================================================
Net asset value, end of period $ 10.16 $ 10.75
____________________________________________________________________________________________________
====================================================================================================
Total return(b) (4.95)% 7.94%
____________________________________________________________________________________________________
====================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $24,550 $10,753
____________________________________________________________________________________________________
====================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.45%(c) 1.43%(d)
----------------------------------------------------------------------------------------------------
Without fee waivers 1.67%(c) 2.89%(d)
====================================================================================================
Ratio of net investment income to average net assets 1.17%(c) 1.16%(d)
____________________________________________________________________________________________________
====================================================================================================
Portfolio turnover rate 15% 7%
____________________________________________________________________________________________________
====================================================================================================
|
(a) Calculated using average shares outstanding.
(b) 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 $18,175,577.
(d) Annualized.
CLASS B
------------------------------------
SEPTEMBER 28, 2001
(DATE OPERATIONS
SIX MONTHS COMMENCED) TO
ENDED JUNE 30, DECEMBER 31,
2002 2001
-------------- ------------------
Net asset value, beginning of period $ 10.75 $ 10.00
----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.03(a) 0.01(a)
----------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.58) 0.77
====================================================================================================
Total from investment operations (0.55) 0.78
====================================================================================================
Less distributions from net investment income (0.03) (0.03)
====================================================================================================
Net asset value, end of period $ 10.17 $ 10.75
____________________________________________________________________________________________________
====================================================================================================
Total return(b) (5.16)% 7.76%
____________________________________________________________________________________________________
====================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $32,381 $16,067
____________________________________________________________________________________________________
====================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.10%(c) 2.08%(d)
----------------------------------------------------------------------------------------------------
Without fee waivers 2.32%(c) 3.54%(d)
====================================================================================================
Ratio of net investment income to average net assets 0.52%(c) 0.52%(d)
____________________________________________________________________________________________________
====================================================================================================
Portfolio turnover rate 15% 7%
____________________________________________________________________________________________________
====================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average net assets of $24,394,113.
(d) Annualized.
FS-159
NOTE 9--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
------------------------------------
SEPTEMBER 28, 2001
SIX MONTHS (DATE OPERATIONS
ENDED JUNE 30, COMMENCED) TO
2002 DECEMBER 31, 2001
-------------- ------------------
Net asset value, beginning of period $ 10.75 $ 10.00
----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.03(a) 0.01(a)
----------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.58) 0.77
====================================================================================================
Total from investment operations (0.55) 0.78
====================================================================================================
Less distributions from net investment income (0.03) (0.03)
====================================================================================================
Net asset value, end of period $ 10.17 $ 10.75
____________________________________________________________________________________________________
====================================================================================================
Total return(b) (5.16)% 7.76%
____________________________________________________________________________________________________
====================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $10,039 $ 5,168
____________________________________________________________________________________________________
====================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.10%(c) 2.08%(d)
----------------------------------------------------------------------------------------------------
Without fee waivers 2.32%(c) 3.54%(d)
====================================================================================================
Ratio of net investment income to average net assets 0.52%(c) 0.52%(d)
____________________________________________________________________________________________________
====================================================================================================
Portfolio turnover rate 15% 7%
____________________________________________________________________________________________________
====================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average net assets of $7,351,438.
(d) Annualized.
FS-160
JUNE 30, 2002
(UNAUDITED)
MARKET
SHARES VALUE
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-91.02%
BELGIUM-1.47%
Omega Pharma S.A. (Health Care Supplies) 4,800 $ 215,710
-----------------------------------------------------------------------
Ontex (Personal Products) 2,900 189,668
=======================================================================
405,378
=======================================================================
DENMARK-1.18%
Topdanmark A.S. (Multi-Line Insurance)(a) 10,300 323,074
=======================================================================
FINLAND-1.80%
Instrumentarium Corp. (Health Care Equipment) 4,600 116,466
-----------------------------------------------------------------------
Marimekko Oy (Apparel, Accessories & Luxury
Goods) 18,500 175,993
-----------------------------------------------------------------------
Vacon Oyj (Electrical Components &
Equipment)(b) 19,200 203,581
=======================================================================
496,040
=======================================================================
FRANCE-16.77%
AES Laboratoire Groupe (Health Care
Equipment) 1,730 216,007
-----------------------------------------------------------------------
Altedia (Employment Services) 7,700 228,146
-----------------------------------------------------------------------
Bonduelle S.C.A. (Packaged Foods & Meats) 6,650 461,287
-----------------------------------------------------------------------
Bricolage (Mr.) S.A. (Home Improvement
Retail)(c) 17,469 320,252
-----------------------------------------------------------------------
Buffalo Grill S.A. (Restaurants) 27,800 445,182
-----------------------------------------------------------------------
Camaieu (Apparel Retail) 12,800 481,364
-----------------------------------------------------------------------
Groupe Crit (Employment Services) 5,500 133,258
-----------------------------------------------------------------------
Ioltech (Health Care Equipment)(a) 2,310 297,353
-----------------------------------------------------------------------
MEDIDEP S.A. (Health Care Facilities)(a) 18,200 449,079
-----------------------------------------------------------------------
Neopost S.A. (Office Electronics)(a) 6,260 249,995
-----------------------------------------------------------------------
Rodriguez Group (Specialty Stores) 2,300 156,352
-----------------------------------------------------------------------
Silicon-On-Insulator Technologies (SOITEC)
(Electronic Equipment & Instruments)(a) 21,870 212,386
-----------------------------------------------------------------------
Societe Virbac S.A. (Pharmaceuticals) 1,905 280,710
-----------------------------------------------------------------------
SR Teleperformance (Advertising) 3,100 74,648
-----------------------------------------------------------------------
TRIGANO (Automobile Manufacturers) 9,500 368,088
-----------------------------------------------------------------------
Wavecom S.A. (Telecommunications
Equipment)(a) 5,900 239,418
=======================================================================
4,613,525
=======================================================================
GERMANY-3.22%
Puma A.G. Rudolf Dassler Sport (Footwear) 10,000 726,763
-----------------------------------------------------------------------
|
MARKET
SHARES VALUE
GERMANY-(CONTINUED)
Suess MicroTec A.G. (Semiconductor
Equipment)(a) 7,900 $ 158,919
=======================================================================
885,682
=======================================================================
IRELAND-9.88%
Anglo Irish Bank Corp. PLC (Banks) 117,800 770,444
-----------------------------------------------------------------------
Arnotts PLC (Department Stores) 13,200 137,346
-----------------------------------------------------------------------
First Active PLC (Consumer Finance)(a) 59,900 287,886
-----------------------------------------------------------------------
Grafton Group PLC-Units (Trading Companies &
Distributors)(d) 130,200 562,535
-----------------------------------------------------------------------
ICON PLC-ADR (Health Care Distributors &
Services)(a) 2,900 82,650
-----------------------------------------------------------------------
Jurys Doyle Hotel Group PLC (Hotels, Resorts
& Cruise Lines) 33,700 340,629
-----------------------------------------------------------------------
Paddy Power PLC (Casinos & Gambling) 57,100 299,055
-----------------------------------------------------------------------
United Drug PLC (Health Care Distributors &
Services) 17,100 237,233
=======================================================================
2,717,778
=======================================================================
ITALY-6.86%
Davide Campari-Milano S.p.A. (Brewers)(a) 5,300 175,943
-----------------------------------------------------------------------
Merloni Elettrodomestici S.p.A. (Household
Appliances) 63,700 698,777
-----------------------------------------------------------------------
Permasteelisa S.p.A. (Construction &
Engineering) 17,900 345,004
-----------------------------------------------------------------------
Recordati S.p.A. (Pharmaceuticals) 13,600 369,268
-----------------------------------------------------------------------
Saeco International Group S.p.A. (Consumer
Electronics)(a) 96,300 298,691
=======================================================================
1,887,683
=======================================================================
NETHERLANDS-3.63%
ASM International N.V. (Semiconductor
Equipment)(a) 13,900 246,696
-----------------------------------------------------------------------
Heijmans N.V.-Dutch Ctfs. (Construction &
Engineering) 7,400 171,960
-----------------------------------------------------------------------
Sligro Beheer N.V. (Food Distributors) 9,100 385,504
-----------------------------------------------------------------------
Van der Moolen Holding N.V. (Diversified
Financial Services) 2,770 58,742
-----------------------------------------------------------------------
Volker Wessels Stevin N.V.-Dutch Ctfs.
(Construction & Engineering)(a) 5,000 136,305
=======================================================================
999,207
=======================================================================
NORWAY-4.56%
Aktiv Kapital A.S.A. (Diversified Financial
Services) 32,950 215,187
-----------------------------------------------------------------------
Ekornes A.S.A. (Home Furnishings) 25,000 314,874
-----------------------------------------------------------------------
|
FS-161
MARKET
SHARES VALUE
NORWAY-(CONTINUED)
Norkom A.S.A. (Computers & Electronics
Retail)(a) 17,900 $ 255,271
-----------------------------------------------------------------------
Tandberg A.S.A. (Electronic Equipment &
Instruments) 14,000 165,134
-----------------------------------------------------------------------
TGS Nopec Geophysical Co. A.S.A. (Oil & Gas
Equipment & Services)(a) 19,600 303,025
=======================================================================
1,253,491
=======================================================================
SPAIN-3.61%
Baron de Ley, S.A. (Distillers & Vinters)(a) 9,600 281,398
-----------------------------------------------------------------------
Enagas (Gas Utilities)(a)(b) 27,300 172,598
-----------------------------------------------------------------------
Miquel y Costos & Miquel, S.A. (Paper
Products)(a) 9,400 281,311
-----------------------------------------------------------------------
Viscofan, Industria Navarra De Envolturas
Celulosicas, S.A. (Packaged Foods & Meats) 33,400 258,162
=======================================================================
993,469
=======================================================================
SWEDEN-8.79%
Axfood A.B. (Food Retail) 19,800 328,416
-----------------------------------------------------------------------
Clas Ohlson A.B.-Class B (Specialty Stores) 18,900 378,454
-----------------------------------------------------------------------
Elekta A.B.-Class B (Health Care
Equipment)(a) 30,600 343,933
-----------------------------------------------------------------------
Getinge A.B.-Class B (Health Care Equipment) 4,300 84,461
-----------------------------------------------------------------------
Intrum Justitia A.B. (Diversified Financial
Services)(a) 61,000 352,794
-----------------------------------------------------------------------
Munters A.B. (Industrial Machinery) 7,500 166,958
-----------------------------------------------------------------------
Perbio Science A.B. (Pharmaceuticals)(a) 16,100 298,669
-----------------------------------------------------------------------
Scandiaconsult A.B. (Construction &
Engineering) 26,800 137,158
-----------------------------------------------------------------------
Swedish Match A.B. (Tobacco) 39,600 328,416
=======================================================================
2,419,259
=======================================================================
SWITZERLAND-1.83%
Micronas Semiconductor Holding A.G.
(Semiconductors)(a) 13,100 414,540
-----------------------------------------------------------------------
Nobel Biocare Holding A.G. (Health Care
Equipment)(a) 1,320 87,866
=======================================================================
502,406
=======================================================================
UNITED KINGDOM-27.42%
Albemarle & Bond Holdings PLC (Consumer
Finance) 205,800 245,039
-----------------------------------------------------------------------
Alexon Group PLC (Apparel, Accessories &
Luxury Goods) 91,300 303,403
-----------------------------------------------------------------------
Ask Central PLC (Restaurants) 48,300 120,566
-----------------------------------------------------------------------
Balfour Beatty PLC (Construction &
Engineering) 74,600 267,327
-----------------------------------------------------------------------
Biotrace International PLC (Health Care
Equipment) 96,600 152,652
-----------------------------------------------------------------------
|
MARKET
SHARES VALUE
UNITED KINGDOM-(CONTINUED)
Cattles PLC (Consumer Finance) 76,800 $ 388,118
-----------------------------------------------------------------------
Chemring Group PLC (Aerospace & Defense) 44,100 205,981
-----------------------------------------------------------------------
Clarke (T.) PLC (Construction & Engineering) 20,700 152,715
-----------------------------------------------------------------------
Cranswick PLC (Packaged Foods & Meats)(a) 21,000 319,986
-----------------------------------------------------------------------
Domino's Pizza UK & IRL PLC (Restaurants) 256,300 382,685
-----------------------------------------------------------------------
Enterprise Inns PLC (Restaurants) 19,400 152,111
-----------------------------------------------------------------------
Express Dairies PLC (Packaged Foods &
Meats)(a) 295,000 127,623
-----------------------------------------------------------------------
GAME GROUP (THE) PLC (Computer & Electronics
Retail) 53,700 100,739
-----------------------------------------------------------------------
Games Workshop Group PLC (Leisure Products) 21,000 150,506
-----------------------------------------------------------------------
Geest PLC (Agricultural Products) 19,900 169,745
-----------------------------------------------------------------------
Hamleys PLC (Specialty Stores) 48,000 118,567
-----------------------------------------------------------------------
HIT Entertainment PLC (Movies &
Entertainment) 19,000 78,197
-----------------------------------------------------------------------
Intercare Group PLC (Health Care Distributors
& Services) 36,100 143,737
-----------------------------------------------------------------------
Inventive Leisure PLC (Restaurants) 55,200 152,160
-----------------------------------------------------------------------
iSOFT Group PLC (Application Software) 81,300 305,032
-----------------------------------------------------------------------
Jardine Lloyd Thompson Group PLC (Insurance
Brokers) 33,500 322,176
-----------------------------------------------------------------------
Jarvis PLC (Construction & Engineering) 13,800 68,958
-----------------------------------------------------------------------
Kier Group PLC (Construction & Engineering) 32,100 295,439
-----------------------------------------------------------------------
Luminar PLC (Restaurants) 28,200 355,632
-----------------------------------------------------------------------
Majestic Wine PLC (Brewers) 12,800 90,051
-----------------------------------------------------------------------
Merchant Retail Group PLC (Food Retail)(a) 58,500 125,870
-----------------------------------------------------------------------
MFI Furniture Group PLC (Home Furnishings) 91,700 179,047
-----------------------------------------------------------------------
Nestor Healthcare Group PLC (Employment
Services) 17,600 126,610
-----------------------------------------------------------------------
New Look Group PLC (Apparel Retail) 74,600 266,185
-----------------------------------------------------------------------
PHS Group PLC (Diversified Commercial
Services) 103,720 155,660
-----------------------------------------------------------------------
Reliance Security Group PLC (Diversified
Commercial Services) 16,600 196,506
-----------------------------------------------------------------------
Speedy Hire PLC (Construction & Engineering) 28,600 145,410
-----------------------------------------------------------------------
Stanley Leisure PLC (Casinos & Gaming) 50,300 272,908
-----------------------------------------------------------------------
Taylor & Francis Group PLC (Publishing) 47,000 406,663
-----------------------------------------------------------------------
Torex PLC (IT Consulting & Services) 13,400 124,561
-----------------------------------------------------------------------
Ultimate Leisure Group PLC (Leisure Products) 20,000 74,885
-----------------------------------------------------------------------
William Hill PLC (Diversified Financial
Services)(a)(b) 30,600 124,181
-----------------------------------------------------------------------
|
FS-162
MARKET
SHARES VALUE
UNITED KINGDOM-(CONTINUED)
Wood Group (John) PLC (Oil & Gas Equipment &
Services)(a) 54,300 $ 174,800
=======================================================================
7,542,431
=======================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $21,604,134) 25,039,423
=======================================================================
MONEY MARKET FUNDS-8.07%
STIC Liquid Assets Portfolio(e) 1,109,428 1,109,428
-----------------------------------------------------------------------
STIC Prime Portfolio(e) 1,109,428 1,109,428
=======================================================================
Total Money Market Funds (Cost
$2,218,856) 2,218,856
=======================================================================
TOTAL INVESTMENTS-99.09% (Cost $23,822,990) 27,258,279
=======================================================================
OTHER ASSETS LESS LIABILITIES-0.91% 251,111
=======================================================================
NET ASSETS-100.00% $27,509,390
_______________________________________________________________________
=======================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Ctfs. - Certificates |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(d) Consists of more than one class of securities traded together as a unit.
(e) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-163
JUNE 30, 2002
(UNAUDITED)
ASSETS:
Investments, at market value (cost
$23,822,990) $27,258,279
-----------------------------------------------------------
Foreign currencies, at value (cost $95,998) 98,263
-----------------------------------------------------------
Receivables for:
Investments sold 114,686
-----------------------------------------------------------
Fund shares sold 570,072
-----------------------------------------------------------
Dividends 37,757
-----------------------------------------------------------
Investment for deferred compensation plan 10,298
-----------------------------------------------------------
Other assets 21,935
===========================================================
Total assets 28,111,290
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 394,324
-----------------------------------------------------------
Fund shares reacquired 120,151
-----------------------------------------------------------
Deferred compensation plan 10,298
-----------------------------------------------------------
Accrued distribution fees 22,110
-----------------------------------------------------------
Accrued transfer agent fees 7,814
-----------------------------------------------------------
Accrued operating expenses 47,203
===========================================================
Total liabilities 601,900
===========================================================
Net assets applicable to shares outstanding $27,509,390
___________________________________________________________
===========================================================
NET ASSETS:
Class A $17,366,279
___________________________________________________________
===========================================================
Class B $ 8,231,805
___________________________________________________________
===========================================================
Class C $ 1,911,306
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 2,087,439
___________________________________________________________
===========================================================
Class B 999,311
___________________________________________________________
===========================================================
Class C 232,132
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 8.32
-----------------------------------------------------------
Offering price per share:
(Net asset value of $8.32 divided
by 94.50%) $ 8.80
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 8.24
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 8.23
___________________________________________________________
===========================================================
|
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$15,290) $ 125,030
-----------------------------------------------------------
Dividends from affiliated money market funds 10,289
===========================================================
Total investment income 135,319
===========================================================
EXPENSES:
Advisory fees 74,924
-----------------------------------------------------------
Administrative services fees 24,795
-----------------------------------------------------------
Custodian fees 43,944
-----------------------------------------------------------
Distribution fees -- Class A 17,258
-----------------------------------------------------------
Distribution fees -- Class B 22,419
-----------------------------------------------------------
Distribution fees -- Class C 7,139
-----------------------------------------------------------
Transfer agent fees 26,383
-----------------------------------------------------------
Trustees' fees 4,540
-----------------------------------------------------------
Registration and filing fees 15,743
-----------------------------------------------------------
Professional fees 19,009
-----------------------------------------------------------
Other 17,001
===========================================================
Total expenses 273,155
===========================================================
Less: Fees waived and expenses reimbursed (97,119)
-----------------------------------------------------------
Expenses paid indirectly (105)
===========================================================
Net expenses 175,931
===========================================================
Net investment income (loss) (40,612)
===========================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities (292,559)
-----------------------------------------------------------
Foreign currencies 396
===========================================================
(292,163)
===========================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 2,502,193
-----------------------------------------------------------
Foreign currencies (2,946)
===========================================================
2,499,247
===========================================================
Net gain from investment securities and
foreign currencies 2,207,084
===========================================================
Net increase in net assets resulting from
operations $2,166,472
___________________________________________________________
===========================================================
|
See Notes to Financial Statements.
FS-164
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND THE YEAR ENDED DECEMBER 31, 2001
(UNAUDITED)
JUNE 30, DECEMBER 31,
2002 2001
----------- ------------
OPERATIONS:
Net investment income (loss) $ (40,612) $ (93,543)
-----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (292,163) (3,815,727)
-----------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 2,499,247 697,690
=========================================================================================
Net increase (decrease) in net assets resulting from
operations 2,166,472 (3,211,580)
=========================================================================================
Share transactions-net:
Class A 9,068,700 647,205
-----------------------------------------------------------------------------------------
Class B 5,263,994 168,698
-----------------------------------------------------------------------------------------
Class C 620,180 256,409
=========================================================================================
Net increase (decrease) in net assets 17,119,346 (2,139,268)
=========================================================================================
NET ASSETS:
Beginning of period 10,390,044 12,529,312
=========================================================================================
End of period $27,509,390 $10,390,044
_________________________________________________________________________________________
=========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $28,869,012 $13,916,138
-----------------------------------------------------------------------------------------
Undistributed net investment income (loss) (49,689) (9,077)
-----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (4,745,814) (4,453,651)
-----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 3,435,881 936,634
=========================================================================================
$27,509,390 $10,390,044
_________________________________________________________________________________________
=========================================================================================
|
JUNE 30, 2002
(UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM European Small Company Fund (the "Fund") is a series portfolio of AIM Funds Group (the "Trust"). The Trust is a Delaware business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of twelve separate portfolios, each having an unlimited number of shares of beneficial interest. 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 long-term growth of capital.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session on the valuation
FS-165
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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date.
C. DISTRIBUTIONS -- Distributions from income and 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 from 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's capital loss carryforward of $4,147,930 as of December 31, 2001 expires as follows:
CAPITAL LOSS CARRYFORWARD EXPIRATION ------------ ---------- $ 220,935 December 31, 2008 ------------------------------- 3,926,995 December 31, 2009 =============================== $4,147,930 _______________________________ =============================== |
E. 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 the 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.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the Fund's average daily net assets. AIM has contractually agreed to waive fees and/or reimburse expenses (excluding interest, taxes, dividends on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) for Class A, Class B and Class C shares to the extent necessary to limit the total annual fund operating expenses of Class A to 2.00%. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market fund of which the Fund has
FS-166
invested. For the six months ended June 30, 2002, AIM waived fees of $74,924 and reimbursed expenses of $22,195.
The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2002, AIM was paid $24,795 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the six months ended June 30, 2002, AFS retained $15,294 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 and Class C shares of the Fund. The Trust 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. 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. For the six months ended June 30, 2002, the Class A, Class B and Class C shares paid AIM Distributors $17,258, $22,419 and $7,139, respectively, as compensation under the Plans.
AIM Distributors retained commissions of $2,949 from sales of the Class A shares of the Fund during the six months ended June 30, 2002. 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 June 30, 2002, AIM Distributors retained $354, $0 and $258 in contingent deferred sales charges imposed on redemptions of Class A, Class B and Class C shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the six months ended June 30, 2002, the Fund paid legal fees of $1,298 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended June 30, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $103 and reductions in custodian fees of $2 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $105.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
NOTE 5--BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $500,000,000 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 six months ended June 30,
2002, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
-------- -------
Distributions paid from ordinary
income $ -- $50,206
___________________________________________________________
===========================================================
|
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Capital loss carryforward $(4,147,930)
-----------------------------------------------------------
Unrealized appreciation 621,836
===========================================================
$(3,526,094)
___________________________________________________________
===========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of capital losses incurred after October 31, and other deferrals.
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 June 30, 2002 was $19,368,782 and $6,297,020, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of June 30, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $3,808,797 ----------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (392,119) =========================================================== Net unrealized appreciation of investment securities $3,416,678 ___________________________________________________________ =========================================================== Cost of investments for tax purposes is $23,841,601 |
FS-167
NOTE 8--SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2002 and the year ended December 31, 2001 were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2002 DECEMBER 31, 2001
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ---------- ------------
Sold:
Class A 1,693,801 $13,603,084 1,443,910 $ 10,877,574
--------------------------------------------------------------------------------------------------------------------
Class B 777,232 6,093,043 87,474 690,405
--------------------------------------------------------------------------------------------------------------------
Class C 294,464 2,335,214 275,312 2,057,628
====================================================================================================================
Reacquired:
Class A (575,170) (4,534,384) (1,413,403) (10,230,369)
--------------------------------------------------------------------------------------------------------------------
Class B (104,003) (829,049) (72,117) (521,707)
--------------------------------------------------------------------------------------------------------------------
Class C (215,084) (1,715,034) (239,549) (1,801,219)
====================================================================================================================
1,871,240 $14,952,874 81,627 $ 1,072,312
____________________________________________________________________________________________________________________
====================================================================================================================
|
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
----------------------------------------------------
AUGUST 31, 2000
(DATE OPERATIONS
SIX MONTHS ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------------- ------------ ----------------
Net asset value, beginning of period $ 7.19 $ 9.17 $10.00
--------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a) (0.05)(a) (0.04)(a)
--------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.14 (1.93) (0.74)
====================================================================================================================
Total from investment operations 1.13 (1.98) (0.78)
====================================================================================================================
Less dividends from net investment income -- -- (0.05)
====================================================================================================================
Net asset value, end of period $ 8.32 $ 7.19 $ 9.17
____________________________________________________________________________________________________________________
====================================================================================================================
Total return(b) 15.72% (21.59)% (7.84)%
____________________________________________________________________________________________________________________
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $17,366 $ 6,969 $8,606
____________________________________________________________________________________________________________________
====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.99%(c) 2.01% 2.07%(d)
--------------------------------------------------------------------------------------------------------------------
Without fee waivers 3.22%(c) 4.65% 6.28%(d)
====================================================================================================================
Ratio of net investment income (loss) to average net assets (0.27)%(c) (0.61)% (1.28)%(d)
____________________________________________________________________________________________________________________
====================================================================================================================
Portfolio turnover rate 42% 152% 25%
____________________________________________________________________________________________________________________
====================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less
than one year.
(c) Ratios are annualized and based on average daily net assets of
$9,943,703.
(d) Annualized.
FS-168
NOTE 9--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
----------------------------------------------------
AUGUST 31, 2000
(DATE OPERATIONS
SIX MONTHS ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------------- ------------ ----------------
Net asset value, beginning of period $ 7.15 $ 9.17 $10.00
--------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.10)(a) (0.06)(a)
--------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.13 (1.92) (0.74)
====================================================================================================================
Total from investment operations 1.09 (2.02) (0.80)
====================================================================================================================
Less dividends from net investment income -- -- (0.03)
====================================================================================================================
Net asset value, end of period $ 8.24 $ 7.15 $ 9.17
____________________________________________________________________________________________________________________
====================================================================================================================
Total return(b) 15.24% (22.03)% (7.99)%
____________________________________________________________________________________________________________________
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $8,232 $ 2,330 $2,851
____________________________________________________________________________________________________________________
====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.64%(c) 2.71% 2.77%(d)
--------------------------------------------------------------------------------------------------------------------
Without fee waivers 3.87%(c) 5.36% 6.98%(d)
====================================================================================================================
Ratio of net investment income (loss) to average net assets (0.92)%(c) (1.31)% (1.98)%(d)
____________________________________________________________________________________________________________________
====================================================================================================================
Portfolio turnover rate 42% 152% 25%
____________________________________________________________________________________________________________________
====================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$4,520,889.
(d) Annualized.
CLASS C
----------------------------------------------------
AUGUST 31, 2000
(DATE OPERATIONS
SIX MONTHS ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------------- ------------ ----------------
Net asset value, beginning of period $ 7.14 $ 9.17 $10.00
--------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.10)(a) (0.06)(a)
--------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.13 (1.93) (0.74)
====================================================================================================================
Total from investment operations 1.09 (2.03) (0.80)
====================================================================================================================
Less dividends from net investment income -- -- (0.03)
====================================================================================================================
Net asset value, end of period $ 8.23 $ 7.14 $ 9.17
____________________________________________________________________________________________________________________
====================================================================================================================
Total return(b) 15.27% (22.14)% (7.99)%
____________________________________________________________________________________________________________________
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,911 $ 1,091 $1,073
____________________________________________________________________________________________________________________
====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.64%(c) 2.71% 2.77%(d)
--------------------------------------------------------------------------------------------------------------------
Without fee waivers 3.87%(c) 5.36% 6.98%(d)
====================================================================================================================
Ratio of net investment income (loss) to average net assets (0.92)%(c) (1.31)% (1.98)%(d)
____________________________________________________________________________________________________________________
====================================================================================================================
Portfolio turnover rate 42% 152% 25%
____________________________________________________________________________________________________________________
====================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$1,439,537.
(d) Annualized.
FS-169
JUNE 30, 2002
(UNAUDITED)
MARKET
SHARES VALUE
DOMESTIC STOCKS-75.70%
BROADCASTING & CABLE TV-1.16%
Univision Communications Inc.-Class A(a) 73,600 $ 2,311,040
=========================================================================
CONSTRUCTION & ENGINEERING-0.72%
Quanta Services, Inc.(a) 146,300 1,443,981
=========================================================================
DIVERSIFIED METALS & MINING-0.86%
Peabody Energy Corp. 61,000 1,726,300
=========================================================================
ELECTRIC UTILITIES-37.63%
American Electric Power Co., Inc. 59,000 2,361,180
-------------------------------------------------------------------------
CMS Energy Corp. 178,000 1,954,440
-------------------------------------------------------------------------
Consolidated Edison, Inc. 65,000 2,713,750
-------------------------------------------------------------------------
Constellation Energy Group, Inc. 86,500 2,537,910
-------------------------------------------------------------------------
DTE Energy Co. 172,000 7,678,080
-------------------------------------------------------------------------
Edison International(a) 51,000 867,000
-------------------------------------------------------------------------
Entergy Corp. 62,000 2,631,280
-------------------------------------------------------------------------
Exelon Corp. 68,500 3,582,550
-------------------------------------------------------------------------
FirstEnergy Corp. 90,000 3,004,200
-------------------------------------------------------------------------
FPL Group, Inc. 175,000 10,498,250
-------------------------------------------------------------------------
Northeast Utilities 49,500 931,095
-------------------------------------------------------------------------
OGE Energy Corp. 106,000 2,423,160
-------------------------------------------------------------------------
PG&E Corp.(a) 72,000 1,288,080
-------------------------------------------------------------------------
Pinnacle West Capital Corp. 209,600 8,279,200
-------------------------------------------------------------------------
PPL Corp. 75,000 2,481,000
-------------------------------------------------------------------------
Public Service Enterprise Group Inc. 60,000 2,598,000
-------------------------------------------------------------------------
Puget Energy, Inc. 96,000 1,982,400
-------------------------------------------------------------------------
Reliant Energy, Inc. 205,000 3,464,500
-------------------------------------------------------------------------
Southern Co. (The) 226,500 6,206,100
-------------------------------------------------------------------------
TECO Energy, Inc. 100,000 2,475,000
-------------------------------------------------------------------------
Xcel Energy, Inc. 322,150 5,402,456
=========================================================================
75,359,631
=========================================================================
GAS UTILITIES-8.63%
El Paso Corp. 72,900 1,502,469
-------------------------------------------------------------------------
El Paso Energy Cap Trust I-$2.38 Conv. Pfd. 74,500 2,741,600
-------------------------------------------------------------------------
KeySpan Corp. 55,000 2,070,750
-------------------------------------------------------------------------
NiSource Inc. 336,000 7,334,880
-------------------------------------------------------------------------
Sempra Energy 164,000 3,629,320
=========================================================================
17,279,019
=========================================================================
|
MARKET
SHARES VALUE
HEAVY ELECTRICAL EQUIPMENT-0.12%
Active Power, Inc.(a) 65,500 $ 236,455
=========================================================================
INDUSTRIAL CONGLOMERATES-1.88%
General Electric Co. 129,600 3,764,880
=========================================================================
INTEGRATED OIL & GAS-1.54%
ChevronTexaco Corp. 34,800 3,079,800
=========================================================================
INTEGRATED TELECOMMUNICATION SERVICES-8.52%
BellSouth Corp. 211,000 6,646,500
-------------------------------------------------------------------------
SBC Communications Inc. 185,693 5,663,637
-------------------------------------------------------------------------
Verizon Communications Inc. 118,462 4,756,249
=========================================================================
17,066,386
=========================================================================
MOVIES & ENTERTAINMENT-0.84%
Viacom Inc.-Class B(a) 38,000 1,686,060
=========================================================================
MULTI-UTILITIES & UNREGULATED POWER-11.03%
Aquila, Inc. 215,856 1,726,848
-------------------------------------------------------------------------
Calpine Corp.(a) 132,000 927,960
-------------------------------------------------------------------------
Duke Energy Corp. 95,334 2,964,887
-------------------------------------------------------------------------
Dynegy Inc.-Class A 272,000 1,958,400
-------------------------------------------------------------------------
Energy East Corp. 475,200 10,739,520
-------------------------------------------------------------------------
Mirant Corp.(a) 193,850 1,415,105
-------------------------------------------------------------------------
Mirant Trust I-Series A, $3.13 Conv. Pfd. 30,600 906,984
-------------------------------------------------------------------------
Williams Cos., Inc. (The) 198,700 1,190,213
-------------------------------------------------------------------------
Williams Cos., Inc. (The)-$2.25 Conv. Pfd. 21,000 264,180
=========================================================================
22,094,097
=========================================================================
NETWORKING EQUIPMENT-0.54%
Cisco Systems, Inc.(a) 77,700 1,083,915
=========================================================================
OIL & GAS EQUIPMENT & SERVICES-0.54%
Cooper Cameron Corp.(a) 22,500 1,089,450
=========================================================================
OIL & GAS EXPLORATION & PRODUCTION-1.33%
Apache Corp. 46,250 2,658,450
=========================================================================
TELECOMMUNICATIONS EQUIPMENT-0.14%
JDS Uniphase Corp.(a) 99,900 268,731
=========================================================================
|
FS-170
MARKET
SHARES VALUE
WIRELESS TELECOMMUNICATION SERVICES-0.22%
MediaOne Group, Inc.-$3.04 Conv. Pfd. 29,200 $ 436,832
=========================================================================
Total Domestic Stocks (Cost $172,346,788) 151,585,027
=========================================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-14.13%
BRAZIL-0.75%
Companhia Paranaense de Energia-Copel-ADR
(Electric Utilities) 370,000 1,498,500
=========================================================================
FINLAND-0.64%
Nokia Oyj-ADR (Telecommunications Equipment) 88,200 1,277,136
=========================================================================
FRANCE-2.14%
Suez S.A. (Multi-Utilities & Unregulated
Power) 124,500 3,331,078
-------------------------------------------------------------------------
TotalFinaElf S.A. (Integrated Oil & Gas) 5,800 944,891
=========================================================================
4,275,969
=========================================================================
GERMANY-1.47%
E.ON A.G. (Electric Utilities) 50,560 2,943,518
=========================================================================
GREECE-0.58%
Public Power Corp.-GDR (Electric
Utilities)(b)(c) 81,800 1,170,502
=========================================================================
ITALY-2.42%
ACEA S.p.A. (Multi-Utilities & Unregulated
Power)(b) 388,800 2,092,078
-------------------------------------------------------------------------
Snam Rete Gas S.p.A. (Gas Utilities)(b) 210,200 622,810
-------------------------------------------------------------------------
Telecom Italia S.p.A. (Integrated
Telecommunication Services) 400,400 2,130,689
=========================================================================
4,845,577
=========================================================================
SPAIN-2.65%
Endesa, S.A. (Electric Utilities) 227,000 3,308,951
-------------------------------------------------------------------------
Telefonica, S.A. (Integrated
Telecommunication Services)(a) 237,299 1,998,787
=========================================================================
5,307,738
=========================================================================
UNITED KINGDOM-3.48%
Kelda Group PLC (Water Utilities) 538,407 3,520,685
-------------------------------------------------------------------------
National Grid Group PLC (Electric Utilities) 131,526 938,612
-------------------------------------------------------------------------
United Utilities PLC (Multi-Utilities &
Unregulated Power) 151,936 1,421,643
-------------------------------------------------------------------------
Vodafone Group PLC (Wireless
Telecommunication Services) 789,118 1,087,610
=========================================================================
6,968,550
=========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $32,503,858) 28,287,490
=========================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
BONDS & NOTES--6.73%
BROADCASTING & CABLE TV-0.46%
TCI Communications, Inc., Sr. Unsec. Deb.,
7.88%, 02/15/26 $1,000,000 $ 919,510
=========================================================================
COMPUTER HARDWARE-0.13%
Candescent Technologies Corp., Sr. Conv.
Unsec. Gtd. Sub. Deb., 8.00%, 05/01/03
(Acquired 04/17/98-04/19/01; Cost
$4,556,330)(c)(d)(e) 4,866,000 257,898
=========================================================================
ELECTRIC UTILITIES-2.51%
National Grid Co. PLC (United Kingdom), Conv.
Bonds, 4.25%, 02/17/08 (Acquired 02/05/98;
Cost $4,574,700)(d)(f) GBP 2,760,000 5,027,976
=========================================================================
GAS UTILITIES-2.26%
Limestone Electron Trust, Sr. Unsec. Gtd.
Notes, 8.63%, 03/15/03 (Acquired 03/15/00;
Cost $4,550,000)(d) 4,550,000 4,532,937
=========================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.86%
AT&T Corp., Unsec. Notes, 7.75%, 03/01/07 1,850,000 1,713,563
=========================================================================
MULTI-UTILITIES & UNREGULATED POWER-0.51%
Dynegy Inc., Sr. Unsec. Deb., 7.13%, 05/15/18 1,400,000 1,027,250
=========================================================================
Total Bonds & Notes (Cost $17,949,547) 13,479,134
=========================================================================
SHARES
MONEY MARKET FUNDS-5.44%
STIC Liquid Assets Portfolio(g) 5,452,563 5,452,563
-------------------------------------------------------------------------
STIC Prime Portfolio(g) 5,452,563 5,452,563
=========================================================================
Total Money Market Funds (Cost
$10,905,126) 10,905,126
=========================================================================
TOTAL INVESTMENTS-102.00% (Cost $233,705,319) 204,256,777
=========================================================================
OTHER ASSETS LESS LIABILITIES-(2.00%) (4,012,435)
=========================================================================
NET ASSETS-100.00% $200,244,342
_________________________________________________________________________
=========================================================================
|
FS-171
Investment Abbreviations:
ADR - American Depositary Receipt Conv. - Convertible Deb. - Debentures GBP - British Pound Sterling GDR - Global Depositary Receipt Gtd. - Guaranteed Pfd. - Preferred Sr. - Senior Sub. - Subordinated Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(d) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The aggregate market value of restricted securities at
06/30/02 was $9,818,811, which represented 4.90% of the Fund's net assets.
(e) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(f) Foreign denominated security. Par value is denominated in currency
indicated.
(g) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-172
JUNE 30, 2002
(UNAUDITED)
ASSETS:
Investments, at market value (cost
$233,705,319)* $204,256,777
-----------------------------------------------------------
Foreign currencies, at value (cost $81,250) 82,020
-----------------------------------------------------------
Receivables for:
Investments sold 8,182,144
-----------------------------------------------------------
Fund shares sold 65,058
-----------------------------------------------------------
Dividends and interest 719,834
-----------------------------------------------------------
Investment for deferred compensation plan 47,300
-----------------------------------------------------------
Collateral for securities loaned 46,579,211
-----------------------------------------------------------
Other assets 25,706
===========================================================
Total assets 259,958,050
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 11,518,333
-----------------------------------------------------------
Fund shares reacquired 1,215,625
-----------------------------------------------------------
Dividends 1,726
-----------------------------------------------------------
Deferred compensation plan 47,300
-----------------------------------------------------------
Collateral upon return of securities
loaned 46,579,211
-----------------------------------------------------------
Accrued distribution fees 197,883
-----------------------------------------------------------
Accrued transfer agent fees 80,018
-----------------------------------------------------------
Accrued operating expenses 73,612
===========================================================
Total liabilities 59,713,708
===========================================================
Net assets applicable to shares outstanding $200,244,342
___________________________________________________________
===========================================================
NET ASSETS:
Class A $132,661,372
___________________________________________________________
===========================================================
Class B $ 59,271,437
___________________________________________________________
===========================================================
Class C $ 8,311,533
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 10,191,789
___________________________________________________________
===========================================================
Class B 4,564,065
___________________________________________________________
===========================================================
Class C 640,247
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 13.02
-----------------------------------------------------------
Offering price per share:
(Net asset value of $13.02 divided
by 94.50%) $ 13.78
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 12.99
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 12.98
___________________________________________________________
===========================================================
|
* At June 30, 2002, securities with an aggregate market value of $46,702,195 were on loan to brokers.
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax
of $66,800) $ 4,069,764
-----------------------------------------------------------
Dividends from affiliated money market
funds 129,310
-----------------------------------------------------------
Interest 569,920
-----------------------------------------------------------
Security lending income 103,410
===========================================================
Total investment income 4,872,404
===========================================================
EXPENSES:
Advisory fees 711,198
-----------------------------------------------------------
Administrative services fees 24,795
-----------------------------------------------------------
Custodian fees 38,612
-----------------------------------------------------------
Distribution fees -- Class A 195,293
-----------------------------------------------------------
Distribution fees -- Class B 390,996
-----------------------------------------------------------
Distribution fees -- Class C 51,872
-----------------------------------------------------------
Transfer agent fees 347,627
-----------------------------------------------------------
Trustees' fees 5,159
-----------------------------------------------------------
Other 87,443
===========================================================
Total expenses 1,852,995
===========================================================
Less: Fees waived (1,856)
-----------------------------------------------------------
Expenses paid indirectly (3,878)
===========================================================
Net expenses 1,847,261
===========================================================
Net investment income 3,025,143
===========================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (5,188,744)
-----------------------------------------------------------
Foreign currencies 72,396
-----------------------------------------------------------
Option contracts written 136,302
===========================================================
(4,980,046)
===========================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (38,146,599)
-----------------------------------------------------------
Foreign currencies 11,556
===========================================================
(38,135,043)
===========================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (43,115,089)
===========================================================
Net increase (decrease) in net assets
resulting from operations $(40,089,946)
___________________________________________________________
===========================================================
|
See Notes to Financial Statements.
FS-173
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND THE YEAR ENDED DECEMBER 31, 2001
(UNAUDITED)
JUNE 30, DECEMBER 31,
2002 2001
------------ -------------
OPERATIONS:
Net investment income $ 3,025,143 $ 4,578,201
-------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and options contracts (4,980,046) (26,958,931)
-------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (38,135,043) (100,097,424)
===========================================================================================
Net increase (decrease) in net assets resulting from
operations (40,089,946) (122,478,154)
===========================================================================================
Distributions to shareholders from net investment income:
Class A (1,938,960) (3,297,866)
-------------------------------------------------------------------------------------------
Class B (626,332) (987,904)
-------------------------------------------------------------------------------------------
Class C (84,842) (115,036)
-------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A -- (1,890,557)
-------------------------------------------------------------------------------------------
Class B -- (1,101,351)
-------------------------------------------------------------------------------------------
Class C -- (130,115)
-------------------------------------------------------------------------------------------
Share transactions-net:
Class A (11,265,723) (18,046,172)
-------------------------------------------------------------------------------------------
Class B (21,868,762) (19,327,801)
-------------------------------------------------------------------------------------------
Class C (1,606,657) (646,339)
===========================================================================================
Net increase (decrease) in net assets (77,481,222) (168,021,295)
-------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 277,725,564 445,746,859
===========================================================================================
End of period $200,244,342 $ 277,725,564
___________________________________________________________________________________________
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $261,044,317 $ 295,785,459
-------------------------------------------------------------------------------------------
Undistributed net investment income 491,912 116,903
-------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and options contracts (31,855,759) (26,875,713)
-------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies (29,436,128) 8,698,915
===========================================================================================
$200,244,342 $ 277,725,564
___________________________________________________________________________________________
===========================================================================================
|
See Notes to Financial Statements.
FS-174
GLOBAL UTILITIES FUND
JUNE 30, 2002
(UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Global Utilities Fund (the "Fund") is a series portfolio of AIM Funds Group (the "Trust"). The Trust is a Delaware business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of twelve separate portfolios, each having an unlimited number of shares of beneficial interest. 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.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. Premiums and discounts are amortized and/or accreted for financial reporting purposes.
C. DISTRIBUTIONS -- Distributions from income are declared and paid quarterly and recorded on ex-dividend date. 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 from 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 $16,817,392 as of December 31, 2001 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2009.
FS-175
E. 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 the 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.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. COVERED CALL OPTIONS -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded 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 written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received.
H. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.60% on the first $200 million of the Fund's average daily net assets, plus 0.50% on the next $300 million of the Fund's average daily net assets, plus 0.40% on the next $500 million of the Fund's average daily net assets, plus 0.30% on the Fund's average daily net assets in excess of $1 billion. AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market fund of which the Fund has invested. For the six months ended June 30, 2002, AIM waived fees of $1,856.
The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2002, AIM was paid $24,795 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the six months ended June 30, 2002, AFS was paid $193,748 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 and Class C shares of the Fund. The Trust 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 0.25% 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. 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. For the six months ended June 30, 2002, the Class A, Class B and Class C shares paid AIM Distributors $195,293, $390,996 and $51,872, respectively, as compensation under the Plans.
AIM Distributors retained commissions of $16,390 from sales of the Class A shares of the Fund during the six months ended June 30, 2002. 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 June 30, 2002, AIM Distributors retained $501, $977 and $2,518 in contingent deferred sales charges imposed on redemptions of Class A, Class B and Class C shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the six months ended June 30, 2002, the Fund paid legal fees of $1,510 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended June 30, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $1,708 and reductions in custodian fees of $2,170 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $3,878.
FS-176
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
NOTE 5--BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $500,000,000 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 six months ended June 30,
2002, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's total assets. Such loans are secured by collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Cash collateral pursuant to these loans is invested in short-term money market instruments or affiliated money market funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. It is the Fund's policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day. Therefore, the value of the collateral may be temporarily less than the value of the securities on loan.
At June 30, 2002, securities with an aggregate value of $46,702,195 were on loan to brokers. The loans were secured by cash collateral of $46,579,211 received by the Fund and subsequently invested in affiliated money market funds as follows: $23,289,606 in STIC Liquid Assets Portfolio and $23,289,605 in STIC Prime Portfolio. For the six months ended June 30, 2002, the Fund received fees of $103,410 for securities lending.
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
---------- -----------
Distributions paid from:
Ordinary income $4,851,946 $29,323,123
-------------------------------------------------------------
Long-term capital gain 2,670,883 22,061,146
=============================================================
$7,522,829 $51,384,269
_____________________________________________________________
=============================================================
|
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Undistributed ordinary income $ 250,637
-----------------------------------------------------------
Capital loss carryforward (16,817,392)
-----------------------------------------------------------
Unrealized appreciation (depreciation) (1,493,140)
===========================================================
$(18,059,895)
___________________________________________________________
===========================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of capital losses incurred after October 31, and other deferrals.
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the six months ended June 30, 2002 was $71,683,239 and $94,287,743, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of June 30, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 23,629,066 ----------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (53,077,608) ----------------------------------------------------------- Net unrealized appreciation (depreciation) of investment securities $(29,448,542) ___________________________________________________________ =========================================================== |
Investments have the same cost for tax and financial statement purposes.
NOTE 9--CALL OPTION CONTRACTS
Transactions in call options written during the six months ended June 30, 2002 are summarized as follows:
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
Beginning of period -- $ --
----------------------------------------------------------
Written 3,320 208,435
----------------------------------------------------------
Exercised (1,605) (72,133)
----------------------------------------------------------
Expired (1,715) (136,302)
==========================================================
End of period -- $ --
__________________________________________________________
==========================================================
|
FS-177
GLOBAL UTILITIES FUND
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2002 and the year ended December 31, 2001 were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2002 DECEMBER 31, 2001
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold:
Class A 1,132,485 $ 16,954,535 1,794,576 $ 34,716,035
----------------------------------------------------------------------------------------------------------------------
Class B 233,639 3,512,283 859,987 17,105,311
----------------------------------------------------------------------------------------------------------------------
Class C 517,439 7,994,292 226,533 4,463,280
======================================================================================================================
Issued as reinvestment of dividends:
Class A 122,531 1,739,947 283,142 4,686,155
----------------------------------------------------------------------------------------------------------------------
Class B 39,190 555,184 111,990 1,793,582
----------------------------------------------------------------------------------------------------------------------
Class C 5,314 75,229 12,912 207,366
======================================================================================================================
Reacquired:
Class A (2,023,693) (29,960,205) (3,018,253) (57,448,362)
----------------------------------------------------------------------------------------------------------------------
Class B (1,774,246) (25,936,229) (2,091,008) (38,226,694)
----------------------------------------------------------------------------------------------------------------------
Class C (631,468) (9,676,178) (282,906) (5,316,985)
======================================================================================================================
(2,378,809) $(34,741,142) (2,103,027) $(38,020,312)
______________________________________________________________________________________________________________________
======================================================================================================================
|
NOTE 11--SIGNIFICANT EVENT
The Board of Trustees unanimously approved, on May 15, 2002, an Agreement and Plan of Reorganization ("Plan") pursuant to which AIM Global Infrastructure Fund ("Global Infrastructure Fund"), a series of AIM Investment Funds ("AIF"), would transfer substantially all of its assets to the Fund. As a result of the transaction, shareholders of Global Infrastructure Fund would receive shares of the Fund in exchange for their shares of Global Infrastructure Fund, and Global Infrastructure Fund would cease operations.
The Plan requires approval of Global Infrastructure Fund shareholders and will be submitted to the shareholders for their consideration at a meeting to be held in September 2002. If the Plan is approved by shareholders of Global Infrastructure Fund and certain conditions required by the Plan are satisfied, the transaction is expected to become effective shortly thereafter.
FS-178
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
---------------------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------------------------------------------------
JUNE 30, 2002 2001 2000 1999 1998 1997
------------- ----------- ----------------- ----------- ----------- --------
Net asset value, beginning of
period $ 15.64 $ 22.45 $ 26.08 $ 21.01 $ 19.26 $ 16.01
---------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.20(a) 0.29(a)(b) 0.33(a) 0.38(a) 0.48 0.47
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized
and unrealized) (2.63) (6.63) (1.00) 6.60 2.53 3.26
=================================================================================================================================
Total from investment
operations (2.43) (6.34) (0.67) 6.98 3.01 3.73
=================================================================================================================================
Less distributions:
Dividends from net investment
income (0.19) (0.29) (0.28) (0.35) (0.46) (0.47)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net
realized gains -- (0.18) (2.68) (1.56) (0.80) (0.01)
=================================================================================================================================
Total distributions (0.19) (0.47) (2.96) (1.91) (1.26) (0.48)
=================================================================================================================================
Net asset value, end of period $ 13.02 $ 15.64 $ 22.45 $ 26.08 $ 21.01 $ 19.26
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (15.66)% (28.33)% (2.54)% 34.15% 16.01% 23.70%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $132,661 $171,432 $267,200 $238,432 $196,665 $179,456
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets 1.24%(d) 1.12% 1.03% 1.10% 1.06% 1.13%
=================================================================================================================================
Ratio of net investment income
to average net assets 2.74%(d) 1.53%(b) 1.23% 1.69% 2.39% 2.79%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 31% 19% 52% 37% 38% 26%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premiums on debt securities. Had the Fund
not amortized premiums on debt securities, the net investment income per
share would have been $0.30 and the ratio of net investment income to
average net assets would have been 1.57%. In accordance with the AICPA
Audit and Accounting Guide for Investment Companies, per share and
ratios for periods prior to January 1, 2001 have not been restated to
reflect this change in presentation.
(c) Does not include sales charges and is not annualized for periods less
than one year.
(d) Ratios are annualized and based on average daily net assets of
$157,528,923.
FS-179
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
----------------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED JUNE -----------------------------------------------------------------------
30, 2002 2001 2000 1999 1998 1997
------------- ------------- ------------- ----------- ----------- -------
Net asset value, beginning of period $ 15.60 $ 22.38 $ 26.03 $ 20.98 $ 19.24 $ 16.01
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.15(a) 0.15(a)(b) 0.13(a) 0.21(a) 0.33 0.34
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) (2.63) (6.60) (1.01) 6.59 2.53 3.25
=================================================================================================================================
Total from investment operations (2.48) (6.45) (0.88) 6.80 2.86 3.59
=================================================================================================================================
Less distributions:
Dividends from net investment
income (0.13) (0.15) (0.09) (0.19) (0.32) (0.35)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized
gains -- (0.18) (2.68) (1.56) (0.80) (0.01)
=================================================================================================================================
Total distributions (0.13) (0.33) (2.77) (1.75) (1.12) (0.36)
=================================================================================================================================
Net asset value, end of period $ 12.99 $ 15.60 $ 22.38 $ 26.03 $ 20.98 $ 19.24
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (15.99)% (28.87)% (3.28)% 33.16% 15.14% 22.74%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $59,271 $94,615 $160,820 $142,632 $111,866 $94,227
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets 1.99%(d) 1.88% 1.80% 1.84% 1.81% 1.91%
=================================================================================================================================
Ratio of net investment income to
average net assets 1.99%(d) 0.78%(b) 0.46% 0.95% 1.64% 2.01%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 31% 19% 52% 37% 38% 26%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premiums on debt securities. Had the Fund
not amortized premiums on debt securities, the net investment income per
share would have been the same and the ratio of net investment income to
average net assets would have been 0.81%. In accordance with the AICPA
Audit and Accounting Guide for Investment Companies, per share and
ratios for periods prior to January 1, 2001 have not been restated to
reflect this change in presentation.
(c) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$78,847,348.
FS-180
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
---------------------------------------------------------------------------------------------------
AUGUST 4, 1997
SIX MONTHS YEAR ENDED DECEMBER 31, (DATE SALES
ENDED ------------------------------------------------------------- COMMENCED) TO
JUNE 30, 2002 2001 2000 1999 1998 DECEMBER 31, 1997
------------- ------------- ------------- ------------ ----------- -----------------
Net asset value, beginning
of period $ 15.59 $ 22.37 $ 26.02 $20.97 $19.24 $ 17.67
---------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.15(a) 0.15(a)(b) 0.13(a) 0.21(a) 0.33 0.13
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) (2.63) (6.60) (1.01) 6.59 2.52 1.58
=================================================================================================================================
Total from investment
operations (2.48) (6.45) (0.88) 6.80 2.85 1.71
=================================================================================================================================
Less distributions:
Dividends from net
investment income (0.13) (0.15) (0.09) (0.19) (0.32) (0.13)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net
realized gains -- (0.18) (2.68) (1.56) (0.80) (0.01)
=================================================================================================================================
Total distributions (0.13) (0.33) (2.77) (1.75) (1.12) (0.14)
=================================================================================================================================
Net asset value, end of
period $ 12.98 $ 15.59 $ 22.37 $26.02 $20.97 $ 19.24
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (16.00)% (28.88)% (3.28)% 33.18% 15.09% 9.74%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $ 8,312 $11,679 $17,727 $6,702 $2,994 $ 1,183
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to
average net assets 1.99%(d) 1.88% 1.80% 1.84% 1.81% 1.90%(e)
=================================================================================================================================
Ratio of net investment
income to average net
assets 1.99%(d) 0.78%(b) 0.46% 0.95% 1.64% 2.02%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 31% 19% 52% 37% 38% 26%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premiums on debt securities. Had the Fund
not amortized premiums on debt securities, the net investment income per
share would have been the same and the ratio of net investment income to
average net assets would have been 0.81%. In accordance with the AICPA
Audit and Accounting Guide for Investment Companies, per share and
ratios for periods prior to January 1, 2001 have not been restated to
reflect this change in presentation.
(c) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$10,460,441.
(e) Annualized.
FS-181
JUNE 30, 2002
(UNAUDITED)
MARKET
SHARES VALUE
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-92.67%
AUSTRALIA-4.08%
Billabong International Ltd. (Movies &
Entertainment) 20,500 $ 103,513
-----------------------------------------------------------------------
CSL Ltd. (Pharmaceuticals)(a) 4,400 79,794
-----------------------------------------------------------------------
Foodland Associated Ltd. (Food Retail) 11,000 117,162
-----------------------------------------------------------------------
Foodland Associated Ltd. (Food Retail)(b) 11,000 114,434
-----------------------------------------------------------------------
Foodland Associated Ltd.-Rts., expiring
07/18/02 (Food Retail)(b)(c) 1,100 186
-----------------------------------------------------------------------
James Hardie Industries N.V. (Construction
Materials)(b) 40,000 146,523
-----------------------------------------------------------------------
Ramsay Health Care Ltd. (Health Care
Facilities) 32,400 76,688
-----------------------------------------------------------------------
Smorgon Steel Group Ltd. (Steel)(a)(b) 265,000 171,742
-----------------------------------------------------------------------
Toll Holdings Ltd. (Trucking) 6,600 117,906
=======================================================================
927,948
=======================================================================
BELGIUM-0.87%
Omega Pharma S.A. (Health Care Supplies) 4,400 197,734
=======================================================================
CANADA-22.89%
A.L.I. Technologies Inc. (Health Care
Equipment)(b) 13,400 382,781
-----------------------------------------------------------------------
AKITA Drilling Ltd.-Class A (Oil & Gas
Drilling) 19,600 219,716
-----------------------------------------------------------------------
Alimentation Couche-Tard Inc.-Class B (Food
Retail)(b) 11,200 227,471
-----------------------------------------------------------------------
BMTC Group, Inc.-Class A (Specialty Stores) 10,000 92,318
-----------------------------------------------------------------------
BW Technologies Ltd. (Electronic Equipment &
Instruments)(b) 20,100 275,687
-----------------------------------------------------------------------
CCL Industries Inc.-Class B (Metal & Glass
Containers) 16,700 221,345
-----------------------------------------------------------------------
Cinram International Inc. (Computer Storage &
Peripherals) 44,700 305,074
-----------------------------------------------------------------------
CoolBrands International, Inc.
(Restaurants)(b) 44,200 208,394
-----------------------------------------------------------------------
Emco Ltd. (Building Products)(b) 23,100 193,300
-----------------------------------------------------------------------
Forzani Group Ltd. (The)-Class A (Specialty
Stores)(b) 25,500 393,472
-----------------------------------------------------------------------
Gennum Corp. (Electronics Equipment &
Instruments)(b) 24,000 230,267
-----------------------------------------------------------------------
Home Capital Group Inc.-Class B (Banks) 24,200 240,165
-----------------------------------------------------------------------
Husky Injection Molding Systems Ltd.
(Industrial Machinery)(b) 24,000 111,414
-----------------------------------------------------------------------
La Senza Corp. (Apparel Retail) 32,300 330,135
-----------------------------------------------------------------------
Mega Bloks Inc. (Leisure Products) (Acquired
05/02/02; Cost $59,464)(b)(d) 6,400 82,928
-----------------------------------------------------------------------
|
MARKET
SHARES VALUE
CANADA-(CONTINUED)
Reitmans (Canada) Ltd.-Class A (Apparel
Retail) 15,300 $ 403,561
-----------------------------------------------------------------------
Richelieu Hardware Ltd. (Distributors)(b) 29,500 317,079
-----------------------------------------------------------------------
Ritchie Bros. Auctioneers Inc. (Diversified
Commercial Services)(b) 7,000 218,470
-----------------------------------------------------------------------
SEAMARK Asset Management Ltd. (Diversified
Financial Services)(a) 15,200 207,979
-----------------------------------------------------------------------
Transat A.T. Inc. (Airlines)(b) 20,600 103,509
-----------------------------------------------------------------------
Vincor International Inc. (Brewers)(a)(b) 8,400 145,401
-----------------------------------------------------------------------
WestJet Airlines Ltd. (Airlines)(a)(b) 7,650 104,674
-----------------------------------------------------------------------
Wittke Inc. (Construction, Farm Machinery &
Heavy Trucks)(b) 25,900 185,305
=======================================================================
5,200,445
=======================================================================
CHINA-2.42%
Anhui Conch Cement Co. Ltd. (Construction
Materials) 530,000 171,572
-----------------------------------------------------------------------
People's Food Holdings Ltd. (Packaged Foods &
Meats) 245,000 174,658
-----------------------------------------------------------------------
Travelsky Technology Ltd.-Class H
(Diversified Commercial Services)(a) 40,000 27,436
-----------------------------------------------------------------------
United Food Holdings Ltd. (Packaged Foods &
Meats) 453,000 175,567
=======================================================================
549,233
=======================================================================
DENMARK-1.20%
Topdanmark A.S. (Multi-Line Insurance)(b) 8,700 272,887
=======================================================================
FINLAND-1.11%
Instrumentarium Corp. (Health Care Equipment) 3,900 98,743
-----------------------------------------------------------------------
Vacon Oyj (Electrical Components &
Equipment)(a) 14,500 153,746
=======================================================================
252,489
=======================================================================
FRANCE-8.23%
AES Laboratoire Groupe (Health Care
Equipment) 1,560 194,781
-----------------------------------------------------------------------
Altedia (Employment Services) 7,200 213,332
-----------------------------------------------------------------------
Buffalo Grill S.A. (Restaurants) 19,800 317,072
-----------------------------------------------------------------------
Ioltech (Health Care Equipment)(b) 1,800 231,704
-----------------------------------------------------------------------
MEDIDEP S.A. (Health Care Facilities)(b) 14,040 346,432
-----------------------------------------------------------------------
Silicon-On-Insulator Technologies (SOITEC)
(Electronic Equipment & Instruments)(b) 17,955 174,367
-----------------------------------------------------------------------
Societe Virbac S.A. (Pharmaceuticals) 800 117,883
-----------------------------------------------------------------------
SR Teleperformance (Advertising) 2,600 62,608
-----------------------------------------------------------------------
|
FS-182
MARKET
SHARES VALUE
FRANCE-(CONTINUED)
Wavecom S.A. (Telecommunications
Equipment)(b) 5,200 $ 211,013
=======================================================================
1,869,192
=======================================================================
GERMANY-2.44%
Puma A.G. Rudolf Dassler Sport (Footwear) 5,830 423,703
-----------------------------------------------------------------------
Suess MicroTec A.G. (Semiconductor
Equipment)(b) 6,500 130,756
=======================================================================
554,459
=======================================================================
HONG KONG-5.55%
Clear Media Ltd. (Advertising)(a)(b) 225,000 152,886
-----------------------------------------------------------------------
Convenience Retail Asia Ltd. (Food
Retail)(a)(b) 210,000 78,077
-----------------------------------------------------------------------
Euro-Asia Agricultural (Holdings) Co. Ltd.
(Agricultural Products) 568,000 171,129
-----------------------------------------------------------------------
Global Bio-chem Technology Group Co. Ltd.
(Biotechnology) 283,200 106,201
-----------------------------------------------------------------------
Techtronic Industries Co. Ltd. (Household
Appliances)(a) 186,000 158,578
-----------------------------------------------------------------------
Texwinca Holdings Ltd. (Textiles) 308,000 260,617
-----------------------------------------------------------------------
Tingyi (Cayman Islands) Holding Corp.
(Packaged Foods & Meats) 548,000 166,860
-----------------------------------------------------------------------
Wah Sang Gas Holdings Ltd. (Gas Utilities)(b) 1,040,000 166,668
=======================================================================
1,261,016
=======================================================================
INDIA-1.07%
Dr. Reddy's Laboratories Ltd.-ADR
(Pharmaceuticals) 5,600 108,640
-----------------------------------------------------------------------
HDFC Bank Ltd.-ADR (Banks) 7,100 91,590
-----------------------------------------------------------------------
Satyam Computer Services Ltd.-ADR (IT
Consulting & Services) 4,200 43,974
=======================================================================
244,204
=======================================================================
IRELAND-5.99%
Anglo Irish Bank Corp. PLC (Banks) 83,100 543,496
-----------------------------------------------------------------------
First Active PLC (Consumer Finance)(b) 21,000 100,928
-----------------------------------------------------------------------
Grafton Group PLC-Units (Trading Companies &
Distributors)(e) 63,200 273,058
-----------------------------------------------------------------------
ICON PLC-ADR (Health Care Distributors &
Services)(b) 2,500 71,250
-----------------------------------------------------------------------
Jurys Doyle Hotel Group PLC (Hotels, Resorts
& Cruise Lines) 27,000 272,908
-----------------------------------------------------------------------
Paddy Power PLC (Casinos & Gambling) 19,000 99,789
=======================================================================
1,361,429
=======================================================================
ISRAEL-1.57%
ECtel Ltd. (Telecommunications Equipment)(b) 15,800 183,280
-----------------------------------------------------------------------
Taro Pharmaceutical Industries Ltd.
(Pharmaceuticals)(b) 4,620 113,282
-----------------------------------------------------------------------
TTI Team Telecom International Ltd.
(Application Software)(b) 3,800 60,838
=======================================================================
357,400
=======================================================================
|
MARKET
SHARES VALUE
ITALY-5.10%
Davide Campari-Milano S.p.A. (Brewers)(b) 4,100 $ 136,107
-----------------------------------------------------------------------
Merloni Elettrodomestici S.p.A. (Household
Appliances) 47,000 515,581
-----------------------------------------------------------------------
Permasteelisa S.p.A. (Construction &
Engineering) 14,500 279,473
-----------------------------------------------------------------------
Saeco International Group S.p.A. (Consumer
Electronics)(b) 73,200 227,043
=======================================================================
1,158,204
=======================================================================
JAPAN-0.62%
Bellsystem24, Inc. (Diversified Commercial
Services) 400 140,413
=======================================================================
NETHERLANDS-2.50%
ASM International N.V. (Semiconductor
Equipment)(b) 11,600 205,876
-----------------------------------------------------------------------
Heijmans N.V.-Dutch Ctfs. (Construction &
Engineering) 6,200 144,074
-----------------------------------------------------------------------
Sligro Beheer N.V. (Food Distributors) 2,600 110,144
-----------------------------------------------------------------------
Volker Wessels Stevin N.V.-Dutch Ctfs.
(Construction & Engineering)(b) 4,000 109,044
=======================================================================
569,138
=======================================================================
NORWAY-3.25%
Aktiv Kapital A.S.A. (Diversified Financial
Services) 30,500 199,187
-----------------------------------------------------------------------
Ekornes A.S.A. (Home Furnishings) 22,900 288,425
-----------------------------------------------------------------------
TGS Nopec Geophysical Co. A.S.A. (Oil & Gas
Equipment & Services)(b) 16,300 252,006
=======================================================================
739,618
=======================================================================
SINGAPORE-2.03%
Datacraft Asia Ltd. (Networking Equipment)(b) 48,000 57,600
-----------------------------------------------------------------------
First Engineering Ltd. (Computer Hardware) 330,000 123,228
-----------------------------------------------------------------------
Informatics Holdings Ltd. (Diversified
Commercial Services) 158,000 138,561
-----------------------------------------------------------------------
SembCorp Logistics Ltd. (Marine Ports &
Services) 113,000 141,294
=======================================================================
460,683
=======================================================================
SOUTH KOREA-3.67%
Cheil Communications Inc. (Advertising) 1,410 147,681
-----------------------------------------------------------------------
Cheil Jedang Corp. (Packaged Foods & Meats) 3,300 134,825
-----------------------------------------------------------------------
CJ39 Shopping Corp. (Internet Retail)(b) 1,000 68,495
-----------------------------------------------------------------------
Hyundai Department Store Co., Ltd.
(Department Stores) 5,330 162,603
-----------------------------------------------------------------------
Kook Soon Dang Brewery Co., Ltd. (Brewers) 5,700 205,162
-----------------------------------------------------------------------
LG Home Shopping Inc. (Catalog Retail) 1,040 114,115
=======================================================================
832,881
=======================================================================
SPAIN-0.62%
Enagas (Gas Utilities)(a)(b) 22,300 140,986
=======================================================================
|
FS-183
MARKET
SHARES VALUE
SWEDEN-4.75%
Elekta A.B.-Class B (Health Care
Equipment)(b) 27,000 $ 303,470
-----------------------------------------------------------------------
Intrum Justitia A.B. (Diversified Financial
Services)(a)(b) 49,000 283,392
-----------------------------------------------------------------------
Perbio Science A.B. (Pharmaceuticals)(b) 13,800 256,002
-----------------------------------------------------------------------
Swedish Match A.B. (Tobacco) 28,400 235,530
=======================================================================
1,078,394
=======================================================================
SWITZERLAND-1.50%
Micronas Semiconductor Holding A.G.
(Semiconductors)(b) 7,900 249,990
-----------------------------------------------------------------------
Nobel Biocare Holding A.G. (Heath Care
Equipment)(b) 1,360 90,528
=======================================================================
340,518
=======================================================================
TAIWAN-1.15%
Nien Made Enterprise Co., Ltd. (Consumer
Electronics)(b) 79,380 131,864
-----------------------------------------------------------------------
Realtek Semiconductor Corp.
(Semiconductors)(b) 36,000 128,764
=======================================================================
260,628
=======================================================================
THAILAND-0.26%
Delta Electronics PCL (Electronic Equipment &
Instruments)(a) 91,000 59,169
=======================================================================
UNITED KINGDOM-9.80%
Biotrace International PLC (Health Care
Equipment) 79,300 125,314
-----------------------------------------------------------------------
Cattles PLC (Consumer Finance) 64,200 324,442
-----------------------------------------------------------------------
Chemring Group PLC (Aerospace & Defense) 37,700 176,088
-----------------------------------------------------------------------
GAME GROUP (THE) PLC (Computer & Electronics
Retail)(a) 98,100 184,032
-----------------------------------------------------------------------
|
MARKET
SHARES VALUE
UNITED KINGDOM-(CONTINUED)
Games Workshop Group PLC (Leisure Products) 18,400 $ 131,872
-----------------------------------------------------------------------
Geest PLC (Agricultural Products) 14,400 122,831
-----------------------------------------------------------------------
HIT Entertainment PLC (Movies &
Entertainment) 17,700 72,847
-----------------------------------------------------------------------
iSOFT Group PLC (Application Software)(a) 41,900 157,206
-----------------------------------------------------------------------
Majestic Wine PLC (Brewers) 12,300 86,534
-----------------------------------------------------------------------
Man Group PLC (Diversified Financial
Services) 6,300 99,373
-----------------------------------------------------------------------
PHS Group PLC (Diversified Commercial
Services) 68,780 103,223
-----------------------------------------------------------------------
Taylor & Francis Group PLC (Publishing) 35,400 306,295
-----------------------------------------------------------------------
Torex PLC (IT Consulting & Services) 11,000 102,252
-----------------------------------------------------------------------
William Hill PLC (Diversified Financial
Services)(a)(b) 25,300 102,673
-----------------------------------------------------------------------
Wood Group (John) PLC (Oil & Gas Equipment &
Services)(a)(b) 41,200 132,629
=======================================================================
2,227,611
=======================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $17,973,693) 21,056,679
=======================================================================
MONEY MARKET FUNDS-9.26%
STIC Liquid Assets Portfolio(f) 1,052,187 1,052,187
-----------------------------------------------------------------------
STIC Prime Portfolio(f) 1,052,187 1,052,187
=======================================================================
Total Money Market Funds (Cost
$2,104,374) 2,104,374
=======================================================================
TOTAL INVESTMENTS-101.93% (Cost $20,078,067) 23,161,053
=======================================================================
OTHER ASSETS LESS LIABILITIES-(1.93%) (439,389)
=======================================================================
NET ASSETS-100.00% $22,721,664
_______________________________________________________________________
=======================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Ctfs. - Certificates Rts. - Rights |
Notes to Schedule of Investments:
(a) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended.
(b) Non-income producing security.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(d) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The market value of this security at 06/30/02 represented
0.36% of the Fund's net assets.
(e) Each unit represents one ordinary share and one ordinary C share.
(f) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-184
JUNE 30, 2002
(UNAUDITED)
ASSETS:
Investments, at market value (cost
$20,078,067) $23,161,053
-----------------------------------------------------------
Foreign currencies, at value (cost $121,016) 124,557
-----------------------------------------------------------
Receivables for:
Investments sold 39,722
-----------------------------------------------------------
Fund shares sold 93,477
-----------------------------------------------------------
Dividends 29,548
-----------------------------------------------------------
Investment for deferred compensation plan 10,296
-----------------------------------------------------------
Other assets 20,728
===========================================================
Total assets 23,479,381
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 660,271
-----------------------------------------------------------
Fund shares reacquired 17,649
-----------------------------------------------------------
Deferred compensation plan 10,296
-----------------------------------------------------------
Accrued distribution fees 19,447
-----------------------------------------------------------
Accrued transfer agent fees 6,262
-----------------------------------------------------------
Accrued operating expenses 43,792
===========================================================
Total liabilities 757,717
===========================================================
Net assets applicable to shares outstanding $22,721,664
___________________________________________________________
===========================================================
NET ASSETS:
Class A $14,259,825
___________________________________________________________
===========================================================
Class B $ 4,817,503
___________________________________________________________
===========================================================
Class C $ 3,644,336
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 1,775,685
___________________________________________________________
===========================================================
Class B 604,007
___________________________________________________________
===========================================================
Class C 457,223
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 8.03
-----------------------------------------------------------
Offering price per share:
(Net asset value of $8.03 divided by
94.50%) $ 8.50
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per share $ 7.98
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per share $ 7.97
___________________________________________________________
===========================================================
|
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$7,682) $ 89,179
-----------------------------------------------------------
Dividends from affiliated money market funds 7,922
-----------------------------------------------------------
Interest 57
===========================================================
Total investment income 97,158
===========================================================
EXPENSES:
Advisory fees 66,871
-----------------------------------------------------------
Administrative services fees 24,795
-----------------------------------------------------------
Custodian fees 27,301
-----------------------------------------------------------
Distribution fees -- Class A 14,849
-----------------------------------------------------------
Distribution fees -- Class B 13,183
-----------------------------------------------------------
Distribution fees -- Class C 14,780
-----------------------------------------------------------
Transfer agent fees 22,649
-----------------------------------------------------------
Trustees' fees 4,537
-----------------------------------------------------------
Registration and filing fees 15,526
-----------------------------------------------------------
Professional fees 13,735
-----------------------------------------------------------
Other 7,341
===========================================================
Total expenses 225,567
===========================================================
Less: Fees waived and expenses reimbursed (68,118)
-----------------------------------------------------------
Expenses paid indirectly (124)
===========================================================
Net expenses 157,325
===========================================================
Net investment income (loss) (60,167)
===========================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities (8,378)
-----------------------------------------------------------
Foreign currencies (3,435)
===========================================================
(11,813)
===========================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 1,716,266
-----------------------------------------------------------
Foreign currencies (184)
===========================================================
1,716,082
===========================================================
Net gain from investment securities and foreign
currencies 1,704,269
===========================================================
Net increase in net assets resulting from
operations $1,644,102
___________________________________________________________
===========================================================
|
See Notes to Financial Statements.
FS-185
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND THE YEAR ENDED DECEMBER 31, 2001
(UNAUDITED)
JUNE 30, DECEMBER 31,
2002 2001
----------- ------------
OPERATIONS:
Net investment income (loss) $ (60,167) $ (144,940)
-----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (11,813) (3,426,468)
-----------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 1,716,082 2,127,186
=========================================================================================
Net increase (decrease) in net assets resulting from
operations 1,644,102 (1,444,222)
=========================================================================================
Distributions to shareholders from net investment income:
Class A -- (23,732)
-----------------------------------------------------------------------------------------
Share transactions-net:
Class A 8,068,536 479,977
-----------------------------------------------------------------------------------------
Class B 2,500,273 279,960
-----------------------------------------------------------------------------------------
Class C 703,019 247,353
=========================================================================================
Net increase (decrease) in net assets 12,915,930 (460,664)
=========================================================================================
NET ASSETS:
Beginning of period 9,805,734 10,266,398
=========================================================================================
End of period $22,721,664 $ 9,805,734
_________________________________________________________________________________________
=========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $23,669,295 $12,397,467
-----------------------------------------------------------------------------------------
Undistributed net investment income (loss) (69,243) (9,076)
-----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (3,962,351) (3,950,538)
-----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 3,083,963 1,367,881
=========================================================================================
$22,721,664 $ 9,805,734
_________________________________________________________________________________________
=========================================================================================
|
JUNE 30, 2002
(UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM International Emerging Growth Fund (the "Fund") is a series portfolio of AIM Funds Group (the "Trust"). The Trust is a Delaware business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of twelve separate portfolios, each having an unlimited number of shares of beneficial interest. 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 long-term growth of capital.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 traded in the over-the-counter market (but not
FS-186
securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date.
C. DISTRIBUTIONS -- Distributions from income and 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 from 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's capital loss carryforward of $3,760,460 as of December 31, 2001 expires as follows:
CAPITAL LOSS CARRYFORWARD EXPIRATION ------------ ---------- $ 161,713 December 31, 2008 ------------------------------- 3,598,747 December 31, 2009 =============================== $3,760,460 _______________________________ =============================== |
E. 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 the 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.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the Fund's average daily net assets. AIM has contractually agreed to waive fees and/or reimburse expenses (excluding interest, taxes, dividends on short sales, extraordinary items and increases in expenses due to expense offset arrangements,
FS-187
if any) for Class A, Class B and Class C shares to the extent necessary to limit the Total Annual Fund Operating Expenses of Class A shares to 2.00% (e.g., if AIM waives 0.97% of Class A expenses, AIM will also waive 0.97% of Class B and Class C expenses). Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market fund of which the Fund has invested. For the six months ended June 30, 2002, AIM waived fees of $66,871 and reimbursed expenses of $1,247.
The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2002, AIM was paid $24,795 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the six months ended June 30, 2002, AFS retained $13,555 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 and Class C shares of the Fund. The Trust 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. 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. For the six months ended June 30, 2002, the Class A, Class B and Class C shares paid AIM Distributors $14,849, $13,183 and $14,780, respectively, as compensation under the Plans.
AIM Distributors retained commissions of $2,218 from sales of the Class A shares of the Fund during the six months ended June 30, 2002. 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 June 30, 2002, AIM Distributors retained $124, $0 and $73 in contingent deferred sales charges imposed on redemptions of Class A, Class B and Class C shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the six months ended June 30, 2002, the Fund paid legal fees of $1,298 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended June 30, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $95 and reductions in custodian fees of $29 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $124.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
NOTE 5--BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $500,000,000 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 six months ended June 30,
2002, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
------- -----
Distributions paid from ordinary income $23,732 $ --
__________________________________________________________
==========================================================
|
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Capital loss carryforward $(3,760,460)
-----------------------------------------------------------
Unrealized appreciation 1,168,727
===========================================================
$(2,591,733)
___________________________________________________________
===========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of capital losses incurred after October 31, and other deferrals.
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 June 30, 2002 was $15,979,749 and $5,835,173, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of June 30, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $3,656,756 ----------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (580,264) ----------------------------------------------------------- Net unrealized appreciation of investment securities $3,076,492 ___________________________________________________________ =========================================================== Cost of investments for tax purposes is $20,084,561 |
FS-188
NOTE 8--SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2002 and the year ended December 31, 2001 were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2002 DECEMBER 31, 2001
------------------------ -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- -------- -----------
Sold:
Class A 1,999,687 $15,413,724 993,758 $ 7,031,221
-----------------------------------------------------------------------------------------------------------------
Class B 363,940 2,842,603 109,838 803,969
-----------------------------------------------------------------------------------------------------------------
Class C 217,988 1,650,984 515,389 3,642,409
=================================================================================================================
Issued as reinvestment of dividends: .
Class A -- -- 3,265 22,694
=================================================================================================================
Reacquired:
Class A (956,802) (7,345,188) (970,367) (6,573,938)
-----------------------------------------------------------------------------------------------------------------
Class B (45,065) (342,330) (75,401) (524,009)
-----------------------------------------------------------------------------------------------------------------
Class C (126,927) (947,965) (482,373) (3,395,056)
=================================================================================================================
1,452,821 $11,271,828 94,109 $ 1,007,290
_________________________________________________________________________________________________________________
=================================================================================================================
|
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
----------------------------------------------
AUGUST 31, 2000
SIX MONTHS (DATE OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------- ------------ ----------------
Net asset value, beginning of period $ 7.10 $ 7.97 $ 10.00
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a) (0.08)(a) (0.03)(a)
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.95 (0.76) (2.00)
============================================================================================================
Total from investment operations 0.93 (0.84) (2.03)
============================================================================================================
Less dividends from net investment income -- (0.03) --
============================================================================================================
Net asset value, end of period $ 8.03 $ 7.10 $ 7.97
____________________________________________________________________________________________________________
============================================================================================================
Total return(b) 13.10% (10.48)% (20.30)%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $14,260 $ 5,202 $ 5,625
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers and expense reimbursements 2.00%(c) 2.02% 2.11%(d)
------------------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 2.97%(c) 4.55% 6.83%(d)
============================================================================================================
Ratio of net investment income (loss) to average net assets (0.62)%(c) (1.12)% (1.09)%(d)
============================================================================================================
Ratio of interest expense to average net assets -- 0.02% --
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 43% 145% 30%
____________________________________________________________________________________________________________
============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less
than one year.
(c) Ratios are annualized and based on average daily net assets of
$8,555,748.
(d) Annualized.
FS-189
NOTE 9--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
----------------------------------------------
AUGUST 31, 2000
SIX MONTHS (DATE OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------- ------------ ----------------
Net asset value, beginning of period $ 7.07 $ 7.95 $ 10.00
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.13)(a) (0.05)(a)
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.96 (0.75) (2.00)
============================================================================================================
Total from investment operations 0.91 (0.88) (2.05)
============================================================================================================
Net asset value, end of period $ 7.98 $ 7.07 $ 7.95
____________________________________________________________________________________________________________
============================================================================================================
Total return(b) 12.87% (11.07)% (20.50)%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $4,818 $ 2,016 $ 1,992
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers and expense reimbursements 2.59%(c) 2.72% 2.81%(d)
------------------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 3.56%(c) 5.25% 7.53%(d)
============================================================================================================
Ratio of net investment income (loss) to average net assets (1.21)%(c) (1.83)% (1.79)%(d)
============================================================================================================
Ratio of interest expense to average net assets -- 0.02% --
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 43% 145% 30%
____________________________________________________________________________________________________________
============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$2,658,517.
(d) Annualized.
CLASS C
----------------------------------------------
AUGUST 31, 2000
SIX MONTHS (DATE OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------- ------------ ----------------
Net asset value, beginning of period $ 7.07 $ 7.95 $ 10.00
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.13)(a) (0.05)(a)
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.95 (0.75) (2.00)
============================================================================================================
Total from investment operations 0.90 (0.88) (2.05)
============================================================================================================
Net asset value, end of period $ 7.97 $ 7.07 $ 7.95
____________________________________________________________________________________________________________
============================================================================================================
Total return(b) 12.73% (11.07)% (20.50)%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $3,644 $ 2,588 $ 2,649
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers and expense reimbursements 2.59%(c) 2.72% 2.81%(d)
------------------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 3.56%(c) 5.25% 7.53%(d)
============================================================================================================
Ratio of net investment income (loss) to average net assets (1.21)%(c) (1.83)% (1.79)%(d)
============================================================================================================
Ratio of interest expense to average net assets -- 0.02% --
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 43% 145% 30%
____________________________________________________________________________________________________________
============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$2,980,436.
(d) Annualized.
FS-190
JUNE 30, 2002
(UNAUDITED)
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-95.42%
ADVERTISING-2.48%
Interpublic Group of Cos., Inc. (The) 72,620 $ 1,798,071
======================================================================
APPAREL RETAIL-6.61%
Abercrombie & Fitch Co.-Class A(a) 44,360 1,069,963
----------------------------------------------------------------------
AnnTaylor Stores Corp.(a) 29,460 747,989
----------------------------------------------------------------------
Gap, Inc. (The) 100,850 1,432,070
----------------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 60,500 1,542,750
======================================================================
4,792,772
======================================================================
AUTO PARTS & EQUIPMENT-1.18%
Visteon Corp. 60,500 859,100
======================================================================
BANKS-7.27%
AmSouth Bancorp. 67,200 1,503,936
----------------------------------------------------------------------
Cullen/Frost Bankers, Inc. 60,500 2,174,975
----------------------------------------------------------------------
Zions Bancorp. 30,620 1,595,302
======================================================================
5,274,213
======================================================================
BUILDING PRODUCTS-2.71%
American Standard Cos. Inc.(a) 26,150 1,963,865
======================================================================
CONSUMER FINANCE-2.16%
AmeriCredit Corp.(a) 55,900 1,567,995
======================================================================
DATA PROCESSING SERVICES-4.20%
Ceridian Corp.(a) 102,080 1,937,478
----------------------------------------------------------------------
DST Systems, Inc.(a) 24,270 1,109,382
======================================================================
3,046,860
======================================================================
DIVERSIFIED FINANCIAL SERVICES-3.92%
Stilwell Financial, Inc. 78,090 1,421,238
----------------------------------------------------------------------
Waddell & Reed Financial, Inc.-Class A 62,040 1,421,957
======================================================================
2,843,195
======================================================================
DIVERSIFIED METALS & MINING-1.35%
Arch Coal, Inc. 43,130 979,482
======================================================================
ELECTRIC UTILITIES-3.31%
PG&E Corp.(a) 67,200 1,202,208
----------------------------------------------------------------------
PPL Corp. 36,240 1,198,819
======================================================================
2,401,027
======================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-1.67%
Rockwell Automation, Inc. 60,500 1,208,790
======================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-4.77%
Amphenol Corp.-Class A(a) 24,270 873,720
----------------------------------------------------------------------
Cognex Corp.(a) 45,540 913,077
----------------------------------------------------------------------
|
MARKET
SHARES VALUE
ELECTRONIC EQUIPMENT & INSTRUMENTS-(CONTINUED)
Waters Corp.(a) 62,600 $ 1,671,420
======================================================================
3,458,217
======================================================================
EMPLOYMENT SERVICES-1.30%
Robert Half International Inc.(a) 40,430 942,019
======================================================================
FOOD RETAIL-1.84%
Kroger Co. (The)(a) 67,200 1,337,280
======================================================================
FOREST PRODUCTS-1.88%
Louisiana-Pacific Corp.(a) 128,580 1,361,662
======================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-1.97%
IMS Health Inc. 79,540 1,427,743
======================================================================
HEALTH CARE SUPPLIES-1.76%
Bausch & Lomb, Inc. 37,790 1,279,192
======================================================================
HOTELS, RESORTS & CRUISE LINES-1.83%
Starwood Hotels & Resorts Worldwide, Inc. 40,430 1,329,743
======================================================================
HOUSEHOLD APPLIANCES-2.51%
Black & Decker Corp. (The) 37,800 1,821,960
======================================================================
INDUSTRIAL CONGLOMERATES-2.23%
Textron, Inc. 34,540 1,619,926
======================================================================
INDUSTRIAL MACHINERY-2.69%
Kennametal Inc. 27,780 1,016,748
----------------------------------------------------------------------
SPX Corp.(a) 7,920 930,600
======================================================================
1,947,348
======================================================================
IT CONSULTING & SERVICES-1.85%
Acxiom Corp.(a) 76,650 1,340,609
======================================================================
LEISURE PRODUCTS-2.80%
Brunswick Corp. 72,520 2,030,560
======================================================================
LIFE & HEALTH INSURANCE-3.74%
Nationwide Financial Services, Inc.-Class A 36,240 1,431,480
----------------------------------------------------------------------
UnumProvident Corp. 50,410 1,282,935
======================================================================
2,714,415
======================================================================
MANAGED HEALTH CARE-3.81%
Aetna Inc. 37,790 1,812,786
----------------------------------------------------------------------
Anthem, Inc.(a) 14,080 950,118
======================================================================
2,762,904
======================================================================
MULTI-LINE INSURANCE-1.44%
American Financial Group, Inc. 43,630 1,042,757
======================================================================
MULTI-UTILITIES & UNREGULATED POWER-0.85%
Reliant Resources, Inc.(a) 70,800 619,500
======================================================================
|
FS-191
MID CAP BASIC VALUE FUND
MARKET
SHARES VALUE
OIL & GAS DRILLING-4.09%
Nabors Industries, Ltd. (Bermuda)(a) 35,890 $ 1,261,534
----------------------------------------------------------------------
Pride International, Inc.(a) 108,910 1,705,531
======================================================================
2,967,065
======================================================================
OIL & GAS EQUIPMENT & SERVICES-4.32%
Cooper Cameron Corp.(a) 30,620 1,482,620
----------------------------------------------------------------------
Smith International, Inc.(a) 24,180 1,648,834
======================================================================
3,131,454
======================================================================
OIL & GAS REFINING, MARKETING &
TRANSPORTATION-1.18%
Premcor Inc.(a) 11,050 284,206
----------------------------------------------------------------------
Valero Energy Corp. 15,320 573,274
======================================================================
857,480
======================================================================
PROPERTY & CASUALTY INSURANCE-3.92%
ACE Ltd. (Bermuda) 46,920 1,482,672
----------------------------------------------------------------------
Radian Group Inc. 27,780 1,357,053
======================================================================
2,839,725
======================================================================
RESTAURANTS-1.96%
Outback Steakhouse, Inc.(a) 40,430 1,419,093
======================================================================
SEMICONDUCTORS-2.84%
Integrated Device Technology, Inc.(a) 46,350 $ 840,789
----------------------------------------------------------------------
|
MARKET
SHARES VALUE
SEMICONDUCTORS-(CONTINUED)
Lattice Semiconductor Corp.(a) 54,930 480,088
----------------------------------------------------------------------
LSI Logic Corp.(a) 84,100 735,875
======================================================================
2,056,752
======================================================================
SPECIALTY CHEMICALS-1.60%
Great Lakes Chemical Corp. 43,730 1,158,408
======================================================================
SYSTEMS SOFTWARE-1.38%
Computer Associates International, Inc. 62,950 1,000,276
======================================================================
Total Common Stocks & Other Equity
Interests (Cost $75,095,051) 69,201,458
======================================================================
MONEY MARKET FUNDS-3.95%
STIC Liquid Assets Portfolio(b) 1,433,216 1,433,216
----------------------------------------------------------------------
STIC Prime Portfolio(b) 1,433,216 1,433,216
======================================================================
Total Money Market Funds (Cost
$2,866,432) 2,866,432
======================================================================
TOTAL INVESTMENTS-99.37% (Cost $77,961,483) 72,067,890
======================================================================
OTHER ASSETS LESS LIABILITIES-0.63% 459,228
======================================================================
NET ASSETS-100.00% $72,527,118
______________________________________________________________________
======================================================================
|
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-192
JUNE 30, 2002
(UNAUDITED)
ASSETS:
Investments, at market value (cost
$77,961,483) $72,067,890
-----------------------------------------------------------
Receivables for:
Fund shares sold 792,496
-----------------------------------------------------------
Dividends 66,640
-----------------------------------------------------------
Investment for deferred compensation plan 1,220
-----------------------------------------------------------
Other assets 54,376
===========================================================
Total assets 72,982,622
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Fund shares reacquired 359,135
-----------------------------------------------------------
Deferred compensation plan 1,220
-----------------------------------------------------------
Accrued distribution fees 66,851
-----------------------------------------------------------
Accrued transfer agent fees 7,880
-----------------------------------------------------------
Accrued operating expenses 20,418
===========================================================
Total liabilities 455,504
===========================================================
Net assets applicable to shares outstanding $72,527,118
___________________________________________________________
===========================================================
NET ASSETS:
Class A $44,532,369
___________________________________________________________
===========================================================
Class B $20,792,723
___________________________________________________________
===========================================================
Class C $ 7,202,026
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 4,625,779
___________________________________________________________
===========================================================
Class B 2,165,444
___________________________________________________________
===========================================================
Class C 750,593
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 9.63
-----------------------------------------------------------
Offering price per share:
(Net asset value of $9.63 divided by
94.50%) $ 10.19
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 9.60
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 9.60
___________________________________________________________
===========================================================
|
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(UNAUDITED)
INVESTMENT INCOME:
Dividends $ 146,365
-----------------------------------------------------------
Dividends from affiliated money market funds 27,215
-----------------------------------------------------------
Interest 2,505
===========================================================
Total investment income 176,085
===========================================================
EXPENSES:
Advisory fees 142,082
-----------------------------------------------------------
Administrative services fees 24,795
-----------------------------------------------------------
Custodian fees 21,858
-----------------------------------------------------------
Distribution fees -- Class A 39,120
-----------------------------------------------------------
Distribution fees -- Class B 46,845
-----------------------------------------------------------
Distribution fees -- Class C 18,985
-----------------------------------------------------------
Professional fees 20,919
-----------------------------------------------------------
Printing fees 18,779
-----------------------------------------------------------
Transfer agent fees 34,156
-----------------------------------------------------------
Trustees' fees 4,575
-----------------------------------------------------------
Other 7,925
===========================================================
Total expenses 380,039
===========================================================
Less: Fees waived (21,294)
-----------------------------------------------------------
Expenses paid indirectly (273)
===========================================================
Net expenses 358,472
===========================================================
Net investment income (loss) (182,387)
===========================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (700,937)
===========================================================
Change in net unrealized appreciation
(depreciation) of investment securities (5,892,579)
===========================================================
Net gain (loss) from investment securities (6,593,516)
===========================================================
Net increase (decrease) in net assets
resulting from operations $(6,775,903)
___________________________________________________________
===========================================================
|
See Notes to Financial Statements.
FS-193
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND THE PERIOD ENDED DECEMBER 31, 2001
(DATE OPERATIONS COMMENCED)
(UNAUDITED)
DECEMBER 31,
2001
JUNE 30, (DATE OPERATIONS
2002 COMMENCED)
------------- ----------------
OPERATIONS:
Net investment income (loss) $ (182,387) $ (19)
-----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (700,937) --
-----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (5,892,579) (1,014)
===============================================================================================
Net increase (decrease) in net assets resulting from
operations (6,775,903) (1,033)
===============================================================================================
Share transactions-net:
Class A 48,222,000 400,000
-----------------------------------------------------------------------------------------------
Class B 22,463,422 300,000
-----------------------------------------------------------------------------------------------
Class C 7,618,632 300,000
===============================================================================================
Net increase in net assets 71,528,151 998,967
===============================================================================================
NET ASSETS:
Beginning of period 998,967 --
===============================================================================================
End of period $72,527,118 $998,967
_______________________________________________________________________________________________
===============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $79,304,035 $999,981
-----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (182,387) --
-----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (700,937) --
-----------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (5,893,593) (1,014)
===============================================================================================
$72,527,118 $998,967
_______________________________________________________________________________________________
===============================================================================================
|
See Notes to Financial Statements.
FS-194
JUNE 30, 2002
(UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Mid Cap Basic Value Fund (the "Fund") is a series portfolio of AIM Funds Group (the "Trust"). The Trust is a Delaware business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of twelve separate portfolios, each having an unlimited number of shares of beneficial interest. 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 long-term growth of capital. The Fund commenced operations on December 31, 2001.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. Premiums and discounts are amortized and/or accreted for financial reporting purposes.
C. DISTRIBUTIONS -- Distributions from income and 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 from 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.
FS-195
E. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.80% of the first $1 billion of the Fund's average daily net assets, plus 0.75% of the Fund's average daily net assets on the next $4 billion, plus 0.70% of the Fund's average daily nest assets in excess of $5 billion. Due to the Fund's small size, AIM has voluntarily agreed to waive a portion of its advisory fees. This waiver may be terminated at any time and AIM retains the ability to be reimbursed for such fees prior to the end of the fiscal year. AIM has also voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market fund of which the Fund has invested. For the six months ended June 30, 2002, AIM waived fees of $21,294.
The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2002, AIM was paid $24,795 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the six months ended June 30, 2002, AFS retained $19,374 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 and Class C shares of the Fund. The Trust 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. 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. For the six months ended June 30, 2002, the Class A, Class B and Class C shares paid AIM Distributors $39,120, $46,845 and $18,985, respectively, as compensation under the Plans.
AIM Distributors retained commissions of $30,695 from sales of the Class A shares of the Fund during the six months ended June 30, 2002. 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 June 30, 2002, AIM Distributors retained $0, $0, and $325 in contingent deferred sales charges imposed on redemptions of Class A, Class B and Class C shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the six months ended June 30, 2002, the Fund paid legal fees of $1,298 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended June 30, 2002, the Fund received reductions in transfer agent fees from AFS (an affiliate of AIM) of $222 and reductions in custodian fees of $51 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $273.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
NOTE 5--BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $500,000,000 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 six months ended June 30,
2002, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6--TAX COMPONENTS OF CAPITAL
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Unrealized appreciation (depreciation) $(1,014) __________________________________________________________ ========================================================== |
FS-196
MID CAP BASIC VALUE FUND
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during six months ended June 30, 2002 was $78,072,576 and $3,220,553, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of June 30, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 849,927 --------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (6,743,520) =========================================================================== Net unrealized appreciation (depreciation) of investment securities $(5,893,593) ___________________________________________________________________________ =========================================================================== Investments have the same costs for tax and financial statement purposes. |
NOTE 8--SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2002 and December 31, 2001 (date operations commenced) were as follows:
DECEMBER 31, 2001
SIX MONTHS ENDED (DATE OPERATIONS
JUNE 30, 2002 COMMENCED)
------------------------ ---------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ------- ----------
Sold:
Class A 4,864,974 $51,125,912 40,000 $ 400,000
---------------------------------------------------------------------------------------------------------------
Class B 2,330,911 24,431,520 30,000 300,000
---------------------------------------------------------------------------------------------------------------
Class C 872,448 9,162,818 30,000 300,000
===============================================================================================================
Reacquired:
Class A (279,195) (2,903,912) -- --
---------------------------------------------------------------------------------------------------------------
Class B (195,467) (1,968,098) -- --
---------------------------------------------------------------------------------------------------------------
Class C (151,855) (1,544,186) -- --
===============================================================================================================
7,441,816 $78,304,054 100,000 $1,000,000
_______________________________________________________________________________________________________________
===============================================================================================================
|
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
-------------------------------------
DECEMBER 31, 2001
SIX MONTHS ENDED (DATE OPERATIONS
JUNE 30, 2002 COMMENCED)
---------------- -----------------
Net asset value, beginning of period $ 9.99 $ 10.00
-----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) 0.00
-----------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.32) (0.01)
=====================================================================================================
Total from investment operations (0.36) (0.01)
=====================================================================================================
Net asset value, end of period $ 9.63 $ 9.99
_____________________________________________________________________________________________________
=====================================================================================================
Total return(b) (3.60)% (0.10)%
_____________________________________________________________________________________________________
=====================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $44,532 $ 400
_____________________________________________________________________________________________________
=====================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.78%(c) 1.80%(d)
-----------------------------------------------------------------------------------------------------
Without fee waivers 1.90%(c) 199.49%(d)
=====================================================================================================
Ratio of net investment income (loss) to average net assets (0.79)%(c) (0.31)%(d)
_____________________________________________________________________________________________________
=====================================================================================================
Portfolio turnover rate 10% --
_____________________________________________________________________________________________________
=====================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less
than one year.
(c) Ratios are annualized and based on average daily net assets of
$22,539,695.
(d) Annualized.
FS-197
NOTE 9--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
-------------------------------------
DECEMBER 31, 2001
SIX MONTHS ENDED (DATE OPERATIONS
JUNE 30, 2002 COMMENCED)
---------------- -----------------
Net asset value, beginning of period $ 9.99 $ 10.00
-----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a) 0.00
-----------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.32) (0.01)
=====================================================================================================
Total from investment operations (0.39) (0.01)
=====================================================================================================
Net asset value, end of period $ 9.60 $ 9.99
_____________________________________________________________________________________________________
=====================================================================================================
Total return(b) (3.90)% (0.10)%
_____________________________________________________________________________________________________
=====================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $20,793 $ 300
_____________________________________________________________________________________________________
=====================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.43%(c) 2.45%(d)
-----------------------------------------------------------------------------------------------------
Without fee waivers 2.55%(c) 200.14%(d)
=====================================================================================================
Ratio of net investment income (loss) to average net assets (1.44)%(c) (0.96)%(d)
_____________________________________________________________________________________________________
=====================================================================================================
Portfolio turnover rate 10% --
_____________________________________________________________________________________________________
=====================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$9,446,654.
(d) Annualized.
CLASS C
-------------------------------------
DECEMBER 31, 2001
SIX MONTHS ENDED (DATE OPERATIONS
JUNE 30, 2002 COMMENCED)
---------------- -----------------
Net asset value, beginning of period $ 9.99 $ 10.00
-----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a) 0.00
-----------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.32) (0.01)
=====================================================================================================
Total from investment operations (0.39) (0.01)
=====================================================================================================
Net asset value, end of period $ 9.60 $ 9.99
_____________________________________________________________________________________________________
=====================================================================================================
Total return(b) (3.90)% (0.10)%
_____________________________________________________________________________________________________
=====================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $7,202 $ 300
_____________________________________________________________________________________________________
=====================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.43%(c) 2.45%(d)
-----------------------------------------------------------------------------------------------------
Without fee waivers 2.55%(c) 200.14%(d)
=====================================================================================================
Ratio of net investment income (loss) to average net assets (1.44)%(c) (0.96)%(d)
_____________________________________________________________________________________________________
=====================================================================================================
Portfolio turnover rate 10% --
_____________________________________________________________________________________________________
=====================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$3,828,446.
(d) Annualized.
FS-198
JUNE 30, 2002
(UNAUDITED)
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-96.57%
AEROSPACE & DEFENSE-6.69%
Alliant Techsystems Inc.(a) 10,050 $ 641,190
---------------------------------------------------------------------
Armor Holdings, Inc.(a) 10,000 255,000
---------------------------------------------------------------------
Engineered Support Systems, Inc. 19,700 1,030,310
---------------------------------------------------------------------
L-3 Communications Holdings, Inc.(a) 16,400 885,600
---------------------------------------------------------------------
Rockwell Collins, Inc. 10,000 274,200
=====================================================================
3,086,300
=====================================================================
APPLICATION SOFTWARE-12.53%
Activision, Inc.(a) 37,400 1,086,844
---------------------------------------------------------------------
Cerner Corp.(a) 13,600 650,488
---------------------------------------------------------------------
Documentum, Inc.(a) 18,100 217,200
---------------------------------------------------------------------
Electronic Arts Inc.(a) 16,000 1,056,800
---------------------------------------------------------------------
FileNet Corp.(a) 20,800 301,600
---------------------------------------------------------------------
HPL Technologies, Inc.(a) 42,800 644,568
---------------------------------------------------------------------
Intuit Inc.(a) 4,900 243,628
---------------------------------------------------------------------
JDA Software Group, Inc.(a) 19,000 536,940
---------------------------------------------------------------------
Mercury Interactive Corp.(a) 26,700 613,032
---------------------------------------------------------------------
Secure Computing Corp.(a) 27,300 206,115
---------------------------------------------------------------------
Take-Two Interactive Software, Inc.(a) 11,100 228,549
=====================================================================
5,785,764
=====================================================================
AUTO PARTS & EQUIPMENT-0.55%
Gentex Corp.(a) 9,200 252,724
=====================================================================
BIOTECHNOLOGY-8.19%
Cephalon, Inc.(a) 4,100 185,320
---------------------------------------------------------------------
Gilead Sciences, Inc.(a) 31,900 1,048,872
---------------------------------------------------------------------
Harvard Bioscience, Inc.(a) 62,800 351,052
---------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 14,000 496,300
---------------------------------------------------------------------
Medarex, Inc.(a) 14,800 109,816
---------------------------------------------------------------------
OraSure Technologies, Inc.(a) 23,500 152,750
---------------------------------------------------------------------
PRAECIS Pharmaceutical Inc.(a) 72,100 250,908
---------------------------------------------------------------------
SangStat Medical Corp.(a) 37,200 854,856
---------------------------------------------------------------------
Trimeris, Inc.(a) 7,500 332,925
=====================================================================
3,782,799
=====================================================================
COMPUTER & ELECTRONICS RETAIL-0.79%
CDW Computer Centers, Inc.(a) 7,800 365,118
=====================================================================
COMPUTER HARDWARE-2.34%
Dell Computer Corp.(a) 41,400 1,082,196
=====================================================================
COMPUTER STORAGE & PERIPHERALS-2.74%
Lexmark International, Inc.(a) 2,100 114,240
---------------------------------------------------------------------
|
MARKET
SHARES VALUE
COMPUTER STORAGE & PERIPHERALS-(CONTINUED)
Overland Storage, Inc.(a) 22,200 $ 365,856
---------------------------------------------------------------------
Storage Technology Corp.(a) 22,800 364,116
---------------------------------------------------------------------
Western Digital Corp.(a) 129,000 419,250
=====================================================================
1,263,462
=====================================================================
DATA PROCESSING SERVICES-1.37%
Concord EFS, Inc.(a) 14,500 437,030
---------------------------------------------------------------------
Fiserv, Inc.(a) 5,300 194,563
=====================================================================
631,593
=====================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-5.38%
FLIR Systems, Inc.(a) 6,000 251,820
---------------------------------------------------------------------
Itron, Inc.(a) 31,900 836,737
---------------------------------------------------------------------
OSI Systems, Inc.(a) 37,000 733,710
---------------------------------------------------------------------
Photon Dynamics, Inc.(a) 22,100 663,000
=====================================================================
2,485,267
=====================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-1.51%
Accredo Health, Inc.(a) 9,900 456,786
---------------------------------------------------------------------
IMPATH Inc.(a) 13,400 240,530
=====================================================================
697,316
=====================================================================
HEALTH CARE EQUIPMENT-0.95%
Endocare, Inc.(a) 33,300 439,893
=====================================================================
HEALTH CARE SUPPLIES-0.82%
ICU Medical, Inc.(a) 12,300 380,070
=====================================================================
INTEGRATED TELECOMMUNICATION SERVICES-1.51%
Intrado Inc.(a) 35,900 695,024
=====================================================================
INTERNET RETAIL-2.28%
eBay Inc.(a) 17,100 1,053,702
=====================================================================
INTERNET SOFTWARE & SERVICES-8.72%
Expedia, Inc.-Class A(a) 8,400 498,036
---------------------------------------------------------------------
Hotels.com-Class A(a) 5,200 219,596
---------------------------------------------------------------------
McAfee.com Corp.(a) 39,100 572,424
---------------------------------------------------------------------
Overture Services, Inc.(a) 34,200 854,316
---------------------------------------------------------------------
Retek Inc.(a) 22,900 556,470
---------------------------------------------------------------------
WebEx Communications, Inc.(a) 38,500 612,150
---------------------------------------------------------------------
Websense, Inc.(a) 27,800 710,846
=====================================================================
4,023,838
=====================================================================
IT CONSULTING & SERVICES-1.44%
Affiliated Computer Services, Inc.-Class A(a) 14,000 664,720
=====================================================================
|
FS-199
MARKET
SHARES VALUE
NETWORKING EQUIPMENT-1.60%
Emulex Corp.(a) 32,900 $ 740,579
=====================================================================
PHARMACEUTICALS-0.72%
Ligand Pharmaceuticals Inc.-Class B(a) 23,000 333,500
=====================================================================
PUBLISHING-0.60%
Getty Images, Inc.(a) 12,600 274,302
=====================================================================
SEMICONDUCTOR EQUIPMENT-7.67%
ASE Test Ltd. (Taiwan)(a) 58,000 562,600
---------------------------------------------------------------------
Brooks-PRI Automation, Inc.(a) 24,600 628,776
---------------------------------------------------------------------
Cymer, Inc.(a) 3,000 105,120
---------------------------------------------------------------------
KLA-Tencor Corp.(a) 16,100 708,239
---------------------------------------------------------------------
Lam Research Corp.(a) 28,100 505,238
---------------------------------------------------------------------
Novellus Systems, Inc.(a) 18,900 642,600
---------------------------------------------------------------------
Varian Semiconductor Equipment Associates,
Inc.(a) 11,500 390,195
=====================================================================
3,542,768
=====================================================================
SEMICONDUCTORS-24.53%
Analog Devices, Inc.(a) 20,300 602,910
---------------------------------------------------------------------
ChipPAC, Inc.-Class A(a) 43,000 265,740
---------------------------------------------------------------------
Cirrus Logic, Inc.(a) 76,100 569,989
---------------------------------------------------------------------
ESS Technology, Inc.(a) 71,500 1,254,110
---------------------------------------------------------------------
Integrated Circuit Systems, Inc.(a) 84,000 1,695,960
---------------------------------------------------------------------
Intersil Corp.-Class A(a) 44,900 959,962
---------------------------------------------------------------------
Marvell Technology Group Ltd. (Bermuda)(a) 34,200 680,238
---------------------------------------------------------------------
Microchip Technology Inc.(a) 50,100 1,374,243
---------------------------------------------------------------------
|
MARKET
SHARES VALUE
SEMICONDUCTORS-(CONTINUED)
QLogic Corp.(a) 16,700 $ 636,270
---------------------------------------------------------------------
RF Micro Devices, Inc.(a) 7,800 59,436
---------------------------------------------------------------------
Semtech Corp.(a) 34,300 915,810
---------------------------------------------------------------------
Silicon Laboratories Inc.(a) 37,200 1,041,228
---------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR (Taiwan) 97,460 1,266,980
=====================================================================
11,322,876
=====================================================================
SYSTEMS SOFTWARE-2.28%
Symantec Corp.(a) 32,000 1,051,200
=====================================================================
TELECOMMUNICATIONS EQUIPMENT-1.36%
Polycom, Inc.(a) 12,700 152,273
---------------------------------------------------------------------
UTStarcom, Inc.(a) 23,600 476,012
=====================================================================
628,285
=====================================================================
Total Common Stocks & Other Equity
Interests (Cost $50,422,903) 44,583,296
=====================================================================
MONEY MARKET FUNDS-3.72%
STIC Liquid Assets Portfolio(b) 858,778 858,778
---------------------------------------------------------------------
STIC Prime Portfolio(b) 858,778 858,778
=====================================================================
Total Money Market Funds (Cost
$1,717,556) 1,717,556
=====================================================================
TOTAL INVESTMENTS-100.29% (Cost $52,140,459) 46,300,852
=====================================================================
OTHER ASSETS LESS LIABILITIES-(0.29%) (133,291)
=====================================================================
NET ASSETS-100.00% $46,167,561
_____________________________________________________________________
=====================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-200
JUNE 30, 2002
(UNAUDITED)
ASSETS:
Investments, at market value (cost
$52,140,459) $46,300,852
-----------------------------------------------------------
Receivables for:
Investments sold 646,451
-----------------------------------------------------------
Fund shares sold 58,640
-----------------------------------------------------------
Dividends 2,449
-----------------------------------------------------------
Investment for deferred compensation plan 10,506
-----------------------------------------------------------
Other assets 22,354
===========================================================
Total assets 47,041,252
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 507,271
-----------------------------------------------------------
Fund shares reacquired 221,180
-----------------------------------------------------------
Deferred compensation plan 10,506
-----------------------------------------------------------
Accrued distribution fees 60,699
-----------------------------------------------------------
Accrued trustees' fees 302
-----------------------------------------------------------
Accrued transfer agent fees 42,737
-----------------------------------------------------------
Accrued operating expenses 30,996
===========================================================
Total liabilities 873,691
===========================================================
Net assets applicable to shares outstanding $46,167,561
___________________________________________________________
===========================================================
NET ASSETS:
Class A $24,751,202
___________________________________________________________
===========================================================
Class B $14,517,252
___________________________________________________________
===========================================================
Class C $ 6,899,107
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 9,499,759
___________________________________________________________
===========================================================
Class B 5,638,885
___________________________________________________________
===========================================================
Class C 2,678,173
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 2.61
-----------------------------------------------------------
Offering price per share:
(Net asset value of $2.61 divided
by 94.50%) $ 2.76
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 2.57
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 2.58
___________________________________________________________
===========================================================
|
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(UNAUDITED)
INVESTMENT INCOME:
Dividends from affiliated money market
funds $ 25,247
-----------------------------------------------------------
Dividends 1,272
===========================================================
Total investment income 26,519
===========================================================
EXPENSES:
Advisory fees 299,897
-----------------------------------------------------------
Administrative services fees 24,795
-----------------------------------------------------------
Custodian fees 11,992
-----------------------------------------------------------
Distribution fees -- Class A 57,790
-----------------------------------------------------------
Distribution fees -- Class B 90,846
-----------------------------------------------------------
Distribution fees -- Class C 43,937
-----------------------------------------------------------
Transfer agent fees 207,918
-----------------------------------------------------------
Trustees' fees 4,965
-----------------------------------------------------------
Other 59,285
===========================================================
Total expenses 801,425
===========================================================
Less: Fees waived (111,542)
-----------------------------------------------------------
Expenses paid indirectly (619)
===========================================================
Net expenses 689,264
===========================================================
Net investment income (loss) (662,745)
===========================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND OPTION
CONTRACTS:
Net realized gain (loss) from:
Investment securities (8,030,424)
-----------------------------------------------------------
Option contracts written 26,729
===========================================================
(8,003,695)
===========================================================
Change in net unrealized appreciation
(depreciation) of investment securities (14,544,793)
===========================================================
Net gain (loss) from investment securities
and option contracts (22,548,488)
===========================================================
Net increase (decrease) in net assets
resulting from operations $(23,211,233)
___________________________________________________________
===========================================================
|
See Notes to Financial Statements.
FS-201
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND THE YEAR ENDED DECEMBER 31, 2001
(UNAUDITED)
JUNE 30, DECEMBER 31,
2002 2001
------------ ------------
OPERATIONS:
Net investment income (loss) $ (662,745) $ (1,199,640)
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
option contracts (8,003,695) (57,039,237)
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (14,544,793) 19,156,038
==========================================================================================
Net increase (decrease) in net assets resulting from
operations (23,211,233) (39,082,839)
==========================================================================================
Share transactions-net:
Class A (2,623,663) 18,653,815
------------------------------------------------------------------------------------------
Class B 266,499 11,339,309
------------------------------------------------------------------------------------------
Class C (143,545) 5,592,841
==========================================================================================
Net increase (decrease) in net assets (25,711,942) (3,496,874)
==========================================================================================
NET ASSETS:
Beginning of period 71,879,503 75,376,377
==========================================================================================
End of period $ 46,167,561 $ 71,879,503
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $129,256,145 $131,756,854
------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (672,159) (9,414)
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and option contracts (76,576,818) (68,573,123)
------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (5,839,607) 8,705,186
==========================================================================================
$ 46,167,561 $ 71,879,503
__________________________________________________________________________________________
==========================================================================================
|
See Notes to Financial Statements.
FS-202
JUNE 30, 2002
(UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM New Technology Fund (the "Fund") is a series portfolio of AIM Funds Group (the "Trust"). The Trust is a Delaware business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of twelve separate portfolios, each having an unlimited number of shares of beneficial interest. 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 long-term growth of capital.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date.
C. DISTRIBUTIONS -- Distributions from income and 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 from 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.
FS-203
The Fund's capital loss carryforward of $66,633,491 as of December 31, 2001 expires as follows:
CAPITAL LOSS CARRYFORWARD EXPIRATION ------------ ---------- $ 1,713,194 December 31, 2008 ------------------------------- 64,920,297 December 31, 2009 ------------------------------- $66,633,491 ______________________________ =============================== |
E. COVERED CALL OPTIONS -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded 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 written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received.
F. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of the Fund's average daily net assets. AIM has contractually agreed to waive fees and/or reimburse expenses (excluding interest, taxes, dividends on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) for Class A, Class B and Class C shares to the extent necessary to limit the total annual fund operating expenses of Class A to 2.00%. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market fund of which the Fund has invested. For the six months ended June 30, 2002, AIM waived fees of $111,542.
The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2002, AIM was paid $24,795 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the six months ended June 30, 2002, AFS retained $130,914 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 and Class C shares of the Fund. The Trust 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. 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. For the six months ended June 30, 2002, the Class A, Class B and Class C shares paid AIM Distributors $57,790, $90,846 and $43,937, respectively, as compensation under the Plans.
AIM Distributors retained commissions of $18,053 from sales of the Class A shares of the Fund during the six months ended June 30, 2002. 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 June 30, 2002, AIM Distributors retained $2,465, $52 and $946 in contingent deferred sales charges imposed on redemptions of Class A, Class B and Class C shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the six months ended June 30, 2002, the Fund paid legal fees of $1,298 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended June 30, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $554 and reductions in custodian fees of $65 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $619.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
NOTE 5--BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $500,000,000 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
FS-204
basis. During the six months ended June 30, 2002, 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. The commitment fee is allocated among the funds based on their respective average net assets for the period.
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Capital loss carryforward $(66,633,491)
---------------------------------------------------------
Unrealized appreciation 6,756,140
=========================================================
$(59,877,351)
_________________________________________________________
=========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of capital losses incurred after October 31, and other deferrals.
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 June 30, 2002 was $47,757,212 and $48,191,263, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of June 30, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 2,756,339 ----------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (8,693,893) =========================================================== Net unrealized appreciation (depreciation) of investment securities $(5,937,554) ___________________________________________________________ =========================================================== Cost of investments for tax purposes is $52,238,406. |
NOTE 8--CALL OPTION CONTRACTS
Transactions in call options written during the six months ended June 30, 2002 are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
Beginning of period -- $ --
---------------------------------------------------------
Written 270 54,783
---------------------------------------------------------
Closed (200) (38,899)
---------------------------------------------------------
Exercised (70) (15,884)
=========================================================
End of period -- $ --
_________________________________________________________
=========================================================
|
NOTE 9--SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2002 and the year ended December 31, 2001 were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2002 DECEMBER 31, 2001
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold:
Class A 2,858,825 $ 9,968,002 10,000,780 $ 42,952,707
----------------------------------------------------------------------------------------------------------------------
Class B 941,575 3,090,158 4,015,952 17,550,457
----------------------------------------------------------------------------------------------------------------------
Class C 1,109,411 3,614,598 2,552,966 10,916,402
======================================================================================================================
Reacquired:
Class A (3,791,298) (12,591,665) (6,054,184) (24,298,892)
----------------------------------------------------------------------------------------------------------------------
Class B (898,156) (2,823,659) (1,587,360) (6,211,148)
----------------------------------------------------------------------------------------------------------------------
Class C (1,176,270) (3,758,143) (1,346,193) (5,323,561)
======================================================================================================================
(955,913) $ (2,500,709) 7,581,961 $ 35,585,965
______________________________________________________________________________________________________________________
======================================================================================================================
|
FS-205
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
----------------------------------------------
AUGUST 31, 2000
SIX MONTHS (DATE OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------- ------------ ----------------
Net asset value, beginning of period $ 3.84 $ 6.74 $ 10.00
-------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03) (0.06)(a) (0.02)(a)
-------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.20) (2.84) (3.24)
=============================================================================================================
Total from investment operations (1.23) (2.90) (3.26)
=============================================================================================================
Net asset value, end of period $ 2.61 $ 3.84 $ 6.74
_____________________________________________________________________________________________________________
=============================================================================================================
Total return(b) (32.03)% (43.03)% (32.60)%
_____________________________________________________________________________________________________________
=============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $24,751 $40,097 $43,732
_____________________________________________________________________________________________________________
=============================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.00%(c) 1.86% 1.72%(d)
-------------------------------------------------------------------------------------------------------------
Without fee waivers 2.37%(c) 2.40% 2.47%(d)
=============================================================================================================
Ratio of net investment income (loss) to average net assets (1.91)%(c) (1.52)% (0.66)%(d)
_____________________________________________________________________________________________________________
=============================================================================================================
Portfolio turnover rate 84% 215% 54%
_____________________________________________________________________________________________________________
=============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less
than one year.
(c) Ratios are annualized and based on average daily net assets of
$33,296,420.
(d) Annualized.
CLASS B
----------------------------------------------
AUGUST 31, 2000
SIX MONTHS (DATE OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------- ------------ ----------------
Net asset value, beginning of period $ 3.81 $ 6.72 $ 10.00
---------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.09)(a) (0.04)(a)
---------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.20) (2.82) (3.24)
===============================================================================================================
Total from investment operations (1.24) (2.91) (3.28)
===============================================================================================================
Net asset value, end of period $ 2.57 $ 3.81 $ 6.72
_______________________________________________________________________________________________________________
===============================================================================================================
Total return(b) (32.55)% (43.30)% (32.80)%
_______________________________________________________________________________________________________________
===============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $14,517 $21,318 $21,296
_______________________________________________________________________________________________________________
===============================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.65(%)(c) 2.51% 2.41%(d)
---------------------------------------------------------------------------------------------------------------
Without fee waivers 3.02%(c) 3.05% 3.16%(d)
===============================================================================================================
Ratio of net investment income (loss) to average net assets (2.56)%(c) (2.17)% (1.36)%(d)
_______________________________________________________________________________________________________________
===============================================================================================================
Portfolio turnover rate 84% 215% 54%
_______________________________________________________________________________________________________________
===============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$18,319,769.
(d) Annualized.
FS-206
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
----------------------------------------------
AUGUST 31, 2000
SIX MONTHS (DATE OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------- ------------ ----------------
Net asset value, beginning of period $ 3.81 $ 6.73 $ 10.00
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.09)(a) (0.04)(a)
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.19) (2.83) (3.23)
============================================================================================================
Total from investment operations (1.23) (2.92) (3.27)
____________________________________________________________________________________________________________
============================================================================================================
Net asset value, end of period $ 2.58 $ 3.81 $ 6.73
____________________________________________________________________________________________________________
============================================================================================================
Total return(b) (32.28)% (43.39)% (32.70)%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $6,899 $10,465 $10,349
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.65%(c) 2.51% 2.41%(d)
------------------------------------------------------------------------------------------------------------
Without fee waivers 3.02%(c) 3.05% 3.16%(d)
============================================================================================================
Ratio of net investment income (loss) to average net assets (2.56)%(c) (2.17)% (1.35)%(d)
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 84% 215% 54%
____________________________________________________________________________________________________________
============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$8,860,236.
(d) Annualized.
FS-207
JUNE 30, 2002
(UNAUDITED)
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-95.86%
ADVERTISING-1.40%
Omnicom Group Inc. 3,928,000 $ 179,902,400
=============================================================================
AIR FREIGHT & LOGISTICS-0.94%
FedEx Corp. 2,266,800 121,047,120
=============================================================================
AIRLINES-0.57%
Southwest Airlines Co. 4,500,000 72,720,000
=============================================================================
APPLICATION SOFTWARE-0.34%
PeopleSoft, Inc.(a) 2,914,800 43,372,224
=============================================================================
BANKS-2.41%
Bank of America Corp. 960,000 67,545,600
-----------------------------------------------------------------------------
Bank of New York Co., Inc. (The) 7,199,500 242,983,125
=============================================================================
310,528,725
=============================================================================
BROADCASTING & CABLE TV-5.40%
Comcast Corp.-Class A(a) 11,000,000 262,240,000
-----------------------------------------------------------------------------
Cox Communications, Inc.-Class A(a) 15,726,100 433,254,055
=============================================================================
695,494,055
=============================================================================
BUILDING PRODUCTS-0.23%
Masco Corp. 1,100,000 29,821,000
=============================================================================
COMPUTER & ELECTRONICS RETAIL-1.49%
Best Buy Co., Inc.(a) 5,288,400 191,968,920
=============================================================================
COMPUTER HARDWARE-3.76%
Dell Computer Corp.(a) 9,400,000 245,716,000
-----------------------------------------------------------------------------
Hewlett-Packard Co. 5,750,000 87,860,000
-----------------------------------------------------------------------------
International Business Machines Corp. 2,086,000 150,192,000
=============================================================================
483,768,000
=============================================================================
CONSUMER FINANCE-0.57%
MBNA Corp. 2,200,000 72,754,000
=============================================================================
DATA PROCESSING SERVICES-2.12%
Automatic Data Processing, Inc. 2,000,000 87,100,000
-----------------------------------------------------------------------------
First Data Corp. 5,000,000 186,000,000
=============================================================================
273,100,000
=============================================================================
DEPARTMENT STORES-1.48%
Federated Department Stores, Inc.(a) 3,000,000 119,100,000
-----------------------------------------------------------------------------
Sears, Roebuck & Co. 1,325,000 71,947,500
=============================================================================
191,047,500
=============================================================================
DIVERSIFIED FINANCIAL SERVICES-12.53%
American Express Co. 2,100,000 76,272,000
-----------------------------------------------------------------------------
|
MARKET
SHARES VALUE
DIVERSIFIED FINANCIAL SERVICES-(CONTINUED)
Citigroup Inc. 11,750,000 $ 455,312,500
-----------------------------------------------------------------------------
Fannie Mae 3,545,000 261,443,750
-----------------------------------------------------------------------------
Freddie Mac 5,320,000 325,584,000
-----------------------------------------------------------------------------
J.P. Morgan Chase & Co. 6,320,000 214,374,400
-----------------------------------------------------------------------------
Morgan Stanley 6,500,000 280,020,000
=============================================================================
1,613,006,650
=============================================================================
DRUG RETAIL-1.65%
Walgreen Co. 5,500,000 212,465,000
=============================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.73%
Agilent Technologies, Inc.(a) 2,250,000 53,212,500
-----------------------------------------------------------------------------
Celestica Inc. (Canada)(a) 7,435,000 168,848,850
=============================================================================
222,061,350
=============================================================================
ENVIRONMENTAL SERVICES-0.96%
Waste Management, Inc. 4,750,000 123,737,500
=============================================================================
FOOD RETAIL-1.24%
Kroger Co. (The)(a) 4,000,000 79,600,000
-----------------------------------------------------------------------------
Safeway Inc.(a) 2,750,000 80,272,500
=============================================================================
159,872,500
=============================================================================
FOOTWEAR-1.48%
NIKE, Inc.-Class B 3,550,000 190,457,500
=============================================================================
GENERAL MERCHANDISE STORES-3.49%
Target Corp. 11,787,900 449,118,990
=============================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-1.06%
Laboratory Corp. of America Holdings(a) 3,000,000 136,950,000
=============================================================================
HEALTH CARE EQUIPMENT-1.99%
Baxter International Inc. 5,750,000 255,587,500
=============================================================================
HEALTH CARE FACILITIES-3.01%
HCA Inc. 8,150,000 387,125,000
=============================================================================
HOUSEHOLD PRODUCTS-1.97%
Kimberly-Clark Corp. 2,500,000 155,000,000
-----------------------------------------------------------------------------
Procter & Gamble Co. (The) 1,100,000 98,230,000
=============================================================================
253,230,000
=============================================================================
INDUSTRIAL CONGLOMERATES-3.50%
General Electric Co. 15,500,000 450,275,000
=============================================================================
INTEGRATED OIL & GAS-7.04%
BP PLC-ADR (United Kingdom) 7,100,000 358,479,000
-----------------------------------------------------------------------------
ChevronTexaco Corp.(b) 2,450,000 216,825,000
-----------------------------------------------------------------------------
|
FS-208
VALUE FUND
MARKET
SHARES VALUE
INTEGRATED OIL & GAS-(CONTINUED)
.xExxon Mobil Corp. 8,100,000 $ 331,452,000
=============================================================================
906,756,000
=============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.45%
AT&T Corp. 5,406,900 57,853,830
=============================================================================
MANAGED HEALTH CARE-3.13%
UnitedHealth Group Inc. 4,400,000 402,820,000
=============================================================================
MOVIES & ENTERTAINMENT-2.74%
AOL Time Warner Inc.(a) 14,150,000 208,146,500
-----------------------------------------------------------------------------
Viacom Inc.-Class B(a) 3,250,000 144,202,500
=============================================================================
352,349,000
=============================================================================
MULTI-LINE INSURANCE-5.07%
American International Group, Inc. 8,000,000 545,840,000
-----------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 1,800,000 107,046,000
=============================================================================
652,886,000
=============================================================================
MULTI-UTILITIES & UNREGULATED POWER-0.91%
Duke Energy Corp. 3,000,000 93,300,000
-----------------------------------------------------------------------------
Williams Cos., Inc. (The) 4,000,000 23,960,000
=============================================================================
117,260,000
=============================================================================
NETWORKING EQUIPMENT-1.14%
Cisco Systems, Inc.(a) 10,500,000 146,475,000
=============================================================================
OIL & GAS DRILLING-0.65%
Transocean Inc. 2,700,000 84,105,000
=============================================================================
OIL & GAS EQUIPMENT & SERVICES-1.00%
Baker Hughes Inc. 3,850,000 128,166,500
=============================================================================
PHARMACEUTICALS-7.84%
Allergan, Inc. 1,450,000 96,787,500
-----------------------------------------------------------------------------
Biovail Corp. (Canada)(a) 820,800 23,770,368
-----------------------------------------------------------------------------
Bristol-Myers Squibb Co. 2,460,100 63,224,570
-----------------------------------------------------------------------------
Johnson & Johnson 4,200,000 219,492,000
-----------------------------------------------------------------------------
King Pharmaceuticals, Inc.(a) 2,124,200 47,263,450
-----------------------------------------------------------------------------
|
MARKET
SHARES VALUE
PHARMACEUTICALS-(CONTINUED)
Pfizer Inc. 15,975,000 $ 559,125,000
=============================================================================
1,009,662,888
=============================================================================
PROPERTY & CASUALTY INSURANCE-0.50%
Allstate Corp. (The) 1,750,000 64,715,000
=============================================================================
SEMICONDUCTOR EQUIPMENT-0.77%
Applied Materials, Inc.(a) 5,200,000 98,904,000
=============================================================================
SEMICONDUCTORS-3.09%
Analog Devices, Inc.(a) 7,250,000 215,325,000
-----------------------------------------------------------------------------
Micron Technology, Inc.(a) 9,000,000 181,980,000
=============================================================================
397,305,000
=============================================================================
SOFT DRINKS-1.50%
PepsiCo, Inc. 4,000,000 192,800,000
=============================================================================
SYSTEMS SOFTWARE-3.81%
Microsoft Corp.(a) 8,125,000 444,437,500
-----------------------------------------------------------------------------
Oracle Corp.(a) 4,852,100 45,949,387
=============================================================================
490,386,887
=============================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.90%
Nextel Communications, Inc.-Class A(a) 12,000,000 38,520,000
-----------------------------------------------------------------------------
Sprint Corp. (PCS Group)(a) 17,250,000 77,107,500
=============================================================================
115,627,500
=============================================================================
Total Common Stocks & Other Equity
Interests (Cost $13,958,759,787) 12,337,483,539
=============================================================================
MONEY MARKET FUNDS-4.60%
STIC Liquid Assets Portfolio(c) 296,199,896 296,199,896
-----------------------------------------------------------------------------
STIC Prime Portfolio(c) 296,199,896 296,199,896
=============================================================================
Total Money Market Funds (Cost
$592,399,792) 592,399,792
=============================================================================
TOTAL INVESTMENTS-100.46%
(Cost $14,551,159,579) 12,929,883,331
=============================================================================
OTHER ASSETS LESS LIABILITIES-(0.46%) (58,942,202)
=============================================================================
NET ASSETS-100.00% $12,870,941,129
_____________________________________________________________________________
=============================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 9.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-209
JUNE 30, 2002
(UNAUDITED)
ASSETS:
Investments, at market value (cost
$14,551,159,579)* $12,929,883,331
-------------------------------------------------------------------
Receivables for:
Investments sold 58,686,560
-------------------------------------------------------------------
Fund shares sold 19,015,171
-------------------------------------------------------------------
Dividends 7,455,457
-------------------------------------------------------------------
Investment for deferred compensation plan 360,172
-------------------------------------------------------------------
Collateral for securities loaned 193,697,800
-------------------------------------------------------------------
Other assets 103,734
===================================================================
Total assets 13,209,202,225
___________________________________________________________________
===================================================================
LIABILITIES:
Payables for:
Investments purchased 38,328,920
-------------------------------------------------------------------
Fund shares reacquired 82,768,326
-------------------------------------------------------------------
Foreign currency contracts closed 1,566,109
-------------------------------------------------------------------
Foreign currency contracts outstanding 2,146,343
-------------------------------------------------------------------
Options written (premiums received $417,987) 275,000
-------------------------------------------------------------------
Deferred compensation plan 360,172
-------------------------------------------------------------------
Collateral upon return of securities loaned 193,697,800
-------------------------------------------------------------------
Accrued distribution fees 14,425,931
-------------------------------------------------------------------
Accrued transfer agent fees 3,339,209
-------------------------------------------------------------------
Accrued operating expenses 1,353,286
===================================================================
Total liabilities 338,261,096
===================================================================
Net assets applicable to shares outstanding $12,870,941,129
___________________________________________________________________
===================================================================
NET ASSETS:
Class A $ 6,128,452,461
___________________________________________________________________
===================================================================
Class B $ 6,109,305,421
___________________________________________________________________
===================================================================
Class C $ 630,877,007
___________________________________________________________________
===================================================================
Class R $ 10,965
___________________________________________________________________
===================================================================
Institutional Class $ 2,295,275
___________________________________________________________________
===================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 718,125,025
___________________________________________________________________
===================================================================
Class B 758,347,131
___________________________________________________________________
===================================================================
Class C 78,264,823
___________________________________________________________________
===================================================================
Class R 1,285
___________________________________________________________________
===================================================================
Institutional Class 268,606
___________________________________________________________________
===================================================================
Class A:
Net asset value per share $ 8.53
___________________________________________________________________
===================================================================
Offering price per share:
(Net asset value of $8.53 divided by 94.50%) $ 9.03
___________________________________________________________________
===================================================================
Class B:
Net asset value and offering price per share $ 8.06
___________________________________________________________________
===================================================================
Class C:
Net asset value and offering price per share $ 8.06
___________________________________________________________________
===================================================================
Class R
Net asset value and offering price per share $ 8.53
___________________________________________________________________
===================================================================
Institutional Class:
Net asset value and offering price per share $ 8.55
___________________________________________________________________
===================================================================
|
* At June 30, 2002, securities with an aggregate market value of $181,554,622 were on loan to brokers.
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$542,964) $ 72,397,924
-------------------------------------------------------------------
Dividends from affiliated money market funds 6,624,366
-------------------------------------------------------------------
Interest 179,553
-------------------------------------------------------------------
Security lending income 369,195
===================================================================
Total investment income 79,571,038
===================================================================
EXPENSES:
Advisory fees 50,473,774
-------------------------------------------------------------------
Administrative services fees 391,316
-------------------------------------------------------------------
Custodian fees 287,877
-------------------------------------------------------------------
Distribution fees -- Class A 9,336,367
-------------------------------------------------------------------
Distribution fees -- Class B 39,169,334
-------------------------------------------------------------------
Distribution fees -- Class C 4,033,719
-------------------------------------------------------------------
Distribution fees -- Class R 4
-------------------------------------------------------------------
Transfer agent fees 18,246,250
-------------------------------------------------------------------
Transfer agent fees -- Institutional Class 124
-------------------------------------------------------------------
Trustees' fees 45,447
-------------------------------------------------------------------
Other 1,523,484
===================================================================
Total expenses 123,507,696
===================================================================
Less: Fees waived (2,402,306)
-------------------------------------------------------------------
Expenses paid indirectly (110,022)
===================================================================
Net expenses 120,995,368
===================================================================
Net investment income (loss) (41,424,330)
===================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCY
CONTRACTS, FUTURES CONTRACTS AND OPTION
CONTRACTS:
Net realized gain (loss) from:
Investment securities (574,877,518)
-------------------------------------------------------------------
Foreign currency contracts (14,653,162)
-------------------------------------------------------------------
Futures contracts 4,540,687
-------------------------------------------------------------------
Option contracts written 1,935,648
===================================================================
(583,054,345)
===================================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (3,157,346,413)
-------------------------------------------------------------------
Foreign currency contracts (2,371,965)
-------------------------------------------------------------------
Futures contracts (3,917,569)
-------------------------------------------------------------------
Option contracts written 142,987
===================================================================
(3,163,492,960)
===================================================================
Net gain (loss) from investment securities,
foreign currency contracts, futures contracts
and option contracts (3,746,547,305)
===================================================================
Net increase (decrease) in net assets resulting
from operations $(3,787,971,635)
___________________________________________________________________
===================================================================
|
See Notes to Financial Statements.
FS-210
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND THE YEAR ENDED DECEMBER 31, 2001
(UNAUDITED)
JUNE 30, DECEMBER 31,
2002 2001
-------- ---------------
OPERATIONS:
Net investment income (loss) $ (41,424,330) $ (94,503,881)
------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currency contracts, futures contracts and option
contracts (583,054,345) (1,808,699,179)
------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currency contracts,
futures contracts and option contracts (3,163,492,960) (1,379,243,076)
================================================================================================
Net increase (decrease) in net assets resulting from
operations (3,787,971,635) (3,282,446,136)
================================================================================================
Distributions to shareholders from net realized gains:
Class A -- (11,567,785)
------------------------------------------------------------------------------------------------
Class B -- (13,103,850)
------------------------------------------------------------------------------------------------
Class C -- (1,340,169)
------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (623,451,300) (1,265,245,616)
------------------------------------------------------------------------------------------------
Class B (1,230,803,823) (1,623,452,392)
------------------------------------------------------------------------------------------------
Class C (122,124,683) (147,015,896)
------------------------------------------------------------------------------------------------
Class R 11,654 --
------------------------------------------------------------------------------------------------
Institutional Class 2,391,135 --
================================================================================================
Net increase (decrease) in net assets (5,761,948,652) (6,344,171,844)
================================================================================================
NET ASSETS:
Beginning of period 18,632,889,781 24,977,061,625
================================================================================================
End of period $12,870,941,129 $18,632,889,781
________________________________________________________________________________________________
================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $16,932,313,014 $18,906,290,031
------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (42,261,368) (837,038)
------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currency contracts, futures
contracts and option contracts (2,395,830,913) (1,812,776,568)
------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currency contracts, futures
contracts and option contracts (1,623,279,604) 1,540,213,356
================================================================================================
$12,870,941,129 $18,632,889,781
________________________________________________________________________________________________
================================================================================================
|
See Notes to Financial Statements.
FS-211
JUNE 30, 2002
(UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Value Fund (the "Fund") is a series portfolio of AIM Funds Group (the "Trust"). The Trust is a Delaware business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of twelve separate portfolios, each having an unlimited number of shares of beneficial interest. The Fund currently offers five different classes of shares: Class A shares, Class B shares, Class C shares, Class R shares and the Institutional Class. 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 long-term growth of capital. Income is a secondary objective.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date.
C. DISTRIBUTIONS -- Distributions from income and 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 from 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.
FS-212
The Fund has a capital loss carryforward of $1,670,556,615 as of December 31, 2001 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2009.
E. 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 the 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.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
Outstanding foreign currency contracts at June 30, 2002 were as follows:
CONTRACT TO UNREALIZED
SETTLEMENT -------------------------- APPRECIATION
DATE CURRENCY DELIVER RECEIVE VALUE (DEPRECIATION)
---------- -------- ----------- ------------ ------------ --------------
08/30/02 CAD 283,750,000 $184,643,363 $186,789,706 $(2,146,343)
________________________________________________________________________________
=================================================================================
|
G. COVERED CALL OPTIONS -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded 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 written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received.
H. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts as a hedge against changes in market conditions. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities as collateral for the account of the broker (the Fund's agent in acquiring the futures position). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by "marking to market" on a daily basis to reflect the market value of the contracts at the end of each day's trading. Variation margin payments are made or received depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund's basis in the contract. Risks include the possibility of an illiquid market and that a change in value of the contracts may not correlate with changes in the value of the securities being hedged.
I. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.80% of the first $150 million of the Fund's average daily net assets, plus 0.625% of the Fund's average daily net assets in excess of $150 million. AIM has agreed to waive advisory fees payable by the Fund to AIM at the annual rate of 0.025% for each $5 billion increment in net assets over $5 billion, up to a maximum waiver of 0.175% on net assets in excess of $35 billion. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market fund of which the Fund has invested. For the six months ended June 30, 2002, AIM waived fees of $2,402,306.
The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2002, AIM was paid $391,316 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the six months ended June 30, 2002, AFS was paid $10,370,948 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, Class R and the Institutional Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares, Class B shares, Class C shares and Class R shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and C shares and 0.50% of the
FS-213
average daily net assets of Class R 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, Class C or Class R 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. For the six months ended June 30, 2002, the Class A, Class B, Class C and Class R shares paid AIM Distributors $9,336,367, $39,169,334, $4,033,719 and $4, respectively, as compensation under the Plans.
AIM Distributors retained commissions of $573,678 from sales of the Class A shares of the Fund during the six months ended June 30, 2002. 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 June 30, 2002, AIM Distributors retained $54,766, $3,277 and $34,973 in contingent deferred sales charges imposed on redemptions of Class A, Class B and Class C shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the six months ended June 30, 2002, the Fund paid legal fees of $14,230 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended June 30, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $108,848 and reductions in custodian fees of $1,174 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $110,022.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
NOTE 5--BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $500,000,000 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 six months ended June 30,
2002, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's total assets. Such loans are secured by collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Cash collateral pursuant to these loans is invested in short-term money market instruments or affiliated money market funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. It is the Fund's policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day. Therefore, the value of the collateral may be temporarily less than the value of the securities on loan.
At June 30, 2002, securities with an aggregate value of $181,554,622 were on loan to brokers. The loans were secured by cash collateral of $193,697,800 received by the Fund and invested in STIC Liquid Assets Portfolio, an affiliated money market fund. For the six months ended June 30, 2002, the Fund received fees of $369,195 for securities lending.
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
----------- --------------
Distributions paid from:
Ordinary income $ -- $ 146,286,027
--------------------------------------------------------------
Long-term capital gain 26,011,804 2,302,049,336
==============================================================
$26,011,804 $2,448,335,363
______________________________________________________________
==============================================================
|
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Capital loss carryforward $(1,670,556,615)
------------------------------------------------------------
Unrealized appreciation 1,397,156,365
============================================================
$ (273,400,250)
____________________________________________________________
============================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of capital losses incurred after October 31, the realization for tax purposes of unrealized gains on certain forward foreign currency contracts and futures contracts, and other deferrals.
FS-214
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the six months ended June 30, 2002 was $2,823,433,521 and $4,364,684,242, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of June 30, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 1,248,291,575 ----------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (2,895,648,986) ============================================================================= Net unrealized appreciation (depreciation) of investment securities $(1,647,357,411) _____________________________________________________________________________ ============================================================================= Cost of investments for tax purposes is $14,577,240,742. |
NOTE 9--CALL OPTION CONTRACTS
Transactions in call options written during the six months ended June 30, 2002 are summarized as follows:
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
Beginning of period -- $ --
--------------------------------------------------------------------------------------
Written 12,750 2,563,635
--------------------------------------------------------------------------------------
Closed (5,000) (860,687)
--------------------------------------------------------------------------------------
Expired (5,000) (1,284,961)
======================================================================================
End of period 2,750 $ 417,987
______________________________________________________________________________________
======================================================================================
|
Open call options written at June 30, 2002 were as follows:
CONTRACT STRIKE NUMBER OF PREMIUMS JUNE 30, 2002 UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
----- -------- ------ --------- -------- ------------- ------------
ChevronTexacoCorp. Sep-02 $95 2,750 $417,987 $275,000 $142,987
_____________________________________________________________________________________________________________________________
=============================================================================================================================
|
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2002 and the year ended December 31, 2001 were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2002 DECEMBER 31, 2001
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
Sold:
Class A 62,163,533 $ 617,671,630 99,493,160 $ 1,142,786,605
--------------------------------------------------------------------------------------------------------------------------------
Class B 13,811,408 131,962,111 53,393,062 589,020,838
--------------------------------------------------------------------------------------------------------------------------------
Class C 3,649,695 34,951,098 14,110,226 155,875,910
--------------------------------------------------------------------------------------------------------------------------------
Class R* 1,285 11,654 -- --
--------------------------------------------------------------------------------------------------------------------------------
Institutional Class** 268,606 2,391,135 -- --
================================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 1,047,730 11,046,064
--------------------------------------------------------------------------------------------------------------------------------
Class B -- -- 1,221,981 12,181,662
--------------------------------------------------------------------------------------------------------------------------------
Class C -- -- 126,038 1,257,875
================================================================================================================================
Reacquired:
Class A (126,224,065) (1,241,122,930) (215,650,396) (2,419,078,285)
--------------------------------------------------------------------------------------------------------------------------------
Class B (147,385,561) (1,362,765,934) (208,566,724) (2,224,654,892)
--------------------------------------------------------------------------------------------------------------------------------
Class C (16,904,584) (157,075,781) (28,342,494) (304,149,681)
================================================================================================================================
(210,619,683) $(1,973,977,017) (283,167,417) $(3,035,713,904)
________________________________________________________________________________________________________________________________
================================================================================================================================
|
* Class R shares commenced sales on June 3, 2002. ** Institutional class shares commenced sales on March 15, 2002.
FS-215
VALUE FUND
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
-------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ---------------------------------------------------------------------------
2002 2001 2000(a) 1999(a) 1998(a) 1997(a)
----------- ------------- ------------ ------------ ----------- -----------
Net asset value, beginning of
period $ 10.87 $ 12.51 $ 16.28 $ 13.40 $ 10.81 $ 9.72
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) -- (0.04)(b) (0.01) 0.03 0.05
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) (2.33) (1.63) (2.42) 3.97 3.46 2.26
=================================================================================================================================
Total from investment
operations (2.34) (1.63) (2.46) 3.96 3.49 2.31
=================================================================================================================================
Less distributions:
Dividends from net investment
income -- -- -- -- (0.03) (0.01)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized
gains -- (0.01) (1.31) (1.08) (0.87) (1.21)
=================================================================================================================================
Total distributions -- (0.01) (1.31) (1.08) (0.90) (1.22)
=================================================================================================================================
Net asset value, end of period $ 8.53 $ 10.87 $ 12.51 $ 16.28 $ 13.40 $ 10.81
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (21.53)% (12.99)% (14.95)% 29.95% 32.76% 23.95%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $6,128,452 $8,502,699 $11,223,504 $12,640,073 $8,823,094 $6,745,253
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets:
With fee waivers 1.10%(d) 1.08% 1.00% 1.00% 1.00% 1.04%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.13%(d) 1.12% 1.04% 1.02% 1.02% 1.06%
=================================================================================================================================
Ratio of net investment income
(loss) to average net assets (0.11)%(d) (0.03)% (0.11)% (0.09)% 0.26% 0.57%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 18% 38% 67% 66% 113% 137%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information and shares have been restated to reflect a 3 for 1
stock split, effected in the form of a 200% stock dividend on November
10, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include sales charges and is not annualized for periods less
than one year.
(d) Ratios are annualized and based on average daily net assets of
$7,530,992,184.
FS-216
VALUE FUND
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
-------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ---------------------------------------------------------------------------
2002 2001 2000(a) 1999(a) 1998(a) 1997(a)
----------- ------------- ------------ ------------ ----------- -----------
Net asset value, beginning of
period $ 10.30 $ 11.94 $ 15.73 $ 13.08 $ 10.63 $ 9.64
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.09) (0.31)(b) (0.13)(b) (0.06) (0.02)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) (2.20) (1.54) (2.17) 3.86 3.38 2.22
=================================================================================================================================
Total from investment
operations (2.24) (1.63) (2.48) 3.73 3.32 2.20
=================================================================================================================================
Less distributions from net
realized gains -- (0.01) (1.31) (1.08) (0.87) (1.21)
=================================================================================================================================
Net asset value, end of period $ 8.06 $ 10.30 $ 11.94 $ 15.73 $ 13.08 $ 10.63
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (21.75)% (13.61)% (15.65)% 28.94% 31.70% 22.96%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $6,109,305 $9,186,980 $12,491,366 $14,338,087 $9,680,068 $6,831,796
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets:
With fee waivers 1.85%(d) 1.84% 1.77% 1.79% 1.80% 1.85%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.88%(d) 1.88% 1.81% 1.81% 1.82% 1.87%
=================================================================================================================================
Ratio of net investment income
(loss) to average net assets (0.86)%(d) (0.79)% (0.89)% (0.88)% (0.54)% (0.24)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 18% 38% 67% 66% 113% 137%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information and shares have been restated to reflect a 3 for 1
stock split, effected in the form of a 200% stock dividend on November
10, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$7,898,788,400.
FS-217
VALUE FUND
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
--------------------------------------------------------------------------------------
AUGUST 4, 1997
SIX MONTHS (DATE SALES
ENDED YEAR ENDED DECEMBER 31, COMMENCED) TO
JUNE 30, ---------------------------------------------------- DECEMBER 31,
2002 2001 2000(a) 1999(a) 1998(a) 1997(a)
---------- ----------- ----------- --------- --------- --------------
Net asset value, beginning of period $ 10.31 $ 11.95 $ 15.74 $ 13.09 $ 10.63 $ 11.86
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.09) (0.31)(b) (0.13)(b) (0.06)(b) 0.00
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) (2.21) (1.54) (2.17) 3.86 3.39 (0.02)
=================================================================================================================================
Total from investment operations (2.25) (1.63) (2.48) 3.73 3.33 (0.02)
=================================================================================================================================
Less distributions from net realized
gains -- (0.01) (1.31) (1.08) (0.87) (1.21)
=================================================================================================================================
Net asset value, end of period $ 8.06 $ 10.31 $ 11.95 $ 15.74 $ 13.09 $ 10.63
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (21.82)% (13.60)% (15.62)% 28.92% 31.72% (0.08)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $630,877 $943,211 $1,262,192 $860,859 $212,095 $32,900
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets:
With fee waivers 1.85%(d) 1.84% 1.77% 1.79% 1.80% 1.84%(e)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.88%(d) 1.88% 1.81% 1.81% 1.82% 1.86%(e)
=================================================================================================================================
Ratio of net investment income (loss)
to average net assets (0.86)%(d) (0.79)% (0.88)% (0.88)% (0.54)% (0.23)%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 18% 38% 67% 66% 113% 137%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information and shares have been restated to reflect a 3 for 1
stock split, effected in the form of a 200% stock dividend on November
10, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$813,429,490.
(e) Annualized.
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
JUNE 30,
2002
-------------
Net asset value, beginning of period $ 9.16
-----------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.00
-----------------------------------------------------------------------------
Net losses on securities (both realized and unrealized) (0.63)
=============================================================================
Total from investment operations (0.63)
=============================================================================
Net asset value, end of period $ 8.53
_____________________________________________________________________________
=============================================================================
Total return(a) (6.88)%
_____________________________________________________________________________
=============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 11
_____________________________________________________________________________
=============================================================================
Ratio of expenses to average net assets:
With fee waivers 1.35%(b)
-----------------------------------------------------------------------------
Without fee waivers 1.38%(b)
=============================================================================
Ratio of net investment loss to average net assets (0.36)%(b)
_____________________________________________________________________________
=============================================================================
Portfolio turnover rate 18%
_____________________________________________________________________________
=============================================================================
|
(a) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $9,579.
FS-218
VALUE FUND
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
INSTITUTIONAL CLASS
-------------------
MARCH 15, 2002
(DATE SALES
COMMENCED) TO
JUNE 30,
2002
-------------------
Net asset value, beginning of period $10.66
-----------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.00
===================================================================================
Net gains (losses) on securities (both realized and
unrealized) (2.11)
===================================================================================
Total from investment operations (2.11)
===================================================================================
Net asset value, end of period $ 8.55
___________________________________________________________________________________
===================================================================================
Total return(a) (19.79)%
___________________________________________________________________________________
===================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,295
___________________________________________________________________________________
===================================================================================
Ratio of expenses to average net assets:
With fee waivers 0.73%(b)
-----------------------------------------------------------------------------------
Without fee waivers 0.76%(b)
===================================================================================
Ratio of net investment income to average net assets 0.26%(b)
___________________________________________________________________________________
===================================================================================
Portfolio turnover rate 18%
___________________________________________________________________________________
===================================================================================
|
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $429,500.
FS-219
JUNE 30, 2002
(UNAUDITED)
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS-82.47%
ADVERTISING-2.04%
Interpublic Group of Cos., Inc. (The) 11,300 $ 279,788
-------------------------------------------------------------------------
Omnicom Group Inc. 42,700 1,955,660
=========================================================================
2,235,448
=========================================================================
AIRLINES-0.59%
Southwest Airlines Co. 40,000 646,400
=========================================================================
APPAREL RETAIL-0.75%
Abercrombie & Fitch Co.-Class A(a) 34,000 820,080
=========================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-2.61%
Coach, Inc.(a) 52,100 2,860,290
=========================================================================
APPLICATION SOFTWARE-1.09%
Cadence Design Systems, Inc.(a) 46,900 756,028
-------------------------------------------------------------------------
PeopleSoft, Inc.(a) 30,000 446,400
=========================================================================
1,202,428
=========================================================================
BANKS-1.21%
Bank of New York Co., Inc. (The) 39,400 1,329,750
=========================================================================
BREWERS-0.51%
Anheuser-Busch Cos., Inc. 11,100 555,000
=========================================================================
BROADCASTING & CABLE TV-3.46%
Comcast Corp.-Class A(a) 65,200 1,554,368
-------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 71,600 2,248,240
=========================================================================
3,802,608
=========================================================================
COMPUTER & ELECTRONICS RETAIL-3.39%
Best Buy Co., Inc.(a) 45,500 1,651,650
-------------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 44,200 2,069,002
=========================================================================
3,720,652
=========================================================================
COMPUTER HARDWARE-1.17%
Dell Computer Corp.(a) 49,000 1,280,860
=========================================================================
CONSTRUCTION & ENGINEERING-1.28%
Jacobs Engineering Group Inc.(a) 40,300 1,401,634
=========================================================================
CONSUMER FINANCE-1.11%
Capital One Financial Corp. 20,000 1,221,000
=========================================================================
DATA PROCESSING SERVICES-6.71%
BISYS Group, Inc. (The)(a) 116,000 3,862,800
-------------------------------------------------------------------------
Concord EFS, Inc.(a) 74,000 2,230,360
-------------------------------------------------------------------------
First Data Corp. 34,200 1,272,240
=========================================================================
7,365,400
=========================================================================
|
MARKET
SHARES VALUE
DIVERSIFIED FINANCIAL SERVICES-11.36%
Ambac Financial Group, Inc. 20,000 $ 1,344,000
-------------------------------------------------------------------------
Citigroup Inc. 89,300 3,460,375
-------------------------------------------------------------------------
Fannie Mae 29,000 2,138,750
-------------------------------------------------------------------------
Freddie Mac 36,000 2,203,200
-------------------------------------------------------------------------
Lehman Brothers Holdings Inc. 28,000 1,750,560
-------------------------------------------------------------------------
Morgan Stanley 36,500 1,572,420
=========================================================================
12,469,305
=========================================================================
EMPLOYMENT SERVICES-1.34%
Robert Half International Inc.(a) 63,000 1,467,900
=========================================================================
GENERAL MERCHANDISE STORES-2.39%
Target Corp. 68,900 2,625,090
=========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-1.47%
Laboratory Corp. of America Holdings(a) 35,400 1,616,010
=========================================================================
HEALTH CARE EQUIPMENT-2.75%
Baxter International Inc. 68,000 3,022,600
=========================================================================
HEALTH CARE FACILITIES-4.90%
HCA Inc. 61,000 2,897,500
-------------------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 68,400 2,483,604
=========================================================================
5,381,104
=========================================================================
HOTELS, RESORTS & CRUISE LINES-1.13%
Royal Caribbean Cruises Ltd. 63,600 1,240,200
=========================================================================
INDUSTRIAL CONGLOMERATES-2.22%
General Electric Co. 83,800 2,434,390
=========================================================================
IT CONSULTING & SERVICES-2.01%
Affiliated Computer Services, Inc.-Class A(a) 46,600 2,212,568
=========================================================================
MANAGED HEALTH CARE-2.65%
Anthem, Inc.(a) 27,400 1,848,952
-------------------------------------------------------------------------
WellPoint Health Networks Inc.(a) 13,600 1,058,216
=========================================================================
2,907,168
=========================================================================
MOVIES & ENTERTAINMENT-1.33%
Viacom Inc.-Class B(a) 33,000 1,464,210
=========================================================================
MULTI-LINE INSURANCE-2.05%
American International Group, Inc. 33,000 2,251,590
=========================================================================
NETWORKING EQUIPMENT-0.31%
NetScreen Technologies, Inc.(a) 37,500 344,250
=========================================================================
OIL & GAS DRILLING-2.21%
ENSCO International Inc. 61,000 1,662,860
-------------------------------------------------------------------------
|
FS-220
MARKET
SHARES VALUE
OIL & GAS DRILLING-(CONTINUED)
GlobalSantaFe Corp. 28,000 $ 765,800
=========================================================================
2,428,660
=========================================================================
OIL & GAS EQUIPMENT & SERVICES-2.39%
Baker Hughes Inc. 30,000 998,700
-------------------------------------------------------------------------
BJ Services Co.(a) 48,000 1,626,240
=========================================================================
2,624,940
=========================================================================
PHARMACEUTICALS-5.86%
Allergan, Inc. 36,100 2,409,675
-------------------------------------------------------------------------
King Pharmaceuticals, Inc.(a) 47,900 1,065,775
-------------------------------------------------------------------------
Pfizer Inc. 84,500 2,957,500
=========================================================================
6,432,950
=========================================================================
RESTAURANTS-0.75%
Brinker International, Inc.(a) 26,000 825,500
=========================================================================
SEMICONDUCTORS-3.31%
Microchip Technology Inc.(a) 86,700 2,378,181
-------------------------------------------------------------------------
Micron Technology, Inc.(a) 62,000 1,253,640
=========================================================================
3,631,821
=========================================================================
SOFT DRINKS-1.37%
PepsiCo, Inc. 31,300 1,508,660
=========================================================================
SPECIALTY STORES-1.01%
Advance Auto Parts, Inc.(a) 10,000 545,100
-------------------------------------------------------------------------
Williams-Sonoma, Inc.(a) 18,400 564,144
=========================================================================
1,109,244
=========================================================================
SYSTEMS SOFTWARE-3.06%
Microsoft Corp.(a) 29,000 1,586,300
-------------------------------------------------------------------------
Network Associates, Inc.(a) 55,000 1,059,850
-------------------------------------------------------------------------
VERITAS Software Corp.(a) 36,000 712,440
=========================================================================
3,358,590
=========================================================================
TELECOMMUNICATIONS EQUIPMENT-0.68%
Polycom, Inc.(a) 62,000 743,380
=========================================================================
Total Domestic Common Stocks
(Cost $93,042,222) 90,541,680
=========================================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-14.90%
BERMUDA-4.39%
Accenture Ltd.-Class A (IT Consulting &
Services)(a) 83,500 1,586,500
-------------------------------------------------------------------------
ACE Ltd. (Property & Casualty Insurance) 30,000 948,000
-------------------------------------------------------------------------
|
MARKET
SHARES VALUE
BERMUDA-(CONTINUED)
Everest Re Group, Ltd. (Reinsurance) 40,800 $ 2,282,760
=========================================================================
4,817,260
=========================================================================
CANADA-2.51%
Biovail Corp. (Pharmaceuticals)(a) 42,900 1,242,384
-------------------------------------------------------------------------
Celestica Inc. (Electronic Equipment &
Instruments)(a) 66,500 1,510,215
=========================================================================
2,752,599
=========================================================================
IRELAND-1.56%
Ryanair Holdings PLC-ADR (Airlines)(a) 49,000 1,708,679
=========================================================================
MEXICO-1.02%
Wal-Mart de Mexico S.A. de C.V.-Series V
(General Merchandise Stores) 485,000 1,121,782
=========================================================================
NETHERLANDS-1.22%
ASML Holding N.V.-New York Shares
(Semiconductor Equipment)(a) 89,000 1,345,680
=========================================================================
SINGAPORE-0.38%
Flextronics International Ltd. (Electronic
Equipment & Instruments)(a) 59,300 422,809
=========================================================================
UNITED KINGDOM-3.82%
BP PLC-ADR (Integrated Oil & Gas) 16,700 843,183
-------------------------------------------------------------------------
Willis Group Holdings Ltd. (Insurance
Brokers)(a) 101,800 3,350,238
=========================================================================
4,193,421
=========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $21,280,981) 16,362,230
=========================================================================
PRINCIPAL
AMOUNT
U.S. TREASURY SECURITIES-1.82%
U.S. TREASURY BILLS-1.82%
1.67%, 09/19/02 (Cost $1,992,600)(b) $2,000,000 1,993,240
=========================================================================
SHARES
MONEY MARKET FUNDS-1.80%
STIC Liquid Assets Portfolio(c) 986,616 986,616
-------------------------------------------------------------------------
STIC Prime Portfolio(c) 986,616 986,616
=========================================================================
Total Money Market Funds
(Cost $1,973,232) 1,973,232
=========================================================================
TOTAL INVESTMENTS-100.99% (Cost $118,289,035) 110,870,382
=========================================================================
OTHER ASSETS LESS LIABILITIES-(0.99%) (1,089,987)
=========================================================================
NET ASSETS-100.00% $109,780,395
_________________________________________________________________________
=========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security traded on a discount basis. The interest rate shown represents the
discount rate at the time of purchase by the Fund.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-221
ASSETS:
Investments, at market value (cost
$118,289,035)* $110,870,382
-----------------------------------------------------------
Receivables for:
Investments sold 1,659,379
-----------------------------------------------------------
Fund shares sold 120,199
-----------------------------------------------------------
Dividends 35,304
-----------------------------------------------------------
Investment for deferred compensation plan 10,821
-----------------------------------------------------------
Collateral for securities loaned 1,620,650
-----------------------------------------------------------
Other assets 24,798
===========================================================
Total assets 114,341,533
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 1,879,396
-----------------------------------------------------------
Fund shares reacquired 819,363
-----------------------------------------------------------
Deferred compensation plan 10,821
-----------------------------------------------------------
Collateral upon return of securities loaned 1,620,650
-----------------------------------------------------------
Accrued distribution fees 159,191
-----------------------------------------------------------
Accrued transfer agent fees 32,305
-----------------------------------------------------------
Accrued operating expenses 39,412
===========================================================
Total liabilities 4,561,138
===========================================================
Net assets applicable to shares outstanding $109,780,395
___________________________________________________________
===========================================================
NET ASSETS:
Class A $ 39,622,547
___________________________________________________________
===========================================================
Class B $ 48,619,378
___________________________________________________________
===========================================================
Class C $ 21,538,470
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 6,881,228
___________________________________________________________
===========================================================
Class B 8,538,087
___________________________________________________________
===========================================================
Class C 3,782,763
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 5.76
-----------------------------------------------------------
Offering price per share:
(Net asset value of $5.76 divided by
94.50%) $ 6.10
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 5.69
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 5.69
___________________________________________________________
===========================================================
|
* At June 30, 2002, securities with an aggregate market value of $1,540,991 were on loan to brokers.
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$4,173) $ 308,451
-----------------------------------------------------------
Dividends from affiliated money market funds 96,897
-----------------------------------------------------------
Interest 17,340
-----------------------------------------------------------
Security lending income 16,643
===========================================================
Total investment income 439,331
===========================================================
EXPENSES:
Advisory fees 512,827
-----------------------------------------------------------
Administrative services fees 24,795
-----------------------------------------------------------
Custodian fees 15,823
-----------------------------------------------------------
Distribution fees -- Class A 88,977
-----------------------------------------------------------
Distribution fees -- Class B 296,748
-----------------------------------------------------------
Distribution fees -- Class C 132,801
-----------------------------------------------------------
Transfer agent fees 204,760
-----------------------------------------------------------
Trustees' fees 4,867
-----------------------------------------------------------
Other 63,726
===========================================================
Total expenses 1,345,324
===========================================================
Less: Fees waived (1,294)
-----------------------------------------------------------
Expenses paid indirectly (1,010)
===========================================================
Net expenses 1,343,020
===========================================================
Net investment income (loss) (903,689)
===========================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
FUTURES CONTRACTS AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (17,509,235)
-----------------------------------------------------------
Foreign currencies 419
-----------------------------------------------------------
Futures contracts (540,659)
-----------------------------------------------------------
Option contracts written 65,098
===========================================================
(17,984,377)
===========================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (8,000,147)
-----------------------------------------------------------
Futures contracts (115,071)
===========================================================
(8,115,218)
===========================================================
Net gain (loss) from investment securities,
foreign currencies, futures contracts and
option contracts (26,099,595)
===========================================================
Net increase (decrease) in net assets
resulting from operations $(27,003,284)
___________________________________________________________
===========================================================
|
See Notes to Financial Statements.
FS-222
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND THE YEAR ENDED DECEMBER 31, 2001
(UNAUDITED)
JUNE 30, DECEMBER 31,
2002 2001
------------ ------------
OPERATIONS:
Net investment income (loss) $ (903,689) $ (1,631,805)
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and option
contracts (17,984,377) (42,661,120)
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and futures contracts (8,115,218) 6,794,527
==========================================================================================
Net increase (decrease) in net assets resulting from
operations (27,003,284) (37,498,398)
==========================================================================================
Distributions to shareholders from net investment income:
Class A -- (64,952)
------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A -- (16,203)
------------------------------------------------------------------------------------------
Class B -- (19,267)
------------------------------------------------------------------------------------------
Class C -- (8,700)
------------------------------------------------------------------------------------------
Share transactions-net:
Class A (8,076,463) 16,139,168
------------------------------------------------------------------------------------------
Class B (7,110,643) 20,998,585
------------------------------------------------------------------------------------------
Class C (3,220,927) 6,902,879
==========================================================================================
Net increase (decrease) in net assets (45,411,317) 6,433,112
==========================================================================================
NET ASSETS:
Beginning of period 155,191,712 148,758,600
==========================================================================================
End of period $109,780,395 $155,191,712
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $181,408,696 $199,816,729
------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (913,632) (9,943)
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures contracts and
option contracts (63,296,015) (45,311,638)
------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and futures contracts (7,418,654) 696,564
==========================================================================================
$109,780,395 $155,191,712
__________________________________________________________________________________________
==========================================================================================
|
See Notes to Financial Statements.
FS-223
JUNE 30, 2002
(UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Value II Fund (the "Fund") is a series portfolio of AIM Funds Group (the "Trust"). The Trust is a Delaware business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of twelve separate portfolios, each having an unlimited number of shares of beneficial interest. 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 long-term growth of capital.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date.
C. DISTRIBUTIONS -- Distributions from income and 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 from 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.
FS-224
The Fund has a capital loss carryforward of $40,823,682 as of December 31, 2001 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized in the year 2009.
E. 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 the 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.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts as a hedge against changes in market conditions. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities as collateral for the account of the broker (the Fund's agent in acquiring the futures position). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by "marking to market" on a daily basis to reflect the market value of the contracts at the end of each day's trading. Variation margin payments are made or received depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund's basis in the contract. Risks include the possibility of an illiquid market and that a change in value of the contracts may not correlate with changes in the value of the securities being hedged.
H. COVERED CALL OPTIONS -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded 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 written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received.
I. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of the Fund's average daily net assets. AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market fund of which the Fund has invested. For the six months ended June 30, 2002, AIM waived fees of $1,294.
The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2002, AIM was paid $24,795 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the six months ended June 30, 2002, AFS retained $129,301 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 and Class C shares of the Fund. The Trust 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. 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. For the six months ended June 30, 2002, the Class A, Class B and Class C shares paid AIM Distributors $88,977,
FS-225
$296,748 and $132,801, respectively, as compensation under the Plans.
AIM Distributors retained commissions of $14,997 from sales of the Class A shares of the Fund during the six months ended June 30, 2002. 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 June 30, 2002, AIM Distributors retained $3,718, $0 and $3,907 in contingent deferred sales charges imposed on redemptions of Class A, Class B and Class C shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the six months ended June 30, 2002, the Fund paid legal fees of $1,396 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended June 30, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $986 and reductions in custodian fees of $24 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $1,010.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
NOTE 5--BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $500,000,000 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 six months ended June 30,
2002, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's total assets. Such loans are secured by collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Cash collateral pursuant to these loans is invested in short-term money market instruments or affiliated money market funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. It is the Fund's policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day. Therefore, the value of the collateral may be temporarily less than the value of the securities on loan.
At June 30, 2002, securities with an aggregate value of $1,540,991 were on loan to brokers. The loans were secured by cash collateral of $1,620,650 received by the Fund and invested subsequently in STIC Liquid Assets Portfolio, an affiliated money market fund. For the six months ended June 30, 2002, the Fund received fees of $16,643 for securities lending.
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
-------- --------
Distributions paid from ordinary
income $109,122 $169,491
___________________________________________________________
===========================================================
|
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Capital loss carryforward $(40,823,682)
-----------------------------------------------------------
Unrealized appreciation (depreciation) (3,801,335)
===========================================================
$(44,625,017)
___________________________________________________________
===========================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of capital losses incurred after October 31, the realization for tax purposes of unrealized gains on certain futures contracts, and other deferrals.
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the six months ended June 30, 2002 was $45,729,345 and $54,966,955, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of June 30, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 9,849,377 ----------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (18,192,549) =========================================================== Net unrealized appreciation (depreciation) of investment securities $ (8,343,172) ___________________________________________________________ =========================================================== Cost of investments for tax purposes is $119,213,554. |
NOTE 9--CALL OPTION CONTRACTS
Transactions in call options written during the six months ended June 30, 2002 are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
Beginning of period -- $ --
---------------------------------------------------------
Written 380 69,658
---------------------------------------------------------
Closed (380) (69,658)
=========================================================
End of period -- $ --
_________________________________________________________
=========================================================
|
FS-226
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2002 and the year ended December 31, 2001 were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2002 DECEMBER 31, 2001
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold:
Class A 681,002 $ 4,504,066 5,985,549 $ 48,356,484
----------------------------------------------------------------------------------------------------------------------
Class B 564,039 3,726,652 5,412,852 43,258,374
----------------------------------------------------------------------------------------------------------------------
Class C 266,584 1,770,268 2,272,059 18,177,771
======================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 11,649 78,507
----------------------------------------------------------------------------------------------------------------------
Class B -- -- 2,749 18,379
----------------------------------------------------------------------------------------------------------------------
Class C -- -- 1,235 8,260
======================================================================================================================
Reacquired:
Class A (1,957,190) (12,580,529) (4,256,465) (32,295,823)
----------------------------------------------------------------------------------------------------------------------
Class B (1,672,797) (10,837,295) (3,057,696) (22,278,168)
----------------------------------------------------------------------------------------------------------------------
Class C (771,365) (4,991,195) (1,532,565) (11,283,152)
======================================================================================================================
(2,889,727) $(18,408,033) 4,839,367 $ 44,040,632
______________________________________________________________________________________________________________________
======================================================================================================================
|
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
------------------------------------------------
AUGUST 31, 2000
(DATE
SIX MONTHS OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------- ------------ ---------------
Net asset value, beginning of period $ 7.06 $ 8.64 $ 10.00
--------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03) (0.04) 0.00(a)
--------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.27) (1.53) (1.35)
==============================================================================================================
Total from investment operations (1.30) (1.57) (1.35)
==============================================================================================================
Less distributions:
Dividends from net investment income -- (0.01) --
--------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- 0.00 (0.01)
==============================================================================================================
Total distributions -- (0.01) (0.01)
==============================================================================================================
Net asset value, end of period $ 5.76 $ 7.06 $ 8.64
______________________________________________________________________________________________________________
==============================================================================================================
Total return(b) (18.41)% (18.17)% (13.49)%
______________________________________________________________________________________________________________
==============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $39,623 $57,591 $55,409
______________________________________________________________________________________________________________
==============================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.56%(c) 1.52% 1.40%(d)
--------------------------------------------------------------------------------------------------------------
Without fee waivers 1.56%(c) 1.54% 2.00%(d)
==============================================================================================================
Ratio of net investment income (loss) to average net assets (0.91)%(c) (0.56)% 0.10%(d)
______________________________________________________________________________________________________________
==============================================================================================================
Portfolio turnover rate 37% 67% 13%
______________________________________________________________________________________________________________
==============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less
than one year.
(c) Ratios are annualized and based on average daily net assets of
$51,265,419.
(d) Annualized.
FS-227
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
------------------------------------------------
AUGUST 31, 2000
(DATE
SIX MONTHS OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------- ------------ ---------------
Net asset value, beginning of period $ 7.00 $ 8.61 $ 10.00
--------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05) (0.09) (0.02)(a)
--------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.26) (1.52) (1.36)
==============================================================================================================
Total from investment operations (1.31) (1.61) (1.38)
==============================================================================================================
Less distributions from net realized gains -- 0.00 (0.01)
==============================================================================================================
Net asset value, end of period $ 5.69 $ 7.00 $ 8.61
______________________________________________________________________________________________________________
==============================================================================================================
Total return(b) (18.71)% (18.68)% (13.79)%
______________________________________________________________________________________________________________
==============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $48,619 $67,571 $62,792
______________________________________________________________________________________________________________
==============================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.21%(c) 2.18% 2.10%(d)
--------------------------------------------------------------------------------------------------------------
Without fee waivers 2.21%(c) 2.20% 2.70%(d)
==============================================================================================================
Ratio of net investment income (loss) to average net assets (1.56)%(c) (1.22)% (0.60)%(d)
______________________________________________________________________________________________________________
==============================================================================================================
Portfolio turnover rate 37% 67% 13%
______________________________________________________________________________________________________________
==============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$59,841,366.
(d) Annualized.
CLASS C
------------------------------------------------
AUGUST 31, 2000
(DATE
SIX MONTHS OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------- ------------ ---------------
Net asset value, beginning of period $ 7.00 $ 8.62 $ 10.00
--------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05) (0.09) (0.02)(a)
--------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.26) (1.53) (1.35)
==============================================================================================================
Total from investment operations (1.31) (1.62) (1.37)
==============================================================================================================
Less distributions from net realized gains -- 0.00 (0.01)
==============================================================================================================
Net asset value, end of period $ 5.69 $ 7.00 $ 8.62
______________________________________________________________________________________________________________
==============================================================================================================
Total return(b) (18.71)% (18.77)% (13.69)%
______________________________________________________________________________________________________________
==============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $21,538 $30,030 $30,557
______________________________________________________________________________________________________________
==============================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.21%(c) 2.18% 2.10%(d)
--------------------------------------------------------------------------------------------------------------
Without fee waivers 2.21%(c) 2.20% 2.70%(d)
==============================================================================================================
Ratio of net investment income (loss) to average net assets (1.56)%(c) (1.22)% (0.60)%(d)
______________________________________________________________________________________________________________
==============================================================================================================
Portfolio turnover rate 37% 67% 13%
______________________________________________________________________________________________________________
==============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$26,780,364.
(d) Annualized.
FS-228
JUNE 30, 2002
(UNAUDITED)
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-96.92%
ADVERTISING-2.87%
Interpublic Group of Cos., Inc. (The) 435,000 $ 10,770,600
-------------------------------------------------------------------------
Lamar Advertising Co.(a) 248,000 9,228,080
=========================================================================
19,998,680
=========================================================================
AEROSPACE & DEFENSE-1.25%
Lockheed Martin Corp. 125,000 8,687,500
=========================================================================
AIRLINES-0.46%
AirTran Holdings, Inc.(a) 600,000 3,210,000
=========================================================================
ALUMINUM-1.14%
Alcoa Inc. 240,000 7,956,000
=========================================================================
APPAREL RETAIL-2.77%
Gap, Inc. (The) 735,000 10,437,000
-------------------------------------------------------------------------
Ross Stores, Inc. 216,400 8,818,300
=========================================================================
19,255,300
=========================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-0.61%
Coach, Inc.(a) 78,000 4,282,200
=========================================================================
APPLICATION SOFTWARE-2.38%
Activision, Inc.(a) 85,600 2,487,536
-------------------------------------------------------------------------
Mercury Interactive Corp.(a) 100,000 2,296,000
-------------------------------------------------------------------------
National Instruments Corp.(a) 225,000 7,326,000
-------------------------------------------------------------------------
PeopleSoft, Inc.(a) 126,000 1,874,880
-------------------------------------------------------------------------
Secure Computing Corp.(a) 344,900 2,603,995
=========================================================================
16,588,411
=========================================================================
BANKS-4.88%
Bank of America Corp. 129,100 9,083,476
-------------------------------------------------------------------------
Bank of New York Co., Inc. (The) 105,000 3,543,750
-------------------------------------------------------------------------
Bank One Corp. 275,000 10,582,000
-------------------------------------------------------------------------
Comerica Inc. 92,000 5,648,800
-------------------------------------------------------------------------
Synovus Financial Corp. 185,000 5,091,200
=========================================================================
33,949,226
=========================================================================
BIOTECHNOLOGY-0.85%
Gilead Sciences, Inc.(a) 179,000 5,885,520
=========================================================================
BROADCASTING & CABLE TV-4.30%
Clear Channel Communications, Inc.(a) 230,000 7,364,600
-------------------------------------------------------------------------
Comcast Corp.-Class A(a) 241,000 5,745,440
-------------------------------------------------------------------------
Cox Communications, Inc.-Class A(a) 215,000 5,923,250
-------------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 276,000 7,203,600
-------------------------------------------------------------------------
|
MARKET
SHARES VALUE
BROADCASTING & CABLE TV-(CONTINUED)
Univision Communications Inc.-Class A(a) 117,000 $ 3,673,800
=========================================================================
29,910,690
=========================================================================
BUILDING PRODUCTS-3.99%
American Standard Cos. Inc.(a) 207,000 15,545,700
-------------------------------------------------------------------------
Masco Corp. 451,000 12,226,610
=========================================================================
27,772,310
=========================================================================
COMPUTER & ELECTRONICS RETAIL-0.81%
CDW Computer Centers, Inc.(a) 121,000 5,664,010
=========================================================================
CONSUMER ELECTRONICS-1.06%
Koninklijke (Royal) Philips Electronics N.V.-
New York Shares (Netherlands) 266,207 7,347,313
=========================================================================
CONSUMER FINANCE-1.35%
AmeriCredit Corp.(a) 181,100 5,079,855
-------------------------------------------------------------------------
Capital One Financial Corp. 70,800 4,322,340
=========================================================================
9,402,195
=========================================================================
DATA PROCESSING SERVICES-6.33%
BISYS Group, Inc. (The)(a) 506,000 16,849,800
-------------------------------------------------------------------------
Ceridian Corp.(a) 809,500 15,364,310
-------------------------------------------------------------------------
DST Systems, Inc.(a) 99,700 4,557,287
-------------------------------------------------------------------------
First Data Corp. 138,000 5,133,600
-------------------------------------------------------------------------
Fiserv, Inc.(a) 59,000 2,165,890
=========================================================================
44,070,887
=========================================================================
DIVERSIFIED COMMERCIAL SERVICES-2.10%
H&R Block, Inc. 317,000 14,629,550
=========================================================================
DIVERSIFIED FINANCIAL SERVICES-6.34%
Citigroup Inc. 308,500 11,954,375
-------------------------------------------------------------------------
J.P. Morgan Chase & Co. 446,000 15,128,320
-------------------------------------------------------------------------
Lehman Brothers Holdings Inc. 92,800 5,801,856
-------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 277,000 11,218,500
=========================================================================
44,103,051
=========================================================================
DRUG RETAIL-1.31%
CVS Corp. 129,300 3,956,580
-------------------------------------------------------------------------
Walgreen Co. 133,000 5,137,790
=========================================================================
9,094,370
=========================================================================
ELECTRIC UTILITIES-2.08%
PG&E Corp.(a) 532,000 9,517,480
-------------------------------------------------------------------------
Public Service Enterprise Group Inc. 113,900 4,931,870
=========================================================================
14,449,350
=========================================================================
|
FS-229
MARKET
SHARES VALUE
ELECTRONIC EQUIPMENT & INSTRUMENTS-0.34%
Celestica Inc. (Canada)(a) 104,000 $ 2,361,840
=========================================================================
ENVIRONMENTAL SERVICES-1.90%
Waste Management, Inc. 509,000 13,259,450
=========================================================================
FOOD RETAIL-2.04%
Kroger Co. (The)(a) 715,000 14,228,500
=========================================================================
GENERAL MERCHANDISE STORES-1.92%
Target Corp. 350,000 13,335,000
=========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-3.67%
Express Scripts, Inc.(a) 200,000 10,022,000
-------------------------------------------------------------------------
IMPATH Inc.(a) 52,500 942,375
-------------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 220,000 10,043,000
-------------------------------------------------------------------------
McKesson Corp. 138,000 4,512,600
=========================================================================
25,519,975
=========================================================================
HEALTH CARE EQUIPMENT-0.55%
Biomet, Inc.(a) 141,000 3,823,920
=========================================================================
HEALTH CARE FACILITIES-2.56%
Community Health Systems Inc.(a) 100,000 2,680,000
-------------------------------------------------------------------------
HCA Inc. 150,000 7,125,000
-------------------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 111,800 4,059,458
-------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 55,000 3,935,250
=========================================================================
17,799,708
=========================================================================
INDUSTRIAL CONGLOMERATES-1.83%
General Electric Co. 160,000 4,648,000
-------------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 601,000 8,119,510
=========================================================================
12,767,510
=========================================================================
LEISURE PRODUCTS-0.77%
Mattel, Inc. 254,000 5,354,320
=========================================================================
LIFE & HEALTH INSURANCE-1.75%
UnumProvident Corp. 478,000 12,165,100
=========================================================================
MANAGED HEALTH CARE-2.60%
CIGNA Corp. 122,000 11,885,240
-------------------------------------------------------------------------
UnitedHealth Group Inc. 68,200 6,243,710
=========================================================================
18,128,950
=========================================================================
MOVIES & ENTERTAINMENT-2.57%
AOL Time Warner Inc.(a) 224,500 3,302,395
-------------------------------------------------------------------------
Macrovision Corp.(a) 175,000 2,294,250
-------------------------------------------------------------------------
Viacom Inc.-Class B(a) 107,300 4,760,901
-------------------------------------------------------------------------
Walt Disney Co. (The) 400,000 7,560,000
=========================================================================
17,917,546
=========================================================================
MULTI-LINE INSURANCE-1.18%
American International Group, Inc. 120,000 8,187,600
=========================================================================
|
MARKET
SHARES VALUE
MULTI-UTILITIES & UNREGULATED POWER-1.45%
Duke Energy Corp. 200,000 $ 6,220,000
-------------------------------------------------------------------------
MDU Resources Group, Inc. 146,700 3,856,743
=========================================================================
10,076,743
=========================================================================
NETWORKING EQUIPMENT-0.55%
Cisco Systems, Inc.(a) 275,000 3,836,250
=========================================================================
OIL & GAS DRILLING-4.12%
ENSCO International Inc. 528,600 14,409,636
-------------------------------------------------------------------------
Transocean Inc. 459,210 14,304,391
=========================================================================
28,714,027
=========================================================================
OIL & GAS EQUIPMENT & SERVICES-0.65%
BJ Services Co.(a) 133,000 4,506,040
=========================================================================
OIL & GAS EXPLORATION & PRODUCTION-0.83%
Apache Corp. 100,820 5,795,134
=========================================================================
PHARMACEUTICALS-4.05%
Biovail Corp. (Canada)(a) 98,000 2,838,080
-------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 77,000 5,451,600
-------------------------------------------------------------------------
ICN Pharmaceuticals, Inc. 500,000 12,105,000
-------------------------------------------------------------------------
Pfizer Inc. 223,000 7,805,000
=========================================================================
28,199,680
=========================================================================
PROPERTY & CASUALTY INSURANCE-1.34%
ACE Ltd. (Bermuda) 295,000 9,322,000
=========================================================================
REINSURANCE-0.86%
Everest Re Group, Ltd. (Bermuda) 106,800 5,975,460
=========================================================================
SEMICONDUCTOR EQUIPMENT-1.74%
Applied Materials, Inc.(a) 500,000 9,510,000
-------------------------------------------------------------------------
Cabot Microelectronics Corp.(a) 60,000 2,589,600
=========================================================================
12,099,600
=========================================================================
SEMICONDUCTORS-3.29%
Analog Devices, Inc.(a) 165,000 4,900,500
-------------------------------------------------------------------------
Broadcom Corp.-Class A(a) 47,100 826,134
-------------------------------------------------------------------------
Cirrus Logic, Inc.(a) 125,000 936,250
-------------------------------------------------------------------------
Intel Corp. 200,000 3,654,000
-------------------------------------------------------------------------
Texas Instruments Inc. 350,000 8,295,000
-------------------------------------------------------------------------
Zoran Corp.(a) 187,500 4,295,625
=========================================================================
22,907,509
=========================================================================
SOFT DRINKS-1.19%
PepsiCo, Inc. 172,000 8,290,400
=========================================================================
SPECIALTY STORES-0.61%
Copart, Inc.(a) 261,000 4,236,030
=========================================================================
SYSTEMS SOFTWARE-4.19%
Computer Associates International, Inc. 572,000 9,089,080
-------------------------------------------------------------------------
|
FS-230
MARKET
SHARES VALUE
SYSTEMS SOFTWARE-(CONTINUED)
Microsoft Corp.(a) 255,000 $ 13,948,500
-------------------------------------------------------------------------
VERITAS Software Corp.(a) 310,000 6,134,900
=========================================================================
29,172,480
=========================================================================
TELECOMMUNICATIONS EQUIPMENT-1.49%
Harmonic Inc.(a) 350,000 1,280,650
-------------------------------------------------------------------------
UTStarcom, Inc.(a) 450,000 9,076,500
=========================================================================
10,357,150
=========================================================================
Total Common Stocks & Other Equity
Interests (Cost $729,813,347) 674,594,485
=========================================================================
|
MARKET
SHARES VALUE
MONEY MARKET FUNDS-2.89%
STIC Liquid Assets Portfolio(b) 10,064,571 $ 10,064,571
-------------------------------------------------------------------------
STIC Prime Portfolio(b) 10,064,571 10,064,571
=========================================================================
Total Money Market Funds (Cost
$20,129,142) 20,129,142
=========================================================================
TOTAL INVESTMENTS-99.81% (Cost $749,942,489) 694,723,627
=========================================================================
OTHER ASSETS LESS LIABILITIES-0.19% 1,292,244
=========================================================================
NET ASSETS-100.00% $696,015,871
_________________________________________________________________________
=========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-231
ASSETS:
Investments, at market value (cost
$749,942,489)* $ 694,723,627
-----------------------------------------------------------
Receivables for:
Investments sold 10,513,530
-----------------------------------------------------------
Fund shares sold 1,024,840
-----------------------------------------------------------
Dividends 415,048
-----------------------------------------------------------
Investment for deferred compensation plan 71,148
-----------------------------------------------------------
Collateral for securities loaned 20,457,300
-----------------------------------------------------------
Other assets 34,948
===========================================================
Total assets 727,240,441
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 5,232,959
-----------------------------------------------------------
Fund shares reacquired 4,314,081
-----------------------------------------------------------
Deferred compensation plan 71,148
-----------------------------------------------------------
Collateral upon return of securities
loaned 20,457,300
-----------------------------------------------------------
Accrued distribution fees 772,006
-----------------------------------------------------------
Accrued transfer agent fees 268,526
-----------------------------------------------------------
Accrued operating expenses 108,550
===========================================================
Total liabilities 31,224,570
===========================================================
Net assets applicable to shares outstanding $ 696,015,871
___________________________________________________________
===========================================================
NET ASSETS:
Class A $ 331,278,286
___________________________________________________________
===========================================================
Class B $ 318,059,547
___________________________________________________________
===========================================================
Class C $ 46,678,038
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 22,986,211
___________________________________________________________
===========================================================
Class B 24,242,446
___________________________________________________________
===========================================================
Class C 3,562,291
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 14.41
-----------------------------------------------------------
Offering price per share:
(Net asset value of $14.41 divided by
94.50%) $ 15.25
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 13.12
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 13.10
___________________________________________________________
===========================================================
|
* At June 30, 2002, securities with an aggregate market value of $19,953,800 were on loan to brokers.
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$21,102) $ 2,834,176
-----------------------------------------------------------
Dividends from affiliated money market funds 276,889
-----------------------------------------------------------
Interest 16,523
-----------------------------------------------------------
Security lending income 21,042
===========================================================
Total investment income 3,148,630
===========================================================
EXPENSES:
Advisory fees 2,681,529
-----------------------------------------------------------
Administrative services fees 75,627
-----------------------------------------------------------
Custodian fees 39,159
-----------------------------------------------------------
Distribution fees -- Class A 471,081
-----------------------------------------------------------
Distribution fees -- Class B 1,925,851
-----------------------------------------------------------
Distribution fees -- Class C 271,997
-----------------------------------------------------------
Transfer agent fees 1,090,724
-----------------------------------------------------------
Trustees' fees 6,653
-----------------------------------------------------------
Other 150,480
===========================================================
Total expenses 6,713,101
===========================================================
Less: Fees waived (2,795)
-----------------------------------------------------------
Expenses paid indirectly (5,746)
===========================================================
Net expenses 6,704,560
===========================================================
Net investment income (loss) (3,555,930)
===========================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FUTURES
CONTRACTS:
Net realized gain (loss) from:
Investment securities (13,199,760)
-----------------------------------------------------------
Futures contracts (957,585)
===========================================================
(14,157,345)
===========================================================
Change in net unrealized appreciation
(depreciation) of investment securities (113,476,515)
===========================================================
Net gain (loss) from investment securities
and futures contracts (127,633,860)
===========================================================
Net increase (decrease) in net assets
resulting from operations $(131,189,790)
___________________________________________________________
===========================================================
|
See Notes to Financial Statements.
FS-232
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND THE YEAR ENDED DECEMBER 31, 2001
(UNAUDITED)
JUNE 30, DECEMBER 31,
2002 2001
------------- --------------
OPERATIONS:
Net investment income (loss) $ (3,555,930) $ (8,768,266)
---------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
futures contracts (14,157,345) (63,074,168)
---------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (113,476,515) (268,042,127)
=============================================================================================
Net increase (decrease) in net assets resulting from
operations (131,189,790) (339,884,561)
=============================================================================================
Distributions to shareholders from net realized gains:
Class A -- (302,937)
---------------------------------------------------------------------------------------------
Class B -- (357,522)
---------------------------------------------------------------------------------------------
Class C -- (50,347)
---------------------------------------------------------------------------------------------
Share transactions-net:
Class A (5,149,372) 6,643,157
---------------------------------------------------------------------------------------------
Class B (52,000,679) (51,890,759)
---------------------------------------------------------------------------------------------
Class C (3,536,849) 8,259,467
=============================================================================================
Net increase (decrease) in net assets (191,876,690) (377,583,502)
=============================================================================================
NET ASSETS:
Beginning of period 887,892,561 1,265,476,063
=============================================================================================
End of period $ 696,015,871 $ 887,892,561
_____________________________________________________________________________________________
=============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 838,988,116 $ 899,675,016
---------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (3,658,810) (102,880)
---------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and futures contracts (84,094,573) (69,937,228)
---------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (55,218,862) 58,257,653
=============================================================================================
$ 696,015,871 $ 887,892,561
_____________________________________________________________________________________________
=============================================================================================
|
See Notes to Financial Statements.
FS-233
JUNE 30, 2002
(UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Select Equity Fund (the "Fund") is a series portfolio of AIM Funds Group (the "Trust"). The Trust is a Delaware business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of twelve separate portfolios, each having an unlimited number of shares of beneficial interest. 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's objective is to achieve long-term growth of capital.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date.
C. DISTRIBUTIONS -- Distributions from income and 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 from 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 $47,261,707 as of December 31, 2001 which may be carried forward to offset
FS-234
future taxable gains, if any, which expires, if not previously utilized, in the year 2009.
E. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts as a hedge against changes in market conditions. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities as collateral for the account of the broker (the Fund's agent in acquiring the futures position). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by "marking to market" on a daily basis to reflect the market value of the contracts at the end of each day's trading. Variation margin payments are made or received depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund's basis in the contract. Risks include the possibility of an illiquid market and that a change in value of the contracts may not correlate with changes in the value of the securities being hedged.
F. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.80% of the first $150 million of the Fund's average daily net assets, plus 0.625% of the Fund's average daily net assets in excess of $150 million. AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market fund of which the Fund has invested. For the six months ended June 30, 2002, AIM waived fees of $2,795.
The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2002, AIM was paid $75,627 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the six months ended June 30, 2002, AFS was paid $696,547 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 and Class C shares of the Fund. The Trust 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 0.25% 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. 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. For the six months ended June 30, 2002, the Class A, Class B and Class C shares paid AIM Distributors $471,081, $1,925,851 and $271,997, respectively, as compensation under the Plans.
AIM Distributors retained commissions of $47,071 from sales of the Class A shares of the Fund during the six months ended June 30, 2002. 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 June 30, 2002, AIM Distributors retained $8,481, $0 and $4,776 in contingent deferred sales charges imposed on redemptions of Class A, Class B and Class C shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the six months ended June 30, 2002, the Fund paid legal fees of $1,942 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended June 30, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $5,745 and reductions in custodian fees of $1 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $5,746.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
NOTE 5--BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $500,000,000 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 six months ended June 30,
2002, 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. The commitment fee is
FS-235
allocated among the funds based on their respective average net assets for the period.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's total assets. Such loans are secured by collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Cash collateral pursuant to these loans is invested in short-term money market instruments or affiliated money market funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. It is the Fund's policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day. Therefore, the value of the collateral may be temporarily less than the value of the securities on loan.
At June 30, 2002, securities with an aggregate value of $19,953,800 were on loan to brokers. The loans were secured by cash collateral of $20,457,300 received by the Fund and subsequently invested in STIC Liquid Assets Portfolio, an affiliated money market fund. For the six months ended June 30, 2002, the Fund received fees of $21,042 for securities lending.
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
---- ----
Distributions paid from long-term
capital gain $710,806 $147,914,663
=============================================================
|
As of December 31, 2001, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Capital loss
carryforward $(47,261,707)
--------------------------------------
Unrealized appreciation 35,479,252
======================================
$(11,782,455)
______________________________________
======================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of capital losses incurred after October 31 and other deferrals.
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the six months ended June 30, 2002 was $302,887,591 and $367,472,043, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of June 30, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 77,397,872 ----------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (132,616,734) =========================================================== Net unrealized appreciation (depreciation) of investment securities $ (55,218,862) ___________________________________________________________ =========================================================== Investments have the same costs for tax and financial statement purposes. |
NOTE 9--SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2002 and the year ended December 31, 2001 were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2002 DECEMBER 31, 2001
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -------------
Sold:
Class A 3,185,750 $ 51,811,915 6,672,144 $ 124,637,977
-----------------------------------------------------------------------------------------------------------------------
Class B 1,004,268 14,916,938 4,452,066 77,747,707
-----------------------------------------------------------------------------------------------------------------------
Class C 357,371 5,295,253 1,686,037 28,895,794
=======================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 17,383 291,047
-----------------------------------------------------------------------------------------------------------------------
Class B -- -- 21,814 329,884
-----------------------------------------------------------------------------------------------------------------------
Class C -- -- 3,040 46,562
=======================================================================================================================
Reacquired:
Class A (3,533,474) (56,961,287) (6,609,149) (118,285,867)
-----------------------------------------------------------------------------------------------------------------------
Class B (4,565,227) (66,917,617) (8,062,270) (129,968,351)
-----------------------------------------------------------------------------------------------------------------------
Class C (604,079) (8,832,102) (1,300,657) (20,682,889)
=======================================================================================================================
(4,155,391) $(60,686,900) (3,119,592) $ (36,988,136)
_______________________________________________________________________________________________________________________
=======================================================================================================================
|
FS-236
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------------------------------------------
2002 2001 2000 1999 1998 1997
---------- -------- -------- -------- -------- --------
Net asset value, beginning of period $ 17.00 $ 22.88 $ 26.23 $ 19.35 $ 15.67 $ 14.78
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.08)(a) (0.01)(a) (0.06) (0.04) 0.01(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (2.55) (5.79) (0.44) 8.00 4.24 2.82
=================================================================================================================================
Total from investment operations (2.59) (5.87) (0.45) 7.94 4.20 2.83
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- -- (0.01)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.01) (2.90) (1.06) (0.52) (1.93)
=================================================================================================================================
Total distributions -- (0.01) (2.90) (1.06) (0.52) (1.94)
=================================================================================================================================
Net asset value, end of period $ 14.41 $ 17.00 $ 22.88 $ 26.23 $ 19.35 $ 15.67
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (15.23)% (25.64)% (1.77)% 41.48% 27.09% 19.54%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $331,278 $396,779 $532,042 $461,628 $320,143 $266,168
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.24%(c) 1.24% 1.07% 1.09% 1.11% 1.13%
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.47)%(c) (0.45)% (0.02)% (0.31)% (0.22)% 0.04%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 38% 117% 56% 31% 68% 110%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less
than one year.
(c) Ratios are annualized and based on average daily net assets of
$379,988,100.
CLASS B
------------------------------------------------------------------------------------
SIX MONTHS
ENDED JUNE YEAR ENDED DECEMBER 31,
30, -------------------------------------------------------------------
2002 2001 2000 1999 1998 1997
---------- -------- -------- -------- -------- --------
Net asset value, beginning of period $ 15.54 $ 21.07 $ 24.57 $ 18.33 $ 14.98 $ 14.32
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)(a) (0.20)(a) (0.22)(a) (0.23)(a) (0.17) (0.13)(a)
--------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (2.33) (5.32) (0.38) 7.53 4.04 2.72
================================================================================================================================
Total from investment operations (2.42) (5.52) (0.60) 7.30 3.87 2.59
================================================================================================================================
Less distributions from net realized gains -- (0.01) (2.90) (1.06) (0.52) (1.93)
================================================================================================================================
Net asset value, end of period $ 13.12 $ 15.54 $ 21.07 $ 24.57 $ 18.33 $ 14.98
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(b) (15.57)% (26.19)% (2.50)% 40.29% 26.13% 18.50%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $318,060 $432,002 $661,445 $592,555 $428,002 $356,186
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets 1.99%(c) 2.00% 1.84% 1.90% 1.93% 1.99%
================================================================================================================================
Ratio of net investment income (loss) to
average net assets (1.22)%(c) (1.21)% (0.80)% (1.12)% (1.04)% (0.82)%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate 38% 117% 56% 31% 68% 110%
________________________________________________________________________________________________________________________________
================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$388,362,185.
FS-237
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
--------------------------------------------------------------------------------------
AUGUST 4, 1997
SIX MONTHS (DATE SALES
ENDED YEAR ENDED DECEMBER 31, COMMENCED) TO
JUNE 30, ------------------------------------------------ DECEMBER 31,
2002 2001 2000 1999 1998 1997
---------- ------- ------- ------- ------ --------------
Net asset value, beginning of period $ 15.52 $ 21.05 $ 24.55 $ 18.32 $14.98 $17.65
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)(a) (0.20)(a) (0.22)(a) (0.23)(a) (0.17)(a) (0.04)(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (2.33) (5.32) (0.38) 7.52 4.03 (0.70)
=================================================================================================================================
Total from investment operations (2.42) (5.52) (0.60) 7.29 3.86 (0.74)
=================================================================================================================================
Less distributions from net realized
gains -- (0.01) (2.90) (1.06) (0.52) (1.93)
=================================================================================================================================
Net asset value, end of period $ 13.10 $ 15.52 $ 21.05 $ 24.55 $18.32 $14.98
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (15.59)% (26.21)% (2.50)% 40.26% 26.07% (3.86)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $46,678 $59,112 $71,989 $25,275 $8,501 $1,189
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.99%(c) 2.00% 1.84% 1.90% 1.93% 1.95%(d)
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets (1.22)%(c) (1.21)% (0.80)% (1.12)% (1.04)% (0.77)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 38% 117% 56% 31% 68% 110%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$54,850,242.
(d) Annualized.
FS-238
JUNE 30, 2002
(UNAUDITED)
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-92.14%
AEROSPACE & DEFENSE-0.32%
Integrated Defense Technologies, Inc.(a) 40,500 $ 1,191,915
========================================================================
AIR FREIGHT & LOGISTICS-0.40%
UTI Worldwide, Inc. 74,300 1,468,911
========================================================================
AIRLINES-1.47%
AirTran Holdings, Inc.(a) 290,100 1,552,035
------------------------------------------------------------------------
ExpressJet Holdings, Inc.(a) 297,100 3,877,155
========================================================================
5,429,190
========================================================================
APPAREL RETAIL-2.01%
Genesco Inc.(a) 146,900 3,577,015
------------------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 151,300 3,858,150
========================================================================
7,435,165
========================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-0.50%
Tommy Hilfiger Corp. (Hong Kong)(a) 127,900 1,831,528
========================================================================
APPLICATION SOFTWARE-3.17%
Advent Software, Inc.(a) 151,600 3,896,120
------------------------------------------------------------------------
HNC Software Inc.(a) 185,800 3,102,860
------------------------------------------------------------------------
National Instruments Corp.(a) 34,900 1,136,344
------------------------------------------------------------------------
Renaissance Learning, Inc.(a) 110,200 2,228,244
------------------------------------------------------------------------
Secure Computing Corp.(a) 180,000 1,359,000
========================================================================
11,722,568
========================================================================
AUTO PARTS & EQUIPMENT-0.94%
Tower Automotive, Inc.(a) 260,000 3,494,400
========================================================================
BANKS-1.37%
Bank of Bermuda Ltd. (Bermuda) 44,200 1,977,950
------------------------------------------------------------------------
Roslyn Bancorp, Inc. 141,800 3,095,494
========================================================================
5,073,444
========================================================================
BIOTECHNOLOGY-0.55%
Transkaryotic Therapies, Inc.(a) 56,300 2,029,615
========================================================================
BROADCASTING & CABLE TV-2.44%
Cox Radio, Inc.-Class A(a) 100,000 2,410,000
------------------------------------------------------------------------
Emmis Communications Corp.-Class A(a) 190,100 4,028,219
------------------------------------------------------------------------
Entravision Communications Corp.-Class A(a) 212,000 2,597,000
========================================================================
9,035,219
========================================================================
BUILDING PRODUCTS-0.99%
Elcor Corp. 134,100 3,667,635
========================================================================
CASINOS & GAMBLING-0.88%
Penn National Gaming, Inc.(a) 180,400 3,274,260
========================================================================
|
MARKET
SHARES VALUE
CATALOG RETAIL-2.72%
dELiA*s Corp.-Class A(a) 442,600 $ 2,257,260
------------------------------------------------------------------------
Insight Enterprises, Inc.(a) 153,250 3,860,368
------------------------------------------------------------------------
J. Jill Group Inc.(a) 104,300 3,958,185
========================================================================
10,075,813
========================================================================
COMMERCIAL PRINTING-0.57%
Valassis Communications, Inc.(a) 57,600 2,102,400
========================================================================
COMPUTER & ELECTRONICS RETAIL-0.94%
GameStop Corp.(a) 166,100 3,486,439
========================================================================
CONSTRUCTION & ENGINEERING-1.17%
Chicago Bridge & Iron Co. N.V.-New York
Shares (Netherlands) 74,000 2,086,060
------------------------------------------------------------------------
Granite Construction Inc. 89,200 2,256,760
========================================================================
4,342,820
========================================================================
CONSTRUCTION MATERIALS-0.54%
Florida Rock Industries, Inc. 56,300 2,016,103
========================================================================
CONSTRUCTION, FARM MACHINERY & HEAVY
TRUCKS-1.07%
AGCO Corp.(a) 50,000 975,000
------------------------------------------------------------------------
Terex Corp.(a) 133,000 2,991,170
========================================================================
3,966,170
========================================================================
CONSUMER ELECTRONICS-0.52%
Garmin Ltd. (Cayman Islands)(a) 87,500 1,929,375
========================================================================
CONSUMER FINANCE-4.15%
AmeriCredit Corp.(a) 145,000 4,067,250
------------------------------------------------------------------------
iDine Rewards Network Inc.(a) 275,200 3,164,800
------------------------------------------------------------------------
Metris Cos. Inc. 143,500 1,192,485
------------------------------------------------------------------------
New Century Financial Corp. 105,300 3,682,341
------------------------------------------------------------------------
Saxon Capital Acquisition Corp. (Acquired
07/27/01; Cost $707,000)(a)(b)(c) 70,000 1,138,900
------------------------------------------------------------------------
Saxon Capital, Inc.(a) 129,700 2,110,219
========================================================================
15,355,995
========================================================================
DATA PROCESSING SERVICES-1.13%
Alliance Data Systems Corp.(a) 163,300 4,172,315
========================================================================
DIVERSIFIED COMMERCIAL SERVICES-2.53%
NCO Group, Inc.(a) 134,000 2,918,520
------------------------------------------------------------------------
PRG-Schultz International, Inc.(a) 303,500 3,736,085
------------------------------------------------------------------------
Sylvan Learning Systems, Inc.(a) 136,000 2,711,840
========================================================================
9,366,445
========================================================================
DIVERSIFIED FINANCIAL SERVICES-3.86%
Affiliated Managers Group, Inc.(a) 60,400 3,714,600
------------------------------------------------------------------------
|
FS-239
MARKET
SHARES VALUE
DIVERSIFIED FINANCIAL SERVICES-(CONTINUED)
American Capital Strategies, Ltd. 46,000 $ 1,263,620
------------------------------------------------------------------------
Charter Municipal Mortgage Acceptance Co. 90,800 1,623,504
------------------------------------------------------------------------
MCG Capital Corp. 212,400 3,549,204
------------------------------------------------------------------------
Oxford Finance Corp. (Acquired 03/25/02; Cost
$1,500,000)(a)(b) 150,000 1,650,000
------------------------------------------------------------------------
W.P. Stewart & Co., Ltd. (Bermuda) 97,000 2,475,440
========================================================================
14,276,368
========================================================================
DRUG RETAIL-0.27%
Duane Reade Inc.(a) 29,500 1,004,475
========================================================================
ELECTRIC UTILITIES-0.91%
Black Hills Corp. 97,100 3,360,631
========================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-2.09%
Amphenol Corp.-Class A(a) 31,400 1,130,400
------------------------------------------------------------------------
Itron, Inc.(a) 50,000 1,311,500
------------------------------------------------------------------------
Tektronix, Inc.(a) 76,000 1,421,960
------------------------------------------------------------------------
Varian Inc.(a) 118,000 3,888,100
========================================================================
7,751,960
========================================================================
FOOD DISTRIBUTORS-0.62%
Performance Food Group Co.(a) 67,900 2,299,094
========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-3.24%
CryoLife, Inc.(a) 91,000 1,461,460
------------------------------------------------------------------------
D & K Healthcare Resources, Inc. 80,600 2,841,956
------------------------------------------------------------------------
First Horizon Pharmaceutical Corp.(a) 153,900 3,184,191
------------------------------------------------------------------------
MAXIMUS, Inc.(a) 97,600 3,093,920
------------------------------------------------------------------------
Medical Staffing Network Holdings, Inc.(a) 58,100 1,423,450
========================================================================
12,004,977
========================================================================
HEALTH CARE EQUIPMENT-0.91%
LifePoint, Inc. (Acquired 04/02/02; Cost
$1,500,000)(a)(b)(c) 400,000 979,200
------------------------------------------------------------------------
LifePoint, Inc.-Wts., expiring 04/02/07
(Acquired 04/02/02; Cost $0)(b)(c)(d) 80,000 1
------------------------------------------------------------------------
Wright Medical Group, Inc.(a) 118,600 2,390,976
========================================================================
3,370,177
========================================================================
HEALTH CARE FACILITIES-2.93%
Genesis Health Ventures, Inc.(a) 65,100 1,307,859
------------------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 104,700 3,801,657
------------------------------------------------------------------------
U.S. Physical Therapy, Inc.(a) 157,700 3,202,887
------------------------------------------------------------------------
VCA Antech, Inc.(a) 162,500 2,528,500
========================================================================
10,840,903
========================================================================
HOUSEHOLD APPLIANCES-0.92%
Snap-on Inc. 114,400 3,396,536
========================================================================
HOUSEHOLD PRODUCTS-0.88%
Dial Corp. (The) 162,500 3,253,250
========================================================================
INDUSTRIAL MACHINERY-0.87%
Flowserve Corp.(a) 108,000 3,218,400
========================================================================
|
MARKET
SHARES VALUE
INTERNET SOFTWARE & SERVICES-0.83%
Quovadx, Inc.(a) 234,700 $ 1,473,916
------------------------------------------------------------------------
SkillSoft Corp.(a) 202,700 1,591,195
========================================================================
3,065,111
========================================================================
IT CONSULTING & SERVICES-2.26%
Anteon International Corp.(a) 74,700 1,888,416
------------------------------------------------------------------------
Tier Technologies, Inc.-Class B(a) 200,000 3,564,000
------------------------------------------------------------------------
Titan Corp. (The)(a) 159,000 2,908,110
========================================================================
8,360,526
========================================================================
LEISURE PRODUCTS-0.32%
Nautilus Group, Inc. (The)(a) 38,900 1,190,340
========================================================================
LIFE & HEALTH INSURANCE-1.29%
American Medical Security Group, Inc.(a) 200,000 4,788,000
========================================================================
MANAGED HEALTH CARE-1.35%
Centene Corp.(a) 92,300 2,859,454
------------------------------------------------------------------------
Coventry Health Care, Inc.(a) 74,600 2,120,132
========================================================================
4,979,586
========================================================================
MOVIES & ENTERTAINMENT-1.11%
Macrovision Corp.(a) 178,100 2,334,891
------------------------------------------------------------------------
Regal Entertainment Group-Class A(a) 76,600 1,786,312
========================================================================
4,121,203
========================================================================
MULTI-UTILITIES & UNREGULATED POWER-1.43%
MDU Resources Group, Inc. 124,100 3,262,589
------------------------------------------------------------------------
Sierra Pacific Resources(a) 261,200 2,037,360
========================================================================
5,299,949
========================================================================
OFFICE ELECTRONICS-1.54%
IKON Office Solutions, Inc. 308,200 2,897,080
------------------------------------------------------------------------
Zebra Technologies Corp.-Class A(a) 58,500 2,820,870
========================================================================
5,717,950
========================================================================
OIL & GAS DRILLING-1.00%
Pride International, Inc.(a) 235,400 3,686,364
========================================================================
OIL & GAS EQUIPMENT & SERVICES-1.06%
Key Energy Services, Inc.(a) 375,000 3,937,500
========================================================================
OIL & GAS EXPLORATION & PRODUCTION-2.93%
Magnum Hunter Resources, Inc.(a) 524,400 4,137,516
------------------------------------------------------------------------
Magnum Hunter Resources, Inc.-Wts., expiring
03/21/05(d) 67,880 56,340
------------------------------------------------------------------------
Ultra Petroleum Corp.(a) 403,800 3,064,842
------------------------------------------------------------------------
XTO Energy, Inc. 173,400 3,572,040
========================================================================
10,830,738
========================================================================
PACKAGED FOODS & MEATS-0.66%
J. M. Smucker Co. (The) 71,857 2,452,479
========================================================================
PHARMACEUTICALS-1.44%
Axcan Pharma Inc. (Canada)(a) 175,000 2,614,500
------------------------------------------------------------------------
|
FS-240
MARKET
SHARES VALUE
PHARMACEUTICALS-(CONTINUED)
ICN Pharmaceuticals, Inc. 112,500 $ 2,723,625
========================================================================
5,338,125
========================================================================
PROPERTY & CASUALTY INSURANCE-0.82%
W. R. Berkley Corp. 55,300 3,041,500
========================================================================
PUBLISHING-0.71%
Belo Corp.-Class A 115,600 2,613,716
========================================================================
RAILROADS-1.61%
GATX Corp. 109,400 3,292,940
------------------------------------------------------------------------
Genesee & Wyoming Inc.-Class A(a) 117,600 2,653,056
========================================================================
5,945,996
========================================================================
REAL ESTATE INVESTMENT TRUSTS-3.56%
America First Mortgage Investments, Inc. 413,000 4,068,050
------------------------------------------------------------------------
Anworth Mortgage Asset Corp. 200,000 2,722,000
------------------------------------------------------------------------
CarrAmerica Realty Corp. 89,600 2,764,160
------------------------------------------------------------------------
FBR Asset Investment Corp. 108,100 3,605,135
========================================================================
13,159,345
========================================================================
REINSURANCE-1.68%
IPC Holdings, Ltd. (Bermuda) 113,700 3,472,398
------------------------------------------------------------------------
PartnerRe Ltd. (Bermuda) 55,900 2,736,305
========================================================================
6,208,703
========================================================================
RESTAURANTS-2.00%
AFC Enterprises, Inc.(a) 119,700 3,740,625
------------------------------------------------------------------------
Sonic Corp.(a) 117,150 3,679,682
========================================================================
7,420,307
========================================================================
SEMICONDUCTOR EQUIPMENT-1.67%
Brooks-PRI Automation, Inc.(a) 78,700 2,011,572
------------------------------------------------------------------------
Cabot Microelectronics Corp.(a) 47,400 2,045,784
------------------------------------------------------------------------
Varian Semiconductor Equipment Associates,
Inc.(a) 63,100 2,140,983
========================================================================
6,198,339
========================================================================
SEMICONDUCTORS-2.89%
Actel Corp.(a) 195,300 4,105,206
------------------------------------------------------------------------
DSP Group, Inc.(a) 120,200 2,355,920
------------------------------------------------------------------------
Fairchild Semiconductor Corp.-Class A(a) 72,500 1,761,750
------------------------------------------------------------------------
MIPS Technologies, Inc.-Class A(a) 244,700 1,509,799
------------------------------------------------------------------------
MIPS Technologies, Inc.-Class B(a) 175,700 978,649
========================================================================
10,711,324
========================================================================
|
MARKET
SHARES VALUE
SPECIALTY CHEMICALS-0.46%
International Flavors & Fragrances Inc. 52,600 $ 1,708,974
========================================================================
SPECIALTY STORES-6.71%
Advance Auto Parts, Inc.(a) 67,200 3,663,072
------------------------------------------------------------------------
Big 5 Sporting Goods Corp.(a) 285,000 4,072,650
------------------------------------------------------------------------
Copart, Inc.(a) 235,600 3,823,788
------------------------------------------------------------------------
CSK Auto Corp.(a) 300,000 4,182,000
------------------------------------------------------------------------
Rent-A-Center, Inc.(a) 61,700 3,579,217
------------------------------------------------------------------------
Sonic Automotive, Inc.(a) 98,400 2,533,800
------------------------------------------------------------------------
United Rentals, Inc.(a) 136,900 2,984,420
========================================================================
24,838,947
========================================================================
SYSTEMS SOFTWARE-0.65%
Borland Software Corp.(a) 120,600 1,242,180
------------------------------------------------------------------------
Micromuse Inc.(a) 263,800 1,173,910
========================================================================
2,416,090
========================================================================
TELECOMMUNICATIONS EQUIPMENT-1.76%
Inter-Tel, Inc. 191,500 3,276,565
------------------------------------------------------------------------
Plantronics, Inc.(a) 169,500 3,222,195
========================================================================
6,498,760
========================================================================
TOBACCO-0.49%
Vector Group Ltd. 102,500 1,804,000
========================================================================
TRUCKING-2.03%
Dollar Thrifty Automotive Group, Inc.(a) 151,400 3,921,260
------------------------------------------------------------------------
Landstar System, Inc.(a) 33,700 3,600,845
========================================================================
7,522,105
========================================================================
Total Common Stocks & Other Equity
Interests (Cost $329,045,338) 341,100,473
========================================================================
MONEY MARKET FUNDS-8.70%
STIC Liquid Assets Portfolio(e) 16,104,387 16,104,387
------------------------------------------------------------------------
STIC Prime Portfolio(e) 16,104,387 16,104,387
========================================================================
Total Money Market Funds (Cost
$32,208,774) 32,208,774
========================================================================
TOTAL INVESTMENTS-100.84% (Cost $361,254,112) 373,309,247
========================================================================
OTHER ASSETS LESS LIABILITIES-(0.84%) (3,108,469)
========================================================================
NET ASSETS-100.00% $370,200,778
________________________________________________________________________
========================================================================
|
Investment Abbreviations:
Wts. - Warrants |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted securities. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The aggregate market value of these securities at 06/30/02
was $3,768,101, which represented 1.02% of the Fund's net assets.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(d) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(e) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-241
JUNE 30, 2002
(UNAUDITED)
ASSETS:
Investments, at market value (cost
$361,254,112) $373,309,247
-----------------------------------------------------------
Receivables for:
Investments sold 8,658,668
-----------------------------------------------------------
Fund shares sold 2,442,646
-----------------------------------------------------------
Dividends 604,480
-----------------------------------------------------------
Investment for deferred compensation plan 10,697
-----------------------------------------------------------
Other assets 55,420
===========================================================
Total assets 385,081,158
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 10,591,971
-----------------------------------------------------------
Fund shares reacquired 3,803,157
-----------------------------------------------------------
Deferred compensation plan 10,697
-----------------------------------------------------------
Accrued distribution fees 399,153
-----------------------------------------------------------
Accrued transfer agent fees 55,437
-----------------------------------------------------------
Accrued operating expenses 19,965
===========================================================
Total liabilities 14,880,380
===========================================================
Net assets applicable to shares outstanding $370,200,778
___________________________________________________________
===========================================================
NET ASSETS:
Class A $194,696,648
___________________________________________________________
===========================================================
Class B $127,534,132
___________________________________________________________
===========================================================
Class C $ 47,960,369
___________________________________________________________
===========================================================
Class R $ 9,629
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 19,109,948
___________________________________________________________
===========================================================
Class B 12,664,714
___________________________________________________________
===========================================================
Class C 4,763,292
___________________________________________________________
===========================================================
Class R 945
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 10.19
-----------------------------------------------------------
Offering price per share:
(Net asset value of $10.19 divided by
94.50%) $ 10.78
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 10.07
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 10.07
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per
share $ 10.19
___________________________________________________________
===========================================================
|
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$1,110) $ 1,461,084
-----------------------------------------------------------
Dividends from affiliated money market funds 243,810
-----------------------------------------------------------
Interest 18
===========================================================
Total investment income 1,704,912
===========================================================
EXPENSES:
Advisory fees 1,233,679
-----------------------------------------------------------
Administrative services fees 43,692
-----------------------------------------------------------
Custodian fees 21,551
-----------------------------------------------------------
Distribution fees -- Class A 271,445
-----------------------------------------------------------
Distribution fees -- Class B 477,660
-----------------------------------------------------------
Distribution fees -- Class C 198,163
-----------------------------------------------------------
Distribution fees -- Class R 4
-----------------------------------------------------------
Transfer agent fees 363,615
-----------------------------------------------------------
Trustees' fees 5,197
-----------------------------------------------------------
Other 54,711
===========================================================
Total expenses 2,669,717
===========================================================
Less: Fees waived (1,375)
-----------------------------------------------------------
Expenses paid indirectly (4,976)
===========================================================
Net expenses 2,663,366
===========================================================
Net investment income (loss) (958,454)
===========================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain from:
Investment securities 3,496,191
-----------------------------------------------------------
Foreign currencies 5,331
===========================================================
3,501,522
===========================================================
Change in net unrealized appreciation
(depreciation) of investment securities (11,887,316)
===========================================================
Net gain (loss) from investment securities
and foreign currencies (8,385,794)
===========================================================
Net increase (decrease) in net assets
resulting from operations $ (9,344,248)
___________________________________________________________
===========================================================
|
See Notes to Financial Statements.
FS-242
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND THE YEAR ENDED DECEMBER 31, 2001
(UNAUDITED)
JUNE 30, DECEMBER 31,
2002 2001
------------ ------------
OPERATIONS:
Net investment income (loss) $ (958,454) $ (1,035,323)
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts 3,501,522 (6,248,749)
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and option contracts (11,887,316) 21,874,869
==========================================================================================
Net increase (decrease) in net assets resulting from
operations (9,344,248) 14,590,797
==========================================================================================
Distributions to shareholders from net investment income:
Class A -- (45,876)
------------------------------------------------------------------------------------------
Share transactions-net:
Class A 94,014,566 64,401,893
------------------------------------------------------------------------------------------
Class B 67,139,466 43,327,916
------------------------------------------------------------------------------------------
Class C 19,674,445 18,212,944
------------------------------------------------------------------------------------------
Class R 10,000 --
==========================================================================================
Net increase in net assets 171,494,229 140,487,674
==========================================================================================
NET ASSETS:
Beginning of period 198,706,549 58,218,875
==========================================================================================
End of period $370,200,778 $198,706,549
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $365,250,395 $184,411,918
------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (968,010) (9,556)
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (6,136,741) (9,638,263)
------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
option contracts 12,055,134 23,942,450
==========================================================================================
$370,200,778 $198,706,549
__________________________________________________________________________________________
==========================================================================================
|
See Notes to Financial Statements.
FS-243
SMALL CAP EQUITY
JUNE 30, 2002
(UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Small Cap Equity Fund (the "Fund") is a series portfolio of AIM Funds Group (the "Trust"). The Trust is a Delaware business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of twelve separate 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 Class R 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 long-term growth of capital.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date.
C. DISTRIBUTIONS -- Distributions from income and 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 from 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.
FS-244
The Fund's capital loss carryforward of $9,014,563 as of December 31, 2001 expires as follows:
CAPITAL LOSS CARRYFORWARD EXPIRATION ------------ ---------- $ 700,372 December 31, 2008 ------------------------------------------------------------------------------ 8,314,191 December 31, 2009 ============================================================================== $9,014,563 ______________________________________________________________________________ ============================================================================== |
E. 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 the 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.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. COVERED CALL OPTIONS -- The Fund may write call options, on a covered basis; that is, the Fun will own the underlying security. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded 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 written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received.
H. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.85% of the Fund's average daily net assets. AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market fund of which the Fund has invested. For the six months ended June 30, 2002, AIM waived fees of $1,375.
The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2002, AIM was paid $43,692 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the six months ended June 30, 2002, AFS retained $223,936 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 Class R shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares, Class B shares, Class C shares and Class R 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, 1.00% of the average daily net assets of Class B and C shares and 0.50% of the average daily net assets of Class R 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, Class C or Class R 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. For the six months ended June 30, 2002, the Class A, Class B, Class C and Class R shares paid AIM Distributors $271,445, $477,660, $198,163 and $4, respectively, as compensation under the Plans.
AIM Distributors retained commissions of $146,999 from sales of the Class A shares of the Fund during the six months ended June 30, 2002. 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 June 30, 2002, AIM Distributors retained $2,577, $84 and $5,856 in contingent deferred sales charges imposed on redemptions of Class A, Class B and Class C shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the six months ended June 30, 2002, the Fund paid legal fees of $1,475 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Board of Trustees. A member of that firm is a trustee of the Trust.
FS-245
NOTE 3--INDIRECT EXPENSES
For the six months ended June 30, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $1,981 and reductions in custodian fees of $2,995 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $4,976.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
NOTE 5--BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $500,000,000 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 six months ended June 30,
2002, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
------- -----
Distributions paid from ordinary Income $45,876 $ --
__________________________________________________________
==========================================================
|
As of December 31, 2001, the components of distributable earnings on a tax basis were as follows:
Capital loss carryforward $(9,014,563)
-----------------------------------------------------------
Unrealized appreciation 23,309,194
===========================================================
$14,294,631
___________________________________________________________
===========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of capital losses incurred after October 31, and other deferrals.
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 June 30, 2002 was $291,710,711 and $128,678,910, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of June 30, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 38,556,079 ----------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (26,565,206) =========================================================== Net unrealized appreciation of investment securities $ 11,990,873 ___________________________________________________________ =========================================================== Cost of investments for tax purposes is $361,318,374. |
NOTE 8--SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2002 and the year ended December 31, 2001 were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2002 DECEMBER 31, 2001
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold:
Class A 15,014,472 $159,343,299 9,399,572 $ 88,163,980
----------------------------------------------------------------------------------------------------------------------
Class B 7,428,315 78,440,342 5,648,744 52,902,323
----------------------------------------------------------------------------------------------------------------------
Class C 2,932,972 30,934,536 3,099,967 29,048,663
----------------------------------------------------------------------------------------------------------------------
Class R* 945 10,000 -- --
======================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 3,879 37,431
======================================================================================================================
Reacquired:
Class A (6,221,127) (65,328,733) (2,593,418) (23,799,518)
----------------------------------------------------------------------------------------------------------------------
Class B (1,098,063) (11,300,876) (1,069,688) (9,574,407)
----------------------------------------------------------------------------------------------------------------------
Class C (1,094,047) (11,260,091) (1,142,623) (10,835,719)
======================================================================================================================
16,963,467 $180,838,477 13,346,433 $125,942,753
______________________________________________________________________________________________________________________
======================================================================================================================
|
* Class R shares commenced sales on June 3, 2002.
FS-246
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
---------------------------------------------
AUGUST 31, 2000
(DATE
SIX MONTHS OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------- ------------ ---------------
Net asset value, beginning of period $ 10.19 $ 9.36 $ 10.00
-----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) (0.05)(a) (0.00)(a)
-----------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.01 0.88 (0.64)
===========================================================================================================
Total from investment operations -- 0.83 (0.64)
===========================================================================================================
Less dividends from net investment income -- 0.00 --
===========================================================================================================
Net asset value, end of period $ 10.19 $ 10.19 $ 9.36
___________________________________________________________________________________________________________
===========================================================================================================
Total return(b) 0.00% 8.92% (6.40)%
___________________________________________________________________________________________________________
===========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $194,697 $105,146 $32,805
___________________________________________________________________________________________________________
===========================================================================================================
Ratio of expenses to average net assets 1.54%(c) 1.78% 1.78%(d)(e)
===========================================================================================================
Ratio of net investment income (loss) to average net assets (0.36)%(c) (0.57)% (0.12)%(e)
___________________________________________________________________________________________________________
===========================================================================================================
Portfolio turnover rate 48% 123% 49%
___________________________________________________________________________________________________________
===========================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less
than one year.
(c) Ratios are annualized and based on average daily net assets of
$156,396,814.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 2.72%.
(e) Annualized.
CLASS B
--------------------------------------------------
AUGUST 31, 2000
(DATE
SIX MONTHS OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
-------------- ------------- ---------------
Net asset value, beginning of period $ 10.11 $ 9.33 $ 10.00
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.11)(a) (0.03)(a)
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.00 0.89 (0.64)
================================================================================================================
Total from investment operations (0.04) 0.78 (0.67)
================================================================================================================
Net asset value, end of period $ 10.07 $ 10.11 $ 9.33
________________________________________________________________________________________________________________
================================================================================================================
Total return(b) (0.40)% 8.36% (6.70)%
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $127,534 $64,012 $16,385
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets 2.19%(c) 2.44% 2.49%(d)(e)
================================================================================================================
Ratio of net investment income (loss) to average net assets (1.01)%(c) (1.23)% (0.83)%(e)
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate 48% 123% 49%
________________________________________________________________________________________________________________
================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$96,323,642.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 3.43%.
(e) Annualized.
FS-247
NOTE 9--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
----------------------------------------------
AUGUST 31, 2000
SIX MONTHS (DATE OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------- ------------ ----------------
Net asset value, beginning of period $ 10.10 $ 9.34 $10.00
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.11)(a) (0.03)(a)
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.01 0.87 (0.63)
============================================================================================================
Total from investment operations (0.03) 0.76 (0.66)
============================================================================================================
Net asset value, end of period $ 10.07 $ 10.10 $ 9.34
____________________________________________________________________________________________________________
============================================================================================================
Total return(b) (0.30)% 8.14% (6.60)%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $47,960 $29,548 $9,028
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets 2.19%(c) 2.44% 2.49%(d)(e)
============================================================================================================
Ratio of net investment income (loss) to average net assets (1.01)%(c) (1.23)% (0.83)%(e)
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 48% 123% 49%
____________________________________________________________________________________________________________
============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$39,961,006.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 3.43%.
(e) Annualized.
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
JUNE 30,
2002
-------------
Net asset value, beginning of period $10.58
---------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.00)
---------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.39)
===========================================================================
Total from investment operations (0.39)
===========================================================================
Net asset value, end of period $10.19
___________________________________________________________________________
===========================================================================
Total return(a) (3.69)%
___________________________________________________________________________
===========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 10
___________________________________________________________________________
===========================================================================
Ratio of expenses to average net assets 1.69%(b)
===========================================================================
Ratio of net investment income (loss) to average net assets (0.51)%(b)
___________________________________________________________________________
===========================================================================
Portfolio turnover rate 48%
___________________________________________________________________________
===========================================================================
|
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $9,722.
FS-248
JUNE 30, 2002
(UNAUDITED)
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS-40.95%
AIRLINES-0.83%
Southwest Airlines Co. 7,000 $ 113,120
======================================================================
AUTO PARTS & EQUIPMENT-0.89%
Johnson Controls, Inc. 1,500 122,415
======================================================================
BANKS-3.86%
Bank of America Corp. 7,500 527,700
======================================================================
BROADCASTING & CABLE TV-0.80%
Cox Communications, Inc.-Class A(a) 4,000 110,200
======================================================================
COMPUTER & ELECTRONICS RETAIL-1.46%
Best Buy Co., Inc.(a) 5,500 199,650
======================================================================
COMPUTER HARDWARE-1.72%
Dell Computer Corp.(a) 9,000 235,260
======================================================================
CONSTRUCTION & ENGINEERING-1.52%
Jacobs Engineering Group Inc.(a) 6,000 208,680
======================================================================
DATA PROCESSING SERVICES-1.75%
Concord EFS, Inc.(a) 4,000 120,560
----------------------------------------------------------------------
First Data Corp. 3,200 119,040
======================================================================
239,600
======================================================================
DIVERSIFIED COMMERCIAL SERVICES-1.15%
H&R Block, Inc. 3,400 156,910
======================================================================
DIVERSIFIED FINANCIAL SERVICES-3.04%
Citigroup Inc. 3,500 135,625
----------------------------------------------------------------------
Fannie Mae 2,400 177,000
----------------------------------------------------------------------
Freddie Mac 1,700 104,040
======================================================================
416,665
======================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.71%
Agilent Technologies, Inc.(a) 7,100 167,915
----------------------------------------------------------------------
Thermo Electron Corp.(a) 4,000 66,000
======================================================================
233,915
======================================================================
GENERAL MERCHANDISE STORES-1.95%
Target Corp. 7,000 266,700
======================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-2.27%
Laboratory Corp. of America Holdings(a) 6,800 310,420
======================================================================
HEALTH CARE EQUIPMENT-0.78%
Baxter International Inc. 2,400 106,680
======================================================================
HEALTH CARE FACILITIES-1.74%
HCA Inc. 5,000 237,500
======================================================================
|
MARKET
SHARES VALUE
HOMEBUILDING-3.78%
NVR, Inc.(a) 1,600 $ 516,800
======================================================================
HOTELS, RESORTS & CRUISE LINES-1.44%
Starwood Hotels & Resorts Worldwide, Inc. 6,000 197,340
======================================================================
MANAGED HEALTH CARE-3.04%
Anthem, Inc.(a) 4,800 323,904
----------------------------------------------------------------------
UnitedHealth Group Inc. 1,000 91,550
======================================================================
415,454
======================================================================
PHARMACEUTICALS-1.15%
Johnson & Johnson 3,000 156,780
======================================================================
SEMICONDUCTORS-3.92%
Integrated Circuit Systems, Inc.(a) 12,000 242,280
----------------------------------------------------------------------
Intel Corp. 4,800 87,696
----------------------------------------------------------------------
Microchip Technology Inc.(a) 7,500 205,725
======================================================================
535,701
======================================================================
SOFT DRINKS-1.06%
PepsiCo, Inc. 3,000 144,600
======================================================================
SPECIALTY STORES-1.09%
PETCO Animal Supplies, Inc.(a) 6,000 149,460
======================================================================
Total Domestic Common Stocks (Cost
$5,036,380) 5,601,550
======================================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-48.34%
BERMUDA-4.16%
Accenture Ltd.-Class A (IT Consulting &
Services)(a) 8,000 152,000
----------------------------------------------------------------------
Everest Re Group, Ltd. (Reinsurance) 4,000 223,800
----------------------------------------------------------------------
Nabors Industries, Ltd. (Oil & Gas
Drilling)(a) 5,500 193,325
======================================================================
569,125
======================================================================
CANADA-2.48%
Celestica Inc. (Electronic Equipment &
Instruments)(a) 7,000 158,970
----------------------------------------------------------------------
Talisman Energy Inc. (Oil & Gas Exploration &
Production) 4,000 180,020
======================================================================
338,990
======================================================================
CAYMAN ISLANDS-0.65%
Noble Corp. (Oil & Gas Drilling)(a) 2,300 88,780
======================================================================
GERMANY-9.56%
Altana A.G. (Pharmaceuticals) 8,000 435,542
----------------------------------------------------------------------
|
FS-249
MARKET
SHARES VALUE
GERMANY-(CONTINUED)
Puma A.G. Rudolf Dassler Sport (Footwear) 12,000 $ 872,115
======================================================================
1,307,657
======================================================================
HONG KONG-5.94%
Euro-Asia Agricultural (Holdings) Co. Ltd.
(Agricultural Products) 400,000 120,513
----------------------------------------------------------------------
Texwinca Holdings Ltd. (Textiles) 350,000 296,156
----------------------------------------------------------------------
Tingyi (Cayman Islands) Holding Corp.
(Packaged Foods & Meats) 1,300,000 395,836
======================================================================
812,505
======================================================================
INDIA-1.43%
Hero Honda Motors Ltd. (Motorcycle
Manufacturers) 31,000 195,669
======================================================================
IRELAND-5.01%
Anglo Irish Bank Corp. PLC (Banks) 62,000 405,497
----------------------------------------------------------------------
Ryanair Holdings PLC (Airlines)(a) 46,000 280,340
======================================================================
685,837
======================================================================
ITALY-3.52%
Merloni Elettrodomestici S.p.A. (Household
Appliances) 33,700 369,683
----------------------------------------------------------------------
Saeco International Group S.p.A. (Consumer
Electronics)(a) 36,000 111,660
======================================================================
481,343
======================================================================
MEXICO-3.04%
Wal-Mart de Mexico S.A. de C.V.-Series V
(General Merchandise Stores) 180,000 416,331
======================================================================
SOUTH KOREA-5.54%
Kookmin Bank-ADR (Banks) 6,000 294,900
----------------------------------------------------------------------
|
MARKET
SHARES VALUE
SOUTH KOREA-(CONTINUED)
Samsung Electronics Co., Ltd. (Electronic
Equipment & Instruments) 700 $ 191,438
----------------------------------------------------------------------
Shinsegae Co., Ltd. (Department Stores) 1,600 271,322
======================================================================
757,660
======================================================================
UNITED KINGDOM-7.01%
New Look Group PLC (Apparel Retail) 60,000 214,090
----------------------------------------------------------------------
Smith & Nephew PLC (Health Care Supplies) 30,169 168,171
----------------------------------------------------------------------
Willis Group Holdings Ltd. (Insurance
Brokers)(a) 17,500 575,925
======================================================================
958,186
======================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $5,349,215) 6,612,083
======================================================================
PRINCIPAL
AMOUNT
U.S. TREASURY SECURITIES-2.19%
U.S. TREASURY BILLS-2.19%
1.68%, 09/19/02 (Cost $298,876)(b) $ 300,000(c) 299,014
======================================================================
SHARES
MONEY MARKET FUNDS-9.91%
STIC Liquid Assets Portfolio(d) 677,967 677,967
----------------------------------------------------------------------
STIC Prime Portfolio(d) 677,967 677,967
======================================================================
Total Money Market Funds (Cost
$1,355,934) 1,355,934
======================================================================
TOTAL INVESTMENTS-101.39% (Cost $12,040,405) 13,868,581
======================================================================
OTHER ASSETS LESS LIABILITIES-(1.39%) (189,966)
======================================================================
NET ASSETS-100.00% $13,678,615
______________________________________________________________________
======================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The interest rate shown represents the rate of discount paid or received at
the time of purchase by the Fund.
(c) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 8.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-250
ASSETS:
Investments, at market value (cost
$12,040,405) $13,868,581
-----------------------------------------------------------
Foreign currencies, at value (cost $1,378) 2,073
-----------------------------------------------------------
Receivables for:
Investments sold 231,770
-----------------------------------------------------------
Fund shares sold 95,264
-----------------------------------------------------------
Dividends 18,251
-----------------------------------------------------------
Investment for deferred compensation plan 7,008
-----------------------------------------------------------
Other assets 10,705
===========================================================
Total assets 14,233,652
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 331,444
-----------------------------------------------------------
Fund shares reacquired 56,589
-----------------------------------------------------------
Foreign currency contracts closed 47
-----------------------------------------------------------
Foreign currency contracts outstanding 113,003
-----------------------------------------------------------
Deferred compensation plan 7,008
-----------------------------------------------------------
Variation margin 5,500
-----------------------------------------------------------
Accrued distribution fees 15,043
-----------------------------------------------------------
Accrued transfer agent fees 3,777
-----------------------------------------------------------
Accrued operating expenses 22,626
===========================================================
Total liabilities 555,037
===========================================================
Net assets applicable to shares outstanding $13,678,615
___________________________________________________________
===========================================================
NET ASSETS:
Class A $ 8,173,808
___________________________________________________________
===========================================================
Class B $ 3,708,087
___________________________________________________________
===========================================================
Class C $ 1,796,720
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 855,422
___________________________________________________________
===========================================================
Class B 391,549
___________________________________________________________
===========================================================
Class C 189,692
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 9.56
-----------------------------------------------------------
Offering price per share:
(Net asset value of $9.56 divided by
94.50%) $ 10.12
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per share $ 9.47
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per share $ 9.47
___________________________________________________________
===========================================================
|
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$1,619) $ 51,356
----------------------------------------------------------
Dividends from affiliated money market funds 8,509
==========================================================
Total investment income 59,865
==========================================================
EXPENSES:
Advisory fees 57,649
----------------------------------------------------------
Administrative services fees 24,795
----------------------------------------------------------
Custodian fees 6,581
----------------------------------------------------------
Distribution fees -- Class A 14,762
----------------------------------------------------------
Distribution fees -- Class B 17,704
----------------------------------------------------------
Distribution fees -- Class C 7,940
----------------------------------------------------------
Transfer agent fees 16,106
----------------------------------------------------------
Trustees' fees 4,538
----------------------------------------------------------
Registration and filing fees 18,074
----------------------------------------------------------
Professional fees 16,904
----------------------------------------------------------
Other 6,793
==========================================================
Total expenses 191,846
==========================================================
Less: Fees waived (39,134)
----------------------------------------------------------
Expenses paid indirectly (282)
==========================================================
Net expenses 152,430
==========================================================
Net investment income (loss) (92,565)
==========================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
FOREIGN CURRENCY CONTRACTS, FUTURES
CONTRACTS AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (804,705)
----------------------------------------------------------
Foreign currencies 650
----------------------------------------------------------
Foreign currency contracts (89,773)
----------------------------------------------------------
Option contracts written 31,365
==========================================================
(862,463)
==========================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 629,319
----------------------------------------------------------
Foreign currencies (1,584)
----------------------------------------------------------
Foreign currency contracts (103,116)
----------------------------------------------------------
Futures contracts (9,070)
----------------------------------------------------------
Option contracts written (17,779)
==========================================================
497,770
==========================================================
Net gain (loss) from investment securities,
foreign currencies, foreign currency
contracts, futures contracts and option
contracts (364,693)
==========================================================
Net increase (decrease) in net assets
resulting from operations $(457,258)
__________________________________________________________
==========================================================
|
See Notes to Financial Statements.
FS-251
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND THE YEAR ENDED DECEMBER 31, 2001
(UNAUDITED)
JUNE 30, DECEMBER 31,
2002 2001
----------- ------------
OPERATIONS:
Net investment income (loss) $ (92,565) $ (55,616)
-----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, foreign currency contracts, futures
contracts and option contracts (862,463) (1,164,114)
-----------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies, foreign currency
contracts, futures contracts and option contracts 497,770 1,208,106
=========================================================================================
Net increase (decrease) in net assets resulting from
operations (457,258) (11,624)
=========================================================================================
Distributions to shareholders from net investment income:
Class A -- (673)
-----------------------------------------------------------------------------------------
Class B -- (285)
-----------------------------------------------------------------------------------------
Class C -- (94)
-----------------------------------------------------------------------------------------
Share transactions-net:
Class A (297,287) 7,688,252
-----------------------------------------------------------------------------------------
Class B 241,878 3,565,526
-----------------------------------------------------------------------------------------
Class C 540,448 1,299,946
=========================================================================================
Net increase in net assets 27,781 12,541,048
=========================================================================================
NET ASSETS:
Beginning of period 13,650,834 1,109,786
=========================================================================================
End of period $13,678,615 $13,650,834
_________________________________________________________________________________________
=========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $14,095,423 $13,610,384
-----------------------------------------------------------------------------------------
Undistributed net investment income (loss) (95,516) (2,951)
-----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, foreign currency
contracts, futures contracts and option contracts (2,027,168) (1,164,705)
-----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, foreign currency contracts, futures
contracts and option contracts 1,705,876 1,208,106
=========================================================================================
$13,678,615 $13,650,834
_________________________________________________________________________________________
=========================================================================================
|
JUNE 30, 2002
(UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Worldwide Spectrum Fund (the "Fund") is a series portfolio of AIM Funds Group (the "Trust"). The Trust is a Delaware business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of twelve separate portfolios, each having an unlimited number of shares of beneficial interest. 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 long-term growth of capital.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.
FS-252
A. SECURITY VALUATIONS -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 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 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 the customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Occasionally, events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
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 on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date.
C. DISTRIBUTIONS -- Distributions from income and 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 from 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 $1,171,360 as of December 31, 2001, which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2009.
E. 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 the 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.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
Outstanding foreign currency contracts at June 30, 2002 were as follows:
CONTRACT TO UNREALIZED
SETTLEMENT ------------------------ APPRECIATION
DATE CURRENCY DELIVER RECEIVE VALUE (DEPRECIATION)
---------- -------- ----------- ---------- ---------- --------------
07/12/02 KRW 597,000,000 $ 461,795 $ 495,653 $ (33,858)
---------------------------------------------------------------------------------------
07/12/02 MXN 3,100,000 336,718 310,703 26,015
---------------------------------------------------------------------------------------
07/23/02 HKD 3,840,000 492,352 492,308 44
---------------------------------------------------------------------------------------
08/30/02 CAD 367,000 238,901 241,592 (2,691)
---------------------------------------------------------------------------------------
08/30/02 EUR 1,495,000 1,387,845 1,477,224 (89,379)
---------------------------------------------------------------------------------------
08/30/02 GBP 180,000 261,445 274,579 (13,134)
=======================================================================================
$3,179,056 $3,292,059 $(113,003)
_______________________________________________________________________________________
=======================================================================================
|
FS-253
G. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts as a hedge against changes in market conditions. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities as collateral for the account of the broker (the Fund's agent in acquiring the futures position). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by "marking to market" on a daily basis to reflect the market value of the contracts at the end of each day's trading. Variation margin payments are made or received depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund's basis in the contract. Risks include the possibility of an illiquid market and that a change in value of the contracts may not correlate with changes in the value of the securities being hedged.
H. COVERED CALL OPTIONS -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded 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 written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received.
I. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.85% of the first $1 billion of the Fund's average daily net assets, plus 0.80% of the Fund's average daily net assets in excess of $1 billion. AIM has contractually agreed to waive fees and/or reimburse expenses (excluding interest, taxes, dividends on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) for Class A, Class B and Class C shares to the extent necessary to limit the total annual fund operating expenses of Class A shares to 2.00%. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market fund of which the Fund has invested. For the six months ended June 30, 2002, AIM waived fees of $39,134.
The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2002, AIM was paid $24,795 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the six months ended June 30, 2002, AFS retained $9,305 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 and Class C shares of the Fund. The Trust 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. 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. For the six months ended June 30, 2002, the Class A, Class B and Class C shares paid AIM Distributors $14,762, $17,704 and $7,940, respectively, as compensation under the Plans.
AIM Distributors retained commissions of $4,020 from sales of the Class A shares of the Fund during the six months ended June 30, 2002. 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 June 30, 2002, AIM Distributors retained $291 and $32 in contingent deferred sales charges imposed on redemptions of Class B and Class C shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the six months ended June 30, 2002, the Fund paid legal fees of $1,298 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended June 30, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $91 and reductions in custodian fees of $191 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $282.
FS-254
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
NOTE 5--BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $500,000,000 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 six months ended June 30,
2002, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during 2001 and 2000 was as follows:
2001 2000
------ -----
Distributions paid from ordinary income $1,052 $ --
__________________________________________________________
==========================================================
|
As of December 31, 2001, the components of distributable earnings on a tax basis were as follows:
Undistributed ordinary income $ 2,838
-----------------------------------------------------------
Capital loss carryforward (1,171,360)
-----------------------------------------------------------
Unrealized appreciation 1,208,972
===========================================================
$ 40,450
___________________________________________________________
===========================================================
|
The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain forward foreign currency contracts and other deferrals.
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 June 30, 2002 was $7,628,301 and $7,494,317, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of June 30, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $2,314,431 ----------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (489,486) =========================================================== Net unrealized appreciation of investment securities $1,824,945 ___________________________________________________________ =========================================================== Cost of investments for tax purposes is $12,043,636. |
NOTE 8--FUTURES CONTRACTS
On June 30, 2002, $185,000 principal amount of U.S. Treasury obligations were pledged as collateral to cover margin requirements for open futures contracts. Open futures contracts as of June 30, 2002 were as follows:
UNREALIZED
NO. OF MONTH/ MARKET APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
-------- --------- ----------- ---------- --------------
Nasdaq 100
Index 10 Sept-02/Buy $1,054,000 $(9,070)
_________________________________________________________________
=================================================================
|
NOTE 9--CALL OPTION CONTRACTS
Transactions in call options written during the six months ended June 30, 2002 are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
Beginning of period 40 $ 19,879
---------------------------------------------------------
Written 25 11,675
---------------------------------------------------------
Closed (7) (3,479)
---------------------------------------------------------
Expired (58) (28,075)
=========================================================
End of period -- $ --
_________________________________________________________
=========================================================
|
FS-255
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2002 and the year ended December 31, 2001 were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2002 DECEMBER 31, 2001
----------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ---------- -----------
Sold:
Class A 275,060 $ 2,704,066 872,405 $ 8,569,590
------------------------------------------------------------------------------------------------------------------
Class B 150,818 1,476,945 389,269 3,753,828
------------------------------------------------------------------------------------------------------------------
Class C 72,081 699,925 183,610 1,766,611
==================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 70 670
------------------------------------------------------------------------------------------------------------------
Class B -- -- 29 277
------------------------------------------------------------------------------------------------------------------
Class C -- -- 9 90
==================================================================================================================
Reacquired:
Class A (305,740) (3,001,353) (97,318) (882,008)
------------------------------------------------------------------------------------------------------------------
Class B (128,280) (1,235,067) (20,288) (188,579)
------------------------------------------------------------------------------------------------------------------
Class C (16,417) (159,477) (49,592) (466,755)
==================================================================================================================
47,522 $ 485,039 1,278,194 $12,553,724
__________________________________________________________________________________________________________________
==================================================================================================================
|
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------------------------
DECEMBER 29, 2000
SIX MONTHS (DATE OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2002 2001 2000
---------- ------------ -----------------
Net asset value, beginning of period $ 9.85 $10.00 $10.00
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.05)(a) --
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.24) (0.10) --
================================================================================================================
Total from investment operations (0.29) (0.15) --
================================================================================================================
Less distributions from net investment income -- (0.00) --
================================================================================================================
Net asset value, end of period $ 9.56 $ 9.85 $10.00
________________________________________________________________________________________________________________
================================================================================================================
Total return(b) (2.94)% (1.49)% --
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $8,174 $8,725 $1,110
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.00%(c) 1.91% 1.80%(d)
----------------------------------------------------------------------------------------------------------------
Without fee waivers 2.58%(c) 4.44% 76.90%(d)
================================================================================================================
Ratio of net investment income (loss) to average net assets (1.12)%(c) (0.52)% 3.91%(d)
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate 59% 168% --
________________________________________________________________________________________________________________
================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less
than one year.
(c) Ratios are annualized and based on average daily net assets of
$8,505,607.
(d) Annualized.
FS-256
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B*
--------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
2002 2001
---------- ------------
Net asset value, beginning of period $ 9.79 $10.00
------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)(a) (0.11)(a)
------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.23) (0.10)
==========================================================================================
Total from investment operations (0.32) (0.21)
==========================================================================================
Less distributions from net investment income -- (0.00)
==========================================================================================
Net asset value, end of period $ 9.47 $ 9.79
__________________________________________________________________________________________
==========================================================================================
Total return(b) (3.27)% (2.09)%
__________________________________________________________________________________________
==========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $3,708 $3,613
__________________________________________________________________________________________
==========================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.65%(c) 2.57%(d)
------------------------------------------------------------------------------------------
Without fee waivers 3.23%(c) 5.10%(d)
==========================================================================================
Ratio of net investment income (loss) to average net assets (1.77)%(c) (1.18)%(d)
__________________________________________________________________________________________
==========================================================================================
Portfolio turnover rate 59% 168%
__________________________________________________________________________________________
==========================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$3,570,119.
(d) Annualized.
* Operations commenced December 29, 2000.
CLASS C*
--------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
2002 2001
---------- ------------
Net asset value, beginning of period $ 9.79 $10.00
------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)(a) (0.11)(a)
------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.23) (0.10)
==========================================================================================
Total from investment operations (0.32) (0.21)
==========================================================================================
Less distributions from net investment income -- (0.00)
==========================================================================================
Net asset value, end of period $ 9.47 $ 9.79
__________________________________________________________________________________________
==========================================================================================
Total return(b) (3.27)% (2.09)%
__________________________________________________________________________________________
==========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,797 $1,312
__________________________________________________________________________________________
==========================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.65%(c) 2.57%(d)
------------------------------------------------------------------------------------------
Without fee waivers 3.23%(c) 5.10%(d)
==========================================================================================
Ratio of net investment income (loss) to average net assets (1.77)%(c) (1.18)%(d)
__________________________________________________________________________________________
==========================================================================================
Portfolio turnover rate 59% 168%
__________________________________________________________________________________________
==========================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$1,601,069.
(d) Annualized.
* Operations commenced December 29, 2000.
FS-257
PART C
OTHER INFORMATION
Item 23. Exhibits
a (1) - (a) Amended and Restated Agreement and Declaration of Trust,
dated May 15, 2002.(19)
(b) Amendment No. 1, dated May 15, 2002, effective July 1,
2002, to the Amended and Restated Declaration of Trust dated
May 15, 2002.(19)
b - Amended and Restated Bylaws, adopted effective May 15,
2002.(19)
c - Articles II, VI, VII, VIII and IX of the Amended and Restated
Agreement and Declaration of Trust, as amended, and Articles
IV, V and VI of the Amended and Restated Bylaws, define rights
of holders of shares.(19)
d - (a) Master Investment Advisory Agreement, dated June 1, 2000,
between the Registrant and A I M Advisors, Inc.(10)
- (b) Amendment No. 1, dated August 30, 2000, to the Master
Investment Advisory Agreement, dated June 1, 2000, between
Registrant and A I M Advisors, Inc.(11)
- (c) Amendment No. 2, dated December 27, 2000, to the Master
Investment Advisory Agreement, dated June 1, 2000, between
Registrant and A I M Advisors, Inc.(13)
- (d) Amendment No. 3, dated September 28, 2001, to the Master
Investment Advisory Agreement, dated June 1, 2000, between
Registrant and A I M Advisors, Inc.(15)
- (e) Amendment No. 4, dated December 27, 2001, to the Master
Investment Advisory Agreement, dated June 1, 2000, between
Registrant and A I M Advisors, Inc.(18)
- (f) Amendment No. 5, dated July 1, 2002, to the Master
Investment Advisory Agreement, dated June 1, 2000, between
Registrant and A I M Advisors, Inc.(20)
e (1) - (a) Second Amended and Restated Master Distribution Agreement,
dated July 1, 2000, between Registrant (with respect to its
Class A Shares and Class C Shares) and A I M Distributors,
Inc.(11)
- (b) Amendment No. 1, dated as of August 30, 2000, to the
Second Amended and Restated Master Distribution Agreement,
dated July 1, 2000, between Registrant (with respect to its
Class A Shares and Class C Shares) and A I M Distributors,
Inc.(11)
- (c) Amendment No. 2, dated December 27, 2000, to the Second
Amended and Restated Master Distribution Agreement, dated July
1, 2000, between Registrant (with respect to its Class A
Shares and Class C Shares) and A I M Distributors, Inc.(13)
- (d) Amendment No. 3, dated September 28, 2001, to the Second
Amended and Restated Master Distribution Agreement, dated July
1, 2000, between Registrant (with respect to its Class A
Shares and Class C Shares) and A I M Distributors, Inc.(15)
|
- (e) Amendment No. 4, dated December 27, 2001, to the Second Amended and Restated Master Distribution Agreement, dated July 1, 2000, between Registrant (with respect to its Class A and Class C Shares) and A I M Distributors, Inc.(18)
- (f) Amendment No. 5, dated March 15, 2002, to the Second Amended and Restated Master Distribution Agreement, dated July 1, 2000, between Registrant (with respect to its Class A, Class C and Institutional Class Shares) and A I M Distributors, Inc.(18)
- (g) Amendment No. 6, dated June 3, 2002, to the Second Amended and Restated Master Distribution Agreement, dated July 1, 2000, between Registrant (with respect to its Class A, Class C and Institutional Class Shares) and A I M Distributors, Inc.(20)
- (h) Amendment No. 7, dated July 1, 2002, to the Second Amended and Restated Master Distribution Agreement, dated July 1, 2000, between Registrant (with respect to its Class A, Class C, Class R and Institutional Class Shares) and A I M Distributors, Inc.(20)
(2) - (a) First Amended and Restated Master Distribution Agreement,
dated December 31, 2000, between Registrant (with respect to
its Class B shares) and A I M Distributors, Inc.(13)
- (b) Amendment No. 1, dated September 28, 2001, to the First
Amended and Restated Master Distribution Agreement, dated
December 31, 2000, between Registrant (with respect to its
Class B Shares) and A I M Distributors, Inc.(15)
- (c) Amendment No. 2, dated December 27, 2001, to the First
Amended and Restated Master Distribution Agreement, dated
December 31, 2000, between Registrant (with respect to Class B
Shares) and A I M Advisors, Inc.(18)
- (d) Amendment No. 3, dated July 1, 2002, to the First Amended
and Restated Master Distribution Agreement, dated December 31,
2000, between Registrant (with respect to its Class B Shares)
and A I M Distributors, Inc.(20)
(3) - Form of Selected Dealer Agreement between A I M Distributors,
Inc. and selected dealers.(13)
(4) - Form of Bank Selling Group Agreement between A I M
Distributors, Inc. and banks.(6)
f (1) - AIM Funds Retirement Plan for Eligible Directors/Trustees,
effective as of March 8, 1994, as restated September 18, 1995,
as restated March 7, 2000, and as restated October 1,
2001.(16)
(2) - Form of Director Deferred Compensation Agreement for
Registrant's Non-Affiliated Directors, as amended March 7,
2000 and September 28, 2001.(16)
g (1) - (a) Master Custodian Contract, dated May 1, 2000, between the
Registrant and State Street Bank and Trust Company.(11)
- (b) Amendment, dated May 1, 2000, to the Master Custodian
Contract, dated May 1, 2000, between Registrant and State
Street Bank and Trust Company.(11)
- (c) Amendment, dated June 29, 2001, to the Master Custodian
Contract, dated May 1, 2000 between Registrant and State
Street Bank and Trust Company.(16)
|
- (d) Amendment, dated April 2, 2002, to the Master Custodian Contract, dated May 1, 2000 between Registrant and State Street Bank and Trust Company.(18)
(2) - (a) Subcustodian Agreement, dated September 9, 1994, among the
Registrant, Texas Commerce Bank National Association, State
Street Bank and Trust Company and A I M Fund Services, Inc.(2)
- (b) Amendment No. 1, dated October 2, 1998 to Subcustodian
Agreement, dated September 9, 1994, among the Registrant,
Chase Bank of Texas N.A. (formerly Texas Commerce Bank), State
Street Bank and Trust Company and A I M Fund Services, Inc.(8)
- (c) Amendment No. 2, dated March 15, 2002, to Subcustodian
Agreement, dated September 9, 1994, among the Registrant, JP
Morgan Chase Bank (formerly Chase Bank of Texas), State Street
Bank and Trust Company and A I M Fund Services, Inc.(20)
(3) - Subcustodian Agreement, dated January 20, 1993, between State
Street Bank and Trust Company and The Bank of New York.(20)
(4) - Foreign Assets Delegation Agreement, dated June 29, 2001,
between A I M Advisors, Inc. and Registrant.(16)
h (1) - (a) Transfer Agency and Service Agreement, dated November 1,
1994, between the Registrant and A I M Fund Services, Inc.(1)
- (b) Amendment No. 1, dated August 4, 1997, to the Transfer
Agency and Service Agreement, dated November 1, 1994, between
Registrant and A I M Fund Services, Inc.(5)
- (c) Amendment No. 2, dated January 1, 1999, to the Transfer
Agency and Service Agreement, dated November 1, 1994, between
Registrant and A I M Fund Services, Inc.(8)
- (d) Amendment No. 3, dated July 1, 2000, to the Transfer
Agency and Service Agreement, dated November 1, 1994, between
Registrant and A I M Fund Services, Inc.(11)
- e) Amendment No. 4, dated March 4, 2002, to the Transfer
Agency and Service Agreement, dated November 1, 1994, between
Registrant and A I M Fund Services, Inc.(18)
(2) - (a) Remote Access and Related Service Agreement, dated as of
December 23, 1994, between the Registrant and First Data
Investor Services Group, Inc. (formerly, The Shareholder
Services Group, Inc.).(2)
- (b) Amendment No. 1, effective October 4, 1995, to the Remote
Access and Related Services Agreement, dated as of December
23, 1994, between the Registrant and First Data Investor
Services Group, Inc.(2)
- (c) Addendum No. 2, effective October 12, 1995, to the Remote
Access and Related Services Agreement, dated as of December
23, 1994, between the Registrant and First Data Investor
Services Group, Inc.(2)
- (d) Amendment No. 3, effective February 1, 1997, to the Remote
Access and Related Services Agreement, dated December 23,
1994, between the Registrant and First Data Investor Services
Group, Inc.(4)
|
- (e) Amendment No. 4, dated June 30, 1998, to the Remote Access
and Related Services Agreement, dated December 23, 1994,
between Registrant and First Data Investor Services Group,
Inc.(6)
- (f) Amendment No. 5, dated July 1, 1998, to the Remote Access
and Related Services Agreement, dated December 23, 1994,
between Registrant and First Data Investor Services Group,
Inc. was filed electronically as an Exhibit to Post-Effective
Amendment No. 75 on February 12, 1999, and is hereby
incorporated by reference.(6)
- (g) Exhibit 1, effective as of August 4, 1997, to the Remote
Access and Related Services Agreement, dated December 23,
1994, between the Registrant and First Data Investor Services
Group, Inc.(5)
- (h) Amendment No. 6, dated August 30, 1999, to the Remote
Access and Related Services Agreement, dated December 23,
1994, between Registrant and First Data Investor Services
Group, Inc.(8)
- (i) Amendment No. 7, dated February 29, 2000, to the Remote
Access and Related Services Agreement, dated December 23,
1994, between Registrant and First Data Investor Services
Group, Inc.(11)
- (j) Amendment No. 8, dated June 26, 2000, to the Remote Access
and Related Services Agreement for AccessTA Services, dated
December 23, 1994, between Registrant and PFPC Inc. (formerly
known as First Data Investor Services Group, Inc.).(14)
- (k) Amendment No. 9, dated June 26, 2000, to the Remote Access
and Related Services Agreement for IMPRESS(TM) Services, dated
December 23, 1994, between Registrant and PFPC Inc.(14)
- (l) Amendment No. 10, dated July 28, 2000, to the Remote
Access and Related Services Agreement, dated December 23,
1994, between Registrant and PFPC Inc.(14)
(3) - Preferred Registration Technology Escrow Agreement, dated
September 10, 1997, between the Registrant and First Data
Investor Services Group, Inc.(5)
(4) - Shareholder Sub-Accounting Services Agreement, dated as of
October 1, 1993, between the Registrant and PFPC, Inc.,
Financial Data Services, Inc. and Merrill, Lynch, Pierce,
Fenner & Smith Incorporated.(2)
(5) - (a) Master Administrative Services Agreement, dated June 1,
2000, between the Registrant and A I M Advisors, Inc.(10)
- (b) Amendment No. 1, dated August 30, 2000, to the Master
Administrative Services Agreement, dated June 1, 2000, between
Registrant and A I M Advisors, Inc.(11)
- (c) Amendment No. 2, dated December 27, 2000, to the Master
Administrative Services Agreement, dated June 1, 2000, between
Registrant and A I M Advisors, Inc.(13)
- (d) Amendment No. 3, dated September 28, 2001, to the Master
Administrative Services Agreement, dated June 1, 2000, between
Registrant and A I M Advisors, Inc.(15)
|
- (e) Amendment No. 4, dated December 27, 2001, to the Master Administrative Services Agreement, dated June 1, 2000, between Registrant and A I M Advisors, Inc.(18)
- (f) Amendment No. 5, dated July 1, 2002, to the Master
Administrative Services Agreement, dated June 1, 2000, between
the Registrant and A I M Advisors, Inc.(20)
(6) - (a) Memorandum of Agreement regarding securities lending,
dated June 1, 2000, between Registrant, with respect to all
Funds, and A I M Advisors, Inc.(13)
- (b) Memorandum of Agreement, dated July 1, 2002, between
Registrant, with respect to AIM European Small Company Fund,
AIM International Emerging Growth Fund, AIM New Technology
Fund and AIM Worldwide Spectrum Fund and A I M Advisors, Inc.
(20)
(7) - Interfund Loan Agreement, dated September 18, 2001, between
Registrant and A I M Advisors, Inc.(15)
i - None
j (1) - Consent of Ballard Spahr Andrews & Ingersoll, LLP.(20)
(2) - Consent of PricewaterhouseCoopers LLP.(20)
k - Omitted Financial Statements - None.
l (1) - Initial Capitalization Agreement for AIM European Small
Company Fund, AIM International Emerging Growth Fund, AIM New
Technology Fund, AIM Small Cap Equity Fund and AIM Value II
Fund.(11)
(2) - Initial Capitalization Agreement for AIM Worldwide Spectrum
Fund.(13)
(3) - Initial Capitalization Agreement for AIM Basic Balanced
Fund.(15)
(4) - Initial Capitalization Agreement for AIM Mid Cap Basic Value
Fund.(18)
m (1) - (a) Sixth Amended and Restated Master Distribution Plan, dated
June 3, 2002, for Registrant's Class A, Class C and Class R
Shares.(20)
- (b) Amendment No. 1, dated July 1, 2002, to the Sixth Amended
and Restated Master Distribution Plan, dated June 3, 2002, for
Registrant's Class A, Class C and Class R Shares.(20)
(2) - (a) Third Amended and Restated Master Distribution Plan, dated
December 31, 2000, for Registrant's Class B Shares.(13)
- (b) Amendment No. 1, dated September 28, 2001, to the Third
Amended and Restated Master Distribution Plan, dated December
31, 2000, for Registrant's Class B Shares.(15)
- (c) Amendment No. 2, dated December 27, 2001, to the Third
Amended and Restated Master Distribution Plan, dated December
31, 2000, for Registrant's Class B Shares.(18)
- (d) Amendment No. 3, dated July 1, 2002, to the Third Amended
and Restated Master Distribution Plan, dated December 31,
2000, for Registrant's Class B Shares.(20)
|
(3) - Form of Shareholder Service Agreement to be used in connection
with Registrant's Master Distribution Plan.(15)
(4) - Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan.(15)
(5) - Form of Variable Group Annuity Contractholder Service
Agreement to be used in connection with Registrant's Master
Distribution Plan.(15)
(6) - Form of Agency Pricing Agreement to be used in connection with
Registrant's Master Distribution Plan.(20)
(7) - Forms of Service Agreement for Bank Trust Departments and for
Brokers for Bank Trust Departments to be used in connection
with Registrant's Master Distribution Plan.(15)
(8) - Form of Shareholder Service Agreement for Shares of the AIM
Mutual Funds.(15)
n (1) - Second Amended and Restated Multiple Class Plan of The AIM
Family of Funds(R), effective December 12, 2001, as amended
and restated March 4, 2002 and October 31, 2002.(20)
o - Reserved
p (1) - The A I M Management Group Inc. Code of Ethics, as revised
February 24, 2000.(11)
(2) - AIM Funds Code of Ethics of the Registrant, effective
September 23, 2000.(11)
(1) Incorporated by reference to PEA No. 70, filed on November 17,
1995.
(2) Incorporated by reference to PEA No. 71, filed on April 26,
1996.
(3) Incorporated by reference to PEA No. 72, filed on April 28,
1997.
(4) Incorporated by reference to PEA No. 73, filed on July 25,
1997.
(5) Incorporated by reference to PEA No. 74, filed on February 27,
1998.
(6) Incorporated by reference to PEA No. 75, filed on February 12,
1999.
(7) Incorporated by reference to PEA No. 76, filed on April 15,
1999.
(8) Incorporated by reference to PEA No. 77, filed on March 9,
2000.
(9) Incorporated by reference to PEA No. 78, filed on March 13,
2000.
(10) Incorporated by reference to PEA No. 80, filed on June 15,
2000.
(11) Incorporated by reference to PEA No. 81, filed on September
29, 2000.
(12) Incorporated by reference to PEA No. 82, filed on December 13,
2000.
(13) Incorporated by reference to PEA No. 84, filed on April 27,
2001.
(14) Incorporated by reference to PEA No. 85, filed on July 13,
2001.
(15) Incorporated by reference to PEA No. 86, filed on October 12,
2001.
(16) Incorporated by reference to PEA No. 87, filed on January 2,
2002.
(17) Incorporated by reference to PEA No. 88, filed on March 1,
2002.
(18) Incorporated by reference to PEA No. 89, filed on April 26,
2002.
(19) Incorporated by reference to PEA No. 90, filed on May 22,
2002.
(20) Filed herewith electronically.
|
Item 24. Persons Controlled by or Under Common Control With the Fund
None.
Item 25. Indemnification
The Registrant's Amended and Restated Agreement and Declaration of Trust, dated May 15, 2002, as amended, provides, among other things (i) that trustees and officers of the Registrant, when acting as such, shall not be personally liable for any act, omission or obligation of the Registrant or any trustee or officer (except for liabilities to the Registrant or its shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of duty); (ii) for the indemnification by the Registrant of the trustees, officers, employees and agents of the Registrant to the fullest extent permitted by the Delaware Statutory Trust Act and Bylaws and other applicable law; (iii) that shareholders of the Registrant shall not be personally liable for the debts, liabilities, obligations or expenses of the Registrant or any portfolio or class; and (iv) for the indemnification by the Registrant, out of the assets belonging to the applicable portfolio, of shareholders and former shareholders of the Registrant in case they are held personally liable solely by reason of being or having been shareholders of the Registrant or any portfolio or class and not because of their acts or omissions or for some other reason.
A I M Advisors, Inc. ("AIM"), the Registrant and other investment companies managed by AIM, their respective officers, trustees, directors and employees (the "Insured Parties") are insured under a joint Mutual Fund and Investment Advisory Professional and Directors and Officers Liability Policy, issued by ICI Mutual Insurance Company, with a $35,000,000 limit of liability.
Section 16 of the Master Investment Advisory Agreement between the Registrant and AIM provides that in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of AIM or any of its officers, directors or employees, that AIM shall not be subject to liability to the Registrant or to any series of the Registrant, or to any shareholder of any series of the Registrant for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security. Any liability of AIM to any series of the Registrant shall not automatically impart liability on the part of AIM to any other series of the Registrant. No series of the Registrant shall be liable for the obligations of any other series of the Registrant.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in connection with the successful defense of any action suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the shares being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and be governed by final adjudication of such issue.
Item 26. Business and Other Connections of Investment Advisor
The only employment of a substantial nature of the Advisor's directors and officers is with the Advisor and its affiliated companies. Reference is also made to the caption "Fund Management--The Advisor" in the Prospectus which comprises Part A of the Registration Statement, and to the caption "Investment Advisory and Other Services" of the Statement of Additional Information which comprises Part B of the Registration Statement, and to Item 27(b) of this Part C.
Item 27. Principal Underwriters
(a) A I M Distributors, Inc., the Registrant's principal underwriter, also acts as a principal underwriter to the following investment companies:
AIM Advisor Funds
AIM Equity Funds
AIM Floating Rate Fund
AIM Growth Series
AIM International Funds, Inc.
AIM Investment Funds
AIM Investment Securities Funds
AIM Series Trust
AIM Special Opportunities Funds
AIM Summit Fund
AIM Tax-Exempt Funds
AIM Variable Insurance Funds
(b)
Name and Principal Position and Officers with Positions and Offices
Business Address* Underwriter with Registrant
------------------ --------------------------- -------------------------
Robert H. Graham Chairman & Director Chairman, President & Trustee
Michael J. Cemo President, Chief Executive Officer & None
Director
Gary T. Crum Director Senior Vice President
James L. Salners Executive Vice President None
Marilyn M. Miller Senior Vice President None
Gene L. Needles Senior Vice President None
Mark D. Santero Senior Vice President None
Leslie A. Schmidt Senior Vice President None
James E. Stueve Senior Vice President None
Michael C. Vessels Senior Vice President None
Mary A. Corcoran Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
Dawn M. Hawley Vice President & Treasurer None
Ofelia M. Mayo Vice President, General Counsel & Assistant Secretary
Assistant Secretary
|
Name and Principal Position and Officers with Positions and Offices Business Address* Underwriter with Registrant ------------------ --------------------------- ------------------------- Kim T. McAuliffe Vice President None Carol F. Relihan Vice President Senior Vice President & Secretary Linda L. Warriner Vice President None Kathleen J. Pflueger Secretary Assistant Secretary |
(c) None.
Item 28. Location of Accounts and Records
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, will maintain physical possession of each such account, book or other document of the Registrant at its principal executive offices, except for those maintained by the Registrant's Custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, and the Registrant's Transfer Agent and Dividend Paying Agent, A I M Fund Services, Inc., P. O. Box 4739, Houston, Texas 77210-4739.
Item 29. Management Services
None.
Item 30. Undertakings
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Houston, Texas on the 7th day of November, 2002.
REGISTRANT: AIM FUNDS GROUP
By: /s/ ROBERT H. GRAHAM
---------------------------
Robert H. Graham, President
|
Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
SIGNATURES TITLE DATE
---------- ----- ----
/s/ ROBERT H. GRAHAM Chairman, Trustee & President November 7, 2002
-----------------------
(Robert H. Graham) (Principal Executive Officer)
/s/ FRANK S. BAYLEY Trustee November 7, 2002
-----------------------
(Frank S. Bayley)
/s/ BRUCE L. CROCKETT Trustee November 7, 2002
-----------------------
(Bruce L. Crockett)
/s/ ALBERT R. DOWDEN Trustee November 7, 2002
-----------------------
(Albert R. Dowden)
/s/ EDWARD K. DUNN, JR. Trustee November 7, 2002
-----------------------
(Edward K. Dunn, Jr.)
/s/ JACK M. FIELDS Trustee November 7, 2002
-----------------------
(Jack M. Fields)
/s/ CARL FRISCHLING Trustee November 7, 2002
-----------------------
(Carl Frischling)
/s/ PREMA MATHAI-DAVID Trustee November 7, 2002
-----------------------
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK Trustee November 7, 2002
-----------------------
(Lewis F. Pennock)
/s/ RUTH H. QUIGLEY Trustee November 7, 2002
-----------------------
(Ruth H. Quigley)
/s/ LOUIS S. SKLAR Trustee November 7, 2002
-----------------------
(Louis S. Sklar)
/s/ DANA R. SUTTON Vice President & Treasurer November 7, 2002
----------------------- (Principal Financial and
(Dana R. Sutton) Accounting Officer)
|
INDEX
Exhibit
Number Description
------- -----------
d(f) - Amendment No. 5, dated July 1, 2002, to the Master Investment Advisory Agreement, dated
June 1, 2000, between Registrant and A I M Advisors, Inc.
e(1)(g) - Amendment No. 6, dated June 3, 2002, to the Second Amended and Restated Master Distribution
Agreement, dated July 1, 2000, between Registrant (with respect to its Class A, Class C and
Institutional Class Shares) and A I M Distributors, Inc.
e(1)(h) - Amendment No. 7, dated July 1, 2002, to the Second Amended and Restated Master Distribution
Agreement, dated July 1, 2000, between Registrant (with respect to its Class A, Class C,
Class R and Institutional Class Shares) and A I M Distributors, Inc.
e(2)(d) - Amendment No. 3, dated July 1, 2002, to First Amended and Restated Master Distribution
Agreement, dated December 31, 2000, between Registrant (with respect to its Class B Shares)
and A I M Distributors, Inc.
g(2)(c) - Amendment No. 2, dated March 15, 2002, to Subcustodian Agreement, dated September 9, 1994,
among the Registrant, JP Morgan Chase Bank (formerly Chase Bank of Texas), State Street
Bank and Trust Company and A I M Fund Services, Inc.
g(3) - Subcustodian Agreement dated January 20, 1993, between State Street Bank and Trust Company
and The Bank of New York
h(5)(f) - Amendment No. 5, dated July 1, 2002 to the Master Administrative Services Agreement, dated
June 1, 2000, between Registrant and A I M Advisors, Inc.
h(6)(b) - Memorandum of Agreement, dated July 1, 2002, between Registrant, with respect to AIM
European Small Company Fund, AIM International Emerging Growth Fund, AIM New Technology
Fund and AIM Worldwide Spectrum Fund and A I M Advisors, Inc.
j(1) - Consent of Ballard Spahr Andrews & Ingersoll, LLP
j(2) - Consent of PricewaterhouseCoopers LLP
m(1)(a) - Form of Sixth Amended and Restated Master Distribution Plan, dated June 3, 2002, for
Registrant's Class A, Class C and Class R Shares.
m(1)(b) - Amendment No. 1, dated July 1, 2002, to the Sixth Amended and Restated Master Distribution
Plan, dated June 3, 2002, for Registrant's Class A, Class C and Class R Shares
m(2)(d) - Amendment No. 3, dated July 1, 2002, to the Third Amended and Restated Master Distribution
Plan, dated December 31, 2000, for Registrant's Class B Shares
m(6) - Form of Agency Pricing Agreement to be used in connection with Registrant's Master
Distribution Plan
n(1) - Second Amended and Restated Multiple Class Plan of The AIM Family of Funds(R), effective
December 12, 2001, as amended and restated March 4, 2002 and October 31, 2002
|
EXHIBIT d(f)
AMENDMENT NO. 5
TO
MASTER INVESTMENT ADVISORY AGREEMENT
This Amendment dated as of July 1, 2002, amends the Master Investment Advisory Agreement (the "Agreement"), dated June 1, 2000, between AIM Funds Group, a Delaware business trust, and A I M Advisors, Inc., a Delaware corporation.
W I T N E S S E T H:
WHEREAS, the parties desire to amend the Agreement to reflect the name change of AIM Value Fund to AIM Premier Equity Fund and AIM Value II Fund to AIM Premier Equity II Fund;
NOW, THEREFORE, the parties agree as follows;
1. Appendix A and Appendix B to the Agreement are hereby deleted in their entirety and replaced with the following:
"APPENDIX A
FUNDS AND EFFECTIVE DATES
NAME OF FUND EFFECTIVE DATE OF ADVISORY AGREEMENT ------------ ------------------------------------ AIM Balanced Fund June 1, 2000 AIM Basic Balanced Fund September 28, 2001 AIM Global Utilities Fund June 1, 2000 AIM Select Growth Fund June 1, 2000 AIM Premier Equity Fund June 1, 2000 AIM European Small Company Fund August 30, 2000 AIM International Emerging Growth Fund August 30, 2000 AIM Mid Cap Basic Value Fund December 31, 2001 AIM New Technology Fund August 30, 2000 AIM Small Cap Equity Fund August 30, 2000 AIM Premier Equity II Fund August 30, 2000 AIM Worldwide Spectrum Fund December 27, 2000 |
APPENDIX B
COMPENSATION TO THE ADVISOR
The Trust shall pay the Advisor, out of the assets of a Fund, as full compensation for all services rendered, an advisory fee for such Fund set forth below. Such fee shall be calculated by applying the following annual rates to the average daily net assets of such Fund for the calendar year computed in the manner used for the determination of the net asset value of shares of such Fund.
AIM BALANCED FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $150 million.................................................... 0.75% Over $150 million..................................................... 0.50% |
AIM BASIC BALANCED FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $1 billion......................................................0.65% Next $4 billion.......................................................0.60% Over $5 billion.......................................................0.55% |
AIM GLOBAL UTILITIES FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $200 million.................................................... 0.60% Next $300 million..................................................... 0.50% Next $500 million..................................................... 0.40% Over $1 billion....................................................... 0.30% |
AIM SELECT GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $150 million.................................................... 0.80% Over $150 million..................................................... 0.625% |
AIM PREMIER EQUITY FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $150 million.................................................... 0.80% Over $150 million..................................................... 0.625% |
AIM EUROPEAN SMALL COMPANY FUND
AIM INTERNATIONAL EMERGING GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- All Assets............................................................ 0.95% |
AIM MID CAP BASIC VALUE FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $1 billion...................................................... 0.80% Next $4 billion....................................................... 0.75% Over $5 billion....................................................... 0.70% |
AIM NEW TECHNOLOGY FUND
NET ASSETS ANNUAL RATE ---------- ----------- All Assets............................................................ 1.00% |
AIM SMALL CAP EQUITY FUND
NET ASSETS ANNUAL RATE ---------- ----------- All Assets............................................................ 0.85% |
AIM PREMIER EQUITY II FUND
NET ASSETS ANNUAL RATE ---------- ----------- All Assets............................................................ 0.75% |
AIM WORLDWIDE SPECTRUM FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $1 billion...................................................... 0.85% Over $1 billion....................................................... 0.80%" |
2. In all other respects, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers on the date first written above.
AIM FUNDS GROUP
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
-------------------------------- -------------------------------
Assistant Secretary Robert H. Graham
President
|
(SEAL)
A I M ADVISORS, INC.
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
-------------------------------- -------------------------------
Assistant Secretary Robert H. Graham
President
|
(SEAL)
EXHIBIT e(1)(g)
AMENDMENT NO. 6
TO THE SECOND AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM FUNDS GROUP
(CLASS A SHARES, CLASS C SHARES AND INSTITUTIONAL CLASS SHARES)
AND
A I M DISTRIBUTORS, INC.
The Second Amended and Restated Master Distribution Agreement (the "Agreement"), dated July 1, 2000, by and between AIM Funds Group, a Delaware business trust, and A I M Distributors, Inc., a Delaware corporation, is hereby amended as follows:
1. The following paragraph is added at the end of Section FOURTH:
(A):
"The public offering price of the Class R shares shall be the net asset value per share of the applicable Class R shares. Net asset value per share shall be determined in accordance with the provisions of the then current prospectus and statement of additional information of the applicable Portfolio. The Distributor may establish a schedule of contingent deferred sales charges to be imposed at the time of redemption of the Shares, and such schedule shall be disclosed in the current prospectus of each Portfolio. Such schedule of contingent deferred sales charges may reflect variations in or waivers of such charges on redemptions of Class R shares, either generally to the public or to any specified class of shareholders and/or in connection with any specified class of transactions, in accordance with applicable rules and regulations and exemptive relief granted by the Securities and Exchange Commission, and as set forth in the Portfolios' current prospectus(es). The Distributor and the Company shall apply any then applicable scheduled variation in or waiver of contingent deferred sales charges uniformly to all shareholders and/or all transactions belonging to a specified class."
2. Appendix A to the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
TO
SECOND AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
OF
AIM FUNDS GROUP
AIM Balanced Fund
AIM Basic Balanced Fund
AIM European Small Company Fund
AIM Global Utilities Fund
AIM International Emerging Growth Fund
AIM Mid Cap Basic Value Fund
AIM New Technology Fund
AIM Select Equity Fund
AIM Small Cap Equity Fund
AIM Value Fund
AIM Value II Fund
AIM Worldwide Spectrum Fund
AIM Balanced Fund
AIM Basic Balanced Fund
AIM European Small Company Fund
AIM Global Utilities Fund
AIM International Emerging Growth Fund
AIM Mid Cap Basic Value Fund
AIM New Technology Fund
AIM Select Equity Fund
AIM Small Cap Equity Fund
AIM Value Fund
AIM Value II Fund
AIM Worldwide Spectrum Fund
AIM Balanced Fund
AIM Small Cap Equity Fund
AIM Value Fund
AIM Balanced Fund
AIM Value Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
AIM FUNDS GROUP
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
----------------------------- ----------------------------------
Assistant Secretary Robert H. Graham
President
|
A I M DISTRIBUTORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ MICHAEL J. CEMO
---------------------------- ----------------------------------
Assistant Secretary Michael J. Cemo
President
|
EXHIBIT e(1)(h)
AMENDMENT NO. 7
TO THE SECOND AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(CLASS A SHARES, CLASS C SHARES, CLASS R SHARES AND INSTITUTIONAL CLASS SHARES)
The Second Amended and Restated Master Distribution Agreement (the "Agreement"), dated July 1, 2000, by and between AIM Funds Group, a Delaware business trust, and A I M Distributors, Inc., a Delaware corporation, is hereby amended as follows:
Appendix A to the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
TO
MASTER DISTRIBUTION AGREEMENT
OF
AIM FUNDS GROUP
AIM Balanced Fund
AIM Basic Balanced Fund
AIM European Small Company Fund
AIM Global Utilities Fund
AIM International Emerging Growth Fund
AIM Mid Cap Basic Value Fund
AIM New Technology Fund
AIM Select Growth Fund
AIM Small Cap Equity Fund
AIM Premier Equity Fund
AIM Premier Equity II Fund
AIM Worldwide Spectrum Fund
AIM Balanced Fund
AIM Basic Balanced Fund
AIM European Small Company Fund
AIM Global Utilities Fund
AIM International Emerging Growth Fund
AIM Mid Cap Basic Value Fund
AIM New Technology Fund
AIM Select Growth Fund
AIM Small Cap Equity Fund
AIM Premier Equity Fund
AIM Premier Equity II Fund
AIM Worldwide Spectrum Fund
AIM Balanced Fund
AIM Small Cap Equity Fund
AIM Premier Equity Fund
AIM Balanced Fund
AIM Premier Equity Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
AIM FUNDS GROUP
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
----------------------------- ----------------------------------
Assistant Secretary Robert H. Graham
President
|
A I M DISTRIBUTORS, INC.
Attest: /s/ LISA A. MOSS By: /s/ MICHAEL J. CEMO
----------------------------- ----------------------------------
Assistant Secretary Michael J. Cemo
President
|
EXHIBIT e(2)(d)
AMENDMENT NO. 3
TO
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(CLASS B SHARES)
The First Amended and Restated Master Distribution Agreement (the "Agreement"), dated December 31, 2000, by and between AIM Funds Group, a Delaware business trust, and A I M Distributors, Inc., a Delaware corporation, is hereby amended as follows:
Schedule A to the Agreement is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
MASTER DISTRIBUTION AGREEMENT
OF
AIM FUNDS GROUP
AIM Balanced Fund
AIM Basic Balanced Fund
AIM European Small Company Fund
AIM Global Utilities Fund
AIM International Emerging Growth Fund
AIM Mid Cap Basic Value Fund
AIM New Technology Fund
AIM Select Growth Fund
AIM Small Cap Equity Fund
AIM Premier Equity Fund
AIM Premier Equity II Fund
AIM Worldwide Spectrum Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
AIM FUNDS GROUP
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
------------------------------- --------------------------------
Assistant Secretary Robert H. Graham
President
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A I M DISTRIBUTORS, INC.
Attest: /s/ LISA A. MOSS By: /s/ MICHAEL J. CEMO
------------------------------- --------------------------------
Assistant Secretary Michael J. Cemo
President
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EXHIBIT g(2)(c)
AMENDMENT NO. 2
SUB-CUSTODIAN AGREEMENT
WITH
JP MORGAN CHASE BANK
The Sub-Custodian Agreement with JP Morgan Chase Bank, formerly known as The Chase Manhattan Bank, successor-in-interest by merger to Chase Bank of Texas, N.A., dated September 9, 1994, as amended October 2, 1998 (collectively, the "Agreement"), is hereby amended as follows (terms used herein but not otherwise defined herein have the meaning ascribed them in the Agreement):
1) The Agreement is amended by inserting "001026118378" as the Bounced Check Account in the 5th line of Section 2.
2) Schedule A to the Agreement is hereby deleted in its entirety and replaced with the following:
AIM Advisor Funds
AIM Equity Funds
AIM Floating Rate Fund
AIM Funds Group
AIM Growth Series
AIM International Funds, Inc.
AIM Investment Funds
AIM Investment Securities Funds
AIM Series Trust
AIM Special Opportunities Funds
AIM Summit Fund
3) Schedule 2 to the Agreement is hereby deleted in its entirety and replaced with the following:
Authorized Officers Tony D. Green President Jack Bridge Senior Vice President Joseph H. Charpentier Senior Vice President Ira P. Cohen Senior Vice President Mary A. Corcoran Senior Vice President Sidney M. Dilgren Senior Vice President Kim T. McAuliffe Senior Vice President Linda L. Warriner Senior Vice President Helen G. Duskin Vice President Robert A. Frazer Vice President Charles A. McLaughlin Vice President Patrick D. Richoux Vice President Laura S. Stanley Vice President |
Authorized Representatives
Sherri Arbour
Debi Folse
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
JP MORGAN CHASE BANK
(as Subcustodian)
By: /s/ ILLEGIBLE
------------------------------------
Title: Vice President
---------------------------------
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STATE STREET BANK AND TRUST COMPANY
(as Custodian)
By: /s/ ILLEGIBLE
------------------------------------
Title: Executive Vice President
---------------------------------
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A I M FUND SERVICES, INC.
(as Transfer Agent)
By: /s/ KIM MCAULIFFE
------------------------------------
Title: Senior Vice President
---------------------------------
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EACH OF THE FUNDS LISTED ON AMENDED
SCHEDULE A HERETO
By: /s/ ILLEGIBLE
------------------------------------
Title: President
---------------------------------
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EXHIBIT g(3)
SUBCUSTODIAN AGREEMENT
AGREEMENT dated as of January 20th, 1993 , between State Street Bank and Trust Company, a trust company organized under the laws of the Commonwealth of Massachusetts (the "Custodian"), and The Bank of New York, a New York trust company (the "Subcustodian").
W I T N E S S E T H:
WHEREAS, the Custodian acts as custodian for certain investment companies affiliated with, sponsored, managed or advised by the firms identified on Schedule A hereto (each, a "Fund"; collectively, the "Funds") from time to time whose shares are registered pursuant to the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Funds have requested the Custodian to appoint a subcustodian in order to facilitate transactions in Securities (as defined herein); and
WHEREAS, the Custodian desires to appoint the Subcustodian as its subcustodian for the purposes of receiving, delivering and safekeeping cash and Securities from time to time on behalf of the Funds; and
WHEREAS, the Subcustodian is a bank within the meaning of Section 2(a)(5) of the Act having aggregate capital, surplus and undivided profits of not less than two million dollars ($2,000,000):
NOW THEREFORE, the Custodian and Subcustodian hereby agree as follows:
ARTICLE I
DEFINITIONS
1. "Authorized Person" shall be any officer of the Custodian and any other person, whether or not any such person is an officer or employee of the Custodian, duly authorized by the Custodian to give Oral and/or Written Instructions on behalf of the Custodian, such persons to be designated in a certificate of an appropriate officer of the Custodian which contains a specimen signature of such person.
2. "Book-Entry Securities" shall mean book-entry securities (as defined in Subpart O of Treasury Department Circular No. 300, 31 C.F.R. 306) and any other securities issued or fully guaranteed by the United States or any agency, instrumentality or establishment of the United States and registered in the form of an entry on the records of the Book-Entry System.
3. "Book-Entry System" shall mean the Federal Reserve/Treasury Book-Entry System for receiving and delivering Securities, its successors and nominees.
4. "Business Day" shall mean any day on which the Subcustodian the Book-Entry System, and the appropriate Clearing Corporation are open for business.
5. "Clearing Corporation" shall mean the Depository Trust Company, Participant's Trust Company and any other clearing corporation within the meaning of Section 6-102(3) of the Uniform Commercial Code of the State of New York.
6. "Clearing Corporation Securities" shall mean securities registered in the name of the Subcustodian on the records of a Clearing Corporation.
7. "Government Securities" shall mean Book-Entry treasury securities (as defined in Subpart O of Treasury Department Circular No. 300, 31 C.F.R. 306) and any other securities issued or fully guaranteed by the United States government or any agency of the United States government which are registered in the form of an entry on the records of the Book-Entry System.
8. "Oral Instructions" shall mean verbal instructions actually received by the Subcustodian from an Authorized Person or from a person reasonably believed by the Subcustodian to be an Authorized Person.
9. "Physical Securities" shall mean securities issued in definitive form which are not Book-Entry or Clearing Corporation Securities.
10. "Securities" shall mean Book-Entry Securities, Clearing Corporation Securities and Physical Securities.
11. "Written Instructions" shall mean written communications actually received by the Subcustodian from an Authorized Person or from a person reasonably believed by the Subcustodian to be an Authorized Person by letter, memorandum, telegram, cable, telex, telecopy facsimile, computer, video (CRT) terminal or other on-line system, or any other method whereby the Subcustodian is able to verify with a reasonable degree of certainty the identify of the sender of such communications.
ARTICLE II
APPOINTMENT; ACCOUNTS; CUSTODY
1. The Custodian hereby appoints the Subcustodian as subcustodian of all Securities and all monies at any time delivered to the Subcustodian during the term of this Agreement. The Subcustodian hereby accepts appointment as such
subcustodian and agrees to establish and maintain one or more accounts in the name of each Fund as follows: "[FUND]/State Street as Custodian" (each an "Account") in which it will hold Securities as provided herein. The Subcustodian also agrees to establish and maintain one or more demand deposit accounts for each Fund in the name of the Custodian (each a "DDA Account") in which it will hold monies as provided herein. Each Account and DDA Account shall be for the exclusive use of the specific Fund for which it was established, and references herein to the Account and DDA Account shall mean to such Fund's Account.
2. The Custodian hereby represents and warrants to the Subcustodian, which representations and warranties shall be deemed to be continuing and to be reaffirmed upon acting on any Oral or Written Instructions hereunder, that:
(a) This Agreement is legally and validly entered into, and does not, and will not, violate any ordinance, charter, by-law, rule, statute or agreement applicable to it, and is enforceable against the Custodian in accordance with its terms;
(b) The person executing this Agreement on behalf of the Custodian has been duly authorized to do so;
(c) The appointment of the Subcustodian as its subcustodian hereunder has been duly authorized and no other corporate action is required prior to utilizing the Account and DDA Account; and
(d) Each of the Funds identified on the respective Schedules A attached hereto have authorized the Custodian to appoint the Subcustodian to act pursuant to this Agreement and to perform the Custodian's obligations hereunder;
(e) All Securities and monies at any time held in a Fund's Account and DDA Account, respectively, are beneficially owned by the Fund; and
(f) Instructions to the Subcustodian in connection with the receipt and delivery of Securities and cash balances hereunder are in connection with repurchase agreements to which Fund(s) are a party.
3. The Custodian may from time to time deliver or cause to be delivered to the Subcustodian for deposit in the Account and DDA Account Securities and monies (in immediately available funds), respectively, at any time during the term of this Agreement.
4. The Custodian agrees that Securities to be delivered to the Subcustodian for deposit in the Account may be in the form of credits to the account of the Subcustodian either at the Book-Entry System or a Clearing corporation or by delivery to the Subcustodian of physical certificates in bearer form or readily negotiable so as to constitute good delivery under securities industry practices, and that all monies to be delivered to the Subcustodian for deposit in the account shall be immediately available funds. Custodian authorizes and instructs the Subcustodian to deposit in the Book-Entry System and Clearing Corporation on a continuous and on-going basis all monies and all Securities eligible for deposit therein and to utilize the Book-Entry System, Clearing Corporation and the receipt and delivery of physical certificates or any combination thereof in connection with its performance hereunder. Transactions with respect to Book-Entry Securities and Clearing Corporation Securities will be effected in accordance with, and subject to, the rules and regulations of the Book-Entry System and each Clearing Corporation, respectively. Securities credited to the Account and the Dealer Account and deposited in the Book-Entry System or a Clearing Corporation will be
represented in accounts of the Subcustodian which include only assets held by the Subcustodian for customers, including, but not limited to, accounts in which the Subcustodian acts in a fiduciary or representative capacity.
ARTICLE III
DEPOSIT AND DISBURSEMENT OF
CASH AND GOVERNMENT SECURITIES
1. (a) On any Business Day prior to 5:00 p.m. (New York City time) the Custodian may give the Subcustodian Written Instructions to receive Securities. Upon receipt of such Securities, the Subcustodian shall promptly advise the Custodian thereof.
(b) Upon receipt of Written Instructions on such Business Day from the Custodian no later than (60) minutes prior to the close of the Federal Reserve Bank of New York money wire and provided sufficient immediately available funds have previously been delivered to the DDA Account, the Subcustodian shall deliver out monies in accordance with such Written Instructions.
2. On any Business Day prior to 10:00 a.m. (New York City time) the Custodian may give Written Instructions to the Subcustodian to deliver from the Account Securities against receipt of funds as specified in such Written Instructions. Upon receipt of immediately available funds in the amount described in such Written Instructions, the Subcustodian shall deliver Securities in accordance therewith. Monies received by the Subcustodian hereunder shall be credited to the DDA Account.
3. Written Instructions from the Custodian to receive and deliver Securities and monies shall reference the Account and DDA Account, as appropriate, and with respect to each Government Security shall specify the name of the issuer, title, CUSIP
number and par value thereof, and such other information as the Subcustodian may require in connection with such Written Instructions.
4. The Subcustodian shall send the Custodian confirmations of Securities and monies received and delivered by it hereunder and with respect to Securities credited to the Account shall identify on its books as belonging to [the Fund's] Account/State Street as Custodian a quantity of Securities in a fungible bulk of securities shown on the Subcustodian's account on the books of the Book-Entry System or the Clearing Corporation. It shall be the Custodian's responsibility to identify on its books the interest of Funds in the Securities and monies held by the Subcustodian hereunder.
5. The Subcustodian shall furnish the Custodian with a summary of all transfers to or from the Account and the DDA Account from time to time as mutually agreed.
6. The Subcustodian shall provide the Custodian with any report obtained by the Subcustodian from the Book-Entry System or the Clearing Corporation on its accounting system, internal accounting control and procedures for safeguarding securities deposited in the Book-Entry System or the Clearing Corporation.
7. With respect to Securities held in the Account, the Subcustodian shall, unless otherwise instructed to the contrary in Written Instructions:
(a) Collect all income and other payments and advise the Custodian as promptly as practicable of any such amounts due but not paid;
(b) Present for payment and collect the amount payable upon all Securities which may mature or otherwise become payable upon presentation and advise the Custodian
as promptly as practicable of any such amounts due but not paid; and
(c) Hold all rights and similar securities issued with respect to Securities held by the Subcustodian hereunder.
8. Upon receipt of Written Instructions, the Subcustodian will exchange Securities held under hereunder for other securities and/or cash in connection with (a) any conversion privilege, redemption in kind, substitution or exchange offer, and (b) any exercise, purchase or other similar rights represented by Securities.
9. The parties agree that the Subcustodian is not at any time under any duty or responsibility to supervise the investment of, or to advise or make any recommendation for the purchase, sale, retention or other disposition of Securities held in the Account.
10. The Subcustodian shall receive and deliver Securities in accordance with the rules and regulations of the Book-Entry System or the Clearing Corporation in effect from time to time.
11. It is expressly agreed and acknowledged by the Custodian that the Subcustodian does not undertake to make credit available to the Custodian to enable it to receive or deliver Securities pursuant to this Agreement.
ARTICLE IV
CONCERNING THE SUBCUSTODIAN
1. (a) The Subcustodian shall not be liable for any costs, expenses, damages, liabilities or claims (including attorneys' and accountants' fees) incurred by the Custodian or any Fund, except those costs, expenses, damages, liabilities or
claims arising out of the negligence or wilful misconduct of the Subcustodian or any of its employees or duly appointed agents. The Subcustodian shall have no obligation hereunder for costs, expenses, damages, liabilities or claims, including attorneys' fees, which are sustained or incurred by reason of any action or inaction by the Book-Entry System or the Clearing Corporation, unless such action or inaction is caused by the negligence or wilful misconduct of the Subcustodian. In no event shall the Subcustodian be liable to the Custodian or any Fund or any other third party for special, indirect or consequential damages, or lost profits or loss of business, arising under or in connection with this Agreement, even if previously informed of the possibility of such damages and regardless of the form of action.
(b) The Subcustodian shall be liable to the Custodian for actual damages sustained or incurred by the Custodian by reason of or as a result of the Subcustodian's failure to exercise reasonable care in the performance of its duties hereunder. The Custodian shall be liable to the Subcustodian for actual damages sustained or incurred by the Subcustodian by reason of or as a result of the Custodian's failure to exercise reasonable care in the performance of its duties. The foregoing provisions shall be continuing obligations of the Custodian and Subcustodian, their successors and assigns, notwithstanding the termination of this Agreement. Actions taken or omitted in reasonable reliance on Oral or Written Instructions, or upon an information, order, affidavit or other instrument reasonably believed by the Subcustodian to be genuine or bearing the signature of a person or persons reasonably believed to be authorized to sign, countersign or execute the same, shall be conclusively presumed to have been taken or omitted in the exercise of reasonable care.
2. Without limiting the generality of the foregoing, the Subcustodian shall be under no obligation to inquire into, and shall not be liable for, the validity of the issue of any
Securities held hereunder, the legality thereof or the propriety of the amount paid therefor.
3. The Subcustodian may, with respect to questions of law, apply for and obtain the advice and opinion of counsel, which shall be competent outside counsel if in connection with the interpretation of any material term contained herein, and shall be fully protected with respect to anything done or omitted by it in good faith in conformity with the advice or opinion of such competent outside counsel.
4. The Subcustodian shall be under no obligation or duty to take action to effect collection of any amount if the Securities upon which such payment is due are in default, or if payment is refused after due demand and presentation.
5. The Subcustodian shall not be responsible for, or considered to be the custodian of, any Securities, or any money, whether or not represented by any check, draft, or other instrument for the payment of money received by it on behalf of the Custodian, until the Subcustodian actually receives and collects such Securities or monies directly or by the final crediting of the Subcustodian's account on the books of the Book-Entry System or the Clearing Corporation. The Subcustodian will be entitled to reverse any credits made on the Custodian's behalf where such credits have been previously made and Securities or monies are not finally collected.
6. It is expressly understood and agreed that the Subcustodian shall have no obligation whatsoever to inquire into, and shall have no responsibility for, the sufficiency of any Securities or monies which the Custodian has instructed the Subcustodian to receive or deliver hereunder, and the Subcustodian shall be entitled to rely upon any Written or Oral Instruction actually received by the Subcustodian and reasonably believed by the Subcustodian to be duly authorized and
delivered. The Custodian agrees to forward to the Subcustodian Written Instructions confirming Oral instructions in such manner so that such Written Instructions are received in by the Subcustodian by the close of business of the same day that such Oral Instructions are given to the Subcustodian. The Custodian agrees that the fact that such confirming Written Instructions are not received or that contrary instructions are received by the Subcustodian shall in no way affect the validity or enforceability of the transactions authorized by the Custodian.
7. It is understood that the Subcustodian is authorized to supply any information regarding the Account or DDA Account which is required by any law or governmental regulation now or hereafter in effect.
8. The Subcustodian shall not be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including without limitation, acts of God, earthquakes, fires, floods, wars, civil or military disturbances, sabotage, epidemics, riots, acts of civil or military authority or governmental actions.
9. The Subcustodian shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement, and no covenant or obligation shall be implied against the Subcustodian in connection with this Agreement.
ARTICLE V
TERMINATION
Either of the parties hereto may terminate this Agreement by giving to the other party a notice in writing specifying the date of such termination, which shall be not less than thirty
(30) days after the date of giving of such notice. Upon termination hereof, the Custodian shall reimburse the Subcustodian for any disbursements and expenses made or incurred by the Subcustodian and payable or reimbursable hereunder. The Subcustodian shall follow such reasonable Oral or Written Instructions concerning the transfer of custody of records, Securities and other items as the Custodian shall give; provided, that the Subcustodian shall not be required to make any such delivery or payment until full payment shall have been made by the Custodian of all liabilities constituting a charge on or against the Subcustodian and until full payment shall have been made to the Subcustodian of all its costs and expenses hereunder. Upon the date set forth in a termination notice this Agreement shall terminate, and except as otherwise provided herein all obligations of the parties to each other hereunder shall cease.
ARTICLE VI
MISCELLANEOUS
1. The Custodian agrees to furnish to the Subcustodian a new certificate in the event that any present Authorized Person ceases to be an Authorized Person or in the event that any other Authorized Persons are appointed and authorized. Until such new certificate is received, the Subcustodian shall be fully protected in acting upon Oral Instructions or signatures of the present Authorized Persons.
2. Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Subcustodian, shall be sufficiently given if addressed to the Subcustodian and received by it at its offices at 80 Broadway, New York, New York, 10286 Attention:_______________________________, or at such other place as the Subcustodian may from time to time designate in writing.
3. Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Custodian shall be sufficiently given if addressed to the Custodian and mailed or delivered to it at its office at P.O. Box 1713, Boston, Massachusetts 02105, Attention: (Fund Name, Number), Telex Number: 940956 St St BK2QNCY, or at such other place or telex number as the Custodian may from time to time designate in writing.
4. Each and every right granted to the Subcustodian and Custodian hereunder or under any other document delivered hereunder or in connection herewith, or allowed them by law or equity, shall be cumulative and may be exercised from time to time. No failure on the part of the Subcustodian or Custodian to exercise, and no delay in exercising, any right will operate as a waiver thereof, nor will any single or partial exercise by the Subcustodian or Custodian of any right preclude any other or future exercise thereof or the exercise of any other right.
5. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations shall not in any way be affected or impaired thereby, and if any provision is inapplicable to any person or circumstances, it shall nevertheless remain applicable to all other persons and circumstances.
6. This Agreement may not be amended or modified in any manner except by a written agreement executed by both parties.
7. This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by either party without the written consent of the other.
8. This Agreement shall be construed in accordance with the laws of the State of New York. The Custodian hereby consents to the jurisdiction of a state or federal court situated in New York City, New York in connection with any dispute arising hereunder.
9. In performance hereunder, the Subcustodian is acting solely on behalf of the Custodian and no contractual or service relationship shall be deemed to be established hereby between the Subcustodian and any other person.
10. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective corporate officers, thereunto duly authorized and their respective corporate seals to be hereunto affixed, as of the day and year first above written.
ATTEST: STATE STREET BANK AND TRUST COMPANY
/s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
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Title: SENIOR VICE PRESIDENT
ATTEST: THE BANK OF NEW YORK
/s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
------------------------------ -----------------------------------------
Title: Vice President
January 20, 1993
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APPENDIX A
(AS REVISED NOVEMBER 1, 2002)
AIM ADVISOR FUNDS
o AIM International Core Equity Fund
o AIM Real Estate Fund
AIM EQUITY FUNDS
o AIM Aggressive Growth Fund
o AIM Blue Chip Fund
o AIM Basic Value II Fund
o AIM Capital Development Fund
o AIM Charter Fund
o AIM Constellation Fund
o AIM Core Strategies Fund
o AIM Dent Demographic Trends Fund
o AIM Emerging Growth Fund
o AIM Large Cap Basic Value Fund
o AIM Large Cap Core Equity Fund
o AIM Large Cap Growth Fund
o AIM Mid Cap Growth Fund
o AIM Weingarten Fund
o AIM U.S. Growth Fund
AIM FUNDS GROUP
o AIM Balanced Fund
o AIM Basic Balanced Fund
o AIM European Small Company Fund
o AIM Global Utilities Fund
o AIM International Emerging Growth Fund
o AIM Mid Cap Basic Value Fund
o AIM New Technology Fund
o AIM Select Equity Fund
o AIM Small Cap Equity Fund
o AIM Premier Equity Fund
o AIM Premier Equity II Fund
o AIM Worldwide Spectrum Fund
AIM INTERNATIONAL FUNDS, INC.
o AIM Asia Pacific Growth Fund
o AIM European Growth Fund
o AIM Global Aggressive Growth Fund
o AIM Global Growth Fund
o AIM Global Income Fund
o AIM International Growth Fund
AIM INVESTMENT SECURITIES FUNDS
o AIM High Yield Fund
o AIM High Yield Fund II
o AIM Income Fund
o AIM Intermediate Government Fund
o AIM Short -Term Bond Fund
o AIM Total Return Bond Fund
AIM SPECIAL OPPORTUNITIES FUNDS
o AIM Opportunities I Fund
o AIM Opportunities II Fund
o AIM Opportunities III Fund
AIM SUMMIT FUND
AIM VARIABLE INSURANCE FUNDS
o AIM V.I. Aggressive Growth Fund
o AIM V.I. Balanced Fund
o AIM V.I. Basic Value Fund
o AIM V.I. Blue Chip Fund
o AIM V.I. Capital Appreciation Fund
o AIM V.I. Capital Development Fund
o AIM V.I. Core Equity Fund
o AIM V.I. Dent Demographic Trends Fund
o AIM V.I. Diversified Income Fund
o AIM V.I. Global Utilities Fund
o AIM V.I. Government Securities Fund
o AIM V.I. Growth Fund
o AIM V.I. High Yield Fund
o AIM V.I. International Growth Fund
o AIM V.I. Mid Cap Core Equity Fund
o AIM V.I. New Technology Fund
o AIM V.I. Premier Equity Fund
AIM FLOATING RATE FUND
AIM GROWTH SERIES
o AIM Basic Value Fund
o AIM Mid Cap Core Equity Fund
o AIM Small Cap Growth Fund
AIM INVESTMENT FUNDS
o AIM Developing Markets Fund
o AIM Global Biotech Fund
o AIM Global Financial Services Fund
o AIM Global Health Care Fund
o AIM Global Energy Fund
o AIM Global Science and Technology Fund
o AIM Libra Fund
o AIM Strategic Income Fund
AIM SERIES TRUST
o AIM Global Trends Fund
AIM SELECT REAL ESTATE INCOME FUND
EXHIBIT h(5)(f)
AMENDMENT NO. 5
MASTER ADMINISTRATIVE SERVICES AGREEMENT
The Master Administrative Services Agreement (the "Agreement"), dated June 1, 2000, by and between A I M Advisors, Inc., a Delaware corporation, and AIM Funds Group, a Delaware business trust, is hereby amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
TO
MASTER ADMINISTRATIVE SERVICES AGREEMENT
OF
AIM FUNDS GROUP
PORTFOLIOS EFFECTIVE DATE OF AGREEMENT ---------- --------------------------- AIM Balanced Fund June 1, 2000 AIM Basic Balanced Fund September 28, 2001 AIM Global Utilities Fund June 1, 2000 AIM Select Growth Fund June 1, 2000 AIM Premier Equity Fund June 1, 2000 AIM European Small Company Fund August 30, 2000 AIM International Emerging Growth Fund August 30, 2000 AIM Mid Cap Basic Value Fund December 31, 2001 AIM New Technology Fund August 30, 2000 AIM Small Cap Equity Fund August 30, 2000 AIM Premier Equity II Fund August 30, 2000 AIM Worldwide Spectrum Fund December 27, 2000" |
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
A I M ADVISORS, INC.
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
-------------------------------- -------------------------------
Assistant Secretary Robert H. Graham
President
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(SEAL)
AIM FUNDS GROUP
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
-------------------------------- -------------------------------
Assistant Secretary Robert H. Graham
President
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(SEAL)
EXHIBIT h(6)(b)
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement is entered into as of this 1st day of July, 2002, between AIM Funds Group (the "Trust"), on behalf of the funds listed on Exhibit "A" to this Memorandum of Agreement (the "Funds"), and A I M Advisors, Inc. ("AIM").
For and in consideration of the mutual terms and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Trust and AIM agree as follows:
The Trust and AIM agree until the date set forth on the attached Exhibit "A" that AIM will waive its fees or reimburse expenses to the extent that expenses (excluding interest, taxes, dividends on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) of a class of a Fund exceed the rate set forth on Exhibit "A" of the average daily net assets allocable to such class. Neither the Trust nor AIM may remove or amend the waivers or expense limitations to the Trust's detriment prior to the date set forth on Exhibit "A." AIM will not have any right to reimbursement of any amount so waived or reimbursed.
The Trust and AIM agree to review the then-current waivers or expense limitations for each class of each Fund listed on Exhibit "A" on a date prior to the date listed on that Exhibit to determine whether such waivers or limitations should be amended, continued or terminated. Unless the Trust, by vote of its Board of Trustees, or AIM terminates the waivers or limitations, or the Trust and AIM are unable to reach an agreement on the amount of the waivers or limitations to which the Trust and AIM desire to be bound, the waivers or limitations will continue for additional one-year terms at the rate to which the Trust and AIM mutually agree. Exhibit "A" will be amended to reflect that rate and the new date through which the Trust and AIM agree to be bound.
It is expressly agreed that the obligations of the Trust hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents or employees of the Trust personally, but shall only bind the assets and property of the Funds, as provided in the Trust's Agreement and Declaration of Trust. The execution and delivery of this Memorandum of Agreement have been authorized by the Trustees of the Trust, and this Memorandum of Agreement has been executed and delivered by an authorized officer of the Trust acting as such; neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the assets and property of the Funds, as provided in the Trust's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the Trust and AIM have entered into this Memorandum of Agreement as of the date first above written.
AIM Funds Group, on behalf of each Fund listed in Exhibit "A" to this Memorandum of Agreement
By: /s/ ROBERT H. GRAHAM
----------------------------------------
Title: President
-------------------------------------
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A I M Advisors, Inc.
By: /s/ ROBERT H. GRAHAM
----------------------------------------
Title: President
-------------------------------------
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EXHIBIT "A"
AIM FUNDS GROUP
FUND EXPENSE LIMITATION COMMITTED UNTIL
---- ------------------ ---------------
AIM European Small Company Fund
Class A 2.00% June 30, 2003
Class B (See Note 1 below) June 30, 2003
Class C (See Note 1 below) June 30, 2003
AIM International Emerging Growth Fund
Class A 2.00% June 30, 2003
Class B (See Note 1 below) June 30, 2003
Class C (See Note 1 below) June 30, 2003
AIM New Technology Fund
Class A 2.00% June 30, 2003
Class B (See Note 1 below) June 30, 2003
Class C (See Note 1 below) June 30, 2003
AIM Worldwide Spectrum Fund
Class A 2.00% June 30, 2003
Class B (See Note 1 below) June 30, 2003
Class C (See Note 1 below) June 30, 2003
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NOTE 1: The amount equal to Total Annual Fund Operating Expenses (as calculated
in the Fund's financial statements less expense exclusions listed in the
Memorandum of Agreement) less the basis point amounts necessary to limit
Class A shares' Total Annual Fund Operating Expenses to 2.00%.
EXHIBIT j(1)
CONSENT OF COUNSEL
AIM FUNDS GROUP
We hereby consent to the use of our name and to the reference to our firm under the caption "Investment Advisory and Other Services - Other Service Providers - Counsel to the Trust" in the Statement of Additional Information for the retail classes of the twelve series portfolios of AIM Funds Group, which is included in Post-Effective Amendment No. 91 to the Registration Statement under the Securities Act of 1933, as amended (No. 2-27334), and Amendment No. 91 to the Registration Statement under the Investment Company Act of 1940, as amended (No. 811-1540), on Form N-1A of AIM Funds Group.
/s/ BALLARD SPAHR ANDREWS & INGERSOLL, LLP
------------------------------------------
Ballard Spahr Andrews & Ingersoll, LLP
Philadelphia, Pennsylvania
November 5, 2002
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EXHIBIT j(2)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form N-1A of our twelve reports each dated February 14, 2002, relating to the financial statements and financial highlights of the twelve funds constituting the AIM Funds Group, which appear in such Registration Statement. We also consent to the references to us under the headings "Financial Highlights" and "Other Service Providers" in such Registration Statement.
/s/ PRICEWATERHOUSECOOPERS LLP ------------------------------ PricewaterhouseCoopers LLP Houston, Texas November 6, 2002 |
EXHIBIT m(1)(a)
SIXTH AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM FUNDS GROUP
(CLASS A SHARES, CLASS C SHARES AND CLASS R SHARES)
SECTION 1. AIM Funds Group, a Delaware business trust (the "Fund"), on behalf of the series of Shares of beneficial interest set forth in Schedule A to this plan (the "Portfolios"), may act as a distributor of the Class A Shares, Class C Shares and Class R Shares, of the Portfolios as described in Schedule A to this plan (the "Shares") of which the Fund is the issuer, pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"), according to the terms of this Distribution Plan (the "Plan").
SECTION 2. The Fund may incur as a distributor of the Shares, expenses at the annual rates set forth on Schedule A per annunm of the average daily net assets of the Fund attributable to the Shares, subject to any applicable limitations imposed from time to time by applicable rules of the National Association of Securities Dealers, Inc.
SECTION 3. Amounts set forth in Schedule A may be expended when and if authorized in advance by the Fund's Board of Trustees. Such amounts may be used to finance any activity which is primarily intended to result in the sale of the Shares, including, but not limited to, expenses of organizing and conducting sales seminars, advertising programs, finders fees, printing of prospectuses and statements of additional information (and supplements thereto) and reports for other than existing shareholders, preparation and distribution of advertising material and sales literature, supplemental payments to dealers and other institutions as asset-based sales charges. Amounts set forth in Schedule A may also be used to finance payments of service fees under a shareholder service arrangement to be established by A I M Distributors, Inc. ("Distributors") as the Fund's distributor in accordance with Section 4, and the costs of administering the Plan. To the extent that amounts paid hereunder are not used specifically to reimburse Distributors for any such expense, such amounts may be treated as compensation for Distributors' distribution-related services. All amounts expended pursuant to the Plan shall be paid to Distributors and are the legal obligation of the Fund and not of Distributors. That portion of the amounts paid under the Plan that is not paid to, or paid or advanced by Distributors to dealers or other institutions, for providing personal continuing shareholder service as a service fee pursuant to Section 4 shall be deemed an asset-based sales charge. No provision of this Plan shall be interpreted to prohibit any payments by the Fund during periods when the Fund has suspended or otherwise limited sales.
SECTION 4.
(a) Amounts expended by the Fund under the Plan shall be used in part for the implementation by Distributors of shareholder service arrangements. The maximum service fee paid to any service provider shall be twenty-five one-hundredths of one percent (0.25%), or such lower rate for the Portfolio as is specified on Schedule A, per annum of the average daily net assets of the Fund attributable to the Shares owned by the customers of such service provider.
(b) Pursuant to this program, Distributors may enter
into agreements substantially in the form attached hereto as
Exhibit A ("Service Agreements") with such broker-dealers
("Dealers") as may be selected from time to time by Distributors
for the provision of distribution-related personal shareholder
services in connection with the sale of Shares to the Dealers'
clients and customers ("Customers") who may from time to time
directly or beneficially own Shares. The distribution-related
personal continuing shareholder services to be rendered by
Dealers under the Service Agreements may include, but shall not
be limited to, the following: (i) distributing sales literature;
(ii) answering routine Customer inquiries concerning the Fund
and the Shares; (iii) assisting Customers in changing dividend
options, account designations and addresses, and in enrolling
into any of several retirement plans offered in connection with
the purchase of Shares; (iv) assisting in the establishment and
maintenance of customer accounts and records, and in the
processing of purchase and redemption transactions; (v)
investing dividends and capital gains distributions
automatically in Shares; and (vi) providing such other
information and services as the Fund or the Customer may
reasonably request.
(c) Distributors may also enter into Bank Shareholder Service Agreements substantially in the form attached hereto as Exhibit B ("Bank Agreements") with selected banks acting in an agency capacity for their customers ("Banks"). Banks acting in such capacity will provide some or all of the shareholder services to their customers as set forth in the Bank Agreements from time to time.
(d) Distributors may also enter into Variable Group Annuity Contractholder Service Agreements substantially in the from attached hereto as Exhibit C ("Variable Contract Agreements") with selected insurance companies ("Companies") offering variable annuity contracts to employers as funding vehicles for retirement plans qualified under Section 401(a) of the Internal Revenue Code, where amounts contributed under such plans are invested pursuant to such variable annuity contracts in Shares of the Fund. The Companies receiving payments under such Variable Contract Agreements will provide specialized services to contractholders and plan participants, as set forth in the Variable Contract Agreements from time to time.
(e) Distributors may also enter into Agency Pricing Agreements substantially in the form attached hereto as Exhibit D ("Pricing Agreements") with selected retirement plan service providers acting in an agency capacity for their customers ("Retirement Plan Providers"). Retirement Plan Providers acting in such capacity will provide some or all of the shareholder services to their customers as set forth in the Pricing Agreements from time to time.
(f) Distributors may also enter into Shareholder Service Agreements substantially in the form attached hereto as Exhibit E ("Bank Trust Department Agreements and Brokers for Bank Trust Department Agreements") with selected bank trust departments and brokers for bank trust departments. Such bank trust departments and brokers for bank trust departments will provide some or all of the shareholder services to their customers as set forth in the Bank Trust Department Agreements and Brokers for Bank Trust Department Agreements from time to time.
(g) Distributors, as agent of the Portfolios may also enter into a Shareholder Service Agreement substantially in the form attached hereto as Exhibit F ("Agreement") with Distributors, acting as principal. Distributors, acting as principal will provide some or all of the shareholder services to Portfolio shareholders for which Distributors is the broker of record, as set forth in such Agreement.
SECTION 5. Any amendment to this Plan that requires the approval of the shareholders of a Class pursuant to Rule 12b-1 under the 1940 Act shall become effective as to such Class upon the approval of such amendment by a "majority of the outstanding voting securities" (as defined in the 1940 Act) of such Class, provided that the Board of Trustees of the Fund has approved such amendment in accordance with the provisions of Section 6 of this Plan.
SECTION 6. This Plan, any amendment to this Plan and any agreements related to this Plan shall become effective immediately upon the receipt by the Fund of both (a) the affirmative vote of a majority of the Board of Trustees of the Fund, and (b) the affirmative vote of a majority of those trustees of the Fund who are not "interested persons" of the Fund (as defined in the 1940 Act) and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it (the "Dis-interested Trustees"), cast in person at a meeting called for the purpose of voting on this Plan or such agreements. Notwithstanding the foregoing, no such amendment that requires the approval of the shareholders of a Class of a Fund shall become effective as to such Class until such amendment has been approved by the shareholders of such Class in accordance with the provisions of Section 5 of this Plan.
SECTION 7. Unless sooner terminated pursuant to Section 9, this Plan shall continue in effect until June 30, 2003 and thereafter shall continue in effect so long as such continuance is specifically approved, at least annually, in the manner provided for approval of this Plan in Section 6.
SECTION 8. Distributors shall provide to the Fund's Board of Trustees and the Board of Trustees shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made.
SECTION 9. This Plan may be terminated, with respect to the Shares of each Portfolio, at any time by vote of a majority of the Dis-interested Trustees, or by vote of a majority of the outstanding voting securities of the Shares of such Portfolios. If this Plan is terminated, the obligation of the Fund to make payments pursuant to this Plan will also cease and the Fund will not be required to make any payments beyond the termination date even with respect to expenses incurred prior to the termination date.
SECTION 10. Any agreement related to this Plan shall be made in writing, and shall provide:
(a) that such agreement may be terminated at any time, without payment of any penalty, by vote of a majority of the Dis-interested Trustees or by a vote of the outstanding voting securities of the Fund attributable to the Shares of each Portfolio, on not more than sixty (60) days' written notice to any other party to the agreement; and
(b) that such agreement shall terminate automatically in the event of its assignment.
SECTION 11. This Plan may not be amended to increase materially the amount of distribution expenses provided for in Section 2 hereof unless such amendment is approved in the manner provided in Section 5 hereof, and no material amendment to the Plan shall be made unless approved in the manner provided for in Section 6 hereof.
AIM FUNDS GROUP
(on behalf of its Class A Shares,
Class C Shares and Class R Shares)
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
---------------------------- --------------------------------
Assistant Secretary President
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Effective as of August 31, 1993, as amended as of March 8, 1994 and September 10, 1994.
Amended and restated for all Portfolios as of June 30, 1997, as of August 4, 1997, as of June 30, 1998, as of June 1, 2000 and as of July 1, 2000, and as amended August 30, 2000, December 27, 2000, September 28, 2001 and December 7, 2001.
Amended and restated for all Portfolios as of June 3, 2002.
SCHEDULE A
TO
SIXTH AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM FUNDS GROUP
(CLASS A SHARES, CLASS C SHARES AND CLASS R SHARES)
(DISTRIBUTION FEE)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for each Portfolio (or Class thereof) as designated below, a Distribution Fee* determined by applying the annual rate set forth below as to each Portfolio (or Class thereof) to the average daily net assets of the Portfolio (or Class thereof) for the plan year, computed in a manner used for the determination of the offering price of shares of the Portfolio (or Class thereof).
MINIMUM
ASSET
PORTFOLIO BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
CLASS A SHARES CHARGE FEE FEE
-------------- ------- ------- ---------
AIM Balanced Fund 0.00% 0.25% 0.25%
AIM Basic Balanced Fund 0.10% 0.25% 0.35%
AIM European Small Company Fund 0.10% 0.25% 0.35%
AIM Global Utilities Fund 0.00% 0.25% 0.25%
AIM International Emerging Growth Fund 0.10% 0.25% 0.35%
AIM Mid Cap Basic Value Fund 0.10% 0.25% 0.35%
AIM New Technology Fund 0.10% 0.25% 0.35%
AIM Select Equity Fund 0.00% 0.25% 0.25%
AIM Small Cap Equity Fund 0.10% 0.25% 0.35%
AIM Value Fund 0.00% 0.25% 0.25%
AIM Value II Fund 0.10% 0.25% 0.35%
AIM Worldwide Spectrum Fund 0.10% 0.25% 0.35%
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MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
CLASS C SHARES CHARGE FEE FEE
-------------- ------- ------- ---------
AIM Balanced Fund 0.75% 0.25% 1.00%
AIM Basic Balanced Fund 0.75% 0.25% 1.00%
AIM European Small Company Fund 0.75% 0.25% 1.00%
AIM Global Utilities Fund 0.75% 0.25% 1.00%
AIM International Emerging Growth Fund 0.75% 0.25% 1.00%
AIM Mid Cap Basic Value Fund 0.75% 0.25% 1.00%
AIM New Technology Fund 0.75% 0.25% 1.00%
AIM Select Equity Fund 0.75% 0.25% 1.00%
AIM Small Cap Equity Fund 0.75% 0.25% 1.00%
AIM Value Fund 0.75% 0.25% 1.00%
AIM Value II Fund 0.75% 0.25% 1.00%
AIM Worldwide Spectrum Fund 0.75% 0.25% 1.00%
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MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
CLASS R SHARES CHARGE FEE FEE
-------------- ------- ------- ---------
AIM Balanced Fund 0.25% 0.25% 0.50%
AIM Small Cap Equity Fund 0.25% 0.25% 0.50%
AIM Value Fund 0.25% 0.25% 0.50%
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EXHIBIT m(1)(b)
AMENDMENT NO. 1
SIXTH AMENDED AND RESTATED MASTER DISTRIBUTION PLAN
The Sixth Amended and Restated Master Distribution Plan (the "Plan"), dated as of June 3, 2002. pursuant to Rule 12b-1 of AIM Funds Group, a Delaware business trust, is hereby amended as follows:
Schedule A of the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
SIXTH AMENDED AND RESTATED MASTER DISTRIBUTION PLAN
OF
AIM FUNDS GROUP
(CLASS A SHARES, CLASS C SHARES AND CLASS R SHARES)
(DISTRIBUTION FEE)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for each Portfolio (or Class thereof) designated below, a Distribution Fee* determined by applying the annual rate set forth below as to each Portfolio (or Class thereof) to the average daily net assets of the Portfolio (or Class thereof) for the plan year, computed in a manner used for the determination of the offering price of shares of the Portfolio (or Class thereof).
MINIMUM MAXIMUM MAXIMUM
PORTFOLIO ASSET BASED SERVICE AGGREGATE
CLASS A SHARES SALES CHARGE FEE FEE
-------------- ------------ ------- ---------
AIM Balanced Fund 0.00% 0.25% 0.25%
AIM Basic Balanced Fund 0.10% 0.25% 0.35%
AIM European Small Company Fund 0.10% 0.25% 0.35%
AIM Global Utilities Fund 0.00% 0.25% 0.25%
AIM International Emerging Growth Fund 0.10% 0.25% 0.35%
AIM Mid Cap Basic Value Fund 0.10% 0.25% 0.35%
AIM New Technology Fund 0.10% 0.25% 0.35%
AIM Select Growth Fund 0.00% 0.25% 0.25%
AIM Small Cap Equity Fund 0.10% 0.25% 0.35%
AIM Premier Equity Fund 0.00% 0.25% 0.25%
AIM Premier Equity II Fund 0.10% 0.25% 0.35%
AIM Worldwide Spectrum Fund 0.10% 0.25% 0.35%
|
MAXIMUM MAXIMUM MAXIMUM
ASSET BASED SERVICE AGGREGATE
CLASS C SHARES SALES CHARGE FEE FEE
-------------- ------------ ------- ---------
AIM Balanced Fund 0.75% 0.25% 1.00%
AIM Basic Balanced Fund 0.75% 0.25% 1.00%
AIM European Small Company Fund 0.75% 0.25% 1.00%
AIM Global Utilities Fund 0.75% 0.25% 1.00%
AIM International Emerging Growth Fund 0.75% 0.25% 1.00%
AIM Mid Cap Basic Value Fund 0.75% 0.25% 1.00%
AIM New Technology Fund 0.75% 0.25% 1.00%
AIM Select Growth Fund 0.75% 0.25% 1.00%
AIM Small Cap Equity Fund 0.75% 0.25% 1.00%
AIM Premier Equity Fund 0.75% 0.25% 1.00%
AIM Premier Equity II Fund 0.75% 0.25% 1.00%
AIM Worldwide Spectrum Fund 0.75% 0.25% 1.00%
|
MAXIMUM MAXIMUM MAXIMUM
ASSET BASED SERVICE AGGREGATE
CLASS R SHARES SALES CHARGE FEE FEE
-------------- ------------ ------- ---------
AIM Balanced Fund 0.25% 0.25% 0.50%
AIM Premier Equity Fund 0.25% 0.25% 0.50%
AIM Small Cap Equity Fund 0.25% 0.25% 0.50%
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The Distributor will waive part or all of its Distribution Fee as to a Portfolio (or Class thereof) to the extent that the ordinary business expenses of the Portfolio exceed the expense limitation as to the Portfolio (if any) as contained in the Master Investment Advisory Agreement between the Company and A I M Advisors, Inc.
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
AIM FUNDS GROUP
(on behalf of its Class A Shares,
Class C Shares and Class R Shares)
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
------------------------------ --------------------------------
Assistant Secretary Robert H. Graham
President
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EXHIBIT m(2)(d)
AMENDMENT NO. 3
TO THE THIRD AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM FUNDS GROUP
(CLASS B SHARES)
(SECURITIZATION FEATURE)
The Third Amended and Restated Master Distribution Plan (the "Plan"), dated as of December 31, 2000, pursuant to Rule 12b-1 of AIM Funds Group, a Delaware business trust, is hereby amended as follows:
Schedule A to the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
AIM FUNDS GROUP
(CLASS B SHARES)
(DISTRIBUTION FEE)
MAXIMUM MAXIMUM MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE FEE
---- ------------ ------- ---------
AIM Balanced Fund 0.75% 0.25% 1.00%
AIM Basic Balanced Fund 0.75% 0.25% 1.00%
AIM European Small Company Fund 0.75% 0.25% 1.00%
AIM Global Utilities Fund 0.75% 0.25% 1.00%
AIM International Emerging Growth Fund 0.75% 0.25% 1.00%
AIM Mid Cap Basic Value Fund 0.75% 0.25% 1.00%
AIM New Technology Fund 0.75% 0.25% 1.00%
AIM Select Growth Fund 0.75% 0.25% 1.00%
AIM Small Cap Equity Fund 0.75% 0.25% 1.00%
AIM Premier Equity Fund 0.75% 0.25% 1.00%
AIM Premier Equity II Fund 0.75% 0.25% 1.00%
AIM Worldwide Spectrum Fund 0.75% 0.25% 1.00%"
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All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: July 1 , 2002
-------------------
AIM FUNDS GROUP
(on behalf of its Class B Shares)
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
------------------------------ ----------------------------------
Assistant Secretary Robert H. Graham
President
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EXHIBIT m(6)
AGENCY PRICING AGREEMENT
(THE AIM FAMILY OF FUNDS")
This Agreement is entered into as of the __ of__________________, 2001, between ____________________________________ (the "Plan Provider") and A I M Distributors, Inc. (the "Distributor").
RECITAL
Plan Provider acts as a trustee and/or servicing agent for defined contribution plans and/or deferred compensation plans (the "Plans") and invests and reinvests such Plans' assets as specified by an investment advisor, sponsor or administrative committee of the Plan (a "Plan Representative") generally upon the direction of Plan beneficiaries (the "Participants").
Plan Provider and Distributor desire to facilitate the purchase and redemption of shares (the "Shares") of the funds listed on Exhibit A hereto which may be amended from time to time by Distributor (the "Fund" or "Funds"), registered investment companies distributed by Distributor, on behalf of the Plans, through one or more accounts (not to exceed one per Plan) in each Fund (individually an "Account" and collectively the "Accounts"), subject to the terms and conditions of this Agreement. Distributor shall, on behalf of the Funds, pay to Plan Provider a fee in accordance with Exhibit A hereto.
AGREEMENT
1. SERVICES
Plan Provider shall provide shareholder and administration services for
the Plans and/or their Participants, including, without limitation:
answering questions about the Funds; assisting in changing dividend
options, account designations and addresses; establishing and
maintaining shareholder accounts and records; and assisting in
processing purchase and redemption transactions (the "Services"). Plan
Provider shall comply with all applicable laws, rules and regulations,
including requirements regarding prospectus delivery and maintenance and
preservation of records. To the extent allowed by law, Plan Provider
shall provide Distributor with copies of all records that Distributor
may reasonably request. Distributor or its affiliate will recognize each
Plan as an unallocated account in each Fund, and will not maintain
separate accounts in each Fund for each Participant. Except to the
extent provided in Section 3, all Services performed by Plan Provider
shall be as an independent contractor and not as an employee or agent of
Distributor or any of the Funds. Plan Provider and Plan Representatives,
and not Distributor, shall take all necessary action so that the
transactions contemplated by this Agreement shall not be "Prohibited
Transactions" under section 406 of the Employee Retirement Income
Security Act of 1974, or section 4975 of the Internal Revenue Code.
2. PRICING INFORMATION
Each Fund or its designee will furnish Plan Provider on each business day that the New York Stock Exchange is open for business ("Business Day"), with (i) net asset value information as of the close of trading (currently 4:00 p.m. Eastern Time) on the New York Stock Exchange or as at such later times at which a Fund's net asset value is calculated as
07/02
specified in such Fund's prospectus ("Close of Trading"), (ii) dividend and capital gains information as it becomes available, and (iii) in the case of income Funds, the daily accrual or interest rate factor (mil rate). The Funds shall use their best efforts to provide such information to Plan Provider by 6:00 p.m. Central Time on the same Business Day.
Distributor or its affiliate will provide Plan Provider (a) daily confirmations of Account activity within five Business Days after each day on which a purchase or redemption of Shares is effected for the particular Account, (b) if requested by Plan Provider, quarterly statements detailing activity in each Account within fifteen Business Days after the end of each quarter, and (c) such other reports as may be reasonably requested by Plan Provider.
3. ORDERS AND SETTLEMENT
If Plan Provider receives instructions in proper form from Participants or Plan Representatives before the Close of Trading on a Business Day, Plan Provider will process such instructions that same evening. On the next Business Day, Plan Provider will transmit orders for net purchases or redemptions of Shares to Distributor or its designee by 9:00 a.m. Central Time and wire payment for net purchases by 2:00 p.m. Central Time. Distributor or its affiliate will wire payment for net redemptions on the Business Day following the day the order is executed for the Accounts. In doing so, Plan Provider will be considered the Funds' agent, and Shares will be purchased and redeemed as of the Business Day on which Plan Provider receives the instructions. Plan Provider will record time and date of receipt of instructions and will, upon request, provide such instructions and other records relating to the Services to Distributor's auditors. If Plan Provider receives instructions in proper form after the Close of Trading on a Business Day, Plan Provider will treat the instructions as if received on the next Business Day.
4. REPRESENTATIONS WITH RESPECT TO THE DISTRIBUTOR AND THE FUNDS
Plan Provider and its agents shall limit representations concerning a Fund or Shares to those contained in the then current prospectus of such Fund, in current sales literature furnished by Distributor to Plan Provider, in publicly available databases, such as those databases created by Standard & Poor's and Morningstar, and in current sales literature created by Plan Provider and submitted to and approved in writing by Distributor prior to its use.
5. USE OF NAMES
Plan Provider and its affiliates will not, without the prior written approval of Distributor, make public references to A I M Management Group Inc. or any of its subsidiaries, or to the Funds. For purposes of this provision, the public does not include Plan Providers' representatives who are actively engaged in promoting the Funds. Any brochure or other communication to the public that mentions the Funds shall be submitted to Distributor for written approval prior to use. Plan Provider shall provide copies of its regulatory filings that include any reference to A I M Management Group Inc. or its subsidiaries or the Funds to Distributor. If Plan Provider or its affiliates should make unauthorized references or representations, Plan Provider agrees to indemnify and hold harmless the Funds, A I M Management Group Inc. and its subsidiaries from any claims, losses, expenses or liability arising in any way out of or connected in any way with such references or representations.
6. TERMINATION
(a) This Agreement may be terminated with respect to any Fund at any time without any penalty by the vote of a majority of the directors of such Fund who are "disinterested directors", as that term is defined in the Investment Company Act of 1940, as amended (the "1940 Act"), or by a vote of a majority of the Fund's outstanding shares, on sixty (60) days' written notice. It will be terminated by any act which terminates either the Fund's Distribution Plan, or any related agreement thereunder, and in any event, it shall terminate automatically in the event of its assignment as that term is defined in the 1940 Act.
(b) Either party may terminate this Agreement upon ninety (90) days' prior written notice to the other party at the address specified below.
7. INDEMNIFICATION
(a) Plan Provider agrees to indemnify and hold harmless the Distributor, its affiliates, the Funds, the Funds' investment advisors, and each of their directors, officers, employees, agents and each person, if any, who controls them within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), (the "Distributor Indemnitees") against any losses, claims, damages, liabilities or expenses to which a Distributor Indemnitee may become subject insofar as those losses, claims, damages, liabilities or expenses or actions in respect thereof, arise out of or are based upon (i) Plan Provider's negligence or willful misconduct in performing the Services, (ii) any breach by Plan Provider of any material provision of this Agreement, or (iii) any breach by Plan Provider of a representation, warranty or covenant made in this Agreement; and Plan Provider will reimburse the Distributor Indemnitee for any legal or other expenses reasonably incurred, as incurred, by them in connection with investigating or defending such loss, claim or action. This indemnity agreement will be in addition to any liability which Plan Provider may otherwise have.
(b) Distributor agrees to indemnify and hold harmless Plan Provider
and its affiliates, and each of its directors, officers,
employees, agents and each person, if any, who controls Plan
Provider within the meaning of the Securities Act (the "Plan
Provider Indemnitees") against any losses, claims, damages,
liabilities or expenses to which a Plan Provider Indemnitee may
become subject insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement or Prospectus of a Fund, or the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make statements therein not misleading,
(ii) any breach by Distributor of any material provision of this
Agreement, (iii) Distributor's negligence or willful misconduct
in carrying out its duties and responsibilities under this
Agreement, or (iv) any breach by Distributor of a representation,
warranty or covenant made in this Agreement; and Distributor will
reimburse the Plan Provider Indemnitees for any legal or other
expenses reasonably incurred, as incurred, by them, in connection
with investigating or defending any such loss, claim or action.
This indemnity agreement will be in addition to any liability
which Distributor may otherwise have.
(c) If any third party threatens to commence or commences any action for which one party (the "Indemnifying Party") may be required to indemnify another person
hereunder (the "Indemnified Party"), the Indemnified Party shall promptly give notice thereof to the Indemnifying Party. The Indemnifying Party shall be entitled, at its own expense and without limiting its obligations to indemnify the Indemnified Party, to assume control of the defense of such action with counsel selected by the Indemnifying Party which counsel shall be reasonably satisfactory to the Indemnified Party. If the Indemnifying Party assumes the control of the defense, the Indemnified Party may participate in the defense of such claim at its own expense. Without the prior written consent of the Indemnified Party, which consent shall not be withheld unreasonably, the Indemnifying Party may not settle or compromise the liability of the Indemnified Party in such action or consent to or permit the entry of any judgment in respect thereof unless in connection with such settlement, compromise or consent each Indemnified Party receives from such claimant an unconditional release from all liability in respect of such claim.
8. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the internal laws of the State of Texas applicable to agreements fully executed and to be performed therein.
9. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each party represents that it is free to enter into this Agreement and that by doing so it will not breach or otherwise impair any other agreement or understanding with any other person, corporation or other entity. Each party represents that it has full power and authority under applicable law, and has taken all action necessary to enter into and perform this Agreement and the person executing this Agreement on its behalf is duly authorized and empowered to execute and deliver this Agreement. Additionally, each party represents that this Agreement, when executed and delivered, shall constitute its valid, legal and binding obligation, enforceable in accordance with its terms.
Plan Provider further represents, warrants, and covenants that:
(a) it is registered as a transfer agent pursuant to Section 17A of the Securities Exchange Act of 1934, as amended (the "1934 Act"), or is not required to be registered as such;
(b) the arrangements provided for in this Agreement will be disclosed to the Plan Representatives; and
(c) it is registered as a broker-dealer under the 1934 Act or any applicable state securities laws, or, including as a result of entering into and performing the services set forth in this Agreement, is not required to be registered as such.
(d) it will ensure that either it, its affiliates or another person other than Distributor is the registered broker-dealer for any transaction made pursuant to this Agreement, that Distributor is not responsible for determining whether Shares are suitable investments for the participants, and that any such registered broker-dealer shall have the appropriate selling group agreement with Distributor in place at the time such transaction occurs. Further, Plan Provider will provide indemnification to Distributor or its affiliates for any breach of this subsection.
(e) it is a member of the National Securities Clearing Corporations ("NSCC") and has executed and filed the standard NSCC Fund/SERV Agreement with the NSCC and will abide by its terms and the applicable rules. Plan Provider further represents and warrants that it or an affiliate is a member of the NSCC and has executed and filed with the NSCC the standard NSCC Fund/SERV Agreement. Plan Provider further represents and warrants that it will abide by the NSCC Fund/SERV rules and agrees that it will perform its duties and obligations under this Agreement in accordance with the terms of the NSCC Fund/SERV Agreement except as otherwise specified in a writing signed by both parties.
Distributor further represents, warrants and covenants, that:
(a) it is registered as a broker-dealer under the 1934 Act and any applicable state securities laws; and
(b) the Funds' advisors are registered as investment advisors under the Investment Advisers Act of 1940, the Funds are registered as investment companies under the 1940 Act and Fund Shares are registered under the Securities Act.
10. MODIFICATION
This Agreement and Exhibit A may be amended at any time by Distributor without Plan Provider's consent by Distributor mailing a copy of an amendment to Plan Provider at the address set forth below. Such amendment shall become effective thirty (30) days from the date of mailing unless this Agreement is terminated by the Plan Provider within such thirty (30) days.
11. ASSIGNMENT
This Agreement shall not be assigned by a party hereto, without the prior written consent of the other parties hereto, except that a party may assign this Agreement to an affiliate having the same ultimate ownership as the assigning party without such consent.
12. SURVIVAL
The provisions of Sections 1, 5 and 7 shall survive termination of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement by their duly authorized officers as of the date first above written.
A I M DISTRIBUTORS, INC.
(DISTRIBUTOR)
07/02
EXHIBIT A
For the term of this Agreement, Distributor, or its affiliates, shall pay Plan Provider the following amounts for each of the following Funds with respect to the average daily net asset value of the Class A Shares of the Plans' balances for the prior quarter:
FUND ANNUAL FEE
---- ----------
AIM Advisor Funds (Class A Shares Only)
AIM International Core Equity Fund .25%
AIM Real Estate Fund .25%
AIM Equity Funds (Class A Shares Only)
AIM Aggressive Growth Fund .25%
AIM Blue Chip Fund .25%
AIM Capital Development Fund .25%
AIM Charter Fund .25%
AIM Constellation Fund .25%
AIM Dent Demographic Trends Fund .25%
AIM Emerging Growth Fund .25%
AIM Large Cap Basic Value Fund .25%
AIM Large Cap Core Equity Fund .25%
AIM Large Cap Growth Fund .25%
AIM Mid Cap Growth Fund .25%
AIM Weingarten Fund .25%
AIM Floating Rate Fund (Class C Shares Only) Up to .25%
AIM Funds Group (Class A Shares Only)
AIM Balanced Fund .25%
AIM Basic Balanced Fund .25%
AIM European Small Company Fund .25%
AIM Global Utilities Fund .25%
AIM International Emerging Growth Fund .25%
AIM Mid Cap Basic Value Fund .25%
AIM New Technology Fund .25%
AIM Premier Equity Fund .25%
AIM Premier Equity II Fund .25%
AIM Select Equity Fund .25%
AIM Small Cap Equity Fund .25%
AIM Worldwide Spectrum Fund .25%
|
10/01/02
AIM Growth Series (Class A Shares Only)
AIM Basic Value Fund .25%
AIM Euroland Growth Fund .25%
AIM Mid Cap Core Equity Fund .25%
AIM Small Cap Growth Fund(1) .25%
AIM International Funds, Inc. (Class A Shares Only)
AIM Asia Pacific Growth Fund .25%
AIM European Growth Fund .25%
AIM Global Aggressive Growth Fund .25%
AIM Global Growth Fund .25%
AIM Global Income Fund .25%
AIM International Growth Fund .25%
AIM Investment Funds (Class A Shares Only)
AIM Developing Markets Fund .25%
AIM Global Energy Fund .25%
AIM Global Financial Services Fund .25%
AIM Global Health Care Fund .25%
AIM Global Infrastructure Fund .25%
AIM Global Science and Technology Fund .25%
AIM Strategic Income Fund .25%
AIM Investment Securities Funds (Class A Shares Only)
AIM High Yield Fund II .25%
AIM Limited Maturity Treasury Fund(2) .15%
AIM High Yield Fund .25%
AIM Income Fund .25%
AIM Intermediate Government Fund .25%
AIM Municipal Bond Fund .25%
AIM Total Return Bond Fund .25%
AIM Series Trust (Class A Shares Only)
AIM Global Trends Fund .25%
AIM Special Opportunities Funds (Class A Shares Only)
AIM Opportunities I Fund .25%
AIM Opportunities II Fund .25%
AIM Opportunities III Fund .25%
|
Distributor or its affiliates shall calculate the amount of quarterly payment and shall deliver to Plan Provider a quarterly statement showing the calculation of the quarterly amounts payable to Plan Provider. Distributor reserves the right at any time to impose minimum fee payment requirements before any quarterly payments will be made to Plan Provider. Payment to Plan Provider shall occur within 30 days following the end of each quarter. All parties agree that the payments referred to herein are for record keeping and administrative services only and are not for legal, investment advisory or distribution services.
10/01/02
Minimum Payments: $50 (with respect to all Funds in the aggregate.)
10/01/02
EXHIBIT n(1)
SECOND AMENDED AND RESTATED
MULTIPLE CLASS PLAN
OF
THE AIM FAMILY OF FUNDS--Registered Trademark--
1. This Multiple Class Plan (the "Plan") adopted in accordance with Rule 18f-3 under the Act shall govern the terms and conditions under which the Funds may issue separate Classes of Shares representing interests in one or more Portfolios of each Fund.
2. Definitions. As used herein, the terms set forth below shall have the meanings ascribed to them below.
(a) Act -- Investment Company Act of 1940, as amended.
(b) AIM Cash Reserve Shares -- shall mean the AIM Cash Reserve Shares Class of AIM Money Market Fund, a Portfolio of AIM Investment Securities Funds.
(c) CDSC -- contingent deferred sales charge.
(d) CDSC Period -- the period of years following acquisition of Shares during which such Shares may be assessed a CDSC upon redemption.
(e) Class -- a class of Shares of a Fund representing an interest in a Portfolio.
(f) Class A Shares -- shall mean those Shares designated as Class A Shares in the Fund's organizing documents.
(g) Class A3 Shares -- shall mean those Shares designated as Class A3 Shares in the Fund's organizing documents.
(h) Class B Shares -- shall mean those Shares designated as Class B Shares in the Fund's organizing documents.
(i) Class C Shares -- shall mean those Shares designated as Class C Shares in the Fund's organizing documents.
(j) Class R Shares -- shall mean those Shares designated as Class R Shares in the Fund's organizing documents.
(k) Directors -- the directors or trustees of a Fund.
(l) Distribution Expenses -- expenses incurred in activities which are primarily intended to result in the distribution and sale of Shares as defined in a Plan of Distribution and/or agreements relating thereto.
(m) Distribution Fee -- a fee paid by a Fund to the Distributor to compensate the Distributor for Distribution Expenses.
(n) Distributor -- A I M Distributors, Inc. or Fund Management Company, as applicable.
(o) Fund -- those investment companies advised by A I M Advisors, Inc. which have adopted this Plan.
(p) Institutional Class Shares -- shall mean Shares of a Fund representing an interest in a Portfolio offered for sale to institutional customers as may be approved by the Directors from time to time and as set forth in the Fund's Prospectus.
(q) Plan of Distribution -- any plan adopted under Rule 12b-1 under the Act with respect to payment of a Distribution Fee and/or Service Fee.
(r) Portfolio -- a series of the Shares of a Fund constituting a separate investment portfolio of the Fund.
(s) Prospectus -- the then currently effective prospectus and statement of additional information of a Portfolio.
(t) Service Fee -- a fee paid to financial intermediaries for the ongoing provision of personal services to Fund shareholders and/or the maintenance of shareholder accounts.
(u) Share -- a share of common stock or beneficial interest in a Fund, as applicable.
3. Allocation of Income and Expenses.
(a) Distribution Fees and Service Fees -- Each Class shall bear directly any and all Distribution Fees and/or Service Fees payable by such Class pursuant to a Plan of Distribution adopted by the Fund with respect to such Class.
(b) Transfer Agency and Shareholder Recordkeeping Fees -- Each Class shall bear directly the transfer agency fees and expenses and other shareholder recordkeeping fees and expenses payable by that Class pursuant to a Transfer Agency and Service Agreement adopted by the Fund with respect to such Class.
(c) Allocation of Other Expenses -- Each Class shall bear proportionately all other expenses incurred by a Portfolio based on the relative net assets attributable to each such Class.
(d) Allocation of Income, Gains and Losses -- Except to the extent provided in the following sentence, each Portfolio will allocate income and realized and unrealized capital gains and losses to a Class based on the relative net assets of each Class. Notwithstanding the foregoing, each Portfolio that declares dividends on a daily basis will allocate income on the basis of settled Shares.
(e) Waiver and Reimbursement of Expenses -- A Portfolio's adviser, underwriter or any other provider of services to the Portfolio may waive or reimburse the expenses of a particular Class or Classes.
4. Distribution and Servicing Arrangements. The distribution and servicing arrangements identified below will apply for the following Classes offered by a Fund with respect to a Portfolio. The provisions of the Fund's Prospectus describing the distribution and servicing arrangements in detail are incorporated herein by this reference.
(a) Class A Shares. Class A Shares shall be offered at net asset
value plus a front-end sales charge as approved from time to time
by the Directors and set forth in the Fund's Prospectus, which
sales charge may be reduced or eliminated for certain money
market fund shares, for larger purchases, under a combined
purchase privilege, under a right of accumulation, under a letter
of intent or for certain categories of purchasers as permitted by
Section 22(d) of the Act and as set forth in the Fund's
Prospectus. Class A Shares that are not subject to a front-end
sales charge as a result of the foregoing shall be subject to a
CDSC for the CDSC Period set forth in Section 5(a) of this Plan
if so provided in the Fund's Prospectus. The offering price of
Shares subject to a front-end sales charge shall be computed in
accordance with Rule 22c-1 and Section 22(d) of the Act and the
rules and regulations thereunder. Class A Shares shall be subject
to ongoing Service Fees and/or Distribution Fees approved from
time to time by the Directors and set forth in the Fund's
Prospectus.
(b) Class A3 Shares. Class A3 Shares shall be (i) offered at net asset value, and (ii) subject to ongoing Service Fees and/or Distribution Fees approved from time to time by the Directors and set forth in the Fund's Prospectus.
(c) Class B Shares. Class B Shares shall be (i) offered at net asset
value, (ii) subject to a CDSC for the CDSC Period set forth in
Section 5(b), (iii) subject to ongoing Service Fees and/or
Distribution Fees approved from time to time by the Directors and
set forth in the Fund's Prospectus, and (iv) converted to Class A
Shares eight years from the end of the calendar month in which
the shareholder's order to purchase was accepted, as set forth in
the Fund's Prospectus.
Class B Shares of AIM Global Trends Funds acquired prior to June 1, 1998 which are continuously held in AIM Global Trends Fund shall convert to Class A Shares seven years from the end of the calendar month in which the shareholder's order to purchase was accepted, as set forth in the Fund's Prospectus.
Class B Shares of AIM Money Market Fund will convert to AIM Cash Reserve Shares of AIM Money Market Fund.
(d) Class C Shares. Class C Shares shall be (i) offered at net asset
value, (ii) subject to a CDSC for the CDSC Period set forth in
Section 5(c), and (iii) subject to ongoing Service Fees and/or
Distribution Fees approved from time to time by the Directors and
set forth in the Fund's Prospectus.
(e) Institutional Class Shares. Institutional Class Shares shall be
(i) offered at net asset value, (ii) offered only to certain
categories of institutional customers as approved from time to
time by the Directors and as set forth in the Fund's
Prospectus, and (iii) may be subject to ongoing Service Fees and/or Distribution Fees as approved from time to time by the Directors and set forth in the Fund's Prospectus.
(f) Class R Shares. Class R Shares shall be (i) offered at net asset
value, (ii) subject to a CDSC for the CDSC Period set forth in
Section 5(d), and (iii) subject to on-going Service Fees and/or
Distribution Fees approved from time to time by the Directors and
set forth in the Fund's Prospectus.
(g) AIM Cash Reserve Shares. AIM Cash Reserve Shares shall be (i) offered at net asset value, and (ii) subject to ongoing Service Fees and/or Distribution Fees approved from time to time by the Directors and set forth in the Fund's Prospectus.
5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that do not incur a front-end sales charge, of certain AIM Cash Reserve Shares, Class C Shares and Class R Shares and of Class B Shares as follows:
(a) AIM Cash Reserve Shares acquired through exchange of Class A Shares of another Portfolio may be subject to a CDSC for the CDSC Period set forth in Section 5(b) of this Plan if so provided in the Fund's Prospectus.
(b) Class A Shares. The CDSC Period for Class A Shares shall be the period set forth in the Fund's Prospectus. The CDSC rate shall be as set forth in the Fund's Prospectus, the relevant portions of which are incorporated herein by this reference. No CDSC shall be imposed on Class A Shares unless so provided in a Fund's Prospectus.
(c) Class B Shares. The CDSC Period for the Class B Shares shall be six years. The CDSC rate for the Class B Shares shall be as set forth in the Fund's Prospectus, the relevant portions of which are incorporated herein by this reference.
(d) Class C Shares. The CDSC Period for the Class C Shares that are subject to a CDSC shall be one year. The CDSC rate for the Class C Shares that are subject to a CDSC shall be as set forth in the Fund's Prospectus, the relevant portions of which are incorporated herein by reference.
(e) Class R Shares. The CDSC Period for the Class R Shares that are subject to a CDSC shall be the period set forth in the Fund's Prospectus. The CDSC rate for the Class R Shares that are subject to a CDSC shall be as set forth in the Fund's Prospectus, the relevant portions of which are incorporated herein by reference.
(f) Method of Calculation. The CDSC shall be assessed on an amount equal to the lesser of the then current market value or the cost of the Shares being redeemed. No CDSC shall be imposed on increases in the net asset value of the Shares being redeemed above the initial purchase price. No CDSC shall be assessed on Shares derived from reinvestment of dividends or capital gains distributions. The order in which Shares are to be redeemed when not all of
such Shares would be subject to a CDSC shall be determined by the Distributor in accordance with the provisions of Rule 6c-10 under the Act.
(g) Waiver. The Distributor may in its discretion waive a CDSC otherwise due upon the redemption of Shares on terms disclosed in the Fund's Prospectus and, for the Class A Shares and AIM Cash Reserve Shares, as allowed under Rule 6c-10 under the Act.
(h) CDSC Computation. The CDSC payable upon redemption of AIM Cash Reserve Shares, Class A Shares, Class B Shares, Class C Shares, and Class R Shares [subject to a CDSC] shall be computed in the manner described in the Fund's Prospectus.
6. Exchange Privileges. Exchanges of Shares, except for Institutional Class Shares, shall be permitted between Funds as follows:
(a) Shares of a Fund generally may be exchanged for Shares of the same Class of another Fund, subject to such exceptions and such terms and limitations as are disclosed in the Fund's Prospectus.
(b) Shares of a Fund generally may not be exchanged for Shares of a different Class of that Fund or another Fund, subject to such exceptions and such terms and limitations as are disclosed in the Fund's Prospectus.
(c) Depending upon the Portfolio from which and into which an exchange is being made and when the shares were purchased, shares being acquired in an exchange may be acquired at their offering price, at their net asset value or by paying the difference in sales charges, as disclosed in the Fund's Prospectus.
7. Service Fees and Distribution Fees. The Service Fee and Distribution Fee applicable to any Class shall be those set forth in the Fund's Prospectus, relevant portions of which are incorporated herein by this reference. All other terms and conditions with respect to Service Fees and Distribution Fees shall be governed by the Plan of Distribution adopted by the Fund with respect to such fees and Rule 12b-1 of the Act.
8. Conversion of Class B Shares.
(a) Shares Received upon Reinvestment of Dividends and Distributions -- Shares purchased through the reinvestment of dividends and distributions paid on Shares subject to conversion shall be treated as if held in a separate sub-account. Each time any Shares in a Shareholder's account (other than Shares held in the sub-account) convert to Class A Shares, a proportionate number of Shares held in the sub-account shall also convert to Class A Shares.
(b) Conversions on Basis of Relative Net Asset Value -- All conversions shall be effected on the basis of the relative net asset values of the two Classes without the imposition of any sales load or other charge.
(c) Amendments to Plan of Distribution for Class A Shares -- If any amendment is proposed to the Plan of Distribution under which Service Fees and Distribution
Fees are paid with respect to Class A Shares of a Fund that would increase materially the amount to be borne by those Class A Shares, then no Class B Shares shall convert into Class A Shares of that Fund until the holders of Class B Shares of that Fund have also approved the proposed amendment. If the holders of such Class B Shares do not approve the proposed amendment, the Directors of the Fund and the Distributor shall take such action as is necessary to ensure that the Class voting against the amendment shall convert into another Class identical in all material respects to Class A Shares of the Fund as constituted prior to the amendment.
9. Effective Date. This Plan shall not take effect until a majority of the Directors of a Fund, including a majority of the Directors who are not interested persons of the Fund, shall find that the Plan, as proposed and including the expense allocations, is in the best interests of each Class individually and the Fund as a whole.
10. Amendments. This Plan may not be amended to materially change the provisions of this Plan unless such amendment is approved in the manner specified in Section 9 above.
11. Administration of Plan. This Plan shall be administered in compliance with all applicable provisions of the Act and all applicable rules promulgated under the Act, including but not limited to Rule 18f-3, Rule 6c-10 (with respect to the imposition of CDSCs upon the redemption of Shares) and Rule 11a-3 (with respect to exchange privileges among Shares).
Effective December 12, 2001 as amended and restated March 4, 2002 and as further amended and restated October 31, 2002.