As filed with the Securities and Exchange Commission on February 24, 2003
1933 Act Registration No. 2-25469
1940 Act Registration No. 811-1424
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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. 75 X
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 75 X
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(Check appropriate box or boxes.)
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AIM EQUITY FUNDS
(Exact Name of Registrant as Specified in Charter)
Robert H. Graham
Copy to:
Lisa A. Moss, 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 77046-1173 Philadelphia, Pennsylvania 19103-7599
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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:
AIM AGGRESSIVE GROWTH FUND
March 3, 2003
Prospectus
AIM Aggressive Growth Fund seeks to provide long-term
growth of capital.
This prospectus contains important information about the Class A, B, C and R 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Registered Trademark-- --Servicemark-- |
--------------------------
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INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 ------------------------------------------------------ The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 ------------------------------------------------------ Sales Charges 4 Dividends and Distributions 4 Future Fund Closure 4 FINANCIAL HIGHLIGHTS 5 ------------------------------------------------------ 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-9 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, AIM Investments, AIM Investments 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 to achieve 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 primarily in common stocks of companies whose earnings the fund's portfolio managers expect to grow more than 15% per year. The fund will invest in securities of small- and medium-sized growth companies. The portfolio managers focus on companies they believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of these factors materially changes. The fund may also invest up to 25% of its total assets in foreign securities. 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.
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.
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 smaller companies, whose prices may go up and down more than equity securities of larger, more- established companies. Also, since equity securities of smaller 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 desirable price.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
An investment in the fund is not a deposit in 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 changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1993................................................................... 32.03%
1994................................................................... 17.18%
1995................................................................... 41.51%
1996................................................................... 14.34%
1997................................................................... 12.24%
1998................................................................... 4.99%
1999................................................................... 44.98%
2000................................................................... 3.00%
2001................................................................... -26.00%
2002................................................................... -22.65%
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During the periods shown in the bar chart, the highest quarterly return was 31.35% (quarter ended December 31, 1999) and the lowest quarterly return was -24.66% (quarter ended September 30, 2001).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of broad-based securities market indices. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------------
(for the periods
ended December 31, SINCE INCEPTION
2002) 1 YEAR 5 YEARS 10 YEARS INCEPTION(1) DATE
--------------------------------------------------------------------------------
Class A 05/01/84
Return Before Taxes (26.90)% (3.24)% 9.07% --
Return After Taxes
on Distributions (26.90) (4.49) 8.04 --
Return After Taxes
on Distributions
and Sale of Fund
Shares (16.52) (1.96) 8.02 --
Class B 03/01/99
Return Before Taxes (27.04) -- -- (2.75)%
Class C 03/01/99
Return Before Taxes (23.97) -- -- (2.20)
Class R(3) 05/01/84(3)
Return Before Taxes (22.73) (2.36) 9.43 --
--------------------------------------------------------------------------------
Russell
2500--Registered
Trademark--
Index(2) (17.80) 1.57 9.29 -- --
(reflects no
deduction for
fees, expenses,
or taxes)
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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, C and R will vary.
(1) Since Inception performance is only provided for a class with less than ten
calendar years of performance.
(2) The Russell 2500--Registered Trademark-- Index measures the performance of
the 2,500 smallest companies in the Russell 3000--Registered Trademark--
Index, which represents approximately 17% of the total market capitalization
of the Russell 3000--Registered Trademark-- Index. The Russell
3000--Registered Trademark-- Index measures the performance of the 3000
largest U.S. companies based on total market capitalization.
(3) The returns shown for these periods are the blended returns of the historical performance of the fund's Class R shares since their inception and the restated historical performance of the fund's 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. The inception date shown in the table is that of the fund's Class A shares. The inception date of the fund's Class R shares is June 3, 2002.
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 CLASS R ------------------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None 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% None(3) ------------------------------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(4) -------------------------------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C CLASS R -------------------------------------------------------------------------------- Management Fees 0.63% 0.63% 0.63% 0.63% Distribution and/or Service (12b-1) Fees 0.25 1.00 1.00 0.50 Other Expenses(5) 0.44 0.44 0.44 0.44 Total Annual Fund Operating Expenses 1.32 2.07 2.07 1.57 -------------------------------------------------------------------------------- |
(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 retirement plan participant and you bought $1,000,000 or more of Class A shares, you may pay a 1.00% CDSC if a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(3) If you are a retirement plan participant, you may pay a 0.75% CDSC if the distributor paid a concession to the dealer of record and a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(4) There is no guarantee that actual expenses will be the same as those shown in the table.
(5) Other expenses for Class R shares are based on estimated average net assets for the current fiscal year.
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
--------------------------------------------------------------------------------
Class A $677 $945 $1,234 $2,053
Class B 710 949 1,314 2,208
Class C 310 649 1,114 2,400
Class R 160 496 855 1,867
--------------------------------------------------------------------------------
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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 $677 $945 $1,234 $2,053
Class B 210 649 1,114 2,208
Class C 210 649 1,114 2,400
Class R 160 496 855 1,867
-------------------------------------------------------------------------------
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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 190 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2002, the advisor received compensation of 0.63% of average daily net assets.
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
- Robert M. Kippes (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 1992 and has been associated with the advisor and/or its affiliates since 1989.
- Ryan E. Crane, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1994.
- Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst for Prudential Securities.
They are assisted by the Mid Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
Effective May 1, 2003, Ryan E. Crane will be removed from, and the following portfolio manager will be added to, the members of the team who are primarily responsible for the management of the fund's portfolio:
- Karl Farmer, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1998. From 1992 to 1998, he worked as a pension actuary for William M. Mercer, Inc.
SALES CHARGES
Purchases of Class A shares of AIM Aggressive 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. Certain purchases of Class R shares may be subject to the contingent deferred sales charge 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.
FUTURE FUND CLOSURE
Due to the sometimes limited availability of common stocks of smaller companies that meet the investment criteria for the fund, the fund may periodically suspend or limit the offering of its shares.
During closed periods, the fund may impose different standards for additional investments. Also, during those periods the fund will continue to pay Rule 12b-1 fees.
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 for the fiscal period ended 2002 and for the fiscal years 2002 and 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by other public accountants.
CLASS A(a)
----------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 8.68 $ 18.41 $ 13.90 $ 10.04 $ 12.49
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)(b) (0.09)(b) (0.13) (0.09) (0.08)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (1.29) (6.34) 11.08 4.05 (1.93)
=================================================================================================================================
Total from investment operations (1.38) (6.43) 10.95 3.96 (2.01)
=================================================================================================================================
Less distributions from net realized gains -- (3.30) (6.44) (0.10) (0.44)
=================================================================================================================================
Net asset value, end of period $ 7.30 $ 8.68 $ 18.41 $ 13.90 $ 10.04
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (15.90)% (40.51)% 47.53% 39.73% (16.36)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,798,318 $2,516,407 $4,444,515 $2,808,451 $2,638,038
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.32%(d) 1.17% 1.04% 1.09% 1.06%
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets (1.00)%(d) (0.79)% (0.77)% (0.69)% (0.64)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 68% 89% 79% 75% 69%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
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(a) Per share information and distributions prior to October 31, 1999 have been restated to reflect a 4 for 1 stock split, effected in the form of a 300% stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting principles and does not include sales charges.
(d) Ratios are based on average daily net assets of $2,312,313,674.
CLASS B(a)
----------------------------------------------------------------------------------
MARCH 1, 1999
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
------------------------------------------------- TO OCTOBER 31,
2002 2001 2000 1999
--------- --------- --------- ----------------------
Net asset value, beginning of period $ 8.45 $ 18.12 $ 13.81 $ 10.85
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)(b) (0.17)(b) (0.29) (0.07)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (1.26) (6.20) 11.04 3.03
=================================================================================================================================
Total from investment operations (1.41) (6.37) 10.75 2.96
=================================================================================================================================
Less distributions from net realized gains -- (3.30) (6.44) --
=================================================================================================================================
Net asset value, end of period $ 7.04 $ 8.45 $ 18.12 $ 13.81
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (16.69)% (40.90)% 46.29% 27.27%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $226,806 $294,303 $374,010 $24,914
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.07%(d) 1.94% 1.86% 2.08%(e)
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets (1.75)%(d) (1.55)% (1.59)% (1.68)%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 68% 89% 79% 75%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
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(a)Per share information and distributions prior to October 31, 1999 have been restated to reflect a 4 for 1 stock split, effected in the form of a 300% stock dividend, on July 14, 2000.
(b)Calculated using average shares outstanding.
(c)Includes adjustments in accordance with generally accepted accounting principles, 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 $285,732,961.
(e)Annualized.
CLASS C(a)
--------------------------------------------------------------------------------
MARCH 1, 1999
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
----------------------------------------------- TO OCTOBER 31,
2002 2001 2000 1999
-------- -------- --------- ----------------------
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.45 $ 18.11 $ 13.81 $10.85
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)(b) (0.17)(b) (0.29) (0.07)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (1.26) (6.19) 11.03 3.03
=================================================================================================================================
Total from investment operations (1.41) (6.36) 10.74 2.96
=================================================================================================================================
Less distributions from net realized gains -- (3.30) (6.44) --
=================================================================================================================================
Net asset value, end of period $ 7.04 $ 8.45 $ 18.11 $13.81
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (16.69)% (40.86)% 46.21% 27.27%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $72,676 $96,640 $120,591 $6,807
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.07%(d) 1.94%(d) 1.86% 2.08%(e)
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets (1.75)%(d) (1.55)%(d) (1.59)% (1.68)%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 68% 89% 79% 75%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
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(a)Per share information and distributions prior to October 31, 1999 have been restated to reflect a 4 for 1 stock split, effected in the form of a 300% stock dividend, on July 14, 2000.
(b)Calculated using average shares outstanding.
(c)Includes adjustments in accordance with generally accepted accounting principles, 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 $92,947,098.
(e)Annualized.
CLASS R
----------------------
JUNE 3, 2002
(DATE SALES COMMENCED)
TO OCTOBER 31,
2002
----------------------
Net asset value, beginning of period $ 8.89
--------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a)
--------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.56)
======================================================================================
Total from investment operations (1.60)
======================================================================================
Net asset value, end of period $ 7.29
______________________________________________________________________________________
======================================================================================
Total return(b) (18.00)%
______________________________________________________________________________________
======================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 137
______________________________________________________________________________________
======================================================================================
Ratio of expenses to average net assets 1.62%(c)
======================================================================================
Ratio of net investment income (loss) to average net assets (1.30)%(c)
______________________________________________________________________________________
======================================================================================
Portfolio turnover rate 68%
______________________________________________________________________________________
======================================================================================
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(a)Calculated using average shares outstanding.
(b)Includes adjustments in accordance with generally accepted accounting principles and is not annualized for periods less than one year.
(c)Ratios are annualized and based on average daily net assets of $33,556.
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 - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge charge
- Reduced or waived - No contingent - Contingent - Contingent - Generally, no
initial sales deferred sales deferred sales deferred sales contingent
charge for certain charge charge on charge on deferred sales
purchases(2,3) redemptions within redemptions within charge(2)
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 - Converts to Class - Does not convert - Does not convert
to Class A shares A shares at the to Class A shares to Class A shares
end of 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 the
long-term short-term less than $250,000 short-term following types of
investors investors investors retirement plans:
(i) all section
401 and 457 plans,
(ii) section 403
plans sponsored by
section 501(c)(3)
organizations, and
(iii) 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 were 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.
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.
MCF--03/03
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.
Some retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor paid a concession to the dealer of record in connection with a Large Purchase of Class A shares by a retirement plan, the Class A shares may be subject to a 1% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the 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 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 PURCHASE MADE CLASS B CLASS 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 12 months from the date of the retirement plan's
initial 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
MCF--03/03
shares on which there is no CDSC first and, then, shares in the order of purchase.
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 plans, 401(k) $ 0 ($25 per AIM Fund investment for $25
plans, Simplified Employee Pension (SEP) accounts, Salary salary deferrals from Savings
Reduction (SARSEP) accounts, Savings Incentive Match Plans 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
-------------------------------------------------------------------------------------------------------------------------
|
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.
MCF--03/03
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
-------------------------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application and Mail your check and the remittance slip
check to the transfer agent, A I M Fund from your confirmation statement to the
Services, Inc., P.O. Box 4739, Houston, transfer agent.
TX 77210-4739.
By Wire Mail completed account application to Call the transfer agent to receive a
the transfer agent. Call the transfer reference number. Then, use the wire
agent at (800) 959-4246 to receive a instructions at left.
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 Telephone Open your account using one of the Select the AIM Bank Connection(SM)
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.
Call the AIM 24-hour Automated Investor
Line. You may place your order after
you have provided the bank instructions
that will be requested.
By Internet Open your account using one of the Access your account at
methods described above. www.aiminvestments.com. The proper bank
instructions must have been provided on
your account. You may not purchase
shares in AIM prototype retirement
accounts on the internet.
-------------------------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
SYSTEMATIC PURCHASE 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 Systematic Purchase 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:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; and (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
MCF--03/03
(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
PURCHASED AFTER AN EXCHANGE CDSC APPLICABLE UPON
--------- ----------------- REDEMPTION OF SHARES
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category III - No CDSC
Fund(1) Fund(1)
- Class A shares of 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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category I or - 1% if shares are redeemed
Fund II Fund within 18 months of initial
purchase of Category III Fund
shares
- Class A shares of Category III - Class A shares of Category III - 0.25% if shares are redeemed
Fund Fund(1) within 12 months of initial
- Class A shares of AIM Tax-Exempt purchase of Category III Fund
Cash 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.
MCF--03/03
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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
I or II Fund or II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(2) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
III Fund(1) or II Fund within 18 months of initial
purchase of Category III Fund
shares
|
SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category III - No CDSC
III Fund(1) Fund(2)
- Class A shares of 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 Consultant Contact your financial 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 or our AIM 24-hour
Automated Investor Line. 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.
By Internet Place your redemption request at
www.aiminvestments.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 already
provided proper bank information. 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.
|
MCF--03/03
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 REDEMPTIONS
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
Redemption 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.
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.
MCF--03/03
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
(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
MCF--03/03
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 you do not hold physical share certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
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
MCF--03/03
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 may 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--03/03
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.aiminvestments.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.
AIMinvestments.com AGRO-PRO-1
AIM BASIC VALUE II FUND
March 3, 2003
Prospectus
AIM Basic Value II Fund seeks to provide long-term
growth of capital.
This prospectus contains important information about the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Registered Trademark-- --Servicemark-- |
-----------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ FEE TABLE AND EXPENSE EXAMPLE 2 ------------------------------------------------------ Fee Table 2 Expense Example 2 FUND MANAGEMENT 3 ------------------------------------------------------ The Advisor 3 Advisor Compensation 3 Portfolio Managers 3 OTHER INFORMATION 3 ------------------------------------------------------ Sales Charges 3 Dividends and Distributions 3 FINANCIAL HIGHLIGHTS ------------------------------------------------------ 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-9 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, AIM Investments, AIM Investments 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 this objective by investing primarily in securities of companies that offer potential for capital growth. These securities may include common stocks, convertible bonds, convertible preferred stocks and warrants. The fund invests without regard to market capitalization. Under normal conditions, the top ten holdings may comprise at least a third up to 40% of the fund's total assets.
The fund may also invest up to 25% of its total assets in foreign securities. The fund may also invest in debt instruments that are consistent with its investment objective of long-term growth of capital. 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 they believe are undervalued in relation to long-term earning power, capital structure and cash flows, among other factors. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential.
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.
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 smaller companies, whose prices may go up and down more than equity securities of larger, more- established companies. Also, since equity securities of smaller companies may not be traded as often as equity securities of larger, more-established companies, it may be difficult or impossible for the portfolio to sell securities at a desirable price. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. When interest rates rise, bond prices fall; the longer a bond's duration, the more sensitive it is to this risk.
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.
Also, since a large percentage of the fund's assets will be invested in a limited number of securities, any change in the value of those securities could significantly affect the value of your investment in the fund.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
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 in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
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 0.75% 0.75% 0.75% Distribution and/or Service (12b-1) Fees(4) 0.35 1.00 1.00 Other Expenses() 9.24 9.24 9.24 Total Annual Fund Operating Expenses(5) 10.34 10.99 10.99 -------------------------------------------------------------------------------- |
(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 retirement plan participant and you bought $1,000,000 or more of Class A shares, you may pay a 1.00% CDSC if a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(3) There is no guarantee that actual expenses will be the same as those shown in the table.
(4) The distributor has agreed to waive 0.35%, 1.00% and 1.00% of Rule 12b-1 distribution plan fees on Class A, Class B and Class C shares, respectively.
(5) The investment advisor has 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 operating expenses of Class A shares to 1.75% (e.g. if AIM waives 8.24% of Class A expenses, AIM will also waive 8.24% of Class B and Class C expenses). Total Annual Fund Operating Expenses for Class A, Class B and Class C net of the above agreements are 1.75%, 1.75% and 1.75%, respectively. This agreement may be terminated at any time.
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
------------------------------------------------------------------------------
Class A $1,501 $3,253
Class B 1,566 3,311
Class C 1,166 3,011
------------------------------------------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS
------------------------------------------------------------------------------
Class A $1,501 $3,253
Class B 1,066 3,011
Class C 1,066 3,011
------------------------------------------------------------------------------
|
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the investment advisor. 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 190 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 0.75% of the first $1 billion of the average daily net assets, 0.70% over $1 billion to and including $2 billion of the average daily net assets and 0.65% of the average daily net assets over $2 billion.
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
- Bret W. Stanley (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1998. From 1994 to 1998, he was Vice President and portfolio manager for Van Kampen American Capital Asset Management, Inc.
- Robert Canon Coleman II, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1999. From 1993 to 1999, he worked as a CPA for Deloitte & Touche.
- Matthew W. Seinsheimer, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1998. From 1995 to 1998, he was portfolio manager for American Indemnity Company.
- Michael J. Simon, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2001. From 1996 to 2001, he was equity analyst and portfolio manager with Luther King Capital Management.
They are assisted by the Basic Value Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
SALES CHARGES
Purchases of Class A shares of AIM Basic Value II 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.
FINANCIAL HIGHLIGHTS
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 for the fiscal period ended 2002 has been audited by Ernst & Young 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 30, 2002
(DATE OPERATIONS COMMENCED)
TO OCTOBER 31,
2002
-----------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
-----------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(loss) (0.01)
-----------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.86)
=========================================================================================
Total from investment operations (0.87)
=========================================================================================
Net asset value, end of period $ 9.13
_________________________________________________________________________________________
=========================================================================================
Total return(a) (8.70)%
_________________________________________________________________________________________
=========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 365
_________________________________________________________________________________________
=========================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.75%(b)
-----------------------------------------------------------------------------------------
Without fee waivers 23.74%(b)
=========================================================================================
Ratio of net investment income (loss) to average net assets (0.49)%(b)
_________________________________________________________________________________________
=========================================================================================
Portfolio turnover rate 4%
_________________________________________________________________________________________
=========================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting principles, 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 $359,547.
FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
---------------------------
AUGUST 30, 2002
(DATE OPERATIONS COMMENCED)
TO OCTOBER 31,
2002
-----------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
-----------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(loss) (0.01)
-----------------------------------------------------------------------------------------
Net losses on securities (both realized and unrealized) (0.86)
=========================================================================================
Total from investment operations (0.87)
=========================================================================================
Net asset value, end of period $ 9.13
_________________________________________________________________________________________
=========================================================================================
Total return(a) (8.70)%
_________________________________________________________________________________________
=========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 274
_________________________________________________________________________________________
=========================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.75%(b)
-----------------------------------------------------------------------------------------
Without fee waivers 24.39%(b)
=========================================================================================
Ratio of net investment income (loss) to average net assets (0.49)%(b)
_________________________________________________________________________________________
=========================================================================================
Portfolio turnover rate 4%
_________________________________________________________________________________________
=========================================================================================
|
(a)Includes adjustments in accordance with generally accepted accounting principles, 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 $269,663.
CLASS C
---------------------------
AUGUST 30, 2002
(DATE OPERATIONS COMMENCED)
TO OCTOBER 31,
2002
-----------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
-----------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(loss) (0.01)
-----------------------------------------------------------------------------------------
Net losses on securities (both realized and unrealized) (0.86)
=========================================================================================
Total from investment operations (0.87)
=========================================================================================
Net asset value, end of period $ 9.13
_________________________________________________________________________________________
=========================================================================================
Total return(a) (8.70)%
_________________________________________________________________________________________
=========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 274
_________________________________________________________________________________________
=========================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.75%(b)
-----------------------------------------------------------------------------------------
Without fee waivers 24.39%(b)
=========================================================================================
Ratio of net investment income (loss) to average net assets (0.49)%(b)
_________________________________________________________________________________________
=========================================================================================
Portfolio turnover rate 4%
_________________________________________________________________________________________
=========================================================================================
|
(a)Includes adjustments in accordance with generally accepted accounting principles, 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 $269,663.
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 - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge charge
- Reduced or waived - No contingent - Contingent - Contingent - Generally, no
initial sales deferred sales deferred sales deferred sales contingent
charge for certain charge charge on charge on deferred sales
purchases(2,3) redemptions within redemptions within charge(2)
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 - Converts to Class - Does not convert - Does not convert
to Class A shares A shares at the to Class A shares to Class A shares
end of 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 the
long-term short-term less than $250,000 short-term following types of
investors investors investors retirement plans:
(i) all section
401 and 457 plans,
(ii) section 403
plans sponsored by
section 501(c)(3)
organizations, and
(iii) IRA
rollovers from
such plans if an
AIM Fund was
offered
------------------------------------------------------------------------------------------------------------
|
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 were 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.
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.
MCF--03/03
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
---------------------------------------------------------------
|
(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
------------------------------------------------------------
|
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
------------------------------------------------------------
|
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.
Some retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor paid a concession to the dealer of record in connection with a Large Purchase of Class A shares by a retirement plan, the Class A shares may be subject to a 1% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the 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 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 PURCHASE MADE CLASS B CLASS 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 12 months from the date of the retirement plan's
initial 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
MCF--03/03
shares on which there is no CDSC first and, then, shares in the order of purchase.
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 plans, 401(k) $ 0 ($25 per AIM Fund investment for $25
plans, Simplified Employee Pension (SEP) accounts, Salary salary deferrals from Savings
Reduction (SARSEP) accounts, Savings Incentive Match Plans 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
-------------------------------------------------------------------------------------------------------------------------
|
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.
MCF--03/03
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
-------------------------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application and Mail your check and the remittance slip
check to the transfer agent, A I M Fund from your confirmation statement to the
Services, Inc., P.O. Box 4739, Houston, transfer agent.
TX 77210-4739.
By Wire Mail completed account application to Call the transfer agent to receive a
the transfer agent. Call the transfer reference number. Then, use the wire
agent at (800) 959-4246 to receive a instructions at left.
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 Telephone Open your account using one of the Select the AIM Bank Connection(SM)
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.
Call the AIM 24-hour Automated Investor
Line. You may place your order after
you have provided the bank instructions
that will be requested.
By Internet Open your account using one of the Access your account at
methods described above. www.aiminvestments.com. The proper bank
instructions must have been provided on
your account. You may not purchase
shares in AIM prototype retirement
accounts on the internet.
-------------------------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
SYSTEMATIC PURCHASE 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 Systematic Purchase 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:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; and (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
MCF--03/03
(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
PURCHASED AFTER AN EXCHANGE CDSC APPLICABLE UPON
--------- ----------------- REDEMPTION OF SHARES
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category III - No CDSC
Fund(1) Fund(1)
- Class A shares of 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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category I or - 1% if shares are redeemed
Fund II Fund within 18 months of initial
purchase of Category III Fund
shares
- Class A shares of Category III - Class A shares of Category III - 0.25% if shares are redeemed
Fund Fund(1) within 12 months of initial
- Class A shares of AIM Tax-Exempt purchase of Category III Fund
Cash 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.
MCF--03/03
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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
I or II Fund or II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(2) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
III Fund(1) or II Fund within 18 months of initial
purchase of Category III Fund
shares
|
SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category III - No CDSC
III Fund(1) Fund(2)
- Class A shares of 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 Consultant Contact your financial 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 or our AIM 24-hour
Automated Investor Line. 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.
By Internet Place your redemption request at
www.aiminvestments.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 already
provided proper bank information. 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.
|
MCF--03/03
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 REDEMPTIONS
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
Redemption 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.
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.
MCF--03/03
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
(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
MCF--03/03
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 you do not hold physical share certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
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
MCF--03/03
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 may 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--03/03
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.aiminvestments.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.
AIMinvestments.com BV2-PRO-1
AIM BLUE CHIP FUND
March 3, 2003
Prospectus
AIM Blue Chip Fund seeks to provide long-term growth of
capital and, secondarily, current income.
This prospectus contains important information about the Class A, B, C and R 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Registered Trademark-- --Servicemark-- |
------------------
|
INVESTMENT OBJECTIVES AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 ------------------------------------------------------ The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 ------------------------------------------------------ Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 ------------------------------------------------------ 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-9 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, AIM Investments, AIM Investments 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 primary investment objective is long-term growth of capital with a secondary objective of current income. The investment objectives of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objectives by investing, normally, at least 80% of its assets in securities of blue chip companies. In complying with this 80% investment requirement, the fund may invest primarily in marketable equity securities, including convertible securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. The fund considers blue chip companies to be large and medium sized companies (i.e., companies which fall in the largest 85% of market capitalization of publicly traded companies listed in the United States) with leading market positions and which possess the following characteristics:
- MARKET CHARACTERISTICS--Companies that occupy (or in AIM's judgment have the potential to occupy) leading market positions that are expected to be maintained or enhanced over time. Strong market positions, particularly in growing industries, can give a company pricing flexibility as well as the potential for strong unit sales. These factors can, in turn, lead to higher earnings growth and greater share price appreciation. Market leaders can be identified within an industry as those companies that have (i) superior growth prospects compared with other companies in the same industry; (ii) possession of proprietary technology with the potential to bring about major changes within an industry; and/or (iii) leading sales within an industry, or the potential to become a market leader.
- FINANCIAL CHARACTERISTICS--Companies that possess at least one of the
following attributes: (i) faster earnings growth than its competitors and the
market in general; (ii) higher profit margins relative to its competitors;
(iii) strong cash flow relative to its competitors; and/or (iv) a balance
sheet with relatively low debt and a high return on equity relative to its
competitors.
The portfolio managers consider whether to sell a particular security when they believe the issuer of the security no longer is a market leader, and/or it no longer has the characteristics described above. When the portfolio managers believe securities other than marketable equity securities offer the opportunity for long-term growth of capital and current income, the fund may invest in United States government securities and high-quality debt securities. The fund may also invest up to 25% of its total assets in foreign securities. 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.
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.
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. 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 of the stock, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
An investment in the fund is not a deposit in 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 changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1993................................................................... 4.61%
1994................................................................... 4.66%
1995................................................................... 32.00%
1996................................................................... 23.75%
1997................................................................... 31.91%
1998................................................................... 30.42%
1999................................................................... 25.65%
2000................................................................... -9.29%
2001................................................................... -22.91%
2002................................................................... -26.42%
|
During the periods shown in the bar chart, the highest quarterly return was 24.45% (quarter ended December 31, 1998) and the lowest quarterly return was -20.05% (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, 2002) 1 YEAR 5 YEARS 10 YEARS INCEPTION(1) DATE
------------------------------------------------------------------------------
Class A 02/04/87
Return Before Taxes (30.48)% (4.44)% 6.52% --
Return After Taxes on
Distributions (30.48) (4.46) 5.50 --
Return After Taxes on
Distributions and
Sale of Fund Shares (18.72) (3.49) 5.00 --
Class B 10/01/96
Return Before Taxes (30.53) (4.39) -- 1.89%
Class C 08/04/97
Return Before Taxes (27.60) (4.00) -- (3.35)
Class R(3) 02/04/87(3)
Return Before Taxes (26.39) (3.46) 6.98 --
------------------------------------------------------------------------------
Russell
1000--Registered
Trademark-- Index(2)
(reflects no
deduction for fees,
expenses, or taxes) (21.65) (0.58) 9.19 --
------------------------------------------------------------------------------
|
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, C and R will vary.
(1) Since Inception performance is only provided for a class with less than ten
calendar years of performance.
(2) The Russell 1000--Registered Trademark-- Index is a widely recognized,
unmanaged index of common stocks that measures the performance of the 1,000
largest companies in the Russell 3000--Registered Trademark-- Index, which
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization.
(3) The returns shown for these periods are the blended returns of the historical performance of the fund's Class R shares since their inception and the restated historical performance of the fund's 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. The inception date shown in the table is that of the fund's Class A shares. The inception date of the fund's Class R shares is June 3, 2002.
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 CLASS R --------------------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None 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% None(3) --------------------------------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(4) --------------------------------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C CLASS R --------------------------------------------------------------------------------- Management Fees(5) 0.64% 0.64% 0.64% 0.64% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 0.50 Other Expenses(6) 0.41 0.41 0.41 0.41 Total Annual Fund Operating Expenses 1.40 2.05 2.05 1.55 --------------------------------------------------------------------------------- |
(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 retirement plan participant and you bought $1,000,000 or more of Class A shares, you may pay a 1.00% CDSC if a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(3) If you are a retirement plan participant, you may pay a 0.75% CDSC if the distributor paid a concession to the dealer of record and a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(4) There is no guarantee that actual expenses will be the same as those shown in the table.
(5) The investment advisor has agreed to waive a portion of the management fee on assets in excess of $5 billion. Termination of this agreement requires approval by the Board of Trustees.
(6) Other expenses for Class R shares are based on estimated average net assets for the current fiscal year.
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
-------------------------------------------------------------------------------
Class A $685 $969 $1,274 $2,137
Class B 708 943 1,303 2,213
Class C 308 643 1,103 2,379
Class R 158 490 845 1,845
-------------------------------------------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class A $685 $969 $1,274 $2,137
Class B 208 643 1,103 2,213
Class C 208 643 1,103 2,379
Class R 158 490 845 1,845
-------------------------------------------------------------------------------
|
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 190 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2002, the advisor received compensation of 0.64% of average daily net assets.
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
- Monika H. Degan (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with the advisor and/or its affiliates since 1995.
- Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for the fund since 1996 and has been associated with the advisor and/or its affiliates since 1986.
They are assisted by the Large Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
Effective May 1, 2003, Jonathan C. Schoolar will be removed from, and the following portfolio manager will be added to, the members of the team who are primarily responsible for the management of the fund's portfolio:
- Kirk L. Anderson, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1994.
SALES CHARGES
Purchases of Class A shares of AIM Blue Chip 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. Certain purchases of Class R shares may be subject to the contingent deferred sales charge 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 for the fiscal period ended 2002 and for the fiscal years 2002 and 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by other public accountants.
CLASS A(A)
------------------------------------------------------------------------
YEAR ENDED
OCTOBER 31,
------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.22 $ 17.29 $ 15.49 $ 12.05 $ 10.32
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(b) (0.04) (0.05)(b) 0.01 0.04(b)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.96) (6.03) 1.85 3.47 1.92
=================================================================================================================================
Total from investment operations (2.00) (6.07) 1.80 3.48 1.96
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.01) (0.02)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- (0.03) (0.21)
=================================================================================================================================
Total distributions -- -- -- (0.04) (0.23)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Net asset value, end of period $ 9.22 $ 11.22 $ 17.29 $ 15.49 $ 12.05
=================================================================================================================================
Total return(c) (17.82)% (35.11)% 11.60% 29.01% 19.36%
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,402,589 $2,067,602 $3,163,453 $2,299,551 $1,085,648
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.40%(d) 1.28% 1.19% 1.19% 1.22%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.33)%(d) (0.29)% (0.31)% 0.03% 0.33%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 28% 31% 22% 22% 27%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information for all periods prior to October 31, 2000 have been restated to reflect a 3 for 1 stock split, effected in the form of a 200% stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting principles and does not include sales charges.
(d) Ratios are based on average daily net assets of $1,862,049,115.
CLASS B(A)
-------------------------------------------------------------------------
YEAR ENDED
OCTOBER 31,
-------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.87 $ 16.87 $ 15.22 $ 11.91 $ 10.25
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10)(b) (0.13) (0.17)(b) (0.10)(b) (0.04)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.89) (5.87) 1.82 3.44 1.91
=================================================================================================================================
Total from investment operations (1.99) (6.00) 1.65 3.34 1.87
=================================================================================================================================
Less distributions from net realized gains -- -- -- (0.03) (0.21)
=================================================================================================================================
Net asset value, end of period $ 8.88 $ 10.87 $ 16.87 $ 15.22 $ 11.91
=================================================================================================================================
Total return(c) (18.31)% (35.57)% 10.87% 28.08% 18.52%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,198,513 $1,806,464 $2,746,149 $1,891,171 $745,862
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.05%(d) 1.94% 1.88% 1.91% 1.94%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.98)%(d) (0.94)% (1.00)% (0.68)% (0.38)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 28% 31% 22% 22% 27%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information for all periods prior to October 31, 2000 have been restated to reflect a 3 for 1 stock split, effected in the form of a 200% stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting principles and does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $1,616,746,189.
CLASS C(A)
----------------------------------------------------------------
YEAR ENDED
OCTOBER 31,
----------------------------------------------------------------
2002 2001 2000 1999 1998
------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.87 $ 16.86 $ 15.21 $ 11.91 $ 10.25
------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10)(b) (0.13) (0.17)(b) (0.10)(b) (0.04)(b)
------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.89) (5.86) 1.82 3.43 1.91
==============================================================================================================================
Total from investment operations (1.99) (5.99) 1.65 3.33 1.87
______________________________________________________________________________________________________________________________
==============================================================================================================================
Less distributions:
Distributions from net realized gains -- -- -- (0.03) (0.21)
------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.88 $ 10.87 $ 16.86 $ 15.21 $ 11.91
==============================================================================================================================
Total return(c) (18.31)% (35.53)% 10.82% 28.09% 18.52%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $302,555 $487,838 $720,186 $349,951 $87,554
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratio of expenses to average net assets 2.05%(d) 1.94% 1.88% 1.90% 1.94%
==============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.98)%(d) (0.94)% (1.00)% (0.68)% (0.38)%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Portfolio turnover rate 28% 31% 22% 22% 27%
______________________________________________________________________________________________________________________________
==============================================================================================================================
|
(a)Per share information for all periods prior to October 31, 2000 have been restated to reflect a 3 for 1 stock split, effected in the form of a 200% stock dividend, on September 8, 2000.
(b)Calculated using average shares outstanding.
(c)Includes adjustments in accordance with generally accepted accounting principles and does not include contingent deferred sales charges.
(d)Ratios are based on average daily net assets of $419,687,377.
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------
Net asset value, beginning of period $ 10.53
---------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a)
---------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.29)
===========================================================================
Total from investment operations (1.31)
===========================================================================
Net asset value, end of period $ 9.22
===========================================================================
Total return(b) (12.44)%
===========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 37
___________________________________________________________________________
===========================================================================
Ratio of expenses to average net assets 1.55%(c)
===========================================================================
Ratio of net investment income (loss) to average net assets (0.49)%(c)
___________________________________________________________________________
===========================================================================
Portfolio turnover rate 28%
___________________________________________________________________________
===========================================================================
|
(a)Calculated using average shares outstanding.
(b)Includes adjustments in accordance with generally accepted accounting principles and is not annualized for periods less than one year.
(c)Ratios are annualized and based on average daily net assets of $15,364.
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 - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge charge
- Reduced or waived - No contingent - Contingent - Contingent - Generally, no
initial sales deferred sales deferred sales deferred sales contingent
charge for certain charge charge on charge on deferred sales
purchases(2,3) redemptions within redemptions within charge(2)
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 - Converts to Class - Does not convert - Does not convert
to Class A shares A shares at the to Class A shares to Class A shares
end of 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 the
long-term short-term less than $250,000 short-term following types of
investors investors investors retirement plans:
(i) all section
401 and 457 plans,
(ii) section 403
plans sponsored by
section 501(c)(3)
organizations, and
(iii) IRA
rollovers from
such plans if an
AIM Fund was
offered
------------------------------------------------------------------------------------------------------------
|
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 were 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.
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.
MCF--03/03
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
---------------------------------------------------------------
|
(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
------------------------------------------------------------
|
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
------------------------------------------------------------
|
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.
Some retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor paid a concession to the dealer of record in connection with a Large Purchase of Class A shares by a retirement plan, the Class A shares may be subject to a 1% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the 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 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 PURCHASE MADE CLASS B CLASS 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 12 months from the date of the retirement plan's
initial 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
MCF--03/03
shares on which there is no CDSC first and, then, shares in the order of purchase.
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 plans, 401(k) $ 0 ($25 per AIM Fund investment for $25
plans, Simplified Employee Pension (SEP) accounts, Salary salary deferrals from Savings
Reduction (SARSEP) accounts, Savings Incentive Match Plans 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
-------------------------------------------------------------------------------------------------------------------------
|
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.
MCF--03/03
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
-------------------------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application and Mail your check and the remittance slip
check to the transfer agent, A I M Fund from your confirmation statement to the
Services, Inc., P.O. Box 4739, Houston, transfer agent.
TX 77210-4739.
By Wire Mail completed account application to Call the transfer agent to receive a
the transfer agent. Call the transfer reference number. Then, use the wire
agent at (800) 959-4246 to receive a instructions at left.
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 Telephone Open your account using one of the Select the AIM Bank Connection(SM)
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.
Call the AIM 24-hour Automated Investor
Line. You may place your order after
you have provided the bank instructions
that will be requested.
By Internet Open your account using one of the Access your account at
methods described above. www.aiminvestments.com. The proper bank
instructions must have been provided on
your account. You may not purchase
shares in AIM prototype retirement
accounts on the internet.
-------------------------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
SYSTEMATIC PURCHASE 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 Systematic Purchase 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:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; and (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
MCF--03/03
(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
PURCHASED AFTER AN EXCHANGE CDSC APPLICABLE UPON
--------- ----------------- REDEMPTION OF SHARES
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category III - No CDSC
Fund(1) Fund(1)
- Class A shares of 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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category I or - 1% if shares are redeemed
Fund II Fund within 18 months of initial
purchase of Category III Fund
shares
- Class A shares of Category III - Class A shares of Category III - 0.25% if shares are redeemed
Fund Fund(1) within 12 months of initial
- Class A shares of AIM Tax-Exempt purchase of Category III Fund
Cash 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.
MCF--03/03
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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
I or II Fund or II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(2) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
III Fund(1) or II Fund within 18 months of initial
purchase of Category III Fund
shares
|
SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category III - No CDSC
III Fund(1) Fund(2)
- Class A shares of 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 Consultant Contact your financial 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 or our AIM 24-hour
Automated Investor Line. 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.
By Internet Place your redemption request at
www.aiminvestments.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 already
provided proper bank information. 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.
|
MCF--03/03
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 REDEMPTIONS
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
Redemption 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.
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.
MCF--03/03
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
(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
MCF--03/03
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 you do not hold physical share certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
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
MCF--03/03
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 may 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--03/03
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.aiminvestments.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.
AIMinvestments.com BCH-PRO-1
AIM CAPITAL DEVELOPMENT FUND
March 3, 2003
Prospectus
AIM Capital Development seeks to provide long-term
growth of capital.
This prospectus contains important information about the Class A, B, C and R 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Registered Trademark-- --Servicemark-- |
----------------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 ------------------------------------------------------ The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 ------------------------------------------------------ Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 ------------------------------------------------------ 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-9 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, AIM Investments, AIM Investments 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 primarily in securities, including common stocks, convertible securities and bonds, of small- and medium-sized companies. Among factors which the portfolio managers may consider when purchasing these securities are (1) the growth prospects for a company's products; (2) the economic outlook for its industry; (3) a company's new product development; (4) its operating management capabilities; (5) the relationship between the price of the security and its estimated fundamental value; (6) relevant market, economic and political environments; and (7) financial characteristics, such as balance sheet analysis and return on assets. The portfolio managers consider whether to sell a particular security when any one of these factors materially changes or when the securities are no longer considered medium-sized company securities. The fund may also invest up to 25% of its total assets in foreign securities. 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.
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 smaller companies, whose prices may go up and down more than equity securities of larger, more- established companies. Also, since equity securities of smaller 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 desirable price.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
An investment in the fund is not a deposit in 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 changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1997................................................................... 23.69%
1998................................................................... 4.53%
1999................................................................... 27.78%
2000................................................................... 9.82%
2001................................................................... -8.65%
2002 -21.71%
|
During the periods shown in the bar chart, the highest quarterly return was 30.92% (quarter ended December 31, 1999) and the lowest quarterly return was -20.93% (quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of broad-based securities market indices. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS
---------------------------------------------------------------------
(for the periods
ended December 31, SINCE INCEPTION
2002) 1 YEAR 5 YEARS INCEPTION DATE
---------------------------------------------------------------------
Class A 06/17/96
Return Before Taxes (26.00)% (0.18)% 5.55%
Return After Taxes
on Distributions (26.00) (1.03) 4.87
Return After Taxes
on Distributions
and Sale of Fund
Shares (15.96) (0.29) 4.44
Class B 10/01/96
Return Before Taxes (26.15) (0.09) 4.03
Class C 08/04/97
Return Before Taxes (22.99) 0.26 1.25
Class R(3) 06/17/96(3)
Return Before Taxes (21.82) 0.81 6.31
---------------------------------------------------------------------
Russell
2500--Trademark--
Index(1) 17.80 1.57 5.90(2) 06/30/96(2)
(reflects no
deduction for
fees, expenses,
or taxes)
---------------------------------------------------------------------
|
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, C and R will vary.
(1) The Russell 2500--Trademark-- Index measures the performance of the 2,500
smallest companies in the Russell 3000--Registered Trademark-- Index, which
represents approximately 17% of the total market capitalization of the
Russell 3000--Registered Trademark-- Index. The Russell 3000--Registered
Trademark-- Index measures the performance of the 3,000 largest U.S.
companies based on total market capitalization.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
(3) The returns shown for these periods are the blended returns of the historical performance of the fund's Class R shares since their inception and the restated historical performance of the fund's 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. The inception date shown in the table is that of the fund's Class A shares. The inception date of the fund's Class R shares is June 3, 2002.
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 CLASS R ---------------------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None 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% None(3) ---------------------------------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(4) -------------------------------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C CLASS R -------------------------------------------------------------------------------- Management Fees 0.66% 0.66% 0.66% 0.66% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 0.50 Other Expenses(5) 0.37 0.37 0.37 0.37 Total Annual Fund Operating Expenses 1.38 2.03 2.03 1.53 -------------------------------------------------------------------------------- |
(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 retirement plan participant and you bought $1,000,000 or more of Class A shares, you may pay a 1.00% CDSC if a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(3) If you are a retirement plan participant, you may pay a 0.75% CDSC if the distributor paid a concession to the dealer of record and a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(4) There is no guarantee that actual expenses will be the same as those shown in the table.
(5) Other expenses for Class R shares are based on estimated average net assets for the current fiscal year.
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
--------------------------------------------------------------------------------
Class A $683 $963 $1,264 $2,116
Class B 706 937 1,293 2,192
Class C 306 637 1,093 2,358
Class R 156 483 834 1,824
--------------------------------------------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class A $683 $963 $1,264 $2,116
Class B 206 637 1,093 2,192
Class C 206 637 1,093 2,358
Class R 156 483 834 1,824
--------------------------------------------------------------------------------
|
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 190 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2002, the advisor received compensation of 0.66% of average daily net assets.
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
- Paul J. Rasplicka (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1994.
- Michael Chapman, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2001. From 1999 to 2001, he was an equity analyst with Chase Manhattan Bank. During part of 1999, he was a securities analyst with Gulf Investment Management. From 1995 to 1999, he was a portfolio manager with US Global Investors, Inc.
- James Gassman, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2000. From 1998 to 2000, he was an equity analyst with Southwest Securities, Inc. Prior to 1998, he was a full time student.
They are assisted by the Small/Mid Cap Core Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
SALES CHARGES
Purchases of Class A shares of AIM Capital Development 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. Certain purchases of Class R shares may be subject to the contingent deferred sales charge 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 for the fiscal period ended 2002 and for fiscal years 2002 and 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by other public accountants.
CLASS A
-----------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------------
2002 2001 2000 1999 1998
--------- --------- --------- --------- ---------
Net asset value, beginning of period $ 14.69 $ 21.79 $ 15.24 $ 12.89 $ 14.57
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.04) (0.13) (0.10)(a) (0.06)(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (1.85) (4.27) 6.68 2.45 (1.62)
=================================================================================================================================
Total from investment operations (1.89) (4.31) 6.55 2.35 (1.68)
=================================================================================================================================
Less distributions from net realized gains -- (2.79) -- -- --
=================================================================================================================================
Net asset value, end of period $ 12.80 $ 14.69 $ 21.79 $ 15.24 $ 12.89
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (12.87)% (21.76)% 42.98% 18.23% (11.53)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $456,268 $576,660 $759,838 $579,514 $717,263
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.38%(c) 1.33% 1.28% 1.38% 1.28%
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.29)%(c) (0.21)% (0.60)% (0.70)% (0.40)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 120% 130% 101% 117% 78%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles and does not include sales charges.
(c) Ratios are based on average daily net assets of $585,989,327.
CLASS B
-----------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------------
2002 2001 2000 1999 1998
--------- --------- --------- --------- ---------
Net asset value, beginning of period $ 14.10 $ 21.16 $ 14.90 $ 12.70 $ 14.46
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14)(a) (0.15) (0.26) (0.20)(a) (0.16)(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (1.75) (4.12) 6.52 2.40 (1.60)
=================================================================================================================================
Total from investment operations (1.89) (4.27) 6.26 2.20 (1.76)
=================================================================================================================================
Less distributions from net realized gains -- (2.79) -- -- --
=================================================================================================================================
Net asset value, end of period $ 12.21 $ 14.10 $ 21.16 $ 14.90 $ 12.70
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (13.40)% (22.29)% 42.01% 17.32% (12.17)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $346,456 $454,018 $617,576 $451,508 $493,993
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.03%(c) 1.99% 1.99% 2.12% 2.02%
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.94)%(c) (0.87)% (1.30)% (1.44)% (1.14)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 120% 130% 101% 117% 78%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Includes adjustments in accordance with generally accepted accounting principles and does not include contingent deferred sales charges.
(c)Ratios are based on average daily net assets of $453,928,113.
CLASS C
---------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------------
2002 2001 2000 1999 1998
--------- --------- --------- ------- ---------
Net asset value, beginning of period $ 14.10 $ 21.15 $ 14.89 $ 12.69 $ 14.45
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14)(a) (0.14) (0.25) (0.20)(a) (0.16)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (1.76) (4.12) 6.51 2.40 (1.60)
=================================================================================================================================
Total from investment operations (1.90) (4.26) 6.26 2.20 (1.76)
=================================================================================================================================
Less distributions from net realized gains -- (2.79) -- -- --
=================================================================================================================================
Net asset value, end of period $ 12.20 $ 14.10 $ 21.15 $ 14.89 $ 12.69
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (13.48)% (22.24)% 42.04% 17.34% (12.18)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $56,298 $66,127 $82,982 $53,832 $48,293
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.03%(c) 1.99% 1.99% 2.12% 2.02%
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.94)%(c) (0.87)% (1.30)% (1.44)% (1.14)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 120% 130% 101% 117% 78%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Includes adjustments in accordance with generally accepted accounting principles and does not include contingent deferred sales charges.
(c)Ratios are based on average daily net assets of $69,063,774.
CLASS R
----------------------
JUNE 3, 2002
(DATE SALES COMMENCED)
TO OCTOBER 31,
2002
----------------------
Net asset value, beginning of period $ 16.62
------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a)
------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.80)
====================================================================================
Total from investment operations (3.83)
====================================================================================
Net asset value, end of period $ 12.79
____________________________________________________________________________________
====================================================================================
Total return(b) (23.05)%
____________________________________________________________________________________
====================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 10
____________________________________________________________________________________
====================================================================================
Ratio of expenses to average net assets 1.54%(c)
====================================================================================
Ratio of net investment income (loss) to average net assets (0.44)%(c)
____________________________________________________________________________________
====================================================================================
Portfolio turnover rate 120%
____________________________________________________________________________________
====================================================================================
|
(a)Calculated using average shares outstanding.
(b)Includes adjustments in accordance with generally accepted accounting principles and is not annualized for periods less than one year.
(c)Ratios are annualized and based on average daily net assets of $9,839.
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 - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge charge
- Reduced or waived - No contingent - Contingent - Contingent - Generally, no
initial sales deferred sales deferred sales deferred sales contingent
charge for certain charge charge on charge on deferred sales
purchases(2,3) redemptions within redemptions within charge(2)
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 - Converts to Class - Does not convert - Does not convert
to Class A shares A shares at the to Class A shares to Class A shares
end of 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 the
long-term short-term less than $250,000 short-term following types of
investors investors investors retirement plans:
(i) all section
401 and 457 plans,
(ii) section 403
plans sponsored by
section 501(c)(3)
organizations, and
(iii) IRA
rollovers from
such plans if an
AIM Fund was
offered
------------------------------------------------------------------------------------------------------------
|
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 were 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.
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.
MCF--03/03
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
---------------------------------------------------------------
|
(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
------------------------------------------------------------
|
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
------------------------------------------------------------
|
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.
Some retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor paid a concession to the dealer of record in connection with a Large Purchase of Class A shares by a retirement plan, the Class A shares may be subject to a 1% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the 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 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 PURCHASE MADE CLASS B CLASS 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 12 months from the date of the retirement plan's
initial 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
MCF--03/03
shares on which there is no CDSC first and, then, shares in the order of purchase.
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 plans, 401(k) $ 0 ($25 per AIM Fund investment for $25
plans, Simplified Employee Pension (SEP) accounts, Salary salary deferrals from Savings
Reduction (SARSEP) accounts, Savings Incentive Match Plans 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
-------------------------------------------------------------------------------------------------------------------------
|
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.
MCF--03/03
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
-------------------------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application and Mail your check and the remittance slip
check to the transfer agent, A I M Fund from your confirmation statement to the
Services, Inc., P.O. Box 4739, Houston, transfer agent.
TX 77210-4739.
By Wire Mail completed account application to Call the transfer agent to receive a
the transfer agent. Call the transfer reference number. Then, use the wire
agent at (800) 959-4246 to receive a instructions at left.
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 Telephone Open your account using one of the Select the AIM Bank Connection(SM)
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.
Call the AIM 24-hour Automated Investor
Line. You may place your order after
you have provided the bank instructions
that will be requested.
By Internet Open your account using one of the Access your account at
methods described above. www.aiminvestments.com. The proper bank
instructions must have been provided on
your account. You may not purchase
shares in AIM prototype retirement
accounts on the internet.
-------------------------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
SYSTEMATIC PURCHASE 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 Systematic Purchase 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:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; and (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
MCF--03/03
(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
PURCHASED AFTER AN EXCHANGE CDSC APPLICABLE UPON
--------- ----------------- REDEMPTION OF SHARES
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category III - No CDSC
Fund(1) Fund(1)
- Class A shares of 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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category I or - 1% if shares are redeemed
Fund II Fund within 18 months of initial
purchase of Category III Fund
shares
- Class A shares of Category III - Class A shares of Category III - 0.25% if shares are redeemed
Fund Fund(1) within 12 months of initial
- Class A shares of AIM Tax-Exempt purchase of Category III Fund
Cash 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.
MCF--03/03
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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
I or II Fund or II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(2) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
III Fund(1) or II Fund within 18 months of initial
purchase of Category III Fund
shares
|
SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category III - No CDSC
III Fund(1) Fund(2)
- Class A shares of 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 Consultant Contact your financial 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 or our AIM 24-hour
Automated Investor Line. 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.
By Internet Place your redemption request at
www.aiminvestments.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 already
provided proper bank information. 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.
|
MCF--03/03
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 REDEMPTIONS
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
Redemption 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.
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.
MCF--03/03
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
(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
MCF--03/03
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 you do not hold physical share certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
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
MCF--03/03
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 may 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--03/03
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.aiminvestments.com
--------------------------------------------------------
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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.
AIMinvestments.com CDV-PRO-1
AIM CHARTER FUND
March 3, 2003
Prospectus
AIM Charter Fund seeks to provide growth of capital.
This prospectus contains important information about the Class A, B, C and R 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Registered Trademark-- --Servicemark-- |
----------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 ------------------------------------------------------ The Advisors 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 ------------------------------------------------------ Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 ------------------------------------------------------ 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-9 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, AIM Investments, AIM Investments 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.
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is 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 established companies that have long-term above-average growth in earnings and growth companies that the portfolio managers believe have the potential for above-average growth in earnings. In selecting investments, the portfolio managers seek to identify those companies that are, in their view, undervalued relative to current or projected earnings, or the current market value of assets owned by the company. The primary emphasis of the portfolio managers' search for undervalued equity securities is in four categories: (1) out-of-favor cyclical growth companies; (2) established growth companies that are undervalued compared to historical relative valuation parameters; (3) companies where there is early but tangible evidence of improving prospects which are not yet reflected in the value of the companies' equity securities; and (4) companies whose equity securities are selling at prices that do not yet reflect the current market value of their assets. The portfolio managers consider whether to sell a particular security when any of these factors materially changes. The fund may also invest up to 20% of its total assets in foreign securities.
For risk management or cash management purposes, the fund may 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.
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.
A larger position in cash or cash equivalents could detract from achieving the fund's objective, but could also reduce the fund's exposure in the event of a market downturn.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objectives. If the fund does trade in this way, it may incur increased transaction costs and brokerage commissions, both of 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. 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.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
To the extent the fund holds cash or cash equivalents rather than equity securities for risk management purposes, the fund may not achieve its investment objective.
An investment in the fund is not a deposit in 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 changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1993................................................................... 9.39%
1994................................................................... -4.26%
1995................................................................... 35.68%
1996................................................................... 19.58%
1997................................................................... 24.73%
1998................................................................... 26.83%
1999................................................................... 33.87%
2000................................................................... -14.69%
2001................................................................... -23.09%
2002................................................................... -16.14%
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During the periods shown in the bar chart, the highest quarterly return was 26.08% (quarter ended December 31, 1998) and the lowest quarterly return was -21.72% (quarter ended September 30, 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 December 31, SINCE INCEPTION
2002) 1 YEAR 5 YEARS 10 YEARS INCEPTION(1) DATE
--------------------------------------------------------------------------------
Class A 11/26/68
Return Before Taxes (20.78)% (2.47)% 6.46% --
Return After Taxes
on Distributions (20.78) (3.31) 4.67 --
Return After Taxes
on Distributions
and Sale of Fund
Shares (12.76) (1.85) 4.79 --
Class B 06/26/95
Return Before Taxes (20.88) (2.40) -- 5.27%
Class C 08/04/97
Return Before Taxes (17.59) (2.08) -- (2.18)
Class R(3) 11/26/68(3)
Return Before Taxes (16.39) (1.57) 6.85
--------------------------------------------------------------------------------
S&P 500(2) (22.09) (0.58) 9.34 --
(reflects no
deduction for
fees, expenses,
or taxes)
--------------------------------------------------------------------------------
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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, C and R will vary.
(1) Since Inception performance is only provided for a class with less than ten
calendar years of performance.
(2) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(3) The returns shown for these periods are the blended returns of the historical performance of the fund's Class R shares since their inception and the restated historical performance of the fund's 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. The inception date shown in the table is that of the fund's Class A shares. The inception date of the fund's Class R shares is June 3, 2002.
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 CLASS R ------------------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None 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% None(3) ------------------------------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(4) -------------------------------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C CLASS R -------------------------------------------------------------------------------- Management Fees 0.63% 0.63% 0.63% 0.63% Distribution and/or Service (12b-1) Fees 0.30 1.00 1.00 0.50 Other Expenses(5) 0.29 0.29 0.29 0.29 Total Annual Fund Operating Expenses(6) 1.22 1.92 1.92 1.42 -------------------------------------------------------------------------------- |
(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 retirement plan participant and you bought $1,000,000 or more of Class A shares, you may pay a 1.00% CDSC if a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(3) If you are a retirement plan participant, you may pay a 0.75% CDSC if the distributor paid a concession to the dealer of record and a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(4) There is no guarantee that actual expenses will be the same as those shown in the table.
(5) Other expenses for Class R shares are based on estimated average net assets for the current fiscal year.
(6) The investment advisor has agreed to waive a portion of the management fee on assets in excess of $5 billion. Termination of this agreement requires approval by the Board of Trustees.
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
--------------------------------------------------------------------------------
Class A $667 $916 $1,183 $1,946
Class B 695 903 1,237 2,061
Class C 295 603 1,037 2,243
Class R 145 449 776 1,702
--------------------------------------------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class A $667 $916 $1,183 $1,946
Class B 195 603 1,037 2,061
Class C 195 603 1,037 2,243
Class R 145 449 776 1,702
--------------------------------------------------------------------------------
|
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. A I M Capital Management, Inc. (the subadvisor), a wholly owned subsidiary of the advisor, is the fund's subadvisor and is responsible for its day-to-day management. Both the advisor and the subadvisor are located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisors supervise all aspects of the fund's operations and provide 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, and the subadvisor has acted as an investment advisor since 1986. Today, the advisor, together with its subsidiaries, advises or manages over 190 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2002, the advisor received compensation of 0.63% of average daily net assets.
PORTFOLIO MANAGERS
The advisors use 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
- Ronald S. Sloan (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1998. From 1993 to 1998, he was President of Verissimo Research & Management, Inc.
- Michael Yellen, Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1994.
They are assisted by the Mid/Large Cap Core Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
Effective May 1, 2003, Michael Yellen will be removed from, and the following portfolio manager will be added to, the members of the team who are primarily responsible for the management of the fund's portfolio:
- David W. Pointer, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999 he was a full-time student.
SALES CHARGES
Purchases of Class A shares of AIM Charter 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. Certain purchases of Class R shares may be subject to the contingent deferred sales charge 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 for the fiscal period ended 2002 and for the fiscal years 2002 and 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by other public accountants.
CLASS A
----------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 10.46 $ 18.07 $ 17.16 $ 13.32 $ 13.41
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.01(a) (0.03) (0.04)(b) 0.02 0.12
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (0.90) (6.70) 2.30 4.39 1.23
=================================================================================================================================
Total from investment operations (0.89) (6.73) 2.26 4.41 1.35
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.03) (0.10)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.88) (1.35) (0.54) (1.34)
=================================================================================================================================
Total distributions -- (0.88) (1.35) (0.57) (1.44)
=================================================================================================================================
Net asset value, end of period $ 9.57 $ 10.46 $ 18.07 $ 17.16 $ 13.32
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (8.51)% (38.75)% 13.60% 34.05% 11.20%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,096,866 $3,159,304 $5,801,869 $4,948,666 $3,706,938
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.22%(d) 1.16% 1.06% 1.05% 1.08%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.22%(d) 1.17% 1.08% 1.07% 1.10%
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets 0.09%(a)(d) (0.24)% (0.20)% 0.11% 0.95%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 103% 78% 80% 107% 154%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) As required, effective November 1, 2001, the Fund 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 and the ratio of net investment income to average net assets would have remained the same. In accordance with the AICPA Audit and Accounting Guide for Investment Companies, per share and ratios for periods prior to November 1, 2001 have not been restated to reflect this change in presentation.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting principles and does not include sales charges.
(d) Ratios are based on average daily net assets of $2,871,191,238.
CLASS B
----------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of
period $ 10.18 $ 17.72 $ 16.97 $ 13.24 $ 13.37
---------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income (loss) (0.08)(a) (0.13) (0.17)(b) (0.10) 0.02
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized
and unrealized) (0.86) (6.53) 2.27 4.37 1.22
=================================================================================================================================
Total from investment
operations (0.94) (6.66) 2.10 4.27 1.24
=================================================================================================================================
Less distributions:
Dividends from net investment
income -- -- -- -- (0.03)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net
realized gains -- (0.88) (1.35) (0.54) (1.34)
=================================================================================================================================
Total distributions -- (0.88) (1.35) (0.54) (1.37)
=================================================================================================================================
Net asset value, end of period $ 9.24 $ 10.18 $ 17.72 $ 16.97 $ 13.24
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (9.23)% (39.14)% 12.76% 33.06% 10.33%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $1,204,617 $1,719,470 $3,088,611 $2,206,752 $1,408,687
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average
net assets:
With fee waivers 1.92%(d) 1.86% 1.80% 1.80% 1.84%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.92%(d) 1.87% 1.82% 1.82% 1.86%
=================================================================================================================================
Ratio of net investment income
(loss) to average net assets (0.61)%(a)(d) (0.94)% (0.94)% (0.64)% 0.19%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 103% 78% 80% 107% 154%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) As required, effective November 1, 2001, the Fund 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 and the ratio of net investment income to average net assets would have remained the same. In accordance with the AICPA Audit and Accounting Guide for Investment Companies, per share and ratios for periods prior to November 1, 2001 have not been restated to reflect this change in presentation.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting principles and does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $1,592,453,859.
CLASS C
----------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
-------- --------- --------- --------- ---------
Net asset value, beginning of
period $ 10.21 $ 17.77 $ 17.01 $ 13.27 $ 13.39
---------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income (loss) (0.08)(a) (0.13) (0.17)(b) (0.09) 0.02
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized and
unrealized) (0.86) (6.55) 2.28 4.37 1.23
=================================================================================================================================
Total from investment
operations (0.94) (6.68) 2.11 4.28 1.25
=================================================================================================================================
Less distributions:
Dividends from net investment
income -- -- -- -- (0.03)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized
gains -- (0.88) (1.35) (0.54) (1.34)
=================================================================================================================================
Total distributions -- (0.88) (1.35) (0.54) (1.37)
=================================================================================================================================
Net asset value, end of period $ 9.27 $ 10.21 $ 17.77 $ 17.01 $ 13.27
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (9.21)% (39.14)% 12.78% 33.06% 10.39%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $170,444 $248,533 $412,872 $138,467 $37,846
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets:
With fee waivers 1.92%(d) 1.86% 1.80% 1.80% 1.84%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.92%(d) 1.87% 1.82% 1.82% 1.86%
=================================================================================================================================
Ratio of net investment income
(loss) to average net assets (0.61)%(a)(d) (0.94)% (0.94)% (0.64)% 0.19%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 103% 78% 80% 107% 154%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) As required, effective November 1, 2001, the Fund 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 and the ratio of net investment income to average net assets would have remained the same. In accordance with the AICPA Audit and Accounting Guide for Investment Companies, per share and ratios for periods prior to November 1, 2001 have not been restated to reflect this change in presentation.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting principles and does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $226,107,746.
CLASS R
----------------------
JUNE 3, 2002
(DATE SALES COMMENCED)
TO OCTOBER 31, 2002
----------------------
Net asset value, beginning of period $ 10.94
--------------------------------------------------------------------------------------
Income from investment operations:
Net investment income --(a)
--------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.38)
======================================================================================
Total from investment operations (1.38)
======================================================================================
Net asset value, end of period $ 9.56
______________________________________________________________________________________
======================================================================================
Total return(b) (12.61)%
______________________________________________________________________________________
======================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 16
______________________________________________________________________________________
======================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.42%(c)
--------------------------------------------------------------------------------------
Without fee waivers 1.42%(c)
======================================================================================
Ratio of net investment income (loss) to average net assets (0.11)%(a)(c)
______________________________________________________________________________________
======================================================================================
Portfolio turnover rate 103%
______________________________________________________________________________________
======================================================================================
|
(a) As required, effective November 1, 2001, the Fund 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 and the ratio of net investment income to average net assets would have remained the same. In accordance with the AICPA Audit and Accounting Guide for Investment Companies, per share and ratios for periods prior to November 1, 2001 have not been restated to reflect this change in presentation.
(b) Includes adjustments in accordance with generally accepted accounting principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $11,405.
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 - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge charge
- Reduced or waived - No contingent - Contingent - Contingent - Generally, no
initial sales deferred sales deferred sales deferred sales contingent
charge for certain charge charge on charge on deferred sales
purchases(2,3) redemptions within redemptions within charge(2)
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 - Converts to Class - Does not convert - Does not convert
to Class A shares A shares at the to Class A shares to Class A shares
end of 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 the
long-term short-term less than $250,000 short-term following types of
investors investors investors retirement plans:
(i) all section
401 and 457 plans,
(ii) section 403
plans sponsored by
section 501(c)(3)
organizations, and
(iii) IRA
rollovers from
such plans if an
AIM Fund was
offered
------------------------------------------------------------------------------------------------------------
|
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 were 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.
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.
MCF--03/03
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
---------------------------------------------------------------
|
(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
------------------------------------------------------------
|
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
------------------------------------------------------------
|
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.
Some retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor paid a concession to the dealer of record in connection with a Large Purchase of Class A shares by a retirement plan, the Class A shares may be subject to a 1% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the 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 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 PURCHASE MADE CLASS B CLASS 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 12 months from the date of the retirement plan's
initial 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
MCF--03/03
shares on which there is no CDSC first and, then, shares in the order of purchase.
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 plans, 401(k) $ 0 ($25 per AIM Fund investment for $25
plans, Simplified Employee Pension (SEP) accounts, Salary salary deferrals from Savings
Reduction (SARSEP) accounts, Savings Incentive Match Plans 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.
MCF--03/03
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
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Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application and Mail your check and the remittance slip
check to the transfer agent, A I M Fund from your confirmation statement to the
Services, Inc., P.O. Box 4739, Houston, transfer agent.
TX 77210-4739.
By Wire Mail completed account application to Call the transfer agent to receive a
the transfer agent. Call the transfer reference number. Then, use the wire
agent at (800) 959-4246 to receive a instructions at left.
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 Telephone Open your account using one of the Select the AIM Bank Connection(SM)
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.
Call the AIM 24-hour Automated Investor
Line. You may place your order after
you have provided the bank instructions
that will be requested.
By Internet Open your account using one of the Access your account at
methods described above. www.aiminvestments.com. The proper bank
instructions must have been provided on
your account. You may not purchase
shares in AIM prototype retirement
accounts on the internet.
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SPECIAL PLANS
SYSTEMATIC PURCHASE 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 Systematic Purchase 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:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; and (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
MCF--03/03
(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
PURCHASED AFTER AN EXCHANGE CDSC APPLICABLE UPON
--------- ----------------- REDEMPTION OF SHARES
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category III - No CDSC
Fund(1) Fund(1)
- Class A shares of AIM Tax-Exempt
Cash Fund
- AIM Cash Reserve Shares of AIM
Money Market Fund
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(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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category I or - 1% if shares are redeemed
Fund II Fund within 18 months of initial
purchase of Category III Fund
shares
- Class A shares of Category III - Class A shares of Category III - 0.25% if shares are redeemed
Fund Fund(1) within 12 months of initial
- Class A shares of AIM Tax-Exempt purchase of Category III Fund
Cash Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
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(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.
MCF--03/03
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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
I or II Fund or II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(2) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
III Fund(1) or II Fund within 18 months of initial
purchase of Category III Fund
shares
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SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category III - No CDSC
III Fund(1) Fund(2)
- Class A shares of AIM Tax-
Exempt Cash Fund
- AIM Cash Reserve Shares of AIM
Money Market
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(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 Consultant Contact your financial 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 or our AIM 24-hour
Automated Investor Line. 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.
By Internet Place your redemption request at
www.aiminvestments.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 already
provided proper bank information. 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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MCF--03/03
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 REDEMPTIONS
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
Redemption 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.
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.
MCF--03/03
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
(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
MCF--03/03
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 you do not hold physical share certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
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
MCF--03/03
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 may 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--03/03
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-- your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
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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.aiminvestments.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.
AIMinvestments.com CHT-PRO-1
AIM CONSTELLATION FUND
March 3, 2003
Prospectus
AIM Constellation Fund seeks to provide growth of
capital.
This prospectus contains important information about the Class A, B, C and R 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Registered Trademark-- --Servicemark-- |
----------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 ------------------------------------------------------ The Advisors 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 ------------------------------------------------------ Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 ------------------------------------------------------ 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-9 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, AIM Investments, AIM Investments 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 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 this objective by investing principally in common stocks of companies the portfolio managers believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when it no longer meets these criteria. The fund will invest without regard to market capitalization. The fund may also invest up to 20% of its total assets in foreign securities. 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.
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.
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 smaller companies, whose prices may go up and down more than equity securities of larger, more- established companies. Also, since equity securities of smaller 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 desirable price.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
An investment in the fund is not a deposit in 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 changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1993................................................................... 17.29%
1994................................................................... 1.30%
1995................................................................... 35.45%
1996................................................................... 16.27%
1997................................................................... 12.92%
1998................................................................... 18.89%
1999................................................................... 44.38%
2000................................................................... -10.37%
2001................................................................... -23.61%
2002................................................................... -24.75%
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During the periods shown in the bar chart, the highest quarterly return was 36.59% (quarter ended December 31, 1999) and the lowest quarterly return was -23.34% (quarter ended September 30, 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, 2002) 1 YEAR 5 YEARS 10 YEARS INCEPTION(1) DATE
-------------------------------------------------------------------------------------
Class A 4/30/76
Return Before Taxes (28.90)% (3.53)% 5.85% --
Return After Taxes on
Distributions (28.90) (4.74) 4.70 --
Return After Taxes on
Distributions and Sale
of Fund Shares (17.75) (2.14) 5.13 --
Class B 11/03/97
Return Before Taxes (29.00) (3.46) -- (4.22)%
Class C 08/04/97
Return Before Taxes (26.02) (3.18) -- (4.09)
Class R(3) 04/30/76(3)
Return Before Taxes (24.59) (2.54) 6.28 --
-------------------------------------------------------------------------------------
S&P 500(2) (reflects no
deduction for fees,
expenses, or taxes) (22.09) (0.58) 9.34 --
-------------------------------------------------------------------------------------
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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, C and R will vary.
(1) Since Inception performance is only provided for a class with less than ten
calendar years of performance.
(2) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used on a general measure of U.S. stock market performance.
(3) The returns shown for these periods are the blended returns of the historical performance of the fund's Class R shares since their inception and the restated historical performance of the fund's 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. The inception date shown in the table is that of the fund's Class A shares. The inception date of the fund's Class R shares is June 3, 2002.
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 CLASS R -------------------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None 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% None(3) -------------------------------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(4) -------------------------------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C CLASS R -------------------------------------------------------------------------------- Management Fees 0.63% 0.63% 0.63% 0.63% Distribution and/or Service (12b-1) Fees 0.30 1.00 1.00 0.50 Other Expenses(5) 0.34 0.34 0.34 0.34 Total Annual Fund Operating Expenses(6) 1.27 1.97 1.97 1.47 -------------------------------------------------------------------------------- |
(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 retirement plan participant and you bought $1,000,000 or more of Class A shares, you may pay a 1.00% CDSC if a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(3) If you are a retirement plan participant, you may pay a 0.75% CDSC if the distributor paid a concession to the dealer of record and a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(4) There is no guarantee that actual expenses will be the same as those shown in the table.
(5) Other expenses for Class R shares are based on estimated average net assets for the current fiscal year.
(6) The investment advisor has agreed to waive a portion of the management fee on assets in excess of $5 billion. Total Annual Fund Operating Expenses net of this agreement are 1.26%, 1.96%, 1.96% and 1.46% for Class A, Class B, Class C and Class R, respectively. Termination of this agreement requires approval by the Board of Trustees.
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
--------------------------------------------------------------------------------
Class A $672 $931 $1,209 $2,000
Class B 700 918 1,262 2,115
Class C 300 618 1,062 2,296
Class R 150 465 803 1,757
--------------------------------------------------------------------------------
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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 $672 $931 $1,209 $2,000
Class B 200 618 1,062 2,115
Class C 200 618 1,062 2,296
Class R 150 465 803 1,757
--------------------------------------------------------------------------------
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THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. A I M Capital Management, Inc. (the subadvisor), a wholly owned subsidiary of the advisor, is the fund's subadvisor and is responsible for its day-to-day management. Both the advisor and the subadvisor are located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisors supervise all aspects of the fund's operations and provide 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, and the subadvisor has acted as an investment advisor since 1986. Today, the advisor, together with its subsidiaries, advises or manages over 190 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2002, the advisor received compensation of 0.63% of average daily net assets.
PORTFOLIO MANAGERS
The advisors use 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
- Kenneth A. Zschappel (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 1996 and has been associated with the advisor and/or its affiliates since 1990.
- Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1989.
They are assisted by the Multi Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
Effective May 1, 2003, Robert M. Kippes will be removed from, and the following portfolio managers will be added to, the members of the team who are primarily responsible for the management of the fund's portfolio:
- Christian A. Costanzo, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1995.
- Robert Lloyd, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 2000. From 1997 to 2000, he was a trader with American Electric Power.
SALES CHARGES
Purchases of Class A shares of AIM Constellation 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. Certain purchases of Class R shares may be subject to the contingent deferred sales charge 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 for the fiscal period ended 2002 and for the fiscal years 2002 and 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by other public accountants.
CLASS A
-------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------- ---------- ----------- ----------- -----------
Net asset value, beginning of period $ 19.72 $ 43.50 $ 34.65 $ 26.37 $ 29.23
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)(a) (0.12) (0.26) (0.17) (0.14)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (2.37) (16.24) 12.39 9.18 (0.62)
=================================================================================================================================
Total from investment operations (2.52) (16.36) 12.13 9.01 (0.76)
=================================================================================================================================
Less distributions from net realized
gains -- (7.42) (3.28) (0.73) (2.10)
=================================================================================================================================
Net asset value, end of period $ 17.20 $ 19.72 $ 43.50 $ 34.65 $ 26.37
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (12.78)% (43.10)% 36.56% 34.81% (2.30)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $6,780,055 $9,703,277 $19,268,977 $14,292,905 $12,391,844
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.26%(c) 1.14% 1.08% 1.10% 1.10%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.27%(c) 1.17% 1.11% 1.12% 1.12%
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.74)%(c) (0.46)% (0.61)% (0.50)% (0.47)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 57% 75% 88% 62% 76%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
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(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles and does not include sales charges.
(c) Ratios are based on average daily net assets of $8,883,810,424.
CLASS B
-----------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, NOVEMBER 3, 1997
------------------------------------------------------- (DATE SALES COMMENCED)
2002 2001 2000 1999 TO OCTOBER 31, 1998
-------- -------- ---------- -------- ----------------------
Net asset value, beginning of period $ 18.89 $ 42.28 $ 34.00 $ 26.11 $ 30.04
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.27)(a) (0.28) (0.58)(a) (0.42) (0.37)(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (2.26) (15.69) 12.14 9.04 (1.46)
=================================================================================================================================
Total from investment operations (2.53) (15.97) 11.56 8.62 (1.83)
=================================================================================================================================
Less distributions from net realized gains -- (7.42) (3.28) (0.73) (2.10)
=================================================================================================================================
Net asset value, end of period $ 16.36 $ 18.89 $ 42.28 $ 34.00 $ 26.11
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (13.39)% (43.49)% 35.51% 33.64% (5.86)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $625,294 $818,343 $1,315,524 $589,718 $275,676
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.96%(c) 1.86% 1.85% 1.98% 1.98%(d)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.97%(c) 1.89% 1.88% 2.00% 2.00%(d)
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets (1.44)%(c) (1.17)% (1.38)% (1.38)% (1.36)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 57% 75% 88% 62% 76%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
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(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles, does not include contingent deferred sales charged and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $786,398,084.
(d) Annualized.
CLASS C
------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------
2002 2001 2000 1999 1998
-------- -------- -------- -------- -------
Net asset value, beginning of period $ 18.88 $ 42.27 $ 33.99 $ 26.10 $ 29.18
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.27)(a) (0.29) (0.59)(a) (0.42) (0.37)(a)
--------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.25) (15.68) 12.15 9.04 (0.61)
================================================================================================================================
Total from investment operations (2.52) (15.97) 11.56 8.62 (0.98)
================================================================================================================================
Less distributions from net realized gains -- (7.42) (3.28) (0.73) (2.10)
================================================================================================================================
Net asset value, end of period $ 16.36 $ 18.88 $ 42.27 $ 33.99 $ 26.10
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(b) (13.35)% (43.51)% 35.52% 33.65% (3.12)%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $184,393 $258,786 $434,544 $161,490 $76,522
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.96%(c) 1.86% 1.85% 1.98% 1.97%
--------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.97%(c) 1.89% 1.88% 2.00% 1.99%
================================================================================================================================
Ratio of net investment income (loss) to average net assets (1.44)%(c) (1.17)% (1.38)% (1.38)% (1.35)%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate 57% 75% 88% 62% 76%
________________________________________________________________________________________________________________________________
================================================================================================================================
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(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles and does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $240,694,256.
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
-------------
Net asset value, beginning of period $ 19.82
-----------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a)
-----------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.49)
=============================================================================
Total from investment operations (2.56)
=============================================================================
Net asset value, end of period $ 17.26
_____________________________________________________________________________
=============================================================================
Total return(b) (12.92)%
_____________________________________________________________________________
=============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 226
_____________________________________________________________________________
=============================================================================
Ratio of expenses to average net assets:
With fee waivers 1.53%(c)
-----------------------------------------------------------------------------
Without fee waivers 1.54%(c)
=============================================================================
Ratio of net investment income (loss) to average net assets (1.01)%(c)
_____________________________________________________________________________
=============================================================================
Portfolio turnover rate 57%
_____________________________________________________________________________
=============================================================================
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(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $50,620.
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 - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge charge
- Reduced or waived - No contingent - Contingent - Contingent - Generally, no
initial sales deferred sales deferred sales deferred sales contingent
charge for certain charge charge on charge on deferred sales
purchases(2,3) redemptions within redemptions within charge(2)
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 - Converts to Class - Does not convert - Does not convert
to Class A shares A shares at the to Class A shares to Class A shares
end of 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 the
long-term short-term less than $250,000 short-term following types of
investors investors investors retirement plans:
(i) all section
401 and 457 plans,
(ii) section 403
plans sponsored by
section 501(c)(3)
organizations, and
(iii) 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 were 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.
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.
MCF--03/03
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
------------------------------------------------------------
|
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
------------------------------------------------------------
|
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.
Some retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor paid a concession to the dealer of record in connection with a Large Purchase of Class A shares by a retirement plan, the Class A shares may be subject to a 1% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the 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 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 PURCHASE MADE CLASS B CLASS 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 12 months from the date of the retirement plan's
initial 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
MCF--03/03
shares on which there is no CDSC first and, then, shares in the order of purchase.
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 plans, 401(k) $ 0 ($25 per AIM Fund investment for $25
plans, Simplified Employee Pension (SEP) accounts, Salary salary deferrals from Savings
Reduction (SARSEP) accounts, Savings Incentive Match Plans 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
-------------------------------------------------------------------------------------------------------------------------
|
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.
MCF--03/03
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
-------------------------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application and Mail your check and the remittance slip
check to the transfer agent, A I M Fund from your confirmation statement to the
Services, Inc., P.O. Box 4739, Houston, transfer agent.
TX 77210-4739.
By Wire Mail completed account application to Call the transfer agent to receive a
the transfer agent. Call the transfer reference number. Then, use the wire
agent at (800) 959-4246 to receive a instructions at left.
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 Telephone Open your account using one of the Select the AIM Bank Connection(SM)
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.
Call the AIM 24-hour Automated Investor
Line. You may place your order after
you have provided the bank instructions
that will be requested.
By Internet Open your account using one of the Access your account at
methods described above. www.aiminvestments.com. The proper bank
instructions must have been provided on
your account. You may not purchase
shares in AIM prototype retirement
accounts on the internet.
-------------------------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
SYSTEMATIC PURCHASE 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 Systematic Purchase 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:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; and (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
MCF--03/03
(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
PURCHASED AFTER AN EXCHANGE CDSC APPLICABLE UPON
--------- ----------------- REDEMPTION OF SHARES
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category III - No CDSC
Fund(1) Fund(1)
- Class A shares of 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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category I or - 1% if shares are redeemed
Fund II Fund within 18 months of initial
purchase of Category III Fund
shares
- Class A shares of Category III - Class A shares of Category III - 0.25% if shares are redeemed
Fund Fund(1) within 12 months of initial
- Class A shares of AIM Tax-Exempt purchase of Category III Fund
Cash 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.
MCF--03/03
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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
I or II Fund or II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(2) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
III Fund(1) or II Fund within 18 months of initial
purchase of Category III Fund
shares
|
SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category III - No CDSC
III Fund(1) Fund(2)
- Class A shares of 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 Consultant Contact your financial 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 or our AIM 24-hour
Automated Investor Line. 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.
By Internet Place your redemption request at
www.aiminvestments.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 already
provided proper bank information. 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.
|
MCF--03/03
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 REDEMPTIONS
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
Redemption 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.
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.
MCF--03/03
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
(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
MCF--03/03
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 you do not hold physical share certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
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
MCF--03/03
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 may 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--03/03
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.aiminvestments.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.
AIMinvestments.com CST-PRO-1
AIM CORE STRATEGIES FUND
March 3, 2003
Prospectus
AIM Core Strategies Fund seeks to provide long-term
growth of capital.
This prospectus contains important information about the 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.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Registered Trademark-- --Servicemark-- |
------------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Return 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 ------------------------------------------------------ The Advisor 4 Advisor Compensation 4 Portfolio Manager(s) 4 OTHER INFORMATION 4 ------------------------------------------------------ Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 ------------------------------------------------------ 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-9 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, AIM Investments, AIM Investments 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, normally, in large-capitalization company securities that are included in either the Standard & Poor's 500 Index (S&P 500 Index) or the Russell 1000--Registered Trademark-- Index at the time of purchase. These securities may include common stocks, convertible bonds, convertible preferred stocks and warrants. Generally, the fund's aggregate sector weightings and risk profile are closely aligned to that of the S&P 500 Index. Under normal conditions, the top 10 holdings may comprise up to 35% of the portfolio's net assets. The fund may also invest up to 25% of its total assets in foreign securities. 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 a limited number of large-cap companies that they believe have the potential for above-average growth and that contribute to the fund's overall risk profile. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential.
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.
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.
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. Also, since a large percentage of the fund's assets will be invested in a limited number of securities, any change in value of those securities could significantly affect the value of your investment in the fund.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
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 affect 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 in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
PERFORMANCE INFORMATION
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.
ANNUAL TOTAL RETURN
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
----------- -------
2002................................................................... -21.92%
|
During the period shown in the bar chart, the highest quarterly return was 4.53% (quarter ended December 31, 2002) and the lowest quarterly return was -15.02% (quarter ended September 30, 2002).
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 December 31, SINCE INCEPTION
2002) 1 YEAR INCEPTION DATE
--------------------------------------------------------------------------------
Class A 12/31/01
Return Before Taxes (26.20)% (26.20)%
Return After Taxes on Distributions (26.70) (26.70)
Return After Taxes on Distributions
and Sale of Fund Shares (16.08) (16.08)
Class B 12/31/01
Return Before Taxes (25.75) (25.75)
Class C 12/31/01
Return Before Taxes (22.68) (22.68)
--------------------------------------------------------------------------------
S&P 500 Index(1) (22.09) (22.09)(2) 12/31/01(2)
(reflects no deduction for fees,
expenses, or taxes)
--------------------------------------------------------------------------------
|
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 Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
(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 0.75% 0.75% 0.75% Distribution and/or Service (12b-1) Fees(4) 0.35 1.00 1.00 Other Expenses 12.61 12.61 12.61 Total Annual Fund Operating Expenses(5) 13.71 14.36 14.36 -------------------------------------------------------------------------------- |
(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 retirement plan participant and you bought $1,000,000 or more of Class A shares, you may pay a 1.00% CDSC if a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(3) There is no guarantee that actual expenses will be the same as those shown in the table.
(4) The Distributor has agreed to waive 0.35%, 1.00% and 1.00% of Rule 12b-1 distribution plan fees on Class A, Class B and Class C shares, respectively. This agreement may be terminated at any time.
(5) The investment advisor has 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 operating expenses of Class A shares to 1.75% (e.g. if AIM waives 11.61% of Class A expenses, AIM will also waive 11.61% of Class B and Class C expenses). Total Annual Operating Expenses for Class A, Class B and Class C net of the above waivers are 1.75%, 1.75% and 1.75%, respectively. This agreement may be terminated at any time.
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
-----------------------------------------------------------------------------------------------------
Class A $1,789 $3,953 $5,757 $9,058
Class B 1,869 4,034 5,877 9,104
Class C 1,469 3,734 5,677 9,150
-----------------------------------------------------------------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------------------------------------------
Class A $1,789 $3,953 $5,757 $9,058
Class B 1,369 3,734 5,677 9,104
Class C 1,369 3,734 5,677 9,150
-----------------------------------------------------------------------------------------------------
|
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 190 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 0.75% of the first $1 billion of average daily net assets, 0.70% of the next $1 billion of average daily net assets and 0.625% of average daily net assets over $2 billion.
PORTFOLIO MANAGER(S)
The advisor uses a team approach to investment management. The individual member(s) of the team who is primarily responsible for the management of the fund's portfolio is
- Duy Nguyen, Senior Quantitative Analyst, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2000. From 1997 to 2000, he served as vice president and director of quantitative services of FactSet Research Systems, Inc. Mr. Nguyen also served as assistant vice president and quantitative equity analyst for Van Kampen American Capital from 1996 to 1997. Mr. Nguyen holds a Chartered Financial Analyst designation.
He is assisted by the Quantitative Research Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
SALES CHARGES
Purchases of Class A shares of AIM Core Strategies 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.
FINANCIAL HIGHLIGHTS
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 for the fiscal period ended 2002 has been audited by Ernst & Young 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
-----------------
DECEMBER 31, 2001
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2002
-----------------
Net asset value, beginning of period $ 10.00
---------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)
---------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.98)
=================================================================================
Total from investment operations (2.01)
=================================================================================
Net asset value, end of period $ 7.99
_________________________________________________________________________________
=================================================================================
Total return(a) (20.10)%
_________________________________________________________________________________
=================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 320
_________________________________________________________________________________
=================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 1.82%(b)
---------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 13.71%(b)
=================================================================================
Ratio of net investment income (loss) to average net assets (0.45)%(b)
_________________________________________________________________________________
=================================================================================
Portfolio turnover rate 42%
_________________________________________________________________________________
=================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting principles, 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 $358,625.
FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
-----------------
DECEMBER 31, 2001
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2002
-----------------
Net asset value, beginning of period $ 10.00
---------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)
---------------------------------------------------------------------------------
Net losses on securities (both realized and unrealized) (1.98)
=================================================================================
Total from investment operations (2.01)
=================================================================================
Net asset value, end of period $ 7.99
_________________________________________________________________________________
=================================================================================
Total return(a) (20.10)%
_________________________________________________________________________________
=================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 240
_________________________________________________________________________________
=================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 1.82%(b)
---------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 14.36%(b)
=================================================================================
Ratio of net investment income (loss) to average net assets (0.45)%(b)
_________________________________________________________________________________
=================================================================================
Portfolio turnover rate 42%
_________________________________________________________________________________
=================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting principles, 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 $268,971.
CLASS C
-----------------
DECEMBER 31, 2001
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2002
-----------------
Net asset value, beginning of period $ 10.00
---------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)
---------------------------------------------------------------------------------
Net losses on securities (both realized and unrealized) (1.98)
=================================================================================
Total from investment operations (2.01)
=================================================================================
Net asset value, end of period $ 7.99
_________________________________________________________________________________
=================================================================================
Total return(a) (20.10)%
_________________________________________________________________________________
=================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 240
_________________________________________________________________________________
=================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 1.82%(b)
---------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 14.36%(b)
=================================================================================
Ratio of net investment income (loss) to average net assets (0.45)%(b)
_________________________________________________________________________________
=================================================================================
Portfolio turnover rate 42%
_________________________________________________________________________________
=================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting principles, 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 $268,971.
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 - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge charge
- Reduced or waived - No contingent - Contingent - Contingent - Generally, no
initial sales deferred sales deferred sales deferred sales contingent
charge for certain charge charge on charge on deferred sales
purchases(2,3) redemptions within redemptions within charge(2)
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 - Converts to Class - Does not convert - Does not convert
to Class A shares A shares at the to Class A shares to Class A shares
end of 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 the
long-term short-term less than $250,000 short-term following types of
investors investors investors retirement plans:
(i) all section
401 and 457 plans,
(ii) section 403
plans sponsored by
section 501(c)(3)
organizations, and
(iii) IRA
rollovers from
such plans if an
AIM Fund was
offered
------------------------------------------------------------------------------------------------------------
|
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 were 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.
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.
MCF--03/03
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
---------------------------------------------------------------
|
(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
------------------------------------------------------------
|
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
------------------------------------------------------------
|
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.
Some retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor paid a concession to the dealer of record in connection with a Large Purchase of Class A shares by a retirement plan, the Class A shares may be subject to a 1% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the 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 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 PURCHASE MADE CLASS B CLASS 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 12 months from the date of the retirement plan's
initial 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
MCF--03/03
shares on which there is no CDSC first and, then, shares in the order of purchase.
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 plans, 401(k) $ 0 ($25 per AIM Fund investment for $25
plans, Simplified Employee Pension (SEP) accounts, Salary salary deferrals from Savings
Reduction (SARSEP) accounts, Savings Incentive Match Plans 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
-------------------------------------------------------------------------------------------------------------------------
|
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.
MCF--03/03
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
-------------------------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application and Mail your check and the remittance slip
check to the transfer agent, A I M Fund from your confirmation statement to the
Services, Inc., P.O. Box 4739, Houston, transfer agent.
TX 77210-4739.
By Wire Mail completed account application to Call the transfer agent to receive a
the transfer agent. Call the transfer reference number. Then, use the wire
agent at (800) 959-4246 to receive a instructions at left.
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 Telephone Open your account using one of the Select the AIM Bank Connection(SM)
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.
Call the AIM 24-hour Automated Investor
Line. You may place your order after
you have provided the bank instructions
that will be requested.
By Internet Open your account using one of the Access your account at
methods described above. www.aiminvestments.com. The proper bank
instructions must have been provided on
your account. You may not purchase
shares in AIM prototype retirement
accounts on the internet.
-------------------------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
SYSTEMATIC PURCHASE 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 Systematic Purchase 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:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; and (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
MCF--03/03
(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
PURCHASED AFTER AN EXCHANGE CDSC APPLICABLE UPON
--------- ----------------- REDEMPTION OF SHARES
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category III - No CDSC
Fund(1) Fund(1)
- Class A shares of 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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category I or - 1% if shares are redeemed
Fund II Fund within 18 months of initial
purchase of Category III Fund
shares
- Class A shares of Category III - Class A shares of Category III - 0.25% if shares are redeemed
Fund Fund(1) within 12 months of initial
- Class A shares of AIM Tax-Exempt purchase of Category III Fund
Cash 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.
MCF--03/03
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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
I or II Fund or II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(2) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
III Fund(1) or II Fund within 18 months of initial
purchase of Category III Fund
shares
|
SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category III - No CDSC
III Fund(1) Fund(2)
- Class A shares of 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 Consultant Contact your financial 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 or our AIM 24-hour
Automated Investor Line. 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.
By Internet Place your redemption request at
www.aiminvestments.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 already
provided proper bank information. 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.
|
MCF--03/03
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 REDEMPTIONS
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
Redemption 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.
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.
MCF--03/03
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
(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
MCF--03/03
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 you do not hold physical share certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
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
MCF--03/03
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 may 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--03/03
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.aiminvestments.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.
AIMinvestments.com CSTR-PRO-1
AIM DENT DEMOGRAPHIC TRENDS FUND
March 3, 2003
Prospectus
AIM Dent Demographic Trends Fund seeks to provide
long-term growth of capital.
This prospectus contains important information about the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Registered Trademark-- --Servicemark-- |
--------------------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 ------------------------------------------------------ The Advisors 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 ------------------------------------------------------ Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 ------------------------------------------------------ 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-9 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, AIM Investments, AIM Investments 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 in securities of companies that are likely to benefit from changing demographic, economic and lifestyle trends. These securities may include common stocks, convertible bonds, convertible preferred stocks and warrants of companies within a broad range of market capitalizations. The fund may also invest up to 25% of its total assets in foreign securities. 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 revenues and earnings. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential.
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- and medium-sized 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- and medium-sized 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 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.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
An investment in the fund is not a deposit in 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 changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2000................................................................... -17.22%
2001................................................................... -32.06%
2002................................................................... -32.68%
|
During the periods shown in the bar chart, the highest quarterly return was 23.26% (quarter ended December 31, 2001) and the lowest quarterly return was -31.35% (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 December 31, SINCE INCEPTION
2002) 1 YEAR INCEPTION DATE
--------------------------------------------------------------------------------
Class A 06/07/99
Return Before Taxes (36.41)% (15.30)%
Return After Taxes on Distributions (36.41) (15.30)
Return After Taxes on Distributions
and Sale of Fund Shares (22.36) (11.67)
Class B 08/01/00
Return Before Taxes (36.56) (15.26)
Class C 08/01/00
Return Before Taxes (33.88) (14.54)
--------------------------------------------------------------------------------
Russell 3000--Registered Trademark--
Index(1) (21.54) (8.30)(2) 05/31/99(2)
(reflects no deduction for fees,
expenses, or taxes)
--------------------------------------------------------------------------------
|
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 Russell 3000--Registered Trademark-- Index is a widely recognized,
unmanaged index of common stocks that measures the performance of the 3,000
largest U.S. companies based on total market capitalization.
(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 0.85% 0.85% 0.85% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 Other Expenses(4) 0.68 0.68 0.68 Total Annual Fund Operating Expenses 1.88 2.53 2.53 -------------------------------------------------------------------------------- |
(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 retirement plan participant and you bought $1,000,000 or more of Class A shares, you may pay a 1.00% CDSC if a total redemption of the retirement plan assets occurs within 12 months from the date of the 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 have been restated to reflect expense arrangements in effect as of March 4, 2002.
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
--------------------------------------------------------------------------------
Class A $730 $1,108 $1,510 $2,630
Class B 756 1,088 1,545 2,707
Class C 356 788 1,345 2,866
--------------------------------------------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class A $730 $1,108 $1,510 $2,630
Class B 256 788 1,345 2,707
Class C 256 788 1,345 2,866
--------------------------------------------------------------------------------
|
THE ADVISORS
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 the fund's investment decisions, the execution of securities transactions, and obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund. H.S. Dent Advisors, Inc. (the subadvisor) serves as the fund's subadvisor, and is located at 6515 Gwin Road, Oakland, California 94611. The subadvisor is responsible for providing the advisor with macroeconomic, thematic, demographic, lifestyle trends and sector research, custom reports and investment and market capitalization recommendations 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 190 investment portfolios, including the fund, encompassing a broad range of investment objectives. The subadvisor has acted as an investment advisor since 1999.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2002, the advisor received compensation of 0.85% of average daily net assets.
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
- Lanny H. Sachnowitz (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1987.
- Edgar M. Larsen, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1996.
They are assisted by the Large Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
Effective May 1, 2003, Edgar M. Larsen will be removed from, and the following portfolio managers will be added to, the members of the team who are primarily responsible for the management of the fund's portfolio:
- Kirk L. Anderson, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1994.
- James G. Birdsall, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1997.
SALES CHARGES
Purchases of Class A shares of AIM Dent Demographic Trends 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 for fiscal years 2002 and 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by other public accountants.
CLASS A
-------------------------------------------------------------------
JUNE 7, 1999
(DATE OPERATIONS
YEAR ENDED OCTOBER 31, COMMENCED) TO
------------------------------------------- OCTOBER 31,
2002 2001 2000 1999
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.62 $ 15.40 $ 12.14 $ 10.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.12) (0.12) (0.11) (0.03)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.50) (7.66) 3.37 2.17
=================================================================================================================================
Total from investment operations (1.62) (7.78) 3.26 2.14
=================================================================================================================================
Net asset value, end of period $ 6.00 $ 7.62 $ 15.40 $ 12.14
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(a) (21.26)% (50.52)% 26.85% 21.40%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $190,253 $312,377 $666,929 $163,872
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.87%(b) 1.64% 1.50% 1.60%(c)(d)
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (1.31)%(b) (1.04)% (0.93)% (1.00)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 189% 143% 90% 29%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Includes adjustments in accordance with general accepted accounting principles, does not include sales charges and is not annualized for periods less than one year.
(b) Ratios are based on average daily net assets of $283,771,505.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements was 1.65% (annualized).
(d) Annualized.
CLASS B
-------------------------------------------------------------------
JUNE 7, 1999
(DATE OPERATIONS
YEAR ENDED OCTOBER 31, COMMENCED) TO
------------------------------------------- OCTOBER 31,
2002 2001 2000 1999
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.50 $ 15.26 $ 12.11 $ 10.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.17) (0.18) (0.18) (0.04)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.46) (7.58) 3.33 2.15
=================================================================================================================================
Total from investment operations (1.63) (7.76) 3.15 2.11
=================================================================================================================================
Net asset value, end of period $ 5.87 $ 7.50 $ 15.26 $ 12.11
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(a) (21.73)% (50.85)% 26.01% 21.10%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $223,666 $367,494 $748,480 $177,430
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.53%(b) 2.32% 2.17% 2.24%(c)(d)
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (1.97)%(b) (1.72)% (1.60)% (1.64)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 189% 143% 90% 29%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Includes adjustments in accordance with general accepted accounting principles, does not include contingent deferred sales charges and is not annualized for periods less than one year.
(b) Ratios are based on average daily net assets of $331,008,412.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements was 2.29% (annualized).
(d) Annualized.
CLASS C
------------------------------------------------------------------
JUNE 7, 1999
(DATE OPERATIONS
YEAR ENDED OCTOBER 31, COMMENCED) TO
------------------------------------------ OCTOBER 31,
2002 2001 2000 1999
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.50 $ 15.26 $ 12.11 $ 10.00
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.17) (0.19) (0.17) (0.04)
--------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.46) (7.57) 3.32 2.15
================================================================================================================================
Total from investment operations (1.63) (7.76) 3.15 2.11
================================================================================================================================
Net asset value, end of period $ 5.87 $ 7.50 $ 15.26 $ 12.11
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(a) (21.73)% (50.85)% 26.01% 21.10%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $87,938 $149,925 $309,821 $51,605
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets 2.53%(b) 2.32% 2.17% 2.24%(c)(d)
================================================================================================================================
Ratio of net investment income (loss) to average net assets (1.97)%(b) (1.72)% (1.60)% (1.64)%(d)
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate 189% 143% 90% 29%
________________________________________________________________________________________________________________________________
================================================================================================================================
|
(a) Includes adjustments in accordance with general accepted accounting principles, does not include contingent deferred sales charges and is not annualized for periods less than one year.
(b) Ratios are based on average daily net assets of $132,416,045.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements was 2.29% (annualized).
(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 - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge charge
- Reduced or waived - No contingent - Contingent - Contingent - Generally, no
initial sales deferred sales deferred sales deferred sales contingent
charge for certain charge charge on charge on deferred sales
purchases(2,3) redemptions within redemptions within charge(2)
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 - Converts to Class - Does not convert - Does not convert
to Class A shares A shares at the to Class A shares to Class A shares
end of 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 the
long-term short-term less than $250,000 short-term following types of
investors investors investors retirement plans:
(i) all section
401 and 457 plans,
(ii) section 403
plans sponsored by
section 501(c)(3)
organizations, and
(iii) IRA
rollovers from
such plans if an
AIM Fund was
offered
------------------------------------------------------------------------------------------------------------
|
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 were 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.
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.
MCF--03/03
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
---------------------------------------------------------------
|
(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
------------------------------------------------------------
|
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
------------------------------------------------------------
|
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.
Some retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor paid a concession to the dealer of record in connection with a Large Purchase of Class A shares by a retirement plan, the Class A shares may be subject to a 1% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the 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 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 PURCHASE MADE CLASS B CLASS 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 12 months from the date of the retirement plan's
initial 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
MCF--03/03
shares on which there is no CDSC first and, then, shares in the order of purchase.
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 plans, 401(k) $ 0 ($25 per AIM Fund investment for $25
plans, Simplified Employee Pension (SEP) accounts, Salary salary deferrals from Savings
Reduction (SARSEP) accounts, Savings Incentive Match Plans 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
-------------------------------------------------------------------------------------------------------------------------
|
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.
MCF--03/03
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
-------------------------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application and Mail your check and the remittance slip
check to the transfer agent, A I M Fund from your confirmation statement to the
Services, Inc., P.O. Box 4739, Houston, transfer agent.
TX 77210-4739.
By Wire Mail completed account application to Call the transfer agent to receive a
the transfer agent. Call the transfer reference number. Then, use the wire
agent at (800) 959-4246 to receive a instructions at left.
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 Telephone Open your account using one of the Select the AIM Bank Connection(SM)
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.
Call the AIM 24-hour Automated Investor
Line. You may place your order after
you have provided the bank instructions
that will be requested.
By Internet Open your account using one of the Access your account at
methods described above. www.aiminvestments.com. The proper bank
instructions must have been provided on
your account. You may not purchase
shares in AIM prototype retirement
accounts on the internet.
-------------------------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
SYSTEMATIC PURCHASE 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 Systematic Purchase 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:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; and (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
MCF--03/03
(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
PURCHASED AFTER AN EXCHANGE CDSC APPLICABLE UPON
--------- ----------------- REDEMPTION OF SHARES
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category III - No CDSC
Fund(1) Fund(1)
- Class A shares of 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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category I or - 1% if shares are redeemed
Fund II Fund within 18 months of initial
purchase of Category III Fund
shares
- Class A shares of Category III - Class A shares of Category III - 0.25% if shares are redeemed
Fund Fund(1) within 12 months of initial
- Class A shares of AIM Tax-Exempt purchase of Category III Fund
Cash 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.
MCF--03/03
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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
I or II Fund or II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(2) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
III Fund(1) or II Fund within 18 months of initial
purchase of Category III Fund
shares
|
SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category III - No CDSC
III Fund(1) Fund(2)
- Class A shares of 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 Consultant Contact your financial 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 or our AIM 24-hour
Automated Investor Line. 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.
By Internet Place your redemption request at
www.aiminvestments.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 already
provided proper bank information. 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.
|
MCF--03/03
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 REDEMPTIONS
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
Redemption 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.
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.
MCF--03/03
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
(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
MCF--03/03
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 you do not hold physical share certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
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
MCF--03/03
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 may 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--03/03
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.aiminvestments.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.
AIMinvestments.com DDT-PRO-1
AIM EMERGING GROWTH FUND
March 3, 2003
Prospectus
AIM Emerging Growth Fund seeks to provide long-term
growth of capital.
This prospectus contains important information about the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Registered Trademark-- --Servicemark-- |
------------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Return 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 ------------------------------------------------------ The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 ------------------------------------------------------ Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 ------------------------------------------------------ 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-9 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, AIM Investments, AIM Investments 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 in securities of companies the portfolio managers believe are likely to benefit from new or innovative products, services or processes. These securities may include common stocks, convertible bonds, convertible preferred stocks and warrants. While the fund will invest without regard to market capitalization, the fund expects to invest a significant portion of its assets in securities of small- and medium-sized companies. Under normal conditions, the top 10 holdings may comprise at least a third of the portfolio's net assets. The fund may also invest up to 25% of its total assets in foreign securities. 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. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential.
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- and medium-sized 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- and medium-sized 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 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.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Because a large percentage of the fund's assets may be invested in a limited number of securities, and because the fund is non-diversified, the fund will invest in fewer securities than if it were a diversified fund. Thus, 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 in 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.
ANNUAL TOTAL RETURNS
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
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2001................................................................... -20.29%
2002................................................................... -33.90%
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During the period shown in the bar chart, the highest quarterly return was 38.43% (quarter ended December 31, 2001) and the lowest quarterly return was -37.12% (quarter ended September 30, 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 December 31, SINCE INCEPTION
2002) 1 YEAR INCEPTION DATE
--------------------------------------------------------------------------------
Class A 03/31/00
Return Before Taxes (37.54)% (26.53)%
Return After Taxes on Distributions (37.54) (27.04)
Return After Taxes on Distributions
and Sale of Fund Shares (23.05) (20.01)
Class B 03/31/00
Return Before Taxes (37.70) (26.29)
Class C 03/31/00
Return Before Taxes (34.97) (25.51)
--------------------------------------------------------------------------------
Russell 2500--Trademark-- Index(1) (17.80) (8.30)(2) 03/31/00(2)
(reflects no deduction for fees,
expenses, or taxes)
--------------------------------------------------------------------------------
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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 Russell 2500--Trademark-- Index measures the performance of the 2,500 smallest companies in the Russell 3000--Registered Trademark-- Index, which represents approximately 17% of the total market capitalization of the Russell 3000--Registered Trademark-- Index. The Russell 3000--Registered Trademark-- Index measures the performance of the 3000 largest U.S. companies based on total market capitalization.
(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 0.85% 0.85% 0.85% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 Other Expenses(4) 0.69 0.69 0.69 Total Annual Fund Operating Expenses 1.89 2.54 2.54 -------------------------------------------------------------------------------- |
(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 retirement plan participant and you bought $1,000,000 or more of Class A shares, you may pay a 1.00% CDSC if a total redemption of the retirement plan assets occurs within 12 months from the date of the 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 have been restated to reflect expense arrangements in effect as of March 4, 2002.
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
--------------------------------------------------------------------------------
Class A $731 $1,111 $1,515 $2,640
Class B 757 1,091 1,550 2,717
Class C 357 791 1,350 2,875
--------------------------------------------------------------------------------
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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 $731 $1,111 $1,515 $2,640
Class B 257 791 1,350 2,717
Class C 257 791 1,350 2,875
--------------------------------------------------------------------------------
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THE ADVISOR
A I M Advisors, Inc. 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 190 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2002, the advisor received compensation of 0.85% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team (co-managers) who are primarily responsible for the management of the fund's portfolio are
- Karl Farmer, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1998. From 1992 to 1998, he worked as a pension actuary for William M. Mercer, Inc.
- Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst for Prudential Securities.
They are assisted by the Mid Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
SALES CHARGES
Purchases of Class A shares of AIM 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. 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 for fiscal years 2002 and 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by other public accountants.
CLASS A
--------------------------------------------------
MARCH 31, 2000
YEAR ENDED (DATE OPERATIONS
OCTOBER 31, COMMENCED) TO
-------------------------- OCTOBER 31,
2002 2001 2000
------- ------- ----------------
Net asset value, beginning of period $ 5.46 $ 10.50 $ 10.00
------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08)(a) (0.10) (0.04)
------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.26) (4.51) 0.54
==================================================================================================================
Total from investment operations (1.34) (4.61) 0.50
==================================================================================================================
Less distributions from net realized gains -- (0.43) --
==================================================================================================================
Net asset value, end of period $ 4.12 $ 5.46 $ 10.50
__________________________________________________________________________________________________________________
==================================================================================================================
Total return(b) (24.54)% (45.37)% 5.00%
__________________________________________________________________________________________________________________
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $51,822 $81,114 $147,101
__________________________________________________________________________________________________________________
==================================================================================================================
Ratio of expenses to average net assets 1.89%(c) 1.71%(d) 1.68%(e)
==================================================================================================================
Ratio of net investment income (loss) to average net assets (1.54)%(c) (1.32)% (1.04)%(e)
__________________________________________________________________________________________________________________
==================================================================================================================
Portfolio turnover rate 407% 242% 111%
__________________________________________________________________________________________________________________
==================================================================================================================
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(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting principles, 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 $78,344,799.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee waivers was 1.83%.
(e) Annualized.
CLASS B
--------------------------------------------------
MARCH 31, 2000
YEAR ENDED (DATE OPERATIONS
OCTOBER 31, COMMENCED) TO
-------------------------- OCTOBER 31,
2002 2001 2000
------- ------- ----------------
Net asset value, beginning of period $ 5.40 $ 10.47 $ 10.00
------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.12)(a) (0.14) (0.07)
------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.23) (4.50) 0.54
==================================================================================================================
Total from investment operations (1.35) (4.64) 0.47
==================================================================================================================
Less distributions from net realized gains -- (0.43) --
==================================================================================================================
Net asset value, end of period $ 4.05 $ 5.40 $ 10.47
__________________________________________________________________________________________________________________
==================================================================================================================
Total return(b) (25.00)% (45.81)% 4.70%
__________________________________________________________________________________________________________________
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $36,060 $58,019 $94,740
__________________________________________________________________________________________________________________
==================================================================================================================
Ratio of expenses to average net assets 2.55%(c) 2.36%(d) 2.37%(e)
==================================================================================================================
Ratio of net investment income (loss) to average net assets (2.19)%(c) (1.98)% (1.73)%(e)
__________________________________________________________________________________________________________________
==================================================================================================================
Portfolio turnover rate 407% 242% 111%
__________________________________________________________________________________________________________________
==================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting principles, 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 $55,361,074.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee waivers was 2.48%.
(e) Annualized.
CLASS C
--------------------------------------------------
MARCH 31, 2000
YEAR ENDED (DATE OPERATIONS
OCTOBER 31, COMMENCED) TO
-------------------------- OCTOBER 31,
2002 2001 2000
------- ------- ----------------
Net asset value, beginning of period $ 5.40 $ 10.46 $ 10.00
------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.12)(a) (0.14) (0.07)
------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.23) (4.49) 0.53
==================================================================================================================
Total from investment operations (1.35) (4.63) 0.46
==================================================================================================================
Less distributions from net realized gains -- (0.43) --
==================================================================================================================
Net asset value, end of period $ 4.05 $ 5.40 $ 10.46
__________________________________________________________________________________________________________________
==================================================================================================================
Total return(b) (25.00)% (45.76)% 4.60%
__________________________________________________________________________________________________________________
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $17,194 $26,483 $41,361
__________________________________________________________________________________________________________________
==================================================================================================================
Ratio of expenses to average net assets 2.55%(c) 2.36%(d) 2.37%(e)
==================================================================================================================
Ratio of net investment income (loss) to average net assets (2.19)%(c) (1.98)% (1.73)%(e)
__________________________________________________________________________________________________________________
==================================================================================================================
Portfolio turnover rate 407% 242% 111%
__________________________________________________________________________________________________________________
==================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting principles, 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 $25,370,253.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee waivers was 2.48%.
(e) 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 - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge charge
- Reduced or waived - No contingent - Contingent - Contingent - Generally, no
initial sales deferred sales deferred sales deferred sales contingent
charge for certain charge charge on charge on deferred sales
purchases(2,3) redemptions within redemptions within charge(2)
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 - Converts to Class - Does not convert - Does not convert
to Class A shares A shares at the to Class A shares to Class A shares
end of 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 the
long-term short-term less than $250,000 short-term following types of
investors investors investors retirement plans:
(i) all section
401 and 457 plans,
(ii) section 403
plans sponsored by
section 501(c)(3)
organizations, and
(iii) IRA
rollovers from
such plans if an
AIM Fund was
offered
------------------------------------------------------------------------------------------------------------
|
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 were 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.
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.
MCF--03/03
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
---------------------------------------------------------------
|
(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
------------------------------------------------------------
|
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
------------------------------------------------------------
|
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.
Some retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor paid a concession to the dealer of record in connection with a Large Purchase of Class A shares by a retirement plan, the Class A shares may be subject to a 1% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the 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 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 PURCHASE MADE CLASS B CLASS 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 12 months from the date of the retirement plan's
initial 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
MCF--03/03
shares on which there is no CDSC first and, then, shares in the order of purchase.
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 plans, 401(k) $ 0 ($25 per AIM Fund investment for $25
plans, Simplified Employee Pension (SEP) accounts, Salary salary deferrals from Savings
Reduction (SARSEP) accounts, Savings Incentive Match Plans 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
-------------------------------------------------------------------------------------------------------------------------
|
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.
MCF--03/03
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
-------------------------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application and Mail your check and the remittance slip
check to the transfer agent, A I M Fund from your confirmation statement to the
Services, Inc., P.O. Box 4739, Houston, transfer agent.
TX 77210-4739.
By Wire Mail completed account application to Call the transfer agent to receive a
the transfer agent. Call the transfer reference number. Then, use the wire
agent at (800) 959-4246 to receive a instructions at left.
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 Telephone Open your account using one of the Select the AIM Bank Connection(SM)
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.
Call the AIM 24-hour Automated Investor
Line. You may place your order after
you have provided the bank instructions
that will be requested.
By Internet Open your account using one of the Access your account at
methods described above. www.aiminvestments.com. The proper bank
instructions must have been provided on
your account. You may not purchase
shares in AIM prototype retirement
accounts on the internet.
-------------------------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
SYSTEMATIC PURCHASE 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 Systematic Purchase 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:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; and (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
MCF--03/03
(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
PURCHASED AFTER AN EXCHANGE CDSC APPLICABLE UPON
--------- ----------------- REDEMPTION OF SHARES
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category III - No CDSC
Fund(1) Fund(1)
- Class A shares of 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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category I or - 1% if shares are redeemed
Fund II Fund within 18 months of initial
purchase of Category III Fund
shares
- Class A shares of Category III - Class A shares of Category III - 0.25% if shares are redeemed
Fund Fund(1) within 12 months of initial
- Class A shares of AIM Tax-Exempt purchase of Category III Fund
Cash 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.
MCF--03/03
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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
I or II Fund or II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(2) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
III Fund(1) or II Fund within 18 months of initial
purchase of Category III Fund
shares
|
SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category III - No CDSC
III Fund(1) Fund(2)
- Class A shares of 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 Consultant Contact your financial 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 or our AIM 24-hour
Automated Investor Line. 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.
By Internet Place your redemption request at
www.aiminvestments.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 already
provided proper bank information. 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.
|
MCF--03/03
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 REDEMPTIONS
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
Redemption 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.
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.
MCF--03/03
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
(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
MCF--03/03
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 you do not hold physical share certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
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
MCF--03/03
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 may 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--03/03
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.aiminvestments.com
--------------------------------------------------------
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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.
AIMinvestments.com EMG-PRO-1
AIM LARGE CAP BASIC VALUE FUND
March 3, 2003
Prospectus
AIM Large Cap Basic Value Fund seeks to provide long-term growth of capital with a secondary objective of current income.
This prospectus contains important information about the Class A, B, C and R 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Registered Trademark-- --Servicemark-- |
------------------------------
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INVESTMENT OBJECTIVES AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 ------------------------------------------------------ The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 ------------------------------------------------------ Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 ------------------------------------------------------ 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-9 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, AIM Investments, AIM Investments 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 primary investment objective is long-term growth of capital with a secondary objective of current income. The investment objectives of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objectives by investing, normally, at least 80% of its assets in securities of large-capitalization companies that offer potential for capital growth, and may offer potential for current income. In complying with this 80% investment requirement, the fund will invest primarily in marketable equity securities, including convertible securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. The fund considers a company to be a large-capitalization company if it has a market capitalization, at the time of purchase, no smaller than the smallest capitalized company included in the Russell 1000--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 1000 Index is a widely recognized, unmanaged index of common stocks that measures the performance of the 1,000 largest companies in the Russell 3000--Registered Trademark-- Index, which measures the performance of the 3,000 largest U.S. companies based on total market capitalization. The fund may also invest up to 25% of its total assets in foreign securities. The fund may also invest in debt instruments that are consistent with its investment objectives of long-term growth of capital and current income. 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 they believe have the potential for above-average growth in revenues and earnings and that they believe are undervalued in relation to long-term earning power or other factors. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential.
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.
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. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. When interest rates rise, bond prices fall; the longer a bond's duration, the more sensitive it is to this risk.
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. Also, since a large percentage of the fund's assets will be invested in a limited number of securities, any change in value of those securities could significantly affect the value of your investment in the fund.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
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 in 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 changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
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2000................................................................... 21.74%
2001................................................................... 1.25%
2002................................................................... -23.20%
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During the periods shown in the bar chart, the highest quarterly return was 12.03% (quarter ended December 31, 2001) and the lowest quarterly return was -20.22% (quarter ended September 30, 2002).
PERFORMANCE TABLE(1)
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 December 31, SINCE INCEPTION
2002) 1 YEAR INCEPTION DATE
-------------------------------------------------------------------------------
Class A 06/30/99
Return Before Taxes (27.42)% 2.41%
Return After Taxes on Distributions (27.42) 2.80
Return After Taxes on Distributions
and Sales of Fund Shares (16.84) 2.10
Class B 08/01/00
Return Before Taxes (27.55) 7.51
Class C 08/01/00
Return Before Taxes (24.50) 6.34
Class R(4) 06/30/99(4)
Return Before Taxes (23.33) (0.98)
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Russell 1000--Registered Trademark--
Index(2) (reflects no deduction for
fees, expenses, or taxes) (21.65) (10.22)(3) 06/30/99(3)
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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, C and R will vary.
(1) A significant portion of the fund's returns during certain periods prior to 2001 was attributable to its investments in IPOs. These investments had a magnified impact when the fund's asset base was relatively small. 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. For additional information regarding the impact of IPO investments on the fund's performance, please see the "Financial Highlights" section of this prospectus.
(2) The Russell 1000--Registered Trademark-- Index is a widely recognized,
unmanaged index of common stocks that measures the performance of the 1,000
largest companies in Russell 3000--Registered Trademark-- Index, which
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization.
(3) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
(4) The returns shown for these periods are the blended returns of the historical performance of the fund's Class R shares since their inception and the restated historical performance of the fund's 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. The inception date shown in the table is that of the fund's Class A shares. The inception date of the fund's Class R shares is June 3, 2002.
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 CLASS R --------------------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None 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% None(3) --------------------------------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(4) -------------------------------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C CLASS R -------------------------------------------------------------------------------- Management Fees 0.60% 0.60% 0.60% 0.60% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 0.50 Other Expenses(5) 0.43 0.43 0.43 0.43 Total Annual Fund Operating Expenses 1.38 2.03 2.03 1.53 -------------------------------------------------------------------------------- |
(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 retirement plan participant and you bought $1,000,000 or more of Class A shares, you may pay a 1.00% CDSC if a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(3) If you are a retirement plan participant, you may pay a 0.75% CDSC if the distributor paid a concession to the dealer of record and a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(4) There is no guarantee that actual expenses will be the same as those shown in the table.
(5) Other expenses for Class R shares are based on estimated average net assets for the current fiscal year.
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
--------------------------------------------------------------------------------
Class A $683 $963 $1,264 $2,116
Class B 706 937 1,293 2,192
Class C 306 637 1,093 2,358
Class R 156 483 834 1,824
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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 $683 $963 $1,264 $2,116
Class B 206 637 1,093 2,192
Class C 206 637 1,093 2,358
Class R 156 483 834 1,824
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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 190 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2002, the advisor received compensation of 0.60% of average daily net assets.
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
- Bret W. Stanley (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1998. From 1994 to 1998, he was Vice President and Portfolio Manager for Van Kampen American Capital Asset Management, Inc.
- R. Canon Coleman II, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1999. From 1993 to 1999, he worked as a CPA with Deloitte & Touche.
- Matthew W. Seinsheimer, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1995 to 1998, he was Portfolio Manager for American Indemnity Company.
- Michael J. Simon, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2001. From 1996 to 2001, he was equity analyst and portfolio manager for Luther King Capital Management.
They are assisted by the Basic Value Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
SALES CHARGES
Purchases of Class A shares of AIM Large Cap Basic Value 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. Certain purchases of Class R shares may be subject to the contingent deferred sales charge 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 for the fiscal period ended 2002 and for the fiscal years 2002 and 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by other public accountants.
A significant portion of the fund's returns was attributable to its investments in IPOs during certain fiscal years prior to 2001, including the fiscal year ended October 31, 2000, which had a magnified impact on the fund due to its relatively small asset base during those periods. 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.
CLASS A
------------------------------------------------------------
JUNE 30, 1999
(DATE OPERATIONS
YEAR ENDED OCTOBER 31, COMMENCED) TO
------------------------------------ OCTOBER 31,
2002 2001 2000 1999
------- ------- ------ ----------------
Net asset value, beginning of period $ 10.94 $ 12.05 $ 9.40 $10.00
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01(a) 0.02(a) 0.07(a) 0.03
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.75) (1.07) 2.88 (0.63)
============================================================================================================================
Total from investment operations (1.74) (1.05) 2.95 (0.60)
============================================================================================================================
Less distributions:
Dividends from net investment income -- (0.04) (0.18) --
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.02) (0.12) --
============================================================================================================================
Total distributions -- (0.06) (0.30) --
============================================================================================================================
Net asset value, end of period $ 9.20 $ 10.94 $12.05 $ 9.40
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) (15.90)% (8.74)% 32.21% (6.00)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $94,387 $68,676 $5,888 $1,153
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.38%(c) 1.27% 1.25% 1.25%(d)
----------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.38%(c) 1.36% 8.21% 10.02%(d)
============================================================================================================================
Ratio of net investment income to average net assets 0.11%(c) 0.17% 0.62% 0.87%(d)
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 37% 18% 57% 10%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles, 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 $99,731,035.
(d) Annualized.
CLASS B
--------------------------------------------
AUGUST 1, 2000
YEAR ENDED (DATE SALES
OCTOBER 31 COMMENCED) TO
---------------------- OCTOBER 31,
2002 2001 2000
------- ------- --------------
Net asset value, beginning of period $ 10.86 $ 12.02 $10.85
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) (0.06)(a) 0.00
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.73) (1.05) 1.17
============================================================================================================
Total from investment operations (1.79) (1.11) 1.17
============================================================================================================
Less distributions:
Dividends from net investment income -- (0.03) --
------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.02) --
============================================================================================================
Total distributions -- (0.05) --
============================================================================================================
Net asset value, end of period $ 9.07 $ 10.86 $12.02
____________________________________________________________________________________________________________
============================================================================================================
Total return(b) (16.48)% (9.25)% 10.78%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $63,977 $58,681 $2,815
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.02%(c) 1.95% 1.93%(d)
------------------------------------------------------------------------------------------------------------
Without fee waivers 2.02%(c) 2.04% 8.89%(d)
============================================================================================================
Ratio of net investment income (loss) to average net assets (0.53)%(c) (0.51)% (0.06)%(d)
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 37% 18% 57%
____________________________________________________________________________________________________________
============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles, 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 $69,753,529.
(d) Annualized.
CLASS C
--------------------------------------------
AUGUST 1, 2000
YEAR ENDED (DATE SALES
OCTOBER 31, COMMENCED) TO
---------------------- OCTOBER 31,
2002 2001 2000
------- ------- --------------
Net asset value, beginning of period $ 10.85 $ 12.02 $10.85
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) (0.06)(a) 0.00
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.72) (1.06) 1.17
============================================================================================================
Total from investment operations (1.78) (1.12) 1.17
============================================================================================================
Less distributions:
Dividends from net investment income -- (0.03) --
------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.02) --
============================================================================================================
Total distributions -- (0.05) --
============================================================================================================
Net asset value, end of period $ 9.07 $ 10.85 $12.02
____________________________________________________________________________________________________________
============================================================================================================
Total return(b) (16.41)% (9.33)% 10.78%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $21,775 $20,680 $1,248
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.02%(c) 1.95% 1.93%(d)
------------------------------------------------------------------------------------------------------------
Without fee waivers 2.02%(c) 2.04% 8.89%(d)
============================================================================================================
Ratio of net investment income (loss) to average net assets (0.53)%(c) (0.51)% (0.06)%(d)
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 37% 18% 57%
____________________________________________________________________________________________________________
============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles, 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 $25,225,493.
(d) Annualized.
CLASS R
----------------------
JUNE 3, 2002
(DATE SALES COMMENCED)
TO OCTOBER 31, 2002
----------------------
Net asset value, beginning of period $11.60
------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.00(a)
------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.40)
====================================================================================
Total from investment operations (2.40)
====================================================================================
Net asset value, end of period $ 9.20
____________________________________________________________________________________
====================================================================================
Total return(b) (20.69)%
____________________________________________________________________________________
====================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 8
____________________________________________________________________________________
====================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.54%(c)
------------------------------------------------------------------------------------
Without fee waivers 1.54%(c)
====================================================================================
Ratio of net investment income (loss) to average net assets (0.05)%(c)
____________________________________________________________________________________
====================================================================================
Portfolio turnover rate 37%
____________________________________________________________________________________
====================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $8,438.
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 - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge charge
- Reduced or waived - No contingent - Contingent - Contingent - Generally, no
initial sales deferred sales deferred sales deferred sales contingent
charge for certain charge charge on charge on deferred sales
purchases(2,3) redemptions within redemptions within charge(2)
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 - Converts to Class - Does not convert - Does not convert
to Class A shares A shares at the to Class A shares to Class A shares
end of 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 the
long-term short-term less than $250,000 short-term following types of
investors investors investors retirement plans:
(i) all section
401 and 457 plans,
(ii) section 403
plans sponsored by
section 501(c)(3)
organizations, and
(iii) IRA
rollovers from
such plans if an
AIM Fund was
offered
------------------------------------------------------------------------------------------------------------
|
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 were 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.
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.
MCF--03/03
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
---------------------------------------------------------------
|
(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
------------------------------------------------------------
|
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
------------------------------------------------------------
|
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.
Some retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor paid a concession to the dealer of record in connection with a Large Purchase of Class A shares by a retirement plan, the Class A shares may be subject to a 1% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the 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 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 PURCHASE MADE CLASS B CLASS 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 12 months from the date of the retirement plan's
initial 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
MCF--03/03
shares on which there is no CDSC first and, then, shares in the order of purchase.
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 plans, 401(k) $ 0 ($25 per AIM Fund investment for $25
plans, Simplified Employee Pension (SEP) accounts, Salary salary deferrals from Savings
Reduction (SARSEP) accounts, Savings Incentive Match Plans 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
-------------------------------------------------------------------------------------------------------------------------
|
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.
MCF--03/03
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
-------------------------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application and Mail your check and the remittance slip
check to the transfer agent, A I M Fund from your confirmation statement to the
Services, Inc., P.O. Box 4739, Houston, transfer agent.
TX 77210-4739.
By Wire Mail completed account application to Call the transfer agent to receive a
the transfer agent. Call the transfer reference number. Then, use the wire
agent at (800) 959-4246 to receive a instructions at left.
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 Telephone Open your account using one of the Select the AIM Bank Connection(SM)
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.
Call the AIM 24-hour Automated Investor
Line. You may place your order after
you have provided the bank instructions
that will be requested.
By Internet Open your account using one of the Access your account at
methods described above. www.aiminvestments.com. The proper bank
instructions must have been provided on
your account. You may not purchase
shares in AIM prototype retirement
accounts on the internet.
-------------------------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
SYSTEMATIC PURCHASE 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 Systematic Purchase 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:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; and (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
MCF--03/03
(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
PURCHASED AFTER AN EXCHANGE CDSC APPLICABLE UPON
--------- ----------------- REDEMPTION OF SHARES
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category III - No CDSC
Fund(1) Fund(1)
- Class A shares of 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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category I or - 1% if shares are redeemed
Fund II Fund within 18 months of initial
purchase of Category III Fund
shares
- Class A shares of Category III - Class A shares of Category III - 0.25% if shares are redeemed
Fund Fund(1) within 12 months of initial
- Class A shares of AIM Tax-Exempt purchase of Category III Fund
Cash 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.
MCF--03/03
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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
I or II Fund or II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(2) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
III Fund(1) or II Fund within 18 months of initial
purchase of Category III Fund
shares
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SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category III - No CDSC
III Fund(1) Fund(2)
- Class A shares of 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 Consultant Contact your financial 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 or our AIM 24-hour
Automated Investor Line. 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.
By Internet Place your redemption request at
www.aiminvestments.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 already
provided proper bank information. 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.
|
MCF--03/03
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 REDEMPTIONS
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
Redemption 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.
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.
MCF--03/03
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
(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
MCF--03/03
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 you do not hold physical share certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
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
MCF--03/03
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 may 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--03/03
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.aiminvestments.com
--------------------------------------------------------
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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.
AIMinvestments.com LCBV-PRO-1
AIM LARGE CAP CORE EQUITY FUND
March 3, 2003
Prospectus
AIM Large Cap Core Equity Fund seeks to provide
long-term growth of capital.
This prospectus contains important information about the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Registered Trademark-- --Servicemark-- |
------------------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 2 ------------------------------------------------------ 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-9 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, AIM Investments, AIM Investments 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, normally, at least 80% of its assets in equity securities, including common stocks, convertible securities and warrants of large-capitalization companies. In complying with this 80% investment requirement, the fund's investments may include synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. The fund considers a company to be a large-capitalization company if it has a market capitalization, at the time of purchase, no smaller than the smallest capitalized company included in the Russell 1000--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 1000 Index is a widely recognized, unmanaged index of common stocks of the 1,000 largest companies in the Russell 3000--Registered Trademark-- Index, which measures the performance of the 3,000 largest U.S. companies based on total market capitalization.
The fund may invest up to 20% of assets in equity securities of companies in other market capitalization ranges or in investment-grade debt securities. The fund may invest in securities that pay dividends. Under normal conditions the top 10 holdings may comprise up to 20% of the fund's total assets. The fund may also invest up to 25% of its total assets in foreign securities.
For risk management or cash management purposes, the fund may 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.
In selecting investments, the portfolio managers seek to identify those
companies that are, in their view, undervalued relative to current or projected
earnings, or the current market value of assets owned by the company. The
primary emphasis of the portfolio managers' search for undervalued equity
securities is in four categories: (1) out-of-favor cyclical growth companies;
(2) established growth companies that are undervalued compared to historical
relative valuation parameters; (3) companies where there is early but tangible
evidence of improving prospects which are not yet reflected in the value of the
companies' equity securities; and (4) companies whose equity securities are
selling at prices that do not yet reflect the current market value of their
assets. The portfolio managers consider whether to sell a particular security
when any of these factors materially change.
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.
A larger position in cash or cash equivalents could detract from achieving the fund's objective, but could also reduce the fund's exposure in the event of a market downturn.
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.
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. Also, since a large percentage of the fund's assets will be invested in a limited number of securities, any change in value of those securities could significantly affect the value of your investment in the fund.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity, and the potential lack of strict financial and accounting controls and standards.
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 affect 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.
To the extent the fund holds cash or cash equivalents rather than equity securities for risk management purposes, the fund may not achieve its investment objective.
An investment in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
PERFORMANCE INFORMATION
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.
ANNUAL TOTAL RETURN
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
----------- -------
2002................................................................... -12.90%
|
During the period shown in the bar chart, the highest quarterly return was 5.58% (quarter ended December 31, 2002) and the lowest quarterly return was -14.15% (quarter ended September 30, 2002).
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 December 31, SINCE INCEPTION
2002) 1 YEAR INCEPTION DATE
--------------------------------------------------------------------------------
Class A 12/31/01
Return Before Taxes (17.67)% (17.76)%
Return After Taxes on Distributions (17.67) (17.76)
Return After Taxes on Distributions
and Sale of Fund Shares (10.85) (10.85)
Class B 12/31/02
Return Before Taxes (17.73) (17.73)
Class C 12/31/01
Return Before Taxes (14.36) (14.36)
--------------------------------------------------------------------------------
S&P 500 Index(1) (22.09) (22.09)(2) 12/31/01(2)
(reflects no deduction for fees,
expenses, or taxes)
--------------------------------------------------------------------------------
|
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 Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
(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 0.75% 0.75% 0.75% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 Other Expenses 3.16 3.16 3.16 Total Annual Fund Operating Expenses(4) 4.26 4.91 4.91 -------------------------------------------------------------------------------- |
(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 retirement plan participant and you bought $1,000,000 or more of Class A shares, you may pay a 1.00% CDSC if a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(3) There is no guarantee that actual expenses will be the same as those shown in the table.
(4) The investment advisor has 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 for Class A shares to 1.75% (e.g. if AIM waives 2.51% of Class A expenses, AIM will also waive 2.51% of Class B and Class C expenses). Total Annual Operating Expenses for Class A, Class B and Class C net of the above agreement are 1.75%, 2.40% and 2.40%, respectively. This agreement may be terminated at any time.
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
--------------------------------------------------------------------------------
Class A $954 $1,771 $2,600 $4,728
Class B 991 1,775 2,661 4,807
Class C 591 1,475 2,461 4,932
--------------------------------------------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class A $954 $1,771 $2,600 $4,728
Class B 491 1,475 2,461 4,807
Class C 491 1,475 2,461 4,932
--------------------------------------------------------------------------------
|
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 190 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2002, the advisor received no compensation from the average daily net assets.
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
- Meggan M. Walsh (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1991.
- J. Philip Ferguson, Senior Investment Officer, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2000. From 1986 to 2000, he was Managing Partner of Beutel, Goodman Capital Management.
They are assisted by the Balanced Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
SALES CHARGES
Purchases of Class A shares of AIM Large Cap Core Equity 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. 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.
FINANCIAL HIGHLIGHTS
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 for fiscal period ended 2002 has been audited by Ernst & Young 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
-----------------
DECEMBER 31, 2001
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2002
-------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a)
-------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.27)
===============================================================================
Total from investment operations (1.30)
===============================================================================
Net asset value, end of period $ 8.70
_______________________________________________________________________________
===============================================================================
Total return(b) (13.00)%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 7,834
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average net assets:
With fee waivers 1.75%(c)
-------------------------------------------------------------------------------
Without fee waivers 4.26%(c)
===============================================================================
Ratio of net investment income (loss) to average net assets (0.34)%(c)
_______________________________________________________________________________
===============================================================================
Portfolio turnover rate 42%
_______________________________________________________________________________
===============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting principles, 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 $3,217,599.
FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
-----------------
DECEMBER 31, 2001
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2002
-------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08)(a)
-------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.27)
===============================================================================
Total from investment operations (1.35)
===============================================================================
Net asset value, end of period $ 8.65
_______________________________________________________________________________
===============================================================================
Total return(b) (13.50)%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 7,100
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average net assets:
With fee waivers 2.40%(c)
-------------------------------------------------------------------------------
Without fee waivers 4.91%(c)
===============================================================================
Ratio of net investment income (loss) to average net assets (0.99)%(c)
_______________________________________________________________________________
===============================================================================
Portfolio turnover rate 42%
_______________________________________________________________________________
===============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting principles, 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 $3,090,223.
CLASS C
-----------------
DECEMBER 31, 2001
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2002
-------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08)(a)
-------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.27)
===============================================================================
Total from investment operations (1.35)
===============================================================================
Net asset value, end of period $ 8.65
_______________________________________________________________________________
===============================================================================
Total return(b) (13.50)%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,116
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average net assets:
With fee waivers 2.40%(c)
-------------------------------------------------------------------------------
Without fee waivers 4.91%(c)
===============================================================================
Ratio of net investment income (loss) to average net assets (0.99)%(c)
_______________________________________________________________________________
===============================================================================
Portfolio turnover rate 42%
_______________________________________________________________________________
===============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting principles, 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 $750,568.
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 - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge charge
- Reduced or waived - No contingent - Contingent - Contingent - Generally, no
initial sales deferred sales deferred sales deferred sales contingent
charge for certain charge charge on charge on deferred sales
purchases(2,3) redemptions within redemptions within charge(2)
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 - Converts to Class - Does not convert - Does not convert
to Class A shares A shares at the to Class A shares to Class A shares
end of 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 the
long-term short-term less than $250,000 short-term following types of
investors investors investors retirement plans:
(i) all section
401 and 457 plans,
(ii) section 403
plans sponsored by
section 501(c)(3)
organizations, and
(iii) IRA
rollovers from
such plans if an
AIM Fund was
offered
------------------------------------------------------------------------------------------------------------
|
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 were 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.
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.
MCF--03/03
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
---------------------------------------------------------------
|
(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
------------------------------------------------------------
|
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
------------------------------------------------------------
|
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.
Some retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor paid a concession to the dealer of record in connection with a Large Purchase of Class A shares by a retirement plan, the Class A shares may be subject to a 1% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the 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 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 PURCHASE MADE CLASS B CLASS 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 12 months from the date of the retirement plan's
initial 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
MCF--03/03
shares on which there is no CDSC first and, then, shares in the order of purchase.
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 plans, 401(k) $ 0 ($25 per AIM Fund investment for $25
plans, Simplified Employee Pension (SEP) accounts, Salary salary deferrals from Savings
Reduction (SARSEP) accounts, Savings Incentive Match Plans 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
-------------------------------------------------------------------------------------------------------------------------
|
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.
MCF--03/03
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
-------------------------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application and Mail your check and the remittance slip
check to the transfer agent, A I M Fund from your confirmation statement to the
Services, Inc., P.O. Box 4739, Houston, transfer agent.
TX 77210-4739.
By Wire Mail completed account application to Call the transfer agent to receive a
the transfer agent. Call the transfer reference number. Then, use the wire
agent at (800) 959-4246 to receive a instructions at left.
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 Telephone Open your account using one of the Select the AIM Bank Connection(SM)
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.
Call the AIM 24-hour Automated Investor
Line. You may place your order after
you have provided the bank instructions
that will be requested.
By Internet Open your account using one of the Access your account at
methods described above. www.aiminvestments.com. The proper bank
instructions must have been provided on
your account. You may not purchase
shares in AIM prototype retirement
accounts on the internet.
-------------------------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
SYSTEMATIC PURCHASE 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 Systematic Purchase 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:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; and (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
MCF--03/03
(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
PURCHASED AFTER AN EXCHANGE CDSC APPLICABLE UPON
--------- ----------------- REDEMPTION OF SHARES
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category III - No CDSC
Fund(1) Fund(1)
- Class A shares of 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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category I or - 1% if shares are redeemed
Fund II Fund within 18 months of initial
purchase of Category III Fund
shares
- Class A shares of Category III - Class A shares of Category III - 0.25% if shares are redeemed
Fund Fund(1) within 12 months of initial
- Class A shares of AIM Tax-Exempt purchase of Category III Fund
Cash 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.
MCF--03/03
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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
I or II Fund or II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(2) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
III Fund(1) or II Fund within 18 months of initial
purchase of Category III Fund
shares
|
SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category III - No CDSC
III Fund(1) Fund(2)
- Class A shares of 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 Consultant Contact your financial 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 or our AIM 24-hour
Automated Investor Line. 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.
By Internet Place your redemption request at
www.aiminvestments.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 already
provided proper bank information. 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.
|
MCF--03/03
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 REDEMPTIONS
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
Redemption 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.
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.
MCF--03/03
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
(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
MCF--03/03
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 you do not hold physical share certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
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
MCF--03/03
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 may 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--03/03
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.aiminvestments.com
--------------------------------------------------------
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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.
AIMinvestments.com LCC-PRO-1
AIM LARGE CAP GROWTH FUND
March 3, 2003
Prospectus
AIM Large Cap Growth Fund seeks to provide long-term
growth of capital.
This prospectus contains important information about the Class A, B, C and R 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Registered Trademark-- --Servicemark-- |
-------------------------
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INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 ------------------------------------------------------ The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 ------------------------------------------------------ Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 ------------------------------------------------------ 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-9 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, AIM Investments, AIM Investments 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, normally, at least 80% of its assets in securities of large-capitalization companies. In complying with this 80% investment requirement, the fund will invest primarily in marketable equity securities, including convertible securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. The fund considers a company to be a large-capitalization company if it has a market capitalization, at the time of purchase, no smaller than the smallest capitalized company included in the Russell 1000--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 1000 Index is a widely recognized, unmanaged index of common stocks that measures the performance of the 1,000 largest companies in the Russell 3000--Registered Trademark-- Index, which measures the performance of the 3,000 largest U.S. companies based on total market capitalization. Under normal conditions, the top 10 holdings may comprise at least a third of the portfolio's net assets. The fund may also invest up to 25% of its total assets in foreign securities. For cash or 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 fund's portfolio managers may focus on securities of companies with market capitalizations that are within the top 50% of stocks in the Russell 1000 Index at the time of purchase. The portfolio managers purchase securities of a limited number of large-cap companies that they believe have the potential for above-average growth in revenues and earnings. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential.
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.
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. Also, since a large percentage of the fund's assets will be invested in a limited number of securities, any change in value of those securities could significantly affect the value of your investment in the fund.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
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 returns. 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 in 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 changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2000................................................................... 8.52%
2001................................................................... -36.13%
2002................................................................... -26.46%
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During the periods shown in the bar chart, the highest quarterly return was 26.64% (quarter ended March 31, 2000) and the lowest quarterly return was -34.26% (quarter ended March 31, 2001).
PERFORMANCE TABLE(1)
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, 2002) 1 YEAR INCEPTION DATE
--------------------------------------------------------------------------------
Class A 03/01/99
Return Before Taxes (30.51)% (9.85)%
Return After Taxes on Distributions (30.51) (9.85)
Return After Taxes on Distributions
and Sale of Fund Shares (18.73) (7.64)
Class B 04/05/99
Return Before Taxes (30.51) (12.52)
Class C 04/05/99
Return Before Taxes (27.56) (11.77)
Class R(4) 03/01/99(4)
Return Before Taxes (26.40) (8.59)
--------------------------------------------------------------------------------
Russell 1000--Registered Trademark--
Index(2) (reflects no deduction for
(fees, expenses, or taxes) (21.65) (6.83)(3) 02/28/99(3)
--------------------------------------------------------------------------------
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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, C and R will vary.
(1) A significant portion of the fund's returns during certain periods prior to 2001 was attributable to its investments in IPOs. These investments had a magnified impact when the fund's asset base was relatively small. 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. For additional information regarding the impact of IPO investments on the fund's performance, please see the "Financial Highlights" section of this prospectus.
(2) The Russell 1000--Registered Trademark-- Index is a widely recognized,
unmanaged index of common stocks that measures the performance of the 1,000
largest companies in the Russell 3000--Registered Trademark-- Index, which
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization.
(3) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
(4) The returns shown for these periods are the blended returns of the historical performance of the fund's Class R shares since their inception and the restated historical performance of the fund's 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. The inception date shown in the table is that of the fund's Class A shares. The inception date of the fund's Class R shares is June 3, 2002.
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 CLASS R ------------------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None 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% None(3) ------------------------------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(4) -------------------------------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C CLASS R -------------------------------------------------------------------------------- Management Fees 0.75% 0.75% 0.75% 0.75% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 0.50 Other Expenses(5) 0.60 0.60 0.60 0.60 Total Annual Fund Operating Expenses 1.70 2.35 2.35 1.85 -------------------------------------------------------------------------------- |
(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 retirement plan participant and you bought $1,000,000 or more of Class A shares, you may pay a 1.00% CDSC if a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(3) If you are a retirement plan participant, you may pay a 0.75% CDSC if the distributor paid a concession to the dealer of record and a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(4) There is no guarantee that actual expenses will be the same as those shown in the table.
(5) Other expenses for Class R shares are based on estimated average net assets for the current fiscal year.
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
--------------------------------------------------------------------------------
Class A $713 $1,056 $1,422 $2,448
Class B 738 1,033 1,455 2,524
Class C 338 733 1,255 2,686
Class R 188 582 1,001 2,169
--------------------------------------------------------------------------------
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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 $713 $1,056 $1,422 $2,448
Class B 238 733 1,255 2,524
Class C 238 733 1,255 2,686
Class R 188 582 1,001 2,169
--------------------------------------------------------------------------------
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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 190 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2002, the advisor received compensation of 0.75% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team (co-managers) who are primarily responsible for the management of the fund's portfolio are
- Geoffrey V. Keeling, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1995.
- Robert L. Shoss, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1995.
They are assisted by the Large Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
SALES CHARGES
Purchases of Class A shares of AIM Large Cap 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. Certain purchases of Class R shares may be subject to the contingent deferred sales charge 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 for the fiscal period ended 2002 and for the fiscal years 2002 and 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by other public accountants.
A significant portion of the fund's returns was attributable to its investments in IPOs during certain fiscal years prior to 2001, including the fiscal year ended October 31, 2000, which had a magnified impact on the fund due to its relatively small asset base during those periods. 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.
CLASS A
-------------------------------------------------------------------
MARCH 1, 1999
YEAR ENDED OCTOBER 31, (DATE OPERATIONS
------------------------------------------- COMMENCED) TO
2002 2001 2000 OCTOBER 31, 1999
--------- --------- --------- ----------------
Net asset value, beginning of period $ 8.82 $ 17.74 $ 11.29 $10.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)(a) (0.08)(a) (0.15)(a) (0.04)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.36) (8.84) 6.60 1.33
=================================================================================================================================
Total from investment operations (1.45) (8.92) 6.45 1.29
=================================================================================================================================
Net asset value, end of period $ 7.37 $ 8.82 $ 17.74 $11.29
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (16.44)% (50.28)% 57.13% 13.70%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $105,320 $138,269 $225,255 $7,785
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.70%(c) 1.57% 1.58% 1.53%(d)(e)
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (1.01)%(c) (0.72)% (0.82)% (0.59)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 111% 124% 113% 21%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
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(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting principles, 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 $133,355,229.
(d) Annualized.
(e) Including fee waiver. Ratio of expenses to average net assets prior to fee
waiver was 3.63%.
CLASS B
----------------------------------------------------------------------------
APRIL 5, 1999
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED) TO
--------------------------------------------------- OCTOBER 31,
2002 2001 2000 1999
--------- --------- --------- -------------
Net asset value, beginning of period $ 8.67 $ 17.54 $ 11.25 $11.02
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14)(a) (0.16)(a) (0.27)(a) (0.08)(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (1.33) (8.71) 6.56 0.31
=================================================================================================================================
Total from investment operations (1.47) (8.87) 6.29 0.23
=================================================================================================================================
Net asset value, end of period $ 7.20 $ 8.67 $ 17.54 $11.25
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (16.96)% (50.57)% 55.91% 2.09%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $104,040 $144,747 $210,224 $5,183
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.35%(c) 2.23%(c) 2.24% 2.23%(d)(e)
=================================================================================================================================
Ratio of net investment income (loss) to average
net assets (1.66)%(c) (1.39)% (1.48)% (1.29)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 111% 124% 113% 21%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
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(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting principles, 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 $132,010,588.
(d) Annualized.
(e) Including fee waiver. Ratio of expenses to average net assets prior to fee
waiver was 4.33%.
CLASS C
-------------------------------------------------------------------------
APRIL 5, 1999
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED) TO
------------------------------------------------ OCTOBER 31,
2002 2001 2000 1999
-------- -------- -------- -------------
Net asset value, beginning of period $ 8.67 $ 17.55 $ 11.25 $11.02
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14)(a) (0.16)(a) (0.27)(a) (0.08)(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (1.32) (8.72) 6.57 0.31
=================================================================================================================================
Total from investment operations (1.46) (8.88) 6.30 0.23
=================================================================================================================================
Net asset value, end of period $ 7.21 $ 8.67 $ 17.55 $11.25
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (16.84)% (50.60)% 56.00% 2.09%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $36,575 $57,865 $79,392 $ 901
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.35%(c) 2.23%(c) 2.24% 2.23%(d)(e)
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (1.66)%(c) (1.39)%(c) (1.48)% (1.29)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 111% 124% 113% 21%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
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(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting principles, 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 $50,768,768.
(d) Annualized.
(e) Including fee waiver. Ratio of expenses to average net assets prior to fee
waiver was 4.33%.
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
-------------
Net asset value, beginning of period $ 8.40
-----------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a)
-----------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.99)
=============================================================================
Total from investment operations (1.03)
=============================================================================
Net asset value, end of period $ 7.37
_____________________________________________________________________________
=============================================================================
Total return(b) (12.26)%
_____________________________________________________________________________
=============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 9
_____________________________________________________________________________
=============================================================================
Ratio of expenses to average net assets 1.85%(c)
=============================================================================
Ratio of net investment income (loss) to average net assets (1.16)%(c)
_____________________________________________________________________________
=============================================================================
Portfolio turnover rate 111%
_____________________________________________________________________________
=============================================================================
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(a)Calculated using average shares outstanding.
(b)Includes adjustments in accordance with general accepted accounting principles and is not annualized for periods less than one year.
(c)Ratios are based on average daily net assets of $8,971.
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 - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge charge
- Reduced or waived - No contingent - Contingent - Contingent - Generally, no
initial sales deferred sales deferred sales deferred sales contingent
charge for certain charge charge on charge on deferred sales
purchases(2,3) redemptions within redemptions within charge(2)
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 - Converts to Class - Does not convert - Does not convert
to Class A shares A shares at the to Class A shares to Class A shares
end of 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 the
long-term short-term less than $250,000 short-term following types of
investors investors investors retirement plans:
(i) all section
401 and 457 plans,
(ii) section 403
plans sponsored by
section 501(c)(3)
organizations, and
(iii) 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 were 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.
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.
MCF--03/03
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.
Some retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor paid a concession to the dealer of record in connection with a Large Purchase of Class A shares by a retirement plan, the Class A shares may be subject to a 1% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the 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 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 PURCHASE MADE CLASS B CLASS 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 12 months from the date of the retirement plan's
initial 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
MCF--03/03
shares on which there is no CDSC first and, then, shares in the order of purchase.
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 plans, 401(k) $ 0 ($25 per AIM Fund investment for $25
plans, Simplified Employee Pension (SEP) accounts, Salary salary deferrals from Savings
Reduction (SARSEP) accounts, Savings Incentive Match Plans 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
-------------------------------------------------------------------------------------------------------------------------
|
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.
MCF--03/03
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
-------------------------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application and Mail your check and the remittance slip
check to the transfer agent, A I M Fund from your confirmation statement to the
Services, Inc., P.O. Box 4739, Houston, transfer agent.
TX 77210-4739.
By Wire Mail completed account application to Call the transfer agent to receive a
the transfer agent. Call the transfer reference number. Then, use the wire
agent at (800) 959-4246 to receive a instructions at left.
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 Telephone Open your account using one of the Select the AIM Bank Connection(SM)
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.
Call the AIM 24-hour Automated Investor
Line. You may place your order after
you have provided the bank instructions
that will be requested.
By Internet Open your account using one of the Access your account at
methods described above. www.aiminvestments.com. The proper bank
instructions must have been provided on
your account. You may not purchase
shares in AIM prototype retirement
accounts on the internet.
-------------------------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
SYSTEMATIC PURCHASE 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 Systematic Purchase 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:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; and (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
MCF--03/03
(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
PURCHASED AFTER AN EXCHANGE CDSC APPLICABLE UPON
--------- ----------------- REDEMPTION OF SHARES
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category III - No CDSC
Fund(1) Fund(1)
- Class A shares of 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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category I or - 1% if shares are redeemed
Fund II Fund within 18 months of initial
purchase of Category III Fund
shares
- Class A shares of Category III - Class A shares of Category III - 0.25% if shares are redeemed
Fund Fund(1) within 12 months of initial
- Class A shares of AIM Tax-Exempt purchase of Category III Fund
Cash 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.
MCF--03/03
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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
I or II Fund or II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(2) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
III Fund(1) or II Fund within 18 months of initial
purchase of Category III Fund
shares
|
SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category III - No CDSC
III Fund(1) Fund(2)
- Class A shares of 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 Consultant Contact your financial 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 or our AIM 24-hour
Automated Investor Line. 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.
By Internet Place your redemption request at
www.aiminvestments.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 already
provided proper bank information. 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.
|
MCF--03/03
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 REDEMPTIONS
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
Redemption 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.
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.
MCF--03/03
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
(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
MCF--03/03
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 you do not hold physical share certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
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
MCF--03/03
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 may 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--03/03
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.aiminvestments.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.
AIMinvestments.com LCG-PRO-1
AIM MID CAP GROWTH FUND
March 3, 2003
Prospectus
AIM Mid Cap Growth Fund seeks to provide long-term
growth of capital.
This prospectus contains important information about the Class A, B, C and R 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Registered Trademark-- --Servicemark-- |
-----------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 ------------------------------------------------------ The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 ------------------------------------------------------ Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 ------------------------------------------------------ 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-9 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, AIM Investments, AIM Investments 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, normally, at least 80% of its assets in securities of mid-capitalization companies. In complying with this 80% investment requirement, the fund will invest primarily in marketable equity securities, including convertible securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. The fund considers a company to be a mid-capitalization company if it has a market capitalization, at the time of purchase, within the range of the largest and smallest capitalized companies 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--Registered Trademark-- Index, which measures the performance of the 3000 largest U.S. companies based on total market capitalization. These companies are considered representative of medium-sized companies. Under normal conditions, the top 10 holdings may comprise up to 40% of the fund's total assets. The fund may also invest up to 25% of its total assets in foreign securities. 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 focus on companies they believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have favorable prospects for future growth. The portfolio managers consider whether to sell a particular security when any of these factors materially changes.
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 smaller companies, whose prices may go up and down more than equity securities of larger, more established companies. Also, since equity securities of smaller 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 desirable price.
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.
Since a large percentage of the fund's assets will be invested in a limited number of securities, any change in value of those securities could significantly affect the value of your investment in the fund.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
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 returns. 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 in 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 changes the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
ANNUAL
YEARS ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2000................................................................... -10.12%
2001................................................................... -21.21%
2002................................................................... -31.86%
|
During the periods shown in the bar chart, the highest quarterly return was 28.02% (quarter ended March 31, 2000) and the lowest quarterly return was -30.93% (quarter ended September 30, 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, 2002) 1 YEAR INCEPTION DATE
--------------------------------------------------------------------------------
Class A 11/01/99
Return Before Taxes (35.63)% (13.73)%
Return After Taxes on Distributions (35.63) (13.73)
Return After Taxes on Distributions and
Sale of Fund Shares (21.88) (10.61)
Class B 11/01/99
Return Before Taxes (35.67) (13.65)
Class C 11/01/99
Return Before Taxes (32.97) (12.81)
Class R(3) 11/01/99(3)
Return Before Taxes (31.90) (12.29)
--------------------------------------------------------------------------------
S&P MidCap 400 Index(1) (14.51) 3.45(2) 10/31/99(2)
(reflects no deduction for fees,
expenses, or taxes)
--------------------------------------------------------------------------------
|
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, C and R will vary.
(1) The Standard & Poor's MidCap 400 Index is an unmanaged index of common
stocks that measures the performance of the mid-size company segment of the
U.S. market.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
(3) The returns shown for these periods are the blended returns of the historical performance of the fund's Class R shares since their inception and the restated historical performance of the fund's 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. The inception date shown in the table is that of the fund's Class A shares. The inception date of the fund's Class R shares is June 3, 2002.
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 CLASS R ------------------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None 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% None(2,3) ------------------------------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(4) -------------------------------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C CLASS R -------------------------------------------------------------------------------- Management Fees 0.80% 0.80% 0.80% 0.80% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 0.50 Other Expenses(5) 0.68 0.68 0.68 0.68 Total Annual Fund Operating Expenses 1.83 2.48 2.48 1.98 -------------------------------------------------------------------------------- |
(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 retirement plan participant and you bought $1,000,000 or more of Class A shares, you may pay a 1.00% CDSC if a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(3) If you are a retirement plan participant, you may pay a 0.75% CDSC if the distributor paid a concession to the dealer of record and a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(4) There is no guarantee that actual expenses will be the same as those shown in the table.
(5) Other expenses for Class R shares are based on estimated average net assets for the current fiscal year.
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
--------------------------------------------------------------------------------
Class A $726 $1,094 $1,486 $2,580
Class B 751 1,073 1,521 2,656
Class C 351 773 1,321 2,816
Class R 201 621 1,068 2,306
--------------------------------------------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class A $726 $1,094 $1,486 $2,580
Class B 251 773 1,321 2,656
Class C 251 773 1,321 2,816
Class R 201 621 1,068 2,306
--------------------------------------------------------------------------------
|
THE ADVISOR
A I M Advisors, Inc. serves as the fund's investment adviser 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 adviser since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 190 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2002, the advisor received compensation of 0.80% of average daily net assets.
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
- Jay K. Rushin (lead manager), Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst for Prudential Securities.
- Ryan E. Crane, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1994.
- Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1989.
- Kenneth A. Zschappel, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1990.
They are assisted by the Mid Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
Effective May 1, 2003, the fund will change to a co-managed fund. Also effective May 1, 2003, Ryan E. Crane, Robert M. Kippes and Kenneth A. Zschappel will be removed from, and the following portfolio manager will be added to, the members of the team who are primarily responsible for the management of the fund's portfolio:
- Karl Farmer, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1998. From 1992 to 1998, he worked as a pension actuary for William M. Mercer, Inc.
SALES CHARGES
Purchases of Class A shares of AIM Mid Cap 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. Certain purchases of Class R shares may be subject to the contingent deferred sales charge 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 for the fiscal period ended 2002 and for the fiscal years 2002 and 2001 has been audited by Ernst & Young, LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by other public accountants.
CLASS A
----------------------------------------------------
NOVEMBER 1, 1999
YEAR ENDED (DATE OPERATIONS
OCTOBER 31, COMMENCED) TO
------------------------- OCTOBER 31,
2002 2001 2000
------- ------- ----------------
Net asset value, beginning of period $ 8.58 $ 14.38 $ 10.00
--------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13)(a) (0.11)(a) (0.12)(a)
--------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.91) (5.69) 4.50
====================================================================================================================
Total from investment operations (2.04) (5.80) 4.38
====================================================================================================================
Net asset value, end of period $ 6.54 $ 8.58 $ 14.38
____________________________________________________________________________________________________________________
====================================================================================================================
Total return(b) (23.78)% (40.33)% 43.80%
____________________________________________________________________________________________________________________
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $63,463 $94,457 $114,913
____________________________________________________________________________________________________________________
====================================================================================================================
Ratio of expenses to average net assets 1.83%(c) 1.65% 1.63%(d)
====================================================================================================================
Ratio of net investment income (loss) to average net assets (1.49)%(c) (1.06)% (0.76)%(d)
____________________________________________________________________________________________________________________
====================================================================================================================
Portfolio turnover rate 185% 173% 183%
____________________________________________________________________________________________________________________
====================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles, 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 $96,466,301.
(d) Annualized.
CLASS B
--------------------------------------------
NOVEMBER 1, 1999
YEAR ENDED (DATE OPERATIONS
OCTOBER 31, COMMENCED) TO
--------------------- OCTOBER 31,
2002 2001 2000
------- ------- ----------------
Net asset value, beginning of period $ 8.45 $ 14.25 $ 10.00
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.18)(a) (0.18)(a) (0.22)(a)
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.87) (5.62) 4.47
============================================================================================================
Total from investment operations (2.05) (5.80) 4.25
============================================================================================================
Net asset value, end of period $ 6.40 $ 8.45 $ 14.25
____________________________________________________________________________________________________________
============================================================================================================
Total return(b) (24.26)% (40.70)% 42.50%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $58,654 $81,905 $103,893
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets 2.48%(c) 2.32% 2.32%(d)
============================================================================================================
Ratio of net investment income (loss) to average net assets (2.14)%(c) (1.73)% (1.45)%(d)
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 185% 173% 183%
____________________________________________________________________________________________________________
============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles, 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 $82,221,008.
(d) Annualized.
CLASS C
------------------------------------------------
NOVEMBER 1, 1999
YEAR ENDED (DATE SALES
OCTOBER 31, COMMENCED) TO
------------------------- OCTOBER 31,
2002 2001 2000
------- ------- ----------------
Net asset value, beginning of period $ 8.45 $ 14.26 $ 10.00
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.18)(a) (0.18)(a) (0.22)(a)
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.87) (5.63) 4.48
================================================================================================================
Total from investment operations (2.05) (5.81) 4.26
================================================================================================================
Net asset value, end of period $ 6.40 $ 8.45 $ 14.26
________________________________________________________________________________________________________________
================================================================================================================
Total return(b) (24.26)% (40.74)% 42.60%
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $16,404 $23,971 $29,969
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets 2.48%(c) 2.32% 2.32%(d)
================================================================================================================
Ratio of net investment income (loss) to average net assets (2.14)%(c) (1.73)% (1.45)%(d)
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate 185% 173% 183%
________________________________________________________________________________________________________________
================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles, 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 $23,835,757.
(d) Annualized.
CLASS R
-------------------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
-------------------------
Net asset value, beginning of period $ 8.73
-----------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a)
-----------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.14)
=========================================================================================
Total from investment operations (2.19)
=========================================================================================
Net asset value, end of period $ 6.54
_________________________________________________________________________________________
=========================================================================================
Total return(b) (25.09)%
_________________________________________________________________________________________
=========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 7
_________________________________________________________________________________________
=========================================================================================
Ratio of expenses to average net assets 1.98%(c)
=========================================================================================
Ratio of net investment income (loss) to average net assets (1.64)%(c)
_________________________________________________________________________________________
=========================================================================================
Portfolio turnover rate 185%
_________________________________________________________________________________________
=========================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $8,077.
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 - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge charge
- Reduced or waived - No contingent - Contingent - Contingent - Generally, no
initial sales deferred sales deferred sales deferred sales contingent
charge for certain charge charge on charge on deferred sales
purchases(2,3) redemptions within redemptions within charge(2)
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 - Converts to Class - Does not convert - Does not convert
to Class A shares A shares at the to Class A shares to Class A shares
end of 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 the
long-term short-term less than $250,000 short-term following types of
investors investors investors retirement plans:
(i) all section
401 and 457 plans,
(ii) section 403
plans sponsored by
section 501(c)(3)
organizations, and
(iii) IRA
rollovers from
such plans if an
AIM Fund was
offered
------------------------------------------------------------------------------------------------------------
|
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 were 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.
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.
MCF--03/03
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
---------------------------------------------------------------
|
(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
------------------------------------------------------------
|
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
------------------------------------------------------------
|
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.
Some retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor paid a concession to the dealer of record in connection with a Large Purchase of Class A shares by a retirement plan, the Class A shares may be subject to a 1% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the 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 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 PURCHASE MADE CLASS B CLASS 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 12 months from the date of the retirement plan's
initial 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
MCF--03/03
shares on which there is no CDSC first and, then, shares in the order of purchase.
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 plans, 401(k) $ 0 ($25 per AIM Fund investment for $25
plans, Simplified Employee Pension (SEP) accounts, Salary salary deferrals from Savings
Reduction (SARSEP) accounts, Savings Incentive Match Plans 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
-------------------------------------------------------------------------------------------------------------------------
|
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.
MCF--03/03
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
-------------------------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application and Mail your check and the remittance slip
check to the transfer agent, A I M Fund from your confirmation statement to the
Services, Inc., P.O. Box 4739, Houston, transfer agent.
TX 77210-4739.
By Wire Mail completed account application to Call the transfer agent to receive a
the transfer agent. Call the transfer reference number. Then, use the wire
agent at (800) 959-4246 to receive a instructions at left.
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 Telephone Open your account using one of the Select the AIM Bank Connection(SM)
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.
Call the AIM 24-hour Automated Investor
Line. You may place your order after
you have provided the bank instructions
that will be requested.
By Internet Open your account using one of the Access your account at
methods described above. www.aiminvestments.com. The proper bank
instructions must have been provided on
your account. You may not purchase
shares in AIM prototype retirement
accounts on the internet.
-------------------------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
SYSTEMATIC PURCHASE 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 Systematic Purchase 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:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; and (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
MCF--03/03
(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
PURCHASED AFTER AN EXCHANGE CDSC APPLICABLE UPON
--------- ----------------- REDEMPTION OF SHARES
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category III - No CDSC
Fund(1) Fund(1)
- Class A shares of 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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category I or - 1% if shares are redeemed
Fund II Fund within 18 months of initial
purchase of Category III Fund
shares
- Class A shares of Category III - Class A shares of Category III - 0.25% if shares are redeemed
Fund Fund(1) within 12 months of initial
- Class A shares of AIM Tax-Exempt purchase of Category III Fund
Cash 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.
MCF--03/03
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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
I or II Fund or II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(2) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
III Fund(1) or II Fund within 18 months of initial
purchase of Category III Fund
shares
|
SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category III - No CDSC
III Fund(1) Fund(2)
- Class A shares of 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 Consultant Contact your financial 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 or our AIM 24-hour
Automated Investor Line. 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.
By Internet Place your redemption request at
www.aiminvestments.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 already
provided proper bank information. 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.
|
MCF--03/03
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 REDEMPTIONS
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
Redemption 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.
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.
MCF--03/03
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
(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
MCF--03/03
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 you do not hold physical share certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
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
MCF--03/03
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 may 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--03/03
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.aiminvestments.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.
AIMinvestments.com MCG-PRO-1
AIM U.S. GROWTH FUND
March 3, 2003
Prospectus
AIM U.S. Growth Fund seeks to provide long-term growth
of capital.
This prospectus contains important information about the 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Registered Trademark-- --Servicemark-- |
--------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ FEE TABLE AND EXPENSE EXAMPLE 2 ------------------------------------------------------ Fee Table 2 Expense Example 2 FUND MANAGEMENT 3 ------------------------------------------------------ The Advisor 3 Advisor Compensation 3 Portfolio Managers 3 OTHER INFORMATION 3 ------------------------------------------------------ Sales Charges 3 Dividends and Distributions 3 FINANCIAL HIGHLIGHTS 4 ------------------------------------------------------ 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-9 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, AIM Investments, AIM Investments 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 this objective by investing, normally, at least 80%
of its assets in equity securities, including convertible securities, of
market-leading U.S. companies that have experienced above-average, long-term
growth in earnings, long-term earnings consistency and have excellent prospects
for future growth. In complying with the 80% investment requirement, the fund's
investments may include synthetic instruments. Synthetic instruments are
investments that have economic characteristics similar to the fund's direct
investments, and may include warrants, futures, options, exchange-traded funds
and American Depositary Receipts. The fund considers various factors when
determining whether a company is in the U.S., including whether (1) it is
organized under the laws of the U.S.; (2) it has a principal office in the U.S.;
(3) it derives 50% or more, alone or on a consolidated basis, of their total
revenues from business in the U.S.; or (4) its equity securities are traded
principally on a stock exchange or in an over-the-counter market in the U.S. The
portfolio managers consider whether to sell a particular security when it no
longer has favorable prospects for earnings or growth.
The fund will invest without regard to market capitalization. The fund may also invest up to 20% of its net assets in foreign securities. 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.
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.
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 smaller companies, whose prices may go up and down more than equity securities of larger, more- established companies. Also, since equity securities of smaller 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 desirable price.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
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 affect 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 in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
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 0.75% 0.75% 0.75% Distribution and/or Service (12b-1) Fees(4) 0.35 1.00 1.00 Other Expenses 9.24 9.24 9.24 Total Annual Fund Operating Expenses(5) 10.34 10.99 10.99 -------------------------------------------------------------------------------- |
(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 retirement plan participant and you bought $1,000,000 or more of Class A shares, you may pay a 1.00% CDSC if a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(3) There is no guarantee that actual expenses will be the same as those shown in the table.
(4) The distributor has agreed to waive 0.35%, 1.00% and 1.00% of Rule 12b-1 distribution plan fees on Class A, Class B and Class C, respectively.
(5) The investment advisor has 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 operating expenses of Class A shares to 1.75% (e.g. if AIM waives 8.24% of Class A expenses, AIM will also waive 8.24% of Class B and Class C expenses). Total Annual Fund Operating Expenses for Class A, Class B and Class C net of the above agreements are 1.75%, 1.75% and 1.75%, respectively. This agreement may be terminated at any time.
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:
ASSUMING REDEMPTION: 1 YEAR 3 YEARS --------------------------------------------------------------------------------- Class A $1,501 $3,253 Class B 1,566 3,311 Class C 1,166 3,011 --------------------------------------------------------------------------------- |
You would pay the following expenses if you did not redeem your shares:
ASSUMING NO REDEMPTION: 1 YEAR 3 YEARS ------------------------------------------------------------------------- Class A $1,501 $3,253 Class B 1,066 3,011 Class C 1,066 3,011 ------------------------------------------------------------------------- |
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. 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 190 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 0.75% of the first $1 billion of the average daily net assets, 0.70% over $1 billion to and including $2 billion of the average daily net assets and 0.65% of the average daily net assets over $2 billion.
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
- Kenneth A. Zschappel (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1990.
- Christian A. Costanzo, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1995.
- Robert Lloyd, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 2000. From 1997 to 2000, he was a trader with American Electric Power.
They are assisted by the Mid Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
SALES CHARGES
Purchases of Class A shares of AIM U.S. 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.
FINANCIAL HIGHLIGHTS
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 for the fiscal period ended 2002 has been audited by Ernst & Young, 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 30, 2002
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2002
----------------
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) (0.24)
================================================================================
Total from investment operations (0.24)
================================================================================
Net asset value, end of period $ 9.76
________________________________________________________________________________
================================================================================
Total return(a) (2.40)%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 391
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursement 1.76%(b)
--------------------------------------------------------------------------------
Without fee waivers and expense reimbursement 22.45%(b)
================================================================================
Ratio of net investment income (loss) to average net assets (0.22)%(b)
________________________________________________________________________________
================================================================================
Portfolio turnover rate 1%
________________________________________________________________________________
================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting principles, 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 $382,290.
FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
----------------
AUGUST 30, 2002
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2002
----------------
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) (0.24)
================================================================================
Total from investment operations (0.24)
================================================================================
Net asset value, end of period $ 9.76
________________________________________________________________________________
================================================================================
Total return(a) (2.40)%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 293
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursement 1.76%(b)
--------------------------------------------------------------------------------
Without fee waivers and expense reimbursement 23.10%(b)
================================================================================
Ratio of net investment income (loss) to average net assets (0.22)%(b)
________________________________________________________________________________
================================================================================
Portfolio turnover rate 1%
________________________________________________________________________________
================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting principles, 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 $286,720.
FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
----------------
AUGUST 30, 2002
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2002
----------------
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) (0.24)
================================================================================
Total from investment operations (0.24)
================================================================================
Net asset value, end of period $ 9.76
________________________________________________________________________________
================================================================================
Total return(a) (2.40)%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 293
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursement 1.76%(b)
--------------------------------------------------------------------------------
Without fee waivers and expense reimbursement 23.10%(b)
================================================================================
Ratio of net investment income (loss) to average net assets (0.22)%(b)
________________________________________________________________________________
================================================================================
Portfolio turnover rate 1%
________________________________________________________________________________
================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting principles, 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 $286,720.
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 - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge charge
- Reduced or waived - No contingent - Contingent - Contingent - Generally, no
initial sales deferred sales deferred sales deferred sales contingent
charge for certain charge charge on charge on deferred sales
purchases(2,3) redemptions within redemptions within charge(2)
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 - Converts to Class - Does not convert - Does not convert
to Class A shares A shares at the to Class A shares to Class A shares
end of 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 the
long-term short-term less than $250,000 short-term following types of
investors investors investors retirement plans:
(i) all section
401 and 457 plans,
(ii) section 403
plans sponsored by
section 501(c)(3)
organizations, and
(iii) IRA
rollovers from
such plans if an
AIM Fund was
offered
------------------------------------------------------------------------------------------------------------
|
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 were 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.
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.
MCF--03/03
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
---------------------------------------------------------------
|
(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
------------------------------------------------------------
|
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
------------------------------------------------------------
|
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.
Some retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor paid a concession to the dealer of record in connection with a Large Purchase of Class A shares by a retirement plan, the Class A shares may be subject to a 1% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the 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 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 PURCHASE MADE CLASS B CLASS 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 12 months from the date of the retirement plan's
initial 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
MCF--03/03
shares on which there is no CDSC first and, then, shares in the order of purchase.
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 plans, 401(k) $ 0 ($25 per AIM Fund investment for $25
plans, Simplified Employee Pension (SEP) accounts, Salary salary deferrals from Savings
Reduction (SARSEP) accounts, Savings Incentive Match Plans 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
-------------------------------------------------------------------------------------------------------------------------
|
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.
MCF--03/03
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
-------------------------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application and Mail your check and the remittance slip
check to the transfer agent, A I M Fund from your confirmation statement to the
Services, Inc., P.O. Box 4739, Houston, transfer agent.
TX 77210-4739.
By Wire Mail completed account application to Call the transfer agent to receive a
the transfer agent. Call the transfer reference number. Then, use the wire
agent at (800) 959-4246 to receive a instructions at left.
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 Telephone Open your account using one of the Select the AIM Bank Connection(SM)
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.
Call the AIM 24-hour Automated Investor
Line. You may place your order after
you have provided the bank instructions
that will be requested.
By Internet Open your account using one of the Access your account at
methods described above. www.aiminvestments.com. The proper bank
instructions must have been provided on
your account. You may not purchase
shares in AIM prototype retirement
accounts on the internet.
-------------------------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
SYSTEMATIC PURCHASE 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 Systematic Purchase 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:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; and (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
MCF--03/03
(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
PURCHASED AFTER AN EXCHANGE CDSC APPLICABLE UPON
--------- ----------------- REDEMPTION OF SHARES
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category III - No CDSC
Fund(1) Fund(1)
- Class A shares of 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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category I or - 1% if shares are redeemed
Fund II Fund within 18 months of initial
purchase of Category III Fund
shares
- Class A shares of Category III - Class A shares of Category III - 0.25% if shares are redeemed
Fund Fund(1) within 12 months of initial
- Class A shares of AIM Tax-Exempt purchase of Category III Fund
Cash 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.
MCF--03/03
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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
I or II Fund or II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(2) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
III Fund(1) or II Fund within 18 months of initial
purchase of Category III Fund
shares
|
SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category III - No CDSC
III Fund(1) Fund(2)
- Class A shares of 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 Consultant Contact your financial 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 or our AIM 24-hour
Automated Investor Line. 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.
By Internet Place your redemption request at
www.aiminvestments.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 already
provided proper bank information. 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.
|
MCF--03/03
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 REDEMPTIONS
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
Redemption 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.
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.
MCF--03/03
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
(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
MCF--03/03
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 you do not hold physical share certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
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
MCF--03/03
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 may 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--03/03
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.aiminvestments.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.
AIMinvestments.com USG-PRO-1
AIM WEINGARTEN FUND
March 3, 2003
Prospectus
AIM Weingarten Fund seeks to provide growth of capital.
This prospectus contains important information about the Class A, B, C and R 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Registered Trademark-- --Registered Trademark-- |
-------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 ------------------------------------------------------ Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 ------------------------------------------------------ The Advisors 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 ------------------------------------------------------ Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 ------------------------------------------------------ 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-9 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, AIM Investments, AIM Investments 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 to provide growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund will invest primarily in common stocks of seasoned and better-capitalized companies. The portfolio managers focus on companies that have experienced above-average growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of these factors materially changes. The fund may also invest up to 20% of its total assets in foreign securities. 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.
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.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
An investment in the fund is not a deposit in 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 changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1993................................................................... 1.53%
1994................................................................... -0.34%
1995................................................................... 34.76%
1996................................................................... 17.67%
1997................................................................... 25.96%
1998................................................................... 33.06%
1999................................................................... 34.90%
2000................................................................... -20.37%
2001................................................................... -34.10%
2002................................................................... -31.50%
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During the periods shown in the bar chart, the highest quarterly return was 28.03% (quarter ended December 31, 1998) and the lowest quarterly return was -27.65% (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, 2002) 1 YEAR 5 YEARS 10 YEARS INCEPTION(1) DATE
-------------------------------------------------------------------------------------
Class A 06/17/69
Return Before Taxes (35.29)% (9.43)% 2.11% --
Return After Taxes on
Distributions (35.29) (10.61) (0.25) --
Return After Taxes on
Distributions and
Sale of Fund
Shares (21.67) (6.27) 1.75 --
Class B 06/25/95
Return Before Taxes (35.39) (9.33) -- (0.03)%
Class C 08/04/97
Return Before Taxes (32.70) (9.07) -- (8.36)
Class R(3) 06/17/69(3)
Return Before Taxes (31.56) (8.56) 2.49 --
-------------------------------------------------------------------------------------
S&P 500(2) (22.09) (0.58) 9.34 --
(reflects no
deduction for
fees, expenses, or
taxes)
-------------------------------------------------------------------------------------
|
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, C and R will vary.
(1) Since Inception performance is only provided for a class with less than ten
calendar years of performance.
(2) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(3) The returns shown for these periods are the blended returns of the historical performance of the fund's Class R shares since their inception and the restated historical performance of the fund's 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. The inception date shown in the table is that of the fund's Class A shares. The inception date of the fund's Class R shares is June 3, 2002.
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 CLASS R -------------------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None 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% None(3) -------------------------------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(4) -------------------------------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C CLASS R -------------------------------------------------------------------------------- Management Fees 0.64% 0.64% 0.64% 0.64% Distribution and/or Service (12b-1) Fees 0.30 1.00 1.00 0.50 Other Expenses(5) 0.39 0.39 0.39 0.39 Total Annual Fund Operating Expenses(6) 1.33 2.03 2.03 1.53 -------------------------------------------------------------------------------- |
(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 retirement plan participant and you bought $1,000,000 or more of Class A shares, you may pay a 1.00% CDSC if a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(3) If you are a retirement plan participant, you may pay a 0.75% CDSC if the distributor paid a concession to the dealer of record and a total redemption of the retirement plan assets occurs within 12 months from the date of the retirement plan's initial purchase.
(4) There is no guarantee that actual expenses will be the same as those shown in the table.
(5) Other expenses for Class R shares are based on estimated average net assets for the current fiscal year.
(6) The investment advisor has agreed to waive a portion of the management fee on assets in excess of $5 billion. Termination of this agreement requires approval by the Board of Trustees.
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
--------------------------------------------------------------------------------
Class A $678 $948 $1,239 $2,063
Class B 706 937 1,293 2,179
Class C 306 637 1,093 2,358
Class R 156 483 834 1,824
--------------------------------------------------------------------------------
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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 $678 $948 $1,239 $2,063
Class B 206 637 1,093 2,179
Class C 206 637 1,093 2,358
Class R 156 483 834 1,824
--------------------------------------------------------------------------------
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THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. A I M Capital Management, Inc. (the subadvisor), a wholly owned subsidiary of the advisor, is the fund's subadvisor and is responsible for its day-to-day management. Both the advisor and the subadvisor are located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisors supervise all aspects of the fund's operations and provide 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, and the subadvisor has acted as an investment advisor since 1986. Today, the advisor, together with its subsidiaries, advises or manages over 190 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2002, the advisor received compensation of 0.64% of average daily net assets.
PORTFOLIO MANAGERS
The advisors use 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
- Lanny H. Sachnowitz (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1987.
- Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1995.
They are assisted by the Large Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
Effective May 1, 2003, the following portfolio manager will be added to the members of the team who are primarily responsible for the management of the fund's portfolio:
- James G. Birdsall, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1997.
SALES CHARGES
Purchases of Class A shares of AIM Weingarten 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. Certain purchases of Class R shares may be subject to the contingent deferred sales charge 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 for the fiscal period ended 2002 and for the fiscal years 2002 and 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by other public accountants.
CLASS A
----------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.65 $ 28.16 $ 28.31 $ 21.72 $ 22.72
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a) (0.10) (0.14)(a) (0.10) 0.02
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) (3.11) (11.87) 3.18 8.16 2.38
=================================================================================================================================
Total from investment operations (3.18) (11.97) 3.04 8.06 2.40
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.01) --
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (3.54) (3.19) (1.46) (3.40)
=================================================================================================================================
Total distributions -- (3.54) (3.19) (1.47) (3.40)
=================================================================================================================================
Net asset value, end of period $ 9.47 $ 12.65 $ 28.16 $ 28.31 $ 21.72
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (25.14)% (47.38)% 10.61% 38.62% 12.34%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $2,104,660 $4,001,552 $8,948,781 $8,089,739 $6,094,178
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets:
With fee waivers 1.33%(c) 1.21% 1.03% 1.03% 1.04%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.33%(c) 1.22% 1.07% 1.08% 1.09%
=================================================================================================================================
Ratio of net investment income (loss)
to average net assets (0.64)%(c) (0.56)% (0.45)% (0.38)% 0.07%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 217% 240% 145% 124% 125%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
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(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles and does not include sales charges.
(c) Ratios are based on average daily net assets of $3,200,178,207.
CLASS B
------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.86 $ 26.82 $ 27.29 $ 21.12 $ 22.34
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)(a) (0.21) (0.36)(a) (0.30)(a) (0.15)(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (2.89) (11.21) 3.08 7.93 2.33
=================================================================================================================================
Total from investment operations (3.04) (11.42) 2.72 7.63 2.18
=================================================================================================================================
Less distributions from net realized gains -- (3.54) (3.19) (1.46) (3.40)
=================================================================================================================================
Net asset value, end of period $ 8.82 $ 11.86 $ 26.82 $ 27.29 $ 21.12
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (25.63)% (47.75)% 9.76% 37.59% 11.45%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $533,224 $922,476 $1,927,514 $1,291,456 $705,750
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.04%(c) 1.92% 1.78% 1.82% 1.83%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.04%(c) 1.93% 1.82% 1.87% 1.87%
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets (1.34)%(c) (1.27)% (1.20)% (1.17)% (0.72)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 217% 240% 145% 124% 125%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Includes adjustments in accordance with generally accepted accounting principles and does not include contingent deferred sales.
(c)Ratios are based on average daily net assets of $765,819,603.
CLASS C
------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.87 $ 26.85 $ 27.30 $ 21.14 $ 22.34
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)(a) (0.21) (0.36)(a) (0.30)(a) (0.15)(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (2.89) (11.23) 3.10 7.92 2.35
=================================================================================================================================
Total from investment operations (3.04) (11.44) 2.74 7.62 2.20
=================================================================================================================================
Less distributions from net realized gains -- (3.54) (3.19) (1.46) (3.40)
=================================================================================================================================
Net asset value, end of period $ 8.83 $ 11.87 $ 26.85 $ 27.30 $ 21.14
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (25.61)% (47.77)% 9.83% 37.50% 11.54%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $86,455 $150,604 $301,590 $105,420 $23,107
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.04%(c) 1.92% 1.78% 1.82% 1.83%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.04%(c) 1.93% 1.82% 1.87% 1.87%
=================================================================================================================================
Ratio of net investment income (loss) to average
net assets (1.34)%(c) (1.27)% (1.20)% (1.17)% (0.72)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 217% 240% 145% 124% 125%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Includes adjustments in accordance with generally accepted accounting principles and does not include contingent deferred sales charges.
(c)Ratios are based on average daily net assets of $123,498,266.
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------
Net asset value, beginning of period $ 11.36
---------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a)
---------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.86)
===========================================================================
Total from investment operations (1.89)
===========================================================================
Net asset value, end of period $ 9.47
___________________________________________________________________________
===========================================================================
Total return(b) (16.64)%
___________________________________________________________________________
===========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 76
___________________________________________________________________________
===========================================================================
Ratio of expenses to average net assets:
With fee waivers 1.53%(c)
---------------------------------------------------------------------------
Without fee waivers 1.53%(c)
===========================================================================
Ratio of net investment income (loss) to average net assets (0.84)%(c)
___________________________________________________________________________
===========================================================================
Portfolio turnover rate 217%
___________________________________________________________________________
===========================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $20,882.
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 - No initial sales - No initial sales - No initial sales - No initial sales
charge charge charge charge charge
- Reduced or waived - No contingent - Contingent - Contingent - Generally, no
initial sales deferred sales deferred sales deferred sales contingent
charge for certain charge charge on charge on deferred sales
purchases(2,3) redemptions within redemptions within charge(2)
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 - Converts to Class - Does not convert - Does not convert
to Class A shares A shares at the to Class A shares to Class A shares
end of 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 the
long-term short-term less than $250,000 short-term following types of
investors investors investors retirement plans:
(i) all section
401 and 457 plans,
(ii) section 403
plans sponsored by
section 501(c)(3)
organizations, and
(iii) IRA
rollovers from
such plans if an
AIM Fund was
offered
------------------------------------------------------------------------------------------------------------
|
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 were 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.
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.
MCF--03/03
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
---------------------------------------------------------------
|
(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
------------------------------------------------------------
|
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
------------------------------------------------------------
|
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.
Some retirement plans can purchase Class A shares at their net asset value per share. Effective November 1, 2002, if the distributor paid a concession to the dealer of record in connection with a Large Purchase of Class A shares by a retirement plan, the Class A shares may be subject to a 1% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the 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 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 PURCHASE MADE CLASS B CLASS 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 12 months from the date of the retirement plan's
initial 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
MCF--03/03
shares on which there is no CDSC first and, then, shares in the order of purchase.
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 plans, 401(k) $ 0 ($25 per AIM Fund investment for $25
plans, Simplified Employee Pension (SEP) accounts, Salary salary deferrals from Savings
Reduction (SARSEP) accounts, Savings Incentive Match Plans 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
-------------------------------------------------------------------------------------------------------------------------
|
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.
MCF--03/03
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
-------------------------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application and Mail your check and the remittance slip
check to the transfer agent, A I M Fund from your confirmation statement to the
Services, Inc., P.O. Box 4739, Houston, transfer agent.
TX 77210-4739.
By Wire Mail completed account application to Call the transfer agent to receive a
the transfer agent. Call the transfer reference number. Then, use the wire
agent at (800) 959-4246 to receive a instructions at left.
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 Telephone Open your account using one of the Select the AIM Bank Connection(SM)
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.
Call the AIM 24-hour Automated Investor
Line. You may place your order after
you have provided the bank instructions
that will be requested.
By Internet Open your account using one of the Access your account at
methods described above. www.aiminvestments.com. The proper bank
instructions must have been provided on
your account. You may not purchase
shares in AIM prototype retirement
accounts on the internet.
-------------------------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
SYSTEMATIC PURCHASE 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 Systematic Purchase 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:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; and (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
MCF--03/03
(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
PURCHASED AFTER AN EXCHANGE CDSC APPLICABLE UPON
--------- ----------------- REDEMPTION OF SHARES
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category III - No CDSC
Fund(1) Fund(1)
- Class A shares of 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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category I - Class A shares of Category I or - 1% if shares are redeemed
or II Fund II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(1) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category III - Class A shares of Category I or - 1% if shares are redeemed
Fund II Fund within 18 months of initial
purchase of Category III Fund
shares
- Class A shares of Category III - Class A shares of Category III - 0.25% if shares are redeemed
Fund Fund(1) within 12 months of initial
- Class A shares of AIM Tax-Exempt purchase of Category III Fund
Cash 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.
MCF--03/03
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 CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
I or II Fund or II Fund within 18 months of initial
- Class A shares of Category III purchase of Category I or II
Fund(2) Fund shares
- AIM Cash Reserve Shares of AIM
Money Market Fund
- Class A shares of Category - Class A shares of Category I - 1% if shares are redeemed
III Fund(1) or II Fund within 18 months of initial
purchase of Category III Fund
shares
|
SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- --------------------
- Class A shares of Category - Class A shares of Category III - No CDSC
III Fund(1) Fund(2)
- Class A shares of 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 Consultant Contact your financial 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 or our AIM 24-hour
Automated Investor Line. 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.
By Internet Place your redemption request at
www.aiminvestments.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 already
provided proper bank information. 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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MCF--03/03
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 REDEMPTIONS
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
Redemption 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.
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.
MCF--03/03
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
(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
MCF--03/03
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 you do not hold physical share certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
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
MCF--03/03
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 may 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--03/03
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.aiminvestments.com
--------------------------------------------------------
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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.
AIMinvestments.com WEI-PRO-1
STATEMENT OF
ADDITIONAL INFORMATION
AIM EQUITY FUNDS
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 OF EACH PORTFOLIO (EACH A "FUND," COLLECTIVELY THE "FUNDS") OF AIM EQUITY FUNDS 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 MARCH 3, 2003, RELATES TO THE CLASS A, CLASS B AND CLASS C SHARES OF THE FOLLOWING PROSPECTUSES:
FUND DATED
---- -----
AIM BASIC VALUE II FUND MARCH 3, 2003
AIM CORE STRATEGIES FUND MARCH 3, 2003
AIM DENT DEMOGRAPHIC TRENDS FUND MARCH 3, 2003
AIM EMERGING GROWTH FUND MARCH 3, 2003
AIM LARGE CAP CORE EQUITY FUND MARCH 3, 2003
AIM U.S. GROWTH FUND MARCH 3, 2003
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THIS STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 3, 2003, RELATES TO THE CLASS A, CLASS B, CLASS C AND CLASS R SHARES OF THE FOLLOWING PROSPECTUSES:
FUND DATED
---- -----
AIM AGGRESSIVE GROWTH FUND MARCH 3, 2003
AIM BLUE CHIP FUND MARCH 3, 2003
AIM CAPITAL DEVELOPMENT FUND MARCH 3, 2003
AIM CHARTER FUND MARCH 3, 2003
AIM CONSTELLATION FUND MARCH 3, 2003
AIM LARGE CAP BASIC VALUE FUND MARCH 3, 2003
AIM LARGE CAP GROWTH FUND MARCH 3, 2003
AIM MID CAP GROWTH FUND MARCH 3, 2003
AIM WEINGARTEN FUND MARCH 3, 2003
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AIM EQUITY FUNDS
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..............................................................................8
Foreign Investments.............................................................................8
Debt Investments...............................................................................10
Other Investments..............................................................................11
Investment Techniques..........................................................................12
Derivatives....................................................................................16
Additional Securities or Investment Techniques.................................................22
Fund Policies...........................................................................................23
Temporary Defensive Positions...........................................................................25
MANAGEMENT OF THE TRUST..........................................................................................26
Board of Trustees.......................................................................................26
Management Information..................................................................................26
Trustee Ownership of Fund Shares...............................................................27
Factors Considered in Approving the Investment Advisory Agreement..............................27
Compensation............................................................................................28
Retirement Plan For Trustees...................................................................28
Deferred Compensation Agreements...............................................................28
Purchase of Class A Shares of the Funds at Net Asset Value.....................................29
Codes of Ethics.........................................................................................29
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES..............................................................29
INVESTMENT ADVISORY AND OTHER SERVICES...........................................................................29
Investment Advisor......................................................................................29
Investment Sub-Advisor..................................................................................31
Service Agreements......................................................................................32
Other Service Providers.................................................................................32
BROKERAGE ALLOCATION AND OTHER PRACTICES.........................................................................34
Brokerage Transactions..................................................................................34
Commissions.............................................................................................34
Brokerage Selection.....................................................................................34
Directed Brokerage (Research Services)..................................................................35
Regular Brokers or Dealers..............................................................................35
Allocation of Portfolio Transactions....................................................................35
Allocation of Initial Public Offering ("IPO") Transactions..............................................36
PURCHASE, REDEMPTION AND PRICING OF SHARES.......................................................................37
Purchase and Redemption of Shares.......................................................................37
Percent of Purchase.....................................................................................39
Offering Price..........................................................................................52
Redemption In Kind......................................................................................53
Backup Withholding......................................................................................54
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PAGE
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................55
Dividends and Distributions.............................................................................55
Tax Matters.............................................................................................55
DISTRIBUTION OF SECURITIES.......................................................................................62
Distribution Plans......................................................................................62
Distributor.............................................................................................64
CALCULATION OF PERFORMANCE DATA..................................................................................65
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 Equity Funds (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 fifteen separate portfolios: AIM Aggressive Growth Fund, AIM Basic Value II Fund (which is not currently offered to the public), AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Core Strategies Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Core Equity Fund, AIM Large Cap Growth Fund, AIM Mid Cap Growth Fund, AIM U.S. Growth Fund (which is not currently offered to the public), and AIM Weingarten Fund (each a "Fund" and collectively, the "Funds"). Under an 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 May 19, 1988 as a Maryland corporation. The Trust reorganized as a Delaware business trust on June 21, 2000. The following Funds were included in the reorganization: AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Growth Fund, AIM Mid Cap Growth Fund and AIM Weingarten Fund. All historical and other information contained in this Statement of Additional Information for periods prior to June 21, 2000 relating to the Funds (or a class thereof) is that of the predecessor funds (or the corresponding class thereof). AIM Basic Value II Fund, AIM U.S. Growth Fund, AIM Core Strategies Fund and AIM Large Cap Core Equity Fund commenced operations as series of the Trust.
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 Aggressive Growth Fund, AIM Blue Chip Fund, AIM
Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Large
Cap Basic Value Fund, AIM Large Cap Growth Fund, AIM Mid Cap Growth Fund and AIM
Weingarten Fund, offers three separate classes of shares: Class A shares, Class
B shares and Class C shares. AIM Large Cap Basic Value Fund, AIM Large Cap
Growth Fund and AIM Mid Cap Growth Fund offer four separate classes of shares:
Class A shares, Class B shares, Class C shares and Class R shares. AIM
Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM
Charter Fund, AIM Constellation Fund and AIM Weingarten Fund offer 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, if applicable, Class R
shares of the Funds. The Institutional Class shares of AIM Aggressive Growth
Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM
Constellation Fund and AIM Weingarten Fund are intended for use by certain
eligible institutional investors. Shares of the Institutional Class of AIM
Aggressive
Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund,
AIM Constellation Fund and AIM Weingarten 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), retirement plans,
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 sponsors with which A I M
Distributors, Inc. ("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.
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 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(R). 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.
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AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
------------------------------------------------------------------------------------------------------------------------------------
FUND AIM AIM AIM AIM AIM AIM AIM AIM AIM AIM
AGGRESSIVE BASIC BLUE CAPITAL CHARTER CONSTELLATION CORE DENT EMERGING LARGE
GROWTH VALUE CHIP DEVELOPMENT FUND FUND STRATEGIES DEMOGRAPHIC GROWTH CAP
SECURITY/ FUND II FUND FUND FUND TRENDS FUND BASIC
INVESTMENT FUND FUND VALUE
TECHNIQUE FUND
------------------------------------------------------------------------------------------------------------------------------------
EQUITY INVESTMENTS
------------------------------------------------------------------------------------------------------------------------------------
Common Stock X X X X X X X X X X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Preferred Stock X X X X X X X X X X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Convertible X X X X X X X X X X
Securities
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Alternative
Entity X X X X X X X X X X
Securities
------------------------------------------------------------------------------------------------------------------------------------
FOREIGN INVESTMENTS
------------------------------------------------------------------------------------------------------------------------------------
Foreign X X X X X X X X X X
Securities
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Foreign
Government X X X X X X X X X X
Obligations
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Foreign
Exchange X X X X X X X X X X
Transactions
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DEBT INVESTMENTS FOR EQUITY FUNDS
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U.S. Government
Obligations X X X X X X X X X X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Liquid Assets X X X X X X X X X X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Investment
Grade Corporate
Debt Obligations X X X X X X X X X X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Junk Bonds
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
|
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AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
--------------------------------------------------------------------------
FUND AIM AIM AIM AIM AIM
LARGE LARGE MID U.S. WEINGARTEN
CAP CAP CAP GROWTH FUND
SECURITY/ CORE GROWTH GROWTH FUND
INVESTMENT EQUITY FUND FUND
TECHNIQUE FUND
-------------------------------------------------------------------------
EQUITY INVESTMENTS
-------------------------------------------------------------------------
Common Stock X X X X X
----------------- ------- --------- -------- --------- -----------
Preferred Stock X X X X X
----------------- ------- --------- -------- --------- ----------
Convertible X X X X X
Securities
----------------- ------- --------- -------- --------- -----------
Alternative
Entity X X X X X
Securities
-------------------------------------------------------------------------
FOREIGN INVESTMENTS
-------------------------------------------------------------------------
Foreign X X X X X
Securities
----------------- ------- --------- -------- --------- -----------
Foreign
Government X X X X X
Obligations
----------------- ------- --------- -------- --------- -----------
Foreign
Exchange X X X X X
Transactions
-------------------------------------------------------------------------
DEBT INVESTMENTS FOR EQUITY FUNDS
-------------------------------------------------------------------------
U.S. Government
Obligations X X X X X
----------------- ------- --------- -------- --------- -----------
Liquid Assets X X X X X
----------------- ------- --------- -------- --------- -----------
Investment
Grade Corporate
Debt Obligations X X X X X
----------------- ------- --------- -------- --------- -----------
Junk Bonds
----------------- ------- --------- -------- --------- -----------
|
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AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
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FUND AIM AIM AIM AIM AIM AIM AIM AIM AIM AIM
AGGRESSIVE BASIC BLUE CAPITAL CHARTER CONSTELLATION CORE DENT EMERGING LARGE
GROWTH VALUE CHIP DEVELOPMENT FUND FUND STRATEGIES DEMOGRAPHIC GROWTH CAP
SECURITY/ FUND II FUND FUND FUND TRENDS FUND BASIC
INVESTMENT FUND FUND VALUE
TECHNIQUE FUND
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OTHER INVESTMENTS
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REITs X X X X X X X X X X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Other Investment
Companies X 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
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Delayed X X X X X X X X X X
Delivery
Transactions
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- ------
When-Issued X X X X X X X X X X
Securities
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- ------
Short Sales X X X X X X X X X X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- ------
Margin
Transactions
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- ------
Swap Agreements X X X X X X X X X X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- ------
Interfund Loans X X X X X X X X X X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- ------
Borrowing X X X X X X X X X X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- ------
Lending X X X X X X X X X X
Portfolio
Securities
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- ------
|
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AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
--------------------------------------------------------------------------
FUND AIM AIM AIM AIM AIM
LARGE LARGE MID U.S. WEINGARTEN
CAP CAP CAP GROWTH FUND
SECURITY/ CORE GROWTH GROWTH FUND
INVESTMENT EQUITY FUND FUND
TECHNIQUE FUND
--------------------------------------------------------------------------
OTHER INVESTMENTS
--------------------------------------------------------------------------
REITs X X X X X
----------------- ------- --------- -------- --------- ------------
Other Investment
Companies 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 X X X X X
Delivery
Transactions
----------------- ------- --------- -------- --------- ------------
When-Issued X X X X X
Securities
----------------- ------- --------- -------- --------- ------------
Short Sales X X X X X
----------------- ------- --------- -------- --------- ------------
Margin
Transactions
----------------- ------- --------- -------- --------- ------------
Swap Agreements X X X X X
----------------- ------- --------- -------- --------- ------------
Interfund Loans X X X X X
----------------- ------- --------- -------- --------- ------------
Borrowing X X X X X
----------------- ------- --------- -------- --------- ------------
Lending X X X X X
Portfolio
Securities
----------------- ------- --------- -------- --------- ------------
|
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AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
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FUND AIM AIM AIM AIM AIM AIM AIM AIM AIM AIM
AGGRESSIVE BASIC BLUE CAPITAL CHARTER CONSTELLATION CORE DENT EMERGING LARGE
GROWTH VALUE CHIP DEVELOPMENT FUND FUND STRATEGIES DEMOGRAPHIC GROWTH CAP
SECURITY/ FUND II FUND FUND FUND TRENDS FUND BASIC
INVESTMENT FUND FUND VALUE
TECHNIQUE FUND
-----------------------------------------------------------------------------------------------------------------------------------
Repurchase X X X X X X X X X X
Agreements
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- ------
Reverse X X X X X
Repurchase
Agreements
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- ------
Dollar Rolls X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- ------
Illiquid X X X X X X X X X X
Securities
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Rule 144A X X X X X X X X X X
Securities
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Unseasoned X X X X X
Issuers
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- ------
Sale of Money
Market
Securities
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Standby
Commitments
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DERIVATIVES
------------------------------------------------------------------------------------------------------------------------------------
Equity-Linked X X X X X X X X X X
Derivatives
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Put Options X X X X X X X X X X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Call Options X X X X X X X X X X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Straddles X X X X X X X X X X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Warrants X X X X X X X X X X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Futures
Contracts and X X X X X X X X X X
Options on
Futures
Contracts
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Forward
Currency X X X X X X X X X X
Contracts
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- -------
Cover X X X X X X X X X X
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|
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AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
--------------------------------------------------------------------------
FUND AIM AIM AIM AIM AIM
LARGE LARGE MID U.S. WEINGARTEN
CAP CAP CAP GROWTH FUND
SECURITY/ CORE GROWTH GROWTH FUND
INVESTMENT EQUITY FUND FUND
TECHNIQUE FUND
--------------------------------------------------------------------------
OTHER INVESTMENTS
--------------------------------------------------------------------------
Repurchase X X X X X
Agreements
----------------- ------- --------- -------- --------- ------------
Reverse X X
Repurchase
Agreements
----------------- ------- --------- -------- --------- ------------
Dollar Rolls
----------------- ------- --------- -------- --------- ------------
Illiquid X X X X X
Securities
----------------- ------- --------- -------- --------- ------------
Rule 144A X X X X X
Securities
----------------- ------- --------- -------- --------- ------------
Unseasoned X X X
Issuers
----------------- ------- --------- -------- --------- ------------
Sale of Money
Market
Securities
----------------- ------- --------- -------- --------- ------------
Standby
Commitments
--------------------------------------------------------------------------
DERIVATIVES
--------------------------------------------------------------------------
Equity-Linked X X X X X
Derivatives
----------------- ------- --------- -------- --------- ------------
Put Options X X X X X
----------------- ------- --------- -------- --------- ------------
Call Options X X X X X
----------------- ------- --------- -------- --------- ------------
Straddles X X X X X
----------------- ------- --------- -------- --------- ------------
Warrants X X X X X
----------------- ------- --------- -------- --------- ------------
Futures
Contracts and X X X X X
Options on
Futures
Contracts
----------------- ------- --------- -------- --------- ------------
Forward
Currency X X X X X
Contracts
----------------- ------- --------- -------- --------- ------------
Cover X X X X X
----------------- ------- --------- -------- --------- ------------
|
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AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
-----------------------------------------------------------------------------------------------------------------------------------
FUND AIM AIM AIM AIM AIM AIM AIM AIM AIM AIM
AGGRESSIVE BASIC BLUE CAPITAL CHARTER CONSTELLATION CORE DENT EMERGING LARGE
GROWTH VALUE CHIP DEVELOPMENT FUND FUND STRATEGIES DEMOGRAPHIC GROWTH CAP
SECURITY/ FUND II FUND FUND FUND TRENDS FUND BASIC
INVESTMENT FUND FUND VALUE
TECHNIQUE FUND
-----------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL SECURITIES OR INVESTMENT TECHNIQUES
-----------------------------------------------------------------------------------------------------------------------------------
Special X
Situations
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- ------
Privatizations X
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- ------
Commercial Bank X
Obligations
----------------- ------------ ------ -------- ------------- --------- -------------- ----------- -------------- ----------- ------
|
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AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
--------------------------------------------------------------------------
FUND AIM AIM AIM AIM AIM
LARGE LARGE MID U.S. WEINGARTEN
CAP CAP CAP GROWTH FUND
SECURITY/ CORE GROWTH GROWTH FUND
INVESTMENT EQUITY FUND FUND
TECHNIQUE FUND
--------------------------------------------------------------------------
ADDITIONAL SECURITIES OR INVESTMENT TECHNIQUES
--------------------------------------------------------------------------
Special
Situations
----------------- ------- --------- -------- --------- ------------
Privatizations
----------------- ------- --------- -------- --------- ------------
Commercial Bank
Obligations
----------------- ------- --------- -------- --------- ------------
|
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. AIM Blue Chip Fund does not intend to invest more than 10% of its total assets in convertible securities.
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 in foreign securities, except that each of AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund may invest up to 20% of its total assets in foreign securities, and AIM U.S. Growth Fund may invest up to 20% of its net assets 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.
Risks of Developing Countries. The Funds, except for AIM Dent Demographic Trends Fund, may each invest up to 5% and AIM Dent Demographic Trends Fund may invest up to 10% of their total assets in securities of companies located 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 Fund. 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 the 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 currency 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 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.
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).
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. AIM Blue Chip Fund will not invest in non-convertible corporate debt securities rated below investment grade by Standard and Poor's ratings Services ("S&P") and Moody's Investors Services ("Moody's") or in unrated non-convertible corporate debt securities believed by the Funds' Investment advisor to be below investment grade quality.
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 leverage technique except for AIM Constellation Fund.
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, a 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 a 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 may invest their cash balances in joint accounts with other AIM Funds 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.
AIM Charter Fund may enter into repurchase agreements (at any time up to 50% of its total net assets), using only U.S. Government securities, for the sole purpose of increasing its yield on idle cash.
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 using 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. A Fund may only write a call option on a security if it 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 subject to the call option. 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.
A Fund may write a put option without owning the underlying security if it covers the option as described in the section "Cover." A Fund may only write a put option on a security as part of an investment strategy and not for speculative purposes. 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 a 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. The Fund is not required to own the underlying security in order to purchase a call option, and may only cover the transaction with cash, liquid assets and/or short-term debt securities. 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 only 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 currently may not invest in any security (including futures contracts or options thereon) that is secured by physical commodities.
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. The Funds currently may not invest in any security (including futures contracts or options thereon) that is secured by physical commodities.
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, in addition to complying with all the restrictions noted in the disclosure above, 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.
Additional Securities or Investment Techniques
SPECIAL SITUATIONS. AIM Constellation Fund may invest in "special situations." A special situation arises when, in the opinion of the Fund's management, the securities of a particular company will, within a reasonably estimated period of time, be accorded market recognition at an appreciated value solely by reason of a development applicable to that company, and regardless of general business conditions or movements of the market as a whole. Developments creating special situations might include, among others: liquidations, reorganizations, recapitalizations, mergers, material litigation, technical breakthroughs, and new management or management policies. Although large and well-known companies may be involved, special situations more often involve comparatively small or unseasoned companies. Investments in unseasoned companies and special situations often involve much greater risk than in ordinary investment securities.
PRIVATIZATIONS. AIM Basic Value II Fund may invest in privatizations. The governments of some foreign countries have been engaged in programs of selling part or all of their stakes in government owned or controlled enterprises ("privatizations"). AIM believes that privatizations may offer opportunities for significant capital appreciation and intend to invest in privatizations in appropriate circumstances. In certain foreign countries, the ability of foreign entities to participate in privatizations may be limited by local law, or the terms on which a Fund may be permitted to participate may be less advantageous than those for local investors. There can be no assurance that foreign governments will continue to sell companies currently owned or controlled by them or that privatization programs will be successful.
COMMERCIAL BANK OBLIGATIONS. For the purpose of AIM Basic Value II Fund's investment policies with respect to bank obligations, obligations of foreign branches of U.S. banks and of foreign banks are obligations of the issuing bank and may be general obligations of the parent bank. Such obligations, however, may be limited by the terms of a specific obligation and by government regulation. As with investment in non-U.S. securities in general, investments in the obligations of foreign branches of U.S. banks and of foreign banks may subject the Fund to investment risks that are different in some
respects from those of investments in obligations of domestic issuers. Although the Fund typically will acquire obligations issued and supported by the credit of U.S. or foreign banks having total assets at the time of purchase of $1 billion or more, this $1 billion figure is not an investment policy or restriction of the Fund. For the purposes of calculation with respect to the $1 billion figure, the assets of a bank will be deemed to include the assets of its U.S. and non-U.S. branches.
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 Emerging Growth Fund is not subject to restriction (1). 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) 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.
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 AIM and certain Funds' sub-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 Emerging Growth Fund is not subject to restriction (1). 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. Other than AIM Constellation 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. AIM Constellation Fund may not purchase additional securities when any borrowings from an AIM Advised Fund are outstanding. Each other 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.
(6) Notwithstanding the fundamental restriction with regard to engaging in transactions involving futures contracts and options thereon or investing in securities that are secured by physical commodities,
the Fund currently may not invest in any security (including futures contracts or options thereon) that is secured by physical commodities.
ADDITIONAL NON-FUNDAMENTAL POLICIES. As non-fundamental policies:
(1) AIM Blue Chip Fund normally invests at least 80% of its assets in securities of blue chip 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.
(2) AIM Mid Cap Growth Fund normally invests at least 80% of its assets in securities of mid-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.
(3) AIM Large Cap Basic Value Fund normally invests at least 80% of its assets in securities of large-capitalization companies that offer potential for capital growth, and may offer potential for current income. 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.
(4) AIM Large Cap Growth Fund normally invests at least 80% of its assets in securities of large-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.
(5) AIM Large Cap Core Equity Fund normally invests at least 80% of its assets in equity securities, including convertible securities and warrants, of large-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.
(6) AIM U.S. Growth Fund normally invests at least 80% of its assets in core growth securities of market-leading U.S. 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) The amount AIM Constellation Fund may borrow will also be limited by the applicable margin limitations imposed by the Federal Reserve Board. If at any time the value of AIM Constellation Fund's assets should fail to meet the 300% asset coverage requirement, the Fund will, within three days, reduce its borrowings to the extent necessary. AIM Constellation Fund may be required to eliminate partially or totally its outstanding borrowings at times when it may not be desirable for it to do so. Any investment gains made by AIM Constellation Fund with the borrowed monies in excess of interest paid by the Fund will cause the net asset value of AIM Constellation Fund's shares to rise faster than would otherwise be the case. On the other hand, if the investment performance of the additional securities purchased with the proceeds of such borrowings fails to cover the interest paid on the money borrowed by AIM Constellation Fund, the net asset value of AIM Constellation Fund will decrease faster than would otherwise be the case. This speculative factor is known as "leveraging."
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.
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, their principal occupations during 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 Miss Ruth H. Quigley. The Audit Committee is responsible for: (1) the appointment, compensation and oversight of any independent auditors employed by each Fund (including resolution of disagreements between Fund management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; (ii) overseeing the financial reporting process of each Fund; (iii) monitoring the process and the resulting financial statements prepared by Fund management to promote accuracy of financial reporting and asset valuation; and (iv) pre-approving permissible non-audit services that are provided to each Fund by its independent auditors. During the fiscal year ended October 31, 2002, the Audit Committee held six 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 October 31, 2002, the Investments Committee held four 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 October
31, 2002, the Valuation Committee held one meeting.
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) nominating persons who are not interested persons of the
Fund for election or appointment: (a) as additions to the Board, (b) to fill
vacancies which, from time to time, may occur in the Board and (c) for election
by shareholders of the Fund at meetings called for the election of trustees;
(ii) nominating persons who are not interested persons of the Fund for selection
as, members of each committee of the Board, including without limitation, the
Audit Committee, the Committee on Directors/Trustees, the Investments Committee
and the Valuation Committee, and to nominate persons for selection as chair and
vice chair of each such committee; (iii) reviewing from time to time the
compensation payable to the independent trustees and making recommendations to
the Board regarding compensation; (iv) reviewing and evaluating from time to
time the functioning of the Board and the various committees of the Board; (v)
selecting independent legal counsel to the independent trustees and approving
the compensation paid to independent legal counsel; and (vi) approving the
compensation paid to independent counsel and other advisers, if any , to the
Audit Committee of the Fund. During the fiscal year ended October 31, 2002, the
Committee on Directors/Trustees held five 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 other than AIM Basic Value II Fund and AIM U.S. Growth Fund by the Trust's Board at a meeting held on May 14-15, 2002, and was initially approved for AIM Basic Value II Fund and AIM U.S. Growth Fund by the Trust's Board at a meeting held on June 11-12, 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 their 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, 2002 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, AIM Distributors, A I M Capital Management, Inc. (the "Sub-Advisor") and H.S. Dent Advisors, Inc. (the "Sub-Advisor") 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 190 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. The Master Investment Advisory Agreement provides that, in fulfilling its responsibilities, AIM may engage the services of other
investment managers with respect to one or more of the Funds. The investment advisory services of AIM and the investment sub-advisory services of the sub-advisor(s) to the Funds are not exclusive and AIM and the sub-advisor(s) are free to render investment advisory services to others, including other investment companies.
AIM is also responsible for furnishing to each Fund, at AIM's expense, the services of persons believes to be competent to perform all supervisory and administrative services required by each Fund, 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
--------- ---------- -----------
AIM Aggressive Growth Fund First $150 million 0.80%
Amount over $150 million 0.625%
AIM Blue Chip Fund* First $350 million 0.75%
Amount over $350 million 0.625%
AIM Capital Development Fund First $350 million 0.75%
Amount over $350 million 0.625%
AIM Charter Fund* First $30 million 1.00%
AIM Constellation Fund* Next $120 million 0.75%
Amount over $150 million 0.625%
AIM Basic Value II Fund First $1 billion 0.75%
AIM U.S. Growth Fund Next $1 billion 0.70%
Amount over $2 billion 0.65%
AIM Core Strategies Fund First $1 billion 0.75%
AIM Large Cap Core Equity Fund Next $1 billion 0.70%
Amount over $2 billion 0.625%
AIM Dent Demographic Trends Fund First $2 billion 0.85%
Amount over $2 billion 0.80%
|
FUND NAME NET ASSETS ANNUAL RATE
--------- ---------- -----------
AIM Emerging Growth Fund First $1 billion 0.85%
Amount over $1 billion 0.80%
AIM Large Cap Basic Value Fund First $1 billion 0.60%
Next $1 billion 0.575%
Amount over $2 billion 0.55%
AIM Large Cap Growth Fund First $1 billion 0.75%
Next $1 billion 0.70%
Amount over $2 billion 0.625%
AIM Mid Cap Growth Fund First $1 billion 0.80%
Amount over $1 billion 0.75%
AIM Weingarten Fund* First $30 million 1.00%
Next $320 million 0.75%
Amount over $350 million 0.625%
|
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 Aggressive Growth Fund, AIM Blue Chip Fund, AIM Charter Fund, AIM Constellation Fund and AIM Weingarten 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."
INVESTMENT SUB-ADVISOR
AIM has entered into a Master Sub-Advisory contract with A I M Capital Management, Inc. ("AIM Capital") to provide investment sub-advisory services to AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund. AIM Capital is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). AIM Capital is a wholly owned subsidiary of AIM.
For the services to be rendered by AIM Capital, under its Master Sub-Advisory Contract, AIM will pay to AIM Capital a fee which will be computed daily and paid as of the last day of each month on the basis of each Fund's daily net asset value, using for each daily calculation the most recently determined net asset value of the Fund. (See "Computation of Net Asset Value.") On an annual basis, the sub-advisory fee is equal to 0.50% of AIM's compensation of the sub-advised assets per year, for each of the AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund.
AIM has entered into a Master Sub-Advisory Agreement with H.S. Dent Advisors, Inc. ("Dent Advisors") to provide investment sub-advisory services to AIM Dent Demographic Trends Fund. Dent Advisors is registered as an investment advisor under the Advisers Act. The Fund is managed by investment managers who utilize Dent Advisors' research and analysis regarding economic and demographic trends.
For the services to be rendered by Dent Advisors under its Master Sub-Advisory Contract, the Advisor will pay to Dent Advisors a fee which will be computed daily and paid as of the last day of each month on the basis of the AIM Dent Demographic Trends Fund's daily net asset value, using for each daily calculation the most recently determined net asset value of the Fund. (See "Computation of Net Asset Value.") On an annual basis, the sub-advisory fee is equal to 0.13% of the first $1 billion of AIM Dent Demographic Trends Fund's average daily net assets, plus 0.10% of the Fund's average daily net assets in excess of $1 billion to and including $2 billion of the Fund's average daily net assets, plus 0.07% of the Fund's average daily net assets in excess of $2 billion.
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 October 31 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 October 31 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).
Primerica Shareholder Services, Inc. ("PSS"), 3120 Breckinridge Boulevard, Duluth, Georgia 30099-0001 has also entered into an agreement with the Trust (and certain other AIM Funds) and AFS pursuant to which PSS 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 Ernst & Young LLP, 1401 McKinney, Suite 1200, Houston, Texas 77010, 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
Each Sub-Advisor has adopted compliance procedures that cover, among other items, brokerage allocation and other trading practices. Unless specifically noted, each Sub-Advisor's procedures do not materially differ from AIM's procedures as set forth below.
BROKERAGE TRANSACTIONS
AIM and/or the Sub-Advisor 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 to the broker-dealer, including electronic communication networks.
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 October 31 are found in Appendix G.
COMMISSIONS
During the last three fiscal years ended October 31, 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, 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 October 31, 2002 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 October 31, 2002 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 40 basis point allocation (founded 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 Fund 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 Large Cap Growth Fund AIM Asia Pacific Growth Fund AIM Libra Fund AIM Basic Value Fund AIM Mid Cap Basic Value Fund AIM Blue Chip Fund AIM Mid Cap Core Equity Fund AIM Capital Development Fund AIM Mid Cap Growth Fund AIM Charter Fund AIM New Technology Fund AIM Constellation Fund AIM Opportunities I Fund AIM Dent Demographic Trends Fund AIM Opportunities II Fund AIM Emerging Growth Fund AIM Opportunities III Fund AIM European Growth Fund AIM Premier Equity Fund AIM European Small Company Fund AIM Premier Equity II Fund AIM Global Utilities Fund AIM Select Equity Fund AIM International Core Equity Fund AIM Small Cap Equity Fund AIM International Emerging Growth Fund AIM Small Cap Growth Fund AIM International Growth Fund AIM Weingarten Fund AIM Large Cap Basic Value Fund AIM Worldwide Spectrum Fund AIM Large Cap Core Equity Fund |
Dealer
Investor's Sales Charge Concession
--------------------------- -------------
As a As a As a
Percentage Percentage Percentage
of the Public of the Net of the 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 I Fund 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
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Dealer
Investor's Sales Charge Concession
----------------------- ----------
As a As a As a
Percentage Percentage Percentage
of the Public of the Net of the 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
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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 the 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
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Beginning on October 31, 2002, Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund were 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 a Category I, II or III Fund 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. If an investor makes a Large Purchase of Class A shares of a Category I or II Fund, however, each share issued will generally 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.
AIM Distributors may make the following payments to dealers of record for Large Purchases of Class A shares of Category I or II Funds by investors other than (i) retirement plans that are maintained pursuant to Sections 401 and 457 of the Internal Revenue Code of 1986, as amended (the Code), and (ii) retirement plans that are maintained pursuant to Section 403 of the Code if the employer or plan sponsor is a tax-exempt organization operated pursuant to Section 501(c)(3) of the Code:
PERCENT OF PURCHASE
1% of the first $2 million
plus 0.80% of the next $1 million
plus 0.50% of the next $17 million
plus 0.25% of amounts in excess of $20 million
If (i) the amount of any single purchase order plus (ii) the net asset value of all other shares owned by the same customer submitting the purchase order on the day on which the purchase order is received equals or exceeds $1,000,000, the purchase will be considered a "jumbo accumulation purchase." With regard to any individual jumbo accumulation purchase, AIM Distributors may make payment to the dealer of record based on the cumulative total of jumbo accumulation purchases made by the same customer over the life of his or her account(s).
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 31, 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 made a Large Purchase of Class A shares and a Category I or II Fund on and after November 15, 2001 and through October 31, 2002 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.
PURCHASES OF CLASS A SHARES BY CERTAIN RETIREMENT PLANS AT NAV. 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 ("NAV") to certain retirement plans provided that the applicable dealer of record is able to establish that the retirement plan's purchase of Class A shares is a new investment (as defined below):
PERCENT OF PURCHASE
0.50% of the first $20 million
plus 0.25% of amounts in excess of $20 million
This payment schedule will be applicable to purchases of Class A shares at NAV by the following types of retirement plans: (i) all plans maintained pursuant to Sections 401 and 457 of the Code, and (ii) plans maintained pursuant to Section 403 of the Code if the employer or plan sponsor is a tax-exempt organization operated pursuant to Section 501(c)(3) of the Code.
A "new investment" means a purchase paid for with money that does not represent (i) the proceeds of one or more redemptions of AIM Fund shares, (ii) an exchange of AIM Fund shares, or (iii) the repayment of one or more retirement plan loans that were funded through the redemption of AIM Fund shares. If AIM Distributors pays a dealer concession in connection with a plan's purchase of Class A shares at NAV, such shares may be subject to a CDSC of 1.00% of net assets for 12 months, commencing on the date the plan first invests in Class A shares of an AIM Fund. If the applicable dealer of record is unable to establish that a plan's purchase of Class A shares at NAV is a new investment, AIM Distributors will not pay a dealer concession in connection with such purchase and such shares will not be subject to a CDSC.
With regard to any individual jumbo accumulation purchase, AIM Distributors may make payment to the dealer of record based on the cumulative total of jumbo accumulation purchases made by the same plan over the life of the plan's account(s).
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; and
o a retirement plan established exclusively for the benefit of an individual, specifically including, but not limited to, a Traditional IRA, Roth IRA, SEP IRA, SIMPLE IRA, Solo 401(k), Keogh plan, or a tax-sheltered 403(b)(7) custodial account; and
o a qualified tuition plan account, maintained pursuant to Section 529 of the Code, or a Coverdell Education Savings Account, maintained pursuant to Section 530 of the Code (in either case, the account must be established by an individual or have an individual named as the beneficiary thereof).
EMPLOYER-SPONSORED RETIREMENT PLANS
o a retirement plan maintained pursuant to Section 401, 403 (only if the employer or plan sponsor is a tax-exempt organization operated pursuant to Section 501(c)(3) of the Code), 408 (includes SEP, SARSEP and SIMPLE IRA plans) or 457 of the Code, if:
a. the employer or plan sponsor submits all contributions for all participating employees in a single contribution transmittal (the AIM Funds will not accept separate contributions submitted with respect to individual participants);
b. each transmittal is accompanied by a single check or wire transfer; and
c. if the AIM Funds are expected to carry separate accounts in the names of each of the plan participants, (i) the employer or plan sponsor notifies AIM Distributors in writing that the separate accounts of all plan participants should be linked, and (ii) all new participant accounts are established by submitting an appropriate Account 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 fiduciary account.
OTHER GROUPS
o any organized group of persons, whether incorporated or not, purchasing AIM Fund shares through a single account, 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 Qualified 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 (i) indicating on the Account Application that he, she or it intends to provide a Letter of Intent ("LOI"), and (ii) subsequently 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, she or it 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 at 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, her or its 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 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(R), 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 DST Systems, Inc. or Personix, a division of Fiserv Solutions, Inc.;
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 Employer-sponsored retirement plans that are Qualified Purchasers, as defined above provided that:
a. a plan's initial investment is at least $1 million;
b. the employer or plan sponsor signs a $1 million LOI;
c. there are at least 100 employees eligible to participate in the plan; or
d. all plan transactions are executed through a single omnibus account per AIM Fund and the financial institution or service organization has entered into the appropriate agreement with the distributor; further provided that
e. retirement plans maintained pursuant to Section 403(b) of the Code are not eligible to purchase shares at NAV based on the aggregate investment made by the plan or the number of eligible employees unless the employer or plan sponsor is a tax-exempt organization operated pursuant to Section 501(c)(3) of the Code; and
f. purchases of AIM Opportunities I Fund by all retirement 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 retirement plans and rollover IRAs 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 CDSC 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 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 AIM 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 provided that the applicable dealer of record is able to establish that the purchase of Class R shares is a new investment or a rollover from a retirement plan in which an AIM Fund was offered as an investment option:
PERCENT OF CUMULATIVE PURCHASES
0.75% of the first $5 million
plus 0.50% of amounts in excess of $5 million
With regard to any individual purchase of Class R shares, AIM Distributors may make payment to the dealer of record based on the cumulative total of purchases made by the same plan over the life of the plan's account(s).
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 REDEMPTION PLAN. A Systematic Redemption Plan permits a shareholder of an AIM Fund to withdraw on a regular basis at least $50 per withdrawal. Under a Systematic Redemption 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 Redemption 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 Redemption 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 Redemption Plan is in effect.
Each AIM Fund bears its share of the cost of operating the Systematic Redemption 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 of shares held by retirement plans in cases where (i) the plan has remained invested in Class A shares of an AIM Fund for at least 12 months, or (ii) the redemption is not a complete redemption of shares held by the plan;
o Redemptions from private foundations or endowment funds;
o Redemptions 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 Redemption 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;
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; and
o Redemptions of Category I or II Funds by retirement plan participants resulting from a total redemption of the plan assets that occurs more than one year from the date of the plan's initial purchase.
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 Code) of the participant or
beneficiary;
o Amounts from a Systematic Redemption 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 AIM Fund when the account value falls below the minimum required account size of $500;
o Investment account(s) of AIM;
CDSCs will not apply to the following redemptions of Class C shares:
o A total or partial redemption of shares where the investor's dealer of record notified the distributor prior to the time of investment that the dealer would waive the upfront payment otherwise payable to him;
o A total or partial redemption which is necessary to fund a distribution
requested by a participant in a retirement plan maintained pursuant to
Section 401, 403, or 457 of the Code;
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 of shares held by retirement plans in cases where (i) the plan has remained invested in Class R shares of an AIM Fund for at least 12 months, or (ii) the redemption is not a complete redemption of all Class R shares held by the plan.
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 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 establishing a Personal Identification Number (PIN). By establishing a PIN, the investor acknowledges and agrees that neither AFS nor AIM Distributors will be liable for any loss, expense or cost arising out of any internet transaction effected by them in accordance with any instructions submitted by a user who transmits the PIN as authentication of his or her identity. 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 the ability to effect internet transactions 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 October 31, 2002, AIM Aggressive Growth Fund - Class A shares had a net asset value per share of $7.30. The offering price, assuming an initial sales charge of 5.50%, therefore was $7.72.
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 price, 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 a 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;
2. the IRS notifies the Fund that the investor furnished an incorrect TIN;
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);
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.
It is each 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.
Distributions paid by a fund, other than daily dividends, have 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 principles 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 qualifications 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, gain from options, futures or forward currency contracts) derived with respect to its business of investing in such stock, securities or currencies (the "Income Requirement"). Under certain circumstances, a Fund may be required to sell portfolio holdings to meet this 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. The Funds are permitted to invest in foreign equity securities and thus 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 a 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 on disposition.
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.
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. 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 of income, and capital gain dividends 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 Aggressive Growth Fund 0.25% 1.00% 1.00% 0.50% AIM Basic Value II Fund 0.35% 1.00% 1.00% N/A AIM Blue Chip Fund 0.35% 1.00% 1.00% 0.50% AIM Capital Development Fund 0.35% 1.00% 1.00% 0.50% AIM Charter Fund 0.30% 1.00% 1.00% 0.50% AIM Constellation Fund 0.30% 1.00% 1.00% 0.50% AIM Core Strategies Fund 0.35% 1.00% 1.00% N/A AIM Dent Demographic Trends Fund 0.35% 1.00% 1.00% N/A AIM Emerging Growth Fund 0.35% 1.00% 1.00% N/A AIM Large Cap Basic Value Fund 0.35% 1.00% 1.00% 0.50% AIM Large Cap Core Equity Fund 0.35% 1.00% 1.00% N/A AIM Large Cap Growth Fund 0.35% 1.00% 1.00% 0.50% AIM Mid Cap Growth Fund 0.35% 1.00% 1.00% 0.50% AIM U.S. Growth Fund 0.35% 1.00% 1.00% N/A AIM Weingarten Fund 0.30% 1.00% 1.00% 0.50% |
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 or 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 October 31, 2002 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 October 31, 2002.
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 other broker-dealers 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, Class C and Class R 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 CDSCs.
Total sales charges (front end and CDSCs) paid in connection with the sale of shares of each class of each Fund, if applicable, for the last three fiscal years ended October 31 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:
P(1+T)(n)=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; and
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, Class C and Class R, if applicable, shares, for the one, five and ten year periods (or since inception if less than ten years) ended October 31 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 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.
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:
P(1+U)(n)=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; and
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; and
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, Class C and Class R, if applicable, shares, for the one, five and ten year periods (or since inception if less than ten years) ended October 31 are found in Appendix L.
Calculation of Certain Performance Data
Funds offering Class R shares may use a restated or a blended performance calculation to derive certain performance data shown in this Statement of Additional Information and in each Fund's advertisements and other sales material. If the Fund's 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 Fund's Class A shares at net asset value, adjusted to reflect the higher Rule 12b-1 fees applicable to the Class R shares. If the Fund's 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 Fund's Class R shares since their inception and the restated historical performance of the Fund's 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 Fund's 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 Fund's Class R shares.
A restated or blended performance calculation may be used to derive (i) the Fund's standardized average annual total returns over one, five and ten years (or since inception if less than ten years) and (ii) the Fund's non-standardized cumulative total returns over a stated period.
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:
P(1+T)(n) = 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(D) = ending value of a hypothetical $1,000 payment
made at 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, Class C and Class R shares, for the one, five and ten year periods (or since inception if less than ten years) ended October 31 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:
P(1+T)(n) = 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(DR) = ending value of a hypothetical $1,000 payment made at
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 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 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 October 31 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 IPO market in some market cycles. Because of these Funds' small asset bases, any investment the Funds may make in IPOs may significantly affect these Funds' total returns. As the Funds' assets grow, the impact of IPO investments will decline, which may reduce the effect of IPO investments on 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 Mid-Cap Growth Fund Index Russell 3000(R) Growth Index Lipper Large Cap Value Fund Index Russell 3000(R) Index Russell 1000(R) Growth Index Russell MidCap Growth Index Russell 1000 Index [Russell Mid Cap Index] Russell 1000 Value Standard & Poor's 500 Stock Index Russell 2500(R) Index Standard & Poor's Mid Cap 400 Index Russell 2500(R) Growth 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.
From time to time, AIM Dent Demographic Trends Fund's sales literature and/or advertisements may quote (i) Harry S. Dent, Jr.'s theories on why the coming decade may offer unprecedented opportunities for investors, including his opinions on the stock market outlook and where growth may be strongest; (ii) Harry S. Dent, Jr.'s opinions and theories from his books and publications, including, but not limited to, Job Shock, The Great Boom Ahead and The Roaring 2000s, including his beliefs that (a) people's spending patterns may help predict the stock market, (b) the stock market has tended to perform best when a generation has reached its peak spending years from ages 45-50, and (c) as more and more baby boomers reach their peak spending age, they could propel stock prices up for the next decade; and (iii) Harry S. Dent, Jr.'s S-curve analysis, a forecasting tool used to analyze products that show remarkable growth.
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 1 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 January 1, 2003
The address of each trustee and officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 89 portfolios in the AIM Funds complex. Column two below includes length of time served with predecessor entities, if any.
TRUSTEE
NAME, YEAR OF BIRTH AND AND/OR
POSITION(s) HELD WITH THE OFFICER OTHER DIRECTORSHIP(s)
TRUST SINCE PRINCIPAL OCCUPATION(s) DURING PAST 5 YEARS HELD BY TRUSTEE
-----------------------------------------------------------------------------------------------------------------------
INTERESTED PERSONS
-----------------------------------------------------------------------------------------------------------------------
Robert H. Graham(1) -- 1946 1988 Director and Chairman, A I M Management Group None
Trustee, Chairman and President Inc. (financial services holding company); and
Director and Vice Chairman, AMVESCAP PLC (parent
of AIM and a global investment management firm);
formerly, President and Chief Executive Officer,
A I M Management Group Inc.; Director, Chairman
and President, A I M Advisors, Inc. (registered
investment advisor); Director and Chairman, A I
M Capital Management, Inc. (registered
investment advisor), A I M Distributors, Inc.
(registered broker dealer), A I M Fund Services,
Inc. (registered transfer agent), and Fund
Management Company (registered broker dealer)
-----------------------------------------------------------------------------------------------------------------------
Mark H. Williamson(2) -- 1951 2003 Director, President and Chief Executive Officer, Director, Chairman,
Trustee A I M Management Group Inc. (financial services President and Chief
holding company); Director, Chairman and Executive Officer,
President, A I M Advisors, Inc. (registered INVESCO Bond Funds,
investment advisor); Director, A I M Capital Inc., INVESCO
Management, Inc. (registered investment advisor) Combination Stock &
and A I M Distributors, Inc. (registered broker Bond Funds, Inc.,
dealer), Director and Chairman, A I M Fund INVESCO Counselor
Services, Inc. (registered transfer agent), and Series Funds, Inc.,
Fund Management Company (registered broker INVESCO Global and
dealer); and Chief Executive Officer, AMVESCAP International Funds,
PLC - AIM Division (parent of AIM and a global Inc., INVESCO Manager
investment management firm); formerly, Director, Series Funds, Inc.,
Chairman and Chief Executive Officer, INVESCO INVESCO Money Market
Funds Group, Inc. Funds, Inc., INVESCO
Sector Funds, Inc.,
INVESCO Stock Funds,
Inc., INVESCO
Treasurer's Series
Funds, Inc. and
INVESCO Variable
Investment Funds, Inc.
|
(1) Mr. Graham is considered an interested person of the Trust because he is a director of AMVESCAP PLC, parent of the advisor to the Trust.
(2) Mr. Williamson 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
POSITION(s) HELD WITH THE OFFICER OTHER DIRECTORSHIP(s)
TRUST SINCE PRINCIPAL OCCUPATION(s) DURING PAST 5 YEARS HELD BY TRUSTEE
-----------------------------------------------------------------------------------------------------------------------
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 1993 Chairman, Crockett Technology Associates ACE Limited
Trustee (technology consulting company) (insurance company);
and Captaris, Inc.
(unified messaging
provider)
-----------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2000 Director, Magellan Insurance Company; Member of Cortland Trust, Inc.
Trustee Advisory Board of Rotary Power International (registered
(designer, manufacturer, and seller of rotary investment company)
power engines); formerly, Director, President
and Chief Executive Officer, Volvo Group North
America, Inc.; Senior Vice President, AB Volvo
and director of various affiliated Volvo
companies
-----------------------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. -- 1935 1998 Formerly, Chairman, Mercantile Mortgage Corp.; None
Trustee President and Chief Operating Officer,
Mercantile-Safe Deposit & Trust Co.; and
President, Mercantile Bankshares Corp.
-----------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Century Administaff
Trustee Group, Inc. (government affairs company) and
Texana Timber LP
-----------------------------------------------------------------------------------------------------------------------
Carl Frischling-- 1937 1988 Partner, law firm of Kramer Levin Naftalis and Cortland Trust, Inc.
Trustee Frankel LLP (registered
investment company)
-----------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 1998 Formerly, Chief Executive Officer, YWCA of the None
Trustee USA
-----------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 1988 Partner, law firm of Pennock & Cooper None
Trustee
-----------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2001 Retired None
Trustee
-----------------------------------------------------------------------------------------------------------------------
|
TRUSTEE
NAME, YEAR OF BIRTH AND AND/OR
POSITION(s) HELD WITH THE OFFICER OTHER DIRECTORSHIP(s)
TRUST SINCE PRINCIPAL OCCUPATION(s) DURING PAST 5 YEARS HELD BY TRUSTEE
-----------------------------------------------------------------------------------------------------------------------
Louis S. Sklar -- 1939 1989 Executive Vice President, Development and None
Trustee Operations, Hines Interests Limited Partnership
(real estate development company)
-----------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
-----------------------------------------------------------------------------------------------------------------------
Gary T. Crum(3) -- 1947 1988 Director, Chairman and Director of Investments, N/A
Senior Vice President A I M Capital 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; formerly,
Chief Executive Officer and President, A I M
Capital Management, Inc.
-----------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
-----------------------------------------------------------------------------------------------------------------------
Carol F. Relihan -- 1954 1988 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.
-----------------------------------------------------------------------------------------------------------------------
Stuart W. Coco -- 1955 2002 Managing Director and Chief Research Officer -- N/A
Vice President Fixed Income, A I M Capital Management, Inc.;
and Vice President, A I M Advisors, Inc.
-----------------------------------------------------------------------------------------------------------------------
Melville B. Cox -- 1943 1992 Vice President and Chief Compliance Officer, A I N/A
Vice President M Advisors, Inc. and A I M Capital Management,
Inc.; and Vice President, A I M Fund Services,
Inc.
-----------------------------------------------------------------------------------------------------------------------
Edgar M. Larsen(3) -- 1940 1999 Vice President, A I M Advisors, Inc.; and N/A
Vice President President, Chief Executive Officer and Chief
Investment Officer, A I M Capital Management,
Inc.
-----------------------------------------------------------------------------------------------------------------------
Dana R. Sutton -- 1959 1988 Vice President and Fund Treasurer, A I M N/A
Vice President and Treasurer Advisors, Inc.
-----------------------------------------------------------------------------------------------------------------------
|
(3) Information is current as of January 10, 2003.
TRUSTEE OWNERSHIP OF FUND SHARES AS OF DECEMBER 31, 2002
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(R)
--------------------------- -------------------------------------------------- -------------------------------------
Robert H. Graham Aggressive Growth Over $100,000 Over $100,000
Blue Chip Over $100,000
Capital Development Over $100,000
Charter Over $100,000
Constellation Over $100,000
Emerging Growth $50,001 - $100,000
Large Cap Core Equity Over $100,000
Large Cap Growth Over $100,000
Mid Cap Growth Over $100,000
Weingarten Over $100,000
--------------------------- -------------------------------------------------- -------------------------------------
Mark H. Williamson [-0-] [$ - ]
--------------------------- -------------------------------------------------- -------------------------------------
Frank S. Bayley - 0 - $10,001 - $50,000
--------------------------- -------------------------------------------------- -------------------------------------
Bruce L. Crockett [Aggressive Growth $1 - $10,000 [$1 - $10,000]
Charter $1 - $10,000
Constellation $1 - $10,000
Weingarten $1 - $10,000]
--------------------------- -------------------------------------------------- -------------------------------------
Albert R. Dowden Blue Chip $10,001 - $50,000 $50,001 - $100,000
Emerging Growth $10,001 - $50,000
--------------------------- -------------------------------------------------- -------------------------------------
Edward K. Dunn, Jr. Capital Development Over $100,000 Over $100,000(4)
--------------------------- -------------------------------------------------- -------------------------------------
Jack M. Fields [Blue Chip $10,001 - $50,000 [Over $100,000](4)
Charter $50,001 - $100,000
Constellation $50,001 - $100,000
Weingarten $50,001 - $100,000]
--------------------------- -------------------------------------------------- -------------------------------------
|
(4) Includes the total amount of compensation deferred bv 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.
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(R)
--------------------------- -------------------------------------------------- -------------------------------------
Carl Frischling Aggressive Growth $50,001 - $100,000 Over $100,000(4)
Blue Chip Over $100,000
Capital Development Over $100,000
Charter Over $100,000
Constellation $50,001 - $100,000
Weingarten $50,001 - $100,000
--------------------------- -------------------------------------------------- -------------------------------------
Prema Mathai-Davis Aggressive Growth $50,001 - $100,000 Over $100,000(4)
Blue Chip $10,001 - $50,000
Large Cap Basic Value $10,001 - $50,000
--------------------------- -------------------------------------------------- -------------------------------------
Lewis F. Pennock Charter $10,001 - $50,000 $50,001 - $100,000
Large Cap Basic Value $1 - $10,000
--------------------------- -------------------------------------------------- -------------------------------------
Ruth H. Quigley -0- $1 -$10,000
--------------------------- -------------------------------------------------- -------------------------------------
Louis S. Sklar Aggressive Growth $50,001 - $100,000 Over $100,000(4)
Charter Over $100,000
Constellation Over $100,000
Weingarten Over $100,000
--------------------------- -------------------------------------------------- -------------------------------------
|
(4) Includes the total amount of compensation deferred bv 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, 2002:
RETIREMENT
AGGREGATE BENEFITS ESTIMATED TOTAL
COMPENSATION ACCRUED ANNUAL COMPENSATION
FROM THE BY ALL BENEFITS UPON FROM ALL AIM
TRUSTEE TRUST(1) AIM FUNDS(2) RETIREMENT(3) FUNDS(4)
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Frank S. Bayley $25,471 $ 142,800 $90,000 $ 150,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Bruce L. Crockett 25,298 50,132 90,000 149,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Owen Daly II(5) 3,636 40,045 75,000 -0-
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Albert R. Dowden 25,471 57,955 90,000 150,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Edward K. Dunn, Jr. 25,298 94,149 90,000 149,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Jack M. Fields 25,471 29,153 90,000 153,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Carl Frischling(6) 25,471 74,511 90,000 150,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Prema Mathai-Davis 25,471 33,931 90,000 150,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Lewis F. Pennock 26,197 54,802 90,000 154,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Ruth H. Quigley 25,471 142,502 90,000 153,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Louis S. Sklar 26,025 78,500 90,000 153,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
|
(1) The total amount of compensation deferred by all trustees of the Trust during the fiscal year ended October 31, 2002, including earnings, was $121,155.
(2) During the fiscal year ended October 31, 2002, the total amount of expenses allocated to the Trust in respect of such retirement benefits was $58,205.
(3) Amounts shown assume each trustee serves until his or her normal retirement date.
(4) All trustees currently serve as directors or trustees of seventeen registered investment companies advised by AIM.
(5) Mr. Daly was a trustee until December 31, 2001, when he retired.
(6) During the fiscal year ended October 31, 2002, the Trust paid $129,560 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 February 4, 2003.
AIM AGGRESSIVE GROWTH FUND
CLASS A CLASS B CLASS C CLASS R INSTITUTIONAL
SHARES SHARES SHARES SHARES CLASS 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 8.20% -- 13.85%
Attn: Fund Administration
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
-------------------------------- ----------------- --------------- --------------- ------------------ -----------------
The Manufacturers Life
Insurance Company'
C/O Manulife Financial USA
Attn: Laurie Ross SRS Acctg 12.08% -- --
250 Bloor St East, 7th Floor
Toronto, Ontario, Canada
M4WIE5
-------------------------------- ----------------- --------------- --------------- ------------------ -----------------
Smith Barney House Acct
Attn: Cindy Tempesta,
7th Floor 5.61% -- 5.13% -- --
333 West 34th Street
New York, NY 10001-2483
-------------------------------- ----------------- --------------- --------------- ------------------ -----------------
First Command Bank Trust
Attn: Trust Department -- -- -- -- 94.44%
PO Box 901075
Fort Worth, TX 76101-0000
-------------------------------- ----------------- --------------- --------------- ------------------ -----------------
|
CLASS A CLASS B CLASS C CLASS R SHARES INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
-------------------------------- ----------------- --------------- --------------- ------------------ -----------------
NAME AND ADDRESS OF PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE OWNED PERCENTAGE
PRINCIPAL HOLDER OWNED OF OWNED OF OWNED OF OF RECORD OWNED OF
RECORD RECORD RECORD RECORD
-------------------------------- ----------------- --------------- --------------- ------------------ -----------------
Reliance Trust Company
Custodian
FBO Olson International Ltd - - - 31.98% -
401k plan
PO Box 48524
Atlanta, GA 30362-0000
-------------------------------- ----------------- --------------- --------------- ------------------ -----------------
SI Howard Glass Company Inc.
PSP
Earl R. Farmer Jr. TTEE FBO - - - 8.50% -
Earl R. Farmer Jr.
379 SW Cutoff
Worcester, MA 01604-2713
-------------------------------- ----------------- --------------- --------------- ------------------ -----------------
Sierra Conveyor Co Inc
401k PSP
Marjorie J or Daniel Watson
TTEEs FBO Daniel P. Watson Dtd - - - 6.97% -
7/01/94
PO Box 1382
Roseville, CA 95678-0000
-------------------------------- ----------------- --------------- --------------- ------------------ -----------------
Integrated Global Concepts Inc.
401k Profit Sharing Plan - - - 6.15% -
2800 S. River Rd. Ste 170
Des Plaines, IL 60018-6092
-------------------------------- ----------------- --------------- --------------- ------------------ -----------------
Reliance Trust Company
Custodian
FBO Mecklenburg Neurological
Associates PA - - - 5.12% -
401k Plan
PO Box 48529
Atlanta, GA 30362-0000
-------------------------------- ----------------- --------------- --------------- ------------------ -----------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza - - - % 5.56%
Suite 100
Houston, TX 77046
-------------------------------- ----------------- --------------- --------------- ------------------ -----------------
|
* Owned of record and beneficially.
AIM BASIC VALUE II 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
---------------------------------------- ------------------------- -------------------------- -------------------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza 100.00%** 100.00%** 100.00%**
Suite 100
Houston, TX 77046
---------------------------------------- ------------------------- -------------------------- -------------------------
|
* Owned of record and beneficially.
** Presumed to be a control person because of beneficial ownership of 25% or more of the Fund.
AIM BLUE CHIP FUND
CLASS A CLASS B CLASS C CLASS R INSTITUTIONAL
SHARES SHARES SHARES SHARES CLASS 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 8.33% 8.38% 15.95%
Attn: Fund Administration
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
-------------------------------- ---------------- ---------------- --------------- ------------------ -----------------
Banc One Securities Corp FBO
The One Investment Solution
Attn: Wrap Processing OH1-1244 - - 7.37%
1111 Polaris Pkwy,
Suite J-2
Columbus, OH 43240-1244
-------------------------------- ---------------- ---------------- --------------- ------------------ -----------------
Smith Barney House Acct
Attn: Cindy Tempesta 7th Floor - 6.62% 9.07% - -
333 West 34th Street
New York, NY 10001-2483
-------------------------------- ---------------- ---------------- --------------- ------------------ -----------------
First Command Bank Trust
Attn: Trust Department - - - - 95.23%
PO Box 901075
Fort Worth, TX 76101-0000
-------------------------------- ---------------- ---------------- --------------- ------------------ -----------------
|
CLASS A CLASS B CLASS C CLASS R INSTITUTIONAL
SHARES SHARES SHARES SHARES CLASS 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
-------------------------------- ---------------- ---------------- --------------- ------------------ -----------------
Reliance Trust Company
Custodian
FBO Mecklenburg Neurological
Associates PA - - - 52.85% -
401k Plan
PO Box 48529
Atlanta, GA 30362-0000
-------------------------------- ---------------- ---------------- --------------- ------------------ -----------------
|
AIM CAPITAL DEVELOPMENT FUND
CLASS A CLASS B CLASS C CLASS R INSTITUTIONAL
SHARES SHARES SHARES SHARES CLASS 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 9.87% 10.63% 14.88%
Attn: Fund Administration
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
-------------------------------- ---------------- ---------------- --------------- ------------------ -----------------
Coastgear & Company
State Street Bank & Trust
Attn: Kevin Smith - - 7.98%
105 Rosemont Avenue
Westwood, MA 02090
-------------------------------- ---------------- ---------------- --------------- ------------------ -----------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza - - - 8.60% 100.00%
Suite 100
Houston, TX 77046
-------------------------------- ---------------- ---------------- --------------- ------------------ -----------------
Smith Barney House Acct
Attn: Cindy Tempesta 7th Floor - 7.19% 6.03% - -
333 West 34th Street
New York, NY 10001-2483
-------------------------------- ---------------- ---------------- --------------- ------------------ -----------------
|
CLASS A CLASS B CLASS C CLASS R INSTITUTIONAL
SHARES SHARES SHARES SHARES CLASS 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
-------------------------------- ---------------- ---------------- --------------- ------------------ -----------------
Reliance Trust Company
Custodian
FBO Agents Assistance - - - 78.98% -
Corporation of Michigan 401k
PO Box 48529
Atlanta, GA 30362-0000
-------------------------------- ---------------- ---------------- --------------- ------------------ -----------------
MCB Trust Services Cust FBO
Zcorum Inc. 401k Plan - - - 6.97% -
700 17th Street, Ste 300
Denver, CO 80202-0000
-------------------------------- ---------------- ---------------- --------------- ------------------ -----------------
|
* Owned of record and beneficially.
AIM CHARTER FUND
CLASS A CLASS B CLASS C CLASS R INSTITUTIONAL
SHARES SHARES SHARES SHARES CLASS 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 % 6.39% 14.75%
Attn: Fund Administration
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
---------------------------------- ---------------- --------------- --------------- ------------------ -----------------
Ruth and Ted Bauer
Family Foundation - - - 11.80%
11 Greenway Plaza, Suite 2600
Houston, TX 77046-1173
---------------------------------- ---------------- --------------- --------------- ------------------ -----------------
City National Bank
Attn: Trust Operations/Mutual
Funds - - - 9.07%
P.O. Box 60520
Los Angeles, CA 90060-0520
---------------------------------- ---------------- --------------- --------------- ------------------ -----------------
|
CLASS A CLASS B CLASS C CLASS R INSTITUTIONAL
SHARES SHARES SHARES SHARES CLASS 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
-------------------------------- ---------------- ---------------- --------------- ------------------ -----------------
City of Springfield, Trustee, FBO
City of Springfield, 457 DCP
C/O Great West, Recordkeeper - - - - 5.47%
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
---------------------------------- ---------------- --------------- --------------- ------------------ -----------------
Town of Watertown, Trustee
FBO: Town of Watertown
457 Deferred Compensation Plan - - - 6.88%
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
---------------------------------- ---------------- --------------- --------------- ------------------ -----------------
City of Cambridge, Trustee FBO
City of Cambridge 457 DCP
c/o Great West, Recordkeeper - - - - 5.41%
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
---------------------------------- ---------------- --------------- --------------- ------------------ -----------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza - - - 5.74% %
Suite 100
Houston, TX 77046
---------------------------------- ---------------- --------------- --------------- ------------------ -----------------
INVESCO Trust Company TTEE
FBO Big Horn Basin
Orthopedic Clinic PC - - - 78.22% -
401k Profit Sharing Plan
PO Box 105779
Atlanta, GA 30348
---------------------------------- ---------------- --------------- --------------- ------------------ -----------------
First Command Bank Trust
Attn: Trust Department - - - - 19.03%
PO Box 901075
Fort Worth, TX 76101-0000
---------------------------------- ---------------- --------------- --------------- ------------------ -----------------
Smith Barney House Acct
Attn: Cindy Tempesta 7th Floor - 6.25% 7.51% - -
333 34th Street
New York, NY 10001-2483
---------------------------------- ---------------- --------------- --------------- ------------------ -----------------
|
* Owned of record and beneficially.
AIM CONSTELLATION FUND
CLASS A CLASS B CLASS C CLASS R INSTITUTIONAL
SHARES SHARES SHARES SHARES CLASS 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 11.89% 5.50% 18.25% -
Attn: Fund Administration
4800 Deer Lake Dr East,
2nd Floor
Jacksonville, FL 32246
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
Ohio Public
Employees Deferred Compensation - - - 63.68%
172 E. State Street
Columbus, OH 43215
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
Wells Fargo Bank West NA Cust.
City of Houston
457 Deferred Compensation Plan - - - 11.25%
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
Nationwide Insurance
Company-DCVA
C/O IPO Portfolio Accounting - - - 9.14%
P.O. Box 182029
Columbus, OH 43218
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
State of Vermont Deferred Comp
C/O Copeland Companies
Attn: Planned Valuation - - - 7.59%
Services
2 Tower Center
East Brunswick, NJ 08816-0000
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
Reliance Trust Custodian
FBO Stadtmauer Bailkin LLP
401k Plan - - - 46.65% -
PO Box 48529
Atlanta, GA 30362-0000
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
|
CLASS A CLASS B CLASS C CLASS R INSTITUTIONAL
SHARES SHARES SHARES SHARES CLASS 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
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
Reliance Trust Custodian
FBO Mecklenburg Neurological
Associates PA - - - 28.75% -
401k Plan
PO Box 48529
Atlanta, GA 30362-0000
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
Smith Barney House Acct
Attn: Cindy Tempesta 7th Floor 5.90 5.76% 7.68% - -
333 West 34th Street
New York, NY 10001-2483
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
|
AIM CORE STRATEGIES 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
---------------------------------------- ------------------------- -------------------------- -------------------------
A I M Advisors, Inc.*
Attn: David Hessel 100.00%** 100.00%** 100.00%**
11 Greenway Plaza, Suite 100
Houston, TX 77046
---------------------------------------- ------------------------- -------------------------- -------------------------
|
AIM DENT DEMOGRAPHIC TRENDS 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 5.35% 11.82% 18.16%
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
---------------------------------------- ------------------------- -------------------------- -------------------------
Smith Barney House Acct
Attn: Cindy Tempesta 7th Floor 5.78% 9.95% 11.29%
333 West 34th Street
New York, NY 10001-2483
---------------------------------------- ------------------------- -------------------------- -------------------------
|
AIM 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
---------------------------------------- ------------------------- -------------------------- -------------------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration 8.55% 7.74% 20.49%
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
---------------------------------------- ------------------------- -------------------------- -------------------------
|
AIM LARGE CAP BASIC VALUE FUND
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES
------------------------------------- -------------------- --------------------- -------------------- ---------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
------------------------------------- -------------------- --------------------- -------------------- ---------------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration 26.33% 14.98% 24.88% -
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
------------------------------------- -------------------- --------------------- -------------------- ---------------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza - - - 9.93%
Suite 100
Houston, TX 77046
------------------------------------- -------------------- --------------------- -------------------- ---------------------
Darse E. Crandall Solo 401k
Darse E. Crandall TTEE
FBO Darse E. Crandall - - - 27.56%
13360 Del Monte Dr. Apt. 2C
Seal Beach, CA 90740-4561
------------------------------------- -------------------- --------------------- -------------------- ---------------------
PVR Inc Solo 401k
Phillip V. Rye TTEE FBO
Phillip V. Rye - - 12.95%
22119 Kensington Dr.
Woodhaven, MI 48183-1151
------------------------------------- -------------------- --------------------- -------------------- ---------------------
|
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES
------------------------------------- -------------------- --------------------- -------------------- ---------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
------------------------------------- -------------------- --------------------- -------------------- ---------------------
Carol's Craftique Inc Solo 401k
Hugo D. Moeckel TTEE FBO
Carol L. Moecker - - - 11.89%
1414 24th Ave S
Moorhead, MN 56560-0000
------------------------------------- -------------------- --------------------- -------------------- ---------------------
MCB Trust Services Cust FBO
ECFIRST.COM Pension Plan - - - 10.40%
700 17th Street, Ste 300
Denver, CO 80202-0000
------------------------------------- -------------------- --------------------- -------------------- ---------------------
Dr. Russell E. Forgoston PC Solo
401k Russell E. Forgoston TTEE
FBO Russell E. Forgoston - - - 8.32%
220 Sandy Springs Cir, Ste 157A
Atlanta, GA 30328-0000
------------------------------------- -------------------- --------------------- -------------------- ---------------------
ANTC Cust Solo 401k
GGB Consulting FBO
Gerard G. Boccuti - - - 5.14%
1566 Spring Meadow Lane
Boothwyn, PA 19061-0000
------------------------------------- -------------------- --------------------- -------------------- ---------------------
|
AIM LARGE CAP CORE EQUITY 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 Solo Benefit of Customers
Attn: Fund Administration 11.35% 23.32% 7.53%
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
---------------------------------------- ------------------------- -------------------------- -------------------------
A I M Advisors, Inc.*
Attn: David Hessel -* -* 15.21%*
11 Greenway Plaza, Suite 100
Houston, TX 77046
---------------------------------------- ------------------------- -------------------------- -------------------------
|
AIM LARGE CAP GROWTH FUND
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES
------------------------------------- -------------------- --------------------- -------------------- ---------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
------------------------------------- -------------------- --------------------- -------------------- ---------------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration 10.70% 10.41% 15.20% -
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
------------------------------------- -------------------- --------------------- -------------------- ---------------------
INVESCO Trust Company TTEE
FBO Big Horn Basin Orthopedic
Clinic PC - - - 95.25%
401k Profit Sharing Plan
PO Box 105779
Atlanta, GA 30348
------------------------------------- -------------------- --------------------- -------------------- ---------------------
Smith Barney House Acct
Attn: Cindy Tempesta, 7th Floor - 7.13% 8.35% -
333 West 34th Street
New York, NY 10001-2483
------------------------------------- -------------------- --------------------- -------------------- ---------------------
|
AIM MID CAP GROWTH FUND
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES
------------------------------------- -------------------- --------------------- -------------------- ---------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
------------------------------------- -------------------- --------------------- -------------------- ---------------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration 7.97% 11.21% 13.65% -
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
------------------------------------- -------------------- --------------------- -------------------- ---------------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza - - - 68.71%
Suite 100
Houston, TX 77046
------------------------------------- -------------------- --------------------- -------------------- ---------------------
Premier Business Resource Solo
401k Plan Louis A. Esserman TTEE
FBO Linda M. Esserman - - - 10.82%
301 W. Platt Street, #1329
Tampa, FL 33606-0000
------------------------------------- -------------------- --------------------- -------------------- ---------------------
|
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES
------------------------------------- -------------------- --------------------- -------------------- ---------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
------------------------------------- -------------------- --------------------- -------------------- ---------------------
Lane M. Schloeder DVM
Solo 401k
Lane M. Schloeder TTEE FBO - - - 8.47%
Lane M. Schloeder
11764 Kirkwood Street
Herald, CA 95638-0000
------------------------------------- -------------------- --------------------- -------------------- ---------------------
|
AIM U.S. 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
---------------------------------------- ------------------------- -------------------------- -------------------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza 100.00%** 100.00%** 100.00%**
Suite 100
Houston, TX 77046
---------------------------------------- ------------------------- -------------------------- -------------------------
|
* Owned of record and beneficially.
** Presumed to be a control person because of beneficial ownership of 25% or more of the Fund.
AIM WEINGARTEN FUND
CLASS A CLASS B CLASS C CLASS R INSTITUTIONAL
SHARES SHARES SHARES SHARES CLASS 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 12.00% 6.10% 17.10% - -
Attn: Fund Administration
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
Sierra Conveyor Co Inc 401k PSP
Marjorie J or Daniel Watson
TTEEs
FBO Marjorie J. Watson - - - 16.32% -
Dtd 7/01/94
PO Box 1382
Roseville, CA 95678-0000
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
|
CLASS A CLASS B CLASS C CLASS R INSTITUTIONAL
SHARES SHARES SHARES SHARES CLASS 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
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
Sierra Conveyor Co Inc 401k PSP
Marjorie J or Daniel Watson
TTEEs
FBO Marjorie J. Watson - - - 14.75% -
Dtd 7/01/94
PO Box 1382
Roseville, CA 95678-0000
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
Sierra Conveyor Co Inc 401k PSP
Marjorie J or Daniel Watson
TTEEs
FBO Marjorie J. Watson - - - 12.93% -
Dtd 7/01/94
PO Box 1382
Roseville, CA 95678-0000
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
Sierra Conveyor Co Inc 401k PSP
Marjorie J or Daniel Watson
TTEEs
FBO Marjorie J. Watson - - - 10.60% -
Dtd 7/01/94
PO Box 1382
Roseville, CA 95678-0000
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
Smith Barney House Acct
Attn: Cindy Tempesta, 7th Floor 7.53% 6.72% 6.58% - -
333 West 34th Street
New York, NY 10001-2483
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
|
CLASS A CLASS B CLASS C CLASS R INSTITUTIONAL
SHARES SHARES SHARES SHARES CLASS 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
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
AIM Foundation
Attn: Patricia Lewis - - - - 21.55%
11 Greenway Plaza, Suite 2600
Houston, TX 77046
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
First Command Bank Trust
Attn: Trust Department - - - - 12.67%
PO Box 901075
Fort Worth, TX 76101-0000
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
David Leary, Trustee
FBO: Town of Weymouth
457 Deferred Compensation Plan - - - - 7.85%
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
Town of Watertown, Trustee
FBO: Town of Watertown
457 Deferred Compensation Plan - - - - 8.50%
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza - - - 7.12% %
Suite 100
Houston, TX 77046
--------------------------------- ---------------- --------------- --------------- ------------------ -----------------
|
MANAGEMENT OWNERSHIP
As of February 4, 2003, 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 4.44% of Class A shares of AIM Blue Chip Fund, 1.18% of Class A shares of AIM Emerging Growth Fund and 2.51% of Class A shares of AIM Large Cap Core Equity Fund.
APPENDIX E
MANAGEMENT FEES
For the last three fiscal years ended October 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 2002 2001
-------------------- ------------------------------------------- ---------------------------------------------
MANAGEMENT MANAGEMENT NET MANAGEMENT MANAGEMENT MANAGEMENT NET MANAGEMENT
FEE PAYABLE FEE WAIVERS FEE PAID FEE PAYABLE FEE WAIVERS FEE PAID
-------------------- ------------- ------------- --------------- ------------- -------------- ----------------
AIM Aggressive $17,081,494 $16,400 $17,065,094 $23,755,259 $7,508 $23,747,751
Growth Fund
-------------------- ------------ ---------- ------------ ----------- ---------- -----------
AIM Basic Value II $1,164 $1,164 $-0- N/A N/A N/A
Fund(1)
-------------------- ------------ ---------- ------------ ----------- ---------- -----------
AIM Blue Chip Fund $24,803,281 $26,519 $24,776,762 $35,318,225 $153,216 $35,165,009
-------------------- ------------ ---------- ------------ ----------- ---------- -----------
AIM Capital $7,368,692 $11,465 $7,357,227 $8,548,376 $3,281 $8,545,095
Development Fund
-------------------- ------------ ---------- ------------ ----------- ---------- -----------
AIM Charter Fund $29,583,893 $58,255 $29,525,638 $43,928,613 $504,457 $43,424,156
-------------------- ------------ ---------- ------------ ----------- ---------- -----------
AIM Constellation $63,117,935 $1,334,866 $61,783,069 $93,618,688 $3,749,927 $89,868,761
Fund
-------------------- ------------ ---------- ------------ ----------- ---------- -----------
AIM Core $5,619 $5,619 $-0- N/A N/A N/A
Strategies Fund(2)
-------------------- ------------ ---------- ------------ ----------- ---------- -----------
AIM Dent
Demographic Trends $6,351,166 $5,666 $6,345,500 $10,214,781 $1,945 $10,212,836
Fund
-------------------- ------------ ---------- ------------ ----------- ---------- -----------
AIM Emerging $1,352,147 $1,704 $1,350,443 $1,912,682 $261,774 $1,650,908
Growth Fund(3)
-------------------- ------------ ---------- ------------ ----------- ---------- -----------
|
FUND NAME 2000
-------------------- --------------------------------------------
MANAGEMENT MANAGEMENT NET MANAGEMENT
FEE PAYABLE FEE WAIVERS FEE PAID
-------------------- ------------- ------------- ----------------
AIM Aggressive $26,977,097 -0- $26,977,097
Growth Fund
-------------------- ------------ ---------- ------------
AIM Basic Value II N/A N/A N/A
Fund(1)
-------------------- ------------ ---------- ------------
AIM Blue Chip Fund $36,923,601 $70,387 $36,853,214
-------------------- ------------ ---------- ------------
AIM Capital $9,200,414 -0- $9,200,414
Development Fund
-------------------- ------------ ---------- ------------
AIM Charter Fund $56,142,463 $1,484,073 $54,658,390
-------------------- ------------ ---------- ------------
AIM Constellation $128,677,520 $6,187,566 $122,489,954
Fund
-------------------- ------------ ---------- ------------
AIM Core N/A N/A N/A
Strategies Fund(2)
-------------------- ------------ ---------- ------------
AIM Dent
Demographic Trends $10,757,633 -0- $10,757,633
Fund
-------------------- ------------ ---------- ------------
AIM Emerging $908,443 -0- $908,443
Growth Fund(3)
-------------------- ------------ ---------- ------------
|
FUND NAME 2002 2001
-------------------- ------------------------------------------- ---------------------------------------------
MANAGEMENT MANAGEMENT NET MANAGEMENT MANAGEMENT MANAGEMENT NET MANAGEMENT
FEE PAYABLE FEE WAIVERS FEE PAID FEE PAYABLE FEE WAIVERS FEE PAID
-------------------- ------------- ------------- --------------- ------------- -------------- ----------------
AIM Large Cap $1,168,281 $793 $1,167,488 $537,749 $85,532 $452,217
Basic Value Fund
-------------------- ------------ ---------- ------------ ----------- ---------- -----------
AIM Large Cap Core $44,236 $44,236 $-0- N/A N/A N/A
Equity Fund(2)
-------------------- ------------ ---------- ------------ ----------- ---------- -----------
AIM Large Cap $2,371,037 $3,052 $2,367,985 $3,378,201 $1,590 $3,376,611
Growth Fund
-------------------- ------------ ---------- ------------ ----------- ---------- -----------
AIM Mid Cap Growth $1,620,211 $2,679 $1,617,532 $1,860,437 $875 $1,859,562
Fund
-------------------- ------------ ---------- ------------ ----------- ---------- -----------
AIM U.S. Growth $1,237 $1,237 $-0- N/A N/A N/A
Fund(1)
-------------------- ------------ ---------- ------------ ----------- ---------- -----------
AIM Weingarten Fund $26,086,537 $28,985 $26,057,552 $46,064,764 $584,500 $45,480,264
-------------------- ------------ ---------- ------------ ----------- ---------- -----------
|
FUND NAME 2000
-------------------- --------------------------------------------
MANAGEMENT MANAGEMENT NET MANAGEMENT
FEE PAYABLE FEE WAIVERS FEE PAID
-------------------- ------------- ------------- ----------------
AIM Large Cap $12,555 $12,555 -0-
Basic Value Fund
-------------------- ------------ ---------- ------------
AIM Large Cap Core N/A N/A N/A
Equity Fund(2)
-------------------- ------------ ---------- ------------
AIM Large Cap $1,064,335 -0- $1,064,335
Growth Fund
-------------------- ------------ ---------- ------------
AIM Mid Cap Growth $1,125,851 -0- $1,125,851
Fund
-------------------- ------------ ---------- ------------
AIM U.S. Growth N/A N/A N/A
Fund(1)
-------------------- ------------ ---------- ------------
AIM Weingarten Fund $75,218,931 $5,181,384 $70,073,547
-------------------- ------------ ---------- ------------
|
(1) Commenced operations on August 30, 2002
(2) Commenced operations on December 31, 2001
(3) Commenced operations on March 31, 2000
For the last three fiscal periods or years ended October 31, the sub-advisory fees paid by AIM Advisors to H.S. Dent Advisors, Inc. with respect to services provided to the AIM Dent Demographic Trends Funds were as follows:
2002 2001 2000
-------- ----------- -----------
AIM Dent Demographic Trends Fund.......................... $971,355 $2,403,478 $2,531,208
|
APPENDIX F
ADMINISTRATIVE SERVICES FEES
The Funds paid AIM the following amounts for administrative services for the last three fiscal years ended October 31:
FUND NAME 2002 2001 2000
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Aggressive Growth Fund $383,159 $276,738 $233,230
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Basic Value II Fund(1) $8,493 N/A N/A
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Blue Chip Fund $441,011 $331,400 $280,996
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Capital Development $205,580 $160,775 $147,339
Fund
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Charter Fund $468,551 $383,570 $383,224
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Constellation Fund $629,514 $622,082 $731,392
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Core Strategies Fund(2) $41,781 N/A N/A
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Dent Demographic $145,864 $151,955 $142,614
Trends Fund
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Emerging Growth Fund(3) $50,000 $50,000 $29,235
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Large Cap Basic Value $50,000 $50,000 $50,000
Fund
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Large Cap Core Equity 41,781 N/A N/A
Fund(2)
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Large Cap Growth Fund $87,337 $110,085 $50,000
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Mid Cap Growth Fund $50,000 $50,000 $50,000
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM U.S. Growth Fund(1) 8,493 N/A N/A
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Weingarten Fund $450,564 $392,623 $473,764
---------------------------- ------------------------------ ------------------------------- --------------------------
|
(1) Commenced operations on August 30, 2002
(2) Commenced operations on December 31, 2001
(3) Commenced operations on March 31, 2000
APPENDIX G
BROKERAGE COMMISSIONS
Brokerage commissions(1) paid by each of the Funds listed below during the last three fiscal years or period ended October 31, were as follows:
FUND 2002 2001 2000
---- ----------- ----------- -----------
AIM Aggressive Growth Fund(2) $5,920,899 $ 6,473,868 $ 4,003,829
AIM Basic Value II Fund(3) 1,313 N/A N/A
AIM Blue Chip Fund $4,014,589 3,838,893 3,087,012
AIM Capital Development Fund $4,525,600 4,153,032 2,924,761
AIM Charter Fund $12,272,154 12,104,855 10,479,914
AIM Constellation Fund(4) $16,936,943 23,003,818 25,382,535
AIM Core Strategies Fund(5) 1,587 N/A N/A
AIM Dent Demographic Trends Fund(6) $4,652,389 3,053,966 1,831,365
AIM Emerging Growth Fund(7)(9) $2,158,091 1,016,711 136,048
AIM Large Cap Basic Value Fund $300,919 235,562 8,679
AIM Large Cap Core Equity Fund(5) 17,394 N/A N/A
AIM Large Cap Growth Fund $864,959 891,255 284,025
AIM Mid Cap Growth Fund $1,118,766 801,920 361,741
AIM U.S. Growth Fund(3) 844 N/A N/A
AIM Weingarten Fund(8) $23,824,701 30,640,967 21,922,844
|
(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 Aggressive Growth Fund for the fiscal year ended October 31, 2002, as compared to the fiscal year ended October 31, 2000, was due to a significant fluctuation in asset levels and cash outflows.
(3) Commenced operations on August 30, 2002.
(4) The variation in brokerage commissions paid by AIM Constellation Fund for the fiscal year ended October 31, 2002, as compared to the two prior fiscal years was due to a decrease in asset levels and portfolio transactions.
(5) Commenced operations on December 31, 2001.
(6) The variation in brokerage commissions paid by AIM Dent Demographic Trends Fund for the fiscal year ended October 31, 2002, as compared to the two prior fiscal years, was due to a significant fluctuation in asset levels, cash outflows and an increase in transactions on which commissions were paid.
(7) Commenced operations on March 31, 2000.
(8) The variation in the brokerage commissions paid by AIM Weingarten Fund for the fiscal year ended October 31, 2002, as compared to the prior fiscal year, was due to a decrease in asses and portfolio turnover.
(9) The variation in brokerage commissions paid by AIM Emerging Growth Fund for the fiscal year ended October 31, 2002, 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.
APPENDIX H
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF
SECURITIES OF REGULAR BROKERS OR DEALERS
During the last fiscal year ended October 31, 2002, 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 Aggressive Growth Fund $ 565,103,831 $ 879,279
AIM Basic Value II Fund(1) 22,299 43
AIM Blue Chip Fund 482,791,925 704,507
AIM Capital Development Fund 275,926,022 559,877
AIM Charter Fund 1,750,689,258 2,288,465
AIM Constellation Fund 1,667,124,770 2,166,999
AIM Core Strategies Fund(2) 732 4
AIM Dent Demographic Trends Fund 303,483,443 523,736
AIM Emerging Growth Fund 107,310,161 296,892
AIM Large Cap Basic Value Fund 11,547,195 16,829
AIM Large Cap Core Equity Fund(2) 2,034,618 2,336
AIM Large Cap Growth Fund 72,803,328 92,460
AIM Mid Cap Growth Fund 70,267,204 143,854
AIM U.S. Growth Fund(1) 0 0
AIM Weingarten Fund 1,938,782,465 3,013,694
|
(1) Commenced operations on August 30, 2002
(2) Commenced operations on December 31, 2001
During the last fiscal year ended October 31, 2002, the Funds held securities issued by the following companies, which are "regular" brokers or dealers of one or more of the Funds identified below:
Fund/Issuer Security Market Value
------------- -------------- --------------
AIM Aggressive Growth Fund
Legg Mason Common Stock $11,615,000
AIM Basic Value II Fund
J.P. Morgan Chase & Co. Common Stock 29,050
Merrill Lynch & Co., Inc. Common Stock 37,950
AIM Blue Chip Fund
Goldman Sachs Group, Inc. (The) Common Stock 28,640,000
J.P. Morgan Chase & Co. Common Stock 18,675,000
Merrill Lynch & Co., Inc. Common Stock 28,462,500
Morgan Stanley Common Stock 35,028,000
AIM Charter Fund
Morgan Stanley Common Stock 29,190,000
AIM Constellation Fund
Goldman Sachs Group, Inc. (The) Common Stock 53,700,000
Merrill Lynch & Co., Inc. Common Stock 57,129,930
Morgan Stanley Common Stock 56,173,236
|
Fund/Issuer Security Market Value
------------- -------------- --------------
AIM Core Strategies Fund
Bear Stearns Cos., Inc. (The) Common Stock 2,442
AIM Dent Demographic Trends Fund
Goldman Sachs Group, Inc. (The) Common Stock 4,296,000
Lehman Brothers Holdings Inc. Common Stock 3,995,250
Morgan Stanley Common Stock 4,475,800
AIM Large Cap Basic Value Fund
J.P. Morgan Chase & Co. Common Stock 3,942,500
Merrill Lynch & Co., Inc. Common Stock 3,719,100
Morgan Stanley Common Stock 3,853,080
AIM Large Cap Core Equity Fund
Morgan Stanley Common Stock 124,544
AIM Weingarten Fund
Goldman Sachs Group, Inc. (The) Common Stock 28,640,000
J.P. Morgan Chase & Co. Common Stock 20,750,000
|
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 October 31, 2002 follows:
CLASS A CLASS B CLASS C CLASS R
FUND SHARES SHARES SHARES SHARES
-------- ------------ ------------ ----------- ---------
AIM Aggressive Growth Fund(3) $ 5,780,784 $ 2,857,330 $ 929,471 $ 69
AIM Basic Value II Fund(1) 218 465 465 N/A
AIM Blue Chip Fund(3) 6,517,172 16,167,462 4,196,874 31
AIM Capital Development Fund(3) 2,050,963 4,539,281 690,638 20
AIM Charter Fund(3) 8,613,574 15,924,539 2,261,077 23
AIM Constellation Fund(3) 26,651,431 7,863,981 2,406,943 104
AIM Core Strategies Fund(2) 1,049 2,248 2,248 N/A
AIM Dent Demographic Trends Fund 993,200 3,310,084 1,324,161 N/A
AIM Emerging Growth Fund 274,207 553,611 253,702 N/A
AIM Large Cap Basic Value Fund(3) 349,059 697,535 252,255 17
AIM Large Cap Core Equity Fund(2) 9,410 25,823 6,272 N/A
AIM Large Cap Growth Fund(3) 466,743 1,320,106 507,688 18
AIM Mid Cap Growth Fund(3) 337,632 822,210 238,357 17
AIM U.S. Growth Fund(1) 231 495 495 N/A
AIM Weingarten Fund(3) 9,600,534 7,658,196 1,234,983 43
|
(1) Commenced operations on August 30, 2002
(2) Commenced operations on December 31, 2001
(3) Commenced operations for R Class 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 fiscal year ended October 31, 2002, follows:
PRINTING & UNDERWRITERS DEALERS
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION
-------------- ------------ ----------- -------------- --------------
AIM Aggressive Growth Fund $ -0- -0- -0- -0- 5,780,784
AIM Basic Value II Fund(1) N/A N/A N/A N/A N/A
AIM Blue Chip Fund 499,128 62,911 187,740 -0- 5,767,393
AIM Capital Development Fund 206,409 25,996 78,021 -0- 1,740,537
AIM Charter Fund 513,609 64,811 190,484 -0- 7,844,670
AIM Constellation Fund 1,391,961 175,372 516,796 -0- 24,567,302
AIM Core Strategies Fund(2) N/A N/A N/A N/A N/A
AIM Dent Demographic Trends Fund 106,595 13,309 37,969 -0- 835,327
AIM Emerging Growth Fund 29,306 3,746 11,017 -0- 230,138
AIM Large Cap Basic Value Fund 34,761 4,450 11,933 -0- 297,915
AIM Large Cap Core Equity Fund(2) -0- -0- -0- -0- 9,410
AIM Large Cap Growth Fund 38,719 4,966 13,795 -0- 409,263
AIM Mid Cap Growth Fund 32,433 4,067 12,167 -0- 288,965
AIM U.S. Growth Fund(1) N/A N/A N/A N/A N/A
AIM Weingarten Fund 613,489 77,459 229,104 -0- 8,680,483
|
(1) Commenced operations on August 30, 2002
(2) Commenced operations on December 31, 2001
An estimate by category of the allocation of actual fees paid by Class B shares of the Funds during the fiscal year ended October 31, 2002, follows:
PRINTING & UNDERWRITERS DEALERS
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION
-------------- ------------ ----------- -------------- --------------
AIM Aggressive Growth Fund $ 69,192 8,852 23,520 2,142,997 612,769
AIM Basic Value II Fund(1) N/A N/A N/A N/A N.A
AIM Blue Chip Fund 167,358 21,023 62,166 12,125,597 3,791,318
AIM Capital Development Fund 29,940 3,710 11,357 3,404,461 1,089,813
AIM Charter Fund 99,364 12,498 36,430 11,943,404 3,832,843
AIM Constellation Fund 115,674 14,521 43,132 5,897,985 1,792,669
AIM Core Strategies Fund(2) N/A N/A N/A N/A N/A
AIM Dent Demographic Trends Fund 36,222 4,523 14,260 2,482,563 772,516
AIM Emerging Growth Fund 8,128 1,108 3,079 415,208 126,088
AIM Large Cap Basic Value Fund 19,549 2,416 7,322 523,151 145,097
AIM Large Cap Core Equity Fund(2) 2,135 -0- -0- 19,367 4,320
AIM Large Cap Growth Fund 22,439 2,822 7,840 990,080 296,925
AIM Mid Cap Growth Fund 15,275 2,024 5,190 616,658 183,063
AIM U.S. Growth Fund(1) N/A N/A N/A N/A N/A
AIM Weingarten Fund 75,003 9,361 27,736 5,743,647 1,802,449
|
(1) Commenced operations on August 30, 2002
(2) Commenced operations on December 31, 2001
An estimate by category of the allocation of actual fees paid by Class C shares of the Funds during the fiscal year ended October 31, 2002, follows:
PRINTING & UNDERWRITERS DEALERS
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION
-------------- ------------ ----------- -------------- --------------
AIM Aggressive Growth Fund $27,661 3,559 9,366 193,567 695,318
AIM Basic Value II Fund(1) N/A N/A N/A N/A N/A
AIM Blue Chip Fund 57,196 7,092 21,430 412,692 3,698,464
AIM Capital Development Fund 11,000 1,222 4,753 81,483 592,180
AIM Charter Fund 27,254 3,526 10,492 199,365 2,020,440
AIM Constellation Fund 39,369 5,059 14,507 282,893 2,065,115
AIM Core Strategies Fund(2) N/A N/A N/A N/A N/A
AIM Dent Demographic Trends Fund 19,412 2,418 6,717 138,540 1,157,073
AIM Emerging Growth Fund 6,316 702 1,560 37,430 207,695
AIM Large Cap Basic Value Fund 11,118 1,346 4,985 82,258 152,548
AIM Large Cap Core Equity Fund(2) 635 87 0 2,860 2,690
AIM Large Cap Growth Fund 12,505 1,705 3,552 85,258 404,668
AIM Mid Cap Growth Fund 7,140 974 1,803 45,975 182,466
AIM U.S. Growth Fund(1) N/A N/A N/A N/A N/A
AIM Weingarten Fund 21,922 2,821 8,248 160,830 1,041,162
|
(1) Commenced operations on August 30, 2002
(2) Commenced operations on December 31, 2001
Class R shares of AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Growth Fund, AIM Mid Cap Growth Fund and AIM Weingarten Fund commenced operations on June 3, 2002. The fees paid by Class R shares of the Funds for the above noted categories during the fiscal year ended October 31, 2002 were $68.96, $31.57, $20.22, $23.43, $104.02, $17.33, $18.44, $16.60 and $42.91, respectively.
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 periods or years ending October 31:
2002 2001 2000
---------------------- ------------------------ ------------------------
SALES AMOUNT SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED CHARGES RETAINED
---------- ---------- ----------- ---------- ----------- ----------
AIM Aggressive Growth Fund $2,490,945 $ 401,540 $ 6,941,065 $1,042,378 $13,013,259 $2,075,726
AIM Basic Value II Fund(1) N/A N/A N/A N/A N/A N/A
AIM Blue Chip Fund 3,369,955 524,961 10,186,805 1,504,443 18,764,141 2,876,209
AIM Capital Development Fund 1,081,325 167,124 1,471,704 217,702 1,986,868 309,839
AIM Charter Fund 2,445,644 387,132 8,482,508 1,267,570 21,686,299 3,447,012
AIM Constellation Fund 7,869,917 1,272,976 18,221,618 2,721,593 32,281,350 5,088,774
AIM Core Strategies Fund(2) N/A N/A N/A N/A N/A N/A
AIM Dent Demographic Trends Fund 890,896 131,333 3,448,426 505,337 13,202,030 2,007,746
AIM Emerging Growth Fund(3) 255,036 42,050 711,947 108,381 2,135,371 336,338
AIM Large Cap Basic Value Fund 447,812 72,325 838,531 120,808 80,721 12,029
AIM Large Cap Core Equity Fund(2) 70,911 11,277 N/A N/A N/A N/A
AIM Large Cap Growth Fund 567,190 89,304 2,588,386 403,111 3,837,030 577,198
AIM Mid Cap Growth Fund 456,202 70,433 1,057,009 162,126 2,652,130 422,379
AIM U.S. Growth Fund* N/A N/A N/A N/A N/A N/A
AIM Weingarten Fund 2,965,221 482,681 9,137,102 1,394,055 23,882,434 3,854,495
|
(1) Commenced operations on August 30, 2002
(2) Commenced operations on December 31, 2001
(3) Commenced operations on March 31, 2000
The following chart reflects the contingent deferred sales charges paid by Class A, Class B and Class C shareholders and retained by AIM Distributors for the last three fiscal periods or years ended October 31:
2002 2001 2000
-------- --------- ---------
AIM Aggressive Growth Fund $ 88,844 $127,954 $ 55,615
AIM Basic Value II Fund(1) N/A N/A N/A
AIM Blue Chip Fund 107,445 251,600 197,230
AIM Capital Development Fund 15,360 19,079 22,923
AIM Charter Fund 69,358 191,689 148,823
AIM Constellation Fund 183,857 317,491 411,140
AIM Core Strategies Fund(2) N/A N/A N/A
AIM Dent Demographic Trends Fund 27,687 152,995 91,369
AIM Emerging Growth Fund(3) 8,141 50,717 9,199
AIM Large Cap Basic Value Fund 10,512 31,559 502
AIM Large Cap Core Equity Fund(2) 83 N/A N/A
AIM Large Cap Growth Fund 19,917 97,612 15,696
AIM Mid Cap Growth Fund 16,428 26,251 23,692
AIM U.S. Growth Fund* N/A N/A N/A
AIM Weingarten Fund 61,852 163,986 139,887
|
(1) Commenced operations on August 30, 2002
(2) Commenced operations on December 31, 2001
(3) Commenced operations on March 31, 2000
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 October 31 are as follows:
PERIODS ENDED
OCTOBER 31, 2002
-----------------------------------------------------------------
SINCE INCEPTION
CLASS A SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- ------- ------- -------- --------- ----------
AIM Aggressive Growth Fund -20.67% -4.03% 10.78% N/A 05/01/84
AIM Basic Value II Fund N/A N/A N/A -13.71% 08/30/02
AIM Blue Chip Fund -22.33% -2.84% 7.11% N/A 02/04/87
AIM Capital Development Fund -17.63% -0.74% N/A 5.47% 06/17/96
AIM Charter Fund -13.55% -2.16% 6.89% N/A 11/26/68
AIM Constellation Fund -17.63 -3.36% 7.47% N/A 04/30/76
AIM Core Strategies Fund N/A N/A N/A -24.48% 12/31/01
AIM Dent Demographic Trends Fund -25.56% N/A N/A -15.37% 06/07/99
AIM Emerging Growth Fund -28.72% N/A N/A -29.22% 03/31/00
AIM Large Cap Basic Value Fund -20.62% N/A N/A -3.06% 06/30/99
AIM Large Cap Core Equity Fund N/A N/A N/A -17.77%* 12/31/01
AIM Large Cap Growth Fund -21.01% N/A N/A -9.22% 03/01/99
AIM Mid Cap Growth Fund -27.86% N/A N/A -14.77% 11/01/99
AIM U.S. Growth Fund N/A N/A N/A -7.75% 08/30/02
AIM Weingarten Fund -29.20% -8.48% 2.82% N/A 06/17/69
|
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 October 31 are as follows:
PERIODS ENDED
OCTOBER 31, 2002
-----------------------------------------------------------------
SINCE INCEPTION
CLASS B SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- ------- ------- -------- --------- ----------
AIM Aggressive Growth Fund -20.85% N/A N/A -2.91% 03/01/99
AIM Basic Value II Fund N/A N/A N/A -13.27% 08/30/02
AIM Blue Chip Fund -22.39% -2.78% N/A 2.48% 10/01/96
AIM Capital Development Fund -17.73% -0.65% N/A 3.94% 10/01/96
AIM Charter Fund -13.77% -2.07 N/A 5.35% 06/26/95
AIM Constellation Fund -17.77% N/A N/A -3.83% 11/03/97
AIM Core Strategies Fund N/A N/A N/A -24.10% 12/31/01
AIM Dent Demographic Trends Fund -25.65% N/A N/A -15.27% 06/07/99
AIM Emerging Growth Fund -28.75% N/A N/A -28.93% 03/31/00
AIM Large Cap Basic Value Fund -20.66% N/A N/A -8.71% 08/01/00
AIM Large Cap Core Equity Fund N/A N/A N/A -17.82%* 12/31/01
AIM Large Cap Growth Fund -21.11% N/A N/A -11.99% 04/05/99
AIM Mid Cap Growth Fund -27.94% N/A N/A -14.65% 11/01/99
AIM U.S. Growth Fund N/A N/A N/A -7.28% 08/30/02
AIM Weingarten Fund -29.35% -8.36% N/A 0.33% 06/26/95
|
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 October 31 are as follows:
PERIODS ENDED
OCTOBER 31, 2002*
---------------------------------------------------------------------
SINCE INCEPTION
CLASS C SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE**
-------------- -------- ------- -------- --------- ---------
AIM Aggressive Growth Fund -17.52% N/A N/A -2.34% 03/01/99
AIM Basic Value II Fund N/A N/A N/A -9.61% 08/30/02
AIM Blue Chip Fund -19.12% -2.39% N/A -2.86% 08/04/97
AIM Capital Development Fund -14.28% -0.31% N/A 1.04% 08/04/97
AIM Charter Fund -10.03% -1.75% N/A -2.29% 08/04/97
AIM Constellation Fund -14.27% -3.01% N/A -3.58% 08/04/97
AIM Core Strategies Fund N/A N/A N/A -20.90% 12/31/01
AIM Dent Demographic Trends Fund -22.52% N/A N/A -14.50% 06/07/99
AIM Emerging Growth Fund -25.75% N/A N/A -28.13% 03/31/00
AIM Large Cap Basic Value Fund -17.32% N/A N/A -7.48% 08/01/00
AIM Large Cap Core Equity Fund N/A N/A N/A -14.36% 12/31/01
AIM Large Cap Growth Fund -17.67% N/A N/A -11.20% 04/05/99
AIM Mid Cap Growth Fund -24.90% N/A N/A -13.78% 11/01/99
AIM U.S. Growth Fund N/A N/A N/A -3.38% 08/30/02
AIM Weingarten Fund -26.35% -8.13% N/A -8.15% 08/04/97
|
* 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.
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 October 31 are as follows:
PERIODS ENDED
OCTOBER 31, 2002
---------------------------------------------------------------------
SINCE INCEPTION
CLASS R SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- -------- ------- -------- ---------- ----------
AIM Aggressive Growth Fund -16.14% -3.16% 11.15% N/A 06/03/02
AIM Blue Chip Fund -17.90% -1.87% 7.56% N/A 06/03/02
AIM Capital Development Fund -13.01% 0.23% N/A 6.25% 06/03/02
AIM Charter Fund -8.71% -1.25% 7.28% N/A 06/03/02
AIM Constellation Fund -12.63% -2.37% 7.91% N/A 06/03/02
AIM Large Cap Basic Value Fund -16.06% N/A N/A -1.54% 06/03/02
AIM Large Cap Growth Fund -16.51% N/A N/A -7.93% 06/03/02
AIM Mid Cap Growth Fund -23.84% N/A N/A -13.31% 06/03/02
AIM Weingarten Fund -25.15% -7.61% 3.20% N/A 06/03/02
|
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 October 31 are as follows:
PERIODS ENDED
OCTOBER 31, 2002
---------------------------------------------------------------------
SINCE INCEPTION
CLASS A SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- -------- --------- -------- --------- ----------
AIM Aggressive Growth Fund -20.67% -18.58% 178.42% N/A 05/01/84
AIM Basic Value II Fund N/A N/A N/A -13.71% 08/30/02
AIM Blue Chip Fund -22.33% -13.40% 98.72% N/A 02/04/87
AIM Capital Development Fund -17.63% -3.66% N/A -40.41% 06/17/96
AIM Charter Fund -13.55% -10.33% 94.65% N/A 11/26/68
AIM Constellation Fund -17.63% -15.70% 105.56% N/A 04/30/76
AIM Core Strategies Fund N/A N/A N/A -24.48% 12/31/01
AIM Dent Demographic Trends Fund -25.56% N/A N/A -43.29% 06/07/99
AIM Emerging Growth Fund -28.72% N/A N/A -59.09% 03/31/00
AIM Large Cap Basic Value Fund -20.62% N/A N/A -9.85% 06/30/99
AIM Large Cap Core Equity Fund N/A N/A N/A -17.77%* 12/31/01
AIM Large Cap Growth Fund -21.01% N/A N/A -29.88% 03/01/99
AIM Mid Cap Growth Fund -27.86% N/A N/A -38.09% 11/01/99
AIM U.S. Growth Fund N/A N/A N/A -7.75% 08/30/02
AIM Weingarten Fund -29.20% -35.81% 32.01% N/A 06/17/69
|
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 October 31 are as follows:
PERIODS ENDED
OCTOBER 31, 2002
---------------------------------------------------------------------
SINCE INCEPTION
CLASS B SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- -------- -------- -------- --------- ----------
AIM Aggressive Growth Fund -20.85% N/A N/A -10.27% 03/01/99
AIM Basic Value II Fund N/A N/A N/A -13.27% 08/30/02
AIM Blue Chip Fund -22.39% -13.15% N/A 16.06% 10/01/96
AIM Capital Development Fund -17.73% -3.21% N/A 26.47% 10/01/96
AIM Charter Fund -13.77% -9.94% N/A 46.62% 06/26/95
AIM Constellation Fund -17.77% N/A N/A -17.71% 11/03/97
AIM Core Strategies Fund N/A N/A N/A -24.10% 12/31/01
AIM Dent Demographic Trends Fund -25.65% N/A N/A -43.06% 06/07/99
AIM Emerging Growth Fund -28.75% N/A N/A -58.66% 03/31/00
AIM Large Cap Basic Value Fund -20.66% N/A N/A -18.54% 08/01/00
AIM Large Cap Core Equity Fund N/A N/A N/A -17.82%* 12/31/01
AIM Large Cap Growth Fund -21.11% N/A N/A -36.62% 04/05/99
AIM Mid Cap Growth Fund -27.94% N/A N/A -37.82% 11/01/99
AIM U.S. Growth Fund N/A N/A N/A -7.28% 08/30/02
AIM Weingarten Fund -29.35% -35.39% N/A 2.42% 06/26/95
|
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 October 31 are as follows:
PERIODS ENDED
OCTOBER 31, 2002
----------------------------------------------------------------------
SINCE INCEPTION
CLASS C SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- --------- --------- --------- --------- -----------
AIM Aggressive Growth Fund -17.52% N/A N/A -8.31% 03/01/99
AIM Basic Value II Fund N/A N/A N/A -9.61% 08/30/02
AIM Blue Chip Fund -19.12% -11.39% N/A -14.10% 08/04/97
AIM Capital Development Fund -14.28% -1.52% N/A 5.56% 08/04/97
AIM Charter Fund -10.03% -8.47% N/A -11.43% 08/04/97
AIM Constellation Fund -14.27% -14.15% N/A -17.38% 08/04/97
AIM Core Strategies Fund N/A N/A N/A -20.90% 12/31/01
AIM Dent Demographic Trends Fund -22.52% N/A N/A -41.30% 06/07/99
AIM Emerging Growth Fund -25.75% N/A N/A -57.45% 03/31/00
AIM Large Cap Basic Value Fund -17.32% N/A N/A -16.04% 08/01/00
AIM Large Cap Core Equity Fund N/A N/A N/A -14.36%* 12/31/01
AIM Large Cap Growth Fund -17.67% N/A N/A -34.57% 04/05/99
AIM Mid Cap Growth Fund -24.90% N/A N/A -35.90% 11/01/99
AIM U.S. Growth Fund N/A N/A N/A -3.38% 08/30/02
AIM Weingarten Fund -26.35% -34.55% N/A -35.95% 08/04/97
|
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 October 31 are as follows:
PERIODS ENDED
OCTOBER 31, 2002*
---------------------------------------------------------------------
SINCE INCEPTION
CLASS R SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE**
-------------- -------- --------- ---------- ------------ -----------
AIM Aggressive Growth Fund -16.14% -14.81% 187.74% N/A 06/03/02
AIM Blue Chip Fund -17.90% -8.99% 107.30% N/A 06/03/02
AIM Capital Development Fund -13.01% 1.18% N/A 47.12% 06/03/02
AIM Charter Fund -8.71% -6.08% 101.94% N/A 06/03/02
AIM Constellation Fund -12.63% -11.30% 114.12% N/A 06/03/02
AIM Large Cap Basic Value Fund -16.06% N/A N/A -5.04% 06/03/02
AIM Large Cap Growth Fund -16.51% N/A N/A -26.15% 06/03/02
AIM Mid Cap Growth Fund -23.84% N/A N/A -34.86% 06/03/02
AIM Weingarten Fund -25.15% -32.70% 37.04% N/A 06/03/02
|
* 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.
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 October 31 are as follows:
PERIODS ENDED
OCTOBER 31, 2002
----------------------------------------------------------------------
SINCE INCEPTION
CLASS A SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- -------- --------- -------- ----------- ----------
AIM Aggressive Growth Fund -20.67% -5.41% 9.58% N/A 05/01/84
AIM Basic Value II Fund N/A N/A N/A -13.71% 08/30/02
AIM Blue Chip Fund -22.33% -2.98% 6.08% N/A 02/04/87
AIM Capital Development Fund -17.63% -1.59% N/A 4.77% 06/17/96
AIM Charter Fund -13.55% -3.66% 5.02% N/A 11/26/68
AIM Constellation Fund -17.63% -4.92% 6.30% N/A 04/30/76
AIM Core Strategies Fund N/A N/A N/A -24.48% 12/31/01
AIM Dent Demographic Trends Fund -25.56% N/A N/A -15.37% 06/07/99
AIM Emerging Growth Fund -28.72% N/A N/A -29.75% 03/31/00
AIM Large Cap Basic Value Fund -20.62% N/A N/A -3.47% 06/30/99
AIM Large Cap Core Equity Fund N/A N/A N/A -17.77%* 12/31/01
AIM Large Cap Growth Fund -21.01% N/A N/A -9.22% 03/01/99
AIM Mid Cap Growth Fund -27.86% N/A N/A -14.77% 11/01/99
AIM U.S. Growth Fund N/A N/A N/A -7.75% 08/30/02
AIM Weingarten Fund -29.20% -10.51% 0.43% N/A 06/17/69
|
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 October 31 are as follows:
PERIODS ENDED
OCTOBER 31, 2002
-------------------------------------------------------------------
SINCE INCEPTION
CLASS B SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- -------- --------- -------- --------- ----------
AIM Aggressive Growth Fund -20.85% N/A N/A -4.63% 03/01/99
AIM Basic Value II Fund N/A N/A N/A -13.27% 08/30/02
AIM Blue Chip Fund -22.39% -2.90% N/A 1.97% 10/01/96
AIM Capital Development Fund -17.73% -1.53% N/A 3.19% 10/01/96
AIM Charter Fund -13.77% -3.55% N/A 3.52% 06/26/95
AIM Constellation Fund -17.77% N/A N/A -5.44% 11/03/97
AIM Core Strategies Fund N/A N/A N/A -24.10% 12/31/01
AIM Dent Demographic Trends Fund -25.65% N/A N/A -15.27% 06/07/99
AIM Emerging Growth Fund -28.75% N/A N/A -29.48% 03/31/00
AIM Large Cap Basic Value Fund -20.66% N/A N/A -8.79% 08/01/00
AIM Large Cap Core Equity Fund N/A N/A N/A -17.82%* 12/31/01
AIM Large Cap Growth Fund -21.11% N/A N/A -11.99% 04/05/99
AIM Mid Cap Growth Fund -27.94% N/A N/A -14.65% 11/01/99
AIM U.S. Growth Fund N/A N/A N/A -7.28% 08/30/02
AIM Weingarten Fund -29.35% -10.48% N/A -2.32% 06/26/95
|
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 October 31 are as follows:
PERIODS ENDED
OCTOBER 31, 2002
------------------------------------------------------------------
SINCE INCEPTION
CLASS C SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- -------- --------- --------- --------- -----------
AIM Aggressive Growth Fund -17.52% N/A N/A -4.03% 03/01/99
AIM Basic Value II Fund N/A N/A N/A -9.61% 08/30/02
AIM Blue Chip Fund %-19.12% -2.51% N/A -2.97% 08/04/97
AIM Capital Development Fund -14.28% -1.18% N/A 0.19% 08/04/97
AIM Charter Fund -10.03% -3.21% N/A -3.69% 08/04/97
AIM Constellation Fund -14.27% -4.61% N/A -5.10% 08/04/97
AIM Core Strategies Fund N/A N/A N/A -20.90% 12/31/01
AIM Dent Demographic Trends Fund -22.52% N/A N/A -14.50% 06/07/99
AIM Emerging Growth Fund -25.75% N/A N/A -28.67% 03/31/00
AIM Large Cap Basic Value Fund -17.32% N/A N/A -7.55% 08/01/00
AIM Large Cap Core Equity Fund N/A N/A N/A -14.36% 12/31/01
AIM Large Cap Growth Fund -17.67% N/A N/A -11.20% 04/05/99
AIM Mid Cap Growth Fund -24.90% N/A N/A -13.78% 11/01/99
AIM U.S. Growth Fund N/A N/A N/A -3.38% 08/30/02
AIM Weingarten Fund -26.35% -10.22% N/A -10.15% 08/04/97
|
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 October 31 are as follows:
PERIODS ENDED
OCTOBER 31, 2002
---------------------------------------------------------------------
SINCE INCEPTION
CLASS A SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- --------- --------- ---------- ----------- ------------
AIM Aggressive Growth Fund -12.69% -2.57% 9.47% N/A 05/01/84
AIM Basic Value II Fund N/A N/A N/A -8.41% 08/30/02
AIM Blue Chip Fund -13.71% -2.27% 5.50% N/A 02/04/87
AIM Capital Development Fund -10.83% -0.73% N/A 4.37% 06/17/96
AIM Charter Fund -8.32% -1.84% 5.12% N/A 11/26/68
AIM Constellation Fund -10.83% -2.11% 6.52% N/A 04/30/76
AIM Core Strategies Fund N/A N/A N/A -15.03% 12/31/01
AIM Dent Demographic Trends Fund -15.69% N/A N/A -11.75% 06/07/99
AIM Emerging Growth Fund -17.63% N/A N/A -22.00% 03/31/00
AIM Large Cap Basic Value Fund -12.66% N/A N/A -2.62% 06/30/99
AIM Large Cap Core Equity Fund N/A N/A N/A -10.91%* 12/31/01
AIM Large Cap Growth Fund -12.90% N/A N/A -7.18% 03/01/99
AIM Mid Cap Growth Fund -17.11% N/A N/A -11.41% 11/01/99
AIM U.S. Growth Fund N/A N/A N/A -4.76% 08/30/02
AIM Weingarten Fund -17.93% -5.74% 2.29% N/A 06/17/69
|
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 October 31 are as follows:
PERIODS ENDED
OCTOBER 31, 2002
----------------------------------------------------------------------
SINCE INCEPTION
CLASS B SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- --------- --------- ---------- ----------- ----------
AIM Aggressive Growth Fund -12.80% N/A N/A -1.41% 03/01/99
AIM Basic Value II Fund N/A N/A N/A -8.14% 08/30/02
AIM Blue Chip Fund -13.75% -2.22% N/A 1.85% 10/01/96
AIM Capital Development Fund -10.89% -0.66% N/A 3.08% 10/01/96
AIM Charter Fund -8.46% -1.73% N/A 3.96% 06/26/95
AIM Constellation Fund -10.91% N/A N/A -2.43% 11/03/97
AIM Core Strategies Fund N/A N/A N/A -14.79% 12/31/01
AIM Dent Demographic Trends Fund -15.75% N/A N/A -11.68% 06/07/99
AIM Emerging Growth Fund -17.65% N/A N/A -21.80% 03/31/00
AIM Large Cap Basic Value Fund -12.68% N/A N/A -6.92% 08/01/00
AIM Large Cap Core Equity Fund N/A N/A N/A -10.94%* 12/31/01
AIM Large Cap Growth Fund -12.96% N/A N/A -9.25% 04/05/99
AIM Mid Cap Growth Fund -14.82% N/A N/A -10.67% 11/01/99
AIM U.S. Growth Fund N/A N/A N/A -4.47% 08/30/02
AIM Weingarten Fund -18.02% -5.55% N/A 0.58% 06/26/95
|
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 October 31 are as follows:
PERIODS ENDED
OCTOBER 31, 2002
----------------------------------------------------------------------
SINCE INCEPTION
CLASS C SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
-------------- -------- --------- ---------- ----------- -----------
AIM Aggressive Growth Fund -10.76% N/A N/A -0.97% 03/01/99
AIM Basic Value II Fund N/A N/A N/A -5.90% 08/30/02
AIM Blue Chip Fund -11.74% -1.91% N/A -2.27% 08/04/97
AIM Capital Development Fund -8.77% -0.38% N/A 0.70% 08/04/97
AIM Charter Fund -6.16% -1.48% N/A -1.90% 08/04/97
AIM Constellation Fund -8.76% -1.79% N/A -2.26% 08/04/97
AIM Core Strategies Fund N/A N/A N/A -12.83% 12/31/01
AIM Dent Demographic Trends Fund -13.83% N/A N/A -11.13% 06/07/99
AIM Emerging Growth Fund -15.81% N/A N/A -21.25% 03/31/00
AIM Large Cap Basic Value Fund -10.63% N/A N/A -5.95% 08/01/00
AIM Large Cap Core Equity Fund N/A N/A N/A -8.82% 12/31/01
AIM Large Cap Growth Fund -10.85% N/A N/A -8.86% 04/05/99
AIM Mid Cap Growth Fund -15.29% N/A N/A -10.67% 11/01/99
AIM U.S. Growth Fund N/A N/A N/A -2.07% 08/30/02
AIM Weingarten Fund -16.18% -5.38% N/A -5.43% 08/04/97
|
FINANCIAL STATEMENTS
FS
Report of Independent Auditors
To the Shareholders of AIM Aggressive Growth Fund And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Aggressive Growth Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statements of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the periods presented through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Aggressive Growth Fund as of October 31, 2002, the results of its operations for the period 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.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2002 |
FS-1
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
---------------------------------------------------------------------------
COMMON STOCKS-93.49%
Advertising-0.65%
Lamar Advertising Co.(a) 400,000 $ 13,576,000
===========================================================================
Aerospace & Defense-1.65%
Alliant Techsystems Inc.(a) 500,000 30,075,000
---------------------------------------------------------------------------
L-3 Communications Holdings, Inc.(a) 97,400 4,577,800
===========================================================================
34,652,800
===========================================================================
Air Freight & Logistics-1.76%
C.H. Robinson Worldwide, Inc. 400,000 11,828,000
---------------------------------------------------------------------------
Expeditors International of Washington, Inc. 800,000 25,208,000
===========================================================================
37,036,000
===========================================================================
Apparel Retail-2.72%
AnnTaylor Stores Corp.(a) 500,000 11,715,000
---------------------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 500,000 6,860,000
---------------------------------------------------------------------------
Pacific Sunwear of California, Inc.(a) 1,000,000 23,370,000
---------------------------------------------------------------------------
Too Inc.(a) 600,000 15,180,000
===========================================================================
57,125,000
===========================================================================
Application Software-3.88%
Activision, Inc.(a) 300,000 6,150,000
---------------------------------------------------------------------------
Electronic Arts Inc.(a) 75,000 4,884,000
---------------------------------------------------------------------------
Intuit Inc.(a) 600,000 31,152,000
---------------------------------------------------------------------------
National Instruments Corp.(a) 956,700 27,447,723
---------------------------------------------------------------------------
Reynolds & Reynolds Co. (The)-Class A 500,000 11,835,000
===========================================================================
81,468,723
===========================================================================
Auto Parts & Equipment-3.09%
Gentex Corp.(a) 1,000,000 29,480,000
---------------------------------------------------------------------------
Lear Corp.(a) 500,000 18,275,000
---------------------------------------------------------------------------
Superior Industries International, Inc. 400,000 16,988,000
===========================================================================
64,743,000
===========================================================================
Banks-1.11%
Southwest Bancorp. of Texas, Inc.(a) 300,000 8,475,000
---------------------------------------------------------------------------
TCF Financial Corp. 350,000 14,854,000
===========================================================================
23,329,000
===========================================================================
Broadcasting & Cable TV-1.87%
Hispanic Broadcasting Corp.(a) 979,800 21,065,700
---------------------------------------------------------------------------
Westwood One, Inc.(a) 500,000 18,150,000
===========================================================================
39,215,700
===========================================================================
Computer & Electronics Retail-3.16%
CDW Computer Centers, Inc.(a) 1,250,000 66,275,000
===========================================================================
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Construction & Engineering-2.55%
Jacobs Engineering Group Inc.(a) 1,768,600 $ 53,570,894
===========================================================================
Consumer Finance-0.94%
Doral Financial Corp. 750,000 19,695,000
===========================================================================
Data Processing Services-5.71%
Concord EFS, Inc.(a) 625,000 8,925,000
---------------------------------------------------------------------------
DST Systems, Inc.(a) 500,000 15,375,000
---------------------------------------------------------------------------
Fiserv, Inc.(a) 1,315,000 41,080,600
---------------------------------------------------------------------------
Iron Mountain Inc.(a) 400,000 11,284,000
---------------------------------------------------------------------------
Paychex, Inc. 1,500,000 43,230,000
===========================================================================
119,894,600
===========================================================================
Department Stores-0.56%
Kohl's Corp.(a) 200,000 11,690,000
===========================================================================
Diversified Commercial Services-3.14%
Apollo Group, Inc.-Class A(a) 125,000 5,187,500
---------------------------------------------------------------------------
ChoicePoint Inc.(a) 300,000 11,358,000
---------------------------------------------------------------------------
Cintas Corp. 500,000 23,635,000
---------------------------------------------------------------------------
H&R Block, Inc. 250,000 11,095,000
---------------------------------------------------------------------------
Regis Corp. 500,000 14,670,000
===========================================================================
65,945,500
===========================================================================
Diversified Financial Services-4.16%
Federated Investors, Inc.-Class B 500,000 13,400,000
---------------------------------------------------------------------------
Investors Financial Services Corp. 1,201,200 36,840,804
---------------------------------------------------------------------------
Legg Mason, Inc. 250,000 11,615,000
---------------------------------------------------------------------------
Moody's Corp. 219,600 10,343,160
---------------------------------------------------------------------------
SEI Investments Co. 185,000 4,937,650
---------------------------------------------------------------------------
Waddell & Reed Financial, Inc.-Class A 575,000 10,062,500
===========================================================================
87,199,114
===========================================================================
Electronic Equipment & Instruments-0.62%
Molex Inc.-Class A 560,000 13,008,800
===========================================================================
Employment Services-1.79%
Robert Half International Inc.(a) 2,250,000 37,575,000
===========================================================================
General Merchandise Stores-1.25%
Dollar Tree Stores, Inc.(a) 1,000,000 26,290,000
===========================================================================
Health Care Distributors & Services-6.48%
AmerisourceBergen Corp. 630,000 44,824,500
---------------------------------------------------------------------------
Express Scripts, Inc.(a) 1,000,000 54,180,000
---------------------------------------------------------------------------
|
FS-2
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Health Care Distributors & Services-(Continued)
Lincare Holdings Inc.(a) 750,000 $ 25,552,500
---------------------------------------------------------------------------
Patterson Dental Co.(a) 221,800 11,424,918
===========================================================================
135,981,918
===========================================================================
Health Care Equipment-4.03%
Biomet, Inc. 400,000 11,784,000
---------------------------------------------------------------------------
Fisher Scientific International Inc.(a) 1,250,000 35,750,000
---------------------------------------------------------------------------
ResMed Inc. 737,100 24,891,867
---------------------------------------------------------------------------
Varian Medical Systems, Inc.(a) 250,000 12,055,000
===========================================================================
84,480,867
===========================================================================
Health Care Facilities-3.61%
Community Health Systems Inc.(a) 1,000,000 23,500,000
---------------------------------------------------------------------------
Health Management Associates, Inc.-Class A 1,500,000 28,680,000
---------------------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 750,000 23,512,500
===========================================================================
75,692,500
===========================================================================
Industrial Machinery-2.07%
Danaher Corp. 750,000 43,387,500
===========================================================================
Insurance Brokers-0.75%
Brown & Brown, Inc. 521,000 15,838,400
===========================================================================
Internet Retail-0.53%
eBay Inc.(a) 175,000 11,070,500
===========================================================================
IT Consulting & Services-5.23%
Affiliated Computer Services, Inc.-Class A(a) 1,250,000 57,562,500
---------------------------------------------------------------------------
CACI International Inc.-Class A(a) 325,000 13,295,750
---------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 1,750,000 38,797,500
===========================================================================
109,655,750
===========================================================================
Managed Health Care-3.82%
Caremark Rx, Inc.(a) 2,000,000 35,400,000
---------------------------------------------------------------------------
First Health Group Corp.(a) 1,720,400 44,695,992
===========================================================================
80,095,992
===========================================================================
Multi-Line Insurance-1.46%
HCC Insurance Holdings, Inc. 1,250,000 30,662,500
===========================================================================
Oil & Gas Drilling-6.30%
ENSCO International Inc. 750,000 20,280,000
---------------------------------------------------------------------------
National-Oilwell, Inc.(a) 1,000,000 20,850,000
---------------------------------------------------------------------------
Patterson-UTI Energy, Inc.(a) 1,500,000 43,380,000
---------------------------------------------------------------------------
Pride International, Inc.(a) 2,250,000 31,230,000
---------------------------------------------------------------------------
Varco International, Inc.(a) 1,000,000 16,440,000
===========================================================================
132,180,000
===========================================================================
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Oil & Gas Equipment & Services-1.63%
Cal Dive International, Inc.(a) 1,000,000 $ 21,970,000
---------------------------------------------------------------------------
Cooper Cameron Corp.(a) 261,200 12,177,144
===========================================================================
34,147,144
===========================================================================
Oil & Gas Exploration & Production-0.83%
Newfield Exploration Co.(a) 500,000 17,495,000
===========================================================================
Pharmaceuticals-2.19%
Medicis Pharmaceutical Corp.-Class A(a) 1,000,000 45,900,000
===========================================================================
Property & Casualty Insurance-0.22%
ACE Ltd. (Cayman Islands) 150,000 4,612,500
===========================================================================
Restaurants-3.77%
CBRL Group, Inc. 500,000 11,715,000
---------------------------------------------------------------------------
CEC Entertainment Inc.(a) 600,000 16,680,000
---------------------------------------------------------------------------
Cheesecake Factory Inc. (The)(a) 450,000 15,255,000
---------------------------------------------------------------------------
Sonic Corp.(a) 499,950 11,633,837
---------------------------------------------------------------------------
Starbucks Corp.(a) 1,000,000 23,750,000
===========================================================================
79,033,837
===========================================================================
Semiconductors-2.98%
Linear Technology Corp. 750,000 20,730,000
---------------------------------------------------------------------------
Microchip Technology Inc. 1,000,000 24,400,000
---------------------------------------------------------------------------
QLogic Corp.(a) 500,000 17,380,000
===========================================================================
62,510,000
===========================================================================
Specialty Chemicals-0.99%
Valspar Corp. (The) 500,000 20,885,000
===========================================================================
Specialty Stores-3.39%
Bed Bath & Beyond Inc.(a) 1,000,000 35,460,000
---------------------------------------------------------------------------
Williams-Sonoma, Inc.(a) 1,500,000 35,700,000
===========================================================================
71,160,000
===========================================================================
Telecommunications Equipment-0.98%
UTStarcom, Inc.(a) 1,200,000 20,496,000
===========================================================================
Trading Companies & Distributors-1.62%
Fastenal Co. 1,000,000 33,950,000
===========================================================================
Total Common Stocks (Cost $1,815,413,949) 1,961,525,539
===========================================================================
|
FS-3
MARKET
SHARES VALUE
---------------------------------------------------------------------------
MONEY MARKET FUNDS-6.73%
STIC Liquid Assets Portfolio(b) 70,615,747 $ 70,615,747
---------------------------------------------------------------------------
STIC Prime Portfolio(b) 70,615,747 70,615,747
===========================================================================
Total Money Market Funds (Cost
$141,231,494) 141,231,494
===========================================================================
TOTAL INVESTMENTS-100.22% (Cost
$1,956,645,443)(c) 2,102,757,033
===========================================================================
OTHER ASSETS LESS LIABILITIES-(0.22%) (4,682,077)
===========================================================================
NET ASSETS-100.00% $2,098,074,956
___________________________________________________________________________
===========================================================================
|
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.
(c) The Investment Company Act of 1940 defines affiliates as those companies in
which a fund holds 5% or more of the outstanding voting securities.
Following is a summary of the transactions with affiliates for the year
ended October 31, 2002.
CHANGE IN
MARKET UNREALIZED MARKET
VALUE PURCHASES SALES APPRECIATION VALUE DIVIDEND REALIZED
10/31/2001 AT COST AT COST (DEPRECIATION) 10/31/2002 INCOME GAIN/(LOSS)
---------------------------------------------------------------------------------------------------------------------------------
Tetra Tech, Inc............. $62,112,000 $ -- $(57,037,978) $(5,074,022) $ -- $ -- $(10,809,052)
Vans, Inc................... 17,950,000 -- (18,219,064) 269,064 -- -- (3,449,586)
=================================================================================================================================
$80,062,000 $ -- $ -- $(14,258,638)
_______________________________________________________________________________________________________________________________
=================================================================================================================================
|
See Notes to Financial Statements.
FS-4
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost $1,956,645,443)* $2,102,757,033
---------------------------------------------------------------------
Receivables for:
Investments sold 32,642,285
---------------------------------------------------------------------
Fund shares sold 1,042,129
---------------------------------------------------------------------
Dividends 587,766
---------------------------------------------------------------------
Investment for deferred compensation plan 77,197
---------------------------------------------------------------------
Collateral for securities loaned 596,209,634
---------------------------------------------------------------------
Other assets 69,721
=====================================================================
Total assets 2,733,385,765
_____________________________________________________________________
=====================================================================
LIABILITIES:
Payables for:
Investments purchased 31,163,532
---------------------------------------------------------------------
Fund shares reacquired 4,848,413
---------------------------------------------------------------------
Deferred compensation plan 77,197
---------------------------------------------------------------------
Collateral upon return of securities loaned 596,209,634
---------------------------------------------------------------------
Accrued distribution fees 834,639
---------------------------------------------------------------------
Accrued trustees' fees 2,141
---------------------------------------------------------------------
Accrued transfer agent fees 1,686,114
---------------------------------------------------------------------
Accrued operating expenses 489,139
=====================================================================
Total liabilities 635,310,809
=====================================================================
Net assets applicable to shares outstanding $2,098,074,956
_____________________________________________________________________
=====================================================================
NET ASSETS:
Class A $1,798,317,504
_____________________________________________________________________
=====================================================================
Class B $ 226,806,244
_____________________________________________________________________
=====================================================================
Class C $ 72,676,014
_____________________________________________________________________
=====================================================================
Class R $ 137,084
_____________________________________________________________________
=====================================================================
Institutional Class $ 138,110
_____________________________________________________________________
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 246,501,426
_____________________________________________________________________
=====================================================================
Class B 32,199,073
_____________________________________________________________________
=====================================================================
Class C 10,319,202
_____________________________________________________________________
=====================================================================
Class R 18,811
_____________________________________________________________________
=====================================================================
Institutional Class 18,865
_____________________________________________________________________
=====================================================================
Class A:
Net asset value per share $ 7.30
---------------------------------------------------------------------
Offering price per share:
(Net asset value of $7.30 divided by 94.50%) $ 7.72
_____________________________________________________________________
=====================================================================
Class B:
Net asset value and offering price per share $ 7.04
_____________________________________________________________________
=====================================================================
Class C:
Net asset value and offering price per share $ 7.04
_____________________________________________________________________
=====================================================================
Class R:
Net asset value and offering price per share $ 7.29
_____________________________________________________________________
=====================================================================
Institutional Class:
Net asset value and offering price per share $ 7.32
_____________________________________________________________________
=====================================================================
|
* At October 31, 2002, securities with an aggregate market value of $580,852,013 were on loan to brokers. Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $22,625) $ 5,288,856
--------------------------------------------------------------------
Dividends from affiliated money market funds 1,521,952
--------------------------------------------------------------------
Interest 661
--------------------------------------------------------------------
Security lending income 1,844,648
====================================================================
Total investment income 8,656,117
====================================================================
EXPENSES:
Advisory fees 17,081,494
--------------------------------------------------------------------
Administrative services fees 383,159
--------------------------------------------------------------------
Custodian fees 236,351
--------------------------------------------------------------------
Distribution fees -- Class A 5,780,784
--------------------------------------------------------------------
Distribution fees -- Class B 2,857,330
--------------------------------------------------------------------
Distribution fees -- Class C 929,471
--------------------------------------------------------------------
Distribution fees -- Class R 69
--------------------------------------------------------------------
Transfer agent fees 10,159,914
--------------------------------------------------------------------
Transfer agent fees -- Institutional Class 32
--------------------------------------------------------------------
Trustees' fees 21,665
--------------------------------------------------------------------
Other 1,001,546
====================================================================
Total expenses 38,451,815
====================================================================
Less: Fees waived (16,400)
--------------------------------------------------------------------
Expenses paid indirectly (41,491)
====================================================================
Net expenses 38,393,924
====================================================================
Net investment income (loss) (29,737,807)
====================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES:
Net realized gain (loss) from investment securities (454,400,428)
--------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 70,396,760
====================================================================
Net gain (loss) from investment securities (384,003,668)
====================================================================
Net increase (decrease) in net assets resulting from
operations $(413,741,475)
____________________________________________________________________
====================================================================
|
See Notes to Financial Statements.
FS-5
Statement of Changes in Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (29,737,807) $ (33,053,668)
------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (454,400,428) (655,234,334)
------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities 70,396,760 (1,352,849,651)
================================================================================================
Net increase (decrease) in net assets resulting from
operations (413,741,475) (2,041,137,653)
================================================================================================
Distributions to shareholders from net realized gains:
Class A -- (805,640,320)
------------------------------------------------------------------------------------------------
Class B -- (74,578,792)
------------------------------------------------------------------------------------------------
Class C -- (23,638,642)
------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (368,156,521) 676,696,702
------------------------------------------------------------------------------------------------
Class B (19,209,543) 177,773,085
------------------------------------------------------------------------------------------------
Class C (8,446,307) 58,760,112
------------------------------------------------------------------------------------------------
Class R 133,795 --
------------------------------------------------------------------------------------------------
Institutional Class 145,043 --
================================================================================================
Net increase (decrease) in net assets (809,275,008) (2,031,765,508)
________________________________________________________________________________________________
================================================================================================
NET ASSETS:
Beginning of year 2,907,349,964 4,939,115,472
================================================================================================
End of year $ 2,098,074,956 $ 2,907,349,964
________________________________________________________________________________________________
================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 3,061,994,083 $ 3,487,258,638
------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (208,878) (202,093)
------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (1,109,821,839) (655,421,411)
------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 146,111,590 75,714,830
================================================================================================
$ 2,098,074,956 $ 2,907,349,964
________________________________________________________________________________________________
================================================================================================
|
See Notes to Financial Statements.
FS-6
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Aggressive Growth Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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. Class R shares and Institutional Class shares are sold at net asset value. 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 and commercial paper 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. 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 gain, 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 gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
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.
FS-7
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 master 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 year ended October 31, 2002, AIM waived fees of $16,400.
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 October 31, 2002, AIM was paid $383,159 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 October 31, 2002, AFS retained $4,349,971 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 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B, Class C and Class R shares paid $5,780,784, $2,857,330, $929,471, and $69, respectively.
AIM Distributors retained commissions of $401,540 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $61,820, $0, $27,024, and $0 in contingent deferred sales charges imposed on redemptions of Class A, Class B, Class C, and Class R shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 2002, the Fund paid legal fees of $11,792 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 October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $40,361 and reductions in custodian fees of $1,130 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $41,491.
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 year ended October 31,
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 October 31, 2002, securities with an aggregate value of $580,852,013 were
on loan to brokers. The loans were secured by cash collateral of $596,209,634
received by the Fund and invested in affiliated money market funds as follows:
$298,104,817 in STIC Liquid Assets Portfolio and $298,104,817 in STIC Prime
Portfolio. For the year ended October 31, 2002, the Fund received fees of
$1,844,648 for securities lending.
FS-8
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
---------------------------------------------------------------
Distributions paid from long-term
capital gain $ -- $903,857,754
_______________________________________________________________
===============================================================
|
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation -- investments $ 136,901,651
--------------------------------------------------------------
Temporary book/tax differences (208,878)
--------------------------------------------------------------
Capital loss carryforward (1,100,611,900)
--------------------------------------------------------------
Shares of beneficial interest 3,061,994,083
==============================================================
$ 2,098,074,956
______________________________________________________________
==============================================================
|
The difference between book-basis and tax-basis unrealized appreciation is due to differences in the timing of recognition of gains and losses on investments for book and tax purposes. The Fund's unrealized appreciation difference is attributable primarily to the deferral of losses on wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the deferral of trustee compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-------------------------------------------------------------
October 31, 2009 $ 636,872,876
-------------------------------------------------------------
October 31, 2010 463,739,024
=============================================================
$1,100,611,900
_____________________________________________________________
=============================================================
|
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 October 31, 2002 was $1,758,341,136 and $2,242,381,518, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 243,936,819 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (107,035,168) ============================================================= Net unrealized appreciation of investment securities $ 136,901,651 _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $1,965,855,382. |
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of the reclassification of a net operating loss and other reclassifications on October 31, 2002, undistributed net investment income (loss) was increased by $29,731,022 and shares of beneficial interest decreased by $29,731,022. This reclassification had no effect on the net assets of the Fund.
FS-9
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 44,249,623* $385,941,183* 66,113,301 $ 764,231,772
--------------------------------------------------------------------------------------------------------------------------
Class B 6,507,666 55,189,130 16,139,430 187,252,162
--------------------------------------------------------------------------------------------------------------------------
Class C 2,934,855 24,752,456 6,138,899 70,314,475
--------------------------------------------------------------------------------------------------------------------------
Class R** 18,814 133,820 -- --
--------------------------------------------------------------------------------------------------------------------------
Institutional Class*** 18,865 145,043 -- --
==========================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 59,903,743 755,374,108
--------------------------------------------------------------------------------------------------------------------------
Class B -- -- 5,828,105 71,964,367
--------------------------------------------------------------------------------------------------------------------------
Class C -- -- 1,838,406 22,685,441
==========================================================================================================================
Reacquired:
Class A (87,574,389) (754,097,704) (77,634,743) (842,909,178)
--------------------------------------------------------------------------------------------------------------------------
Class B (9,151,616)* (74,398,673)* (7,763,426) (81,443,444)
--------------------------------------------------------------------------------------------------------------------------
Class C (4,058,002) (33,198,763) (3,192,257) (34,239,804)
--------------------------------------------------------------------------------------------------------------------------
Class R** (3) (25) -- --
==========================================================================================================================
(47,054,187) $(395,533,533) 67,371,458 $ 913,229,899
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
* Includes automatic conversion of 188,487 shares of Class B shares in the amount of $1,563,408 to 182,647 shares of Class A shares in the amount of $1,563,408. ** Class R shares commenced sales on June 3, 2002. *** Institutional shares commenced sales on March 15, 2002.
FS-10
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A(a)
------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.68 $ 18.41 $ 13.90 $ 10.04 $ 12.49
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)(b) (0.09)(b) (0.13) (0.09) (0.08)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (1.29) (6.34) 11.08 4.05 (1.93)
=================================================================================================================================
Total from investment operations (1.38) (6.43) 10.95 3.96 (2.01)
=================================================================================================================================
Less distributions from net realized gains -- (3.30) (6.44) (0.10) (0.44)
=================================================================================================================================
Net asset value, end of period $ 7.30 $ 8.68 $ 18.41 $ 13.90 $ 10.04
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (15.90)% (40.51)% 47.53% 39.73% (16.36)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,798,318 $2,516,407 $4,444,515 $2,808,451 $2,638,038
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.32%(d) 1.17% 1.04% 1.09% 1.06%
=================================================================================================================================
Ratio of net investment income (loss) to average
net assets (1.00)%(d) (0.79)% (0.77)% (0.69)% (0.64)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 68% 89% 79% 75% 69%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information and distributions prior to October 31, 1999 have
been restated to reflect a 4 for 1 stock split, effected in the form of
a 300% stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles and does not include sales charges.
(d) Ratios are based on average daily net assets of $2,312,313,674.
CLASS B(a)
----------------------------------------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED) TO
-------------------------------------- OCTOBER 31,
2002 2001 2000 1999
------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.45 $ 18.12 $ 13.81 $ 10.85
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)(b) (0.17)(b) (0.29) (0.07)
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.26) (6.20) 11.04 3.03
========================================================================================================================
Total from investment operations (1.41) (6.37) 10.75 2.96
========================================================================================================================
Less distributions from net realized gains -- (3.30) (6.44) --
========================================================================================================================
Net asset value, end of period $ 7.04 $ 8.45 $ 18.12 $ 13.81
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(c) (16.69)% (40.90)% 46.29% 27.27%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $226,806 $294,303 $374,010 $24,914
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets 2.07%(d) 1.94% 1.86% 2.08%(e)
========================================================================================================================
Ratio of net investment income (loss) to average net assets (1.75)%(d) (1.55)% (1.59)% (1.68)%(e)
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate 68% 89% 79% 75%
________________________________________________________________________________________________________________________
========================================================================================================================
|
(a) Per share information and distributions prior to October 31, 1999 have
been restated to reflect a 4 for 1 stock split, effected in the form of
a 300% stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles, 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 $285,732,961.
(e) Annualized.
FS-11
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C(a)
--------------------------------------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED) TO
------------------------------------ OCTOBER 31,
2002 2001 2000 1999
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.45 $ 18.11 $ 13.81 $10.85
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)(b) (0.17)(b) (0.29) (0.07)
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.26) (6.19) 11.03 3.03
======================================================================================================================
Total from investment operations (1.41) (6.36) 10.74 2.96
======================================================================================================================
Less distributions from net realized gains -- (3.30) (6.44) --
======================================================================================================================
Net asset value, end of period $ 7.04 $ 8.45 $ 18.11 $13.81
______________________________________________________________________________________________________________________
======================================================================================================================
Total return(c) (16.69)% (40.86)% 46.21% 27.27%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $72,676 $96,640 $120,591 $6,807
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets 2.07%(d) 1.94%(d) 1.86% 2.08%(e)
======================================================================================================================
Ratio of net investment income (loss) to average net assets (1.75)%(d) (1.55)%(d) (1.59)% (1.68)%(e)
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate 68% 89% 79% 75%
______________________________________________________________________________________________________________________
======================================================================================================================
|
(a) Per share information and distributions prior to October 31, 1999 have
been restated to reflect a 4 for 1 stock split, effected in the form of
a 300% stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles, 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 $92,947,098.
(e) Annualized.
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------
Net asset value, beginning of period $ 8.89
---------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a)
---------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.56)
===========================================================================
Total from investment operations (1.60)
===========================================================================
Net asset value, end of period $ 7.29
___________________________________________________________________________
===========================================================================
Total return(b) (18.00)%
___________________________________________________________________________
===========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 137
___________________________________________________________________________
===========================================================================
Ratio of expenses to average net assets 1.62%(c)
===========================================================================
Ratio of net investment income (loss) to average net assets (1.30)%(c)
___________________________________________________________________________
===========================================================================
Portfolio turnover rate 68%
___________________________________________________________________________
===========================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $33,556.
FS-12
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
INSTITUTIONAL CLASS
-------------------
MARCH 15, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.53
---------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a)
---------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.19)
=================================================================================
Total from investment operations (2.21)
=================================================================================
Net asset value, end of period $ 7.32
_________________________________________________________________________________
=================================================================================
Total return(b) (23.19)%
_________________________________________________________________________________
=================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 138
_________________________________________________________________________________
=================================================================================
Ratio of expenses to average net assets 0.81%(c)
=================================================================================
Ratio of net investment income (loss) to average net assets (0.49)%(c)
_________________________________________________________________________________
=================================================================================
Portfolio turnover rate 68%
_________________________________________________________________________________
=================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $50,407.
FS-13
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Basic Value II Fund And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Basic Value II Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations, the statement of changes in net assets and the financial highlights for the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Basic Value II Fund as of October 31, 2002, the results of its operations, the changes in its net assets and the financial highlights for the period then ended in conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP Houston, Texas December , 2002 |
FS-14
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
-----------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-97.94%
Advertising-4.38%
Interpublic Group of Cos., Inc. (The) 1,900 $ 22,743
-----------------------------------------------------------------
Omnicom Group Inc. 300 17,289
=================================================================
40,032
=================================================================
Aerospace & Defense-1.84%
Honeywell International Inc. 700 16,758
=================================================================
Apparel Retail-2.71%
Gap, Inc. (The) 2,100 24,717
=================================================================
Banks-2.96%
Bank One Corp. 700 26,999
=================================================================
Building Products-2.92%
American Standard Cos. Inc.(a) 400 26,680
=================================================================
Data Processing Services-4.79%
Ceridian Corp.(a) 1,400 19,292
-----------------------------------------------------------------
First Data Corp. 700 24,458
=================================================================
43,750
=================================================================
Diversified Commercial Services-3.71%
Cendant Corp.(a) 1,400 16,100
-----------------------------------------------------------------
H&R Block, Inc. 400 17,752
=================================================================
33,852
=================================================================
Diversified Financial Services-16.96%
Citigroup Inc. 1,100 40,645
-----------------------------------------------------------------
Freddie Mac 500 30,790
-----------------------------------------------------------------
J.P. Morgan Chase & Co. 1,400 29,050
-----------------------------------------------------------------
Merrill Lynch & Co., Inc. 1,000 37,950
-----------------------------------------------------------------
Stilwell Financial, Inc. 1,400 16,394
=================================================================
154,829
=================================================================
Electronic Equipment & Instruments-2.76%
Waters Corp.(a) 1,000 25,180
=================================================================
Employment Services-2.01%
Robert Half International Inc.(a) 1,100 18,370
=================================================================
Environmental Services-3.53%
Waste Management, Inc. 1,400 32,228
=================================================================
Food Retail-4.62%
Kroger Co. (The)(a) 1,600 23,744
-----------------------------------------------------------------
|
MARKET
SHARES VALUE
-----------------------------------------------------------------
Food Retail-(Continued)
Safeway Inc.(a) 800 $ 18,480
=================================================================
42,224
=================================================================
Health Care Distributors & Services-2.80%
IMS Health Inc. 1,700 25,568
=================================================================
Hotels, Resorts & Cruise Lines-2.55%
Starwood Hotels & Resorts Worldwide, Inc. 1,000 23,300
=================================================================
Industrial Conglomerates-3.80%
Tyco International Ltd. (Bermuda) 2,400 34,704
=================================================================
Leisure Products-2.71%
Brunswick Corp. 1,200 24,696
=================================================================
Managed Health Care-2.87%
Aetna Inc. 650 26,195
=================================================================
Multi-Utilities & Unregulated Power-2.24%
Duke Energy Corp. 1,000 20,490
=================================================================
Oil & Gas Drilling-5.54%
Pride International, Inc.(a) 1,900 26,372
-----------------------------------------------------------------
Transocean Inc. 1,100 24,178
=================================================================
50,550
=================================================================
Oil & Gas Equipment & Services-4.39%
Schlumberger Ltd. 500 20,055
-----------------------------------------------------------------
Weatherford International Ltd.(a) 500 20,020
=================================================================
40,075
=================================================================
Pharmaceuticals-1.83%
Wyeth 500 16,750
=================================================================
Property & Casualty Insurance-4.96%
ACE Ltd. (Bermuda) 900 27,675
-----------------------------------------------------------------
Radian Group Inc. 500 17,635
=================================================================
45,310
=================================================================
Restaurants-2.98%
Outback Steakhouse, Inc. 800 27,240
=================================================================
Semiconductor Equipment-4.50%
Novellus Systems, Inc.(a) 1,300 41,080
=================================================================
|
FS-15
MARKET
SHARES VALUE
-----------------------------------------------------------------
Systems Software-3.58%
Computer Associates International, Inc. 2,200 $ 32,692
=================================================================
Total Common Stocks & Other Equity
Interests (Cost $960,073) 894,269
=================================================================
TOTAL INVESTMENTS-97.94% (Cost $960,073) 894,269
=================================================================
OTHER ASSETS LESS LIABILITIES-2.06% 18,854
=================================================================
NET ASSETS-100.00% $913,123
_________________________________________________________________
=================================================================
|
Notes to Schedule of Investments:
(a) Non-income producing security.
See Notes to Financial Statements.
FS-16
AIM BASIC VALUE II
ASSETS:
Investments, at market value (cost
$960,073) $894,269
---------------------------------------------------------------------------------
Cash 21,070
---------------------------------------------------------------------------------
Receivables for:
Amount due from Advisor 13,770
---------------------------------------------------------------------------------
Dividends 486
=================================================================================
Total assets 929,595
_________________________________________________________________________________
=================================================================================
LIABILITIES:
Accrued trustees' fees 626
---------------------------------------------------------------------------------
Accrued transfer agent fees 147
---------------------------------------------------------------------------------
Accrued operating expenses 15,699
=================================================================================
Total liabilities 16,472
=================================================================================
Net assets applicable to shares outstanding $913,123
_________________________________________________________________________________
=================================================================================
NET ASSETS:
Class A $365,247
_________________________________________________________________________________
=================================================================================
Class B $273,938
_________________________________________________________________________________
=================================================================================
Class C $273,938
_________________________________________________________________________________
=================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 40,001
_________________________________________________________________________________
=================================================================================
Class B 30,001
_________________________________________________________________________________
=================================================================================
Class C 30,001
_________________________________________________________________________________
=================================================================================
Class A:
Net asset value per share $ 9.13
---------------------------------------------------------------------------------
Offering price per share:
(Net asset value of $9.13 / 94.50%) $ 9.66
_________________________________________________________________________________
=================================================================================
Class B:
Net asset value and offering price per share $ 9.13
_________________________________________________________________________________
=================================================================================
Class C:
Net asset value and offering price per share $ 9.13
_________________________________________________________________________________
=================================================================================
|
See Notes to Financial Statements.
FS-17
FOR THE PERIOD AUGUST 30, 2002 (DATE OPERATIONS COMMENCED) TO OCTOBER 31, 2002
INVESTMENT INCOME:
Dividends $ 1,642
---------------------------------------------------------------------------------------------------
Interest 295
===================================================================================================
Total investment income 1,937
===================================================================================================
EXPENSES:
Advisory fees 1,164
---------------------------------------------------------------------------------------------------
Administrative services fees 8,493
---------------------------------------------------------------------------------------------------
Custodian fees 1,826
---------------------------------------------------------------------------------------------------
Distribution fees -- Class A 218
---------------------------------------------------------------------------------------------------
Distribution fees -- Class B 465
---------------------------------------------------------------------------------------------------
Distribution fees -- Class C 465
---------------------------------------------------------------------------------------------------
Transfer agent fees 264
---------------------------------------------------------------------------------------------------
Trustees' fees 2,615
---------------------------------------------------------------------------------------------------
Printing 9,234
---------------------------------------------------------------------------------------------------
Professional fees 11,588
---------------------------------------------------------------------------------------------------
Other 1,107
===================================================================================================
Total expenses 37,439
===================================================================================================
Less: Fees waived and expenses reimbursed (34,726)
---------------------------------------------------------------------------------------------------
Expenses paid indirectly (11)
===================================================================================================
Net expenses 2,702
===================================================================================================
Net investment income (loss) (765)
===================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment securities (20,338)
---------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investment securities (65,804)
===================================================================================================
Net gain (loss) from investment securities (86,142)
===================================================================================================
Net increase (decrease) in net assets resulting from operations $(86,907)
___________________________________________________________________________________________________
===================================================================================================
|
See Notes to Financial Statements.
FS-18
FOR THE PERIOD AUGUST 30, 2002 (DATE OPERATIONS COMMENCED) TO OCTOBER 31, 2002
OCTOBER 31
2002
------------
OPERATIONS:
Net investment income (loss) $ (765)
--------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (20,338)
--------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investment securities (65,804)
========================================================================================================
Net increase (decrease) in net assets resulting from operations (86,907)
========================================================================================================
Share transactions-net:
Class A 400,010
--------------------------------------------------------------------------------------------------------
Class B 300,010
--------------------------------------------------------------------------------------------------------
Class C 300,010
========================================================================================================
Net increase in net assets 913,123
========================================================================================================
NET ASSETS:
Beginning of period --
========================================================================================================
End of period $913,123
________________________________________________________________________________________________________
========================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $993,034
--------------------------------------------------------------------------------------------------------
Undistributed net investment income 6,231
--------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment securities (20,338)
--------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities (65,804)
========================================================================================================
$913,123
________________________________________________________________________________________________________
========================================================================================================
|
See Notes to Financial Statements.
FS-19
OCTOBER 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Basic Value II Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen separate portfolios, each having an unlimited number of shares of beneficial interest. The Fund commenced operations August 30, 2002 and consists of three different classes of shares that are not currently available for sale: Class A shares, Class B shares and Class C shares. 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 provide 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 and commercial paper 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. 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.
FS-20
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 gain, 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 gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
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 0.75% of the first $1 billion of the Fund's average daily net assets, plus 0.70% of the Fund's next $1 billion of average daily net assets, plus 0.65% of the Fund's average daily nest assets in excess of $2 billion. AIM has voluntarily 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 1.75% which may be terminated or modified at any time. 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 period August 30, 2002 (date operations commenced) through October 31, 2002, AIM waived fees of $1,164 and reimbursed expenses of $32,414.
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 period August 30, 2002 (date operations commenced) through October 31, 2002, AIM was paid $8,493 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 August 30, 2002 (date operations commenced) through October 31, 2002, AFS retained $6 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the
FS-21
Fund. AIM Distributors has voluntarily agreed to waive all fees during the time the shares are not available for sale. This waiver may be terminated or modified at any time. Pursuant to the master distribution agreements, for the period August 30, 2002 (date operations commenced) through October 31, 2002, AIM Distributors waived fees of $217, $465 and $466 for 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 period August 30, 2002 (date operations commenced) through October 31, 2002, the Fund paid legal fees of $0 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 period August 30, 2002 (date operations commenced) through October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $2 and reductions in custodian fees of $9 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $11.
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--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid during the period August 30, 2002 (date operations commenced) through October 31, 2002.
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Undistributed ordinary income $ 6,691
Unrealized appreciation (depreciation) - investments (65,804)
Temporary book/tax differences (460)
Capital loss carryforward (20,338)
Shares of beneficial interest 993,034
--------------------------------------------------------------------------
$913,123
==========================================================================
|
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book and tax differences are the result of stock issuance costs.
The Fund's capital loss carryforward expires as follows:
Capital
Expiration Loss Carryforward
------------------------ ------------------------
October 31, 2010 $20,338
|
NOTE 6--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the period August 30, 2002 (date operations commenced) through October 31, 2002 was $1,017,941 and $37,530, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of
FS-22
October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ -- ----------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (65,804) ================================================================= Net unrealized appreciation (depreciation) of investment securities $(65,804) _________________________________________________________________ ================================================================= |
Investments have the same cost for tax and financial statement purposes.
NOTE 7--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of nondeductible stock issuance costs on October 31, 2002, undistributed net investment income was increased by $6,996 and shares of beneficial interest decreased by $6,996. The reclassification has no effect on net assets of the Fund.
NOTE 8--SHARE INFORMATION
Changes in shares outstanding during the period August 30, 2002 (date operations commenced) through October 31, 2002 were as follows:
2002
----------------------------------
Shares Amount
------------ ------------
Sold:
Class A* 40,001 $ 400,010
------------------------------------------------------------------------------
Class B* 30,001 300,010
------------------------------------------------------------------------------
Class C* 30,001 300,010
==============================================================================
100,003 $1,000,030
______________________________________________________________________________
==============================================================================
|
* Currently all shares are owned by AIM.
FS-23
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the period August 30, 2002 (date operations commenced) through October 31, 2002.
CLASS A
----------------
AUGUST 30, 2002
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2002
----------------
Net asset value, beginning of period $ 10.00
-------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)
-------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (0.86)
===========================================================================================
Total from investment operations (0.87)
===========================================================================================
Net asset value, end of period $ 9.13
___________________________________________________________________________________________
===========================================================================================
Total return (a) (8.70)%
___________________________________________________________________________________________
===========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 365
___________________________________________________________________________________________
===========================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.75%(b)
-------------------------------------------------------------------------------------------
Without fee waivers 23.74%(b)
___________________________________________________________________________________________
===========================================================================================
Ratio of net investment income (loss) to average net assets (0.49)%(b)
___________________________________________________________________________________________
===========================================================================================
Portfolio turnover rate 4%
___________________________________________________________________________________________
===========================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting
principles, 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
$359,547.
FS-24
NOTE 9--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
----------------
AUGUST 30, 2002
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2002
----------------
Net asset value, beginning of period $10.00
------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)
------------------------------------------------------------------------------------
Net losses on securities (both realized and unrealized) (0.86)
====================================================================================
Total from investment operations (0.87)
====================================================================================
Net asset value, end of period $ 9.13
____________________________________________________________________________________
====================================================================================
Total return(a) (8.70)%
____________________________________________________________________________________
====================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 274
____________________________________________________________________________________
====================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.75%(b)
------------------------------------------------------------------------------------
Without fee waivers 24.39%(b)
____________________________________________________________________________________
====================================================================================
Ratio of net investment income (loss) to average net assets (0.49)%(b)
____________________________________________________________________________________
====================================================================================
Portfolio turnover rate 4%
____________________________________________________________________________________
====================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting
principles, 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
$269,663.
FS-25
NOTE 9--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
----------------
AUGUST 30, 2002
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2002
----------------
Net asset value, beginning of period $10.00
-----------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)
-----------------------------------------------------------------------------------
Net losses on securities (both realized and unrealized) (0.86)
====================================================================================
Total from investment operations (0.87)
====================================================================================
Net asset value, end of period $ 9.13
___________________________________________________________________________________
===================================================================================
Total return(a) (8.70)%
___________________________________________________________________________________
===================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 274
___________________________________________________________________________________
===================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.75%(b)
-----------------------------------------------------------------------------------
Without fee waivers 24.39%(b)
___________________________________________________________________________________
===================================================================================
Ratio of net investment income (loss) to average net assets (0.49)%(b)
___________________________________________________________________________________
===================================================================================
Portfolio turnover rate 4%
___________________________________________________________________________________
===================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting
principles, 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
$269,663.
FS-26
Report of Independent Auditors
To the Shareholders of AIM Blue Chip Fund And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Blue Chip Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the periods presented through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Blue Chip Fund as of October 31, 2002, 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.
Houston, Texas /s/ ERNST & YOUNG LLP December 10, 2002 |
FS-27
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
--------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-95.34%
Aerospace & Defense-3.12%
General Dynamics Corp. 200,000 $ 15,826,000
--------------------------------------------------------------------------
Lockheed Martin Corp. 650,000 37,635,000
--------------------------------------------------------------------------
United Technologies Corp. 600,000 37,002,000
==========================================================================
90,463,000
==========================================================================
Aluminum-0.53%
Alcoa Inc. 700,000 15,442,000
==========================================================================
Apparel Retail-0.32%
Limited Brands 600,000 9,402,000
==========================================================================
Banks-5.46%
Bank of America Corp. 825,000 57,585,000
--------------------------------------------------------------------------
Fifth Third Bancorp 675,000 42,862,500
--------------------------------------------------------------------------
Wells Fargo & Co. 1,150,000 58,040,500
==========================================================================
158,488,000
==========================================================================
Biotechnology-1.24%
Amgen Inc.(a) 775,000 36,084,000
==========================================================================
Brewers-0.77%
Anheuser-Busch Cos., Inc. 425,000 22,423,000
==========================================================================
Broadcasting & Cable TV-0.96%
Clear Channel Communications, Inc.(a) 750,000 27,787,500
==========================================================================
Building Products-0.53%
Masco Corp. 750,000 15,420,000
==========================================================================
Computer Hardware-2.77%
Dell Computer Corp.(a) 1,850,000 52,928,500
--------------------------------------------------------------------------
International Business Machines Corp. 350,000 27,629,000
==========================================================================
80,557,500
==========================================================================
Data Processing Services-2.31%
First Data Corp. 1,200,000 41,928,000
--------------------------------------------------------------------------
Fiserv, Inc.(a) 800,000 24,992,000
==========================================================================
66,920,000
==========================================================================
Department Stores-0.91%
Kohl's Corp.(a) 450,000 26,302,500
==========================================================================
Diversified Chemicals-0.25%
Du Pont (E. I.) de Nemours & Co. 175,000 7,218,750
==========================================================================
Diversified Commercial Services-0.31%
H&R Block, Inc. 200,000 8,876,000
==========================================================================
|
MARKET
SHARES VALUE
--------------------------------------------------------------------------
Diversified Financial Services-11.80%
American Express Co. 900,000 $ 32,733,000
--------------------------------------------------------------------------
Citigroup Inc. 2,400,000 88,680,000
--------------------------------------------------------------------------
Fannie Mae 700,000 46,802,000
--------------------------------------------------------------------------
Freddie Mac 700,000 43,106,000
--------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 400,000 28,640,000
--------------------------------------------------------------------------
J.P. Morgan Chase & Co. 900,000 18,675,000
--------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 750,000 28,462,500
--------------------------------------------------------------------------
Morgan Stanley 900,000 35,028,000
--------------------------------------------------------------------------
SLM Corp. 200,000 20,548,000
==========================================================================
342,674,500
==========================================================================
Drug Retail-0.64%
Walgreen Co. 550,000 18,562,500
==========================================================================
Electric Utilities-1.02%
FPL Group, Inc. 250,000 14,745,000
--------------------------------------------------------------------------
Southern Co. (The) 500,000 14,850,000
==========================================================================
29,595,000
==========================================================================
Food Distributors-1.36%
SYSCO Corp. 1,250,000 39,600,000
==========================================================================
General Merchandise Stores-4.65%
Costco Wholesale Corp.(a) 450,000 15,268,500
--------------------------------------------------------------------------
Target Corp. 950,000 28,614,000
--------------------------------------------------------------------------
Wal-Mart Stores, Inc. 1,700,000 91,035,000
==========================================================================
134,917,500
==========================================================================
Health Care Distributors & Services-1.43%
Cardinal Health, Inc. 600,000 41,526,000
==========================================================================
Health Care Equipment-3.86%
Boston Scientific Corp.(a) 350,000 13,170,500
--------------------------------------------------------------------------
Medtronic, Inc. 1,175,000 52,640,000
--------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 550,000 19,585,500
--------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 650,000 26,793,000
==========================================================================
112,189,000
==========================================================================
Health Care Facilities-2.04%
HCA Inc. 900,000 39,141,000
--------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 700,000 20,125,000
==========================================================================
59,266,000
==========================================================================
Home Improvement Retail-1.84%
Home Depot, Inc. (The) 1,850,000 53,428,000
==========================================================================
|
FS-28
MARKET
SHARES VALUE
--------------------------------------------------------------------------
Hotels, Resorts & Cruise Lines-0.85%
Carnival Corp. 950,000 $ 24,814,000
==========================================================================
Household Products-2.90%
Colgate-Palmolive Co. 725,000 39,860,500
--------------------------------------------------------------------------
Procter & Gamble Co. (The) 500,000 44,225,000
==========================================================================
84,085,500
==========================================================================
Industrial Conglomerates-3.04%
General Electric Co. 3,500,000 88,375,000
==========================================================================
Industrial Gases-0.69%
Air Products & Chemicals, Inc. 450,000 19,890,000
==========================================================================
Integrated Oil & Gas-3.07%
Exxon Mobil Corp. 2,650,000 89,199,000
==========================================================================
Integrated Telecommunication Services-1.50%
AT&T Corp. 675,000 8,802,000
--------------------------------------------------------------------------
BellSouth Corp. 350,000 9,152,500
--------------------------------------------------------------------------
SBC Communications Inc. 1,000,000 25,660,000
==========================================================================
43,614,500
==========================================================================
Life & Health Insurance-0.60%
Prudential Financial, Inc.(a) 600,000 17,520,000
==========================================================================
Managed Health Care-1.49%
UnitedHealth Group Inc. 475,000 43,201,250
==========================================================================
Motorcycle Manufacturers-0.42%
Harley-Davidson, Inc. 235,000 12,290,500
==========================================================================
Movies & Entertainment-1.88%
Viacom Inc.-Class B(a) 1,225,000 54,647,250
==========================================================================
Multi-Line Insurance-1.99%
American International Group, Inc. 925,000 57,858,750
==========================================================================
Multi-Utilities & Unregulated Power-0.51%
Duke Energy Corp. 725,000 14,855,250
==========================================================================
Networking Equipment-1.73%
Cisco Systems, Inc.(a) 4,500,000 50,310,000
==========================================================================
Oil & Gas Drilling-1.63%
ENSCO International Inc. 675,000 18,252,000
--------------------------------------------------------------------------
Nabors Industries, Ltd. (Bermuda)(a) 500,000 17,485,000
--------------------------------------------------------------------------
Transocean Inc. 525,000 11,539,500
==========================================================================
47,276,500
==========================================================================
Oil & Gas Equipment & Services-0.62%
Schlumberger Ltd. (Netherlands) 450,000 18,049,500
==========================================================================
|
MARKET
SHARES VALUE
--------------------------------------------------------------------------
Pharmaceuticals-10.38%
Allergan, Inc. 400,000 $ 21,780,000
--------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 275,000 26,947,250
--------------------------------------------------------------------------
Johnson & Johnson 1,600,000 94,000,000
--------------------------------------------------------------------------
Pfizer Inc. 3,250,000 103,252,500
--------------------------------------------------------------------------
Pharmacia Corp. 625,000 26,875,000
--------------------------------------------------------------------------
Wyeth 850,000 28,475,000
==========================================================================
301,329,750
==========================================================================
Railroads-0.62%
Canadian National Railway Co. (Canada) 425,000 18,134,750
==========================================================================
Semiconductor Equipment-1.87%
Applied Materials, Inc.(a) 2,550,000 38,326,500
--------------------------------------------------------------------------
KLA-Tencor Corp.(a) 450,000 16,033,500
==========================================================================
54,360,000
==========================================================================
Semiconductors-3.65%
Analog Devices, Inc.(a) 800,000 21,440,000
--------------------------------------------------------------------------
Intel Corp. 1,400,000 24,220,000
--------------------------------------------------------------------------
Linear Technology Corp. 380,000 10,503,200
--------------------------------------------------------------------------
Microchip Technology Inc. 1,000,000 24,400,000
--------------------------------------------------------------------------
Texas Instruments Inc. 1,000,000 15,860,000
--------------------------------------------------------------------------
Xilinx, Inc.(a) 500,000 9,495,000
==========================================================================
105,918,200
==========================================================================
Soft Drinks-1.80%
Coca-Cola Co. (The) 600,000 27,888,000
--------------------------------------------------------------------------
PepsiCo, Inc. 550,000 24,255,000
==========================================================================
52,143,000
==========================================================================
Specialty Stores-0.86%
Bed Bath & Beyond Inc.(a) 700,000 24,822,000
==========================================================================
Systems Software-4.57%
Microsoft Corp.(a) 2,000,000 106,940,000
--------------------------------------------------------------------------
Oracle Corp.(a) 1,700,000 17,323,000
--------------------------------------------------------------------------
VERITAS Software Corp.(a) 550,000 8,387,500
==========================================================================
132,650,500
==========================================================================
Wireless Telecommunication Services-0.55%
Vodafone Group PLC-ADR (United Kingdom) 1,000,000 15,920,000
==========================================================================
Common Stocks & Other Equity Interests
(Cost $2,687,527,249) 2,768,407,950
==========================================================================
PRINCIPAL
AMOUNT
U.S. TREASURY BILLS-0.27%
1.63%, 12/19/02 (Cost $7,982,560)(b) $8,000,000(c) 7,982,560
==========================================================================
|
FS-29
MARKET
SHARES VALUE
--------------------------------------------------------------------------
MONEY MARKET FUNDS-4.59%
STIC Liquid Assets Portfolio(d) 66,569,490 $ 66,569,490
--------------------------------------------------------------------------
STIC Prime Portfolio(d) 66,569,490 66,569,490
==========================================================================
Total Money Market Funds (Cost
$133,138,980) 133,138,980
==========================================================================
TOTAL INVESTMENTS-100.20% (Cost
$2,828,648,789) 2,909,529,490
==========================================================================
OTHER ASSETS LESS LIABILITIES-(0.20%) (5,675,437)
==========================================================================
NET ASSETS-100.00% $2,903,854,053
__________________________________________________________________________
==========================================================================
|
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) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 7.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-30
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost $2,828,648,789)* $2,909,529,490
---------------------------------------------------------------------
Receivables for:
Investments sold 13,899,569
---------------------------------------------------------------------
Fund shares sold 2,307,628
---------------------------------------------------------------------
Dividends and interest 2,411,671
---------------------------------------------------------------------
Investment for deferred compensation plan 61,174
---------------------------------------------------------------------
Collateral for securities loaned 8,988,400
---------------------------------------------------------------------
Other assets 56,116
=====================================================================
Total assets 2,937,254,048
_____________________________________________________________________
=====================================================================
LIABILITIES:
Payables for:
Investments purchased 11,603,709
---------------------------------------------------------------------
Fund shares reacquired 7,982,722
---------------------------------------------------------------------
Deferred compensation plan 61,174
---------------------------------------------------------------------
Collateral upon return of securities loaned 8,988,400
---------------------------------------------------------------------
Variation margin 243,840
---------------------------------------------------------------------
Accrued distribution fees 2,434,100
---------------------------------------------------------------------
Accrued trustees' fees 2,651
---------------------------------------------------------------------
Accrued transfer agent fees 1,836,246
---------------------------------------------------------------------
Accrued operating expenses 247,153
=====================================================================
Total liabilities 33,399,995
=====================================================================
Net assets applicable to shares outstanding $2,903,854,053
_____________________________________________________________________
=====================================================================
NET ASSETS:
Class A $1,402,588,789
_____________________________________________________________________
=====================================================================
Class B $1,198,513,202
_____________________________________________________________________
=====================================================================
Class C $ 302,555,409
_____________________________________________________________________
=====================================================================
Class R $ 36,623
_____________________________________________________________________
=====================================================================
Institutional Class $ 160,030
_____________________________________________________________________
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 152,087,477
_____________________________________________________________________
=====================================================================
Class B 135,006,825
_____________________________________________________________________
=====================================================================
Class C 34,083,249
_____________________________________________________________________
=====================================================================
Class R 3,972
_____________________________________________________________________
=====================================================================
Institutional Class 17,280
_____________________________________________________________________
=====================================================================
Class A:
Net asset value per share $ 9.22
---------------------------------------------------------------------
Offering price per share:
(Net asset value of $9.22 divided by 94.50%) $ 9.76
_____________________________________________________________________
=====================================================================
Class B:
Net asset value and offering price per share $ 8.88
_____________________________________________________________________
=====================================================================
Class C:
Net asset value and offering price per share $ 8.88
_____________________________________________________________________
=====================================================================
Class R:
Net asset value and offering price per share $ 9.22
_____________________________________________________________________
=====================================================================
Institutional Class:
Net asset value and offering price per share $ 9.26
_____________________________________________________________________
=====================================================================
|
* At October 31, 2002, securities with an aggregate market value of $8,734,920
were on loan to brokers.
Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$192,363) $ 38,304,023
--------------------------------------------------------------------
Dividends from affiliated money market funds 2,827,516
--------------------------------------------------------------------
Interest 79,361
--------------------------------------------------------------------
Security lending income 200,425
====================================================================
Total investment income 41,411,325
====================================================================
EXPENSES:
Advisory fees 24,803,281
--------------------------------------------------------------------
Administrative services fees 441,011
--------------------------------------------------------------------
Custodian fees 227,964
--------------------------------------------------------------------
Distribution fees -- Class A 6,517,172
--------------------------------------------------------------------
Distribution fees -- Class B 16,167,462
--------------------------------------------------------------------
Distribution fees -- Class C 4,196,874
--------------------------------------------------------------------
Distribution fees -- Class R 31
--------------------------------------------------------------------
Transfer agent fees 14,152,359
--------------------------------------------------------------------
Transfer agent fees -- Institutional Class 28
--------------------------------------------------------------------
Trustees' fees 28,525
--------------------------------------------------------------------
Other 1,144,829
====================================================================
Total expenses 67,679,536
====================================================================
Less: Fees waived (26,519)
--------------------------------------------------------------------
Expenses paid indirectly (60,293)
====================================================================
Net expenses 67,592,724
====================================================================
Net investment income (loss) (26,181,399)
====================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND FUTURES
CONTRACTS:
Net realized gain (loss) from:
Investment securities (597,204,711)
--------------------------------------------------------------------
Foreign currencies (914)
--------------------------------------------------------------------
Futures contracts (8,019,257)
====================================================================
(605,224,882)
====================================================================
Change in net unrealized appreciation (depreciation)
of:
Investment securities (88,799,949)
--------------------------------------------------------------------
Foreign currencies 8,118
--------------------------------------------------------------------
Futures contracts 1,164,391
====================================================================
(87,627,440)
====================================================================
Net gain (loss) from investment securities, foreign
currencies and futures contracts (692,852,322)
====================================================================
Net increase (decrease) in net assets resulting from
operations $(719,033,721)
____________________________________________________________________
====================================================================
|
See Notes to Financial Statements.
FS-31
Statement of Changes In Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (26,181,399) $ (35,262,129)
------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and futures contracts (605,224,882) (875,780,324)
------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and futures
contracts (87,627,440) (1,586,297,713)
================================================================================================
Net increase (decrease) in net assets resulting from
operations (719,033,721) (2,497,340,166)
================================================================================================
Share transactions-net:
Class A (325,975,435) 81,644,114
------------------------------------------------------------------------------------------------
Class B (303,773,409) 98,738,160
------------------------------------------------------------------------------------------------
Class C (109,471,968) 49,072,979
------------------------------------------------------------------------------------------------
Class R 36,356 --
------------------------------------------------------------------------------------------------
Institutional Class 168,155 --
================================================================================================
Net increase (decrease) in net assets (1,458,050,022) (2,267,884,913)
================================================================================================
NET ASSETS:
Beginning of year 4,361,904,075 6,629,788,988
================================================================================================
End of year $ 2,903,854,053 $ 4,361,904,075
________________________________________________________________________________________________
================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 4,536,803,562 $ 5,301,981,761
------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (154,369) (133,954)
------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and futures contracts (1,714,840,770) (1,109,616,802)
------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 82,045,630 169,673,070
================================================================================================
$ 2,903,854,053 $ 4,361,904,075
________________________________________________________________________________________________
================================================================================================
|
See Notes to Financial Statements.
FS-32
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Blue Chip Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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. Class R shares and Institutional Class shares are sold at net asset value. 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 with a secondary objective of 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 and commercial paper 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. 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 gain, 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 gain) 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.
FS-33
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. 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 master investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of the first $350 million of the Fund's average daily net assets, plus 0.625% of the Fund's average daily net assets in excess of $350 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. 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 October 31, 2002, AIM waived fees of $26,519.
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 October 31, 2002, AIM was paid $441,011 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 October 31, 2002, AFS retained $7,192,239 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 0.35% 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B, Class C and Class R shares paid $6,517,172, $16,167,462, $4,196,874 and $31, respectively.
AIM Distributors retained commissions of $524,961 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $43,312, $2,640, $61,493 and $0 in contingent deferred sales charges imposed on redemptions of Class A, Class B, Class C and Class R shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 2002, the Fund paid legal fees of $15,064 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-34
NOTE 3--INDIRECT EXPENSES
For the year ended October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $59,304 and reductions in custodian fees of $989 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $60,293.
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 year ended October 31,
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 October 31, 2002, securities with an aggregate value of $8,734,920 were on loan to brokers. The loans were secured by cash collateral of $8,988,400 received by the Fund and invested in STIC Liquid Assets Portfolio, an affiliated money market fund. For the year ended October 31, 2002, the Fund received fees of $200,425 for securities lending.
NOTE 7--FUTURES CONTRACTS
On October 31, 2002, $3,964,000 principal amount of U.S. Treasury obligations were pledged as collateral to cover margin requirements for open futures contracts. Open futures contracts as of October 31, 2002 were as follows:
NO. OF MONTH/ MARKET UNREALIZED
CONTRACT CONTRACTS COMMITMENT VALUE APPRECIATION
---------------------------------------------------------------------------
S&P 500 Index 230 Dec-02 Long $50,910,500 $1,164,391
___________________________________________________________________________
===========================================================================
|
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid during the years ended October 31, 2002 and 2001.
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation -- investments $ 40,944,547
--------------------------------------------------------------
Temporary book/tax differences (154,369)
--------------------------------------------------------------
Capital loss carryforward (1,673,739,687)
--------------------------------------------------------------
Shares of beneficial interest 4,536,803,562
==============================================================
$ 2,903,854,053
______________________________________________________________
==============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized depreciation difference is attributable to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains on futures contracts. Amount includes appreciation on foreign currencies of $539.
The temporary book/tax differences are the result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the results of the deferral of trustee compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
October 31, 2007 $ 38,614,682
-----------------------------------------------------------
October 31, 2008 185,511,022
-----------------------------------------------------------
October 31, 2009 833,974,843
-----------------------------------------------------------
October 31, 2010 615,639,140
===========================================================
$1,673,739,687
___________________________________________________________
===========================================================
|
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 October 31, 2002 was $1,058,391,209 and $1,837,546,899, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 314,846,721 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (273,902,713) ------------------------------------------------------------- Net unrealized appreciation of investment securities $ 40,944,008 _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $2,868,585,482. |
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
As of result of differing book/tax treatment of foreign currency transactions and net operating loss reclassifications, on October 31, 2002, shares of beneficial interest was decreased by $26,161,898, undistributed net investment income was increased by $26,160,984 and undistributed net realized gains was increased by $914. This reclassification had no effect on the net assets of the Fund.
FS-35
NOTE 11--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 36,847,391* $ 400,415,874* 59,896,009 $859,547,781
-------------------------------------------------------------------------------------------------------------------------
Class B 15,784,454 168,633,848 38,414,696 544,596,082
-------------------------------------------------------------------------------------------------------------------------
Class C 5,922,957 63,436,977 15,458,538 219,941,831
-------------------------------------------------------------------------------------------------------------------------
Class R** 3,975 36,381 -- --
-------------------------------------------------------------------------------------------------------------------------
Institutional Class*** 19,795 192,879 -- --
=========================================================================================================================
Reacquired:
Class A (68,970,741) (726,391,309) (58,620,165) (777,903,667)
-------------------------------------------------------------------------------------------------------------------------
Class B (46,891,521)* (472,407,257)* (35,112,835) (445,857,922)
-------------------------------------------------------------------------------------------------------------------------
Class C (16,701,794) (172,908,945) (13,300,112) (170,868,852)
-------------------------------------------------------------------------------------------------------------------------
Class R** (3) (25) -- --
-------------------------------------------------------------------------------------------------------------------------
Institutional Class*** (2,515) (24,724) -- --
=========================================================================================================================
(73,988,002) $(739,016,301) 6,736,131 $229,455,253
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
* Includes automatic conversion of 1,170,222 shares of Class B shares in the amount of $12,298,772 to 1,132,609 shares of Class A shares in the amount of $12,298,772. ** Class R shares commenced operations as of June 3, 2002. *** Institutional Class shares commenced operations as of March 15, 2002.
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A(A)
------------------------------------------------------------------------
YEAR ENDED
OCTOBER 31,
------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.22 $ 17.29 $ 15.49 $ 12.05 $ 10.32
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(b) (0.04) (0.05)(b) 0.01 0.04(b)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.96) (6.03) 1.85 3.47 1.92
=================================================================================================================================
Total from investment operations (2.00) (6.07) 1.80 3.48 1.96
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.01) (0.02)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- (0.03) (0.21)
=================================================================================================================================
Total distributions -- -- -- (0.04) (0.23)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Net asset value, end of period $ 9.22 $ 11.22 $ 17.29 $ 15.49 $ 12.05
=================================================================================================================================
Total return(c) (17.82)% (35.11)% 11.60% 29.01% 19.36%
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,402,589 $2,067,602 $3,163,453 $2,299,551 $1,085,648
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.40%(d) 1.28% 1.19% 1.19% 1.22%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.33)%(d) (0.29)% (0.31)% 0.03% 0.33%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 28% 31% 22% 22% 27%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information for all periods prior to October 31, 2000 have
been restated to reflect a 3 for 1 stock split, effected in the form of
a 200% stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles and does not include sales charges.
(d) Ratios are based on average daily net assets of $1,862,049,115.
FS-36
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B(A)
-------------------------------------------------------------------------
YEAR ENDED
OCTOBER 31,
-------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.87 $ 16.87 $ 15.22 $ 11.91 $ 10.25
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10)(b) (0.13) (0.17)(b) (0.10)(b) (0.04)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.89) (5.87) 1.82 3.44 1.91
=================================================================================================================================
Total from investment operations (1.99) (6.00) 1.65 3.34 1.87
=================================================================================================================================
Less distributions from net realized gains -- -- -- (0.03) (0.21)
=================================================================================================================================
Net asset value, end of period $ 8.88 $ 10.87 $ 16.87 $ 15.22 $ 11.91
=================================================================================================================================
Total return(c) (18.31)% (35.57)% 10.87% 28.08% 18.52%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,198,513 $1,806,464 $2,746,149 $1,891,171 $745,862
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.05%(d) 1.94% 1.88% 1.91% 1.94%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.98)%(d) (0.94)% (1.00)% (0.68)% (0.38)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 28% 31% 22% 22% 27%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information for all periods prior to October 31, 2000 have
been restated to reflect a 3 for 1 stock split, effected in the form of
a 200% stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $1,616,746,189.
CLASS C(A)
-----------------------------------------------------------------
YEAR ENDED
OCTOBER 31,
-----------------------------------------------------------------
2002 2001 2000 1999 1998
-------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.87 $ 16.86 $ 15.21 $ 11.91 $ 10.25
-------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10)(b) (0.13) (0.17)(b) (0.10)(b) (0.04)(b)
-------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.89) (5.86) 1.82 3.43 1.91
===============================================================================================================================
Total from investment operations (1.99) (5.99) 1.65 3.33 1.87
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Less distributions:
Distributions from net realized gains -- -- -- (0.03) (0.21)
-------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.88 $ 10.87 $ 16.86 $ 15.21 $ 11.91
===============================================================================================================================
Total return(c) (18.31)% (35.53)% 10.82% 28.09% 18.52%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $302,555 $487,838 $720,186 $349,951 $ 87,554
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets 2.05%(d) 1.94% 1.88% 1.90% 1.94%
===============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.98)%(d) (0.94)% (1.00)% (0.68)% (0.38)%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 28% 31% 22% 22% 27%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
|
(a) Per share information for all periods prior to October 31, 2000 have
been restated to reflect a 3 for 1 stock split, effected in the form of
a 200% stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $419,687,377.
FS-37
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------
Net asset value, beginning of period $10.53
---------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a)
---------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.29)
===========================================================================
Total from investment operations (1.31)
===========================================================================
Net asset value, end of period $ 9.22
===========================================================================
Total return(b) (12.44)%
===========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 37
___________________________________________________________________________
===========================================================================
Ratio of expenses to average net assets 1.55%(c)
===========================================================================
Ratio of net investment income (loss) to average net assets (0.49)%(c)
___________________________________________________________________________
===========================================================================
Portfolio turnover rate 28%
___________________________________________________________________________
===========================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $15,364.
FS-38
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
INSTITUTIONAL CLASS
-------------------
MARCH 15, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.13
---------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.02(a)
---------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.89)
=================================================================================
Total from investment operations (2.87)
=================================================================================
Net asset value, end of period $ 9.26
=================================================================================
Total return(b) (23.66)%
=================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 160
_________________________________________________________________________________
=================================================================================
Ratio of expenses to average net assets 0.77%(c)
=================================================================================
Ratio of net investment income to average net assets 0.30%(c)
_________________________________________________________________________________
=================================================================================
Portfolio turnover rate 28%
_________________________________________________________________________________
=================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $57,632.
FS-39
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Capital Development Fund And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Capital Development Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the periods presented through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Capital Development Fund as of October 31, 2002, 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.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
|
FS-40
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
------------------------------------------------------------------------
DOMESTIC COMMON STOCKS & OTHER EQUITY
INTERESTS-82.50%
Advertising-1.12%
Lamar Advertising Co.(a) 284,000 $ 9,638,960
========================================================================
Air Freight & Logistics-2.12%
Robinson (C.H.) Worldwide, Inc. 371,600 10,988,212
------------------------------------------------------------------------
Ryder System, Inc. 314,500 7,217,775
========================================================================
18,205,987
========================================================================
Apparel Retail-0.76%
Ross Stores, Inc. 155,400 6,503,490
========================================================================
Application Software-1.16%
Fair, Issac and Co., Inc. 259,700 9,990,659
========================================================================
Banks-2.91%
Compass Bancshares, Inc. 293,600 9,483,280
------------------------------------------------------------------------
Huntington Bancshares Inc. 524,300 9,914,513
------------------------------------------------------------------------
Sovereign Bancorp, Inc. 400,000 5,632,000
========================================================================
25,029,793
========================================================================
Biotechnology-0.26%
Invitrogen Corp.(a) 81,300 2,261,766
========================================================================
Broadcasting & Cable TV-1.95%
Cox Radio, Inc.-Class A(a) 300,000 7,122,000
------------------------------------------------------------------------
Entercom Communications Corp.(a) 100,000 4,922,000
------------------------------------------------------------------------
Lin TV Corp.-Class A(a) 228,600 4,716,018
========================================================================
16,760,018
========================================================================
Building Products-1.01%
American Standard Cos. Inc.(a) 129,600 8,644,320
========================================================================
Casinos & Gambling-0.96%
Harrah's Entertainment, Inc.(a) 197,400 8,290,800
========================================================================
Commercial Printing-0.00%
American Bank Note Holographics, Inc.-Wts.,
expiring 06/18/03(a) 29,695 297
========================================================================
Computer & Electronics Retail-1.51%
Best Buy Co., Inc.(a) 180,300 3,715,983
------------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 173,800 9,214,876
========================================================================
12,930,859
========================================================================
Consumer Finance-1.18%
AmeriCredit Corp.(a) 902,100 6,846,939
------------------------------------------------------------------------
Saxon Capital Acquisition Corp. (Acquired
07/27/01; Cost $3,120,900)(a)(b)(c) 309,000 3,306,300
========================================================================
10,153,239
========================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Data Processing Services-6.35%
Alliance Data Systems Corp.(a) 590,200 $ 10,033,400
------------------------------------------------------------------------
BISYS Group, Inc. (The)(a) 494,100 8,844,390
------------------------------------------------------------------------
Ceridian Corp.(a) 628,600 8,662,108
------------------------------------------------------------------------
Certegy Inc.(a) 381,350 8,008,350
------------------------------------------------------------------------
Concord EFS, Inc.(a) 273,800 3,909,864
------------------------------------------------------------------------
DST Systems, Inc.(a) 146,200 4,495,650
------------------------------------------------------------------------
Iron Mountain Inc.(a) 375,000 10,578,750
========================================================================
54,532,512
========================================================================
Diversified Chemicals-0.71%
Engelhard Corp. 275,300 6,097,895
========================================================================
Diversified Financial Services-2.07%
Affiliated Managers Group, Inc.(a) 98,600 5,119,312
------------------------------------------------------------------------
LaBranche & Co. Inc.(a) 146,000 3,943,460
------------------------------------------------------------------------
Principal Financial Group, Inc. 311,000 8,723,550
========================================================================
17,786,322
========================================================================
Drug Retail-1.25%
CVS Corp. 388,500 10,773,105
========================================================================
Electric Utilities-1.02%
FPL Group, Inc. 147,900 8,723,142
========================================================================
Electrical Components & Equipment-1.12%
Rockwell Automation, Inc. 579,100 9,584,105
========================================================================
Electronic Equipment & Instruments-4.14%
Amphenol Corp.-Class A(a) 185,800 7,153,300
------------------------------------------------------------------------
Tektronix, Inc.(a) 528,400 9,336,828
------------------------------------------------------------------------
Varian Inc.(a) 350,000 10,293,500
------------------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 467,700 4,817,310
------------------------------------------------------------------------
Waters Corp.(a) 157,100 3,955,778
========================================================================
35,556,716
========================================================================
Environmental Services-1.04%
Republic Services, Inc.(a) 435,000 8,952,300
========================================================================
Food Distributors-1.03%
Performance Food Group Co.(a) 238,000 8,851,220
========================================================================
Food Retail-0.88%
Winn-Dixie Stores, Inc. 504,500 7,577,590
========================================================================
Footwear-1.02%
Reebok International Ltd.(a) 309,000 8,729,250
========================================================================
|
FS-41
MARKET
SHARES VALUE
------------------------------------------------------------------------
Forest Products-0.47%
Louisiana-Pacific Corp.(a) 593,300 $ 3,998,842
========================================================================
General Merchandise Stores-1.07%
Dollar Tree Stores, Inc.(a) 349,200 9,180,468
========================================================================
Health Care Distributors & Services-1.30%
AdvancePCS(a) 238,400 5,983,840
------------------------------------------------------------------------
Lincare Holdings Inc.(a) 153,100 5,216,117
========================================================================
11,199,957
========================================================================
Health Care Equipment-2.41%
Bard (C.R.), Inc. 222,400 12,438,832
------------------------------------------------------------------------
Fisher Scientific International Inc.(a) 290,000 8,294,000
========================================================================
20,732,832
========================================================================
Health Care Facilities-1.49%
LifePoint Hospitals, Inc.(a) 149,100 4,674,285
------------------------------------------------------------------------
Triad Hospitals, Inc.(a) 222,700 8,128,550
========================================================================
12,802,835
========================================================================
Household Appliances-2.46%
Black & Decker Corp. (The) 248,000 11,596,480
------------------------------------------------------------------------
Snap-on Inc. 364,500 9,495,225
========================================================================
21,091,705
========================================================================
Industrial Machinery-2.36%
Flowserve Corp.(a) 158,000 1,851,760
------------------------------------------------------------------------
Pall Corp. 534,100 9,277,317
------------------------------------------------------------------------
SPX Corp.(a) 217,600 9,141,376
========================================================================
20,270,453
========================================================================
Integrated Oil & Gas-0.85%
Murphy Oil Corp. 87,100 7,301,593
========================================================================
IT Consulting & Services-2.99%
Affiliated Computer Services, Inc.-Class A(a) 22,800 1,049,940
------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 224,300 4,972,731
------------------------------------------------------------------------
Titan Corp. (The)(a) 798,600 10,293,954
------------------------------------------------------------------------
Unisys Corp.(a) 1,074,600 9,381,258
========================================================================
25,697,883
========================================================================
Leisure Products-1.69%
Brunswick Corp. 315,500 6,492,990
------------------------------------------------------------------------
Hasbro, Inc. 782,700 7,999,194
========================================================================
14,492,184
========================================================================
Life & Health Insurance-0.38%
Nationwide Financial Services, Inc.-Class A 117,100 3,243,670
========================================================================
Managed Health Care-2.91%
Anthem, Inc.(a) 153,000 9,639,000
------------------------------------------------------------------------
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Managed Health Care-(Continued)
Caremark Rx, Inc.(a) 490,900 $ 8,688,930
------------------------------------------------------------------------
Coventry Health Care, Inc.(a) 200,000 6,692,000
========================================================================
25,019,930
========================================================================
Movies & Entertainment-0.25%
Macrovision Corp.(a) 165,300 2,132,370
========================================================================
Mutual Funds-1.96%
iShares Nasdaq Biotechnology Index Fund(a) 158,900 8,119,790
------------------------------------------------------------------------
S&P MidCap 400 Depositary Receipts Trust
Series 1 112,000 8,708,000
========================================================================
16,827,790
========================================================================
Networking Equipment-0.25%
Emulex Corp.(a) 119,600 2,146,820
========================================================================
Office Electronics-1.46%
Zebra Technologies Corp.-Class A(a) 203,700 12,531,624
========================================================================
Oil & Gas Drilling-2.18%
GlobalSantaFe Corp. 394,400 9,426,160
------------------------------------------------------------------------
Pride International, Inc.(a) 672,900 9,339,852
========================================================================
18,766,012
========================================================================
Oil & Gas Equipment & Services-1.57%
BJ Services Co.(a) 285,700 8,665,281
------------------------------------------------------------------------
Key Energy Services, Inc.(a) 539,500 4,817,735
========================================================================
13,483,016
========================================================================
Oil & Gas Exploration & Production-1.80%
Devon Energy Corp. 171,000 8,635,500
------------------------------------------------------------------------
Ocean Energy, Inc. 367,200 6,840,936
========================================================================
15,476,436
========================================================================
Oil & Gas Refining, Marketing &
Transportation-0.57%
Valero Energy Corp. 138,900 4,890,669
========================================================================
Paper Products-1.00%
Bowater Inc. 253,000 8,574,170
========================================================================
Pharmaceuticals-1.59%
Medicis Pharmaceutical Corp.-Class A(a) 97,600 4,479,840
------------------------------------------------------------------------
Mylan Laboratories Inc. 292,400 9,201,828
========================================================================
13,681,668
========================================================================
Property & Casualty Insurance-2.04%
PMI Group, Inc. (The) 281,500 8,388,700
------------------------------------------------------------------------
Radian Group Inc. 259,500 9,152,565
========================================================================
17,541,265
========================================================================
Publishing-2.45%
Belo Corp.-Class A 499,000 11,526,900
------------------------------------------------------------------------
|
FS-42
MARKET
SHARES VALUE
------------------------------------------------------------------------
Publishing-(Continued)
New York Times Co. (The)-Class A 197,300 $ 9,551,293
========================================================================
21,078,193
========================================================================
Real Estate Investment Trusts-2.88%
American Financial Realty Trust (Acquired
09/04/02; Cost $9,401,000)(a)(c) 940,100 10,106,075
------------------------------------------------------------------------
FBR Asset Investment Corp. 337,800 10,134,000
------------------------------------------------------------------------
Plum Creek Timber Co., Inc. 200,000 4,522,000
========================================================================
24,762,075
========================================================================
Restaurants-0.79%
Brinker International, Inc.(a) 237,700 6,748,303
========================================================================
Semiconductors-1.82%
Microchip Technology Inc. 449,762 10,974,193
------------------------------------------------------------------------
QLogic Corp.(a) 134,100 4,661,316
========================================================================
15,635,509
========================================================================
Specialty Chemicals-1.18%
International Flavors & Fragrances Inc. 301,000 10,098,550
========================================================================
Specialty Stores-1.54%
Advance Auto Parts, Inc.(a) 152,500 8,166,375
------------------------------------------------------------------------
Copart, Inc.(a) 472,700 5,043,709
========================================================================
13,210,084
========================================================================
Systems Software-1.22%
Adobe Systems Inc. 200,900 4,749,276
------------------------------------------------------------------------
Symantec Corp.(a) 143,500 5,740,000
========================================================================
10,489,276
========================================================================
Total Domestic Common Stocks & Other
Equity Interests (Cost $653,444,191) 708,680,527
========================================================================
FOREIGN STOCKS & OTHER EQUITY INTERESTS-9.75%
Bermuda-3.76%
Everest Re Group, Ltd. (Reinsurance) 158,700 9,207,774
------------------------------------------------------------------------
Platinum Underwriters Holdings, Ltd.
(Insurance Brokers)(a) 243,400 6,109,340
------------------------------------------------------------------------
Willis Group Holdings Ltd. (Insurance
Brokers)(a) 238,100 7,285,860
------------------------------------------------------------------------
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Bermuda-(Continued)
XL Capital Ltd.-Class A (Property & Casualty
Insurance) 127,900 $ 9,739,585
========================================================================
32,342,559
========================================================================
Canada-1.77%
Biovail Corp. (Pharmaceuticals)(a) 101,400 3,209,310
------------------------------------------------------------------------
Celestica Inc. (Electronic Equipment &
Instruments)(a) 143,500 1,980,300
------------------------------------------------------------------------
Potash Corp. of Saskatchewan Inc.
(Fertilizers & Agricultural Chemicals) 147,800 9,998,670
========================================================================
15,188,280
========================================================================
Cayman Islands-2.17%
ACE Ltd. (Property & Casualty Insurance) 268,617 8,259,973
------------------------------------------------------------------------
Garmin Ltd. (Consumer Electronics)(a) 495,000 10,355,400
========================================================================
18,615,373
========================================================================
France-0.49%
Business Objects S.A.-ADR (Application
Software)(a) 285,500 4,253,950
========================================================================
Germany-0.66%
Altana A.G. (Pharmaceuticals) 117,500 5,619,688
------------------------------------------------------------------------
Altana A.G.-ADR (Pharmaceuticals)(a) 1,000 48,050
========================================================================
5,667,738
========================================================================
United Kingdom-0.90%
Shire Pharmaceuticals Group PLC-ADR
(Pharmaceuticals)(a) 331,300 7,739,168
========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $81,147,708) 83,807,068
========================================================================
MONEY MARKET FUNDS-6.58%
STIC Liquid Assets Portfolio(d) 28,252,214 28,252,214
------------------------------------------------------------------------
STIC Prime Portfolio(d) 28,252,214 28,252,214
========================================================================
Total Money Market Funds (Cost
$56,504,428) 56,504,428
========================================================================
TOTAL INVESTMENTS-98.83% (Cost $791,096,327) 848,992,023
========================================================================
OTHER ASSETS LESS LIABILITIES-1.17% 10,046,397
========================================================================
NET ASSETS-100.00% $859,038,420
________________________________________________________________________
========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Wts. - Warrants |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(c) Security not registered under the Securities Act of 1933, as amended ("the
1933 Act") (e.g., the security was purchased in a Rule 144A transaction or a
Regulation D transaction); the security may be resold only pursuant to an
exemption from registration under the 1933 Act, typically to qualified
institutional buyers. The aggregate market value of these securities at
10/31/02 was $13,412,375, which represented 1.56% of the Fund's net assets.
The Fund has no rights to demand registration of these securities.
(d) 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
October 31, 2002
ASSETS:
Investments, at market value (cost
$791,096,327)* $ 848,992,023
-------------------------------------------------------------
Foreign currencies, at value (cost $123) 124
-------------------------------------------------------------
Receivables for:
Investments sold 36,591,218
-------------------------------------------------------------
Fund shares sold 990,971
-------------------------------------------------------------
Dividends 335,817
-------------------------------------------------------------
Investment for deferred compensation plan 35,228
-------------------------------------------------------------
Collateral for securities loaned 176,899,625
-------------------------------------------------------------
Other assets 50,717
=============================================================
Total assets 1,063,895,723
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Investments purchased 24,494,742
-------------------------------------------------------------
Fund shares reacquired 2,275,994
-------------------------------------------------------------
Deferred compensation plan 35,228
-------------------------------------------------------------
Collateral upon return of securities loaned 176,899,625
-------------------------------------------------------------
Accrued distribution fees 785,683
-------------------------------------------------------------
Accrued trustees' fees 1,128
-------------------------------------------------------------
Accrued transfer agent fees 312,124
-------------------------------------------------------------
Accrued operating expenses 52,779
=============================================================
Total liabilities 204,857,303
=============================================================
Net assets applicable to shares outstanding $ 859,038,420
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $ 456,267,590
_____________________________________________________________
=============================================================
Class B $ 346,455,510
_____________________________________________________________
=============================================================
Class C $ 56,298,292
_____________________________________________________________
=============================================================
Class R $ 9,583
_____________________________________________________________
=============================================================
Institutional Class $ 7,445
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 35,650,215
_____________________________________________________________
=============================================================
Class B 28,385,003
_____________________________________________________________
=============================================================
Class C 4,615,576
_____________________________________________________________
=============================================================
Class R 749
_____________________________________________________________
=============================================================
Institutional Class 580
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 12.80
-------------------------------------------------------------
Offering price per share:
(Net asset value of $12.80 divided by
94.50%) $ 13.54
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 12.21
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 12.20
_____________________________________________________________
=============================================================
Class R:
Net asset value and offering price per
share $ 12.79
_____________________________________________________________
=============================================================
Institutional Class:
Net asset value and offering price per
share $ 12.84
_____________________________________________________________
=============================================================
|
* At October 31, 2002, securities with an aggregate market value of $173,201,778 were on loan to brokers.
Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$23,403) $ 10,192,451
-------------------------------------------------------------
Dividends from affiliated money market funds 1,079,090
-------------------------------------------------------------
Interest 403
-------------------------------------------------------------
Security lending income 815,917
=============================================================
Total investment income 12,087,861
=============================================================
EXPENSES:
Advisory fees 7,368,692
-------------------------------------------------------------
Administrative services fees 205,580
-------------------------------------------------------------
Custodian fees 75,325
-------------------------------------------------------------
Distribution fees -- Class A 2,050,963
-------------------------------------------------------------
Distribution fees -- Class B 4,539,281
-------------------------------------------------------------
Distribution fees -- Class C 690,638
-------------------------------------------------------------
Distribution fees -- Class R 20
-------------------------------------------------------------
Transfer agent fees 3,325,906
-------------------------------------------------------------
Transfer agent fees -- Institutional Class 14
-------------------------------------------------------------
Trustees' fees 13,919
-------------------------------------------------------------
Other 447,889
=============================================================
Total expenses 18,718,227
=============================================================
Less: Fees waived and expenses reimbursed (11,473)
-------------------------------------------------------------
Expenses paid indirectly (33,031)
=============================================================
Net expenses 18,673,723
=============================================================
Net investment income (loss) (6,585,862)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (28,754,591)
-------------------------------------------------------------
Foreign currencies 43,447
-------------------------------------------------------------
Option contracts written 1,068,505
=============================================================
(27,642,639)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (101,336,943)
-------------------------------------------------------------
Foreign currencies 10,628
-------------------------------------------------------------
Option contracts written (288,959)
=============================================================
(101,615,274)
=============================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (129,257,913)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(135,843,775)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-44
Statement of Changes in Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
----------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (6,585,862) $ (6,818,556)
----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (27,642,639) (4,802,278)
----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and option
contracts (101,615,274) (306,202,141)
==============================================================================================
Net increase (decrease) in net assets resulting from
operations (135,843,775) (317,822,975)
==============================================================================================
Distributions to shareholders from net realized gains:
Class A -- (96,954,437)
----------------------------------------------------------------------------------------------
Class B -- (81,364,674)
----------------------------------------------------------------------------------------------
Class C -- (11,018,702)
----------------------------------------------------------------------------------------------
Share transactions-net:
Class A (49,872,882) 77,378,574
----------------------------------------------------------------------------------------------
Class B (51,574,661) 52,952,759
----------------------------------------------------------------------------------------------
Class C (497,034) 13,238,100
----------------------------------------------------------------------------------------------
Class R 12,300 --
----------------------------------------------------------------------------------------------
Institutional Class 10,000 --
==============================================================================================
Net increase (decrease) in net assets (237,766,052) (363,591,355)
==============================================================================================
NET ASSETS:
Beginning of year 1,096,804,472 1,460,395,827
==============================================================================================
End of year $ 859,038,420 $1,096,804,472
______________________________________________________________________________________________
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 842,029,553 $ 950,485,964
----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (70,846) (62,566)
----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (40,816,886) (13,130,799)
----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and option contracts 57,896,599 159,511,873
==============================================================================================
$ 859,038,420 $1,096,804,472
______________________________________________________________________________________________
==============================================================================================
|
See Notes to Financial Statements.
FS-45
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Capital Development Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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. Class R shares and Institutional Class shares are sold at net asset value. 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 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 and commercial paper 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. 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 gain, 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 gain) 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. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-
FS-46
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. 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.
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 master investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of the first $350 million of the Fund's average daily net assets, plus 0.625% of the Fund's average daily net assets in excess of $350 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 year ended October 31, 2002, AIM waived fees of $11,465.
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 October 31, 2002, AIM was paid $205,580 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 October 31, 2002, AFS retained $1,974,790 for such services. For the year ended October 31, 2002, AFS reimbursed fees of $8 on the Institutional Class.
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 0.35% 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B, Class C and Class R shares paid $2,050,963, $4,539,281, $690,638 and $20, respectively.
AIM Distributors retained commissions of $167,124 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $2,583, $0, $12,777 and $0 in contingent deferred sales charges imposed on redemptions of Class A, Class B, Class C and Class R shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 2002, the Fund paid legal fees of $7,589 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 October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $16,963 and reductions in custodian fees of $16,068 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $33,031.
FS-47
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 year ended October 31,
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 October 31, 2002, securities with an aggregate value of $173,201,778 were
on loan to brokers. The loans were secured by cash collateral of $176,899,625
received by the Fund and invested in affiliated money market funds as follows:
$88,449,813 in STIC Liquid Assets Portfolio and $88,449,812 in STIC Prime
Portfolio. For the year ended October 31, 2002, the Fund received fees of
$815,917 for securities lending.
NOTE 7--CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2002 are summarized as follows:
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-------------------------------------------------------------
Beginning of year 4,067 $ 1,099,367
-------------------------------------------------------------
Written 5,747 1,799,011
-------------------------------------------------------------
Closed (8,577) (2,821,687)
-------------------------------------------------------------
Expired (1,237) (76,691)
=============================================================
End of year -- $ --
_____________________________________________________________
=============================================================
|
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
----------------------------------------------------------------
Distributions paid from:
Ordinary Income $ -- $ 97,976,430
----------------------------------------------------------------
Long-Term Capital Gain -- 91,361,383
================================================================
$ -- $189,337,813
________________________________________________________________
================================================================
|
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Tax Components of Beneficial Interest:
Unrealized appreciation -- investments $ 56,060,721
-------------------------------------------------------------
Temporary book/tax differences (70,846)
-------------------------------------------------------------
Capital loss carryforward (38,981,008)
-------------------------------------------------------------
Shares of beneficial interest 842,029,553
=============================================================
$859,038,420
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation difference is attributable primarily to the tax deferral of losses on wash sales. Amount includes appreciation on foreign currencies of $901.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the deferral of trustee compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-----------------------------------------------------------
October 31, 2009 $11,152,255
-----------------------------------------------------------
October 31, 2010 27,828,753
===========================================================
$38,981,008
___________________________________________________________
===========================================================
|
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 October 31, 2002 was $1,263,469,101 and $1,362,774,725, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $107,514,652 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (51,454,832) ============================================================= Net unrealized appreciation of investment securities $ 56,059,820 _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $792,932,203. |
FS-48
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of foreign currency transactions, a net operating loss reclassification, excise tax paid and other items, on October 31, 2002, undistributed net investment income was increased by $6,577,582, undistributed net realized gains decreased by $43,448 and shares of beneficial interest decreased by $6,534,134. This reclassification had no effect on the net assets of the Fund.
NOTE 11--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 8,723,183 $ 137,031,183 10,419,720 $ 176,330,665
--------------------------------------------------------------------------------------------------------------------------
Class B 3,358,008 50,474,614 3,656,256 60,895,695
--------------------------------------------------------------------------------------------------------------------------
Class C 1,443,905 21,757,217 1,125,563 18,758,747
--------------------------------------------------------------------------------------------------------------------------
Class R* 749 12,300 -- --
--------------------------------------------------------------------------------------------------------------------------
Institutional Class** 580 10,000 -- --
==========================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 5,235,028 90,980,110
--------------------------------------------------------------------------------------------------------------------------
Class B -- -- 4,475,584 75,098,584
--------------------------------------------------------------------------------------------------------------------------
Class C -- -- 616,947 10,344,899
==========================================================================================================================
Reacquired:
Class A (12,317,285) (186,904,065) (11,277,708) (189,932,201)
--------------------------------------------------------------------------------------------------------------------------
Class B (7,163,019) (102,049,275) (5,128,289) (83,041,520)
--------------------------------------------------------------------------------------------------------------------------
Class C (1,519,831) (22,254,251) (974,815) (15,865,546)
==========================================================================================================================
(7,473,710) $(101,922,277) 8,148,286 $ 143,569,433
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
* Class R shares commenced sales on June 3, 2002. ** Institutional Class shares commenced sales on March 15, 2002.
FS-49
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 OCTOBER 31,
--------------------------------------------------------------
2002 2001 2000 1999 1998
----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.69 $ 21.79 $ 15.24 $ 12.89 $ 14.57
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.04) (0.13) (0.10)(a) (0.06)(a)
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.85) (4.27) 6.68 2.45 (1.62)
============================================================================================================================
Total from investment operations (1.89) (4.31) 6.55 2.35 (1.68)
============================================================================================================================
Less distributions from net realized gains -- (2.79) -- -- --
============================================================================================================================
Net asset value, end of period $ 12.80 $ 14.69 $ 21.79 $ 15.24 $ 12.89
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) (12.87)% (21.76)% 42.98% 18.23% (11.53)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $456,268 $576,660 $759,838 $579,514 $717,263
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 1.38%(c) 1.33% 1.28% 1.38% 1.28%
============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.29)%(c) (0.21)% (0.60)% (0.70)% (0.40)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 120% 130% 101% 117% 78%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include sales charges.
(c) Ratios are based on average daily net assets of $585,989,327.
CLASS B
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
2002 2001 2000 1999 1998
----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.10 $ 21.16 $ 14.90 $ 12.70 $ 14.46
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14)(a) (0.15) (0.26) (0.20)(a) (0.16)(a)
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.75) (4.12) 6.52 2.40 (1.60)
============================================================================================================================
Total from investment operations (1.89) (4.27) 6.26 2.20 (1.76)
============================================================================================================================
Less distributions from net realized gains -- (2.79) -- -- --
============================================================================================================================
Net asset value, end of period $ 12.21 $ 14.10 $ 21.16 $ 14.90 $ 12.70
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) (13.40)% (22.29)% 42.01% 17.32% (12.17)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $346,456 $454,018 $617,576 $451,508 $493,993
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 2.03%(c) 1.99% 1.99% 2.12% 2.02%
============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.94)%(c) (0.87)% (1.30)% (1.44)% (1.14)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 120% 130% 101% 117% 78%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $453,928,113.
FS-50
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
---------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------
2002 2001 2000 1999 1998
-----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.10 $ 21.15 $ 14.89 $ 12.69 $ 14.45
-----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14)(a) (0.14) (0.25) (0.20)(a) (0.16)
-----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.76) (4.12) 6.51 2.40 (1.60)
=======================================================================================================================
Total from investment operations (1.90) (4.26) 6.26 2.20 (1.76)
=======================================================================================================================
Less distributions from net realized gains -- (2.79) -- -- --
=======================================================================================================================
Net asset value, end of period $ 12.20 $ 14.10 $ 21.15 $ 14.89 $ 12.69
_______________________________________________________________________________________________________________________
=======================================================================================================================
Total return(b) (13.48)% (22.24)% 42.04% 17.34% (12.18)%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $56,298 $66,127 $82,982 $53,832 $48,293
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of expenses to average net assets 2.03%(c) 1.99% 1.99% 2.12% 2.02%
=======================================================================================================================
Ratio of net investment income (loss) to average net assets (0.94)%(c) (0.87)% (1.30)% (1.44)% (1.14)%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Portfolio turnover rate 120% 130% 101% 117% 78%
_______________________________________________________________________________________________________________________
=======================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $69,063,774.
CLASS R
----------------------
JUNE 3, 2002
(DATE SALES COMMENCED)
TO OCTOBER 31,
2002
------------------------------------------------------------------------------------
Net asset value, beginning of period $ 16.62
------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a)
------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.80)
====================================================================================
Total from investment operations (3.83)
====================================================================================
Net asset value, end of period $ 12.79
____________________________________________________________________________________
====================================================================================
Total return(b) (23.05)%
____________________________________________________________________________________
====================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 10
____________________________________________________________________________________
====================================================================================
Ratio of expenses to average net assets 1.54%(c)
====================================================================================
Ratio of net investment income (loss) to average net assets (0.44)%(c)
____________________________________________________________________________________
====================================================================================
Portfolio turnover rate 120%
____________________________________________________________________________________
====================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $9,839.
FS-51
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
INSTITUTIONAL CLASS
----------------------
MARCH 15, 2002
(DATE SALES COMMENCED)
TO OCTOBER 31,
2002
------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.25
------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.02(a)
------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.43)
====================================================================================
Total from investment operations (4.41)
====================================================================================
Net asset value, end of period $ 12.84
____________________________________________________________________________________
====================================================================================
Total return(b) (25.57)%
____________________________________________________________________________________
====================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 7
____________________________________________________________________________________
====================================================================================
Ratio of expenses to average net assets
With fee waivers and expenses reimbursed 0.84%(c)
------------------------------------------------------------------------------------
Without fee waivers and expenses reimbursed 0.99%(c)
====================================================================================
Ratio of net investment income (loss) to average net assets 0.25%(c)
____________________________________________________________________________________
====================================================================================
Portfolio turnover rate 120%
____________________________________________________________________________________
====================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $8,687.
FS-52
Report of Independent Auditors
To the Shareholders of AIM Charter Fund
And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Charter Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the periods presented through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Charter Fund as of October 31, 2002, the results of its operations for the year then ended, and the changes in its net assets and financial highlights for each of the two years in the period then ended in conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
|
FS-53
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
----------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-89.02%
Advertising-1.33%
Omnicom Group Inc. 800,000 $ 46,104,000
============================================================================
Aerospace & Defense-3.91%
Lockheed Martin Corp. 262,200 15,181,380
----------------------------------------------------------------------------
Northrop Grumman Corp. 560,000 57,752,800
----------------------------------------------------------------------------
Raytheon Co. 2,126,000 62,717,000
============================================================================
135,651,180
============================================================================
Apparel Retail-1.40%
Limited Brands 3,105,000 48,655,350
============================================================================
Banks-2.55%
Bank of America Corp. 530,000 36,994,000
----------------------------------------------------------------------------
Washington Mutual, Inc. 1,440,000 51,494,400
============================================================================
88,488,400
============================================================================
Biotechnology-0.80%
Amgen Inc.(a) 600,000 27,936,000
============================================================================
Brewers-1.82%
Anheuser-Busch Cos., Inc. 1,200,000 63,312,000
============================================================================
Building Products-2.25%
American Standard Cos. Inc.(a) 615,000 41,020,500
----------------------------------------------------------------------------
Masco Corp. 1,804,500 37,100,520
============================================================================
78,121,020
============================================================================
Computer & Electronics Retail-0.83%
Best Buy Co., Inc.(a) 1,400,000 28,854,000
============================================================================
Computer Hardware-2.07%
International Business Machines Corp. 910,000 71,835,400
============================================================================
Construction Materials-0.91%
Vulcan Materials Co. 940,000 31,546,400
============================================================================
Data Processing Services-2.67%
Automatic Data Processing, Inc. 1,330,000 56,564,900
----------------------------------------------------------------------------
Convergys Corp.(a) 2,420,000 36,009,600
============================================================================
92,574,500
============================================================================
Diversified Financial Services-3.71%
Citigroup Inc. 1,400,000 51,730,000
----------------------------------------------------------------------------
Morgan Stanley 750,000 29,190,000
----------------------------------------------------------------------------
Principal Financial Group, Inc. 1,715,000 48,105,750
============================================================================
129,025,750
============================================================================
|
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Electric Utilities-0.35%
TXU Corp. 850,000 $ 12,197,500
============================================================================
Electrical Components & Equipment-1.54%
Emerson Electric Co. 1,113,400 53,643,612
============================================================================
Environmental Services-1.29%
Waste Management, Inc. 1,940,000 44,658,800
============================================================================
Food Retail-2.26%
Kroger Co. (The)(a) 2,950,000 43,778,000
----------------------------------------------------------------------------
Safeway Inc.(a) 1,500,000 34,650,000
============================================================================
78,428,000
============================================================================
Footwear-1.07%
NIKE, Inc.-Class B 790,000 37,280,100
============================================================================
General Merchandise Stores-2.84%
Target Corp. 1,600,000 48,192,000
----------------------------------------------------------------------------
Wal-Mart Stores, Inc. 940,000 50,337,000
============================================================================
98,529,000
============================================================================
Health Care Distributors & Services-2.22%
IMS Health Inc. 2,956,000 44,458,240
----------------------------------------------------------------------------
Quest Diagnostics Inc.(a) 510,000 32,553,300
============================================================================
77,011,540
============================================================================
Health Care Equipment-0.90%
St. Jude Medical, Inc.(a) 880,000 31,336,800
============================================================================
Health Care Supplies-1.89%
Alcon, Inc. (Switzerland)(a) 1,600,000 65,632,000
============================================================================
Hotels, Resorts & Cruise Lines-0.82%
Carnival Corp. 1,090,000 28,470,800
============================================================================
Household Products-1.58%
Procter & Gamble Co. (The) 620,000 54,839,000
============================================================================
Housewares & Specialties-0.59%
Newell Rubbermaid Inc. 630,200 20,431,084
============================================================================
Industrial Machinery-2.71%
Dover Corp. 1,840,000 46,147,200
----------------------------------------------------------------------------
Illinois Tool Works Inc. 780,000 47,892,000
============================================================================
94,039,200
============================================================================
|
FS-54
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Integrated Oil & Gas-2.84%
ChevronTexaco Corp. 480,000 $ 32,462,400
----------------------------------------------------------------------------
Exxon Mobil Corp. 1,970,000 66,310,200
============================================================================
98,772,600
============================================================================
Leisure Products-0.73%
Mattel, Inc. 1,380,000 25,336,800
============================================================================
Life & Health Insurance-1.37%
Prudential Financial, Inc.(a) 1,630,000 47,596,000
============================================================================
Oil & Gas Drilling-1.14%
GlobalSantaFe Corp. 1,660,000 39,674,000
============================================================================
Oil & Gas Equipment & Services-1.00%
Baker Hughes Inc. 1,200,000 34,860,000
============================================================================
Oil & Gas Refining, Marketing &
Transportation-0.93%
Valero Energy Corp. 920,000 32,393,200
============================================================================
Packaged Foods & Meats-9.45%
ConAgra Foods, Inc. 2,640,000 64,020,000
----------------------------------------------------------------------------
General Mills, Inc. 1,930,000 79,747,600
----------------------------------------------------------------------------
Kellogg Co. 1,810,000 57,666,600
----------------------------------------------------------------------------
Kraft Foods Inc.-Class A 1,450,000 57,275,000
----------------------------------------------------------------------------
Sara Lee Corp. 3,045,000 69,517,350
============================================================================
328,226,550
============================================================================
Personal Products-3.43%
Avon Products, Inc. 1,370,000 66,431,300
----------------------------------------------------------------------------
Gillette Co. (The) 1,770,000 52,887,600
============================================================================
119,318,900
============================================================================
Pharmaceuticals-6.25%
Abbott Laboratories 750,000 31,402,500
----------------------------------------------------------------------------
Johnson & Johnson 815,000 47,881,250
----------------------------------------------------------------------------
Pfizer Inc. 1,670,000 53,055,900
----------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 620,000 48,006,600
----------------------------------------------------------------------------
Wyeth 1,100,000 36,850,000
============================================================================
217,196,250
============================================================================
Property & Casualty Insurance-2.28%
MGIC Investment Corp. 659,300 27,664,228
----------------------------------------------------------------------------
Travelers Property Casualty Corp.-Class A(a) 856,486 11,365,569
----------------------------------------------------------------------------
|
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Property & Casualty Insurance-(Continued)
Travelers Property Casualty Corp.-Class B(a) 1,054,271 $ 14,253,744
----------------------------------------------------------------------------
XL Capital Ltd.-Class A (Bermuda) 340,000 25,891,000
============================================================================
79,174,541
============================================================================
Publishing-1.05%
New York Times Co. (The)-Class A 750,000 36,307,500
============================================================================
Railroads-1.70%
Norfolk Southern Corp. 1,484,000 29,976,800
----------------------------------------------------------------------------
Union Pacific Corp. 490,000 28,934,500
============================================================================
58,911,300
============================================================================
Semiconductor Equipment-0.98%
KLA-Tencor Corp.(a) 960,000 34,204,800
============================================================================
Semiconductors-3.35%
Intel Corp. 3,000,000 51,900,000
----------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR (Taiwan)(a) 2,266,000 17,720,120
----------------------------------------------------------------------------
Texas Instruments Inc. 1,160,000 18,397,600
----------------------------------------------------------------------------
Xilinx, Inc.(a) 1,500,000 28,485,000
============================================================================
116,502,720
============================================================================
Soft Drinks-1.50%
Coca-Cola Co. (The) 1,120,000 52,057,600
============================================================================
Specialty Chemicals-1.01%
Rohm & Haas Co. 1,050,000 34,933,500
============================================================================
Systems Software-5.70%
Computer Associates International, Inc. 5,360,000 79,649,600
----------------------------------------------------------------------------
Microsoft Corp.(a) 1,640,000 87,690,800
----------------------------------------------------------------------------
Oracle Corp.(a) 3,000,000 30,570,000
============================================================================
197,910,400
============================================================================
Total Common Stocks & Other Equity
Interests (Cost $3,380,933,906) 3,091,978,097
============================================================================
PRINCIPAL
AMOUNT
CONVERTIBLE DEBENTURES-0.09%
Computer Hardware-0.09%
Candescent Technologies Corp., Sr. Conv.
Unsec. Gtd. Sub. Deb.,
8.00%, 05/01/03 (Acquired
04/17/98-04/19/01; Cost
$47,529,750)(b)(c)(d) $42,800,000 3,217,100
============================================================================
Total Convertible Debentures (Cost
$49,098,968) 3,217,100
============================================================================
|
FS-55
----------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
MONEY MARKET FUNDS-9.55%
STIC Liquid Assets Portfolio(e) 165,830,838 $ 165,830,838
----------------------------------------------------------------------------
STIC Prime Portfolio(e) 165,830,838 165,830,838
============================================================================
Total Money Market Funds (Cost
$331,661,676) 331,661,676
============================================================================
TOTAL INVESTMENTS-98.66% (Cost
$3,761,694,550) 3,426,856,873
============================================================================
OTHER ASSETS LESS LIABILITIES-1.34% 46,543,813
============================================================================
NET ASSETS-100.00% $3,473,400,686
____________________________________________________________________________
============================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Conv. - Convertible Deb. - Debentures Gtd. - Guaranteed Sr. - Senior Sub. - Subordinated Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction); the security may be resold only pursuant to an exemption from
registration under the 1933 Act, typically to qualified institutional
buyers. The aggregate market value of these securities at 10/31/02 was
$3,217,100, which represented 0.09% of the Fund's net assets. The Fund has
no rights to demand registration of these securities.
(c) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(d) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(e) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-56
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost
$3,761,694,550)* $3,426,856,873
-------------------------------------------------------------
Receivables for:
Investments sold 54,192,843
-------------------------------------------------------------
Fund shares sold 1,191,488
-------------------------------------------------------------
Dividends 4,035,682
-------------------------------------------------------------
Investment for deferred compensation plan 116,150
-------------------------------------------------------------
Collateral for securities loaned 18,062,100
-------------------------------------------------------------
Other assets 63,991
=============================================================
Total assets 3,504,519,127
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 9,109,903
-------------------------------------------------------------
Deferred compensation plan 116,150
-------------------------------------------------------------
Collateral upon return of securities
loaned 18,062,100
-------------------------------------------------------------
Accrued distribution fees 2,369,539
-------------------------------------------------------------
Accrued trustees' fees 2,478
-------------------------------------------------------------
Accrued transfer agent fees 1,154,915
-------------------------------------------------------------
Accrued operating expenses 303,356
=============================================================
Total liabilities 31,118,441
=============================================================
Net assets applicable to shares outstanding $3,473,400,686
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $2,096,865,957
_____________________________________________________________
=============================================================
Class B $1,204,617,059
_____________________________________________________________
=============================================================
Class C $ 170,444,220
_____________________________________________________________
=============================================================
Class R $ 16,387
_____________________________________________________________
=============================================================
Institutional Class $ 1,457,063
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 219,052,553
_____________________________________________________________
=============================================================
Class B 130,317,602
_____________________________________________________________
=============================================================
Class C 18,386,548
_____________________________________________________________
=============================================================
Class R 1,714
_____________________________________________________________
=============================================================
Institutional Class 148,611
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 9.57
-------------------------------------------------------------
Offering price per share:
(Net asset value of $9.57 divided
by 94.50%) $ 10.13
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 9.24
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 9.27
_____________________________________________________________
=============================================================
Class R:
Net asset value and offering price per
share $ 9.56
_____________________________________________________________
=============================================================
Institutional Class:
Net asset value and offering price per
share $ 9.80
_____________________________________________________________
=============================================================
|
* At October 31, 2002, securities with an aggregate market value of $18,300,061 were on loan to brokers.
Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$88,345) $ 54,348,250
-------------------------------------------------------------
Dividends from affiliated money market funds 6,593,048
-------------------------------------------------------------
Interest 107,071
-------------------------------------------------------------
Security lending income 165,508
=============================================================
Total investment income 61,213,877
_____________________________________________________________
=============================================================
EXPENSES:
Advisory fees 29,583,893
-------------------------------------------------------------
Administrative services fees 468,551
-------------------------------------------------------------
Custodian fees 285,376
-------------------------------------------------------------
Distribution fees -- Class A 8,613,574
-------------------------------------------------------------
Distribution fees -- Class B 15,924,539
-------------------------------------------------------------
Distribution fees -- Class C 2,261,077
-------------------------------------------------------------
Distribution fees -- Class R 23
-------------------------------------------------------------
Transfer agent fees 11,653,652
-------------------------------------------------------------
Transfer agent fees -- Institutional Class 2,686
-------------------------------------------------------------
Trustees' fees 32,769
-------------------------------------------------------------
Other 1,020,807
=============================================================
Total expenses 69,846,947
=============================================================
Less: Fees waived and expenses reimbursed (58,911)
-------------------------------------------------------------
Expenses paid indirectly (69,299)
=============================================================
Net expenses 69,718,737
=============================================================
Net investment income (loss) (8,504,860)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities 304,600,971
-------------------------------------------------------------
Foreign currencies (17,130)
=============================================================
304,583,841
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (628,244,716)
-------------------------------------------------------------
Foreign currencies 33,301
=============================================================
(628,211,415)
=============================================================
Net gain (loss) from investment securities
and foreign currencies (323,627,574)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(332,132,434)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-57
Statement of Changes in Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
--------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (8,504,860) $ (35,217,915)
--------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts 304,583,841 (1,051,836,206)
--------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (628,211,415) (2,495,895,336)
==================================================================================================
Net increase (decrease) in net assets resulting from
operations (332,132,434) (3,582,949,457)
==================================================================================================
Distributions to shareholders from net realized gains:
Class A -- (282,256,150)
--------------------------------------------------------------------------------------------------
Class B -- (155,149,624)
--------------------------------------------------------------------------------------------------
Class C -- (21,295,588)
--------------------------------------------------------------------------------------------------
Institutional Class -- (157,658)
--------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (870,998,051) (161,661,243)
--------------------------------------------------------------------------------------------------
Class B (391,079,522) (2,882,485)
--------------------------------------------------------------------------------------------------
Class C (61,301,813) 28,949,621
--------------------------------------------------------------------------------------------------
Class R 17,606 --
--------------------------------------------------------------------------------------------------
Institutional Class (60,090) (227,735)
==================================================================================================
Net increase (decrease) in net assets (1,655,554,304) (4,177,630,319)
==================================================================================================
NET ASSETS:
Beginning of year 5,128,954,990 9,306,585,309
==================================================================================================
End of year $ 3,473,400,686 $ 5,128,954,990
__________________________________________________________________________________________________
==================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 4,585,710,984 $ 5,916,415,607
--------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (2,131,563) (892,327)
--------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (775,341,125) (1,078,954,767)
--------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies (334,837,610) 292,386,477
==================================================================================================
$ 3,473,400,686 $ 5,128,954,990
__________________________________________________________________________________________________
==================================================================================================
|
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Charter Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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. Class R shares and Institutional Class shares are sold at net asset value. 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 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
FS-58
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 and commercial paper 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. 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 gain, 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 gain) 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. 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.
FS-59
NOTE 2--CHANGE IN ACCOUNTING PRINCIPLE
As required, effective November 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. Prior to November 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 $987,328 reduction in the cost of securities and a corresponding $987,328 increase in net unrealized gains and losses, based on securities held by the Fund on November 1, 2001.
The effect of this change in the current period was to decrease net investment income by $154,475 and to increase net realized gains and losses by $154,475. As a result the net investment income per share, the net realized and unrealized gains and losses per share, and the ratio of net investment income to average net assets were unchanged.
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 master investment agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of the first $30 million of the Fund's average daily net assets, plus 0.75% of the Fund's average daily net assets in excess of $30 million to and including $150 million, 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. 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 October 31, 2002, AIM waived fees of $58,255. Under the terms of a master sub-advisory agreement between AIM and A I M Capital Management, Inc. ("AIM Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to AIM.
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 October 31, 2002, AIM was paid $468,551 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 October 31, 2002, AFS retained $6,433,443 for such services. For the year ended October 31, 2002, AFS reimbursed fees of $656 on the Institutional Class.
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 0.30% 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B, Class C and Class R shares paid $8,613,574, $15,924,539, $2,261,077 and $23, respectively.
AIM Distributors retained commissions of $387,132 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $36,917, $2,641, $29,800 and $0 in contingent deferred sales charges imposed on redemptions of Class A, Class B, Class C and Class R shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 2002, the Fund paid legal fees of $17,145 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 October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $69,012 and reductions in custodian fees of $287 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $69,299.
NOTE 5--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 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) $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 year ended October 31,
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 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.
FS-60
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 October 31, 2002, securities with an aggregate value of $18,300,061 were on loan to brokers. The loans were secured by cash collateral of $18,062,100 received by the Fund and invested in STIC Liquid Assets Portfolio, an affiliated money market fund. For the year ended October 31, 2002, the Fund received fees of $165,508 for securities lending.
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
---------------------------------------------------------------
Distributions paid from long-term
capital gain $ -- $458,859,020
_______________________________________________________________
===============================================================
|
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation (depreciation) -- investments $ (340,653,684) ----------------------------------------------------------- Temporary book/tax differences (325,492) ----------------------------------------------------------- Capital loss carryforward (771,331,122) ----------------------------------------------------------- Shares of beneficial interest 4,585,710,984 =========================================================== Total Net Assets $3,473,400,686 ___________________________________________________________ =========================================================== |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales and the treatment of defaulted bonds. Amount includes appreciation on foreign currency of $66.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the results of the deferral of Trustee compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-------------------------------
October 31, 2009 $771,331,122
_______________________________
===============================
|
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 October 31, 2002 was $4,385,524,178 and $6,035,095,988, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 204,500,096 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (545,153,846) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(340,653,750) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $3,767,510,623. |
FS-61
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of foreign currency transactions, bond premium amortization, net operating loss and other items, on October 31, 2002, undistributed net investment income was increased by $8,252,952, undistributed net realized gains decreased by $970,199 and shares of beneficial interest decreased by $7,282,753. This reclassification had no effect on the net assets of the Fund.
NOTE 11--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
------------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 16,910,821* $ 182,696,524* 37,578,186 $ 517,083,181
-----------------------------------------------------------------------------------------------------------------------------
Class B 9,302,039 97,387,968 24,357,854 333,276,040
-----------------------------------------------------------------------------------------------------------------------------
Class C 2,633,061 27,700,439 7,575,697 105,353,193
-----------------------------------------------------------------------------------------------------------------------------
Class R** 1,719 17,663 -- --
-----------------------------------------------------------------------------------------------------------------------------
Institutional Class 45,275 481,439 21,223 287,988
=============================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 17,611,530 266,615,003
-----------------------------------------------------------------------------------------------------------------------------
Class B -- -- 9,886,847 146,422,053
-----------------------------------------------------------------------------------------------------------------------------
Class C -- -- 1,369,533 20,351,280
-----------------------------------------------------------------------------------------------------------------------------
Institutional Class -- -- 8,709 133,843
=============================================================================================================================
Reacquired:
Class A (99,779,666) (1,053,694,575) (74,345,004) (945,359,427)
-----------------------------------------------------------------------------------------------------------------------------
Class B (47,954,479)* (488,467,490)* (39,590,160) (482,580,578)
-----------------------------------------------------------------------------------------------------------------------------
Class C (8,599,959) (89,002,252) (7,831,344) (96,754,852)
-----------------------------------------------------------------------------------------------------------------------------
Class R** (5) (57) -- --
-----------------------------------------------------------------------------------------------------------------------------
Institutional Class (51,011) (541,529) (52,054) (649,566)
=============================================================================================================================
(127,492,205) $(1,323,421,870) (23,408,983) $(135,821,842)
_____________________________________________________________________________________________________________________________
=============================================================================================================================
|
* Includes automatic conversion of 739,880 shares of Class B shares in the amount of $7,724,451 to 717,246 shares of Class A shares in the amount of $7,724,451.
** Class R shares commenced sales on June 3, 2002.
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 OCTOBER 31,
---------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.46 $ 18.07 $ 17.16 $ 13.32 $ 13.41
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.01(a) (0.03) (0.04)(b) 0.02 0.12
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (0.90) (6.70) 2.30 4.39 1.23
=================================================================================================================================
Total from investment operations (0.89) (6.73) 2.26 4.41 1.35
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.03) (0.10)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.88) (1.35) (0.54) (1.34)
=================================================================================================================================
Total distributions -- (0.88) (1.35) (0.57) (1.44)
=================================================================================================================================
Net asset value, end of period $ 9.57 $ 10.46 $ 18.07 $ 17.16 $ 13.32
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (8.51)% (38.75)% 13.60% 34.05% 11.20%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,096,866 $3,159,304 $5,801,869 $4,948,666 $3,706,938
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.22%(d) 1.16% 1.06% 1.05% 1.08%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.22%(d) 1.17% 1.08% 1.07% 1.10%
=================================================================================================================================
Ratio of net investment income (loss) to average
net assets 0.09%(a)(d) (0.24)% (0.20)% 0.11% 0.95%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 103% 78% 80% 107% 154%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) As required, effective November 1, 2001, the Fund 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 and the
ratio of net investment income to average net assets would have remained
the same. In accordance with the AICPA Audit and Accounting Guide for
Investment Companies, per share and ratios for periods prior to November
1, 2001 have not been restated to reflect this change in presentation.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles and does not include sales charges.
(d) Ratios are based on average daily net assets of $2,871,191,238.
FS-62
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
----------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.18 $ 17.72 $ 16.97 $ 13.24 $ 13.37
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08)(a) (0.13) (0.17)(b) (0.10) 0.02
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (0.86) (6.53) 2.27 4.37 1.22
=================================================================================================================================
Total from investment operations (0.94) (6.66) 2.10 4.27 1.24
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.03)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.88) (1.35) (0.54) (1.34)
=================================================================================================================================
Total distributions -- (0.88) (1.35) (0.54) (1.37)
=================================================================================================================================
Net asset value, end of period $ 9.24 $ 10.18 $ 17.72 $ 16.97 $ 13.24
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (9.23)% (39.14)% 12.76% 33.06% 10.33%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,204,617 $1,719,470 $3,088,611 $2,206,752 $1,408,687
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.92%(d) 1.86% 1.80% 1.80% 1.84%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.92%(d) 1.87% 1.82% 1.82% 1.86%
=================================================================================================================================
Ratio of net investment income (loss) to average
net assets (0.61)%(a)(d) (0.94)% (0.94)% (0.64)% 0.19%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 103% 78% 80% 107% 154%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) As required, effective November 1, 2001, the Fund 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 and the
ratio of net investment income to average net assets would have remained
the same. In accordance with the AICPA Audit and Accounting Guide for
Investment Companies, per share and ratios for periods prior to November
1, 2001 have not been restated to reflect this change in presentation.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $1,592,453,859.
CLASS C
-------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.21 $ 17.77 $ 17.01 $ 13.27 $ 13.39
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08)(a) (0.13) (0.17)(b) (0.09) 0.02
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.86) (6.55) 2.28 4.37 1.23
=================================================================================================================================
Total from investment operations (0.94) (6.68) 2.11 4.28 1.25
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.03)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.88) (1.35) (0.54) (1.34)
=================================================================================================================================
Total distributions -- (0.88) (1.35) (0.54) (1.37)
=================================================================================================================================
Net asset value, end of period $ 9.27 $ 10.21 $ 17.77 $ 17.01 $ 13.27
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (9.21)% (39.14)% 12.78% 33.06% 10.39%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $170,444 $248,533 $412,872 $138,467 $37,846
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.92%(d) 1.86% 1.80% 1.80% 1.84%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.92%(d) 1.87% 1.82% 1.82% 1.86%
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.61)%(a)(d) (0.94)% (0.94)% (0.64)% 0.19%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 103% 78% 80% 107% 154%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) As required, effective November 1, 2001, the Fund 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 and the
ratio of net investment income to average net assets would have remained
the same. In accordance with the AICPA Audit and Accounting Guide for
Investment Companies, per share and ratios for periods prior to November
1, 2001 have not been restated to reflect this change in presentation.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $226,107,746.
FS-63
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
-------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.94
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income --(a)
-------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.38)
===============================================================================
Total from investment operations (1.38)
===============================================================================
Net asset value, end of period $ 9.56
_______________________________________________________________________________
===============================================================================
Total return(b) (12.61)%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 16
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average net assets:
With fee waivers 1.42%(c)
-------------------------------------------------------------------------------
Without fee waivers 1.42%(c)
===============================================================================
Ratio of net investment income (loss) to average net assets (0.11)%(a)(c)
_______________________________________________________________________________
===============================================================================
Portfolio turnover rate 103%
_______________________________________________________________________________
===============================================================================
|
(a) As required, effective November 1, 2001, the Fund 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 and the
ratio of net investment income to average net assets would have remained
the same. In accordance with the AICPA Audit and Accounting Guide for
Investment Companies, per share and ratios for periods prior to November
1, 2001 have not been restated to reflect this change in presentation.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $11,405.
INSTITUTIONAL CLASS
------------------------------------------------------------
YEAR ENDED OCTOBER 31
------------------------------------------------------------
2002 2001 2000 1999 1998
--------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.67 $ 18.33 $17.33 $ 13.42 $ 13.48
--------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.06(a) 0.04 0.52 0.09 0.18
--------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.93) (6.82) 1.83 4.43 1.24
==========================================================================================================================
Total from investment operations (0.87) (6.78) 2.35 4.52 1.42
==========================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.07) (0.14)
--------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.88) (1.35) (0.54) (1.34)
==========================================================================================================================
Total distributions -- (0.88) (1.35) (0.61) (1.48)
==========================================================================================================================
Net asset value, end of period $ 9.80 $ 10.67 $18.33 $ 17.33 $ 13.42
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) (8.15)% (38.46)% 14.02% 34.61% 11.69%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,457 $ 1,648 $3,234 $66,801 $43,815
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursement 0.79%(c) 0.68% 0.66% 0.65% 0.66%
--------------------------------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursement 0.83%(c) 0.69% 0.68% 0.67% 0.67%
==========================================================================================================================
Ratio of net investment income to average net assets 0.52%(a)(c) 0.25% 0.20% 0.51% 1.37%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate 103% 78% 80% 107% 154%
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
(a) As required, effective November 1, 2001, the Fund 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 and the
ratio of net investment income to average net assets would have remained
the same. In accordance with the AICPA Audit and Accounting Guide for
Investment Companies, per share and ratios prior to November 1, 2001
have not been restated to reflect this change in presentation.
(b) Includes adjustments in accordance with generally accepted accounting
principles.
(c) Ratios are based on average daily net assets of $1,665,295.
FS-64
Report of Independent Auditors
To the Shareholders of AIM Constellation Fund And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Constellation Fund (a portfolio of AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the periods presented through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Constellation Fund as of October 31, 2002, 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.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
|
FS-65
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
----------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-97.29%
Advertising-1.32%
Lamar Advertising Co.(a) 3,000,000 $ 101,820,000
============================================================================
Aerospace & Defense-4.22%
L-3 Communications Holdings, Inc.(a) 1,820,000 85,540,000
----------------------------------------------------------------------------
Lockheed Martin Corp. 3,000,000 173,700,000
----------------------------------------------------------------------------
Northrop Grumman Corp. 643,500 66,364,155
============================================================================
325,604,155
============================================================================
Airlines-0.57%
Southwest Airlines Co. 3,000,000 43,800,000
============================================================================
Apparel Retail-1.78%
Gap, Inc. (The) 658,700 7,752,899
----------------------------------------------------------------------------
Limited Brands 3,000,000 47,010,000
----------------------------------------------------------------------------
Ross Stores, Inc. 500,000 20,925,000
----------------------------------------------------------------------------
TJX Cos., Inc. (The) 3,000,000 61,560,000
============================================================================
137,247,899
============================================================================
Application Software-2.89%
Electronic Arts Inc.(a) 1,100,000 71,632,000
----------------------------------------------------------------------------
Intuit Inc.(a) 2,500,000 129,800,000
----------------------------------------------------------------------------
Mercury Interactive Corp.(a) 803,700 21,193,569
============================================================================
222,625,569
============================================================================
Banks-3.44%
Bank of America Corp. 1,250,000 87,250,000
----------------------------------------------------------------------------
Fifth Third Bancorp 1,280,000 81,280,000
----------------------------------------------------------------------------
Washington Mutual, Inc. 2,000,000 71,520,000
----------------------------------------------------------------------------
Wells Fargo & Co. 500,000 25,235,000
============================================================================
265,285,000
============================================================================
Biotechnology-2.93%
Amgen Inc.(a) 2,352,600 109,537,056
----------------------------------------------------------------------------
Cephalon, Inc.(a) 871,700 43,794,208
----------------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 1,585,900 72,983,118
============================================================================
226,314,382
============================================================================
Broadcasting & Cable TV-1.19%
Clear Channel Communications, Inc.(a) 1,000,000 37,050,000
----------------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 750,000 16,125,000
----------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 1,500,000 38,865,000
============================================================================
92,040,000
============================================================================
Casinos & Gambling-0.58%
MGM Mirage Inc.(a) 1,436,100 44,662,710
============================================================================
|
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Computer & Electronics Retail-1.33%
CDW Computer Centers, Inc.(a) 1,929,000 $ 102,275,580
============================================================================
Computer Hardware-1.48%
Dell Computer Corp.(a) 4,000,000 114,440,000
============================================================================
Construction, Farm Machinery & Heavy
Trucks-0.75%
Deere & Co. 1,250,000 57,987,500
============================================================================
Consumer Finance-0.72%
MBNA Corp. 2,714,500 55,131,495
============================================================================
Data Processing Services-3.27%
Concord EFS, Inc.(a) 1,500,000 21,420,000
----------------------------------------------------------------------------
Fiserv, Inc.(a) 6,000,000 187,440,000
----------------------------------------------------------------------------
Paychex, Inc. 1,500,000 43,230,000
============================================================================
252,090,000
============================================================================
Department Stores-0.57%
Kohl's Corp.(a) 756,500 44,217,425
============================================================================
Diversified Chemicals-0.36%
Eastman Chemical Co. 764,900 27,796,466
============================================================================
Diversified Financial Services-5.84%
Citigroup Inc. 1,200,000 44,340,000
----------------------------------------------------------------------------
Fannie Mae 500,000 33,430,000
----------------------------------------------------------------------------
Freddie Mac 750,000 46,185,000
----------------------------------------------------------------------------
Goldman Sachs Group, Inc. 750,000 53,700,000
----------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 1,505,400 57,129,930
----------------------------------------------------------------------------
Moody's Corp. 1,856,000 87,417,600
----------------------------------------------------------------------------
Morgan Stanley 1,443,300 56,173,236
----------------------------------------------------------------------------
SLM Corp. 701,000 72,020,740
============================================================================
450,396,506
============================================================================
Drug Retail-0.88%
Walgreen Co. 2,000,000 67,500,000
============================================================================
Electronic Equipment & Instruments-0.91%
Molex Inc. 1,500,000 39,615,000
----------------------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 3,000,000 30,900,000
============================================================================
70,515,000
============================================================================
Employment Services-0.29%
Robert Half International Inc.(a) 1,353,700 22,606,790
============================================================================
Food Distributors-0.51%
Sysco Corp. 1,250,000 39,600,000
============================================================================
|
FS-66
MARKET
SHARES VALUE
----------------------------------------------------------------------------
General Merchandise Stores-2.09%
Family Dollar Stores, Inc. 1,750,000 $ 53,882,500
----------------------------------------------------------------------------
Wal-Mart Stores, Inc. 2,000,000 107,100,000
============================================================================
160,982,500
============================================================================
Health Care Distributors & Services-1.54%
AdvancePCS(a) 908,200 22,795,820
----------------------------------------------------------------------------
Cardinal Health, Inc. 1,385,200 95,869,692
============================================================================
118,665,512
============================================================================
Health Care Equipment-3.27%
Biomet, Inc. 3,770,675 111,084,085
----------------------------------------------------------------------------
Medtronic, Inc. 2,500,000 112,000,000
----------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 819,000 29,164,590
============================================================================
252,248,675
============================================================================
Health Care Facilities-2.15%
HCA Inc. 1,353,200 58,850,668
----------------------------------------------------------------------------
Health Management Associates, Inc.-Class A 3,115,700 59,572,184
----------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 1,636,500 47,049,375
============================================================================
165,472,227
============================================================================
Home Improvement Retail-1.22%
Lowe's Cos., Inc. 2,250,000 93,892,500
============================================================================
Homebuilding-1.88%
Centex Corp. 600,000 27,288,000
----------------------------------------------------------------------------
D.R. Horton, Inc. 1,200,000 23,124,000
----------------------------------------------------------------------------
Lennar Corp. 600,000 33,102,000
----------------------------------------------------------------------------
NVR, Inc.(a) 100,000 33,900,000
----------------------------------------------------------------------------
Pulte Homes, Inc. 600,000 27,552,000
============================================================================
144,966,000
============================================================================
Household Products-1.26%
Procter & Gamble Co. (The) 1,100,000 97,295,000
============================================================================
Housewares & Specialties-0.76%
Newell Rubbermaid Inc. 1,800,000 58,356,000
============================================================================
Industrial Conglomerates-0.66%
3M Co. 400,000 50,776,000
============================================================================
Industrial Machinery-0.75%
Danaher Corp. 500,000 28,925,000
----------------------------------------------------------------------------
Ingersoll-Rand Co.-Class A (Bermuda) 750,000 29,250,000
============================================================================
58,175,000
============================================================================
Integrated Oil & Gas-0.40%
Exxon Mobil Corp. 920,500 30,984,030
============================================================================
Internet Retail-0.41%
eBay Inc.(a) 500,000 31,630,000
============================================================================
|
MARKET
SHARES VALUE
----------------------------------------------------------------------------
IT Consulting & Services-0.92%
Affiliated Computer Services, Inc.-Class A(a) 439,000 $ 20,215,950
----------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 2,298,500 50,957,745
============================================================================
71,173,695
============================================================================
Life & Health Insurance-0.38%
AFLAC Inc. 950,000 28,918,000
============================================================================
Managed Health Care-3.69%
Caremark Rx, Inc.(a) 5,000,000 88,500,000
----------------------------------------------------------------------------
UnitedHealth Group Inc. 850,000 77,307,500
----------------------------------------------------------------------------
WellPoint Health Networks Inc.(a) 1,583,600 119,102,556
============================================================================
284,910,056
============================================================================
Motorcycle Manufacturers-1.19%
Harley-Davidson, Inc. 1,750,000 91,525,000
============================================================================
Multi-Line Insurance-1.98%
American International Group, Inc. 2,440,800 152,672,040
============================================================================
Networking Equipment-1.16%
Cisco Systems, Inc.(a) 8,000,000 89,440,000
============================================================================
Oil & Gas Drilling-1.23%
Nabors Industries, Ltd. (Bermuda)(a) 1,000,000 34,970,000
----------------------------------------------------------------------------
Noble Corp. (Cayman Islands)(a) 1,000,000 32,320,000
----------------------------------------------------------------------------
Transocean Inc. 1,250,000 27,475,000
============================================================================
94,765,000
============================================================================
Oil & Gas Equipment & Services-0.75%
Smith International, Inc.(a) 900,000 28,134,000
----------------------------------------------------------------------------
Weatherford International Ltd. (Bermuda)(a) 750,000 30,030,000
============================================================================
58,164,000
============================================================================
Oil & Gas Exploration & Production-0.35%
Apache Corp. 500,000 27,030,000
============================================================================
Packaged Foods & Meats-0.18%
Unilever PLC (United Kingdom)(a) 1,405,150 13,887,950
============================================================================
Personal Products-0.48%
Gillette Co. (The) 1,250,000 37,350,000
============================================================================
Pharmaceuticals-6.91%
Forest Laboratories, Inc.(a)(b) 1,309,300 128,298,307
----------------------------------------------------------------------------
Johnson & Johnson 714,300 41,965,125
----------------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a)(c) 2,000,000 91,800,000
----------------------------------------------------------------------------
Pfizer Inc. 5,789,800 183,941,946
----------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 1,122,400 86,907,432
============================================================================
532,912,810
============================================================================
|
FS-67
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Property & Casualty Insurance-0.24%
XL Capital Ltd.-Class A (Bermuda) 238,000 $ 18,123,700
============================================================================
Publishing-0.49%
Gannett Co., Inc. 500,000 37,965,000
============================================================================
Restaurants-2.75%
Brinker International, Inc.(a) 2,710,600 76,953,934
----------------------------------------------------------------------------
Darden Restaurants, Inc. 1,625,800 30,857,684
----------------------------------------------------------------------------
Outback Steakhouse, Inc. 1,707,400 58,136,970
----------------------------------------------------------------------------
Wendy's International, Inc. 750,000 23,760,000
----------------------------------------------------------------------------
Yum! Brands, Inc.(a) 1,000,000 22,530,000
============================================================================
212,238,588
============================================================================
Semiconductor Equipment-4.97%
Applied Materials, Inc.(a) 8,500,000 127,755,000
----------------------------------------------------------------------------
KLA-Tencor Corp.(a) 1,739,400 61,974,822
----------------------------------------------------------------------------
Lam Research Corp.(a) 4,000,000 50,360,000
----------------------------------------------------------------------------
Novellus Systems, Inc.(a) 3,000,000 94,800,000
----------------------------------------------------------------------------
Teradyne, Inc.(a) 4,000,000 48,440,000
============================================================================
383,329,822
============================================================================
Semiconductors-8.40%
Altera Corp.(a) 5,000,000 58,600,000
----------------------------------------------------------------------------
Analog Devices, Inc.(a) 4,658,000 124,834,400
----------------------------------------------------------------------------
Integrated Device Technology, Inc.(a) 2,694,900 26,617,527
----------------------------------------------------------------------------
Intel Corp. 4,000,000 69,200,000
----------------------------------------------------------------------------
Linear Technology Corp. 3,000,000 82,920,000
----------------------------------------------------------------------------
Maxim Integrated Products, Inc. 2,000,000 63,680,000
----------------------------------------------------------------------------
Microchip Technology Inc. 6,000,052 146,401,269
----------------------------------------------------------------------------
Micron Technology, Inc.(a) 3,000,000 48,000,000
----------------------------------------------------------------------------
Texas Instruments Inc. 1,745,500 27,683,630
============================================================================
647,936,826
============================================================================
|
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Soft Drinks-1.08%
Coca-Cola Co. (The) 1,800,000 $ 83,664,000
============================================================================
Specialty Stores-3.53%
AutoZone, Inc.(a) 707,500 60,682,275
----------------------------------------------------------------------------
Bed Bath & Beyond Inc.(a) 2,600,000 92,196,000
----------------------------------------------------------------------------
CarMax, Inc.(a) 1,000,000 16,390,000
----------------------------------------------------------------------------
Office Depot, Inc.(a) 2,000,000 28,780,000
----------------------------------------------------------------------------
Staples, Inc.(a) 4,786,900 74,196,950
============================================================================
272,245,225
============================================================================
Systems Software-3.47%
Microsoft Corp.(a) 5,000,000 267,350,000
============================================================================
Tobacco-0.48%
Philip Morris Cos. Inc. 900,000 36,675,000
============================================================================
Wireless Telecommunication Services-0.44%
Nextel Communications, Inc.-Class A(a) 3,000,000 33,840,000
============================================================================
Total Common Stocks & Other Equity
Interests (Cost $7,420,902,017) 7,503,516,633
============================================================================
MONEY MARKET FUNDS-3.21%
STIC Liquid Assets Portfolio(d) 123,937,638 123,937,638
----------------------------------------------------------------------------
STIC Prime Portfolio(d) 123,937,638 123,937,638
============================================================================
Total Money Market Funds (Cost
$247,875,276) 247,875,276
============================================================================
TOTAL INVESTMENTS-100.50% (Cost
$7,668,777,293) 7,751,391,909
============================================================================
OTHER ASSETS LESS LIABILITIES-(0.50%) (38,679,071)
============================================================================
NET ASSETS-100.00% $7,712,712,838
____________________________________________________________________________
============================================================================
|
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 7.
(c) The investment Company Act of 1940 defines affiliates as those companies in
which a fund holds 5% or more of the outstanding voting securities. The Fund
has not owned enough of the outstanding voting securities of the issuer to
have control (as defined in the Investment Company Act of 1940) of that
issuer. The market value as of 10/31/02 represented 1.19% of the Fund's net
assets. The following is a summary of the transactions with affiliates for
the year ended October 31, 2002.
MARKET CHANGE IN MARKET
VALUE PURCHASES SALES UNREALIZED VALUE DIVIDEND REALIZED
10/31/2001 AT COST AT COST APPR./(DEPR.) 10/31/2002 INCOME GAIN/(LOSS)
--------------------------------------------------------------------------------------------------------------------- ------------
Lamar Advertising Co.......... $141,300,000 $ -- $ (71,607,551) $(69,692,449) $ -- $ -- $(15,840,701)
Medicis Pharmaceutical
Corp.-Class A..-............ 115,380,000 -- -- (23,580,000) 91,800,000 $ -- --
-----------------------------------------------------------------------------------------------------------------------------------
$256,680,000 $91,800,000 $ -- $(15,840,701)
-----------------------------------------------------------------------------------------------------------------------------------
|
(d) The money market fund and the Fund are affiliated by having the same investment advisor. See Notes to Financial Statements.
FS-68
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost $7,668,777,293)* $7,751,391,909
---------------------------------------------------------------------
Receivables for:
Investments sold 74,463,938
---------------------------------------------------------------------
Fund shares sold 4,847,030
---------------------------------------------------------------------
Dividends 2,968,987
---------------------------------------------------------------------
Investment for deferred compensation plan 240,854
---------------------------------------------------------------------
Collateral for securities loaned 165,293,972
---------------------------------------------------------------------
Other assets 96,627
=====================================================================
Total assets 7,999,303,317
_____________________________________________________________________
=====================================================================
LIABILITIES:
Payables for:
Investments purchased 92,727,322
---------------------------------------------------------------------
Fund shares reacquired 17,298,062
---------------------------------------------------------------------
Options written (premiums received $398,595) 275,303
---------------------------------------------------------------------
Deferred compensation plan 240,854
---------------------------------------------------------------------
Collateral upon return of securities loaned 165,293,972
---------------------------------------------------------------------
Accrued distribution fees 4,085,668
---------------------------------------------------------------------
Accrued trustees' fees 4,118
---------------------------------------------------------------------
Accrued transfer agent fees 5,381,201
---------------------------------------------------------------------
Accrued operating expenses 1,283,979
=====================================================================
Total liabilities 286,590,479
=====================================================================
Net assets applicable to shares outstanding $7,712,712,838
_____________________________________________________________________
=====================================================================
NET ASSETS:
Class A $6,780,054,557
_____________________________________________________________________
=====================================================================
Class B $ 625,293,580
_____________________________________________________________________
=====================================================================
Class C $ 184,393,109
_____________________________________________________________________
=====================================================================
Class R $ 225,741
_____________________________________________________________________
=====================================================================
Institutional Class $ 122,745,851
_____________________________________________________________________
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 394,113,108
_____________________________________________________________________
=====================================================================
Class B 38,221,650
_____________________________________________________________________
=====================================================================
Class C 11,274,294
_____________________________________________________________________
=====================================================================
Class R 13,078
_____________________________________________________________________
=====================================================================
Institutional Class 6,669,472
_____________________________________________________________________
=====================================================================
Class A:
Net asset value per share $ 17.20
---------------------------------------------------------------------
Offering price per share:
(Net asset value of $17.20 divided by 94.50%) $ 18.20
_____________________________________________________________________
=====================================================================
Class B:
Net asset value and offering price per share $ 16.36
_____________________________________________________________________
=====================================================================
Class C:
Net asset value and offering price per share $ 16.36
_____________________________________________________________________
=====================================================================
Class R:
Net asset value and offering price per share $ 17.26
_____________________________________________________________________
=====================================================================
Institutional Class:
Net asset value and offering price per share $ 18.40
_____________________________________________________________________
=====================================================================
|
* At October 31, 2002, securities with an aggregate market value of $158,495,812
were on loan to brokers.
Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$141,553) $ 46,976,801
---------------------------------------------------------------------
Dividends from affiliated money market funds 5,128,250
---------------------------------------------------------------------
Interest 1,921
---------------------------------------------------------------------
Security lending income 375,840
=====================================================================
Total investment income 52,482,812
=====================================================================
EXPENSES:
Advisory fees 63,117,935
---------------------------------------------------------------------
Administrative services fees 629,514
---------------------------------------------------------------------
Custodian fees 517,119
---------------------------------------------------------------------
Distribution fees -- Class A 26,651,431
---------------------------------------------------------------------
Distribution fees -- Class B 7,863,981
---------------------------------------------------------------------
Distribution fees -- Class C 2,406,943
---------------------------------------------------------------------
Distribution fees -- Class R 104
---------------------------------------------------------------------
Transfer agent fees 30,950,844
---------------------------------------------------------------------
Transfer agent fees -- Institutional Class 161,290
---------------------------------------------------------------------
Trustees' fees 59,978
---------------------------------------------------------------------
Other 2,613,142
=====================================================================
Total expenses 134,972,281
=====================================================================
Less: Fees waived (1,334,866)
---------------------------------------------------------------------
Expenses paid indirectly (150,045)
=====================================================================
Net expenses 133,487,370
=====================================================================
Net investment income (loss) (81,004,558)
=====================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES AND
OPTION CONTRACTS:
Net realized gain (loss) from investment
securities (1,231,119,667)
---------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 143,330,722
---------------------------------------------------------------------
Foreign currencies (17,825)
---------------------------------------------------------------------
Option contracts written 123,292
=====================================================================
143,436,189
=====================================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (1,087,683,478)
=====================================================================
Net increase (decrease) in net assets resulting
from operations $(1,168,688,036)
_____________________________________________________________________
=====================================================================
|
See Notes to Financial Statements.
FS-69
Statement of Changes in Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (81,004,558) $ (76,893,890)
------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (1,231,119,667) (1,225,239,040)
------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and option
contracts 143,436,189 (7,717,578,312)
================================================================================================
Net increase (decrease) in net assets resulting from
operations (1,168,688,036) (9,019,711,242)
================================================================================================
Distributions to shareholders from net realized gains:
Class A -- (3,284,079,983)
------------------------------------------------------------------------------------------------
Class B -- (239,710,222)
------------------------------------------------------------------------------------------------
Class C -- (79,328,549)
------------------------------------------------------------------------------------------------
Institutional Class -- (47,688,484)
------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (1,905,685,542) 1,798,697,583
------------------------------------------------------------------------------------------------
Class B (89,586,163) 360,350,428
------------------------------------------------------------------------------------------------
Class C (44,303,197) 104,195,656
------------------------------------------------------------------------------------------------
Class R 204,500 --
------------------------------------------------------------------------------------------------
Institutional Class (10,243,640) 31,147,864
================================================================================================
Net increase (decrease) in net assets (3,218,302,078) (10,376,126,949)
================================================================================================
NET ASSETS:
Beginning of year 10,931,014,916 21,307,141,865
================================================================================================
End of year $ 7,712,712,838 $10,931,014,916
________________________________________________________________________________________________
================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $10,096,779,185 $12,227,372,518
------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (770,211) (744,944)
------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (2,466,016,219) (1,234,896,552)
------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and option contracts 82,720,083 (60,716,106)
================================================================================================
$ 7,712,712,838 $10,931,014,916
________________________________________________________________________________________________
================================================================================================
|
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Constellation Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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. Class R shares and the Institutional Class shares are sold at net asset value. 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 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
FS-70
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 and commercial paper 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. 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 gain, 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 gain) 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. 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.
FS-71
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 master investment agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of the first $30 million of the Fund's average daily net assets, plus 0.75% of the Fund's average daily net assets in excess of $30 million to and including $150 million, 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. 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 October 31, 2002, AIM waived fees of $1,334,866. Under the terms of a master sub-advisory agreement between AIM and A I M Capital Management, Inc. ("AIM Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to AIM.
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 October 31, 2002, AIM was paid $629,514 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 October 31, 2002, AFS retained $13,879,506 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 0.30% 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B, Class C and Class R shares paid $26,651,431, $7,863,981, $2,406,943 and $104, respectively.
AIM Distributors retained commissions of $1,272,976 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $146,648, $851, $36,358 and $0 in contingent deferred sales charges imposed on redemptions of Class A, Class B, Class C and Class R shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 2002, the Fund paid legal fees of $31,003 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 October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $147,794 and reductions in custodian fees of $2,251 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $150,045.
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 year ended October 31,
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 October 31, 2002, securities with an aggregate value of $158,495,812 were
on loan to brokers. The loans were secured by cash collateral of $165,293,972
received by the Fund and invested in affiliated money market funds as follows:
$140,355,489 in STIC Liquid Assets Portfolio and $24,938,483 in STIC Prime
Portfolio. For the year ended October 31, 2002, the Fund received fees of
$375,840 for securities lending.
FS-72
NOTE 7--CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2002 are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
----------------------------------------------------------
Beginning of year -- $ --
----------------------------------------------------------
Written 1,551 398,595
==========================================================
End of year 1,551 $398,595
__________________________________________________________
==========================================================
|
Open call options written at October 31, 2002 were as follows:
OCTOBER 31,
CONTRACT STRIKE NUMBER OF PREMIUMS 2002 UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
---------------------------------------------------------------------------------------------
Forest Laboratories,
Inc. Nov-02 $100 1,551 $398,595 $275,303 $123,292
_____________________________________________________________________________________________
=============================================================================================
|
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
------------------------
Distributions paid from long-term
capital gain $ -- $3,650,807,238
_______________________________________________________________
===============================================================
|
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation -- investments $ 64,763,381
--------------------------------------------------------------
Temporary book/tax differences (770,211)
--------------------------------------------------------------
Capital loss carryforward (2,448,059,517)
--------------------------------------------------------------
Shares of beneficial interest 10,096,779,185
==============================================================
$ 7,712,712,838
______________________________________________________________
==============================================================
|
The difference between book-basis and tax-basis unrealized appreciation is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation difference is attributable to the tax deferral of losses on wash sales. Amount includes appreciation on foreign currencies and option contacts written of $105,467.
The temporary book/tax differences are the result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the deferral of trustee compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-------------------------------------------------------------
October 31, 2009 $1,224,074,030
-------------------------------------------------------------
October 31, 2010 1,223,985,487
=============================================================
$2,448,059,517
_____________________________________________________________
=============================================================
|
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 October 31, 2002 was $5,527,191,684 and $7,640,311,238, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 1,338,956,260 -------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (1,274,298,346) ============================================================== Net unrealized appreciation of investment securities $ 64,657,914 ______________________________________________________________ ============================================================== Cost of investments for tax purposes is $7,686,733,995. |
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of a net operating loss reclassification, on October 31, 2002, undistributed net investment income was increased by $80,979,291 and shares of beneficial interest decreased by $80,979,291. This reclassification had no effect on the net assets of the Fund.
FS-73
NOTE 11--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 49,193,225* $ 974,921,543* 69,882,787 $ 1,870,548,957
--------------------------------------------------------------------------------------------------------------------------------
Class B 5,811,283 111,506,491 12,298,051 324,078,409
--------------------------------------------------------------------------------------------------------------------------------
Class C 2,391,741 46,150,281 4,478,320 117,760,474
--------------------------------------------------------------------------------------------------------------------------------
Class R** 13,083 204,591 -- --
--------------------------------------------------------------------------------------------------------------------------------
Institutional Class 6,254,346 139,801,926 1,273,391 37,026,988
================================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 107,528,397 3,125,797,826
--------------------------------------------------------------------------------------------------------------------------------
Class B -- -- 8,229,796 230,503,608
--------------------------------------------------------------------------------------------------------------------------------
Class C -- -- 2,703,433 75,693,277
--------------------------------------------------------------------------------------------------------------------------------
Institutional Class -- -- 1,529,945 47,137,606
================================================================================================================================
Reacquired:
Class A (147,108,087) (2,880,607,085) (128,320,077) (3,197,649,200)
--------------------------------------------------------------------------------------------------------------------------------
Class B (10,919,779)* (201,092,654)* (8,314,571) (194,231,589)
--------------------------------------------------------------------------------------------------------------------------------
Class C (4,824,172) (90,453,478) (3,756,367) (89,258,095)
--------------------------------------------------------------------------------------------------------------------------------
Class R** (5) (91) -- --
--------------------------------------------------------------------------------------------------------------------------------
Institutional Class (6,757,582) (150,045,566) (1,955,216) (53,016,730)
================================================================================================================================
(105,945,947) $(2,049,614,042) 65,577,889 $ 2,294,391,531
________________________________________________________________________________________________________________________________
================================================================================================================================
|
* Includes automatic conversion of 234,440 shares of Class B shares in the amount of $4,426,684 to 223,534 shares of Class A shares in the amount of $4,426,684.
** Class R shares commenced sales on June 3, 2002.
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 OCTOBER 31,
---------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 19.72 $ 43.50 $ 34.65 $ 26.37 $ 29.23
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)(a) (0.12) (0.26) (0.17) (0.14)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.37) (16.24) 12.39 9.18 (0.62)
=================================================================================================================================
Total from investment operations (2.52) (16.36) 12.13 9.01 (0.76)
=================================================================================================================================
Less distributions from net realized gains -- (7.42) (3.28) (0.73) (2.10)
=================================================================================================================================
Net asset value, end of period $ 17.20 $ 19.72 $ 43.50 $ 34.65 $ 26.37
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (12.78)% (43.10)% 36.56% 34.81% (2.30)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $6,780,055 $9,703,277 $19,268,977 $14,292,905 $12,391,844
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.26%(c) 1.14% 1.08% 1.10% 1.10%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.27%(c) 1.17% 1.11% 1.12% 1.12%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.74)%(c) (0.46)% (0.61)% (0.50)% (0.47)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 57% 75% 88% 62% 76%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include sales charges.
(c) Ratios are based on average daily net assets of $8,883,810,424.
FS-74
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
-----------------------------------------------------------------
NOVEMBER 3, 1997
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED) TO
---------------------------------------------- OCTOBER 31,
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.89 $ 42.28 $ 34.00 $ 26.11 $ 30.04
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.27)(a) (0.28) (0.58)(a) (0.42) (0.37)(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.26) (15.69) 12.14 9.04 (1.46)
=================================================================================================================================
Total from investment operations (2.53) (15.97) 11.56 8.62 (1.83)
=================================================================================================================================
Less distributions from net realized gains -- (7.42) (3.28) (0.73) (2.10)
=================================================================================================================================
Net asset value, end of period $ 16.36 $ 18.89 $ 42.28 $ 34.00 $ 26.11
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (13.39)% (43.49)% 35.51% 33.64% (5.86)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $625,294 $818,343 $1,315,524 $589,718 $275,676
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.96%(c) 1.86% 1.85% 1.98% 1.98%(d)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.97%(c) 1.89% 1.88% 2.00% 2.00%(d)
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (1.44)%(c) (1.17)% (1.38)% (1.38)% (1.36)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 57% 75% 88% 62% 76%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles, does not include contingent deferred sales charged and is
not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$786,398,084.
(d) Annualized.
CLASS C
-------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.88 $ 42.27 $ 33.99 $ 26.10 $ 29.18
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.27)(a) (0.29) (0.59)(a) (0.42) (0.37)(a)
---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.25) (15.68) 12.15 9.04 (0.61)
=====================================================================================================================
Total from investment operations (2.52) (15.97) 11.56 8.62 (0.98)
=====================================================================================================================
Less distributions from net realized gains -- (7.42) (3.28) (0.73) (2.10)
=====================================================================================================================
Net asset value, end of period $ 16.36 $ 18.88 $ 42.27 $ 33.99 $ 26.10
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(b) (13.35)% (43.51)% 35.52% 33.65% (3.12)%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $184,393 $258,786 $434,544 $161,490 $76,522
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.96%(c) 1.86% 1.85% 1.98% 1.97%
---------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.97%(c) 1.89% 1.88% 2.00% 1.99%
=====================================================================================================================
Ratio of net investment income (loss) to average net assets (1.44)%(c) (1.17)% (1.38)% (1.38)% (1.35)%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate 57% 75% 88% 62% 76%
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $240,694,256.
FS-75
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------
Net asset value, beginning of period $ 19.82
---------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a)
---------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.49)
===========================================================================
Total from investment operations (2.56)
===========================================================================
Net asset value, end of period $ 17.26
___________________________________________________________________________
===========================================================================
Total return(b) (12.92)%
___________________________________________________________________________
===========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 226
___________________________________________________________________________
===========================================================================
Ratio of expenses to average net assets:
With fee waivers 1.53%(c)
---------------------------------------------------------------------------
Without fee waivers 1.54%(c)
===========================================================================
Ratio of net investment income (loss) to average net assets (1.01)%(c)
___________________________________________________________________________
===========================================================================
Portfolio turnover rate 57%
___________________________________________________________________________
===========================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $50,620.
INSTITUTIONAL CLASS
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
2002 2001 2000 1999 1998
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 21.00 $ 45.55 $ 36.01 $ 27.25 $ 30.00
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) 0.01 (0.09) (0.01) --
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.54) (17.14) 12.91 9.50 (0.65)
======================================================================================================================
Total from investment operations (2.60) (17.13) 12.82 9.49 (0.65)
======================================================================================================================
Less distributions from net realized gains -- (7.42) (3.28) (0.73) (2.10)
======================================================================================================================
Net asset value, end of period $ 18.40 $ 21.00 $ 45.55 $ 36.01 $ 27.25
______________________________________________________________________________________________________________________
======================================================================================================================
Total return(b) (12.38)% (42.80)% 37.14% 35.46% (1.85)%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $122,746 $150,609 $288,097 $244,369 $189,039
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 0.80%(c) 0.65% 0.65% 0.64% 0.63%
----------------------------------------------------------------------------------------------------------------------
Without fee waivers 0.81%(c) 0.68% 0.68% 0.66% 0.65%
======================================================================================================================
Ratio of net investment income (loss) to average net assets (0.28)%(c) 0.03% (0.18)% (0.04)% (0.01)%
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate 57% 75% 88% 62% 76%
______________________________________________________________________________________________________________________
======================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles.
(c) Ratios are based on average daily net assets of $145,946,095.
FS-76
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Core Strategies Fund And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Core Strategies Fund (a portfolio of AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations, the statement of changes in net assets and the financial highlights for the period then ended. Those financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Core Strategies Fund as of October 31, 2002, and the results of its operations, the changes in its net assets and the financial highlights for the period then ended in conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
|
FS-77
October 31, 2002
MARKET
SHARES VALUE
COMMON STOCKS--97.44%
AEROSPACE & DEFENSE--2.28%
Lockheed Martin Corp.(a) 140 $ 8,106
-----------------------------------------------------------------------------------------------
Northrop Grumman Corp. 50 5,156
-----------------------------------------------------------------------------------------------
Rockwell Collins, Inc. 220 4,957
===============================================================================================
18,219
===============================================================================================
AIR FREIGHT & LOGISTICS--0.60%
FedEx Corp. 90 4,787
===============================================================================================
APPAREL RETAIL--0.92%
Abercrombie & Fitch Co.-Class A(b) 100 1,782
-----------------------------------------------------------------------------------------------
Gap, Inc. (The) 250 2,942
-----------------------------------------------------------------------------------------------
Limited Brands 170 2,664
===============================================================================================
7,388
===============================================================================================
APPAREL, ACCESSORIES & LUXURY GOODS--0.30%
Jones Apparel Group, Inc.(b) 70 2,425
===============================================================================================
AUTO PARTS & EQUIPMENT--0.25%
ArvinMeritor, Inc. 130 1,969
===============================================================================================
BANKS--7.29%
BancorpSouth, Inc. 130 2,463
-----------------------------------------------------------------------------------------------
Bank of America Corp. 200 13,960
-----------------------------------------------------------------------------------------------
Bank One Corp. 200 7,714
-----------------------------------------------------------------------------------------------
Fifth Third Bancorp 90 5,715
-----------------------------------------------------------------------------------------------
Huntington Bancshares Inc. 460 8,699
-----------------------------------------------------------------------------------------------
National City Corp. 280 7,596
-----------------------------------------------------------------------------------------------
U.S. Bancorp. 160 3,374
-----------------------------------------------------------------------------------------------
Washington Mutual, Inc. 150 5,364
-----------------------------------------------------------------------------------------------
Whitney Holding Corp. 100 3,396
===============================================================================================
58,281
===============================================================================================
BIOTECHNOLOGY--1.29%
Amgen Inc.(b) 90 4,190
-----------------------------------------------------------------------------------------------
Gilead Sciences, Inc.(b) 120 4,169
-----------------------------------------------------------------------------------------------
Invitrogen Corp.(b) 70 1,947
===============================================================================================
10,306
===============================================================================================
BROADCASTING & CABLE TV--0.46%
Clear Channel Communications, Inc.(b) 100 3,705
===============================================================================================
CASINOS & GAMBLING--0.68%
Harrah's Entertainment, Inc.(b) 130 5,460
===============================================================================================
COMPUTER & ELECTRONICS RETAIL--0.27%
GameStop Corp.(b) 120 2,148
===============================================================================================
|
FS-78
MARKET
SHARES VALUE
COMPUTER HARDWARE--3.48%
Dell Computer Corp.(b) 640 18,310
-----------------------------------------------------------------------------------------------
International Business Machines Corp. 120 9,473
===============================================================================================
27,783
===============================================================================================
COMPUTER STORAGE & PERIPHERALS--0.24%
Network Appliance, Inc.(a)(b) 210 1,884
===============================================================================================
CONSTRUCTION MATERIALS--0.30%
Lafarge North America Inc. 80 2,372
===============================================================================================
CONSUMER FINANCE--1.18%
Capital One Financial Corp. 90 2,742
-----------------------------------------------------------------------------------------------
MBNA Corp. 330 6,702
===============================================================================================
9,444
===============================================================================================
DATA PROCESSING SERVICES--0.93%
Automatic Data Processing, Inc. 80 3,402
-----------------------------------------------------------------------------------------------
CheckFree Corp.(b) 250 4,070
===============================================================================================
7,472
===============================================================================================
DEPARTMENT STORES--0.73%
Kohl's Corp.(b) 40 2,338
-----------------------------------------------------------------------------------------------
Saks Inc.(b) 320 3,472
===============================================================================================
5,810
===============================================================================================
DIVERSIFIED COMMERCIAL SERVICES--1.80%
Dun & Bradstreet Corp. (The)(b) 140 5,117
-----------------------------------------------------------------------------------------------
Equifax Inc. 200 4,712
-----------------------------------------------------------------------------------------------
H&R Block, Inc. 50 2,219
-----------------------------------------------------------------------------------------------
Pittston Brink's Group 110 2,329
===============================================================================================
14,377
===============================================================================================
DIVERSIFIED FINANCIAL SERVICES--6.51%
American Express Co. 200 7,274
-----------------------------------------------------------------------------------------------
Bear Stearns Cos., Inc. (The) 40 2,442
-----------------------------------------------------------------------------------------------
Citigroup Inc. 420 15,519
-----------------------------------------------------------------------------------------------
Fannie Mae 235 15,712
-----------------------------------------------------------------------------------------------
Freddie Mac(a) 180 11,084
===============================================================================================
52,031
===============================================================================================
DIVERSIFIED METALS & MINING--0.19%
Peabody Energy Corp. 60 1,545
===============================================================================================
DRUG RETAIL--0.83%
CVS Corp. 240 6,655
===============================================================================================
ELECTRIC UTILITIES--3.72%
Entergy Corp. 300 13,227
-----------------------------------------------------------------------------------------------
Southern Co. (The) 555 16,483
===============================================================================================
29,710
===============================================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS--1.03%
Jabil Circuit, Inc.(a)(b) 150 2,314
-----------------------------------------------------------------------------------------------
Thermo Electron Corp.(b) 320 5,885
===============================================================================================
8,199
===============================================================================================
|
FS-79
MARKET
SHARES VALUE
FOOD DISTRIBUTORS--1.03%
Performance Food Group Co.(b) 110 4,091
-----------------------------------------------------------------------------------------------
Sysco Corp. 130 4,118
===============================================================================================
8,209
===============================================================================================
FOOD RETAIL--0.45%
Albertson's, Inc. 160 3,570
===============================================================================================
GENERAL MERCHANDISE STORES--2.34%
Costco Wholesale Corp.(b) 110 3,732
-----------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 280 14,994
===============================================================================================
18,726
===============================================================================================
HEALTH CARE DISTRIBUTORS & SERVICES--0.90%
Cardinal Health, Inc. 30 2,076
-----------------------------------------------------------------------------------------------
Express Scripts, Inc.(b) 50 2,709
-----------------------------------------------------------------------------------------------
McKesson Corp. 80 2,385
===============================================================================================
7,170
===============================================================================================
HEALTH CARE EQUIPMENT--0.25%
Fisher Scientific International Inc.(b) 70 2,002
===============================================================================================
HEALTH CARE FACILITIES--1.14%
HCA Inc. 130 5,654
-----------------------------------------------------------------------------------------------
Tenet Healthcare Corp.(b) 120 3,450
===============================================================================================
9,104
===============================================================================================
HOME IMPROVEMENT RETAIL--1.84%
Home Depot, Inc. (The) 350 10,108
-----------------------------------------------------------------------------------------------
Lowe's Cos., Inc. 110 4,590
===============================================================================================
14,698
===============================================================================================
HOTELS, RESORTS & CRUISE LINES--0.82%
Carnival Corp. 250 6,530
===============================================================================================
HOUSEHOLD PRODUCTS--2.89%
Clorox Co. 120 5,392
-----------------------------------------------------------------------------------------------
Procter & Gamble Co. (The) 200 17,690
===============================================================================================
23,082
===============================================================================================
INDUSTRIAL CONGLOMERATES--3.03%
General Electric Co. 960 24,240
===============================================================================================
INSURANCE BROKERS--0.63%
Platinum Underwriters Holdings Ltd. (Bermuda)(b) 200 5,020
===============================================================================================
INTEGRATED OIL & GAS--4.76%
ChevronTexaco Corp. 60 4,058
-----------------------------------------------------------------------------------------------
Exxon Mobil Corp. 650 21,879
-----------------------------------------------------------------------------------------------
Marathon Oil Corp. 400 8,360
-----------------------------------------------------------------------------------------------
Occidental Petroleum Corp. 130 3,709
===============================================================================================
38,006
===============================================================================================
INTEGRATED TELECOMMUNICATION SERVICES--3.12%
AT&T Corp. 380 4,955
-----------------------------------------------------------------------------------------------
BellSouth Corp. 125 3,269
-----------------------------------------------------------------------------------------------
SBC Communications Inc. 430 11,034
-----------------------------------------------------------------------------------------------
Verizon Communications Inc. 150 5,664
===============================================================================================
24,922
===============================================================================================
|
FS-80
MARKET
SHARES VALUE
IT CONSULTING & SERVICES--0.30%
SunGard Data Systems Inc.(b) 110 2,439
===============================================================================================
LEISURE PRODUCTS--0.30%
Mattel, Inc. 130 2,387
===============================================================================================
LIFE & HEALTH INSURANCE--2.09%
AFLAC Inc. 250 7,610
-----------------------------------------------------------------------------------------------
John Hancock Financial Services, Inc. 110 3,223
-----------------------------------------------------------------------------------------------
MetLife, Inc. 160 3,821
-----------------------------------------------------------------------------------------------
UnumProvident Corp. 100 2,052
===============================================================================================
16,706
===============================================================================================
MANAGED HEALTH CARE--1.38%
Anthem, Inc.(b) 40 2,520
-----------------------------------------------------------------------------------------------
Caremark Rx, Inc.(b) 120 2,124
-----------------------------------------------------------------------------------------------
UnitedHealth Group Inc. 70 6,367
===============================================================================================
11,011
===============================================================================================
METAL & GLASS CONTAINERS--0.84%
Pactiv Corp.(b) 340 6,746
===============================================================================================
MOVIES & ENTERTAINMENT--0.37%
Fox Entertainment Group, Inc.-Class A(b) 120 2,929
===============================================================================================
MULTI-LINE INSURANCE--1.72%
American International Group, Inc.(a) 220 13,761
===============================================================================================
MULTI-UTILITIES & UNREGULATED POWER--0.22%
SCANA Corp. 60 1,751
===============================================================================================
NETWORKING EQUIPMENT--1.31%
Cisco Systems, Inc.(b) 940 10,509
===============================================================================================
OFFICE ELECTRONICS--0.62%
IKON Office Solutions, Inc. 700 4,956
===============================================================================================
OFFICE SERVICES & SUPPLIES--0.76%
Pitney Bowes, Inc. 180 6,039
===============================================================================================
OIL & GAS DRILLING--0.30%
Transocean Inc. 110 2,418
===============================================================================================
OIL & GAS EXPLORATION & PRODUCTION--1.23%
XTO Energy, Inc. 410 9,861
===============================================================================================
PACKAGED FOODS & MEATS--0.88%
ConAgra Foods, Inc. 290 7,033
===============================================================================================
PHARMACEUTICALS--9.33%
Abbott Laboratories 120 5,024
-----------------------------------------------------------------------------------------------
Johnson & Johnson 480 28,200
-----------------------------------------------------------------------------------------------
King Pharmaceuticals, Inc.(b) 120 1,842
-----------------------------------------------------------------------------------------------
Merck & Co., Inc. 170 9,221
-----------------------------------------------------------------------------------------------
Pfizer Inc. 850 27,005
-----------------------------------------------------------------------------------------------
Watson Pharmaceuticals, Inc.(b) 120 3,299
===============================================================================================
74,591
===============================================================================================
|
FS-81
MARKET
SHARES VALUE
PROPERTY & CASUALTY INSURANCE--0.20%
Allstate Corp. (The) 40 1,591
===============================================================================================
RAILROADS--0.74%
Union Pacific Corp. 100 5,905
===============================================================================================
REAL ESTATE INVESTMENT TRUSTS--0.73%
Host Marriott Corp.(b) 160 1,312
-----------------------------------------------------------------------------------------------
Plum Creek Timber Co., Inc. 200 4,522
===============================================================================================
5,834
===============================================================================================
RESTAURANTS--1.77%
Brinker International, Inc.(b) 200 5,678
-----------------------------------------------------------------------------------------------
Darden Restaurants, Inc. 195 3,701
-----------------------------------------------------------------------------------------------
McDonald's Corp. 90 1,630
-----------------------------------------------------------------------------------------------
Yum! Brands, Inc.(b) 140 3,154
===============================================================================================
14,163
===============================================================================================
SEMICONDUCTORS--2.15%
Intel Corp. 700 12,110
-----------------------------------------------------------------------------------------------
Maxim Integrated Products, Inc. 100 3,184
-----------------------------------------------------------------------------------------------
Texas Instruments Inc. 120 1,903
===============================================================================================
17,197
===============================================================================================
SOFT DRINKS--2.54%
Coca-Cola Co. (The) 220 10,226
-----------------------------------------------------------------------------------------------
Pepsi Bottling Group, Inc. (The) 210 5,660
-----------------------------------------------------------------------------------------------
PepsiCo, Inc. 100 4,410
===============================================================================================
20,296
===============================================================================================
SPECIALTY STORES--0.18%
Blockbuster Inc.-Class A 60 1,438
===============================================================================================
SYSTEMS SOFTWARE--5.53%
Computer Associates International, Inc. 250 3,715
-----------------------------------------------------------------------------------------------
Microsoft Corp.(b) 510 27,270
-----------------------------------------------------------------------------------------------
Oracle Corp.(b) 750 7,643
-----------------------------------------------------------------------------------------------
Symantec Corp.(b) 140 5,600
===============================================================================================
44,228
===============================================================================================
TELECOMMUNICATIONS EQUIPMENT--1.63%
Advanced Fibre Communications, Inc.(b) 420 6,795
-----------------------------------------------------------------------------------------------
Motorola, Inc. 300 2,751
-----------------------------------------------------------------------------------------------
QUALCOMM Inc.(b) 100 3,452
===============================================================================================
12,998
===============================================================================================
TOBACCO--0.51%
Philip Morris Cos. Inc. 100 4,075
===============================================================================================
TRADING COMPANIES & DISTRIBUTORS--0.45%
MSC Industrial Direct Co., Inc.-Class A(b) 280 3,629
===============================================================================================
WIRELESS TELECOMMUNICATION SERVICES--0.88%
AT&T Wireless Services Inc.(b) 370 2,542
-----------------------------------------------------------------------------------------------
Nextel Communications, Inc.-Class A(a)(b) 400 4,512
===============================================================================================
7,054
===============================================================================================
Total Common Stocks (Cost $875,821) 778,794
===============================================================================================
|
MARKET
SHARES VALUE
TOTAL INVESTMENTS--97.44% (Cost $875,821) 778,794
===============================================================================================
OTHER ASSETS LESS LIABILITIES--2.56% 20,432
===============================================================================================
NET ASSETS--100.00% $799,226
_______________________________________________________________________________________________
===============================================================================================
|
Notes to Schedule of Investments:
(a) A portion of this security is subject to call options written. See Note 8.
(b) Non-income producing security.
See Notes to Financial Statements.
FS-82
ASSETS:
Investments, at market value (cost $875,821) $ 778,794
----------------------------------------------------------------------------------------------------
Cash 26,063
----------------------------------------------------------------------------------------------------
Receivables for:
Dividends 975
----------------------------------------------------------------------------------------------------
Amount due from advisor 10,270
----------------------------------------------------------------------------------------------------
Investment for deferred compensation plan 1,520
----------------------------------------------------------------------------------------------------
Other assets 879
====================================================================================================
Total assets 818,501
____________________________________________________________________________________________________
====================================================================================================
LIABILITIES:
Payables for:
Investments purchased 4,500
----------------------------------------------------------------------------------------------------
Options written (premiums received $405) 328
----------------------------------------------------------------------------------------------------
Deferred compensation plan 1,520
----------------------------------------------------------------------------------------------------
Accrued trustees' fees 824
----------------------------------------------------------------------------------------------------
Accrued transfer agent fees 5
----------------------------------------------------------------------------------------------------
Accrued operating expenses 12,098
====================================================================================================
Total liabilities 19,275
====================================================================================================
Net assets applicable to shares outstanding $ 799,226
____________________________________________________________________________________________________
====================================================================================================
NET ASSETS:
Class A $ 319,688
____________________________________________________________________________________________________
====================================================================================================
Class B $ 239,769
____________________________________________________________________________________________________
====================================================================================================
Class C $ 239,769
____________________________________________________________________________________________________
====================================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 40,001
____________________________________________________________________________________________________
====================================================================================================
Class B 30,001
____________________________________________________________________________________________________
====================================================================================================
Class C 30,001
____________________________________________________________________________________________________
====================================================================================================
Class A :
Net asset value per share $ 7.99
----------------------------------------------------------------------------------------------------
Offering price per share:
(Net asset value of $7.99 divided by 94.50%) $ 8.46
____________________________________________________________________________________________________
====================================================================================================
Class B :
Net asset value and offering price per share $ 7.99
____________________________________________________________________________________________________
====================================================================================================
Class C :
Net asset value and offering price per share $ 7.99
____________________________________________________________________________________________________
====================================================================================================
|
See Notes to Financial Statements.
FS-83
FOR THE PERIOD DECEMBER 31, 2001 (DATE OPERATIONS COMMENCED) TO OCTOBER 31, 2002
INVESTMENT INCOME:
Dividends $ 9,409
----------------------------------------------------------------------------------------------------
Dividends from affiliated money market funds 152
----------------------------------------------------------------------------------------------------
Interest 181
====================================================================================================
Total investment income 9,742
====================================================================================================
EXPENSES:
Advisory fees 5,619
----------------------------------------------------------------------------------------------------
Administrative services fees 41,781
----------------------------------------------------------------------------------------------------
Custodian fees 1,524
----------------------------------------------------------------------------------------------------
Distribution fees--Class A 1,049
----------------------------------------------------------------------------------------------------
Distribution fees--Class B 2,248
----------------------------------------------------------------------------------------------------
Distribution fees--Class C 2,248
----------------------------------------------------------------------------------------------------
Transfer agent fees 324
----------------------------------------------------------------------------------------------------
Trustees' fees 7,377
----------------------------------------------------------------------------------------------------
Printing 19,321
----------------------------------------------------------------------------------------------------
Professional fees 20,567
----------------------------------------------------------------------------------------------------
Other 3,579
====================================================================================================
Total expenses 105,637
====================================================================================================
Less: Fees waived and expenses reimbursed (92,015)
----------------------------------------------------------------------------------------------------
Expenses paid indirectly (500)
====================================================================================================
Net expenses 13,122
====================================================================================================
Net investment income (loss) (3,380)
====================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (101,863)
----------------------------------------------------------------------------------------------------
Option contracts written 1,389
====================================================================================================
(100,474)
====================================================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (97,027)
----------------------------------------------------------------------------------------------------
Option contracts written 77
====================================================================================================
(96,950)
====================================================================================================
Net gain (loss) from investment securities
and option contracts (197,424)
====================================================================================================
Net increase (decrease) in net assets resulting from operations $ (200,804)
____________________________________________________________________________________________________
====================================================================================================
|
See Notes to Financial Statements.
FS-84
For the period December 31, 2001 (Date operations commenced) to October 31, 2002
2002
----------
OPERATIONS:
Net investment income (loss) $ (3,380)
-------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities
and option contracts (100,474)
-------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investment securities
and option contracts (96,950)
=================================================================================================
Net increase (decrease) in net assets resulting from operations (200,804)
=================================================================================================
Share transactions-net:
Class A 400,010
-------------------------------------------------------------------------------------------------
Class B 300,010
-------------------------------------------------------------------------------------------------
Class C 300,010
=================================================================================================
Net increase in net assets 799,226
=================================================================================================
NET ASSETS
Beginning of period --
=================================================================================================
End of period $ 799,226
_________________________________________________________________________________________________
=================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 984,957
-------------------------------------------------------------------------------------------------
Undistributed net investment income 11,693
-------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment securities
and option contracts (100,474)
-------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities
and option contracts (96,950)
=================================================================================================
$ 799,226
_________________________________________________________________________________________________
=================================================================================================
|
See Notes to Financial Statements.
FS-85
October 31, 2002
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
AIM Core Strategies Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen separate portfolios, each having an unlimited number of shares of beneficial interest. The Fund commenced operations December 31, 2001 and consists of three different classes of shares that are not currently available for sale: Class A shares, Class B shares and Class C shares. 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 provide 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 and commercial paper 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. 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.
FS-86
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 gain, 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 gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
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 0.75% of the first $1 billion of the Fund's average daily net assets, plus 0.70% of the Fund's next $1 billion of average daily net assets, plus 0.625% of the Fund's average daily nest assets in excess of $2 billion. AIM has voluntarily 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 1.75% which may be terminated or modified at any time. 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 period December 31, 2001 (date operations commenced) through October 31, 2002, AIM waived fees of $5,619 and reimbursed fees of $80,851.
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 December 31, 2001 (date operations commenced) through October 31, 2002, AIM was paid $41,781 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
FS-87
period December 31, 2001 (date operations commenced) through October 31, 2002, AFS retained $48 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. NASD rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by the respective classes. AIM Distributors has voluntarily agreed to waive all fees during the time the shares are not available for sale. This waiver may be terminated or modified at any time. Pursuant to the master distribution agreements, for the period December 31, 2001 (date operations commenced) through October 31, 2002, AIM Distributors waived fees of $1,049, $2,248 and $2,248 for 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 period December 31, 2001 (date operations commenced) through October 31, 2002, the Fund paid legal fees of $2,356 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 period December 31, 2001 (date operations commenced) through October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $255 and reductions in custodian fees of $245 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $500.
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 -- TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid during the period December 31, 2001 (date operations commenced) through October 31, 2002.
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Undistributed ordinary income $ 13,740
Unrealized appreciation (depreciation) - investments (96,950)
Temporary book/tax differences (2,047)
Capital loss carryforward (100,474)
Shares of beneficial interest 984,957
---------
$ 799,226
=========
|
Amount includes appreciation on option contracts written of $77.
FS-88
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the deferral of trustee compensation.
The Fund's capital loss carryforward expires as follows:
CAPITAL
EXPIRATION LOSS CARRYFORWARD
------------------------ -----------------
October 31, 2010 $100,474
=================
|
NOTE 6 -- INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the period December 31, 2001 (date operations commenced) through October 31, 2002 was $1,340,991 and $363,251, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 33,053 ------------------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (130,080) ========================================================================================== Net unrealized appreciation (depreciation) of investment securities $ (97,027) __________________________________________________________________________________________ ========================================================================================== Investments have the same cost for tax and financial statement purposes. |
NOTE 7 -- RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of stock issuance costs and other items, on October 31, 2002, undistributed net investment income was increased by $15,073 and shares of beneficial interest decreased by $15,073. This reclassification had no effect on the net assets of the Fund.
NOTE 8 -- CALL OPTION CONTRACTS
Transactions in call options written during the period December 31, 2001 (date operations commenced) through October 31, 2002 are summarized as follows:
CALL OPTION CONTRACTS
-------------------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
------------- ------------
Beginning of year -- $ --
------------------------------------------------------------------------------------------------
Written 43 2,228
------------------------------------------------------------------------------------------------
Closed (20) (1,199)
------------------------------------------------------------------------------------------------
Exercised (2) (56)
------------------------------------------------------------------------------------------------
Expired (11) (568)
================================================================================================
End of year 10 $ 405
________________________________________________________________________________________________
================================================================================================
|
FS-89
Open call options written at October 31, 2002 were as follows:
OCTOBER 31, UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS 2002 APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE (DEPRECIATION)
----- -------- ------ --------- -------- ------------ --------------
American International Dec-02 $75 1 $78 $30 $48
Group, Inc.
------------------------------------------------------------------------------------------------------
Freddie Mac Dec-02 70 1 48 38 10
------------------------------------------------------------------------------------------------------
Jabil Circuit, Inc. Dec-02 20 1 33 32 1
------------------------------------------------------------------------------------------------------
Lockheed Martin Corp. Dec-02 70 1 48 43 5
------------------------------------------------------------------------------------------------------
Network Appliance, Inc. Dec-02 12.5 2 106 45 61
------------------------------------------------------------------------------------------------------
Nextel Communications, Dec-02 15 4 92 140 (48)
Inc.-Class A
======================================================================================================
10 $405 $328 $77
______________________________________________________________________________________________________
======================================================================================================
|
NOTE 9 - SHARE INFORMATION
Changes in shares outstanding during the period December 31, 2001 (date operations commenced) through October 31, 2002 were as follows:
OCTOBER 31,
2002
-----------------------
SHARES AMOUNT
---------- ----------
Sold:
Class A* 40,001 $ 400,010
------------------------------------------------------------
Class B* 30,001 300,010
------------------------------------------------------------
Class C* 30,001 300,010
============================================================
100,003 $1,000,030
____________________________________________________________
============================================================
* Currently all shares are owned by AIM.
|
FS-90
NOTE 10 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding during the period December 31, 2001 (date operations commenced) through October 31, 2002.
CLASS A
------------------------
DECEMBER 31, 2001 (DATE
OPERATIONS COMMENCED) TO
OCTOBER 31,
2002
------------------------
Net asset value, beginning of period $10.00
-------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)
-------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (1.98)
=================================================================================================
Total from investment operations (2.01)
=================================================================================================
Net asset value, end of period $7.99
_________________________________________________________________________________________________
=================================================================================================
Total return(a) (20.10)%
_________________________________________________________________________________________________
=================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $320
_________________________________________________________________________________________________
=================================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 1.82%(b)
-------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 13.71%(b)
_________________________________________________________________________________________________
=================================================================================================
Ratio of net investment income (loss) to average net assets (0.45)%(b)
_________________________________________________________________________________________________
=================================================================================================
Portfolio turnover rate 42%
_________________________________________________________________________________________________
=================================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting
principles, 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 $358,625.
FS-91
NOTE 10 - FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
------------------------
DECEMBER 31, 2001 (DATE
OPERATIONS COMMENCED) TO
OCTOBER 31,
2002
------------------------
Net asset value, beginning of period $10.00
-------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)
-------------------------------------------------------------------------------------------------
Net losses on securities (both realized and unrealized) (1.98)
=================================================================================================
Total from investment operations (2.01)
=================================================================================================
Net asset value, end of period $7.99
_________________________________________________________________________________________________
=================================================================================================
Total return(a) (20.10)%
_________________________________________________________________________________________________
=================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $240
_________________________________________________________________________________________________
=================================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 1.82%(b)
-------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 14.36%(b)
_________________________________________________________________________________________________
=================================================================================================
Ratio of net investment income (loss) to average net assets (0.45)%(b)
_________________________________________________________________________________________________
=================================================================================================
Portfolio turnover rate 42%
_________________________________________________________________________________________________
=================================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting
principles, 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 $268,971.
FS-92
NOTE 10 - FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
------------------------
DECEMBER 31, 2001 (DATE
OPERATIONS COMMENCED) TO
OCTOBER 31,
2002
------------------------
Net asset value, beginning of period $10.00
-------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)
-------------------------------------------------------------------------------------------------
Net losses on securities (both realized and unrealized) (1.98)
=================================================================================================
Total from investment operations (2.01)
=================================================================================================
Net asset value, end of period $7.99
_________________________________________________________________________________________________
=================================================================================================
Total return(a) (20.10)%
_________________________________________________________________________________________________
=================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $240
_________________________________________________________________________________________________
=================================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 1.82%(b)
-------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 14.36%(b)
_________________________________________________________________________________________________
=================================================================================================
Ratio of net investment income (loss) to average net assets (0.45)%(b)
_________________________________________________________________________________________________
=================================================================================================
Portfolio turnover rate 42%
_________________________________________________________________________________________________
=================================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting
principles, 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 $268,971.
FS-93
Report of Independent Auditors
To the Shareholders of AIM Dent Demographic Trends Fund and Board of Trustees of AIM Equity Funds
We have audited the accompanying statement of assets and liabilities of AIM Dent Demographic Trends Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the periods presented from commencement of operations through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Dent Demographic Trends Fund as of October 31, 2002, 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.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
|
FS-94
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
-------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-96.13%
Advertising-1.08%
Lamar Advertising Co.(a) 160,000 $ 5,430,400
=========================================================================
Apparel Retail-2.37%
Abercrombie & Fitch Co.-Class A(a) 200,000 3,564,000
-------------------------------------------------------------------------
AnnTaylor Stores Corp.(a) 103,800 2,432,034
-------------------------------------------------------------------------
Gap, Inc. (The) 500,000 5,885,000
=========================================================================
11,881,034
=========================================================================
Apparel, Accessories & Luxury Goods-0.44%
Coach, Inc.(a) 75,000 2,231,250
=========================================================================
Application Software-1.94%
Activision, Inc.(a) 125,000 2,562,500
-------------------------------------------------------------------------
Electronic Arts Inc.(a)(b) 27,500 1,790,800
-------------------------------------------------------------------------
Intuit Inc.(a) 55,000 2,855,600
-------------------------------------------------------------------------
PeopleSoft, Inc.(a) 140,000 2,534,000
=========================================================================
9,742,900
=========================================================================
Automobile Manufacturers-0.86%
Porsche A.G.-Pfd. (Germany) 9,000 4,316,023
=========================================================================
Banks-2.77%
Bank of America Corp. 60,000 4,188,000
-------------------------------------------------------------------------
Kookmin Bank (South Korea) 150,000 4,975,490
-------------------------------------------------------------------------
Synovus Financial Corp. 230,000 4,712,700
=========================================================================
13,876,190
=========================================================================
Biotechnology-1.51%
Amgen Inc.(a) 70,000 3,259,200
-------------------------------------------------------------------------
Charles River Laboratories International,
Inc.(a) 42,000 1,543,500
-------------------------------------------------------------------------
Gilead Sciences, Inc.(a) 80,000 2,779,200
=========================================================================
7,581,900
=========================================================================
Brewers-0.74%
Anheuser-Busch Cos., Inc. 70,000 3,693,200
=========================================================================
Broadcasting & Cable TV-1.54%
Clear Channel Communications, Inc.(a) 135,000 5,001,750
-------------------------------------------------------------------------
Westwood One, Inc.(a) 75,000 2,722,500
=========================================================================
7,724,250
=========================================================================
Computer & Electronics Retail-0.79%
CDW Computer Centers, Inc.(a) 75,000 3,976,500
=========================================================================
Computer Hardware-3.84%
Dell Computer Corp.(a) 390,000 11,157,900
-------------------------------------------------------------------------
|
MARKET
SHARES VALUE
-------------------------------------------------------------------------
Computer Hardware-(Continued)
Hewlett-Packard Co. 165,000 $ 2,607,000
-------------------------------------------------------------------------
International Business Machines Corp. 70,000 5,525,800
=========================================================================
19,290,700
=========================================================================
Consumer Finance-1.11%
MBNA Corp. 275,000 5,585,250
=========================================================================
Data Processing Services-0.81%
Fiserv, Inc.(a) 130,000 4,061,200
=========================================================================
Department Stores-1.22%
Kohl's Corp.(a) 45,000 2,630,250
-------------------------------------------------------------------------
Nordstrom, Inc. 175,000 3,486,000
=========================================================================
6,116,250
=========================================================================
Distillers & Vintners-0.63%
Constellation Brands, Inc.-Class A(a) 125,000 3,166,250
=========================================================================
Diversified Commercial Services-1.94%
Apollo Group, Inc.-Class A(a) 70,000 2,905,000
-------------------------------------------------------------------------
H&R Block, Inc. 85,000 3,772,300
-------------------------------------------------------------------------
Weight Watchers International, Inc.(a) 65,000 3,077,750
=========================================================================
9,755,050
=========================================================================
Diversified Financial Services-7.17%
American Express Co. 100,000 3,637,000
-------------------------------------------------------------------------
Citigroup Inc. 145,000 5,357,750
-------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 60,000 4,296,000
-------------------------------------------------------------------------
J.P. Morgan Chase & Co. 225,000 4,668,750
-------------------------------------------------------------------------
Lehman Brothers Holdings Inc. 75,000 3,995,250
-------------------------------------------------------------------------
Moody's Corp. 60,000 2,826,000
-------------------------------------------------------------------------
Morgan Stanley 115,000 4,475,800
-------------------------------------------------------------------------
SLM Corp. 40,000 4,109,600
-------------------------------------------------------------------------
Stilwell Financial, Inc. 225,000 2,634,750
=========================================================================
36,000,900
=========================================================================
Drug Retail-0.39%
CVS Corp. 70,000 1,941,100
=========================================================================
Employment Services-0.67%
Robert Half International Inc.(a) 200,000 3,340,000
=========================================================================
Food Distributors-0.79%
Sysco Corp. 125,000 3,960,000
=========================================================================
Food Retail-0.51%
Whole Foods Market, Inc.(a) 55,000 2,565,970
=========================================================================
|
FS-95
MARKET
SHARES VALUE
-------------------------------------------------------------------------
General Merchandise Stores-1.06%
Family Dollar Stores, Inc. 75,000 $ 2,309,250
-------------------------------------------------------------------------
Target Corp. 100,000 3,012,000
=========================================================================
5,321,250
=========================================================================
Health Care Distributors & Services-0.78%
AdvancePCS(a) 80,000 2,008,000
-------------------------------------------------------------------------
Express Scripts, Inc.(a) 35,000 1,896,300
=========================================================================
3,904,300
=========================================================================
Health Care Equipment-4.03%
Becton, Dickinson & Co. 75,000 2,213,250
-------------------------------------------------------------------------
Boston Scientific Corp.(a) 75,000 2,822,250
-------------------------------------------------------------------------
Medtronic, Inc. 160,000 7,168,000
-------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 73,000 2,599,530
-------------------------------------------------------------------------
Varian Medical Systems, Inc.(a) 48,000 2,314,560
-------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 75,000 3,091,500
=========================================================================
20,209,090
=========================================================================
Health Care Facilities-1.60%
HCA Inc. 105,000 4,566,450
-------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 120,000 3,450,000
=========================================================================
8,016,450
=========================================================================
Health Care Supplies-0.98%
Alcon, Inc. (Switzerland)(a) 120,000 4,922,400
=========================================================================
Home Improvement Retail-1.30%
Home Depot, Inc. (The) 225,000 6,498,000
=========================================================================
Homebuilding-0.96%
KB Home 50,000 2,360,000
-------------------------------------------------------------------------
Toll Brothers, Inc.(a) 120,000 2,457,600
=========================================================================
4,817,600
=========================================================================
Hotels, Resorts & Cruise Lines-1.36%
Royal Caribbean Cruises Ltd. 200,000 3,672,000
-------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. 135,000 3,145,500
=========================================================================
6,817,500
=========================================================================
Household Appliances-0.70%
Black & Decker Corp. (The) 75,000 3,507,000
=========================================================================
Household Products-1.88%
Colgate-Palmolive Co. 35,000 1,924,300
-------------------------------------------------------------------------
Procter & Gamble Co. (The) 85,000 7,518,250
=========================================================================
9,442,550
=========================================================================
Integrated Telecommunication Services-0.91%
AT&T Corp. 350,000 4,564,000
=========================================================================
|
MARKET
SHARES VALUE
-------------------------------------------------------------------------
Internet Retail-1.47%
Amazon.com, Inc.(a) 135,000 $ 2,613,600
-------------------------------------------------------------------------
eBay Inc.(a) 75,000 4,744,500
=========================================================================
7,358,100
=========================================================================
Internet Software & Services-0.59%
Yahoo! Inc.(a) 200,000 2,984,000
=========================================================================
IT Consulting & Services-0.73%
Affiliated Computer Services, Inc.-Class A(a) 80,000 3,684,000
=========================================================================
Life & Health Insurance-0.70%
AFLAC Inc. 115,000 3,500,600
=========================================================================
Managed Health Care-3.08%
Aetna Inc. 62,500 2,518,750
-------------------------------------------------------------------------
Anthem, Inc.(a) 80,000 5,040,000
-------------------------------------------------------------------------
Caremark Rx, Inc.(a) 100,000 1,770,000
-------------------------------------------------------------------------
First Health Group Corp.(a) 95,000 2,468,100
-------------------------------------------------------------------------
UnitedHealth Group Inc. 40,000 3,638,000
=========================================================================
15,434,850
=========================================================================
Motorcycle Manufacturers-0.78%
Harley-Davidson, Inc. 75,000 3,922,500
=========================================================================
Multi-Line Insurance-1.97%
American International Group, Inc. 95,000 5,942,250
-------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 100,000 3,950,000
=========================================================================
9,892,250
=========================================================================
Networking Equipment-2.47%
Cisco Systems, Inc.(a) 850,000 9,503,000
-------------------------------------------------------------------------
Juniper Networks, Inc.(a) 500,000 2,912,500
=========================================================================
12,415,500
=========================================================================
Packaged Foods & Meats-0.61%
Sara Lee Corp. 135,000 3,082,050
=========================================================================
Pharmaceuticals-12.17%
Barr Laboratories, Inc.(a) 31,000 1,823,730
-------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 40,000 3,919,600
-------------------------------------------------------------------------
Johnson & Johnson 225,000 13,218,750
-------------------------------------------------------------------------
Lilly (Eli) & Co. 65,000 3,607,500
-------------------------------------------------------------------------
Pfizer Inc. 325,000 10,325,250
-------------------------------------------------------------------------
Pharmacia Corp. 330,000 14,190,000
-------------------------------------------------------------------------
Shire Pharmaceuticals Group PLC-ADR (United
Kingdom)(a) 110,000 2,569,600
-------------------------------------------------------------------------
Taro Pharmaceutical Industries Ltd.
(Israel)(a) 52,000 1,807,000
-------------------------------------------------------------------------
Teva Pharmaceutical industries Ltd.-ADR
(Israel) 57,000 4,413,510
-------------------------------------------------------------------------
Wyeth 155,000 5,192,500
=========================================================================
61,067,440
=========================================================================
|
FS-96
MARKET
SHARES VALUE
-------------------------------------------------------------------------
Publishing-0.53%
Tribune Co. 55,000 $ 2,642,750
=========================================================================
Restaurants-1.33%
Starbucks Corp.(a) 175,000 4,156,250
-------------------------------------------------------------------------
Wendy's International, Inc. 80,000 2,534,400
=========================================================================
6,690,650
=========================================================================
Semiconductor Equipment-5.11%
Applied Materials, Inc.(a) 850,000 12,775,500
-------------------------------------------------------------------------
Entegris Inc.(a) 225,000 1,937,250
-------------------------------------------------------------------------
KLA-Tencor Corp.(a) 60,000 2,137,800
-------------------------------------------------------------------------
Lam Research Corp.(a) 700,000 8,813,000
=========================================================================
25,663,550
=========================================================================
Semiconductors-6.69%
Analog Devices, Inc.(a) 250,000 6,700,000
-------------------------------------------------------------------------
Intel Corp. 225,000 3,892,500
-------------------------------------------------------------------------
Linear Technology Corp. 150,000 4,146,000
-------------------------------------------------------------------------
Maxim Integrated Products, Inc. 125,000 3,980,000
-------------------------------------------------------------------------
Microchip Technology Inc. 250,000 6,100,000
-------------------------------------------------------------------------
Micron Technology, Inc.(a) 300,000 4,800,000
-------------------------------------------------------------------------
STMicroelectronics N.V.-New York Shares
(Netherlands) 200,000 3,934,000
=========================================================================
33,552,500
=========================================================================
Specialty Stores-1.63%
Bed Bath & Beyond Inc.(a) 100,000 3,546,000
-------------------------------------------------------------------------
Blockbuster Inc.-Class A 100,000 2,397,000
-------------------------------------------------------------------------
Michaels Stores, Inc.(a) 50,000 2,248,000
=========================================================================
8,191,000
=========================================================================
|
MARKET
SHARES VALUE
-------------------------------------------------------------------------
Systems Software-6.36%
Computer Associates International, Inc. 185,000 $ 2,749,100
-------------------------------------------------------------------------
Microsoft Corp.(a) 370,000 19,783,900
-------------------------------------------------------------------------
Oracle Corp.(a) 625,000 6,368,750
-------------------------------------------------------------------------
Symantec Corp.(a) 75,000 3,000,000
=========================================================================
31,901,750
=========================================================================
Telecommunications Equipment-0.48%
QUALCOMM Inc.(a) 70,000 2,416,400
=========================================================================
Wireless Telecommunication Services-0.75%
AT&T Wireless Services Inc.(a) 300,000 2,061,000
-------------------------------------------------------------------------
Nextel Communications, Inc.-Class A(a) 150,000 1,692,000
=========================================================================
3,753,000
=========================================================================
Total Common Stocks & Other Equity
Interests (Cost $488,560,430) 482,409,347
=========================================================================
PRINCIPAL
AMOUNT
U.S. TREASURY BILLS-0.40%
1.57%, 12/19/02 (Cost $1,995,813)(c) $2,000,000 1,995,813
=========================================================================
SHARES
MONEY MARKET FUNDS-2.88%
STIC Liquid Assets Portfolio(d) 7,236,519 7,236,519
-------------------------------------------------------------------------
STIC Prime Portfolio(d) 7,236,519 7,236,519
=========================================================================
Total Money Market Funds (Cost
$14,473,038) 14,473,038
=========================================================================
TOTAL INVESTMENTS-99.41% (Cost $505,029,281) 498,878,198
=========================================================================
OTHER ASSETS LESS LIABILITIES-0.59% 2,977,494
=========================================================================
NET ASSETS-100.00% $501,855,692
_________________________________________________________________________
=========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Pfd. - Preferred |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 7.
(c) Security traded on a discount basis. The interest rate shown represents the
discount rate at the time of purchase by the Fund.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-97
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost
$505,029,281)* $498,878,198
-------------------------------------------------------------
Foreign currencies, at value (cost $3,692,571) 3,673,730
-------------------------------------------------------------
Receivables for:
Investments sold 22,537,528
-------------------------------------------------------------
Fund shares sold 237,461
-------------------------------------------------------------
Dividends 184,367
-------------------------------------------------------------
Investment for deferred compensation plan 20,129
-------------------------------------------------------------
Collateral for securities loaned 6,832,380
-------------------------------------------------------------
Other assets 89,980
=============================================================
Total assets 532,453,773
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Investments purchased 20,785,760
-------------------------------------------------------------
Fund shares reacquired 1,861,765
-------------------------------------------------------------
Options written (premiums received $69,460) 61,187
-------------------------------------------------------------
Deferred compensation plan 20,129
-------------------------------------------------------------
Collateral upon return of securities loaned 6,832,380
-------------------------------------------------------------
Accrued distribution fees 452,708
-------------------------------------------------------------
Accrued trustees' fees 1,176
-------------------------------------------------------------
Accrued transfer agent fees 408,893
-------------------------------------------------------------
Accrued operating expenses 174,083
=============================================================
Total liabilities 30,598,081
=============================================================
Net assets applicable to shares outstanding $501,855,692
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $190,252,593
_____________________________________________________________
=============================================================
Class B $223,665,513
_____________________________________________________________
=============================================================
Class C $ 87,937,586
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 31,711,909
_____________________________________________________________
=============================================================
Class B 38,124,758
_____________________________________________________________
=============================================================
Class C 14,990,675
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 6.00
-------------------------------------------------------------
Offering price per share:
(Net asset value of $6.00 divided by
94.50%) $ 6.35
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per share $ 5.87
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per share $ 5.87
_____________________________________________________________
=============================================================
|
* At October 31, 2002, securities with an aggregate market value of $6,590,119 were on loan to brokers. Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$35,121) $ 3,393,852
-------------------------------------------------------------
Dividends from affiliated money market funds 560,524
-------------------------------------------------------------
Interest 14,055
-------------------------------------------------------------
Security lending income 255,265
=============================================================
Total investment income 4,223,696
=============================================================
EXPENSES:
Advisory fees 6,351,166
-------------------------------------------------------------
Administrative services fees 145,864
-------------------------------------------------------------
Custodian fees 137,576
-------------------------------------------------------------
Distribution fees -- Class A 993,200
-------------------------------------------------------------
Distribution fees -- Class B 3,310,084
-------------------------------------------------------------
Distribution fees -- Class C 1,324,161
-------------------------------------------------------------
Transfer agent fees 4,364,586
-------------------------------------------------------------
Trustees' fees 12,401
-------------------------------------------------------------
Other 428,170
=============================================================
Total expenses 17,067,208
=============================================================
Less: Fees waived (5,666)
-------------------------------------------------------------
Expenses paid indirectly (12,587)
=============================================================
Net expenses 17,048,955
=============================================================
Net investment income (loss) (12,825,259)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
FUTURES CONTRACTS AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (204,315,367)
-------------------------------------------------------------
Foreign currencies (126,522)
-------------------------------------------------------------
Futures contracts 760,783
-------------------------------------------------------------
Option contracts written 967,974
=============================================================
(202,713,132)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 63,154,998
-------------------------------------------------------------
Foreign currencies (18,842)
-------------------------------------------------------------
Option contracts written 8,273
=============================================================
63,144,429
=============================================================
Net gain (loss) from investment securities,
foreign currencies, futures contracts and
option contracts (139,568,703)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(152,393,962)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-98
Statement of Changes in Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
----------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (12,825,259) $ (17,536,932)
----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and option
contracts (202,713,132) (545,282,682)
----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and option
contracts 63,144,429 (352,555,160)
==============================================================================================
Net increase (decrease) in net assets resulting from
operations (152,393,962) (915,374,774)
==============================================================================================
Share transactions-net:
Class A (64,886,914) (4,824,124)
----------------------------------------------------------------------------------------------
Class B (75,460,458) 19,065,645
----------------------------------------------------------------------------------------------
Class C (35,199,684) 5,699,957
==============================================================================================
Net increase (decrease) in net assets (327,941,018) (895,433,296)
==============================================================================================
NET ASSETS:
Beginning of year 829,796,710 1,725,230,006
==============================================================================================
End of year $ 501,855,692 $ 829,796,710
______________________________________________________________________________________________
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,411,375,359 $1,599,864,940
----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (36,813) (27,556)
----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures contracts and
option contracts (903,321,202) (700,734,593)
----------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and option contracts (6,161,652) (69,306,081)
==============================================================================================
$ 501,855,692 $ 829,796,710
______________________________________________________________________________________________
==============================================================================================
|
See Notes to Financial Statements.
FS-99
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Dent Demographic Trends Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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 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 and commercial paper 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. 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 gain, 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 gain) 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. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-
FS-100
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. 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"). H.S. Dent Advisors, Inc. ("H.S. Dent") is the Fund's subadvisor. Under the terms of the master investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.85% of the first $2 billion of the Fund's average daily net assets, plus 0.80% of the Fund's average daily net assets exceeding $2 billion. Under the terms of a subadvisory agreement between AIM and H.S. Dent, AIM pays H.S. Dent at the annual rate of 0.13% of the first $1 billion of the Fund's average daily net assets, plus 0.10% of the next $1 billion of the Fund's average daily net assets, plus 0.07% of the Fund's average daily net assets exceeding $2 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 October 31, 2002, AIM waived fees of $5,666.
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 October 31, 2002, AIM was paid $145,864 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 October 31, 2002, AFS retained $2,443,344 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B and Class C shares paid $993,200, $3,310,084 and $1,324,161, respectively.
AIM Distributors retained commissions of $131,333 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $3,253, $137 and $24,297 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 year ended October 31, 2002, the Fund paid legal fees of $6,862 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-101
NOTE 3--INDIRECT EXPENSES
For the year ended October 31, 2002, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) of $12,564 and reductions in
custodian fees of $23 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $12,587.
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 year ended October 31,
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 October 31, 2002, securities with an aggregate value of $6,590,119 were on loan to brokers. The loans were secured by cash collateral of $6,832,380 received by the Fund and invested in STIC Liquid Assets Portfolio, an affiliated money market fund. For the year ended October 31, 2002, the Fund received fees of $255,265 for securities lending.
NOTE 7--CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2002 are summarized as follows:
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-------------------------------------------------------------
Beginning of year -- $ --
-------------------------------------------------------------
Written 25,223 3,895,258
-------------------------------------------------------------
Closed (21,423) (3,028,231)
-------------------------------------------------------------
Exercised (2,425) (574,834)
-------------------------------------------------------------
Expired (1,100) (222,733)
=============================================================
End of year 275 $ 69,460
_____________________________________________________________
=============================================================
|
Open call options written at October 31, 2002 were as follows:
OCTOBER 31,
2002
CONTRACT STRIKE NUMBER OF PREMIUMS MARKET UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE APPRECIATION
-------------------------------------------------------------------------------------------
Electronic Arts Inc. Dec-02 $70 275 $69,460 $61,187 $8,273
___________________________________________________________________________________________
===========================================================================================
|
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid during the years ended October 31, 2002 and 2001.
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation
(depreciation) -- investments $ (24,040,280)
-------------------------------------------------------------
Temporary book/tax differences (36,813)
-------------------------------------------------------------
Capital loss carryforward (885,442,574)
-------------------------------------------------------------
Shares of beneficial interest 1,411,375,359
=============================================================
$ 501,855,692
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales. Amount includes appreciation (depreciation) on foreign currencies and option contracts written of $(10,569).
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the deferral of trustee compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-----------------------------------------------------------
October 31, 2007 $ 3,389,675
-----------------------------------------------------------
October 31, 2008 144,576,334
-----------------------------------------------------------
October 31, 2009 541,794,870
-----------------------------------------------------------
October 31, 2010 195,681,695
===========================================================
$885,442,574
___________________________________________________________
===========================================================
|
FS-102
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 October 31, 2002 was $1,344,963,173 and $1,518,730,510, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 30,032,233 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (54,061,944) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(24,029,711) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $522,907,909. |
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of foreign currency transactions, a net operating loss reclassification and other reclassifications, on October 31, 2002, undistributed net investment income (loss) was increased by $12,816,002, undistributed net realized gain (loss) increased by $126,523 and shares of beneficial interest decreased by $12,942,525. This reclassification had no effect on the net assets of the Fund.
NOTE 11--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 5,752,818* $ 44,745,859* 12,849,753 $ 144,467,400
--------------------------------------------------------------------------------------------------------------------------
Class B 3,503,829 26,984,220 11,680,092 132,373,521
--------------------------------------------------------------------------------------------------------------------------
Class C 1,824,515 14,029,736 6,058,052 68,141,585
==========================================================================================================================
Reacquired:
Class A (15,019,465) (109,632,773) (15,179,735) (149,291,524)
--------------------------------------------------------------------------------------------------------------------------
Class B (14,355,627)* (102,444,678)* (11,736,735) (113,307,876)
--------------------------------------------------------------------------------------------------------------------------
Class C (6,815,024) (49,229,420) (6,377,405) (62,441,628)
==========================================================================================================================
(25,108,954) $(175,547,056) (2,705,978) $ 19,941,478
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
* Includes automatic conversion of 217,773 shares of Class B shares in the amount of $1,628,659 to 214,960 shares of Class A shares in the amount of $1,628,659.
FS-103
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
-------------------------------------------------------
JUNE 7, 1999
(DATE OPERATIONS
YEAR ENDED OCTOBER 31, COMMENCED) TO
----------------------------------- OCTOBER 31,
2002 2001 2000 1999
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.62 $ 15.40 $ 12.14 $ 10.00
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.12) (0.12) (0.11) (0.03)
---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.50) (7.66) 3.37 2.17
=====================================================================================================================
Total from investment operations (1.62) (7.78) 3.26 2.14
=====================================================================================================================
Net asset value, end of period $ 6.00 $ 7.62 $ 15.40 $ 12.14
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(a) (21.26)% (50.52)% 26.85% 21.40%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $190,253 $312,377 $666,929 $163,872
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets 1.87%(b) 1.64% 1.50% 1.60%(c)(d)
=====================================================================================================================
Ratio of net investment income (loss) to average net assets (1.31)%(b) (1.04)% (0.93)% (1.00)%(d)
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate 189% 143% 90% 29%
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
(a) Includes adjustments in accordance with general accepted accounting
principles, does not include sales charges and is not annualized for
periods less than one year.
(b) Ratios are based on average daily net assets of $283,771,505.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 1.65% (annualized).
(d) Annualized.
FS-104
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
-------------------------------------------------------
JUNE 7, 1999
(DATE OPERATIONS
YEAR ENDED OCTOBER 31, COMMENCED) TO
----------------------------------- OCTOBER 31,
2002 2001 2000 1999
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.50 $ 15.26 $ 12.11 $ 10.00
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.17) (0.18) (0.18) (0.04)
---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.46) (7.58) 3.33 2.15
=====================================================================================================================
Total from investment operations (1.63) (7.76) 3.15 2.11
=====================================================================================================================
Net asset value, end of period $ 5.87 $ 7.50 $ 15.26 $ 12.11
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(a) (21.73)% (50.85)% 26.01% 21.10%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $223,666 $367,494 $748,480 $177,430
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets 2.53%(b) 2.32% 2.17% 2.24%(c)(d)
=====================================================================================================================
Ratio of net investment income (loss) to average net assets (1.97)%(b) (1.72)% (1.60)% (1.64)%(d)
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate 189% 143% 90% 29%
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
(a) Includes adjustments in accordance with general accepted accounting
principles, does not include contingent deferred sales charges and is
not annualized for periods less than one year.
(b) Ratios are based on average daily net assets of $331,008,412.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 2.29% (annualized).
(d) Annualized.
FS-105
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
------------------------------------------------------
JUNE 7, 1999
(DATE OPERATIONS
YEAR ENDED OCTOBER 31, COMMENCED) TO
---------------------------------- OCTOBER 31,
2002 2001 2000 1999
--------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.50 $ 15.26 $ 12.11 $ 10.00
--------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.17) (0.19) (0.17) (0.04)
--------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.46) (7.57) 3.32 2.15
====================================================================================================================
Total from investment operations (1.63) (7.76) 3.15 2.11
====================================================================================================================
Net asset value, end of period $ 5.87 $ 7.50 $ 15.26 $ 12.11
____________________________________________________________________________________________________________________
====================================================================================================================
Total return(a) (21.73)% (50.85)% 26.01% 21.10%
____________________________________________________________________________________________________________________
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $87,938 $149,925 $309,821 $51,605
____________________________________________________________________________________________________________________
====================================================================================================================
Ratio of expenses to average net assets 2.53%(b) 2.32% 2.17% 2.24%(c)(d)
====================================================================================================================
Ratio of net investment income (loss) to average net assets (1.97)%(b) (1.72)% (1.60)% (1.64)%(d)
____________________________________________________________________________________________________________________
====================================================================================================================
Portfolio turnover rate 189% 143% 90% 29%
____________________________________________________________________________________________________________________
====================================================================================================================
|
(a) Includes adjustments in accordance with general accepted accounting
principles, does not include contingent deferred sales charges and is
not annualized for periods less than one year.
(b) Ratios are based on average daily net assets of $132,416,045.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 2.29% (annualized).
(d) Annualized.
FS-106
Report of Independent Auditors
To the Shareholders of AIM Emerging Growth Fund and Board of Trustees of AIM Equity Funds
We have audited the accompanying statement of assets and liabilities of AIM Emerging Growth Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the periods presented from commencement of operations through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Emerging Growth Fund as of October 31, 2002, 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.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
|
FS-107
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-87.48%
Advertising-3.31%
Lamar Advertising Co.(a) 60,000 $ 2,036,400
------------------------------------------------------------------------
Omnicom Group Inc. 25,000 1,440,750
========================================================================
3,477,150
========================================================================
Aerospace & Defense-0.58%
Integrated Defense Technologies, Inc.(a) 30,000 420,900
------------------------------------------------------------------------
L-3 Communications Holdings, Inc.(a) 3,900 183,300
========================================================================
604,200
========================================================================
Air Freight & Logistics-0.67%
Pacer International, Inc.(a) 60,000 708,000
========================================================================
Airlines-0.51%
SkyWest, Inc. 35,000 530,985
========================================================================
Apparel Retail-3.71%
Abercrombie & Fitch Co.-Class A(a) 75,000 1,336,500
------------------------------------------------------------------------
Gap, Inc. (The) 135,000 1,588,950
------------------------------------------------------------------------
Talbots, Inc. (The) 35,000 970,200
========================================================================
3,895,650
========================================================================
Apparel, Accessories & Luxury Goods-0.73%
Polo Ralph Lauren Corp.(a) 40,000 761,600
========================================================================
Application Software-3.65%
Activision, Inc.(a) 50,000 1,025,000
------------------------------------------------------------------------
Mercury Interactive Corp.(a) 20,000 527,400
------------------------------------------------------------------------
National Instruments Corp.(a) 23,500 674,215
------------------------------------------------------------------------
PeopleSoft, Inc.(a) 60,000 1,086,000
------------------------------------------------------------------------
Siebel Systems, Inc.(a) 70,000 526,400
========================================================================
3,839,015
========================================================================
Banks-1.15%
Southwest Bancorp. of Texas, Inc.(a) 25,000 706,250
------------------------------------------------------------------------
UCBH Holdings, Inc. 12,000 502,680
========================================================================
1,208,930
========================================================================
Broadcasting & Cable TV-2.26%
Hispanic Broadcasting Corp.(a) 50,000 1,075,000
------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 50,000 1,295,500
========================================================================
2,370,500
========================================================================
Building Products-0.51%
Masco Corp. 26,000 534,560
========================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Catalog Retail-0.73%
Insight Enterprises, Inc.(a) 100,000 $ 764,000
========================================================================
Computer & Electronics Retail-2.26%
Best Buy Co., Inc.(a) 45,000 927,450
------------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 13,000 689,260
------------------------------------------------------------------------
Electronics Boutique Holdings Corp.(a) 30,000 756,030
========================================================================
2,372,740
========================================================================
Construction & Engineering-0.43%
Jacobs Engineering Group Inc.(a) 15,000 454,350
========================================================================
Consumer Finance-1.45%
MBNA Corp. 75,000 1,523,250
========================================================================
Data Processing Services-6.96%
Automatic Data Processing, Inc. 10,000 425,300
------------------------------------------------------------------------
BISYS Group, Inc. (The)(a) 100,000 1,790,000
------------------------------------------------------------------------
Certegy Inc.(a) 40,000 840,000
------------------------------------------------------------------------
DST Systems, Inc.(a) 40,000 1,230,000
------------------------------------------------------------------------
First Data Corp. 25,000 873,500
------------------------------------------------------------------------
Iron Mountain Inc.(a) 45,000 1,269,450
------------------------------------------------------------------------
NDCHealth Corp. 50,000 882,500
========================================================================
7,310,750
========================================================================
Diversified Commercial Services-1.37%
Coinstar, Inc.(a) 15,000 449,850
------------------------------------------------------------------------
Education Management Corp.(a) 10,000 367,000
------------------------------------------------------------------------
FTI Consulting, Inc.(a) 15,000 624,000
========================================================================
1,440,850
========================================================================
Electronic Equipment & Instruments-1.65%
Photon Dynamics, Inc.(a) 40,000 857,200
------------------------------------------------------------------------
Waters Corp.(a) 35,000 881,300
========================================================================
1,738,500
========================================================================
Employment Services-1.59%
Robert Half International Inc.(a) 100,000 1,670,000
========================================================================
General Merchandise Stores-1.25%
Dollar Tree Stores, Inc.(a) 50,000 1,314,500
========================================================================
Health Care Distributors & Services-4.92%
AdvancePCS(a) 75,000 1,882,500
------------------------------------------------------------------------
AMN Healthcare Services, Inc.(a) 60,000 867,600
------------------------------------------------------------------------
Express Scripts, Inc.(a) 5,000 270,900
------------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 15,000 361,500
------------------------------------------------------------------------
|
FS-108
MARKET
SHARES VALUE
------------------------------------------------------------------------
Health Care Distributors & Services-(Continued)
McKesson Corp. 60,000 $ 1,788,600
========================================================================
5,171,100
========================================================================
Health Care Equipment-1.42%
Fisher Scientific International Inc.(a) 15,000 429,000
------------------------------------------------------------------------
Kyphon Inc.(a) 60,000 567,600
------------------------------------------------------------------------
Med-Design Corp. (The)(a) 100,000 500,000
========================================================================
1,496,600
========================================================================
Health Care Facilities-1.31%
HCA Inc. 10,000 434,900
------------------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 15,000 470,250
------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 16,500 474,375
========================================================================
1,379,525
========================================================================
Health Care Supplies-0.59%
Alcon, Inc. (Switzerland)(a) 15,000 615,300
========================================================================
Homebuilding-0.41%
Centex Corp. 9,500 432,060
========================================================================
Hotels, Resorts & Cruise Lines-1.75%
Intrawest Corp. (Canada) 75,000 1,020,000
------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. 35,000 815,500
========================================================================
1,835,500
========================================================================
Housewares & Specialties-0.98%
Yankee Candle Co., Inc. (The)(a) 60,000 1,029,000
========================================================================
Industrial Machinery-0.40%
SPX Corp.(a) 10,000 420,100
========================================================================
Integrated Telecommunication Services-0.55%
Intrado Inc.(a) 60,000 580,200
========================================================================
Internet Software & Services-0.84%
Fidelity National Information Solutions,
Inc.(a) 25,000 478,500
------------------------------------------------------------------------
SmartForce PLC-ADR (Ireland)(a) 100,000 401,000
========================================================================
879,500
========================================================================
IT Consulting & Services-3.28%
Forrester Research, Inc.(a) 40,000 552,000
------------------------------------------------------------------------
ProQuest Co.(a) 30,000 581,100
------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 90,000 1,995,300
------------------------------------------------------------------------
Titan Corp. (The)(a) 25,000 322,250
========================================================================
3,450,650
========================================================================
Leisure Products-0.63%
Nautilus Group, Inc. (The)(a) 20,000 274,800
------------------------------------------------------------------------
Racing Champions Ertl Corp.(a) 30,000 390,000
========================================================================
664,800
========================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Movies & Entertainment-0.67%
AMC Entertainment Inc.(a) 100,000 $ 705,000
========================================================================
Multi-Utilities & Unregulated Power-0.85%
El Paso Corp. 60,000 465,000
------------------------------------------------------------------------
Mirant Corp.(a) 200,000 428,000
========================================================================
893,000
========================================================================
Networking Equipment-0.44%
Brocade Communications Systems, Inc.(a) 67,500 463,725
========================================================================
Office Services & Supplies-0.41%
Daisytek International Corp.(a) 50,000 425,500
========================================================================
Oil & Gas Drilling-4.45%
Nabors Industries, Ltd. (Bermuda)(a) 55,000 1,923,350
------------------------------------------------------------------------
Patterson-UTI Energy, Inc.(a) 35,000 1,012,200
------------------------------------------------------------------------
Pride International, Inc.(a) 125,000 1,735,000
========================================================================
4,670,550
========================================================================
Oil & Gas Equipment & Services-2.28%
Hanover Compressor Co.(a) 50,000 524,500
------------------------------------------------------------------------
Smith International, Inc.(a) 60,000 1,875,600
========================================================================
2,400,100
========================================================================
Oil & Gas Exploration & Production-2.68%
Quicksilver Resources Inc.(a) 25,000 550,000
------------------------------------------------------------------------
Spinnaker Exploration Co.(a) 75,000 1,443,750
------------------------------------------------------------------------
Ultra Petroleum Corp.(a) 100,000 823,000
========================================================================
2,816,750
========================================================================
Oil & Gas Refining, Marketing &
Transportation-0.38%
Premcor Inc.(a) 20,000 401,000
========================================================================
Personal Products-1.39%
Estee Lauder Cos. Inc. (The)-Class A 50,000 1,456,000
========================================================================
Pharmaceuticals-2.11%
King Pharmaceuticals, Inc.(a) 25,000 383,750
------------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a) 40,000 1,836,000
========================================================================
2,219,750
========================================================================
Property & Casualty Insurance-1.02%
ACE Ltd. (Cayman Islands) 35,000 1,076,250
========================================================================
Publishing-0.63%
Scholastic Corp.(a) 15,000 662,250
========================================================================
Restaurants-3.56%
AFC Enterprises, Inc.(a) 40,000 730,800
------------------------------------------------------------------------
CEC Entertainment Inc.(a) 35,000 973,000
------------------------------------------------------------------------
Darden Restaurants, Inc. 50,000 949,000
------------------------------------------------------------------------
|
FS-109
MARKET
SHARES VALUE
------------------------------------------------------------------------
Restaurants-(Continued)
Outback Steakhouse, Inc. 32,000 $ 1,089,600
========================================================================
3,742,400
========================================================================
Semiconductor Equipment-2.83%
Cabot Microelectronics Corp.(a) 35,000 1,588,650
------------------------------------------------------------------------
Mykrolis Corp.(a) 50,000 280,500
------------------------------------------------------------------------
Novellus Systems, Inc.(a) 35,000 1,106,000
========================================================================
2,975,150
========================================================================
Semiconductors-2.65%
Broadcom Corp.-Class A(a) 70,000 838,600
------------------------------------------------------------------------
ChipPAC, Inc.-Class A(a) 150,000 397,650
------------------------------------------------------------------------
Micron Technology, Inc.(a) 75,000 1,200,000
------------------------------------------------------------------------
Semtech Corp.(a) 25,000 353,250
========================================================================
2,789,500
========================================================================
Specialty Stores-3.66%
Foot Locker, Inc.(a) 75,000 735,000
------------------------------------------------------------------------
Rent-A-Center, Inc.(a) 17,500 776,125
------------------------------------------------------------------------
Tiffany & Co. 30,000 785,400
------------------------------------------------------------------------
Williams-Sonoma, Inc.(a) 65,000 1,547,000
========================================================================
3,843,525
========================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Systems Software-0.73%
VERITAS Software Corp.(a) 50,000 $ 762,500
========================================================================
Telecommunications Equipment-4.41%
Arris Group Inc.(a) 250,000 435,000
------------------------------------------------------------------------
Harmonic Inc.(a) 200,000 358,000
------------------------------------------------------------------------
UTStarcom, Inc.(a) 225,000 3,843,000
========================================================================
4,636,000
========================================================================
Trading Companies & Distributors-0.48%
Fastenal Co. 15,000 509,250
========================================================================
Total Common Stocks & Other Equity
Interests (Cost $105,392,708) 91,922,065
========================================================================
MONEY MARKET FUNDS-13.05%
STIC Liquid Assets Portfolio(b) 6,856,431 6,856,431
------------------------------------------------------------------------
STIC Prime Portfolio(b) 6,856,431 6,856,431
========================================================================
Total Money Market Funds (Cost
$13,712,862) 13,712,862
========================================================================
TOTAL INVESTMENTS-100.53% (Cost $119,105,570) 105,634,927
========================================================================
OTHER ASSETS LESS LIABILITIES-(0.53%) (559,283)
========================================================================
NET ASSETS-100.00% $105,075,644
________________________________________________________________________
========================================================================
|
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-110
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost
$119,105,570)* $105,634,927
-------------------------------------------------------------
Receivables for:
Investments sold 6,038,726
-------------------------------------------------------------
Fund shares sold 56,514
-------------------------------------------------------------
Dividends 12,951
-------------------------------------------------------------
Investment for deferred compensation plan 10,304
-------------------------------------------------------------
Collateral for securities loaned 10,358,147
-------------------------------------------------------------
Other assets 13,571
=============================================================
Total assets 122,125,140
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Investments purchased 6,159,639
-------------------------------------------------------------
Fund shares reacquired 312,648
-------------------------------------------------------------
Deferred compensation plan 10,304
-------------------------------------------------------------
Collateral upon return of securities loaned 10,358,147
-------------------------------------------------------------
Accrued distribution fees 95,392
-------------------------------------------------------------
Accrued trustees' fees 614
-------------------------------------------------------------
Accrued transfer agent fees 66,459
-------------------------------------------------------------
Accrued operating expenses 46,293
=============================================================
Total liabilities 17,049,496
=============================================================
Net assets applicable to shares outstanding $105,075,644
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $ 51,821,974
_____________________________________________________________
=============================================================
Class B $ 36,059,524
_____________________________________________________________
=============================================================
Class C $ 17,194,146
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 12,589,176
_____________________________________________________________
=============================================================
Class B 8,903,269
_____________________________________________________________
=============================================================
Class C 4,248,581
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 4.12
-------------------------------------------------------------
Offering price per share:
(Net asset value of $4.12 divided by
94.50%) $ 4.36
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 4.05
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 4.05
_____________________________________________________________
=============================================================
|
* At October 31, 2002, securities with an aggregate market value of $9,896,883 were on loan to brokers. Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$1,983) $ 276,688
-------------------------------------------------------------
Dividends from affiliated money market funds 169,106
-------------------------------------------------------------
Security lending income 108,544
=============================================================
Total investment income 554,338
=============================================================
EXPENSES:
Advisory fees 1,352,147
-------------------------------------------------------------
Administrative services fees 50,000
-------------------------------------------------------------
Custodian fees 51,326
-------------------------------------------------------------
Distribution fees -- Class A 274,207
-------------------------------------------------------------
Distribution fees -- Class B 553,611
-------------------------------------------------------------
Distribution fees -- Class C 253,702
-------------------------------------------------------------
Transfer agent fees 826,456
-------------------------------------------------------------
Trustees' fees 9,001
-------------------------------------------------------------
Other 166,420
=============================================================
Total expenses 3,536,870
=============================================================
Less: Fees waived (1,704)
-------------------------------------------------------------
Expenses paid indirectly (3,457)
=============================================================
Net expenses 3,531,709
=============================================================
Net investment income (loss) (2,977,371)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (43,958,840)
-------------------------------------------------------------
Foreign currencies 6,853
-------------------------------------------------------------
Option contracts written 463,689
=============================================================
(43,488,298)
=============================================================
Change in net unrealized appreciation of
investment securities 7,080,269
=============================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (36,408,029)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(39,385,400)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-111
Statement of Changes in Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
--------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (2,977,371) $ (3,685,565)
--------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (43,488,298) (129,204,045)
--------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities 7,080,269 (11,516,298)
============================================================================================
Net increase (decrease) in net assets resulting from
operations (39,385,400) (144,405,908)
============================================================================================
Distributions to shareholders from net realized gains:
Class A -- (6,485,823)
--------------------------------------------------------------------------------------------
Class B -- (4,157,366)
--------------------------------------------------------------------------------------------
Class C -- (1,871,035)
--------------------------------------------------------------------------------------------
Share transactions-net:
Class A (10,076,931) 14,714,393
--------------------------------------------------------------------------------------------
Class B (8,139,807) 15,848,783
--------------------------------------------------------------------------------------------
Class C (2,937,370) 8,770,527
============================================================================================
Net increase (decrease) in net assets (60,539,508) (117,586,429)
============================================================================================
NET ASSETS:
Beginning of year 165,615,152 283,201,581
============================================================================================
End of year $ 105,075,644 $ 165,615,152
____________________________________________________________________________________________
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 294,868,387 $ 318,987,409
--------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (14,890) (9,286)
--------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (176,307,210) (132,812,059)
--------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (13,470,643) (20,550,912)
============================================================================================
$ 105,075,644 $ 165,615,152
____________________________________________________________________________________________
============================================================================================
|
See Notes to Financial Statements.
FS-112
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Emerging Growth Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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 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 and commercial paper 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. 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 gain, 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 gain) 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. 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
FS-113
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. 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.
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 master 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 over $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 October 31, 2002, AIM waived fees of $1,704.
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 October 31, 2002, 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 October 31, 2002, AFS retained $499,378 for such services.
The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A, Class B and Class C shares of the Fund. The Company has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the average daily net assets of Class B and Class C shares. Of these amounts, the Fund may pay a service fee of 0.25% of the average daily net assets of the Class A, 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B and Class C shares paid $274,207, $553,611 and $253,702, respectively.
AIM Distributors retained commissions of $42,050 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $3,447, $204 and $4,490 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 year ended October 31, 2002, the Fund paid legal fees of $4,320 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 October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $2,671 and reductions in custodian fees of $786 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $3,457.
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.
FS-114
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 year ended October 31,
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 October 31, 2002, securities with an aggregate value of $9,896,883 were on loan to brokers. The loans were secured by cash collateral of $10,358,147 received by the Fund and invested in STIC Liquid Assets Portfolio, an affiliated money market fund. For the year ended October 31, 2002, the Fund received fees of $108,544 for securities lending.
NOTE 7--CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2002 are summarized as follows:
CALL OPTION CONTRACTS
-----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
------------------------------------------------------------
Beginning of year -- $ --
------------------------------------------------------------
Written 14,180 1,198,094
------------------------------------------------------------
Closed (10,000) (873,109)
------------------------------------------------------------
Exercised (1,595) (126,208)
------------------------------------------------------------
Expired (2,585) (198,777)
============================================================
End of year -- $ --
____________________________________________________________
============================================================
|
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
-------------------------------------------------------------
Distributions paid from ordinary Income $ -- $12,514,224
_____________________________________________________________
=============================================================
|
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation
(depreciation)-investments $ (16,033,675)
-------------------------------------------------------------
Temporary book/tax differences (14,890)
-------------------------------------------------------------
Capital loss carryforward (173,744,178)
-------------------------------------------------------------
Shares of beneficial interest 294,868,387
=============================================================
$ 105,075,644
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) is attributable to the tax deferral of losses on wash sales. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the deferral of trustee compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-------------------------------
October 31, 2009 $128,445,323
-------------------------------
October 31, 2010 45,298,855
===============================
$173,744,178
_______________________________
===============================
|
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 October 31, 2002 was $604,899,388 and $636,322,122, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 5,215,259 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (21,248,934) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(16,033,675) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $121,668,602. |
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of foreign currency transactions, a net operating loss reclassification and other items, on October 31, 2002, undistributed net investment income (loss) was increased by $2,971,767, undistributed net realized gain (loss) decreased by $6,853 and shares of beneficial interest decreased by $2,964,914. This reclassification had no effect on the net assets of the Fund.
FS-115
NOTE 11--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 8,175,285* $ 45,450,141* 10,878,561 $ 81,971,539
------------------------------------------------------------------------------------------------------------------------
Class B 1,711,610 9,848,093 4,634,109 35,853,848
------------------------------------------------------------------------------------------------------------------------
Class C 1,313,206 7,417,468 2,272,711 17,218,224
========================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 735,802 6,291,110
------------------------------------------------------------------------------------------------------------------------
Class B -- -- 472,976 4,025,501
------------------------------------------------------------------------------------------------------------------------
Class C -- -- 208,202 1,771,798
========================================================================================================================
Reacquired:
Class A (10,450,880) (55,527,072) (10,760,676) (73,548,256)
------------------------------------------------------------------------------------------------------------------------
Class B (3,545,284)* (17,987,900)* (3,422,165) (24,030,566)
------------------------------------------------------------------------------------------------------------------------
Class C (1,969,513) (10,354,838) (1,530,116) (10,219,495)
========================================================================================================================
(4,765,576) $(21,154,108) 3,489,404 $ 39,333,703
________________________________________________________________________________________________________________________
========================================================================================================================
|
* Includes automatic conversion of 72,057 shares of Class B shares in the amount of $388,408 to 70,830 shares of Class A shares in the amount of $388,408.
FS-116
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------------------------
MARCH 31, 2000
YEAR ENDED (DATE OPERATIONS
OCTOBER 31, COMMENCED) TO
-------------------------- OCTOBER 31,
2002 2001 2000
------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.46 $ 10.50 $ 10.00
------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08)(a) (0.10) (0.04)
------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.26) (4.51) 0.54
==================================================================================================================
Total from investment operations (1.34) (4.61) 0.50
==================================================================================================================
Less distributions from net realized gains -- (0.43) --
==================================================================================================================
Net asset value, end of period $ 4.12 $ 5.46 $ 10.50
__________________________________________________________________________________________________________________
==================================================================================================================
Total return(b) (24.54)% (45.37)% 5.00%
__________________________________________________________________________________________________________________
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $51,822 $81,114 $147,101
__________________________________________________________________________________________________________________
==================================================================================================================
Ratio of expenses to average net assets 1.89%(c) 1.71%(d) 1.68%(e)
==================================================================================================================
Ratio of net investment income (loss) to average net assets (1.54)%(c) (1.32)% (1.04)%(e)
__________________________________________________________________________________________________________________
==================================================================================================================
Portfolio turnover rate 407% 242% 111%
__________________________________________________________________________________________________________________
==================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting
principles, 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 $78,344,799.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 1.83%.
(e) Annualized.
FS-117
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
--------------------------------------------------
MARCH 31, 2000
YEAR ENDED (DATE OPERATIONS
OCTOBER 31, COMMENCED) TO
-------------------------- OCTOBER 31,
2002 2001 2000
------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.40 $ 10.47 $ 10.00
------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.12)(a) (0.14) (0.07)
------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.23) (4.50) 0.54
==================================================================================================================
Total from investment operations (1.35) (4.64) 0.47
==================================================================================================================
Less distributions from net realized gains -- (0.43) --
==================================================================================================================
Net asset value, end of period $ 4.05 $ 5.40 $ 10.47
__________________________________________________________________________________________________________________
==================================================================================================================
Total return(b) (25.00)% (45.81)% 4.70%
__________________________________________________________________________________________________________________
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $36,060 $58,019 $94,740
__________________________________________________________________________________________________________________
==================================================================================================================
Ratio of expenses to average net assets 2.55%(c) 2.36%(d) 2.37%(e)
==================================================================================================================
Ratio of net investment income (loss) to average net assets (2.19)%(c) (1.98)% (1.73)%(e)
__________________________________________________________________________________________________________________
==================================================================================================================
Portfolio turnover rate 407% 242% 111%
__________________________________________________________________________________________________________________
==================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting
principles, 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 $55,361,074.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 2.48%.
(e) Annualized.
FS-118
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
--------------------------------------------------
MARCH 31, 2000
YEAR ENDED (DATE OPERATIONS
OCTOBER 31, COMMENCED) TO
-------------------------- OCTOBER 31,
2002 2001 2000
------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.40 $ 10.46 $ 10.00
------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.12)(a) (0.14) (0.07)
------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.23) (4.49) 0.53
==================================================================================================================
Total from investment operations (1.35) (4.63) 0.46
==================================================================================================================
Less distributions from net realized gains -- (0.43) --
==================================================================================================================
Net asset value, end of period $ 4.05 $ 5.40 $ 10.46
__________________________________________________________________________________________________________________
==================================================================================================================
Total return(b) (25.00)% (45.76)% 4.60%
__________________________________________________________________________________________________________________
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $17,194 $26,483 $41,361
__________________________________________________________________________________________________________________
==================================================================================================================
Ratio of expenses to average net assets 2.55%(c) 2.36%(d) 2.37%(e)
==================================================================================================================
Ratio of net investment income (loss) to average net assets (2.19)%(c) (1.98)% (1.73)%(e)
__________________________________________________________________________________________________________________
==================================================================================================================
Portfolio turnover rate 407% 242% 111%
__________________________________________________________________________________________________________________
==================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting
principles, 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 $25,370,253.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 2.48%.
(e) Annualized.
FS-119
Report of Independent Auditors
To the Shareholders of AIM Large Cap Basic Value Fund And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Large Cap Basic Value Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the periods presented from commencement of operations through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Large Cap Basic Value Fund as of October 31, 2002, and the results of its operations for the year then ended, and the changes in its net assets and financial highlights for each of the two years in the period then ended in conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
|
FS-120
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
------------------------------------------------------------------------
COMMON STOCKS-90.70%
Advertising-4.24%
Interpublic Group of Cos., Inc. (The) 241,500 $ 2,890,755
------------------------------------------------------------------------
Omnicom Group Inc. 82,300 4,742,949
========================================================================
7,633,704
========================================================================
Aerospace & Defense-1.74%
Honeywell International Inc. 130,600 3,126,564
========================================================================
Apparel Retail-2.33%
Gap, Inc. (The) 357,100 4,203,067
========================================================================
Banks-5.96%
Bank of America Corp. 56,900 3,971,620
------------------------------------------------------------------------
Bank of New York Co., Inc. (The) 113,000 2,938,000
------------------------------------------------------------------------
Bank One Corp. 99,000 3,818,430
========================================================================
10,728,050
========================================================================
Building Products-2.37%
Masco Corp. 207,800 4,272,368
========================================================================
Construction, Farm Machinery & Heavy
Trucks-1.58%
Deere & Co. 61,200 2,839,068
========================================================================
Consumer Electronics-1.20%
Koninklijke (Royal) Philips Electronics
N.V.-New York Shares (Netherlands) 122,270 2,164,179
========================================================================
Data Processing Services-4.05%
Ceridian Corp.(a) 212,300 2,925,494
------------------------------------------------------------------------
First Data Corp. 125,200 4,374,488
========================================================================
7,299,982
========================================================================
Diversified Commercial Services-3.26%
Cendant Corp.(a) 196,000 2,254,000
------------------------------------------------------------------------
H&R Block, Inc. 81,700 3,625,846
========================================================================
5,879,846
========================================================================
Diversified Financial Services-12.99%
Citigroup Inc. 175,293 6,477,076
------------------------------------------------------------------------
Freddie Mac 87,900 5,412,882
------------------------------------------------------------------------
J.P. Morgan Chase & Co. 190,000 3,942,500
------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 98,000 3,719,100
------------------------------------------------------------------------
Morgan Stanley 99,000 3,853,080
========================================================================
23,404,638
========================================================================
Electric Utilities-0.70%
PG&E Corp.(a) 116,500 1,264,025
========================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Environmental Services-3.06%
Waste Management, Inc. 239,750 $ 5,519,045
========================================================================
Food Retail-3.93%
Kroger Co. (The)(a) 273,100 4,052,804
------------------------------------------------------------------------
Safeway Inc.(a) 131,000 3,026,100
========================================================================
7,078,904
========================================================================
General Merchandise Stores-1.87%
Target Corp. 112,100 3,376,452
========================================================================
Health Care Distributors & Services-1.29%
McKesson Corp. 78,000 2,325,180
========================================================================
Industrial Conglomerates-5.38%
General Electric Co. 125,000 3,156,250
------------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 452,400 6,541,704
========================================================================
9,697,954
========================================================================
Industrial Machinery-2.03%
Illinois Tool Works Inc. 59,600 3,659,440
========================================================================
Insurance Brokers-1.17%
Marsh & McLennan Cos., Inc. 45,100 2,106,621
========================================================================
Integrated Telecommunication Services-1.90%
AT&T Corp. 261,700 3,412,568
========================================================================
Life & Health Insurance-1.52%
Prudential Financial, Inc.(a) 94,000 2,744,800
========================================================================
Managed Health Care-1.71%
UnitedHealth Group Inc. 33,900 3,083,205
========================================================================
Movies & Entertainment-2.57%
Walt Disney Co. (The) 276,800 4,622,560
========================================================================
Multi-Utilities & Unregulated Power-1.79%
Duke Energy Corp. 157,000 3,216,930
========================================================================
Oil & Gas Drilling-4.83%
ENSCO International Inc. 159,000 4,299,360
------------------------------------------------------------------------
Transocean Inc. 200,277 4,402,089
========================================================================
8,701,449
========================================================================
Oil & Gas Equipment & Services-2.77%
Schlumberger Ltd. (Netherlands) 124,200 4,981,662
========================================================================
|
FS-121
MARKET
SHARES VALUE
------------------------------------------------------------------------
Pharmaceuticals-3.13%
Pharmacia Corp. 54,857 $ 2,358,851
------------------------------------------------------------------------
Wyeth 98,000 3,283,000
========================================================================
5,641,851
========================================================================
Photographic Products-1.65%
Eastman Kodak Co. 90,100 2,968,795
========================================================================
Property & Casualty Insurance-3.11%
ACE Ltd. (Cayman Islands) 140,300 4,314,225
------------------------------------------------------------------------
MGIC Investment Corp. 30,600 1,283,976
========================================================================
5,598,201
========================================================================
Semiconductor Equipment-2.95%
Applied Materials, Inc.(a) 354,000 5,320,620
========================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Systems Software-2.41%
Computer Associates International, Inc. 291,500 $ 4,331,690
========================================================================
Telecommunications Equipment-1.21%
Motorola, Inc. 238,500 2,187,045
========================================================================
Total Common Stocks (Cost $201,602,876) 163,390,463
========================================================================
MONEY MARKET FUNDS-3.43%
STIC Liquid Assets Portfolio(b) 3,093,942 3,093,942
------------------------------------------------------------------------
STIC Prime Portfolio(b) 3,093,942 3,093,942
========================================================================
Total Money Market Funds (Cost
$6,187,884) 6,187,884
========================================================================
TOTAL INVESTMENTS-94.13% (Cost $207,790,760) 169,578,347
========================================================================
OTHER ASSETS LESS LIABILITIES-5.87% 10,567,874
========================================================================
NET ASSETS-100.00% $180,146,221
________________________________________________________________________
========================================================================
|
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-122
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost
$207,790,760) $169,578,347
-------------------------------------------------------------
Receivables for:
Fund shares sold 11,059,450
-------------------------------------------------------------
Dividends 241,465
-------------------------------------------------------------
Investment for deferred compensation plan 13,459
-------------------------------------------------------------
Other assets 31,100
=============================================================
Total assets 180,923,821
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 511,579
-------------------------------------------------------------
Deferred compensation plan 13,459
-------------------------------------------------------------
Accrued distribution fees 169,586
-------------------------------------------------------------
Accrued trustees' fees 958
-------------------------------------------------------------
Accrued transfer agent fees 52,482
-------------------------------------------------------------
Accrued operating expenses 29,536
=============================================================
Total liabilities 777,600
=============================================================
Net assets applicable to shares outstanding $180,146,221
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $ 94,386,519
_____________________________________________________________
=============================================================
Class B $ 63,976,578
_____________________________________________________________
=============================================================
Class C $ 21,775,194
_____________________________________________________________
=============================================================
Class R $ 7,930
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 10,256,870
_____________________________________________________________
=============================================================
Class B 7,055,270
_____________________________________________________________
=============================================================
Class C 2,401,565
_____________________________________________________________
=============================================================
Class R 862
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 9.20
-------------------------------------------------------------
Offering price per share:
(Net asset value of $9.20 divided by
94.50%) $ 9.74
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per share $ 9.07
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per share $ 9.07
_____________________________________________________________
=============================================================
Class R:
Net asset value and offering price per share $ 9.20
_____________________________________________________________
=============================================================
|
Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$5,993) $ 2,746,176
-------------------------------------------------------------
Dividends from affiliated money market funds 103,765
-------------------------------------------------------------
Interest 38,013
-------------------------------------------------------------
Security lending income 3,342
=============================================================
Total investment income 2,891,296
=============================================================
EXPENSES:
Advisory fees 1,168,281
-------------------------------------------------------------
Administrative services fees 50,000
-------------------------------------------------------------
Custodian fees 41,450
-------------------------------------------------------------
Distribution fees -- Class A 349,059
-------------------------------------------------------------
Distribution fees -- Class B 697,535
-------------------------------------------------------------
Distribution fees -- Class C 252,255
-------------------------------------------------------------
Distribution fees -- Class R 17
-------------------------------------------------------------
Transfer agent fees 539,629
-------------------------------------------------------------
Trustees' fees 9,513
-------------------------------------------------------------
Other 188,007
=============================================================
Total expenses 3,295,746
=============================================================
Less: Fees waived (793)
-------------------------------------------------------------
Expenses paid indirectly (2,928)
=============================================================
Net expenses 3,292,025
=============================================================
Net investment income (loss) (400,729)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (13,193,071)
-------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (26,617,408)
=============================================================
Net gain (loss) from investment securities (39,810,479)
=============================================================
Net increase (decrease) in net assets resulting
from operations $(40,211,208)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-123
Statement of Changes in Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (400,729) $ (169,797)
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
option contracts (13,193,071) (3,723,278)
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (26,617,408) (12,281,495)
==========================================================================================
Net increase (decrease) in net assets resulting from
operations (40,211,208) (16,174,570)
==========================================================================================
Distributions to shareholders from net investment income:
Class A -- (42,840)
------------------------------------------------------------------------------------------
Class B -- (23,006)
------------------------------------------------------------------------------------------
Class C -- (9,037)
------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A -- (23,272)
------------------------------------------------------------------------------------------
Class B -- (16,266)
------------------------------------------------------------------------------------------
Class C -- (6,794)
------------------------------------------------------------------------------------------
Share transactions-net:
Class A 47,013,800 70,108,784
------------------------------------------------------------------------------------------
Class B 19,109,813 62,478,722
------------------------------------------------------------------------------------------
Class C 6,186,422 21,795,123
------------------------------------------------------------------------------------------
Class R 10,003 --
==========================================================================================
Net increase in net assets 32,108,830 138,086,844
==========================================================================================
NET ASSETS:
Beginning of year 148,037,391 9,950,547
==========================================================================================
End of year $180,146,221 $148,037,391
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $235,342,926 $163,417,511
------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (18,649) (12,543)
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and option contracts (16,965,643) (3,772,572)
------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (38,212,413) (11,595,005)
==========================================================================================
$180,146,221 $148,037,391
__________________________________________________________________________________________
==========================================================================================
|
See Notes to Financial Statements.
FS-124
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Large Cap Basic Value Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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. Class R shares are sold at net asset value. 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 primary investment objective is long-term growth of capital with a secondary objective of 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 and commercial paper 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. 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 gain, 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 gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
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
FS-125
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 master investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.60% of the first $1 billion of the Fund's average daily net assets, plus 0.575% over $1 billion to and including $2 billion of the Fund's average daily net assets and 0.55% of the Fund's average daily net assets over $2 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 October 31, 2002, AIM waived fees of $793.
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 October 31, 2002, 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 October 31, 2002, AFS retained $261,475 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 Class 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B, Class C and Class R shares paid $349,059, $697,535, $252,255 and $17, respectively.
AIM Distributors retained commissions of $72,325 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $1,341, $136, $9,035, and $0 in contingent deferred sales charges imposed on redemptions of Class A, Class B, Class C and Class R shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 2002, the Fund paid legal fees of $4,327 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 October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $2,920 and reductions in custodian fees of $8 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $2,928.
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 year ended October 31,
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 October 31, 2002, there were no securities on loan to brokers. For the year ended October 31, 2002, the Fund received fees of $3,342 for securities lending.
FS-126
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
--------------------------------------------------------------
Distributions paid from ordinary income $ -- $121,215
______________________________________________________________
==============================================================
|
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation
(depreciation)--investments $(39,118,476)
-------------------------------------------------------------
Temporary book/tax differences (18,649)
-------------------------------------------------------------
Capital loss carryforward (16,059,580)
-------------------------------------------------------------
Shares of beneficial interest 235,342,926
=============================================================
$180,146,221
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for book and tax purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the deferral of trustee compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-------------------------------------------------------
October 31, 2009 $ 2,651,488
-------------------------------------------------------
October 31, 2010 13,408,092
=======================================================
$16,059,580
_______________________________________________________
=======================================================
|
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 October 31, 2002 was $128,166,154 and $67,785,275, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 6,614,421 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (45,732,897) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(39,118,476) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $208,696,823. |
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of a net operating loss reclassification on October 31, 2002, undistributed net investment income (loss) was increased by $394,623 and shares of beneficial interest decreased by $394,623. This reclassification had no effect on net assets of the Fund.
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 12,415,160* $131,220,111* 7,153,461 $ 86,201,459
----------------------------------------------------------------------------------------------------------------------
Class B 4,427,046 47,877,276 6,008,413 71,939,323
----------------------------------------------------------------------------------------------------------------------
Class C 1,524,511 16,806,696 2,229,528 26,797,760
----------------------------------------------------------------------------------------------------------------------
Class R** 862 10,003 -- --
======================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 5,215 60,966
----------------------------------------------------------------------------------------------------------------------
Class B -- -- 3,133 36,546
----------------------------------------------------------------------------------------------------------------------
Class C -- -- 1,248 14,550
----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (8,433,346) (84,206,311) (1,372,417) (16,153,641)
----------------------------------------------------------------------------------------------------------------------
Class B (2,777,520)* (28,767,463)* (839,944) (9,497,147)
----------------------------------------------------------------------------------------------------------------------
Class C (1,028,142) (10,620,274) (429,406) (5,017,187)
======================================================================================================================
6,128,571 $ 72,320,038 12,759,231 $154,382,629
______________________________________________________________________________________________________________________
======================================================================================================================
|
* Includes automatic conversion of 71,494 shares of Class B shares in the amount of $788,677 to 69,318 shares of Class A shares in the amount of $788,677.
** Class R shares commenced sales on June 3, 2002.
FS-127
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
---------------------------------------------------------
JUNE 30, 1999
(DATE OPERATIONS
YEAR ENDED OCTOBER 31, COMMENCED) TO
---------------------------------- OCTOBER 31,
2002 2001 2000 1999
-----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.94 $ 12.05 $ 9.40 $10.00
-----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01(a) 0.02(a) 0.07(a) 0.03
-----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.75) (1.07) 2.88 (0.63)
=======================================================================================================================
Total from investment operations (1.74) (1.05) 2.95 (0.60)
=======================================================================================================================
Less distributions:
Dividends from net investment income -- (0.04) (0.18) --
-----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.02) (0.12) --
=======================================================================================================================
Total distributions -- (0.06) (0.30) --
=======================================================================================================================
Net asset value, end of period $ 9.20 $ 10.94 $12.05 $ 9.40
_______________________________________________________________________________________________________________________
=======================================================================================================================
Total return(b) (15.90)% (8.74)% 32.21% (6.00)%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $94,387 $68,676 $5,888 $1,153
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.38%(c) 1.27% 1.25% 1.25%(d)
-----------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.38%(c) 1.36% 8.21% 10.02%(d)
=======================================================================================================================
Ratio of net investment income to average net assets 0.11%(c) 0.17% 0.62% 0.87%(d)
_______________________________________________________________________________________________________________________
=======================================================================================================================
Portfolio turnover rate 37% 18% 57% 10%
_______________________________________________________________________________________________________________________
=======================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles, 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 $99,731,035.
(d) Annualized.
FS-128
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
------------------------------------------
AUGUST 1, 2000
YEAR ENDED (DATE SALES
OCTOBER 31, COMMENCED) TO
--------------------- OCTOBER 31,
2002 2001 2000
--------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.86 $ 12.02 $10.85
--------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) (0.06)(a) 0.00
--------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.73) (1.05) 1.17
========================================================================================================
Total from investment operations (1.79) (1.11) 1.17
========================================================================================================
Less distributions:
Dividends from net investment income -- (0.03) --
--------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.02) --
========================================================================================================
Total distributions -- (0.05) --
========================================================================================================
Net asset value, end of period $ 9.07 $ 10.86 $12.02
________________________________________________________________________________________________________
========================================================================================================
Total return(b) (16.48)% (9.25)% 10.78%
________________________________________________________________________________________________________
========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $63,977 $58,681 $2,815
________________________________________________________________________________________________________
========================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.02%(c) 1.95% 1.93%(d)
--------------------------------------------------------------------------------------------------------
Without fee waivers 2.02%(c) 2.04% 8.89%(d)
========================================================================================================
Ratio of net investment income (loss) to average net assets (0.53)%(c) (0.51)% (0.06)%(d)
________________________________________________________________________________________________________
========================================================================================================
Portfolio turnover rate 37% 18% 57%
________________________________________________________________________________________________________
========================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles, 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 $69,753,529.
(d) Annualized.
FS-129
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
------------------------------------------
AUGUST 1, 2000
YEAR ENDED (DATE SALES
OCTOBER 31, COMMENCED) TO
--------------------- OCTOBER 31,
2002 2001 2000
--------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.85 $ 12.02 $10.85
--------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) (0.06)(a) 0.00
--------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.72) (1.06) 1.17
========================================================================================================
Total from investment operations (1.78) (1.12) 1.17
========================================================================================================
Less distributions:
Dividends from net investment income -- (0.03) --
--------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.02) --
========================================================================================================
Total distributions -- (0.05) --
========================================================================================================
Net asset value, end of period $ 9.07 $ 10.85 $12.02
________________________________________________________________________________________________________
========================================================================================================
Total return(b) (16.41)% (9.33)% 10.78%
________________________________________________________________________________________________________
========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $21,775 $20,680 $1,248
________________________________________________________________________________________________________
========================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.02%(c) 1.95% 1.93%(d)
--------------------------------------------------------------------------------------------------------
Without fee waivers 2.02%(c) 2.04% 8.89%(d)
========================================================================================================
Ratio of net investment income (loss) to average net assets (0.53)%(c) (0.51)% (0.06)%(d)
________________________________________________________________________________________________________
========================================================================================================
Portfolio turnover rate 37% 18% 57%
________________________________________________________________________________________________________
========================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles, 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 $25,225,493.
(d) Annualized.
FS-130
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------
Net asset value, beginning of period $11.60
---------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.00(a)
---------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.40)
===========================================================================
Total from investment operations (2.40)
===========================================================================
Net asset value, end of period $ 9.20
___________________________________________________________________________
===========================================================================
Total return(b) (20.69)%
___________________________________________________________________________
===========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 8
___________________________________________________________________________
===========================================================================
Ratio of expenses to average net assets:
With fee waivers 1.54%(c)
---------------------------------------------------------------------------
Without fee waivers 1.54%(c)
===========================================================================
Ratio of net investment income (loss) to average net assets (0.05)%(c)
___________________________________________________________________________
===========================================================================
Portfolio turnover rate 37%
___________________________________________________________________________
===========================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $8,438.
FS-131
Report of Independent Auditors
To the Shareholders of AIM Large Cap Core Equity Fund And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Large Cap Core Equity Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations, statement of changes in net assets, and financial highlights for the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Large Cap Core Equity Fund as of October 31, 2002, and the results of its operations, changes in its net assets, and financial highlights for the period then ended in conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
|
FS-132
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
----------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-82.15%
Advertising-1.26%
Omnicom Group Inc. 3,500 $ 201,705
======================================================================
Aerospace & Defense-3.59%
Lockheed Martin Corp. 1,100 63,690
----------------------------------------------------------------------
Northrop Grumman Corp. 2,400 247,512
----------------------------------------------------------------------
Raytheon Co. 9,000 265,500
======================================================================
576,702
======================================================================
Apparel Retail-1.29%
Limited Brands 13,200 206,844
======================================================================
Banks-2.36%
Bank of America Corp. 2,300 160,540
----------------------------------------------------------------------
Washington Mutual, Inc. 6,100 218,136
======================================================================
378,676
======================================================================
Biotechnology-0.75%
Amgen Inc.(a) 2,600 121,056
======================================================================
Brewers-1.68%
Anheuser-Busch Cos., Inc. 5,100 269,076
======================================================================
Building Products-2.07%
American Standard Cos. Inc.(a) 2,600 173,420
----------------------------------------------------------------------
Masco Corp. 7,700 158,312
======================================================================
331,732
======================================================================
Computer & Electronics Retail-0.77%
Best Buy Co., Inc.(a) 6,000 123,660
======================================================================
Computer Hardware-1.92%
International Business Machines Corp. 3,900 307,866
======================================================================
Construction Materials-0.84%
Vulcan Materials Co. 4,000 134,240
======================================================================
Data Processing Services-2.47%
Automatic Data Processing, Inc. 5,700 242,421
----------------------------------------------------------------------
Convergys Corp.(a) 10,300 153,264
======================================================================
395,685
======================================================================
Diversified Financial Services-3.43%
Citigroup Inc. 6,000 221,700
----------------------------------------------------------------------
Morgan Stanley 3,200 124,544
----------------------------------------------------------------------
Principal Financial Group, Inc. (The) 7,300 204,765
======================================================================
551,009
======================================================================
|
MARKET
SHARES VALUE
----------------------------------------------------------------------
Electric Utilities-0.32%
TXU Corp. 3,600 $ 51,660
======================================================================
Electrical Components & Equipment-1.44%
Emerson Electric Co. 4,800 231,264
======================================================================
Environmental Services-1.18%
Waste Management, Inc. 8,200 188,764
======================================================================
Food Retail-2.08%
Kroger Co. (The)(a) 12,500 185,500
----------------------------------------------------------------------
Safeway Inc.(a) 6,400 147,840
======================================================================
333,340
======================================================================
Footwear-1.00%
NIKE, Inc.-Class B 3,400 160,446
======================================================================
General Merchandise Stores-2.61%
Target Corp. 6,800 204,816
----------------------------------------------------------------------
Wal-Mart Stores, Inc. 4,000 214,200
======================================================================
419,016
======================================================================
Health Care Distributors & Services-2.06%
IMS Health Inc. 12,600 189,504
----------------------------------------------------------------------
Quest Diagnostics Inc.(a) 2,200 140,426
======================================================================
329,930
======================================================================
Health Care Equipment-0.82%
St. Jude Medical, Inc.(a) 3,700 131,757
======================================================================
Health Care Supplies-1.74%
Alcon, Inc. (Switzerland)(a) 6,800 278,936
======================================================================
Hotels, Resorts & Cruise Lines-0.75%
Carnival Corp. 4,600 120,152
======================================================================
Household Products-1.43%
Procter & Gamble Co. (The) 2,600 229,970
======================================================================
Housewares & Specialties-0.52%
Newell Rubbermaid Inc. 2,600 84,292
======================================================================
Industrial Machinery-2.48%
Dover Corp. 7,800 195,624
----------------------------------------------------------------------
Illinois Tool Works Inc. 3,300 202,620
======================================================================
398,244
======================================================================
Integrated Oil & Gas-2.60%
ChevronTexaco Corp. 2,000 135,260
----------------------------------------------------------------------
Exxon Mobil Corp. 8,400 282,744
======================================================================
418,004
======================================================================
|
FS-133
MARKET
SHARES VALUE
----------------------------------------------------------------------
Leisure Products-0.67%
Mattel, Inc. 5,900 $ 108,324
======================================================================
Life & Health Insurance-1.25%
Prudential Financial, Inc.(a) 6,900 201,480
======================================================================
Oil & Gas Drilling-1.06%
GlobalSantaFe Corp. 7,100 169,690
======================================================================
Oil & Gas Equipment & Services-0.92%
Baker Hughes Inc. 5,100 148,155
======================================================================
Oil & Gas Refining, Marketing &
Transportation-0.86%
Valero Energy Corp. 3,900 137,319
======================================================================
Packaged Foods & Meats-8.69%
ConAgra Foods, Inc. 11,200 271,600
----------------------------------------------------------------------
General Mills, Inc. 8,200 338,824
----------------------------------------------------------------------
Kellogg Co. 7,700 245,322
----------------------------------------------------------------------
Kraft Foods, Inc.-Class A 6,200 244,900
----------------------------------------------------------------------
Sara Lee Corp. 12,900 294,507
======================================================================
1,395,153
======================================================================
Personal Products-3.15%
Avon Products, Inc. 5,800 281,242
----------------------------------------------------------------------
Gillette Co. (The) 7,500 224,100
======================================================================
505,342
======================================================================
Pharmaceuticals-5.76%
Abbott Laboratories 3,200 133,984
----------------------------------------------------------------------
Johnson & Johnson 3,500 205,625
----------------------------------------------------------------------
Pfizer Inc. 7,100 225,567
----------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 2,600 201,318
----------------------------------------------------------------------
Wyeth 4,700 157,450
======================================================================
923,944
======================================================================
Property & Casualty Insurance-2.07%
MGIC Investment Corp. 2,800 117,488
----------------------------------------------------------------------
Travelers Property Casualty Corp.-Class A(a) 3,664 48,622
----------------------------------------------------------------------
Travelers Property Casualty Corp.-Class B(a) 4,437 59,988
----------------------------------------------------------------------
XL Capital Ltd.-Class A (Cayman Islands) 1,400 106,610
======================================================================
332,708
======================================================================
|
MARKET
SHARES VALUE
----------------------------------------------------------------------
Publishing-0.96%
New York Times Co. (The)-Class A 3,200 $ 154,912
======================================================================
Railroads-1.57%
Norfolk Southern Corp. 6,300 127,260
----------------------------------------------------------------------
Union Pacific Corp. 2,100 124,005
======================================================================
251,265
======================================================================
Semiconductor Equipment-0.91%
KLA-Tencor Corp.(a) 4,100 146,083
======================================================================
Semiconductors-3.24%
Intel Corp. 12,800 221,440
----------------------------------------------------------------------
STMicroelectronics N.V.-New York Shares
(Netherlands) 1,200 23,604
----------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR (Taiwan)(a) 9,650 75,463
----------------------------------------------------------------------
Texas Instruments Inc. 4,900 77,714
----------------------------------------------------------------------
Xilinx, Inc.(a) 6,400 121,536
======================================================================
519,757
======================================================================
Soft Drinks-1.39%
Coca-Cola Co. (The) 4,800 223,104
======================================================================
Specialty Chemicals-0.93%
Rohm & Haas Co. 4,500 149,714
======================================================================
Systems Software-5.26%
Computer Associates International, Inc. 22,800 338,808
----------------------------------------------------------------------
Microsoft Corp.(a) 7,000 374,290
----------------------------------------------------------------------
Oracle Corp.(a) 12,800 130,432
======================================================================
843,530
======================================================================
Total Common Stocks & Other Equity
Interests (Cost $14,405,398) 13,184,506
======================================================================
MONEY MARKET FUNDS-15.47%
STIC Liquid Assets Portfolio(b) 1,241,371 1,241,371
----------------------------------------------------------------------
STIC Prime Portfolio(b) 1,241,371 1,241,371
======================================================================
Total Money Market Funds (Cost
$2,482,742) 2,482,742
======================================================================
TOTAL INVESTMENTS-97.62% (Cost $16,888,140) 15,667,248
======================================================================
OTHER ASSETS LESS LIABILITIES-2.38% 382,106
======================================================================
NET ASSETS-100.00% $16,049,354
______________________________________________________________________
======================================================================
|
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-134
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost $16,888,140) $15,667,248
------------------------------------------------------------
Receivables for:
Investments sold 243,697
------------------------------------------------------------
Fund shares sold 211,253
------------------------------------------------------------
Dividends 16,765
------------------------------------------------------------
Amount due from advisor 3,772
------------------------------------------------------------
Investment for deferred compensation plan 1,522
------------------------------------------------------------
Other assets 31,494
============================================================
Total assets 16,175,751
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 88,420
------------------------------------------------------------
Deferred compensation plan 1,522
------------------------------------------------------------
Accrued distribution fees 11,190
------------------------------------------------------------
Accrued trustees' fees 858
------------------------------------------------------------
Accrued transfer agent fees 4,683
------------------------------------------------------------
Accrued operating expenses 19,724
============================================================
Total liabilities 126,397
============================================================
Net assets applicable to shares outstanding $16,049,354
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 7,833,646
____________________________________________________________
============================================================
Class B $ 7,100,180
____________________________________________________________
============================================================
Class C $ 1,115,528
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 900,607
____________________________________________________________
============================================================
Class B 820,620
____________________________________________________________
============================================================
Class C 128,990
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 8.70
------------------------------------------------------------
Offering price per share:
(Net asset value of $8.70 divided by
94.50%) $ 9.21
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 8.65
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 8.65
____________________________________________________________
============================================================
|
Statement of Operations
For the period December 31, 2001 (date operations commenced) through October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$174) $ 66,651
-------------------------------------------------------------
Dividends from affiliated money market funds 9,850
-------------------------------------------------------------
Interest 6,602
=============================================================
Total investment income 83,103
=============================================================
EXPENSES:
Advisory fees 44,236
-------------------------------------------------------------
Administrative services fees 41,781
-------------------------------------------------------------
Custodian fees 16,668
-------------------------------------------------------------
Distribution fees -- Class A 9,410
-------------------------------------------------------------
Distribution fees -- Class B 25,823
-------------------------------------------------------------
Distribution fees -- Class C 6,272
-------------------------------------------------------------
Transfer agent fees 22,089
-------------------------------------------------------------
Trustees' fees 7,431
-------------------------------------------------------------
Registration and filing fees 52,111
-------------------------------------------------------------
Printing 13,841
-------------------------------------------------------------
Professional fees 28,288
-------------------------------------------------------------
Other 4,389
=============================================================
Total expenses 272,339
=============================================================
Less: Fees waived and expenses reimbursed (148,155)
-------------------------------------------------------------
Expenses paid indirectly (106)
=============================================================
Net expenses 124,078
=============================================================
Net investment income (loss) (40,975)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (206,181)
-------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (1,220,892)
=============================================================
Net gain (loss) from investment securities (1,427,073)
=============================================================
Net increase (decrease) in net assets resulting
from operations $(1,468,048)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-135
Statement of Changes in Net Assets
For the period December 31, 2001 (date operations commenced) through October 31, 2002
OCTOBER 31,
2002
-------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (40,975)
-------------------------------------------------------------------------
Net realized gain (loss) from investment securities (206,181)
-------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (1,220,892)
=========================================================================
Net increase (decrease) in net assets resulting from
operations (1,468,048)
=========================================================================
Share transactions-net:
Class A 8,520,795
-------------------------------------------------------------------------
Class B 7,728,359
-------------------------------------------------------------------------
Class C 1,268,248
=========================================================================
Net increase in net assets 16,049,354
=========================================================================
NET ASSETS:
Beginning of period --
=========================================================================
End of period $16,049,354
_________________________________________________________________________
=========================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $17,478,476
-------------------------------------------------------------------------
Undistributed net investment income (loss) (2,049)
-------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (206,181)
-------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (1,220,892)
=========================================================================
$16,049,354
_________________________________________________________________________
=========================================================================
|
See Notes to Financial Statements.
FS-136
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Large Cap Core Equity Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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 provide 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 and commercial paper 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. 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 gain, 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 gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
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.
FS-137
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 $1 billion of the Fund's average daily net assets, plus 0.70% of the Fund's next $1 billion of average daily net assets, plus 0.625% of the Fund's average daily nest assets in excess of $2 billion. AIM has voluntarily 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 1.75% which may be terminated or modified at any time. 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 period December 31, 2001 (date operations commenced) through October 31, 2002, AIM waived fees of $44,236 and reimbursed expenses of $103,919.
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 December 31, 2001 (date operations commenced) through October 31, 2002, AIM was paid $41,781 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 December 31, 2001 (date operations commenced) through October 31, 2002, AFS retained $10,815 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. NASD Rules also impose a cap on the total amount of sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the period December 31, 2001 (date operations commenced) through October 31, 2002, the Class A, Class B and Class C shares paid $9,410, $25,823 and $6,272, respectively.
AIM Distributors retained commissions of $11,277 from sales of the Class A shares of the Fund during the period December 31, 2001 (date operations commenced) through October 31, 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 period December 31, 2001 (date operations commenced) through October 31, 2002, AIM Distributors retained $0, $0 and $83 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 period December 31, 2001 (date operations commenced) through October 31, 2002, the Fund paid legal fees of $2,356 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 period December 31, 2001 (date operations commenced) through October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $94 and reductions in custodian fees of $12 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $106.
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 period December 31, 2001
(date operations commenced) through October 31, 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.
FS-138
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid during the period December 31, 2001 (date operations commenced) through October 31, 2002.
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation
(depreciation) -- investments $(1,272,241)
------------------------------------------------------------
Temporary book/tax differences (2,049)
------------------------------------------------------------
Capital loss carryforward (154,832)
------------------------------------------------------------
Shares of beneficial interest 17,478,476
============================================================
$16,049,354
____________________________________________________________
============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the deferral of trustee compensation.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-----------------------------------------------------------
October 31, 2010 $154,832
___________________________________________________________
===========================================================
|
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the period December 31, 2001 (date operations commenced) through October 31, 2002 was $16,779,068 and $2,167,488, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 137,259 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (1,409,500) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(1,272,241) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $16,939,489. |
NOTE 8--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of nondeductible stock issuance costs, a net operating loss reclassification and other items, on October 31, 2002, undistributed net investment income (loss) was increased by $38,926 and shares of beneficial interest was decreased by $38,926. This reclassification had no effect on the net assets of the Fund.
NOTE 9--SHARE INFORMATION
Changes in shares outstanding during the period December 31, 2001 (date operations commenced) through October 31, 2002 were as follows:
OCTOBER 31,
2002
------------------------
SHARES AMOUNT
--------------------------------------------------------------------------------------
Sold:
Class A 1,170,454* $10,859,545*
--------------------------------------------------------------------------------------
Class B 976,016 9,080,411
--------------------------------------------------------------------------------------
Class C 158,298 1,525,564
======================================================================================
Reacquired:
Class A (269,847) (2,338,750)
--------------------------------------------------------------------------------------
Class B (155,396)* (1,352,052)*
--------------------------------------------------------------------------------------
Class C (29,308) (257,316)
======================================================================================
1,850,217 $17,517,402
______________________________________________________________________________________
======================================================================================
|
* Includes automatic conversion of 2,981 shares of Class B shares in the amount of $25,596 to 2,855 shares of Class A shares in the amount of $25,596.
FS-139
NOTE 10--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) TO
OCTOBER 31,
2002
-------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a)
-------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.27)
===============================================================================
Total from investment operations (1.30)
===============================================================================
Net asset value, end of period $ 8.70
_______________________________________________________________________________
===============================================================================
Total return(b) (13.00)%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 7,834
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average net assets:
With fee waivers 1.75%(c)
-------------------------------------------------------------------------------
Without fee waivers 4.26%(c)
===============================================================================
Ratio of net investment income (loss) to average net assets (0.34)%(c)
_______________________________________________________________________________
===============================================================================
Portfolio turnover rate 42%
_______________________________________________________________________________
===============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting
principles, 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
$3,217,599.
CLASS B
-----------------
DECEMBER 31, 2001
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2002
-------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08)(a)
-------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.27)
===============================================================================
Total from investment operations (1.35)
===============================================================================
Net asset value, end of period $ 8.65
_______________________________________________________________________________
===============================================================================
Total return(b) (13.50)%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 7,100
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average net assets:
With fee waivers 2.40%(c)
-------------------------------------------------------------------------------
Without fee waivers 4.91%(c)
===============================================================================
Ratio of net investment income (loss) to average net assets (0.99)%(c)
_______________________________________________________________________________
===============================================================================
Portfolio turnover rate 42%
_______________________________________________________________________________
===============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting
principles, 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
$3,090,223.
FS-140
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
-----------------
DECEMBER 31, 2001
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2002
-------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08)(a)
-------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.27)
===============================================================================
Total from investment operations (1.35)
===============================================================================
Net asset value, end of period $ 8.65
_______________________________________________________________________________
===============================================================================
Total return(b) (13.50)%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,116
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average net assets:
With fee waivers 2.40%(c)
-------------------------------------------------------------------------------
Without fee waivers 4.91%(c)
===============================================================================
Ratio of net investment income (loss) to average net assets (0.99)%(c)
_______________________________________________________________________________
===============================================================================
Portfolio turnover rate 42%
_______________________________________________________________________________
===============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting
principles, 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 $750,568.
FS-141
Report of Independent Auditors
To the Shareholders of AIM Large Cap Growth Fund and Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Large Cap Growth Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the periods presented from commencement of operations through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Large Cap Growth Fund as of October 31, 2002, 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.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
|
FS-142
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
-------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-97.24%
Aerospace & Defense-1.50%
Lockheed Martin Corp. 34,000 $ 1,968,600
-------------------------------------------------------------------------
United Technologies Corp. 28,000 1,726,760
=========================================================================
3,695,360
=========================================================================
Apparel Retail-1.23%
Limited Brands 84,000 1,316,280
-------------------------------------------------------------------------
TJX Cos., Inc. (The) 83,000 1,703,160
=========================================================================
3,019,440
=========================================================================
Apparel, Accessories & Luxury Goods-0.72%
Jones Apparel Group, Inc.(a) 51,000 1,766,640
=========================================================================
Application Software-3.06%
Electronic Arts Inc.(a) 55,000 3,581,600
-------------------------------------------------------------------------
Intuit Inc.(a) 76,000 3,945,920
=========================================================================
7,527,520
=========================================================================
Automobile Manufacturers-0.87%
Bayerische Motoren Werke A.G. (Germany) 60,000 2,140,938
=========================================================================
Banks-5.80%
Bank of America Corp. 31,000 2,163,800
-------------------------------------------------------------------------
Charter One Financial, Inc. 81,850 2,478,418
-------------------------------------------------------------------------
M & T Bank Corp. 18,000 1,474,560
-------------------------------------------------------------------------
North Fork Bancorp., Inc. 53,000 2,038,380
-------------------------------------------------------------------------
U.S. Bancorp 67,000 1,413,030
-------------------------------------------------------------------------
Washington Mutual, Inc. 75,000 2,682,000
-------------------------------------------------------------------------
Wells Fargo & Co. 40,000 2,018,800
=========================================================================
14,268,988
=========================================================================
Brewers-1.22%
Anheuser-Busch Cos., Inc. 57,000 3,007,320
=========================================================================
Building Products-0.53%
Masco Corp. 64,000 1,315,840
=========================================================================
Casinos & Gambling-0.85%
Harrah's Entertainment, Inc.(a) 50,000 2,100,000
=========================================================================
Computer Hardware-4.79%
Dell Computer Corp.(a) 315,000 9,012,150
-------------------------------------------------------------------------
International Business Machines Corp. 35,000 2,762,900
=========================================================================
11,775,050
=========================================================================
Computer Storage & Peripherals-1.50%
Lexmark International, Inc.(a) 62,000 3,684,040
=========================================================================
Consumer Finance-0.88%
MBNA Corp. 107,000 2,173,170
=========================================================================
Data Processing Services-1.28%
First Data Corp. 90,000 3,144,600
=========================================================================
|
MARKET
SHARES VALUE
-------------------------------------------------------------------------
Diversified Commercial Services-3.32%
Apollo Group, Inc.-Class A(a) 65,000 $ 2,697,500
-------------------------------------------------------------------------
H&R Block, Inc. 60,000 2,662,800
-------------------------------------------------------------------------
Weight Watchers International, Inc.(a) 59,000 2,793,650
=========================================================================
8,153,950
=========================================================================
Diversified Financial Services-6.40%
Fannie Mae 27,000 1,805,220
-------------------------------------------------------------------------
Freddie Mac 113,000 6,958,540
-------------------------------------------------------------------------
Moody's Corp. 50,000 2,355,000
-------------------------------------------------------------------------
SLM Corp. 45,000 4,623,300
=========================================================================
15,742,060
=========================================================================
Electronic Equipment & Instruments-0.68%
Samsung Electronics Co., Ltd. (South Korea) 5,900 1,662,990
=========================================================================
General Merchandise Stores-0.78%
Wal-Mart Stores, Inc. 36,000 1,927,800
=========================================================================
Health Care Equipment-5.35%
Becton, Dickinson & Co. 83,000 2,449,330
-------------------------------------------------------------------------
Boston Scientific Corp.(a) 98,000 3,687,740
-------------------------------------------------------------------------
Medtronic, Inc. 35,000 1,568,000
-------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 50,000 1,780,500
-------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 89,000 3,668,580
=========================================================================
13,154,150
=========================================================================
Health Care Facilities-1.84%
Tenet Healthcare Corp.(a) 157,500 4,528,125
=========================================================================
Health Care Supplies-1.25%
Alcon, Inc. (Switzerland)(a) 75,000 3,076,500
=========================================================================
Home Improvement Retail-2.19%
Home Depot, Inc. (The) 87,000 2,512,560
-------------------------------------------------------------------------
Lowe's Cos., Inc. 69,000 2,879,370
=========================================================================
5,391,930
=========================================================================
Household Products-4.14%
Clorox Co. 60,000 2,695,800
-------------------------------------------------------------------------
Procter & Gamble Co. (The) 56,000 4,953,200
-------------------------------------------------------------------------
Reckitt Benckiser PLC (United Kingdom) 140,000 2,541,722
=========================================================================
10,190,722
=========================================================================
Housewares & Specialties-2.36%
Fortune Brands, Inc. 51,000 2,553,060
-------------------------------------------------------------------------
Newell Rubbermaid Inc. 100,000 3,242,000
=========================================================================
5,795,060
=========================================================================
Industrial Conglomerates-2.22%
3M Co. 24,000 3,046,560
-------------------------------------------------------------------------
General Electric Co. 96,000 2,424,000
=========================================================================
5,470,560
=========================================================================
|
FS-143
MARKET
SHARES VALUE
-------------------------------------------------------------------------
Industrial Machinery-0.82%
ITT Industries, Inc. 31,000 $ 2,014,380
=========================================================================
Internet Retail-0.85%
eBay Inc.(a) 32,900 2,081,254
=========================================================================
Leisure Products-0.81%
Mattel, Inc. 108,000 1,982,880
=========================================================================
Life & Health Insurance-1.03%
AFLAC Inc. 83,600 2,544,784
=========================================================================
Managed Health Care-4.03%
Anthem, Inc.(a) 70,600 4,447,800
-------------------------------------------------------------------------
UnitedHealth Group Inc. 60,000 5,457,000
=========================================================================
9,904,800
=========================================================================
Motorcycle Manufacturers-1.38%
Harley-Davidson, Inc. 65,000 3,399,500
=========================================================================
Networking Equipment-1.93%
Cisco Systems, Inc.(a) 424,000 4,740,320
=========================================================================
Office Services & Supplies-0.66%
Avery Dennison Corp. 26,000 1,618,240
=========================================================================
Personal Products-1.69%
Avon Products, Inc. 53,000 2,569,970
-------------------------------------------------------------------------
Gillette Co. (The) 53,000 1,583,640
=========================================================================
4,153,610
=========================================================================
Pharmaceuticals-11.28%
Allergan, Inc. 33,000 1,796,850
-------------------------------------------------------------------------
Johnson & Johnson 153,000 8,988,750
-------------------------------------------------------------------------
Novartis A.G. (Switzerland) 38,000 1,448,379
-------------------------------------------------------------------------
Pfizer Inc. 342,000 10,865,340
-------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 60,000 4,645,800
=========================================================================
27,745,119
=========================================================================
Property & Casualty Insurance-1.79%
Ambac Financial Group, Inc. 31,000 1,915,800
-------------------------------------------------------------------------
Progressive Corp. 45,000 2,475,000
=========================================================================
4,390,800
=========================================================================
Publishing-0.80%
Gannett Co., Inc. 26,000 1,974,180
=========================================================================
Restaurants-0.89%
Yum! Brands, Inc.(a) 97,000 2,185,410
=========================================================================
|
MARKET
SHARES VALUE
-------------------------------------------------------------------------
Semiconductor Equipment-0.58%
Applied Materials, Inc.(a) 95,000 $ 1,427,850
=========================================================================
Semiconductors-1.64%
Analog Devices, Inc.(a) 56,000 1,500,800
-------------------------------------------------------------------------
Microchip Technology Inc. 71,000 1,732,400
-------------------------------------------------------------------------
Texas Instruments Inc. 51,000 808,860
=========================================================================
4,042,060
=========================================================================
Soft Drinks-2.02%
Coca-Cola Enterprises, Inc. 107,000 2,550,880
-------------------------------------------------------------------------
PepsiCo, Inc. 55,000 2,425,500
=========================================================================
4,976,380
=========================================================================
Specialty Stores-3.94%
AutoZone, Inc.(a) 37,000 3,173,490
-------------------------------------------------------------------------
Bed Bath & Beyond Inc.(a) 58,000 2,056,680
-------------------------------------------------------------------------
Blockbuster Inc.-Class A 68,000 1,629,960
-------------------------------------------------------------------------
Staples, Inc.(a) 182,000 2,821,000
=========================================================================
9,681,130
=========================================================================
Systems Software-6.34%
Microsoft Corp.(a) 215,000 11,496,050
-------------------------------------------------------------------------
Oracle Corp.(a) 209,000 2,129,710
-------------------------------------------------------------------------
Symantec Corp.(a) 49,000 1,960,000
=========================================================================
15,585,760
=========================================================================
Total Common Stocks & Other Equity
Interests (Cost $242,606,462) 239,161,210
=========================================================================
PRINCIPAL
AMOUNT
U.S. TREASURY SECURITIES-0.81%
U.S. Treasury Bills-0.81%
1.63%, 12/19/02 (Cost $1,995,640)(b) $2,000,000 1,995,640
=========================================================================
SHARES
MONEY MARKET FUNDS-1.94%
STIC Liquid Assets Portfolio(c) 2,384,197 2,384,197
-------------------------------------------------------------------------
STIC Prime Portfolio(c) 2,384,197 2,384,197
=========================================================================
Total Money Market Funds (Cost
$4,768,394) 4,768,394
=========================================================================
TOTAL INVESTMENTS-99.99% (Cost $249,370,496) 245,925,244
=========================================================================
OTHER ASSETS LESS LIABILITIES-0.01% 19,112
=========================================================================
NET ASSETS-100.00% $245,944,356
_________________________________________________________________________
=========================================================================
|
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-144
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost
$249,370,496)* $245,925,244
-------------------------------------------------------------
Receivables for:
Investments sold 4,827,370
-------------------------------------------------------------
Fund shares sold 696,907
-------------------------------------------------------------
Dividends 121,841
-------------------------------------------------------------
Investment for deferred compensation plan 17,077
-------------------------------------------------------------
Collateral for securities loaned 2,126,650
-------------------------------------------------------------
Other assets 25,972
=============================================================
Total assets 253,741,061
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Investments purchased 4,435,649
-------------------------------------------------------------
Fund shares reacquired 876,851
-------------------------------------------------------------
Deferred compensation plan 17,077
-------------------------------------------------------------
Collateral upon return of securities loaned 2,126,650
-------------------------------------------------------------
Accrued distribution fees 213,061
-------------------------------------------------------------
Accrued trustees' fees 779
-------------------------------------------------------------
Accrued transfer agent fees 80,523
-------------------------------------------------------------
Accrued operating expenses 46,115
=============================================================
Total liabilities 7,796,705
=============================================================
Net assets applicable to shares outstanding $245,944,356
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $105,320,114
_____________________________________________________________
=============================================================
Class B $104,039,933
_____________________________________________________________
=============================================================
Class C $ 36,575,031
_____________________________________________________________
=============================================================
Class R $ 9,278
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 14,281,935
_____________________________________________________________
=============================================================
Class B 14,448,671
_____________________________________________________________
=============================================================
Class C 5,076,179
_____________________________________________________________
=============================================================
Class R 1,259
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 7.37
-------------------------------------------------------------
Offering price per share:
(Net asset value of $7.37 divided by
94.50%) $ 7.80
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per share $ 7.20
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per share $ 7.21
_____________________________________________________________
=============================================================
Class R:
Net asset value and offering price per share $ 7.37
_____________________________________________________________
=============================================================
|
* At October 31, 2002, securities with an aggregate market value of $2,108,802 were on loan to brokers.
Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$21,274) $ 1,825,498
-------------------------------------------------------------
Dividends from affiliated money market funds 298,261
-------------------------------------------------------------
Interest 22,601
-------------------------------------------------------------
Security lending income 19,706
=============================================================
Total investment income 2,166,066
=============================================================
EXPENSES:
Advisory fees 2,371,037
-------------------------------------------------------------
Administrative services fees 87,337
-------------------------------------------------------------
Custodian fees 56,234
-------------------------------------------------------------
Distribution fees -- Class A 466,743
-------------------------------------------------------------
Distribution fees -- Class B 1,320,106
-------------------------------------------------------------
Distribution fees -- Class C 507,688
-------------------------------------------------------------
Distribution fees -- Class R 18
-------------------------------------------------------------
Transfer agent fees 1,497,914
-------------------------------------------------------------
Trustees' fees 10,132
-------------------------------------------------------------
Other 232,830
=============================================================
Total expenses 6,550,039
=============================================================
Less: Fees waived (3,052)
-------------------------------------------------------------
Expenses paid indirectly (5,183)
=============================================================
Net expenses 6,541,804
=============================================================
Net investment income (loss) (4,375,738)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
FUTURES CONTRACTS AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (85,726,890)
-------------------------------------------------------------
Foreign currencies (84,924)
-------------------------------------------------------------
Futures contracts (1,875,220)
-------------------------------------------------------------
Option contracts written 34,439
=============================================================
(87,652,595)
=============================================================
Change in net unrealized appreciation of:
Investment securities 38,162,533
-------------------------------------------------------------
Foreign currencies 148
=============================================================
38,162,681
=============================================================
Net gain (loss) from investment securities,
foreign currencies, futures contracts and
option contracts (49,489,914)
=============================================================
Net increase (decrease) in net assets resulting
from operations $(53,865,652)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-145
Statement of Changes in Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
--------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (4,375,738) $ (5,009,257)
--------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and option
contracts (87,652,595) (271,898,189)
--------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and futures
contracts 38,162,681 (66,317,198)
============================================================================================
Net increase (decrease) in net assets resulting from
operations (53,865,652) (343,224,644)
============================================================================================
Share transactions-net:
Class A (10,042,539) 55,385,107
--------------------------------------------------------------------------------------------
Class B (18,237,379) 79,498,885
--------------------------------------------------------------------------------------------
Class C (12,801,049) 34,349,074
--------------------------------------------------------------------------------------------
Class R 10,502 --
============================================================================================
Net increase (decrease) in net assets (94,936,117) (173,991,578)
============================================================================================
NET ASSETS:
Beginning of year 340,880,473 514,872,051
============================================================================================
End of year $ 245,944,356 $ 340,880,473
____________________________________________________________________________________________
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 640,049,335 $ 685,573,543
--------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (25,407) (18,489)
--------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures contracts and
option contracts (390,634,468) (303,066,796)
--------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and futures contracts (3,445,104) (41,607,785)
============================================================================================
$ 245,944,356 $ 340,880,473
____________________________________________________________________________________________
============================================================================================
|
See Notes to Financial Statements.
FS-146
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Large Cap Growth Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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. Class R shares are sold at net asset value. 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 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 and commercial paper 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. 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 gain, 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 gain) 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. COVERED CALL OPTIONS -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security.
FS-147
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. 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. 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 master investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of the first $1 billion of the Fund's average daily net assets, plus 0.70% over $1 billion to and including $2 billion of the Fund's average daily net assets and 0.625% of the Fund's average daily net assets over $2 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 October 31, 2002, AIM waived fees of $3,052.
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 October 31, 2002, AIM was paid $87,337 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 October 31, 2002, AFS retained $907,446 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 Class 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B, Class C and Class R shares paid $466,743, $1,320,106, $507,688 and $18, respectively.
AIM Distributors retained commissions of $89,304 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $4,846, $17, $15,054 and $0 in contingent deferred sales charges imposed on redemptions of Class A, Class B, Class C and Class R shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 2002, the Fund paid legal fees of $5,602 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 October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $5,176 and reductions in custodian fees of $7 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $5,183.
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
FS-148
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 October 31, 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 October 31, 2002, securities with an aggregate value of $2,108,802 were on loan to brokers. The loans were secured by cash collateral of $2,126,650 received by the Fund and invested in STIC Liquid Assets Portfolio, an affiliated money market fund. For the year ended October 31, 2002, the Fund received fees of $19,706 for securities lending.
NOTE 7--CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2002 are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
----------------------------------------------------------
Beginning of year -- $ --
----------------------------------------------------------
Written 120 34,439
----------------------------------------------------------
Expired (120) (34,439)
==========================================================
End of year -- $ --
__________________________________________________________
==========================================================
|
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid during the years ended October 31, 2002 and 2001.
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation
(depreciation) -- investments $ (5,076,412)
-------------------------------------------------------------
Temporary book/tax differences (25,407)
-------------------------------------------------------------
Capital loss carryforward (389,003,160)
-------------------------------------------------------------
Shares of beneficial interest 640,049,335
=============================================================
$ 245,944,356
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) is attributable to the tax deferral of losses on wash sales. Amount includes appreciation on foreign currencies of $148. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the deferral of trustee compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-----------------------------------------------------------
October 31, 2007 $ 380,100
-----------------------------------------------------------
October 31, 2008 27,182,658
-----------------------------------------------------------
October 31, 2009 267,323,492
-----------------------------------------------------------
October 31, 2010 94,116,910
===========================================================
$389,003,160
___________________________________________________________
===========================================================
|
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 October 31, 2002 was $302,851,012 and $337,372,834, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 16,023,101 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (21,099,661) ============================================================= Net unrealized appreciation (depreciation) of investment securities $ (5,076,560) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $251,001,804. |
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of foreign currency transactions and a net operating loss reclassification, on October 31, 2002, undistributed net investment income (loss) was increased by $4,368,820, undistributed net realized gain (loss) increased by $84,923 and shares of beneficial interest decreased by $4,453,743. This reclassification had no effect on the net assets of the Fund.
FS-149
NOTE 11--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 5,296,167* $46,126,883* 12,973,656 $ 170,871,961
-----------------------------------------------------------------------------------------------------------------------
Class B 3,444,001 28,987,280 10,999,634 148,982,917
-----------------------------------------------------------------------------------------------------------------------
Class C 1,465,202 12,332,848 4,827,150 63,219,920
-----------------------------------------------------------------------------------------------------------------------
Class R** 1,259 10,502 -- --
=======================================================================================================================
Reacquired:
Class A (6,691,678) (56,169,422) (9,996,104) (115,486,854)
-----------------------------------------------------------------------------------------------------------------------
Class B (5,692,652)* (47,224,659)* (6,284,953) (69,484,032)
-----------------------------------------------------------------------------------------------------------------------
Class C (3,059,594) (25,133,897) (2,680,111) (28,870,846)
=======================================================================================================================
(5,237,295) $(41,070,465) 9,839,272 $ 169,233,066
_______________________________________________________________________________________________________________________
=======================================================================================================================
|
* Includes automatic conversion of 139,167 shares of Class B shares in the amount of $1,177,906 to 136,498 shares of Class A shares in the amount of $1,177,906. ** Class R shares commenced sales on June 3, 2002.
FS-150
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
-----------------------------------------------------------------------
MARCH 1, 1999
(DATE OPERATIONS
YEAR ENDED OCTOBER 31, COMMENCED) TO
---------------------------------------------- OCTOBER 31,
2002 2001 2000 1999
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.82 $ 17.74 $ 11.29 $10.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)(a) (0.08)(a) (0.15)(a) (0.04)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.36) (8.84) 6.60 1.33
=================================================================================================================================
Total from investment operations (1.45) (8.92) 6.45 1.29
=================================================================================================================================
Net asset value, end of period $ 7.37 $ 8.82 $ 17.74 $11.29
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (16.44)% (50.28)% 57.13% 13.70%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $105,320 $138,269 $225,255 $7,785
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.70%(c) 1.57% 1.58% 1.53%(d)(e)
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (1.01)%(c) (0.72)% (0.82)% (0.59)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 111% 124% 113% 21%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting
principles, 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 $133,355,229.
(d) Annualized.
(e) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 3.63%.
FS-151
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
------------------------------------------------------------------
APRIL 5, 1999
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED) TO
-------------------------------------------- OCTOBER 31,
2002 2001 2000 1999
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.67 $ 17.54 $ 11.25 $11.02
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14)(a) (0.16)(a) (0.27)(a) (0.08)(a)
--------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.33) (8.71) 6.56 0.31
================================================================================================================================
Total from investment operations (1.47) (8.87) 6.29 0.23
================================================================================================================================
Net asset value, end of period $ 7.20 $ 8.67 $ 17.54 $11.25
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(b) (16.96)% (50.57)% 55.91% 2.09%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $104,040 $144,747 $210,224 $5,183
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets 2.35%(c) 2.23% 2.24% 2.23%(d)(e)
================================================================================================================================
Ratio of net investment income (loss) to average net assets (1.66)%(c) (1.39)% (1.48)% (1.29)%(d)
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate 111% 124% 113% 21%
________________________________________________________________________________________________________________________________
================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting
principles, 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 $132,010,588.
(d) Annualized.
(e) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 4.33%.
FS-152
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
---------------------------------------------------------------
APRIL 5, 1999
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED) TO
----------------------------------------- OCTOBER 31,
2002 2001 2000 1999
-----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.67 $ 17.55 $ 11.25 $11.02
-----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14)(a) (0.16)(a) (0.27)(a) (0.08)(a)
-----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.32) (8.72) 6.57 0.31
=============================================================================================================================
Total from investment operations (1.46) (8.88) 6.30 0.23
=============================================================================================================================
Net asset value, end of period $ 7.21 $ 8.67 $ 17.55 $11.25
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Total return(b) (16.84)% (50.60)% 56.00% 2.09%
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $36,575 $57,865 $79,392 $ 901
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratio of expenses to average net assets 2.35%(c) 2.23% 2.24% 2.23%(d)(e)
=============================================================================================================================
Ratio of net investment income (loss) to average net assets (1.66)%(c) (1.39)% (1.48)% (1.29)%(d)
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Portfolio turnover rate 111% 124% 113% 21%
_____________________________________________________________________________________________________________________________
=============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting
principles, 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 $50,768,768.
(d) Annualized.
(e) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 4.33%.
FS-153
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------
Net asset value, beginning of period $ 8.40
---------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a)
---------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.99)
===========================================================================
Total from investment operations (1.03)
===========================================================================
Net asset value, end of period $ 7.37
___________________________________________________________________________
===========================================================================
Total return(b) (12.26)%
___________________________________________________________________________
===========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 9
___________________________________________________________________________
===========================================================================
Ratio of expenses to average net assets 1.85%(c)
===========================================================================
Ratio of net investment income (loss) to average net assets (1.16)%(c)
___________________________________________________________________________
===========================================================================
Portfolio turnover rate 111%
___________________________________________________________________________
===========================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with general accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $8,971.
FS-154
Report of Independent Auditors
To the Shareholders of AIM Mid Cap Growth Fund and Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Mid Cap Growth Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the periods presented from commencement of operations through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Mid Cap Growth Fund as of October 31, 2002, 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.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
|
FS-155
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
-------------------------------------------------------------------------
COMMON STOCKS-90.05%
Advertising-3.29%
Lamar Advertising Co.(a) 75,000 $ 2,545,500
-------------------------------------------------------------------------
Omnicom Group Inc. 35,000 2,017,050
=========================================================================
4,562,550
=========================================================================
Aerospace & Defense-1.25%
Alliant Techsystems Inc.(a) 25,000 1,503,750
-------------------------------------------------------------------------
L-3 Communications Holdings, Inc.(a) 4,900 230,300
=========================================================================
1,734,050
=========================================================================
Air Freight & Logistics-1.25%
Expeditors International of Washington, Inc. 55,000 1,733,050
=========================================================================
Airlines-0.63%
Southwest Airlines Co. 60,000 876,000
=========================================================================
Apparel Retail-3.83%
Abercrombie & Fitch Co.-Class A(a) 100,000 1,782,000
-------------------------------------------------------------------------
Gap, Inc. (The) 170,000 2,000,900
-------------------------------------------------------------------------
Talbots, Inc. (The) 18,000 498,960
-------------------------------------------------------------------------
TJX Cos., Inc. (The) 50,000 1,026,000
=========================================================================
5,307,860
=========================================================================
Application Software-2.76%
Activision, Inc.(a) 55,000 1,127,500
-------------------------------------------------------------------------
Mercury Interactive Corp.(a) 25,000 659,250
-------------------------------------------------------------------------
PeopleSoft, Inc.(a) 75,000 1,357,500
-------------------------------------------------------------------------
Siebel Systems, Inc.(a) 90,000 676,800
=========================================================================
3,821,050
=========================================================================
Auto Parts & Equipment-0.75%
Gentex Corp.(a) 35,000 1,031,800
=========================================================================
Banks-0.47%
Comerica Inc. 15,000 654,900
=========================================================================
Biotechnology-0.74%
MedImmune, Inc.(a) 40,000 1,022,000
=========================================================================
Broadcasting & Cable TV-2.89%
Cox Radio, Inc.-Class A(a) 30,000 712,200
-------------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 75,000 1,612,500
-------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 65,000 1,684,150
=========================================================================
4,008,850
=========================================================================
Building Products-0.52%
Masco Corp. 35,000 719,600
=========================================================================
|
MARKET
SHARES VALUE
-------------------------------------------------------------------------
Computer & Electronics Retail-1.54%
Best Buy Co., Inc.(a) 60,000 $ 1,236,600
-------------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 17,000 901,340
=========================================================================
2,137,940
=========================================================================
Construction & Engineering-1.64%
Jacobs Engineering Group Inc.(a) 75,000 2,271,750
=========================================================================
Consumer Finance-0.66%
Capital One Financial Corp. 30,000 914,100
=========================================================================
Data Processing Services-6.42%
BISYS Group, Inc. (The)(a) 110,000 1,969,000
-------------------------------------------------------------------------
Certegy Inc.(a) 35,000 735,000
-------------------------------------------------------------------------
DST Systems, Inc.(a) 55,000 1,691,250
-------------------------------------------------------------------------
First Data Corp. 25,000 873,500
-------------------------------------------------------------------------
Fiserv, Inc.(a) 25,000 781,000
-------------------------------------------------------------------------
Iron Mountain Inc.(a) 60,000 1,692,600
-------------------------------------------------------------------------
Paychex, Inc. 20,000 576,400
-------------------------------------------------------------------------
Sabre Holdings Corp. 30,000 575,400
=========================================================================
8,894,150
=========================================================================
Drug Retail-1.00%
CVS Corp. 50,000 1,386,500
=========================================================================
Electronic Equipment & Instruments-2.52%
Celestica Inc. (Canada)(a) 75,000 1,035,000
-------------------------------------------------------------------------
Molex Inc.-Class A 19,200 446,016
-------------------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 60,000 618,000
-------------------------------------------------------------------------
Waters Corp.(a) 55,000 1,384,900
=========================================================================
3,483,916
=========================================================================
Employment Services-2.12%
Manpower Inc. 25,000 852,500
-------------------------------------------------------------------------
Robert Half International Inc.(a) 125,000 2,087,500
=========================================================================
2,940,000
=========================================================================
General Merchandise Stores-1.33%
Dollar Tree Stores, Inc.(a) 70,000 1,840,300
=========================================================================
Health Care Distributors & Services-5.48%
AdvancePCS(a) 90,000 2,259,000
-------------------------------------------------------------------------
AMN Healthcare Services, Inc.(a) 75,000 1,084,500
-------------------------------------------------------------------------
Express Scripts, Inc.(a) 10,000 541,800
-------------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 25,000 602,500
-------------------------------------------------------------------------
Lincare Holdings Inc.(a) 30,000 1,022,100
-------------------------------------------------------------------------
|
FS-156
MARKET
SHARES VALUE
-------------------------------------------------------------------------
Health Care Distributors & Services-(Continued)
McKesson Corp. 70,000 $ 2,086,700
=========================================================================
7,596,600
=========================================================================
Health Care Equipment-1.20%
Apogent Technologies Inc.(a) 60,000 1,090,800
-------------------------------------------------------------------------
Fisher Scientific International Inc.(a) 20,000 572,000
=========================================================================
1,662,800
=========================================================================
Health Care Facilities-2.02%
Community Health Systems Inc.(a) 60,000 1,410,000
-------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 16,500 474,375
-------------------------------------------------------------------------
Triad Hospitals, Inc.(a) 25,000 912,500
=========================================================================
2,796,875
=========================================================================
Health Care Supplies-0.59%
Alcon, Inc. (Switzerland)(a) 20,000 820,400
=========================================================================
Homebuilding-0.41%
Centex Corp. 12,500 568,500
=========================================================================
Hotels, Resorts & Cruise Lines-0.84%
Starwood Hotels & Resorts Worldwide, Inc. 50,000 1,165,000
=========================================================================
Industrial Machinery-1.08%
Danaher Corp. 15,000 867,750
-------------------------------------------------------------------------
SPX Corp.(a) 15,000 630,150
=========================================================================
1,497,900
=========================================================================
Insurance Brokers-1.33%
Willis Group Holdings Ltd. (Bermuda)(a) 60,000 1,836,000
=========================================================================
IT Consulting & Services-1.84%
SunGard Data Systems Inc.(a) 115,000 2,549,550
=========================================================================
Managed Health Care-3.21%
Anthem, Inc.(a) 35,000 2,205,000
-------------------------------------------------------------------------
Caremark Rx, Inc.(a) 90,000 1,593,000
-------------------------------------------------------------------------
First Health Group Corp.(a) 25,000 649,500
=========================================================================
4,447,500
=========================================================================
Multi-Line Insurance-0.44%
HCC Insurance Holdings, Inc. 25,000 613,250
=========================================================================
Multi-Utilities & Unregulated Power-0.81%
El Paso Corp. 75,000 581,250
-------------------------------------------------------------------------
Mirant Corp.(a) 250,000 535,000
=========================================================================
1,116,250
=========================================================================
Networking Equipment-0.44%
Brocade Communications Systems, Inc.(a) 87,500 601,125
=========================================================================
Oil & Gas Drilling-6.69%
ENSCO International Inc. 100,000 2,704,000
-------------------------------------------------------------------------
|
MARKET
SHARES VALUE
-------------------------------------------------------------------------
Oil & Gas Drilling-(Continued)
Nabors Industries, Ltd. (Bermuda)(a) 65,000 $ 2,273,050
-------------------------------------------------------------------------
National-Oilwell, Inc.(a) 75,000 1,563,750
-------------------------------------------------------------------------
Patterson-UTI Energy, Inc.(a) 45,000 1,301,400
-------------------------------------------------------------------------
Rowan Cos., Inc.(a) 70,000 1,427,300
=========================================================================
9,269,500
=========================================================================
Oil & Gas Equipment & Services-2.81%
Smith International, Inc.(a) 82,000 2,563,320
-------------------------------------------------------------------------
Weatherford International Ltd. (Bermuda)(a) 33,000 1,321,320
=========================================================================
3,884,640
=========================================================================
Personal Products-1.05%
Estee Lauder Cos. Inc. (The)-Class A 50,000 1,456,000
=========================================================================
Pharmaceuticals-2.21%
King Pharmaceuticals, Inc.(a) 50,000 767,500
-------------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a) 50,000 2,295,000
=========================================================================
3,062,500
=========================================================================
Property & Casualty Insurance-2.37%
ACE Ltd. (Cayman Islands) 55,000 1,691,250
-------------------------------------------------------------------------
Radian Group Inc. 45,000 1,587,150
=========================================================================
3,278,400
=========================================================================
Publishing-0.77%
Scholastic Corp.(a) 24,000 1,059,600
=========================================================================
Restaurants-2.78%
Darden Restaurants, Inc. 50,000 949,000
-------------------------------------------------------------------------
Jack in the Box Inc.(a) 30,000 650,700
-------------------------------------------------------------------------
Outback Steakhouse, Inc. 43,000 1,464,150
-------------------------------------------------------------------------
Wendy's International, Inc. 25,000 792,000
=========================================================================
3,855,850
=========================================================================
Semiconductor Equipment-2.29%
Cabot Microelectronics Corp.(a) 35,000 1,588,650
-------------------------------------------------------------------------
Novellus Systems, Inc.(a) 50,000 1,580,000
=========================================================================
3,168,650
=========================================================================
Semiconductors-3.93%
Altera Corp.(a) 70,000 820,400
-------------------------------------------------------------------------
Broadcom Corp.-Class A(a) 85,000 1,018,300
-------------------------------------------------------------------------
Linear Technology Corp. 25,000 691,000
-------------------------------------------------------------------------
Microchip Technology Inc. 25,000 610,000
-------------------------------------------------------------------------
Micron Technology, Inc.(a) 100,000 1,600,000
-------------------------------------------------------------------------
Semtech Corp.(a) 50,000 706,500
=========================================================================
5,446,200
=========================================================================
Soft Drinks-0.49%
Pepsi Bottling Group, Inc. (The) 25,000 673,750
=========================================================================
|
FS-157
MARKET
SHARES VALUE
-------------------------------------------------------------------------
Specialty Stores-4.87%
Barnes & Noble, Inc.(a) 50,000 $ 1,055,000
-------------------------------------------------------------------------
Bed Bath & Beyond Inc.(a) 20,000 709,200
-------------------------------------------------------------------------
Foot Locker, Inc.(a) 105,000 1,029,000
-------------------------------------------------------------------------
Rent-A-Center, Inc.(a) 20,000 887,000
-------------------------------------------------------------------------
Tiffany & Co. 40,000 1,047,200
-------------------------------------------------------------------------
Williams-Sonoma, Inc.(a) 85,000 2,023,000
=========================================================================
6,750,400
=========================================================================
Systems Software-1.41%
Computer Associates International, Inc. 65,000 965,900
-------------------------------------------------------------------------
VERITAS Software Corp.(a) 65,000 991,250
=========================================================================
1,957,150
=========================================================================
Telecommunications Equipment-2.59%
UTStarcom, Inc.(a) 210,000 3,586,800
=========================================================================
|
MARKET
SHARES VALUE
-------------------------------------------------------------------------
Trading Companies & Distributors-0.49%
Fastenal Co. 20,000 $ 679,000
=========================================================================
Total Common Stocks (Cost $138,011,245) 124,740,556
=========================================================================
MONEY MARKET FUNDS-9.41%
STIC Liquid Assets Portfolio(b) 6,518,756 6,518,756
-------------------------------------------------------------------------
STIC Prime Portfolio(b) 6,518,756 6,518,756
=========================================================================
Total Money Market Funds (Cost
$13,037,512) 13,037,512
=========================================================================
TOTAL INVESTMENTS-99.46% (Cost $151,048,757) 137,778,068
=========================================================================
OTHER ASSETS LESS LIABILITIES-0.54% 750,876
=========================================================================
NET ASSETS-100.00% $138,528,944
_________________________________________________________________________
=========================================================================
|
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-158
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost
$151,048,757)* $137,778,068
----------------------------------------------------------------
Receivables for:
Investments sold 4,417,647
----------------------------------------------------------------
Fund shares sold 316,945
----------------------------------------------------------------
Dividends 27,298
----------------------------------------------------------------
Investment for deferred compensation plan 12,690
----------------------------------------------------------------
Collateral for securities loaned 3,308,750
----------------------------------------------------------------
Other assets 31,711
================================================================
Total assets 145,893,109
________________________________________________________________
================================================================
LIABILITIES:
Payables for:
Investments purchased 3,387,662
----------------------------------------------------------------
Fund shares reacquired 402,094
----------------------------------------------------------------
Deferred compensation plan 12,690
----------------------------------------------------------------
Collateral upon return of securities loaned 3,308,750
----------------------------------------------------------------
Accrued distribution fees 118,083
----------------------------------------------------------------
Accrued trustees' fees 800
----------------------------------------------------------------
Accrued transfer agent fees 89,941
----------------------------------------------------------------
Accrued operating expenses 44,145
================================================================
Total liabilities 7,364,165
================================================================
Net assets applicable to shares outstanding $138,528,944
________________________________________________________________
================================================================
NET ASSETS:
Class A $ 63,463,318
________________________________________________________________
================================================================
Class B $ 58,654,251
________________________________________________________________
================================================================
Class C $ 16,403,883
________________________________________________________________
================================================================
Class R $ 7,492
________________________________________________________________
================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 9,700,683
________________________________________________________________
================================================================
Class B 9,163,679
________________________________________________________________
================================================================
Class C 2,562,001
________________________________________________________________
================================================================
Class R 1,146
________________________________________________________________
================================================================
Class A:
Net asset value per share $ 6.54
----------------------------------------------------------------
Offering price per share:
(Net asset value of $6.54 divided by 94.50%) $ 6.92
________________________________________________________________
================================================================
Class B:
Net asset value and offering price per share $ 6.40
________________________________________________________________
================================================================
Class C:
Net asset value and offering price per share $ 6.40
________________________________________________________________
================================================================
Class R:
Net asset value and offering price per share $ 6.54
________________________________________________________________
================================================================
|
* At October 31, 2002, securities with an aggregate market value of $3,629,239 were on loan to brokers.
Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$1,469) $ 393,962
----------------------------------------------------------------
Dividends from affiliated money market funds 262,194
----------------------------------------------------------------
Interest 76
----------------------------------------------------------------
Security lending income 25,416
================================================================
Total investment income 681,648
================================================================
EXPENSES:
Advisory fees 1,620,211
----------------------------------------------------------------
Administrative services fees 50,000
----------------------------------------------------------------
Custodian fees 49,246
----------------------------------------------------------------
Distribution fees -- Class A 337,632
----------------------------------------------------------------
Distribution fees -- Class B 822,210
----------------------------------------------------------------
Distribution fees -- Class C 238,357
----------------------------------------------------------------
Distribution fees -- Class R 17
----------------------------------------------------------------
Transfer agent fees 1,053,288
----------------------------------------------------------------
Trustees' fees 9,394
----------------------------------------------------------------
Other 217,745
================================================================
Total expenses 4,398,100
================================================================
Less: Fees waived (2,679)
----------------------------------------------------------------
Expenses paid indirectly (3,916)
================================================================
Net expenses 4,391,505
================================================================
Net investment income (loss) (3,709,857)
================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (51,459,202)
----------------------------------------------------------------
Change in net unrealized appreciation of
investment securities 6,176,897
================================================================
Net gain (loss) from investment securities (45,282,305)
================================================================
Net increase (decrease) in net assets resulting
from operations $(48,992,162)
________________________________________________________________
================================================================
|
See Notes to Financial Statements.
FS-159
Statement of Changes in Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
--------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (3,709,857) $ (3,321,394)
--------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (51,459,202) (85,651,301)
--------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities 6,176,897 (34,496,810)
============================================================================================
Net increase (decrease) in net assets resulting from
operations (48,992,162) (123,469,505)
============================================================================================
Share transactions-net:
Class A (8,529,105) 35,302,179
--------------------------------------------------------------------------------------------
Class B (2,639,544) 30,599,965
--------------------------------------------------------------------------------------------
Class C (1,653,044) 9,125,015
--------------------------------------------------------------------------------------------
Class R 10,003 --
============================================================================================
Net increase (decrease) in net assets (61,803,852) (48,442,346)
============================================================================================
NET ASSETS:
Beginning of year 200,332,796 248,775,142
============================================================================================
End of year $ 138,528,944 $ 200,332,796
____________________________________________________________________________________________
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 314,422,132 $ 330,937,475
--------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (18,569) (12,365)
--------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (162,603,930) (111,144,728)
--------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (13,270,689) (19,447,586)
============================================================================================
$ 138,528,944 $ 200,332,796
____________________________________________________________________________________________
============================================================================================
|
See Notes to Financial Statements.
FS-160
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Mid Cap Growth Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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. Class R shares are sold at net asset value. 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 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 and commercial paper 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. 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 gain, 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 gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
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.
FS-161
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 master 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 over $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 October 31, 2002, AIM waived fees of $2,679.
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 October 31, 2002, 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 October 31, 2002, AFS retained $610,985 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 Class 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B, Class C and Class R shares paid $337,632, $822,210, $238,357 and $17, respectively.
AIM Distributors retained commissions of $70,433 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $1,045, $601, $14,782, and $0 in contingent deferred sales charges imposed on redemptions of Class A, Class B, Class C, and Class R shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 2002, the Fund paid legal fees of $4,888 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 October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $3,368 and reductions in custodian fees of $548 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $3,916.
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 year ended October 31,
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 October 31, 2002, securities with an aggregate value of $3,629,239 were on loan to brokers. The loans were secured by cash collateral of $3,308,750 received by the Fund and subsequently invested in STIC Liquid Assets Portfolio, an affiliated money market fund. For the year ended October 31, 2002, the Fund received fees of $25,416 for securities lending.
FS-162
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid during the years ended October 31, 2002 and 2001.
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation
(depreciation) -- investments $ (14,719,044)
----------------------------------------------------------
Temporary book/tax differences (18,569)
----------------------------------------------------------
Capital loss carryforward (161,155,575)
----------------------------------------------------------
Shares of beneficial interest 314,422,132
==========================================================
$ 138,528,944
__________________________________________________________
==========================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales.
The temporary book/tax differences are the result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the deferral of trustee compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
---------------------------------------------------------
October 31, 2008 $ 23,619,065
---------------------------------------------------------
October 31, 2009 86,724,292
---------------------------------------------------------
October 31, 2010 50,812,218
=========================================================
$161,155,575
_________________________________________________________
=========================================================
|
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 October 31, 2002 was $342,738,409 and $356,538,958, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 11,035,029 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (25,754,073) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(14,719,044) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $152,497,112. |
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of a net operating loss reclassification on October 31, 2002, undistributed net investment income (loss) was increased by $3,703,653 and shares of beneficial interest decreased by $3,703,653. This reclassification had no effect on net assets of the Fund.
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 8,138,787* $ 73,354,688* 7,467,674 $ 81,492,237
----------------------------------------------------------------------------------------------------------------------
Class B 3,669,099 31,692,709 5,024,132 57,335,690
----------------------------------------------------------------------------------------------------------------------
Class C 1,168,577 10,169,033 1,707,494 19,292,222
----------------------------------------------------------------------------------------------------------------------
Class R** 1,146 10,003 -- --
======================================================================================================================
Reacquired:
Class A (9,446,798) (81,883,793) (4,452,029) (46,190,058)
----------------------------------------------------------------------------------------------------------------------
Class B (4,198,791)* (34,332,253)* (2,619,664) (26,735,725)
----------------------------------------------------------------------------------------------------------------------
Class C (1,442,681) (11,822,077) (973,019) (10,167,207)
======================================================================================================================
(2,110,661) $(12,811,690) 6,154,588 $ 75,027,159
______________________________________________________________________________________________________________________
======================================================================================================================
|
* Includes automatic conversion of 76,507 shares of Class B shares in the amount of $635,418 to 74,934 shares of Class A shares in the amount of $635,418. ** Class R shares commenced sales on June 3, 2002.
FS-163
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------------------
NOVEMBER 1, 1999
YEAR ENDED (DATE OPERATIONS
OCTOBER 31, COMMENCED) TO
--------------------- OCTOBER 31,
2002 2001 2000
------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.58 $ 14.38 $ 10.00
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13)(a) (0.11)(a) (0.12)(a)
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.91) (5.69) 4.50
============================================================================================================
Total from investment operations (2.04) (5.80) 4.38
============================================================================================================
Net asset value, end of period $ 6.54 $ 8.58 $ 14.38
____________________________________________________________________________________________________________
============================================================================================================
Total return(b) (23.78)% (40.33)% 43.80%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $63,463 $94,457 $114,913
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets 1.83%(c) 1.65% 1.63%(d)
============================================================================================================
Ratio of net investment income (loss) to average net assets (1.49)%(c) (1.06)% (0.76)%(d)
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 185% 173% 183%
____________________________________________________________________________________________________________
============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles, 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 $96,466,301.
(d) Annualized.
FS-164
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
--------------------------------------------
NOVEMBER 1, 1999
YEAR ENDED (DATE OPERATIONS
OCTOBER 31, COMMENCED) TO
--------------------- OCTOBER 31,
2002 2001 2000
------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.45 $ 14.25 $ 10.00
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.18)(a) (0.18)(a) (0.22)(a)
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.87) (5.62) 4.47
============================================================================================================
Total from investment operations (2.05) (5.80) 4.25
============================================================================================================
Net asset value, end of period $ 6.40 $ 8.45 $ 14.25
____________________________________________________________________________________________________________
============================================================================================================
Total return(b) (24.26)% (40.70)% 42.50%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $58,654 $81,905 $103,893
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets 2.48%(c) 2.32% 2.32%(d)
============================================================================================================
Ratio of net investment income (loss) to average net assets (2.14)%(c) (1.73)% (1.45)%(d)
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 185% 173% 183%
____________________________________________________________________________________________________________
============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles, 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 $82,221,008.
(d) Annualized.
FS-165
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
------------------------------------------------
NOVEMBER 1, 1999
YEAR ENDED (DATE SALES
OCTOBER 31, COMMENCED) TO
------------------------- OCTOBER 31,
2002 2001 2000
----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.45 $ 14.26 $ 10.00
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.18)(a) (0.18)(a) (0.22)(a)
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.87) (5.63) 4.48
================================================================================================================
Total from investment operations (2.05) (5.81) 4.26
================================================================================================================
Net asset value, end of period $ 6.40 $ 8.45 $ 14.26
________________________________________________________________________________________________________________
================================================================================================================
Total return(b) (24.26)% (40.74)% 42.60%
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $16,404 $23,971 $29,969
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets 2.48%(c) 2.32% 2.32%(d)
================================================================================================================
Ratio of net investment income (loss) to average net assets (2.14)%(c) (1.73)% (1.45)%(d)
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate 185% 173% 183%
________________________________________________________________________________________________________________
================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles, 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 $23,835,757.
(d) Annualized.
FS-166
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
-----------------------------------------------------------------------------
Net asset value, beginning of period $ 8.73
-----------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a)
-----------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.14)
=============================================================================
Total from investment operations (2.19)
=============================================================================
Net asset value, end of period $ 6.54
_____________________________________________________________________________
=============================================================================
Total return(b) (25.09)%
_____________________________________________________________________________
=============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 7
_____________________________________________________________________________
=============================================================================
Ratio of expenses to average net assets 1.98%(c)
=============================================================================
Ratio of net investment income (loss) to average net assets (1.64)%(c)
_____________________________________________________________________________
=============================================================================
Portfolio turnover rate 185%
_____________________________________________________________________________
=============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $8,077.
FS-167
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM U.S. Growth Fund And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM U.S. Growth Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations, the statement of changes in net assets and the financial highlights for the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM U.S. Growth Fund as of October 31, 2002, the results of its operations, the changes in its net assets and the financial highlights for the period then ended in conformity with accounting principles generally accepted in the United States.
Houston, Texas /s/ ERNST & YOUNG LLP December 10, 2002 |
FS-168
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
----------------------------------------------------------------
COMMON STOCKS-98.24%
Aerospace & Defense-2.69%
Lockheed Martin Corp. 240 $ 13,896
----------------------------------------------------------------
Northrop Grumman Corp. 120 12,376
================================================================
26,272
================================================================
Air Freight & Logistics-0.87%
FedEx Corp. 160 8,510
================================================================
Airlines-1.03%
Southwest Airlines Co. 690 10,074
================================================================
Apparel Retail-0.53%
TJX Cos., Inc. (The) 250 5,130
================================================================
Application Software-0.53%
Electronic Arts Inc.(a) 80 5,210
================================================================
Banks-6.90%
Bank of America Corp. 210 14,658
----------------------------------------------------------------
Fifth Third Bancorp 300 19,050
----------------------------------------------------------------
Synovus Financial Corp. 930 19,056
----------------------------------------------------------------
Wells Fargo & Co. 290 14,636
================================================================
67,400
================================================================
Biotechnology-1.05%
Amgen Inc.(a) 220 10,243
================================================================
Brewers-0.54%
Anheuser-Busch Cos., Inc. 100 5,276
================================================================
Broadcasting & Cable TV-0.57%
Clear Channel Communications, Inc.(a) 150 5,557
================================================================
Casinos & Gambling-0.47%
Harrah's Entertainment, Inc.(a) 110 4,620
================================================================
Computer & Electronics Retail-0.65%
CDW Computer Centers, Inc.(a) 120 6,362
================================================================
Computer Hardware-2.20%
Dell Computer Corp.(a) 750 21,457
================================================================
Consumer Finance-1.54%
MBNA Corp. 740 15,029
================================================================
Data Processing Services-2.19%
Concord EFS, Inc.(a) 480 6,854
----------------------------------------------------------------
Fiserv, Inc.(a) 270 8,435
----------------------------------------------------------------
Paychex, Inc. 210 6,052
================================================================
21,341
================================================================
Department Stores-0.90%
Kohl's Corp.(a) 150 8,767
================================================================
|
MARKET
SHARES VALUE
----------------------------------------------------------------
Diversified Financial Services-5.70%
Citigroup Inc. 910 $ 33,625
----------------------------------------------------------------
Fannie Mae 330 22,064
================================================================
55,689
================================================================
Drug Retail-1.24%
Walgreen Co. 360 12,150
================================================================
Electric Utilities-1.09%
FPL Group, Inc. 180 10,616
================================================================
Food Distributors-1.17%
Sysco Corp. 360 11,405
================================================================
General Merchandise Stores-3.61%
Family Dollar Stores, Inc. 180 5,542
----------------------------------------------------------------
Target Corp. 150 4,518
----------------------------------------------------------------
Wal-Mart Stores, Inc. 470 25,169
================================================================
35,229
================================================================
Health Care Distributors & Services-0.57%
Cardinal Health, Inc. 80 5,537
================================================================
Health Care Equipment-1.99%
Biomet, Inc. 280 8,249
----------------------------------------------------------------
Medtronic, Inc. 250 11,200
================================================================
19,449
================================================================
Health Care Facilities-0.71%
HCA Inc. 160 6,958
================================================================
Home Improvement Retail-1.21%
Home Depot, Inc. (The) 150 4,332
----------------------------------------------------------------
Lowe's Cos., Inc. 180 7,511
================================================================
11,843
================================================================
Household Products-1.54%
Procter & Gamble Co. (The) 170 15,037
================================================================
Housewares & Specialties-0.73%
Newell Rubbermaid Inc. 220 7,132
================================================================
Industrial Conglomerates-3.99%
3M Co. 60 7,616
----------------------------------------------------------------
General Electric Co. 1,240 31,310
================================================================
38,926
================================================================
INDUSTRIAL MACHINERY-0.47%
Danaher Corp. 80 4,628
================================================================
INSURANCE BROKERS-1.01%
Marsh & McLennan Cos., Inc. 210 9,809
================================================================
|
FS-169
MARKET
SHARES VALUE
----------------------------------------------------------------
Integrated Oil & Gas-3.83%
ChevronTexaco Corp. 130 $ 8,792
----------------------------------------------------------------
Exxon Mobil Corp. 850 28,611
================================================================
37,403
================================================================
Integrated Telecommunication Services-3.84%
AT&T Corp. 810 10,562
----------------------------------------------------------------
SBC Communications Inc. 580 14,883
----------------------------------------------------------------
Verizon Communications Inc. 320 12,083
================================================================
37,528
================================================================
Managed Health Care-0.84%
UnitedHealth Group Inc. 90 8,186
================================================================
Metal & Glass Containers-0.79%
Ball Corp. 160 7,749
================================================================
Motorcycle Manufacturers-1.07%
Harley-Davidson, Inc. 200 10,460
================================================================
Movies & Entertainment-1.95%
Viacom Inc.-Class B(a) 190 8,476
----------------------------------------------------------------
Walt Disney Co. (The) 630 10,521
================================================================
18,997
================================================================
Multi-Line Insurance-3.08%
American International Group, Inc. 480 30,024
================================================================
Multi-Utilities & Unregulated Power-1.15%
Duke Energy Corp. 550 11,270
================================================================
Networking Equipment-1.21%
Cisco Systems, Inc.(a) 1,060 11,851
================================================================
Oil & Gas Drilling-0.54%
Nabors Industries, Ltd. (Bermuda)(a) 150 5,246
================================================================
Oil & Gas Equipment & Services-1.02%
BJ Services Co.(a) 170 5,156
----------------------------------------------------------------
Weatherford International Ltd. (Bermuda)(a) 120 4,805
================================================================
9,961
================================================================
Oil & Gas Exploration & Production-0.50%
Apache Corp. 90 4,865
================================================================
Personal Products-0.98%
Gillette Co. (The) 320 9,562
================================================================
Pharmaceuticals-10.45%
Bristol-Myers Squibb Co. 620 15,258
----------------------------------------------------------------
Forest Laboratories, Inc.(a) 100 9,799
----------------------------------------------------------------
|
MARKET
SHARES VALUE
----------------------------------------------------------------
Pharmaceuticals-(Continued)
Johnson & Johnson 460 $ 27,025
----------------------------------------------------------------
Lilly (Eli) & Co. 130 7,215
----------------------------------------------------------------
Merck & Co. Inc. 150 8,136
----------------------------------------------------------------
Pfizer Inc. 910 28,911
----------------------------------------------------------------
Wyeth 170 5,695
================================================================
102,039
================================================================
Property & Casualty Insurance-2.22%
Ambac Financial Group, Inc. 350 21,630
================================================================
Restaurants-1.56%
Brinker International, Inc.(a) 180 5,110
----------------------------------------------------------------
Starbucks Corp.(a) 240 5,700
----------------------------------------------------------------
Wendy's International, Inc. 140 4,435
================================================================
15,245
================================================================
Semiconductor Equipment-1.12%
Applied Materials, Inc.(a) 370 5,561
----------------------------------------------------------------
KLA-Tencor Corp.(a) 150 5,345
================================================================
10,906
================================================================
Semiconductors-4.21%
Intel Corp. 730 12,629
----------------------------------------------------------------
Linear Technology Corp. 190 5,252
----------------------------------------------------------------
Microchip Technology Inc. 950 23,180
================================================================
41,061
================================================================
Soft Drinks-1.90%
Coca-Cola Co. (The) 400 18,592
================================================================
Specialty Chemicals-0.54%
Ecolab Inc. 110 5,308
================================================================
Specialty Stores-0.80%
Bed Bath & Beyond Inc.(a) 220 7,801
================================================================
Systems Software-4.33%
Microsoft Corp.(a) 790 42,241
================================================================
Tobacco-2.13%
Philip Morris Cos. Inc. 510 20,783
================================================================
Trading Companies & Distributors-0.49%
Fastenal Co. 140 4,753
================================================================
Total Common Stocks (Cost $971,141) 959,117
================================================================
TOTAL INVESTMENTS-98.24% (Cost $971,141) 959,117
================================================================
OTHER ASSETS LESS LIABILITIES-1.76% 17,218
================================================================
NET ASSETS-100.00% $976,335
________________________________________________________________
================================================================
|
Notes to Schedule of Investments:
(a) Non-income producing security.
See Notes to Financial Statements.
FS-170
ASSETS:
Investments, at market value (cost $971,141) $ 959,117
---------------------------------------------------------------------------------------------
Cash 17,253
---------------------------------------------------------------------------------------------
Receivables for:
Amount due from advisor 13,538
---------------------------------------------------------------------------------------------
Investments sold 1,859
---------------------------------------------------------------------------------------------
Dividends 994
=============================================================================================
Total assets 992,761
_____________________________________________________________________________________________
=============================================================================================
LIABILITIES:
Payables for:
Accrued trustees' fees 663
---------------------------------------------------------------------------------------------
Accrued transfer agent fees 5
---------------------------------------------------------------------------------------------
Accrued operating expenses 15,758
=============================================================================================
Total liabilities 16,426
=============================================================================================
Net assets applicable to shares outstanding $ 976,335
_____________________________________________________________________________________________
=============================================================================================
NET ASSETS:
Class A $ 390,533
_____________________________________________________________________________________________
=============================================================================================
Class B $ 292,901
_____________________________________________________________________________________________
=============================================================================================
Class C $ 292,901
_____________________________________________________________________________________________
=============================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 40,001
_____________________________________________________________________________________________
=============================================================================================
Class B 30,001
_____________________________________________________________________________________________
=============================================================================================
Class C 30,001
_____________________________________________________________________________________________
=============================================================================================
Class A :
Net asset value per share $ 9.76
---------------------------------------------------------------------------------------------
Offering price per share:
(Net asset value of $9.76 / 94.50%) $ 10.33
_____________________________________________________________________________________________
=============================================================================================
Class B :
Net asset value and offering price per share $ 9.76
_____________________________________________________________________________________________
=============================================================================================
Class C :
Net asset value and offering price per share $ 9.76
_____________________________________________________________________________________________
=============================================================================================
|
See Notes to Financial Statements.
FS-171
INVESTMENT INCOME:
Dividends $ 2,229
---------------------------------------------------------------------------------------------
Interest 295
=============================================================================================
Total investment income 2,524
=============================================================================================
EXPENSES:
Advisory fees 1,237
---------------------------------------------------------------------------------------------
Administrative services fees 8,493
---------------------------------------------------------------------------------------------
Custodian fees 2,442
---------------------------------------------------------------------------------------------
Distribution fees--Class A 231
---------------------------------------------------------------------------------------------
Distribution fees--Class B 495
---------------------------------------------------------------------------------------------
Distribution fees--Class C 495
---------------------------------------------------------------------------------------------
Printing 9,280
---------------------------------------------------------------------------------------------
Professional fees 11,588
---------------------------------------------------------------------------------------------
Transfer agent fees 14
---------------------------------------------------------------------------------------------
Trustees' fees 2,652
---------------------------------------------------------------------------------------------
Other 752
=============================================================================================
Total expenses 37,679
=============================================================================================
Less: Fees waived and expenses reimbursed (34,778)
----------------------------------------------------------------------------------------------
Expenses paid indirectly (13)
=============================================================================================
Net expenses 2,888
=============================================================================================
Net investment income (loss) (364)
=============================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES:
Net realized gain (loss) from investment securities (11,307)
---------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investment securities (12,024)
=============================================================================================
Net gain (loss) from investment securities (23,331)
=============================================================================================
Net increase (decrease) in net assets resulting from operations $ (23,695)
_____________________________________________________________________________________________
=============================================================================================
|
See Notes to Financial Statements.
FS-172
OCTOBER 31,
2002
-----------
OPERATIONS:
Net investment income (loss) $ (364)
---------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (11,307)
---------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investment securities (12,024)
=============================================================================================
Net increase (decrease) in net assets resulting from operations (23,695)
=============================================================================================
Share transactions-net:
Class A 400,010
---------------------------------------------------------------------------------------------
Class B 300,010
---------------------------------------------------------------------------------------------
Class C 300,010
=============================================================================================
Net increase in net assets 976,335
=============================================================================================
NET ASSETS:
Beginning of period --
=============================================================================================
End of period $ 976,335
_____________________________________________________________________________________________
=============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 993,105
---------------------------------------------------------------------------------------------
Undistributed net investment income 6,561
---------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment securities (11,307)
---------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities (12,024)
=============================================================================================
$ 976,335
_____________________________________________________________________________________________
=============================================================================================
|
See Notes to Financial Statements.
FS-173
October 31, 2002
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM U.S. Growth Fund (the "Fund") is a series portfolio of AIM Equity Funds (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 fifteen separate portfolios, each having an unlimited number of shares of beneficial interest. The Fund commenced operations August 30, 2002 and consists of three different classes of shares that are not currently available for sale: Class A shares, Class B shares and Class C shares. 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 provide 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 and commercial paper 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. 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
FS-174
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 gain, 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 gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
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 0.75% of the first $1 billion of the Fund's average daily net assets, plus 0.70% of the Fund's next $1 billion of average daily net assets, plus 0.65% of the Fund's average daily nest assets in excess of $2 billion. AIM has voluntarily 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 1.75% which may be terminated or modified at any time. 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 period August 30, 2002 (date operations commenced) through October 31, 2002, AIM waived fees of $1,237 and reimbursed expenses of $32,320.
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 August 30, 2002 (date operations commenced) through October 31, 2002, AIM was paid $8,493 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 August 30, 2002 (date operations commenced) through October 31, 2002, AFS retained $6 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. NASD Rules also impose a cap on the total amount of sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. AIM Distributors has voluntarily agreed to waive all fees during the time the shares are not available for sale. This waiver may be terminated or modified at any time. Pursuant to the master distribution agreements, for the period August 30, 2002 (date operations commenced) through October 31, 2002, AIM Distributors waived fees of $231, $495 and $495 for Class A, Class B and Class C shares, respectively.
AIM Distributors retained commissions of $0 from sales of the Class A shares of the Fund during the period August 30, 2002 (date operations commenced) through October 31, 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 period August 30, 2002 (date operations commenced) through October 31,
FS-175
2002, AIM Distributors retained $0, $0 and $0 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 period August 30, 2002 (date operations commenced) through October 31, 2002, the Fund paid legal fees of $0 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 period August 30, 2002 (date operations commenced) through October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $2 and reductions in custodian fees of $11 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $13.
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 - DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
There were no ordinary income or long-term capital distributions paid during the period August 30, 2002 (date operations commenced) through October 31, 2002.
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Undistributed ordinary income $ 6,561
Unrealized appreciation (depreciation) - investments (12,024)
Capital loss carryforward (11,307)
Shares of beneficial interest 993,105
---------------
$ 976,335
===============
|
Unrealized appreciation (depreciation) is the same for tax and financial statement purposes.
The Fund's capital loss carryforward expires as follows:
CAPITAL
EXPIRATION LOSS CARRYFORWARD
---------------- -----------------
October 31, 2010 $11,307
|
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the period August 30, 2002 (date operations commenced) through October 31, 2002 was $992,044 and $9,596, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 36,742 ------------------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (48,766) ========================================================================================== Net unrealized appreciation (depreciation) of investment securities $ (12,024) __________________________________________________________________________________________ ========================================================================================== |
Investments have the same costs for tax and financial statement purposes.
FS-176
NOTE 7 - RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of stock issuance costs, and other items, on October 31, 2002, undistributed net investment income was increased by $6,925 and shares of beneficial interest decreased by $6,925. This reclassification had no effect on the net assets of the Fund.
NOTE 8 - SHARE INFORMATION
Changes in shares outstanding during the period August 30, 2002 (date operations commenced) through October 31, 2002 were as follows:
2002
--------------------------------
SHARES AMOUNT
------------ ---------------
Sold:
Class A * 40,001 $ 400,010
--------------------------------------------------------------------
Class B * 30,001 300,010
--------------------------------------------------------------------
Class C * 30,001 300,010
====================================================================
100,003 $ 1,000,030
____________________________________________________________________
====================================================================
|
* Currently all shares are owned by AIM.
FS-177
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding during the period August 30, 2002 (date operations commenced) through October 31, 2002.
CLASS A
---------------------------
AUGUST 30, 2002
(DATE OPERATIONS COMMENCED)
TO OCTOBER 31,
2002
---------------------------
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) (0.24)
______________________________________________________________________________________
======================================================================================
Total from investment operations (0.24)
______________________________________________________________________________________
======================================================================================
Net asset value, end of period $ 9.76
______________________________________________________________________________________
======================================================================================
Total return (a) (2.40)%
______________________________________________________________________________________
======================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 391
______________________________________________________________________________________
======================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursement 1.76%(b)
--------------------------------------------------------------------------------------
Without fee waivers and expense reimbursement 22.45%(b)
______________________________________________________________________________________
======================================================================================
Ratio of net investment income (loss) to average net assets (0.22)%(b)
______________________________________________________________________________________
======================================================================================
Portfolio turnover rate 1%
______________________________________________________________________________________
======================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting
principles, 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 $382,290.
FS-178
NOTE 9 - FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
---------------------------
AUGUST 30, 2002
(DATE OPERATIONS COMMENCED)
TO OCTOBER 31,
2002
---------------------------
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) (0.24)
______________________________________________________________________________________
======================================================================================
Total from investment operations (0.24)
______________________________________________________________________________________
======================================================================================
Net asset value, end of period $ 9.76
______________________________________________________________________________________
======================================================================================
Total return (a) (2.40)%
______________________________________________________________________________________
======================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 293
______________________________________________________________________________________
======================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursement 1.76%(b)
--------------------------------------------------------------------------------------
Without fee waivers and expense reimbursement 23.10%(b)
______________________________________________________________________________________
======================================================================================
Ratio of net investment income (loss) to average net assets (0.22)%(b)
______________________________________________________________________________________
======================================================================================
Portfolio turnover rate 1%
______________________________________________________________________________________
======================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting
principles, 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 $286,720.
FS-179
NOTE 9 - FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
---------------------------
AUGUST 30, 2002
(DATE OPERATIONS COMMENCED)
TO OCTOBER 31,
2002
---------------------------
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) (0.24)
______________________________________________________________________________________
======================================================================================
Total from investment operations (0.24)
______________________________________________________________________________________
======================================================================================
Net asset value, end of period $ 9.76
______________________________________________________________________________________
======================================================================================
Total return (a) (2.40)%
______________________________________________________________________________________
======================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 293
______________________________________________________________________________________
======================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursement 1.76%(b)
--------------------------------------------------------------------------------------
Without fee waivers and expense reimbursement 23.10%(b)
______________________________________________________________________________________
======================================================================================
Ratio of net investment income (loss) to average net assets (0.22)%(b)
______________________________________________________________________________________
======================================================================================
Portfolio turnover rate 1%
______________________________________________________________________________________
======================================================================================
|
(a) Includes adjustments in accordance with generally accepted accounting
principles, 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 $286,720.
FS-180
Report of Independent Auditors
To the Shareholders of AIM Weingarten Fund and Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Weingarten Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations for the year then ended, and the statements of changes in net assets and financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the periods presented through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Weingarten Fund as of October 31, 2002, the results of its operations for the year then ended, and the changes in its net assets and financial highlights for each of the two years in the period then ended in conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
|
FS-181
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
---------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-98.40%
Advertising-0.74%
Omnicom Group Inc. 350,000 $ 20,170,500
===========================================================================
Aerospace & Defense-1.44%
L-3 Communications Holdings, Inc.(a) 200,000 9,400,000
---------------------------------------------------------------------------
Lockheed Martin Corp. 250,000 14,475,000
---------------------------------------------------------------------------
United Technologies Corp. 250,000 15,417,500
===========================================================================
39,292,500
===========================================================================
Airlines-0.32%
Southwest Airlines Co. 600,000 8,760,000
===========================================================================
Apparel Retail-2.15%
Gap, Inc. (The) 2,065,900 24,315,643
---------------------------------------------------------------------------
Limited Brands 600,000 9,402,000
---------------------------------------------------------------------------
Ross Stores, Inc. 250,000 10,462,500
---------------------------------------------------------------------------
TJX Cos., Inc. (The) 700,000 14,364,000
===========================================================================
58,544,143
===========================================================================
Application Software-0.76%
Electronic Arts Inc.(a)(b) 150,000 9,768,000
---------------------------------------------------------------------------
PeopleSoft, Inc.(a) 600,000 10,860,000
===========================================================================
20,628,000
===========================================================================
Automobile Manufacturers-0.52%
Bayerische Motoren Werke A.G. (Germany) 400,000 14,272,916
===========================================================================
Banks-2.91%
Bank of America Corp. 600,000 41,880,000
---------------------------------------------------------------------------
Bank of New York Co., Inc. (The) 350,000 9,100,000
---------------------------------------------------------------------------
Kookmin Bank-ADR (South Korea) 400,000 12,940,000
---------------------------------------------------------------------------
Synovus Financial Corp. 750,000 15,367,500
===========================================================================
79,287,500
===========================================================================
Biotechnology-0.93%
Gilead Sciences, Inc.(a) 400,000 13,896,000
---------------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 250,000 11,505,000
===========================================================================
25,401,000
===========================================================================
Brewers-0.68%
Anheuser-Busch Cos., Inc. 350,000 18,466,000
===========================================================================
Broadcasting & Cable TV-1.28%
Clear Channel Communications, Inc.(a) 700,000 25,935,000
---------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 350,000 9,068,500
===========================================================================
35,003,500
===========================================================================
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Building Products-1.00%
American Standard Cos. Inc.(a) 100,000 $ 6,670,000
---------------------------------------------------------------------------
Masco Corp. 1,000,000 20,560,000
===========================================================================
27,230,000
===========================================================================
Computer Hardware-3.49%
Dell Computer Corp.(a) 2,000,000 57,220,000
---------------------------------------------------------------------------
Hewlett-Packard Co. 900,000 14,220,000
---------------------------------------------------------------------------
International Business Machines Corp. 300,000 23,682,000
===========================================================================
95,122,000
===========================================================================
Construction Materials-0.31%
Vulcan Materials Co. 250,000 8,390,000
===========================================================================
Consumer Finance-1.30%
Household International, Inc. 300,000 7,128,000
---------------------------------------------------------------------------
MBNA Corp. 1,400,000 28,434,000
===========================================================================
35,562,000
===========================================================================
Data Processing Services-1.78%
First Data Corp. 400,000 13,976,000
---------------------------------------------------------------------------
Fiserv, Inc.(a) 600,000 18,744,000
---------------------------------------------------------------------------
Paychex, Inc. 550,000 15,851,000
===========================================================================
48,571,000
===========================================================================
Department Stores-2.00%
Federated Department Stores, Inc.(a) 400,000 12,280,000
---------------------------------------------------------------------------
Kohl's Corp.(a) 500,000 29,225,000
---------------------------------------------------------------------------
Nordstrom, Inc. 650,000 12,948,000
===========================================================================
54,453,000
===========================================================================
Diversified Commercial Services-1.87%
Apollo Group, Inc.-Class A(a) 350,000 14,525,000
---------------------------------------------------------------------------
Cendant Corp.(a) 800,000 9,200,000
---------------------------------------------------------------------------
H&R Block, Inc. 400,000 17,752,000
---------------------------------------------------------------------------
Weight Watchers International, Inc.(a) 200,000 9,470,000
===========================================================================
50,947,000
===========================================================================
Diversified Financial Services-7.03%
American Express Co. 450,000 16,366,500
---------------------------------------------------------------------------
Charles Schwab Corp. (The) 1,500,000 13,770,000
---------------------------------------------------------------------------
Citigroup Inc. 750,000 27,712,500
---------------------------------------------------------------------------
Fannie Mae 300,000 20,058,000
---------------------------------------------------------------------------
Freddie Mac 450,000 27,711,000
---------------------------------------------------------------------------
|
FS-182
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Diversified Financial Services-(Continued)
Goldman Sachs Group, Inc. (The) 400,000 $ 28,640,000
---------------------------------------------------------------------------
J.P. Morgan Chase & Co. 1,000,000 20,750,000
---------------------------------------------------------------------------
Moody's Corp. 200,000 9,420,000
---------------------------------------------------------------------------
SLM Corp. 150,000 15,411,000
---------------------------------------------------------------------------
Stilwell Financial, Inc. 1,000,000 11,710,000
===========================================================================
191,549,000
===========================================================================
Drug Retail-1.09%
CVS Corp. 400,000 11,092,000
---------------------------------------------------------------------------
Walgreen Co. 550,000 18,562,500
===========================================================================
29,654,500
===========================================================================
Employment Services-0.40%
Robert Half International Inc.(a) 650,000 10,855,000
===========================================================================
Food Distributors-0.41%
Sysco Corp. 350,000 11,088,000
===========================================================================
Food Retail-0.78%
Kroger Co. (The)(a) 650,000 9,646,000
---------------------------------------------------------------------------
Whole Foods Market, Inc.(a) 250,000 11,663,500
===========================================================================
21,309,500
===========================================================================
Footwear-0.52%
NIKE, Inc.-Class B 300,000 14,157,000
===========================================================================
General Merchandise Stores-1.39%
Family Dollar Stores, Inc. 350,000 10,776,500
---------------------------------------------------------------------------
Target Corp. 900,000 27,108,000
===========================================================================
37,884,500
===========================================================================
Health Care Distributors & Services-2.30%
AdvancePCS(a) 400,000 10,040,000
---------------------------------------------------------------------------
AmerisourceBergen Corp. 200,000 14,230,000
---------------------------------------------------------------------------
Cardinal Health, Inc. 400,000 27,684,000
---------------------------------------------------------------------------
Express Scripts, Inc.(a) 200,000 10,836,000
===========================================================================
62,790,000
===========================================================================
Health Care Equipment-2.71%
Becton, Dickinson & Co. 400,000 11,804,000
---------------------------------------------------------------------------
Boston Scientific Corp.(a) 450,000 16,933,500
---------------------------------------------------------------------------
Medtronic, Inc. 450,000 20,160,000
---------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 300,000 10,683,000
---------------------------------------------------------------------------
Zimmer Holdings, Inc.(a)(b) 350,000 14,427,000
===========================================================================
74,007,500
===========================================================================
Health Care Facilities-1.85%
HCA Inc. 500,000 21,745,000
---------------------------------------------------------------------------
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Health Care Facilities-(Continued)
Tenet Healthcare Corp.(a) 1,000,000 $ 28,750,000
===========================================================================
50,495,000
===========================================================================
Health Care Supplies-0.90%
Alcon, Inc. (Switzerland)(a) 600,000 24,612,000
===========================================================================
Home Improvement Retail-2.35%
Home Depot, Inc. (The) 1,350,000 38,988,000
---------------------------------------------------------------------------
Lowe's Cos., Inc. 600,000 25,038,000
===========================================================================
64,026,000
===========================================================================
Hotels, Resorts & Cruise Lines-0.54%
Royal Caribbean Cruises Ltd. 800,000 14,688,000
===========================================================================
Household Appliances-0.34%
Black & Decker Corp. (The) 200,000 9,352,000
===========================================================================
Household Products-2.13%
Colgate-Palmolive Co. 250,000 13,745,000
---------------------------------------------------------------------------
Procter & Gamble Co. (The) 500,000 44,225,000
===========================================================================
57,970,000
===========================================================================
Housewares & Specialties-0.77%
Newell Rubbermaid Inc. 650,000 21,073,000
===========================================================================
Industrial Conglomerates-1.59%
Tyco International Ltd. (Bermuda) 3,000,000 43,380,000
===========================================================================
Industrial Gases-0.72%
Air Products & Chemicals, Inc. 200,000 8,840,000
---------------------------------------------------------------------------
Praxair, Inc. 200,000 10,900,000
===========================================================================
19,740,000
===========================================================================
Industrial Machinery-0.53%
Danaher Corp. 250,000 14,462,500
===========================================================================
Integrated Telecommunication Services-1.07%
AT&T Corp. 1,550,000 20,212,000
---------------------------------------------------------------------------
SBC Communications Inc. 350,000 8,981,000
===========================================================================
29,193,000
===========================================================================
Internet Retail-1.01%
Amazon.com, Inc.(a) 600,000 11,616,000
---------------------------------------------------------------------------
eBay Inc.(a) 250,000 15,815,000
===========================================================================
27,431,000
===========================================================================
Internet Software & Services-0.49%
Yahoo! Inc.(a) 900,000 13,428,000
===========================================================================
IT Consulting & Services-0.76%
Affiliated Computer Services, Inc.-Class A(a) 450,000 20,722,500
===========================================================================
|
FS-183
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Managed Health Care-2.94%
Aetna Inc. 350,000 $ 14,105,000
---------------------------------------------------------------------------
Anthem, Inc.(a) 250,000 15,750,000
---------------------------------------------------------------------------
Caremark Rx, Inc.(a) 550,000 9,735,000
---------------------------------------------------------------------------
UnitedHealth Group Inc. 300,000 27,285,000
---------------------------------------------------------------------------
WellPoint Health Networks Inc.(a) 175,000 13,161,750
===========================================================================
80,036,750
===========================================================================
Motorcycle Manufacturers-0.67%
Harley-Davidson, Inc. 350,000 18,305,000
===========================================================================
Multi-Line Insurance-1.85%
American International Group, Inc. 650,000 40,657,500
---------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 250,000 9,875,000
===========================================================================
50,532,500
===========================================================================
Networking Equipment-1.64%
Cisco Systems, Inc.(a) 4,000,000 44,720,000
===========================================================================
Office Services & Supplies-0.34%
Avery Dennison Corp. 150,000 9,336,000
===========================================================================
Oil & Gas Drilling-1.25%
ENSCO International Inc. 250,000 6,760,000
---------------------------------------------------------------------------
Nabors Industries, Ltd. (Bermuda)(a) 500,000 17,485,000
---------------------------------------------------------------------------
Transocean Inc. 450,000 9,891,000
===========================================================================
34,136,000
===========================================================================
Oil & Gas Equipment & Services-0.37%
Schlumberger Ltd. (Netherlands) 250,000 10,027,500
===========================================================================
Oil & Gas Exploration & Production-0.37%
Devon Energy Corp. 200,000 10,100,000
===========================================================================
Packaged Foods & Meats-0.34%
Sara Lee Corp. 400,000 9,132,000
===========================================================================
Personal Products-0.38%
Gillette Co. (The) 350,000 10,458,000
===========================================================================
Pharmaceuticals-9.78%
Forest Laboratories, Inc.(a) 100,000 9,799,000
---------------------------------------------------------------------------
Johnson & Johnson 950,000 55,812,500
---------------------------------------------------------------------------
Lilly (Eli) & Co. 400,000 22,200,000
---------------------------------------------------------------------------
Pfizer Inc. 1,000,000 31,770,000
---------------------------------------------------------------------------
Pharmacia Corp. 2,250,000 96,750,000
---------------------------------------------------------------------------
Wyeth 1,500,000 50,250,000
===========================================================================
266,581,500
===========================================================================
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Property & Casualty Insurance-0.42%
XL Capital Ltd.-Class A (Bermuda) 150,000 $ 11,422,500
===========================================================================
Restaurants-0.74%
Starbucks Corp.(a) 450,000 10,687,500
---------------------------------------------------------------------------
Wendy's International, Inc. 300,000 9,504,000
===========================================================================
20,191,500
===========================================================================
Semiconductor Equipment-6.45%
Applied Materials, Inc.(a) 6,500,000 97,695,000
---------------------------------------------------------------------------
KLA-Tencor Corp.(a) 400,000 14,252,000
---------------------------------------------------------------------------
Lam Research Corp.(a) 1,300,000 16,367,000
---------------------------------------------------------------------------
Novellus Systems, Inc.(a) 1,500,000 47,400,000
===========================================================================
175,714,000
===========================================================================
Semiconductors-6.95%
Analog Devices, Inc.(a) 1,250,000 33,500,000
---------------------------------------------------------------------------
Intel Corp. 1,700,000 29,410,000
---------------------------------------------------------------------------
Linear Technology Corp. 1,000,000 27,640,000
---------------------------------------------------------------------------
Maxim Integrated Products, Inc. 350,000 11,144,000
---------------------------------------------------------------------------
Microchip Technology Inc. 1,250,000 30,500,000
---------------------------------------------------------------------------
Micron Technology, Inc.(a) 1,600,000 25,600,000
---------------------------------------------------------------------------
STMicroelectronics N.V.-New York Shares
(Netherlands) 800,000 15,736,000
---------------------------------------------------------------------------
Texas Instruments Inc. 1,000,000 15,860,000
===========================================================================
189,390,000
===========================================================================
Soft Drinks-0.51%
Coca-Cola Co. (The) 300,000 13,944,000
===========================================================================
Specialty Chemicals-0.35%
Ecolab Inc. 200,000 9,650,000
===========================================================================
Specialty Stores-0.98%
Bed Bath & Beyond Inc.(a) 750,000 26,595,000
===========================================================================
Systems Software-5.22%
Computer Associates International, Inc. 1,000,000 14,860,000
---------------------------------------------------------------------------
Microsoft Corp.(a) 2,000,000 106,940,000
---------------------------------------------------------------------------
Oracle Corp.(a) 2,000,000 20,380,000
===========================================================================
142,180,000
===========================================================================
Telecommunications Equipment-0.38%
QUALCOMM Inc.(a) 300,000 10,356,000
===========================================================================
Tobacco-0.52%
Philip Morris Cos. Inc. 350,000 14,262,500
===========================================================================
|
FS-184
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Wireless Telecommunication Services-0.79%
AT&T Wireless Services Inc.(a) 1,500,000 $ 10,305,000
---------------------------------------------------------------------------
Nextel Communications, Inc.-Class A(a) 1,000,000 11,280,000
===========================================================================
21,585,000
===========================================================================
Total Common Stocks & Other Equity
Interests (Cost $2,799,876,312) 2,682,624,809
===========================================================================
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Money Market Funds-2.68%
STIC Liquid Assets Portfolio(c) 36,578,212 $ 36,578,212
---------------------------------------------------------------------------
STIC Prime Portfolio(c) 36,578,212 36,578,212
===========================================================================
Total Money Market Funds (Cost
$73,156,424) 73,156,424
===========================================================================
TOTAL INVESTMENTS-101.08% (Cost
$2,873,032,736)(d) 2,755,781,233
===========================================================================
OTHER ASSETS LESS LIABILITIES-(1.08%) (29,484,351)
===========================================================================
NET ASSETS-100.00% $2,726,296,882
___________________________________________________________________________
===========================================================================
|
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 7.
(c) The money market fund and the Fund are affiliated by having the same investment advisor.
(d) The Investment Company Act of 1940 defines affiliates as those companies in which a fund holds 5% or more of the outstanding voting securities. The Fund has not owned enough of the outstanding voting securities of the issuer to have control (as defined in the Investment Company Act of 1940) of that issuer. The following is a summary of the transactions with affiliates for the year ended October 31, 2002.
CHANGE IN
MARKET VALUE PURCHASE SALES UNREALIZED MARKET VALUE DIVIDEND REALIZED
10/31/2001 AT COST AT COST APPR./(DEPR.) 10/31/2002 INCOME GAIN/(LOSS)
======================================================================================================
Blockbuster Inc.-Class
A $14,471,160 $66,246,373 $(78,186,855) $(2,530,678) $ - $35,090 $(11,465,501)
|
See Notes to Financial Statements.
FS-185
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost $2,873,032,736)* $2,755,781,233
---------------------------------------------------------------------
Foreign currencies, at value (cost $127) 128
---------------------------------------------------------------------
Receivables for:
Investments sold 86,174,507
---------------------------------------------------------------------
Fund shares sold 748,513
---------------------------------------------------------------------
Dividends 1,728,725
---------------------------------------------------------------------
Investment for deferred compensation plan 159,752
---------------------------------------------------------------------
Collateral for securities loaned 48,365,000
---------------------------------------------------------------------
Other assets 498,784
=====================================================================
Total assets 2,893,456,642
_____________________________________________________________________
=====================================================================
LIABILITIES:
Payables for:
Investments purchased 105,798,488
---------------------------------------------------------------------
Fund shares reacquired 8,813,795
---------------------------------------------------------------------
Options written (premiums received $585,867) 541,250
---------------------------------------------------------------------
Deferred compensation plan 159,752
---------------------------------------------------------------------
Collateral upon return of securities loaned 48,365,000
---------------------------------------------------------------------
Accrued distribution fees 1,661,024
---------------------------------------------------------------------
Accrued trustees' fees 2,610
---------------------------------------------------------------------
Accrued transfer agent fees 1,341,608
---------------------------------------------------------------------
Accrued operating expenses 476,233
=====================================================================
Total liabilities 167,159,760
=====================================================================
Net assets applicable to shares outstanding $2,726,296,882
_____________________________________________________________________
=====================================================================
NET ASSETS:
Class A $2,104,660,220
_____________________________________________________________________
=====================================================================
Class B $ 533,223,559
_____________________________________________________________________
=====================================================================
Class C $ 86,454,751
_____________________________________________________________________
=====================================================================
Class R $ 75,548
_____________________________________________________________________
=====================================================================
Institutional Class $ 1,882,804
_____________________________________________________________________
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 222,166,712
_____________________________________________________________________
=====================================================================
Class B 60,468,715
_____________________________________________________________________
=====================================================================
Class C 9,794,273
_____________________________________________________________________
=====================================================================
Class R 7,975
_____________________________________________________________________
=====================================================================
Institutional Class 190,038
_____________________________________________________________________
=====================================================================
Class A:
Net asset value per share $ 9.47
---------------------------------------------------------------------
Offering price per share:
(Net asset value of $9.47 divided by 94.50%) $ 10.02
_____________________________________________________________________
=====================================================================
Class B:
Net asset value and offering price per share $ 8.82
_____________________________________________________________________
=====================================================================
Class C:
Net asset value and offering price per share $ 8.83
_____________________________________________________________________
=====================================================================
Class R:
Net asset value and offering price per share $ 9.47
_____________________________________________________________________
=====================================================================
Institutional Class:
Net asset value and offering price per share $ 9.91
_____________________________________________________________________
=====================================================================
|
* At October 31, 2002, securities with an aggregate market value of $47,963,220 were on loan to brokers. Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$167,474) $ 25,641,915
---------------------------------------------------------------------
Dividends from affiliated money market funds 2,003,666
---------------------------------------------------------------------
Interest 79,513
---------------------------------------------------------------------
Security lending income 568,605
=====================================================================
Total investment income 28,293,699
=====================================================================
EXPENSES:
Advisory fees 26,086,537
---------------------------------------------------------------------
Administrative services fees 450,564
---------------------------------------------------------------------
Custodian fees 267,075
---------------------------------------------------------------------
Distribution fees -- Class A 9,600,534
---------------------------------------------------------------------
Distribution fees -- Class B 7,658,196
---------------------------------------------------------------------
Distribution fees -- Class C 1,234,983
---------------------------------------------------------------------
Distribution fees -- Class R 43
---------------------------------------------------------------------
Transfer agent fees 14,162,876
---------------------------------------------------------------------
Transfer agent fees -- Institutional Class 2,990
---------------------------------------------------------------------
Trustees' fees 22,833
---------------------------------------------------------------------
Other 1,291,447
=====================================================================
Total expenses 60,778,078
=====================================================================
Less: Fees waived (28,985)
---------------------------------------------------------------------
Expenses paid indirectly (62,973)
=====================================================================
Net expenses 60,686,120
=====================================================================
Net investment income (loss) (32,392,421)
=====================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES, FUTURES CONTRACTS
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (810,794,403)
---------------------------------------------------------------------
Foreign currencies (315,885)
---------------------------------------------------------------------
Futures contracts 10,637,350
---------------------------------------------------------------------
Option contracts written 3,889,123
=====================================================================
(796,583,815)
=====================================================================
Change in net unrealized appreciation (depreciation)
of:
Investment securities (252,798,311)
---------------------------------------------------------------------
Foreign currencies 413,050
---------------------------------------------------------------------
Futures contracts 6,153,088
---------------------------------------------------------------------
Option contracts written 44,617
=====================================================================
(246,187,556)
=====================================================================
Net gain (loss) from investment securities, foreign
currencies, futures contracts and option contracts (1,042,771,371)
=====================================================================
Net increase (decrease) in net assets resulting from
operations $(1,075,163,792)
_____________________________________________________________________
=====================================================================
|
See Notes to Financial Statements.
FS-186
Statement of Changes in Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (32,392,421) $ (51,530,302)
------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and option
contracts (796,583,815) (2,619,839,284)
------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies, futures
contracts and option contracts (246,187,556) (2,503,372,023)
================================================================================================
Net increase (decrease) in net assets resulting from
operations (1,075,163,792) (5,174,741,609)
================================================================================================
Distributions to shareholders from net realized gains:
Class A -- (1,121,031,643)
------------------------------------------------------------------------------------------------
Class B -- (257,775,222)
------------------------------------------------------------------------------------------------
Class C -- (40,618,148)
------------------------------------------------------------------------------------------------
Institutional Class -- (2,238,331)
------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (1,064,806,254) 270,194,498
------------------------------------------------------------------------------------------------
Class B (180,109,268) 174,387,701
------------------------------------------------------------------------------------------------
Class C (30,575,415) 38,305,460
------------------------------------------------------------------------------------------------
Class R 72,385 --
------------------------------------------------------------------------------------------------
Institutional Class (5,419,461) (703,710)
================================================================================================
Net increase (decrease) in net assets (2,356,001,805) (6,114,221,004)
================================================================================================
NET ASSETS:
Beginning of year 5,082,298,687 11,196,519,691
================================================================================================
End of year $ 2,726,296,882 $ 5,082,298,687
________________________________________________________________________________________________
================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 6,266,669,716 $ 7,580,212,372
------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (437,153) (433,499)
------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures contracts and
option contracts (3,422,728,820) (2,626,460,881)
------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies, futures contracts and
option contracts (117,206,861) 128,980,695
================================================================================================
$ 2,726,296,882 $ 5,082,298,687
________________________________________________________________________________________________
================================================================================================
|
See Notes to Financial Statements.
FS-187
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Weingarten Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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. Class R shares and Institutional Class shares are sold at net asset value. 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 provide 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 and commercial paper 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. 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 gain, 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 gain) 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.
FS-188
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. 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 master investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of the first $30 million of the Fund's average daily net assets, plus 0.75% of the Fund's average daily net assets in excess of $30 million to and including $350 million, plus 0.625% of the Fund's average daily net assets in excess of $350 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. 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 October 31, 2002, AIM waived fees of $28,985. Under the terms of a master sub-advisory agreement between AIM and A I M Capital Management, Inc. ("AIM Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to AIM.
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 October 31, 2002, AIM was paid $450,564 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 October 31, 2002, AFS retained $7,929,845 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 0.30% 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B, Class C and Class R shares paid $9,600,534, $7,658,196, $1,234,983 and $43, respectively.
AIM Distributors retained commissions of $482,681 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $39,755, $181, $21,916 and $0 in contingent deferred sales charges imposed on redemptions of Class A, Class B, Class C and Class R shares, respectively.
FS-189
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 2002, the Fund paid legal fees of $16,256 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 October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $62,514 and reductions in custodian fees of $459 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $62,973.
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 year ended October 31,
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 October 31, 2002, securities with an aggregate value of $47,963,220 were on loan to brokers. The loans were secured by cash collateral of $48,365,000 received by the Fund and subsequently invested in STIC Liquid Assets Portfolio, an affiliated money market fund. For the year ended October 31, 2002, the Fund received fees of $568,605 for securities lending.
NOTE 7--CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2002 are summarized as follows:
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-------------------------------------------------------------
Beginning of year -- $ --
-------------------------------------------------------------
Written 45,149 8,998,111
-------------------------------------------------------------
Closed (40,828) (7,924,598)
-------------------------------------------------------------
Exercised (1,821) (487,646)
=============================================================
End of year 2,500 $ 585,867
_____________________________________________________________
=============================================================
|
Open call option contracts written at October 31, 2002 were as follows:
OCTOBER 31,
2002 UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
-----------------------------------------------------------------------------------
Electronic
Arts
Inc. Dec-02 $70 1,500 $378,873 $333,750 $45,123
-----------------------------------------------------------------------------------
Zimmer
Holdings,
Inc. Nov-02 40 1,000 206,994 207,500 (506)
===================================================================================
2,500 $585,867 $541,250 $44,617
___________________________________________________________________________________
===================================================================================
|
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
--------------------------------------------------------------
Distributions paid from long-term
capital gain $ -- $1,421,300,129
______________________________________________________________
==============================================================
|
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation
(depreciation) -- investments $ (217,806,596)
--------------------------------------------------------------
Temporary book/tax differences (437,153)
--------------------------------------------------------------
Capital loss carryforward (3,322,129,085)
--------------------------------------------------------------
Shares of beneficial interest 6,266,669,716
==============================================================
$ 2,726,296,882
______________________________________________________________
==============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales. Amount includes appreciation on foreign currencies and options contracts written of $44,643.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the deferral of trustee compensation and retirement plan expenses.
FS-190
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-------------------------------------------------------------
October 31, 2009 $2,559,101,338
-------------------------------------------------------------
October 31, 2010 763,027,747
=============================================================
$3,322,129,085
_____________________________________________________________
=============================================================
|
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 October 31, 2002 was $8,582,126,797 and $9,241,130,432, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 167,346,747 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (385,197,986) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(217,851,239) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $2,973,632,472. |
NOTE 10--RECLASSIFICATIONS OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of foreign currency transactions, a net operating loss reclassification, and other items, on October 31, 2002, undistributed net investment income increased by $32,388,767, undistributed net realized gains increased by $315,876 and shares of beneficial interest decreased by $32,704,643. This reclassification had no effect on the net assets of the Fund.
NOTE 11--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 16,965,953* $ 203,558,830* 30,268,361 $ 534,842,502
-------------------------------------------------------------------------------------------------------------------------------
Class B 5,995,984 66,787,479 13,914,532 238,827,916
-------------------------------------------------------------------------------------------------------------------------------
Class C 1,919,777 21,362,371 4,329,075 74,411,514
-------------------------------------------------------------------------------------------------------------------------------
Class R** 7,975 72,385 -- --
-------------------------------------------------------------------------------------------------------------------------------
Institutional Class 45,598 504,589 96,341 1,778,918
===============================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 50,737,569 1,049,729,056
-------------------------------------------------------------------------------------------------------------------------------
Class B -- -- 12,575,383 245,330,006
-------------------------------------------------------------------------------------------------------------------------------
Class C -- -- 2,001,892 39,096,945
-------------------------------------------------------------------------------------------------------------------------------
Institutional Class -- -- 98,123 2,101,806
===============================================================================================================================
Reacquired:
Class A (111,225,206) (1,268,365,084) (82,325,956) (1,314,377,060)
-------------------------------------------------------------------------------------------------------------------------------
Class B (23,336,616)* (246,896,747)* (20,537,177) (309,770,221)
-------------------------------------------------------------------------------------------------------------------------------
Class C (4,815,984) (51,937,786) (4,874,492) (75,202,999)
-------------------------------------------------------------------------------------------------------------------------------
Institutional Class (438,298) (5,924,050) (254,314) (4,584,434)
===============================================================================================================================
(114,880,817) $(1,280,838,013) 6,029,337 $ 482,183,949
_______________________________________________________________________________________________________________________________
===============================================================================================================================
|
* Includes automatic conversion of 393,806 shares of Class B shares in the amount of $4,307,233 to 368,013 shares of Class A shares in the amount of $4,307,233. ** Class R shares commenced sales on June 3, 2002.
FS-191
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 OCTOBER 31,
------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.65 $ 28.16 $ 28.31 $ 21.72 $ 22.72
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a) (0.10) (0.14)(a) (0.10) 0.02
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.11) (11.87) 3.18 8.16 2.38
=================================================================================================================================
Total from investment operations (3.18) (11.97) 3.04 8.06 2.40
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.01) --
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (3.54) (3.19) (1.46) (3.40)
=================================================================================================================================
Total distributions -- (3.54) (3.19) (1.47) (3.40)
=================================================================================================================================
Net asset value, end of period $ 9.47 $ 12.65 $ 28.16 $ 28.31 $ 21.72
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (25.14)% (47.38)% 10.61% 38.62% 12.34%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,104,660 $4,001,552 $8,948,781 $8,089,739 $6,094,178
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.33%(c) 1.21% 1.03% 1.03% 1.04%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.33%(c) 1.22% 1.07% 1.08% 1.09%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.64)%(c) (0.56)% (0.45)% (0.38)% 0.07%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 217% 240% 145% 124% 125%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include sales charges.
(c) Ratios are based on average daily net assets of $3,200,178,207.
FS-192
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
---------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------
2002 2001 2000 1999 1998
-------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.86 $ 26.82 $ 27.29 $ 21.12 $ 22.34
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)(a) (0.21) (0.36)(a) (0.30)(a) (0.15)(a)
-------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (2.89) (11.21) 3.08 7.93 2.33
=========================================================================================================================
Total from investment operations (3.04) (11.42) 2.72 7.63 2.18
=========================================================================================================================
Less distributions from net realized gains -- (3.54) (3.19) (1.46) (3.40)
=========================================================================================================================
Net asset value, end of period $ 8.82 $ 11.86 $ 26.82 $ 27.29 $ 21.12
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(b) (25.63)% (47.75)% 9.76% 37.59% 11.45%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $533,224 $922,476 $1,927,514 $1,291,456 $705,750
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.04%(c) 1.92% 1.78% 1.82% 1.83%
-------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.04%(c) 1.93% 1.82% 1.87% 1.87%
=========================================================================================================================
Ratio of net investment income (loss) to average
net assets (1.34)%(c) (1.27)% (1.20)% (1.17)% (0.72)%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate 217% 240% 145% 124% 125%
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales.
(c) Ratios are based on average daily net assets of $765,819,603.
FS-193
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------
2002 2001 2000 1999 1998
------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.87 $ 26.85 $ 27.30 $ 21.14 $ 22.34
------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)(a) (0.21) (0.36)(a) (0.30)(a) (0.15)(a)
------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.89) (11.23) 3.10 7.92 2.35
==============================================================================================================================
Total from investment operations (3.04) (11.44) 2.74 7.62 2.20
==============================================================================================================================
Less distributions from net realized gains -- (3.54) (3.19) (1.46) (3.40)
==============================================================================================================================
Net asset value, end of period $ 8.83 $ 11.87 $ 26.85 $ 27.30 $ 21.14
______________________________________________________________________________________________________________________________
==============================================================================================================================
Total return(b) (25.61)% (47.77)% 9.83% 37.50% 11.54%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $86,455 $150,604 $301,590 $105,420 $23,107
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.04%(c) 1.92% 1.78% 1.82% 1.83%
------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.04%(c) 1.93% 1.82% 1.87% 1.87%
==============================================================================================================================
Ratio of net investment income (loss) to average net assets (1.34)%(c) (1.27)% (1.20)% (1.17)% (0.72)%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Portfolio turnover rate 217% 240% 145% 124% 125%
______________________________________________________________________________________________________________________________
==============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $123,498,266.
FS-194
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------
Net asset value, beginning of period $ 11.36
---------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a)
---------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.86)
===========================================================================
Total from investment operations (1.89)
===========================================================================
Net asset value, end of period $ 9.47
___________________________________________________________________________
===========================================================================
Total return(b) (16.64)%
___________________________________________________________________________
===========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 76
___________________________________________________________________________
===========================================================================
Ratio of expenses to average net assets:
With fee waivers 1.53%(c)
---------------------------------------------------------------------------
Without fee waivers 1.53%(c)
===========================================================================
Ratio of net investment income (loss) to average net assets (0.84)%(c)
___________________________________________________________________________
===========================================================================
Portfolio turnover rate 217%
___________________________________________________________________________
===========================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $20,882.
FS-195
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
INSTITUTIONAL CLASS
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
2002 2001 2000 1999 1998
------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.16 $ 29.00 $ 28.96 $ 22.18 $ 23.05
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a) (0.01) (0.06)(a) 0.02 0.10
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.24) (12.29) 3.29 8.32 2.43
========================================================================================================================
Total from investment operations (3.25) (12.30) 3.23 8.34 2.53
========================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.10) --
------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (3.54) (3.19) (1.46) (3.40)
========================================================================================================================
Total distributions -- (3.54) (3.19) (1.56) (3.40)
========================================================================================================================
Net asset value, end of period $ 9.91 $ 13.16 $ 29.00 $ 28.96 $ 22.18
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(b) (24.70)% (47.11)% 11.07% 39.20% 12.79%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,883 $ 7,667 $18,634 $114,076 $72,884
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 0.82%(c) 0.69% 0.64% 0.63% 0.62%
------------------------------------------------------------------------------------------------------------------------
Without fee waivers 0.82%(c) 0.70% 0.68% 0.68% 0.67%
========================================================================================================================
Ratio of net investment income (loss) to average net assets (0.12)%(c) (0.04)% (0.04)% 0.02% 0.49%
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate 217% 240% 145% 124% 125%
________________________________________________________________________________________________________________________
========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles.
(c) Ratios are based on average daily net assets of $2,341,287.
FS-196
AIM AGGRESSIVE GROWTH FUND
AIM BLUE CHIP FUND
AIM CAPITAL DEVELOPMENT FUND
AIM CHARTER FUND
AIM CONSTELLATION FUND
AIM WEINGARTEN FUND
March 3, 2003
Prospectus
Institutional Classes
AIM Aggressive Growth Fund seeks to provide long-term
growth of capital.
AIM Blue Chip Fund seeks to provide long-term growth of
capital and, secondarily, current income.
AIM Capital Development Fund seeks to provide long-term
growth of capital.
AIM Charter Fund seeks to provide growth of capital.
AIM Constellation Fund seeks to provide growth of
capital.
AIM Weingarten Fund seeks to provide growth of capital.
This prospectus contains important information about the Institutional Class shares of the funds. 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
INVEST WITH DISCIPLINE [AIM LOGO APPEARS HERE] --Service Mark-- --Service Mark-- |
---------------------------------------------------------
|
INVESTMENT OBJECTIVES AND STRATEGIES 1 ------------------------------------------------------ AIM Aggressive Growth Fund 1 AIM Blue Chip Fund 1 AIM Capital Development Fund 1 AIM Charter Fund 1 AIM Constellation Fund 2 AIM Weingarten Fund 2 PRINCIPAL RISKS OF INVESTING IN THE FUNDS 2 ------------------------------------------------------ PERFORMANCE INFORMATION 3 ------------------------------------------------------ Annual Total Returns 3 Performance Table 6 FEE TABLE AND EXPENSE EXAMPLE 8 ------------------------------------------------------ Fee Table 8 Expense Example 8 FUND MANAGEMENT 9 ------------------------------------------------------ The Advisors 9 Advisor Compensation 9 Portfolio Managers 9 OTHER INFORMATION 10 ------------------------------------------------------ Dividends and Distributions 10 Suitability for Investors 10 Future Fund Closure 10 FINANCIAL HIGHLIGHTS 11 ------------------------------------------------------ SHAREHOLDER INFORMATION A-1 ------------------------------------------------------ Purchasing Shares A-1 Redeeming Shares A-2 Pricing of Shares A-2 Taxes A-2 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, AIM Investments, AIM Investments 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.
AIM AGGRESSIVE GROWTH FUND (AGGRESSIVE GROWTH)
The fund's investment objective is to achieve 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 primarily in common stocks of companies whose earnings the fund's portfolio managers expect to grow more than 15% per year. The fund will invest in securities of small- and medium-sized growth companies. The portfolio managers focus on companies they believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of these factors materially changes.
AIM BLUE CHIP FUND (BLUE CHIP)
The fund's primary investment objective is long-term growth of capital with a secondary objective of current income. The investment objectives of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objectives by investing, normally, at least 80% of its assets, in securities of blue chip companies. In complying with this 80% investment requirement, the fund may invest primarily in marketable equity securities, including convertible securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. The fund considers blue chip companies to be large and medium sized companies (i.e., companies which fall in the largest 85% of market capitalization of publicly traded companies listed in the United States) with leading market positions and which possess the following characteristics:
- MARKET CHARACTERISTICS--Companies that occupy (or in AIM's judgment have the potential to occupy) leading market positions that are expected to be maintained or enhanced over time. Strong market positions, particularly in growing industries, can give a company pricing flexibility as well as the potential for strong unit sales. These factors can, in turn, lead to higher earnings growth and greater share price appreciation. Market leaders can be identified within an industry as those companies that have (i) superior growth prospects compared with other companies in the same industry; (ii) possession of proprietary technology with the potential to bring about major changes within an industry; and/or (iii) leading sales within an industry, or the potential to become a market leader.
- FINANCIAL CHARACTERISTICS--Companies that possess at least one of the
following attributes (i) faster earnings growth than its competitors and the
market in general; (ii) higher profit margins relative to its competitors;
(iii) strong cash flow relative to its competitors; and/or (iv) a balance
sheet with relatively low debt and a high return on equity relative to its
competitors.
The portfolio managers consider whether to sell a particular security when they believe the issuer of the security no longer is a market leader, and/or it no longer has the characteristics described above. When the portfolio managers believe securities other than marketable equity securities offer the opportunity for long-term growth of capital and current income, the fund may invest in United States government securities and high-quality debt securities.
AIM CAPITAL DEVELOPMENT FUND (CAPITAL DEVELOPMENT)
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 primarily in securities, including common stocks, convertible securities and bonds, of small- and medium-sized companies. Among factors which the portfolio managers may consider when purchasing these securities are (1) the growth prospects for a company's products; (2) the economic outlook for its industry; (3) a company's new product development; (4) its operating management capabilities; (5) the relationship between the price of the security and its estimated fundamental value; (6) relevant market, economic and political environments; and (7) financial characteristics, such as balance sheet analysis and return on assets. The portfolio managers consider whether to sell a particular security when any one of these factors materially changes or when the securities are no longer considered medium-sized company securities.
AIM CHARTER FUND (CHARTER)
The fund's investment objective is 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 established companies that have long-term above-average growth in earnings and growth companies that the portfolio managers believe have the potential for above-average growth in earnings. In selecting investments, the portfolio managers seek to identify those companies that are, in their view, undervalued relative to current or projected earnings, or the current market value of assets owned by the company. The primary emphasis of the portfolio managers' search for undervalued equity securities is in four categories: (1) out-of-favor cyclical growth companies; (2) established growth companies that undervalued compared to historical relative valuation parameters; (3) companies where there is early but tangible evidence of improving prospects which are not yet reflected in the value of the companies' equity securities; and (4) companies whose equity securities are selling at prices that do not yet reflect the current market value of their assets. The portfolio managers consider whether to sell a particular security when any of these factors materially changes. For risk management or cash management purposes, the fund may 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. A larger position in cash or cash
equivalents could detract from achieving the fund's objective, but could also reduce the fund's exposure in the event of a market downturn.
AIM CONSTELLATION FUND (CONSTELLATION)
The fund's investment objective is 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 principally in common stocks of companies the portfolio managers believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when it no longer meets these criteria. The fund will invest without regard to market capitalization.
AIM WEINGARTEN FUND (WEINGARTEN)
The fund's investment objective is to provide growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund will invest primarily in common stocks of seasoned and better-capitalized companies. The portfolio managers focus on companies that have experienced above-average growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of these factors materially changes.
CAPITAL DEVELOPMENT, CHARTER, AND WEINGARTEN
Each fund may engage in active and frequent trading of portfolio securities to achieve its investment objectives. If a fund does trade in this way, it may incur increased transaction costs and brokerage commissions, both of 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.
ALL FUNDS
Each of Aggressive Growth, Blue Chip and Capital Development may invest up to 25% of its total assets in foreign securities. Each of Charter, Constellation and Weingarten may invest up to 20% of its total assets in foreign securities. Any percentage limitations with respect to assets of a fund are applied at the time of purchase. 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.
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. As a result, a fund may not achieve its investment objective.
ALL FUNDS
There is a risk that you could lose all or a portion of your investment in the funds. The value of your investment in a 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. Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
An investment in the funds is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
BLUE CHIP
The income you may receive from your investment in Blue Chip may vary.
AGGRESSIVE GROWTH, CAPITAL DEVELOPMENT AND CONSTELLATION
The fluctuation in the value of your investment is especially true with respect to equity securities of smaller companies, whose prices may go up and down more than equity securities of larger, more-established companies. Also, since equity securities of smaller 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 desirable price.
CHARTER
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.
To the extent the fund holds cash or cash equivalents rather than equity securities for risk management purposes, the fund may not achieve its investment objective.
The bar charts and tables shown below provide an indication of the risks of investing in each of the funds. A fund's past performance (before and after taxes) is not necessarily an indication of its future performance. The returns shown for Aggressive Growth, Blue Chip and Capital Development are those of each fund's Class A shares, which are not offered in this prospectus. Institutional Class shares would have higher annual returns because, although the shares are invested in the same portfolio of securities, Institutional Class shares have lower expenses. The Institutional Classes of Aggressive Growth, Blue Chip and Capital Development commenced operations on March 15, 2002.
The following bar charts show changes in the performance of Aggressive Growth's, Blue Chip's and Capital Development's Class A shares and Charter's, Constellation's and Weingarten's Institutional Class shares from year to year. The bar charts do not reflect sales loads for Class A shares. If they did, the annual total returns shown for Class A shares would be lower. Institutional Class shares are not subject to front-end or back-end sales loads.
AGGRESSIVE GROWTH--CLASS A
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1993................................................................... 32.03%
1994................................................................... 17.18%
1995................................................................... 41.51%
1996................................................................... 14.34%
1997................................................................... 12.24%
1998................................................................... 4.99%
1999................................................................... 44.98%
2000................................................................... 3.00%
2001................................................................... -26.00%
2002................................................................... -22.65%
|
BLUE CHIP--CLASS A
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1993................................................................... 4.61%
1994................................................................... 4.66%
1995................................................................... 32.00%
1996................................................................... 23.75%
1997................................................................... 31.91%
1998................................................................... 30.42%
1999................................................................... 25.65%
2000................................................................... -9.29%
2001................................................................... -22.91%
2002................................................................... -26.42%
|
CAPITAL DEVELOPMENT--CLASS A
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1997................................................................... 23.69%
1998................................................................... 4.53%
1999................................................................... 27.78%
2000................................................................... 9.82%
2001................................................................... -8.65%
2002................................................................... -21.71%
|
CHARTER--INSTITUTIONAL CLASS
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1993................................................................... 9.81%
1994................................................................... -3.84%
1995................................................................... 36.13%
1996................................................................... 20.29%
1997................................................................... 25.18%
1998................................................................... 27.40%
1999................................................................... 34.37%
2000................................................................... -14.37%
2001................................................................... -22.67%
2002................................................................... -15.81%
|
CONSTELLATION--INSTITUTIONAL CLASS
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1993................................................................... 17.65%
1994................................................................... 1.80%
1995................................................................... 36.16%
1996................................................................... 16.83%
1997................................................................... 13.45%
1998................................................................... 19.41%
1999................................................................... 45.07%
2000................................................................... -9.98%
2001................................................................... -23.22%
2002................................................................... -24.37%
|
WEINGARTEN--INSTITUTIONAL CLASS
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1993................................................................... 1.91%
1994................................................................... 0.13%
1995................................................................... 35.43%
1996................................................................... 18.24%
1997................................................................... 26.48%
1998................................................................... 33.58%
1999................................................................... 35.23%
2000................................................................... -19.98%
2001................................................................... -33.70%
2002................................................................... -31.10%
|
During the periods shown in the bar charts, the highest quarterly returns and the lowest quarterly returns were as follows:
HIGHEST QUARTERLY RETURN LOWEST QUARTERLY RETURN
FUND (QUARTER ENDED) (QUARTER ENDED)
--------------------------------------------------------------------------------
Aggressive Growth--Class A 31.35% (12/31/99) -24.66% (09/30/01)
Blue Chip--Class A 24.45% (12/31/98) -20.05% (03/31/01)
Capital Development--Class 30.92% (12/31/99) -21.26% (09/30/02)
A
Charter--Institutional 26.29% (12/31/98) -21.63% (09/30/01)
Class
Constellation-- 36.71% (12/31/99) -23.20% (09/30/01)
Institutional Class
Weingarten--Institutional 28.14% (03/31/01) -27.56% (03/31/01)
Class
--------------------------------------------------------------------------------
|
PERFORMANCE TABLE
The following performance table compares each fund's performance to that of a broad-based securities market index. Aggressive Growth's, Blue Chip's and Capital Development's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------------------------------------------------
(for the periods
ended December 31, SINCE INCEPTION
2002) 1 YEAR 5 YEARS 10 YEARS INCEPTION(1) DATE
------------------------------------------------------------------------------
Aggressive
Growth--Class A 05/01/84
Return Before
Taxes (26.90)% (3.24)% 9.07% --
Return After Taxes
on
Distributions (26.90) (4.49) 8.04 --
Return After Taxes
on
Distributions
and Sale of
Fund Shares (16.52) (1.96) 8.02 --
------------------------------------------------------------------------------
Russell
2500--Trademark--
Index(2) (17.80) 1.57 9.29 --
(reflects no
deduction for
fees, expenses,
or taxes)
------------------------------------------------------------------------------
Blue Chip--Class A 02/04/87
Return Before
Taxes (30.48)% (4.44)% 6.52% --
Return After Taxes
on
Distributions (30.48) (4.46) 5.50 --
Return After Taxes
on
Distributions
and Sale of
Fund Shares (18.72) (3.49) 5.00 --
------------------------------------------------------------------------------
Russell
1000--Registered
Trademark-- Index(4) (21.65) (0.58)% 9.19 --
(reflects no
deduction for
fees, expenses,
or taxes)
------------------------------------------------------------------------------
Capital
Development--Class
A 06/17/96
Return Before
Taxes (26.00)% (0.18)% N/A 5.55%
Return After Taxes
on
Distributions (26.00) (1.03) N/A 4.87
Return After Taxes
on
Distributions
and Sale of
Fund Shares (15.96) (0.29) N/A 4.44
------------------------------------------------------------------------------
Russell
2500--Trademark--
Index(2) (17.80) 1.57 N/A 5.90(3) 06/30/96(3)
(reflects no
deduction for
fees, expenses,
or taxes)
------------------------------------------------------------------------------
Charter--Institutional
Class
Return Before
Taxes (15.81)% (0.93)% 7.52% -- 07/30/91
Return After Taxes
on
Distributions (15.81) (1.82) 5.56 --
Return After Taxes
on
Distributions
and Sale of
Fund Shares (9.71) (0.66) 5.56 --
------------------------------------------------------------------------------
S&P 500(5) (22.09) (0.58) 9.34 --
(reflects no
deduction for
fees, expenses,
or taxes)
------------------------------------------------------------------------------
Constellation--Institutional
Class 04/08/92
Return Before
Taxes (24.37)% (1.96)% 6.95 --
Return After Taxes
on
Distributions (24.37) (3.14) 5.82 --
Return After Taxes
on
Distributions
and Sale of
Fund Shares (14.97) (0.94) 6.06 --
------------------------------------------------------------------------------
S&P 500(5) (22.09) (0.58) 9.34 --
(reflects no
deduction for
fees, expenses,
or taxes)
------------------------------------------------------------------------------
|
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------------------------------------------------
(for the periods
ended December 31, SINCE INCEPTION
2002) 1 YEAR 5 YEARS 10 YEARS INCEPTION(1) DATE
------------------------------------------------------------------------------
Weingarten--Institutional
Class 10/08/91
Return Before
Taxes (33.10)% (7.96)% 3.16% --
Return After Taxes
on
Distributions (33.10) (9.16) 0.76 --
Return After Taxes
on
Distributions
and Sale of
Fund Shares (19.10) (5.22) 2.55 --
------------------------------------------------------------------------------
S&P 500(5) (22.09) (0.58) 9.34 --
(reflects no
deduction for
fees, expenses,
or taxes)
------------------------------------------------------------------------------
|
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.
(1) Since Inception performance is only provided for a class with less than ten calendar years of performance.
(2) The Russell 2500--Trademark-- Index measures the performance of the 2,500 smallest companies in the Russell 3000--Registered Trademark-- Index, which represents approximately 17% of the total market capitalization of the Russell 3000--Registered Trademark-- Index. The Russell 3000--Registered Trademark-- Index measures the performance of the 3000 largest U.S. companies based on total market capitalization.
(3) The average annual total return given is since the date closest to the inception date of the class with the longest performance history.
(4) The Russell 1000--Registered Trademark-- Index is a widely recognized, unmanaged index of common stocks that measures the performance of the 1,000 largest companies in the Russell 3000--Registered Trademark-- Index.
(5) The Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold Institutional Class shares of the funds.
SHAREHOLDER FEES ----------------------------------------------------------------------------------------------------------------------------------- (fees paid directly from your investment) AGGRESSIVE GROWTH BLUE CHIP CAPITAL DEVELOPMENT CHARTER CONSTELLATION WEINGARTEN ----------------------------------------------------------------------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None None None None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None None None None None None ----------------------------------------------------------------------------------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(1) ----------------------------------------------------------------------------------------------------------------------------------- (expenses that are deducted from fund assets) AGGRESSIVE GROWTH BLUE CHIP CAPITAL DEVELOPMENT CHARTER CONSTELLATION WEINGARTEN ----------------------------------------------------------------------------------------------------------------------------------- Management Fees 0.63% 0.64% 0.66% 0.63% 0.63% 0.64% Distribution and/or Service (12b-1) Fees None None None None None None Other Expenses() 0.18 0.13 0.33 0.20 0.18 0.18 Total Annual Fund Operating Expenses(2,3) 0.81 0.77 0.99 0.83 0.81 0.82 ----------------------------------------------------------------------------------------------------------------------------------- |
(1) There is no guarantee that actual expenses will be the same as those shown in the table.
(2) The investment advisor has agreed to waive a portion of the management fee on assets in excess of $5 billion. Total Annual Fund Operating Expenses net of this agreement are 0.80% for Constellation. Termination of this agreement requires approval by the Board of Trustees.
(3) The investment advisor has agreed to reimburse class specific transfer agent fees to the extent necessary to limit transfer agent fees to 0.10% of average net assets of the fund. This agreement may be terminated or modified at any time. Total Annual Fund Operating Expenses net of this agreement are 0.84% for Capital Development and Charter, respectively.
You should also consider the effect of any account fees charged by the financial institution managing your account.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the funds with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in a 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
---------------------------------------------------------------------------------------------------------------------------------
Aggressive Growth $83 $259 $450 $1,002
Blue Chip 79 246 428 954
Capital Development 101 315 597 1,213
Charter 85 265 460 1,025
Constellation 83 259 450 1,002
Weingarten 84 262 455 1,014
---------------------------------------------------------------------------------------------------------------------------------
|
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as each fund's investment advisor. A I M Capital Management, Inc. (the subadvisor), a wholly owned subsidiary of the advisor, is each of Charter's, Constellation's and Weingarten's subadvisor and is responsible for its day-to-day management. Both the advisor and the subadvisor are located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisors supervise all aspects of the funds' operations and provide investment advisory services to the funds, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the funds.
The advisor has acted as an investment advisor since its organization in 1976, and the subadvisor has acted as an investment advisor since 1986. Today, the advisor, together with its subsidiaries, advises or manages over 190 investment portfolios, including the funds, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2002, the advisor received compensation from the funds at the following rates:
ANNUAL RATE
(AS A PERCENTAGE
OF AVERAGE DAILY
FUND NET ASSETS)
---- ----------------
Aggressive Growth 0.63%
Blue Chip 0.64%
Capital Development 0.66%
Charter 0.63%
Constellation 0.63%
Weingarten 0.64%
|
PORTFOLIO MANAGERS
The advisors use a team approach to investment management. The individual members of the team who are primarily responsible for the management of each fund's portfolio are
AGGRESSIVE GROWTH
- Robert M. Kippes (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 1992 and has been associated with the advisor and/or its affiliates since 1989.
- Ryan E. Crane, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1994.
- Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst for Prudential Securities.
They are assisted by the Mid Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
Effective May 1, 2003, Ryan E. Crane will be removed from, and the following portfolio manager will be added to, the members of the team who are primarily responsible for the management of the fund's portfolio:
- Karl Farmer, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1998. From 1992 to 1998, he worked as a pension actuary for William M. Mercer, Inc.
BLUE CHIP
- Monika H. Degan (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with the advisor and/or its affiliates since 1995.
- Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for the fund since 1996 and has been associated with the advisor and/or its affiliates since 1986.
They are assisted by the Large Cap Growth Europe/Canada Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
Effective May 1, 2003, Johnathan C. Schoolar will be removed from, and the following portfolio manager will be added to, the members of the team who are primarily responsible for the management of the fund's portfolio:
- Kirk L. Anderson, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/ or its affiliates since 1994.
CAPITAL DEVELOPMENT
- Paul J. Rasplicka (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1994.
- Michael Chapman, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2001. From 1999 to 2001, he was an equity analyst with Chase Manhattan Bank. During part of 1999, he was a securities analyst with Gulf Investment Management. From 1995 to 1999, he was a portfolio manager with US Global Investors, Inc.
- James Gassman, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2000. From 1998 to 2000, he was an equity analyst with Southwest Securities, Inc. Prior to 1998, he was a full time student.
They are assisted by the Small/Mid Cap Core Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
CHARTER
- Ronald S. Sloan (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1998. From 1993 to 1998, he was President of Verissimo Research & Management, Inc.
- Michael Yellen, Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1994.
They are assisted by the Mid/Large Cap Core Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
Effective May 1, 2003, Michael Yellen will be removed from, and the following portfolio manager will be added to, the members of the team who are primarily responsible for the management of the fund's portfolio:
- David W. Pointer, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999 he was a full-time student.
CONSTELLATION
- Kenneth A. Zschappel (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 1996 and has been associated with the advisor and/or its affiliates since 1990.
- Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1989.
They are assisted by the Multi Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
Effective May 1, 2003, Robert M. Kippes will be removed from, and the following portfolio managers will be added to, the members of the team who are primarily responsible for the management of the fund's portfolio:
- Christian A. Costanzo, Portfolio Manager, who has bee responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1995.
- Robert Lloyd, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 2000. From 1997 to 2000, he was a trader with American Electric Power.
WEINGARTEN
- Lanny H. Sachnowitz (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1987.
- Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1995.
They are assisted by the Large Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
Effective May 1, 2003, the following portfolio manager will be added to the members of the team who are primarily responsible for the management of the fund's portfolio:
- James G. Birdsall, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1997.
DIVIDENDS AND DISTRIBUTIONS
Each of the funds expects that its distributions, if any, will consist primarily of capital gains.
DIVIDENDS
The funds generally declare and pay dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The funds generally distribute long-term and short-term capital gains, if any, annually.
SUITABILITY FOR INVESTORS
The Institutional Classes of the funds are intended for use by institutional investors. Shares of the Institutional Classes of the funds 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 and 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). For defined contribution plans for which the sponsor has combined defined contribution and defined benefit assets of at least $100 million there is no minimum initial investment requirement, otherwise the minimum initial investment requirement for defined contribution plans is $10 million. There is no minimum initial investment requirement for defined benefit plans; and the minimum initial investment requirement for all other investors for which the Institutional Classes of funds are available is $1 million.
The Institutional Classes of funds are designed to be convenient and economical vehicles in which institutions can invest in a portfolio of equity securities. An investment in the funds may relieve the institution of many of the investment and administrative burdens encountered when investing in equity securities directly. These include: selection and diversification of portfolio investments; surveying the market for the best price at which to buy and sell; valuation of portfolio securities; receipt, delivery and safekeeping of securities; and portfolio recordkeeping.
FUTURE FUND CLOSURE (AGGRESSIVE GROWTH)
Due to the sometimes limited availability of common stocks of smaller companies that meet the investment criteria for the fund, the fund may periodically suspend or limit the offering of its shares.
During closed periods, the fund may impose different standards for additional investments.
The financial highlights tables are intended to help you understand each fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the tables represent the rate that an investor would have earned (or lost) on an investment in each fund (assuming reinvestment of all dividends and distributions).
The information for the fiscal year or period ended 2002 and for the fiscal year 2001 has been audited by Ernst & Young LLP, whose report, along with each fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by other public accountants.
AGGRESSIVE
GROWTH--INSTITUTIONAL
CLASS
--------------------
MARCH 15, 2002
(DATE SALES
COMMENCED)
TO OCTOBER 31, 2002
--------------------
Net asset value, beginning of period $ 9.53
----------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a)
----------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.19)
==================================================================================
Total from investment operations (2.21)
==================================================================================
Net asset value, end of period $ 7.32
__________________________________________________________________________________
==================================================================================
Total return(b) (23.19)%
__________________________________________________________________________________
==================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 138
__________________________________________________________________________________
==================================================================================
Ratio of expenses to average net assets 0.81%(c)
==================================================================================
Ratio of net investment income (loss) to average net assets (0.49)%(c)
__________________________________________________________________________________
==================================================================================
Portfolio turnover rate 68%
__________________________________________________________________________________
==================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $50,407.
BLUE CHIP--INSTITUTIONAL CLASS
------------------------------
MARCH 15, 2002
(DATE SALES COMMENCED) TO
OCTOBER 31, 2002
------------------------------
Net asset value, beginning of period $ 12.13
--------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.02(a)
--------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.89)
============================================================================================
Total from investment operations (2.87)
============================================================================================
Net asset value, end of period $ 9.26
============================================================================================
Total return(b) (23.66)%
============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 160
____________________________________________________________________________________________
============================================================================================
Ratio of expenses to average net assets 0.77%(c)
============================================================================================
Ratio of net investment income to average net assets 0.30%(c)
____________________________________________________________________________________________
============================================================================================
Portfolio turnover rate 28%
____________________________________________________________________________________________
============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles and is not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $57,632.
CAPITAL DEVELOPMENT--INSTITUTIONAL CLASS
----------------------------------------
MARCH 15, 2002
(DATE SALES COMMENCED)
TO OCTOBER 31, 2002
----------------------------------------
Net asset value, beginning of period $ 17.25
------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.02(a)
------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.43)
======================================================================================================
Total from investment operations (4.41)
======================================================================================================
Net asset value, end of period $ 12.84
______________________________________________________________________________________________________
======================================================================================================
Total return(b) (25.57)%
______________________________________________________________________________________________________
======================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 7
______________________________________________________________________________________________________
======================================================================================================
Ratio of expenses to average net assets
With fee waivers and expenses reimbursed 0.84%(c)
------------------------------------------------------------------------------------------------------
Without fee waivers and expenses reimbursed 0.99%(c)
======================================================================================================
Ratio of net investment income (loss) to average net assets 0.25%(c)
______________________________________________________________________________________________________
======================================================================================================
Portfolio turnover rate 120%
______________________________________________________________________________________________________
======================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $8,687.
CHARTER--INSTITUTIONAL CLASS
------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------
2002 2001 2000 1999 1998
------- ------ ------- ------- -------
Net asset value, beginning of period $ 10.67 $18.33 $ 17.33 $ 13.42 $ 13.48
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.06(a) 0.04 0.52 0.09 0.18
--------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.93) (6.82) 1.83 4.43 1.24
================================================================================================================================
Total from investment operations (0.87) (6.78) 2.35 4.52 1.42
================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.07) (0.14)
--------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.88) (1.35) (0.54) (1.34)
================================================================================================================================
Total distributions -- (0.88) (1.35) (0.61) (1.48)
================================================================================================================================
Net asset value, end of period $ 9.80 $10.67 $ 18.33 $ 17.33 $ 13.42
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(b) (8.15)% (38.46)% 14.02% 34.61% 11.69%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,457 $1,648 $ 3,234 $66,801 $43,815
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursement 0.79%(c) 0.68% 0.66% 0.65% 0.66%
--------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursement 0.83%(c) 0.69% 0.68% 0.67% 0.67%
================================================================================================================================
Ratio of net investment income to average net assets 0.52%(a)(c) 0.25% 0.20% 0.51% 1.37%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate 103% 78% 80% 107% 154%
________________________________________________________________________________________________________________________________
================================================================================================================================
|
(a) As required, effective November 1, 2001, the Fund 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 and the ratio of net investment income to average net assets would have remained the same. In accordance with the AICPA Audit and Accounting Guide for Investment Companies, per share and ratios prior to November 1, 2001 have not been restated to reflect this change in presentation.
(b)Includes adjustments in accordance with generally accepted accounting principles.
(c)Ratios are based on average daily net assets of $1,665,295.
CONSTELLATION--INSTITUTIONAL CLASS
--------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------------
2002 2001 2000 1999 1998
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 21.00 $ 45.55 $ 36.01 $ 27.25 $ 30.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) 0.01 (0.09) (0.01) --
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.54) (17.14) 12.91 9.50 (0.65)
=================================================================================================================================
Total from investment operations (2.60) (17.13) 12.82 9.49 (0.65)
=================================================================================================================================
Less distributions from net realized gains -- (7.42) (3.28) (0.73) (2.10)
=================================================================================================================================
Net asset value, end of period $ 18.40 $ 21.00 $ 45.55 $ 36.01 $ 27.25
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (12.38)% (42.80)% 37.14% 35.46% (1.85)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $122,746 $150,609 $288,097 $244,369 $189,039
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 0.80%(c) 0.65% 0.65% 0.64% 0.63%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 0.81%(c) 0.68% 0.68% 0.66% 0.65%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.28)%(c) 0.03% (0.18)% (0.04)% (0.01)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 57% 75% 88% 62% 76%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b)Includes adjustments in accordance with generally accepted accounting principles.
(c)Ratios are based on average daily net assets of $145,946,095.
WEINGARTEN--INSTITUTIONAL CLASS
---------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------
2002 2001(a) 2000 1999 1998
------- -------- ------- -------- -------
Net asset value, beginning of period $ 13.16 $ 29.00 $ 28.96 $ 22.18 $ 23.05
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a) (0.01) (0.06)(a) 0.02 0.10
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.24) (12.29) 3.29 8.32 2.43
=================================================================================================================================
Total from investment operations (3.25) (12.30) 3.23 8.34 2.53
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.10) --
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (3.54) (3.19) (1.46) (3.40)
=================================================================================================================================
Total distributions -- (3.54) (3.19) (1.56) (3.40)
=================================================================================================================================
Net asset value, end of period $ 9.91 $ 13.16 $ 29.00 $ 28.96 $ 22.18
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (24.70)% (47.11)% 11.07% 39.20% 12.79%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,883 $ 7,667 $18,634 $114,076 $72,884
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 0.82%(c) 0.69% 0.64% 0.63% 0.62%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 0.82%(c) 0.70% 0.68% 0.68% 0.67%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.12)%(c) (0.04)% (0.04)% 0.02% 0.49%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 217% 240% 145% 124% 125%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Includes adjustments in accordance with generally accepted accounting principles.
(c)Ratios are based on average daily net assets of $2,341,287.
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 Institutional Classes of the AIM Funds.
SHARES SOLD WITHOUT SALES CHARGES
You will not pay an initial or contingent deferred sales charge on purchases of any Institutional Class of shares.
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund Institutional Class accounts are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
----------------------------------------------------------------------------------------
Defined Benefit Plans or Platform Sponsors for Defined
Contribution Plans $ 0 no minimum
Banks acting in a fiduciary or similar capacity, Collective
and Common Trust Funds, Banks and Broker-Dealers acting for
their own account or Foundations and Endowments 1 million no minimum
Defined Contribution Plans (Corporate, Non-profit or
Governmental) 10 million no minimum
----------------------------------------------------------------------------------------
|
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.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
-------------------------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
The financial consultant should mail
your completed account application to
the transfer agent,
A I M Fund Services, Inc.,
P.O. Box 4497,
Houston, TX 77210-4497.
The financial consultant should call
the transfer agent at (800) 659-1005 to
receive a reference number.
Then, use the following wire
instructions:
Beneficiary Bank
ABA/Routing #: 113000609
Beneficiary Account Number: 00100366732
Beneficiary Account Name: A I M Fund
Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By Telephone Open your account as described above. Call the transfer agent at (800)
659-1005 and wire payment for your
purchase order in accordance with the
wire instructions noted above.
-------------------------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in the same AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund.
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.
Through a Financial Consultant Contact your financial consultant.
Redemption proceeds will be sent in accordance with the wire
instructions specified in the account application provided
to the transfer agent. The transfer agent must receive your
financial intermediary's call before the close of the
customary trading session of the New York Stock Exchange
(NYSE) on days the NYSE is open for business in order to
effect the redemption at the day's closing price.
By Telephone A person who has been authorized in the account application
to effect transactions may make redemptions by telephone.
You must call the transfer agent before the close of the
customary trading session of the NYSE on days the NYSE is
open for business in order to effect the redemption at that
day's closing price.
|
TIMING AND METHOD OF PAYMENT
We normally will send out redemption proceeds within one business day, and in any event no more than seven days, after we accept your request to redeem.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will transmit the amount of the redemption
proceeds 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.
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 Fund's short-term investments are valued at amortized cost when the security has 60 days or less to maturity.
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 may 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.
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.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
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 funds 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 each fund's investments. Each 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 these funds, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of a fund's current SAI or annual or semiannual reports, please contact us
--------------------------------------------------------
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4497
Houston, TX 77001-4497
BY TELEPHONE: (800) 451-4246
ON THE INTERNET: You can send us a request
by e-mail or download
prospectuses, annual or
semiannual reports via
our website:
http://www.aiminvestments.com
--------------------------------------------------------
|
You also can review and obtain copies of a 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.
AIMinvestments.com EQ-PRO-1
STATEMENT OF
ADDITIONAL INFORMATION
AIM EQUITY FUNDS
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
THIS STATEMENT OF ADDITIONAL INFORMATION RELATES TO THE INSTITUTIONAL CLASS SHARES OF EACH PORTFOLIO (EACH A "FUND", COLLECTIVELY THE "FUNDS") OF AIM EQUITY FUNDS LISTED BELOW. THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND IT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INSTITUTIONAL CLASS SHARES OF THE FUNDS LISTED BELOW. YOU MAY OBTAIN A COPY OF THE PROSPECTUS FOR THE FUNDS LISTED BELOW FROM AN AUTHORIZED DEALER OR BY WRITING TO:
A I M FUND SERVICES, INC.
P.O. BOX 0843
HOUSTON, TEXAS 77001-0843
OR BY CALLING (800) 659-1005
THIS STATEMENT OF ADDITIONAL INFORMATION, DATED MARCH 3, 2003, RELATES TO THE
FOLLOWING PROSPECTUS FOR THE PORTFOLIOS NAMED BELOW:
FUND DATED
-------- ---------
AIM AGGRESSIVE GROWTH FUND - INSTITUTIONAL CLASS MARCH 3, 2003
AIM BLUE CHIP FUND - INSTITUTIONAL CLASS MARCH 3, 2003
AIM CAPITAL DEVELOPMENT FUND - INSTITUTIONAL CLASS MARCH 3, 2003
AIM CHARTER FUND - INSTITUTIONAL CLASS MARCH 3, 2003
AIM CONSTELLATION FUND - INSTITUTIONAL CLASS MARCH 3, 2003
AIM WEINGARTEN FUND - INSTITUTIONAL CLASS MARCH 3, 2003
|
AIM EQUITY FUNDS
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..............................................................................10
Investment Techniques..........................................................................10
Derivatives....................................................................................14
Additional Securities or Investment Techniques.................................................21
Fund Policies...........................................................................................21
Temporary Defensive Positions...........................................................................23
MANAGEMENT OF THE TRUST..........................................................................................23
Board of Trustees.......................................................................................23
Management Information..................................................................................24
Trustee Ownership of Fund Shares...............................................................25
Factors Considered in Approving the Investment Advisory Agreement..............................25
Compensation............................................................................................26
Retirement Plan For Trustees...................................................................26
Deferred Compensation Agreements...............................................................26
Purchases of Class A Shares of the Funds at Net Asset Value....................................27
Codes of Ethics.........................................................................................27
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES..............................................................27
INVESTMENT ADVISORY AND OTHER SERVICES...........................................................................27
Investment Advisor......................................................................................27
Investment Sub-Advisor..................................................................................29
Service Agreements......................................................................................29
Other Service Providers.................................................................................30
BROKERAGE ALLOCATION AND OTHER PRACTICES.........................................................................30
Brokerage Transactions..................................................................................30
Commissions.............................................................................................31
Brokerage Selection.....................................................................................31
Directed Brokerage (Research Services)..................................................................32
Regular Brokers or Dealers..............................................................................32
Allocation of Portfolio Transactions....................................................................32
Allocation of Initial Public Offering ("IPO") Transactions..............................................33
PURCHASE, REDEMPTION AND PRICING OF SHARES.......................................................................33
Purchase and Redemption of Shares.......................................................................33
Redemptions by the Funds................................................................................34
Offering Price..........................................................................................34
Redemption In Kind......................................................................................35
Backup Withholding......................................................................................35
|
PAGE
------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................36
Dividends and Distributions.............................................................................36
Tax Matters.............................................................................................37
DISTRIBUTION OF SECURITIES.......................................................................................43
Distributor.............................................................................................43
CALCULATION OF PERFORMANCE DATA..................................................................................44
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 AND
REGULAR BROKERS OR DEALERS......................................................................................H-1
PERFORMANCE DATA................................................................................................I-1
FINANCIAL STATEMENTS.............................................................................................FS
|
GENERAL INFORMATION ABOUT THE TRUST
FUND HISTORY
AIM Equity Funds (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 fifteen separate portfolios: AIM Aggressive Growth Fund, AIM Basic Value II Fund (which is not currently offered to the public), AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Core Strategies Fund (which is not currently offered to the public), AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Core Equity Fund, AIM Large Cap Growth Fund, AIM Mid Cap Growth Fund, AIM U.S. Growth Fund (which is not currently offered to the public) and AIM Weingarten Fund, (each a "Fund" and collectively, the "Funds"). Under an 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 May 19, 1988 as a Maryland corporation. The Trust reorganized as a Delaware business trust on June 21, 2000. The following Funds were included in the reorganization: AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Growth Fund, AIM Mid Cap Growth Fund and AIM Weingarten Fund. All historical and other information contained in this Statement of Additional Information for periods prior to June 21, 2000 relating to the Funds (or a class thereof) is that of the predecessor funds (or the corresponding class thereof). AIM Basic Value II Fund, AIM U.S. Growth Fund, AIM Core Strategies Fund and AIM Large Cap Core Equity Fund commenced operations as series of the Trust.
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 of
AIM Basic Value II Fund, AIM Core Strategies Fund, AIM Dent Demographic Trends
Fund, AIM Emerging Growth Fund, AIM Large Cap Core Equity Fund and AIM U.S.
Growth Fund offers three separate classes of shares: Class A, Class B and Class
C shares. Each of AIM Large Cap Basic Value Fund, AIM Large Cap Growth Fund and
AIM Mid Cap Growth Fund offers four separate classes of shares: Class A shares,
Class B shares, Class C shares and Class R shares. Each of AIM Aggressive Growth
Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM
Constellation Fund and AIM Weingarten Fund offers five classes of shares: Class
A. Class B, Class C, Class R and Institutional Class shares. This Statement of
Additional Information relates solely to the Institutional Classes of these six
Funds. 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 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.
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.
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS
CLASSIFICATION
The Trust is an open-end management investment company. Each of the Funds 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 EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------------------------------------------------------
FUND AIM AGGRESSIVE AIM BLUE CHIP AIM CAPITAL AIM CHARTER AIM CONSTELLATION AIM WEINGARTEN
GROWTH FUND FUND DEVELOPMENT FUND FUND FUND FUND
SECURITY/
INVESTMENT
TECHNIQUE
--------------------------------------------------------------------------------------------------------------------------------
EQUITY INVESTMENT
--------------------------------------------------------------------------------------------------------------------------------
Common Stock X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Preferred Stock X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Convertible Securities X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Alternative Entity X X X X X X
Securities
--------------------------------------------------------------------------------------------------------------------------------
FOREIGN INVESTMENTS
--------------------------------------------------------------------------------------------------------------------------------
Foreign Securities X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Foreign Government X X X X X X
Obligations
--------------------------------------------------------------------------------------------------------------------------------
Foreign Exchange X X X X X X
Transactions
--------------------------------------------------------------------------------------------------------------------------------
DEBT INVESTMENTS FOR EQUITY FUNDS
--------------------------------------------------------------------------------------------------------------------------------
U.S. Government X X X X X X
Obligations
--------------------------------------------------------------------------------------------------------------------------------
Liquid Assets X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Investment Grade
Corporate Debt X X X X X X
Obligations
--------------------------------------------------------------------------------------------------------------------------------
Junk Bonds
--------------------------------------------------------------------------------------------------------------------------------
OTHER INVESTMENTS
--------------------------------------------------------------------------------------------------------------------------------
REITs X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Other Investment X X X X X X
Companies
--------------------------------------------------------------------------------------------------------------------------------
Defaulted Securities
--------------------------------------------------------------------------------------------------------------------------------
Municipal Forward
Contracts
--------------------------------------------------------------------------------------------------------------------------------
Variable or Floating
Rate Instruments
--------------------------------------------------------------------------------------------------------------------------------
|
AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------------------------------------------------------
FUND AIM AGGRESSIVE AIM BLUE CHIP AIM CAPITAL AIM CHARTER AIM CONSTELLATION AIM WEINGARTEN
GROWTH FUND FUND DEVELOPMENT FUND FUND FUND FUND
SECURITY/
INVESTMENT
TECHNIQUE
--------------------------------------------------------------------------------------------------------------------------------
Indexed Securities
--------------------------------------------------------------------------------------------------------------------------------
Zero-Coupon and
Pay-in-Kind Securities
--------------------------------------------------------------------------------------------------------------------------------
Synthetic Municipal
Instruments
--------------------------------------------------------------------------------------------------------------------------------
INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------------------------------------------------------
Delayed Delivery X X X X X X
Transactions
--------------------------------------------------------------------------------------------------------------------------------
When-Issued Securities X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Short Sales X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Margin Transactions
--------------------------------------------------------------------------------------------------------------------------------
Swap Agreements X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Interfund Loans X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Borrowing X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Lending Portfolio X X X X X X
Securities
--------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Reverse Repurchase X
Agreements
--------------------------------------------------------------------------------------------------------------------------------
Dollar Rolls
--------------------------------------------------------------------------------------------------------------------------------
Illiquid Securities X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Rule 144A Securities X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Unseasoned Issuers X
--------------------------------------------------------------------------------------------------------------------------------
Sale of Money Market
Securities
--------------------------------------------------------------------------------------------------------------------------------
Standby Commitments
--------------------------------------------------------------------------------------------------------------------------------
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AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------------------------------------------------------
FUND AIM AGGRESSIVE AIM BLUE CHIP AIM CAPITAL AIM CHARTER AIM CONSTELLATION AIM WEINGARTEN
GROWTH FUND FUND DEVELOPMENT FUND FUND FUND FUND
SECURITY/
INVESTMENT
TECHNIQUE
--------------------------------------------------------------------------------------------------------------------------------
DERIVATIVES
--------------------------------------------------------------------------------------------------------------------------------
Equity-Linked X X X X X X
Derivatives
--------------------------------------------------------------------------------------------------------------------------------
Put Options X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Call Options X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Straddles X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Warrants X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
Futures Contracts and X X X X X X
Options on Futures
Contracts
--------------------------------------------------------------------------------------------------------------------------------
Forward Currency X X X X X X
Contracts
--------------------------------------------------------------------------------------------------------------------------------
Cover X X X X X X
--------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL SECURITIES OR INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------------------------------------------------------
Special Situations 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. AIM Blue Chip Fund does not intend to invest more than 10% of its total assets in convertible securities.
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 in foreign securities, except that each of AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund may invest up to 20% of its total assets 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 on January 1, 2002.
Risks of Developing Countries. Each Fund may invest up to 5% of its 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 area 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 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.
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).
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. AIM Blue Chip Fund will not invest in non-convertible corporate debt securities rated below investment grade by Standard and Poor's Ratings Services ("S&P") and Moody's Investors Service ("Moody's") or in unrated non-convertible corporate debt securities believed by the Funds' investment advisor to be below investment grade quality.
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 basis 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 leverage technique except for AIM Constellation Fund.
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, a 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 a 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 may invest their cash balances in joint accounts with other AIM Funds 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.
AIM Charter Fund may enter into repurchase agreements (at any time up to 50% of its total net assets), using only U.S. Government securities, for the sole purpose of increasing its yield on idle cash.
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.
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 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 using 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. A Fund may only write a call option on a security if it 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 subject to the call option. 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.
A Fund may write a put option without owning the underlying security if it covers the option as described in the section "Cover." A Fund may only write a put option on a security as part of an
investment strategy and not for speculative purposes. 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 a 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. The Fund is not required to own the underlying security in order to purchase a call option, and may only cover this transaction with cash, liquid assets and/or short-term debt securities. 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 only 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 currently may not invest in any security (including futures contracts or options thereon) that is secured by physical commodities.
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. The Funds currently may not invest in any security (including futures contracts or options thereon) that is secured by physical commodities.
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 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 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 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 contracts varies with factors such as the currencies involved, the length of the contract period and the market conditions then prevailing. Because forward contracts are usually entered into on a principal basis, no fees or commissions are involved. The use of forward 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 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 contracts may require that Fund to set aside assets to reduce the risks associated with using forward 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, in addition to complying with all the restrictions noted in the disclosure above, it owns either (1) an offsetting ("covered") position in securities, currencies, or other options, forward 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 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 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.
Additional Securities or Investment Techniques
SPECIAL SITUATIONS. AIM Constellation Fund may invest in "special situations." A special situation arises when, in the opinion of the Fund's management, the securities of a particular company will, within a reasonably estimated period of time, be accorded market recognition at an appreciated value solely by reason of a development applicable to that company, and regardless of general business conditions or movements of the market as a whole. Developments creating special situations might include, among others: liquidations, reorganizations, recapitalizations, mergers, material litigation, technical breakthroughs, and new management or management policies. Although large and well-known companies may be involved, special situations more often involve comparatively small or unseasoned companies. Investments in unseasoned companies and special situations often involve much greater risk than in ordinary investment securities.
FUND POLICIES
FUNDAMENTAL RESTRICTIONS. Each Fund is subject to the following investment restrictions, which may be changed only by a vote of a majority of such Fund's outstanding shares. 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) 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.
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 AIM and certain Funds' sub-advisors 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. 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. Other than AIM Constellation 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. AIM Constellation Fund may not purchase additional securities when any borrowings from an AIM Advised Fund are outstanding. Each other 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.
(6) Notwithstanding the fundamental restriction with regard to engaging in transactions involving futures contracts and options thereon or investing in securities that are secured by physical commodities, the Fund currently may not invest in any security (including futures contracts or options thereon) that is secured by physical commodities.
ADDITIONAL NON-FUNDAMENTAL POLICIES. As non-fundamental policies:
(1) AIM Blue Chip Fund normally invests at least 80% of its assets in securities of blue chip 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.
(2) The amount AIM Constellation Fund may borrow will also be limited by the applicable margin limitations imposed by the Federal Reserve Board. If at any time the value of AIM Constellation Fund's assets should fail to meet the 300% asset coverage requirement, the Fund will, within three days, reduce its borrowings to the extent necessary. AIM Constellation Fund may be required to eliminate partially or totally its outstanding borrowings at times when it may not be desirable for it to do so. Any investment gains made by AIM Constellation Fund with the borrowed monies in excess of interest paid by the Fund will cause the net asset value of AIM Constellation Fund's shares to rise faster than would otherwise be the case. On the other hand, if the investment performance of the additional securities purchased with the proceeds of such borrowings fails to cover the interest paid on the money borrowed by AIM Constellation Fund, the net asset value of AIM Constellation Fund will decrease faster than would otherwise be the case. This speculative factor is known as "leveraging."
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 obligations. Each of the Funds may also invest up to 25% of its total assets in Affiliated Money Market Funds for these purposes.
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, their principal occupations during 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 Miss Ruth H. Quigley. The Audit Committee is responsible for: (i) the appointment, compensation and oversight of any independent auditors employed by each Fund (including resolution of disagreements between Fund management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; (ii) overseeing the financial reporting process of each Fund; (iii) monitoring the process and the resulting financial statements prepared by Fund management to promote accuracy of financial reporting and asset valuation; and (iv) preapproving permissible non-audit services that are provided to each Fund by its independent auditors. During the fiscal year ended October 31, 2002, the Audit Committee held six 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 October 31, 2002, the Investment Committee held four 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 October
31, 2002, the Valuation Committee held one meeting.
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) nominating persons who are not interested persons of the
Fund for election or appointment: (a) as additions to the Board, (b) to fill
vacancies which, from time to time, may occur in the Board and (c) for election
by shareholders of the Fund at meetings called for the election of trustees;
(ii) nominating persons who are not interested persons of the Fund for selection
as, members of each committee of the Board, including without limitation, the
Audit Committee, the Committee on Directors/Trustees, the Investments Committee
and the Valuation Committee, and to nominate persons for selection as chair and
vice chair of each such committee; (iii) reviewing from time to time the
compensation payable to the independent trustees and making recommendations to
the Board regarding compensation; (iv) reviewing and evaluating from time to
time the functioning of the Board and the various committees of the Board; (v)
selecting independent legal counsel to the independent trustees and approving
the compensation paid to independent legal counsel; and (vi) approving the
compensation paid to independent counsel and other advisers, if any, to the
Audit Committee of the Fund. During the fiscal year ended October 31, 2002, the
Committee on Directors/Trustees held five 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 by the Funds' 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 their 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 the 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 is not affiliated with AIM during the year ended December 31, 2002 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.
Purchases 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 and A I M Capital Management, Inc. (the "Sub-Advisor") 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 190 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. The Master Investment Advisory Agreement provides that, in fulfilling its responsibilities, AIM may engage the services of other investment managers with respect to one or more of the Funds. The investment advisory services of AIM and the investment sub-advisory services of the sub-advisor(s) to the Funds are not exclusive and AIM and the sub-advisor(s) are free to render investment advisory services to others, including other investment companies.
AIM is also responsible for furnishing to the Funds, at AIM's expense, the services of persons believes 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 trustees 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
------------------------------------------------------------ ------------------------------------ --------------------
AIM Aggressive Growth Fund First $150 million 0.80%
Amount over $150 million 0.625%
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AIM Blue Chip Fund* First $350 million 0.75%
Amount over $350 million 0.625%
------------------------------------------------------------ ------------------------------------ --------------------
AIM Capital Development Fund First $350 million 0.75%
Amount over $350 million 0.625%
------------------------------------------------------------ ------------------------------------ --------------------
AIM Charter Fund* First $30 million 1.00%
AIM Constellation Fund* Next $120 million 0.75%
Amount over $150 million 0.625%
------------------------------------------------------------ ------------------------------------ --------------------
AIM Weingarten Fund* First $30 million 1.00%
Next $320 million 0.75%
Amount over $350 million 0.625%
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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 Aggressive Growth Fund, AIM Blue Chip Fund, AIM Charter Fund, AIM Constellation Fund and AIM Weingarten 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 "Investment Strategies and Risks - Other Investments - Other Investment Companies."
INVESTMENT SUB-ADVISOR
AIM has entered into a Master Sub-Advisory Contract with A I M Capital Management, Inc. ("AIM Capital") to provide investment sub-advisory services to AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund. AIM Capital is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). AIM Capital is a wholly owned subsidiary of AIM.
For the services to be rendered by AIM Capital under its Master Sub-Advisory Contract, AIM will pay to AIM Capital a fee which will be computed daily and paid as of the last day of each month on the basis of each Fund's daily net asset value, using for each daily calculation the most recently determined net asset value of the Fund. (See "Computation of Net Asset Value.") On an annual basis, the sub-advisory fee is equal to 0.50% of AIM's compensation of the sub-advised assets per year, for each of the AIM Charter Fund, AIM Constellation Fund and AIM Weingarten 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 October 31 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 October 31 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.
It is anticipated that most investors will perform their own subaccounting.
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 Ernst & Young LLP, 1401 McKinney, Suite 1200, Houston, Texas 77010, 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
The Sub-Advisor has adopted compliance procedures that cover, among other items, brokerage allocation and other trading practices. Unless specifically noted, the Sub-Advisor's procedures do not materially differ from AIM's procedures as set forth below.
BROKERAGE TRANSACTIONS
AIM and/or the Sub-Advisor 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 to the broker-dealer, including electronic communication networks.
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 October 31, 2001 are found in Appendix G.
COMMISSIONS
During the last three fiscal years ended October 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, 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 October 31, 2002 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 October 31, 2002 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
Before the initial purchase of shares, an investor must submit a completed account application to his financial intermediary, who should forward the application to A I M Fund Services, Inc. at P.O. Box 4497, Houston, Texas 77210-4497. An investor may change information in his account application by submitting written changes or a new account application to his intermediary or to AFS.
Purchase and redemption orders must be received in good order. To be in good order, the financial intermediary must give AFS all required information and documentation with respect to the
investor. If the intermediary fails to deliver the investor's payment on the required settlement date, the intermediary must reimburse the Fund for any overdraft charges incurred.
A financial intermediary may submit a written request to AFS for correction of transactions involving Fund shares. If AFS agrees to correct a transaction, and the correction requires a dividend adjustment, the intermediary must agree in writing to reimburse the Fund for any resulting loss.
An investor may terminate his relationship with an intermediary and become the shareholder of record on his account. However, until the investor establishes a relationship with an intermediary, the investor will not be able to purchase additional shares of the Fund, except through the reinvestment of distributions.
Payment for redeemed shares is normally made by Federal Reserve wire to the bank account designated in the investor's account application, but may be sent by check at the investor's request. By providing written notice to his financial intermediary or to AFS, an investor may change the bank account designated to receive redemption proceeds. AFS may request additional documentation.
AFS may request that an intermediary maintain separate master accounts in the Fund for shares held by the intermediary (a) for its own account, for the account of other institutions and for accounts for which the intermediary acts as a fiduciary; and (b) for accounts for which the intermediary acts in some other capacity. An intermediary may aggregate its master accounts and subaccounts to satisfy the minimum investment requirement.
Only platform sponsors that have entered into a defined contribution plans agreement with AIM Distributors may purchase Institutional Class shares.
REDEMPTIONS BY THE FUNDS
If the Funds determine that you have provided incorrect information in opening an account or in the course of conducting subsequent transactions, the Funds may, at their discretion, redeem the account and distribute the proceeds to you.
Additional information regarding purchases and redemptions is located in the Funds' prospectus, under the headings "Purchasing Shares" and "Redeeming Shares."
OFFERING PRICE
Shares of the Institutional Class of a Fund are sold at net asset value.
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 price, 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 a 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 each Fund to declare and pay annually net investment income dividends and capital gain distributions.
It is each 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.
Distributions paid by a fund, other than daily dividends, have 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.
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 qualifications 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 gain 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, gain 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, gain from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies (the "Income Requirement"). Under certain circumstances, a Fund may
be required to sell portfolio holdings to meet this 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 a 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 on disposition.
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.
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. 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 of dividends from income and capital gain dividends 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
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.
The Trust (on behalf of the Institutional Classes) or AIM Distributors may terminate the Distribution Agreement on sixty (60) days' written notice without penalty. The Distribution Agreement will terminate automatically in the event of its assignment.
AIM Distributors may, from time to time at its expense, pay a bonus or other consideration or incentive to dealers or banks. 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 Funds 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 Fund's shares or the amount that any particular Fund will receive as proceeds from such sales. Dealers may not use sales of the Funds' shares to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any state.
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; and
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 Institutional Class shares, for the one, five and ten year periods (or since inception if less than ten years) ended October 31 are found in Appendix I.
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.
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; and
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;
and
ERV = ending redeemable value of a hypothetical $1,000 payment
at the end of the stated period.
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The cumulative total return for each Fund, with respect to its Institutional Class shares, for the one, five and ten year periods (or since inception if less than ten years) ended October 31 are found in Appendix I.
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 the
D 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) Institutional Class shares does not reflect a deduction of any sales charges
since that class is sold and redeemed at net asset value and (2) Class A shares
reflects the deduction of a Fund's maximum front-end sales charge at the time of
purchase.
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 Institutional Class or Class A shares, if applicable, for the one, five and ten year periods (or since inception if applicable) ended October 31 are found in the Funds' prospectus.
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 the
DR 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) Institutional Class shares does not reflect a deduction of
any sales charges since that class is sold and redeemed at net asset value and
(2) Class A shares reflects the deduction of a Fund's maximum front-end sales
charge at the time of purchase.
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 Institutional Class or Class A shares, if applicable, for the one, five and ten year periods (or since inception if applicable) ended October 31, 2001 are found in the Funds' prospectus.
Performance Information
All advertisements for the Funds' Class A, B and C shares will disclose the maximum sales charge (including deferred sales charges) imposed on purchases of a Fund's shares. If any advertised performance data for such classes 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 IPO market in some market cycles. Because of these Funds' small asset bases, any investment the Funds may make in IPOs may significantly affect these Funds' total returns. As the Funds' assets grow, the impact of IPO investments will decline, which may reduce the effect of IPO investments on 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 Mid-Cap Growth Fund Index Russell 3000 --Registered Trademark-- Index Lipper Large Cap Value Fund Index Russell Mid Cap Index Russell 1000 Index Standard & Poor's 500 Stock Index Russell 2500 --Registered Trademark-- Index Standard & Poor's Mid Cap 400 Index Russell 1000 Growth Index NASDAQ Index Russell 2500 --Registered Trademark-- Growth 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.
From time to time, AIM Dent Demographic Trends Fund's sales literature and/or advertisements may quote (i) Harry S. Dent, Jr.'s theories on why the coming decade may offer unprecedented opportunities for investors, including his opinions on the stock market outlook and where growth may be strongest; (ii) Harry S. Dent, Jr.'s opinions and theories from his books and publications, including, but not limited to, Job Shock, The Great Boom Ahead and The Roaring 2000s, including his beliefs that (a) people's spending patterns may help predict the stock market, (b) the stock market has tended to perform best when a generation has reached its peak spending years from ages 45-50, and (c) as more and more baby boomers reach their peak spending age, they could propel stock prices up for the next decade; and (iii) Harry S. Dent, Jr.'s S-curve analysis, a forecasting tool used to analyze products that show remarkable growth.
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 1 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 January 1, 2003
The address of each trustee and officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 89 portfolios in the AIM Funds complex. Column two below includes length of time served with predecessor entities, if any.
NAME, YEAR OF BIRTH AND TRUSTEE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS OTHER
POSITION(S) HELD WITH THE TRUST AND/OR DIRECTORSHIP(S)
OFFICER HELD BY TRUSTEE
SINCE
-------------------------------- ----------- -------------------------------------------------- ---------------------
INTERESTED PERSONS
---------------------------------------------------------------------------------------------------------------------
Robert H. Graham(1) -- 1946 1988 Director and Chairman, A I M Management Group None
Trustee, Chairman and President Inc. (financial services holding company); and
Director and Vice Chairman, AMVESCAP PLC (parent
of AIM and a global investment management firm);
formerly, President and Chief Executive Officer,
A I M Management Group Inc.; Director, Chairman
and President, A I M Advisors, Inc. (registered
investment advisor); Director and Chairman,
A I M Capital Management, Inc. (registered
investment advisor), A I M Distributors, Inc.
(registered broker dealer), A I M Fund Services,
Inc. (registered transfer agent), and Fund
Management Company (registered broker dealer)
-------------------------------- ----------- -------------------------------------------------- ---------------------
Mark H. Williamson(2) -- 1951 2003 Director, President and Chief Executive Officer, Director, Chairman,
Trustee A I M Management Group Inc. (financial services President and Chief
holding company); Director, Chairman and Executive Officer,
President, A I M Advisors, Inc. (registered INVESCO Bond Funds,
investment advisor); Director, A I M Capital Inc., INVESCO
Management, Inc. (registered investment advisor) Combination Stock &
and A I M Distributors, Inc. (registered broker Bond Funds, Inc.,
dealer), Director and Chairman, A I M Fund INVESCO Counselor
Services, Inc. (registered transfer agent), and Series Funds, Inc.,
Fund Management Company (registered broker INVESCO Global and
dealer); and Chief Executive Officer, AMVESCAP International
PLC - AIM Division (parent of AIM and a global Funds, Inc.,
investment management firm); formerly, Director, INVESCO Manager
Chairman and Chief Executive Officer, INVESCO Series Funds, Inc.,
Funds Group, Inc. INVESCO Money
Market Funds, Inc.,
INVESCO Sector
Funds, Inc.,
INVESCO Stock
Funds, Inc.,
INVESCO Treasurer's
Series
|
(1) Mr. Graham is considered an interested person of the Trust because he is a director of AMVESCAP PLC, parent of the advisor to the Trust.
(2) Mr. Williamson 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.
NAME, YEAR OF BIRTH AND TRUSTEE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS OTHER
POSITION(S) HELD WITH THE TRUST AND/OR DIRECTORSHIP(S)
OFFICER HELD BY TRUSTEE
SINCE
-------------------------------- ----------- -------------------------------------------------- ---------------------
Funds, Inc.
and INVESCO
Variable Investment
Funds, Inc.
-------------------------------- ----------- -------------------------------------------------- ---------------------
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 1993 Chairman, Crockett Technology Associates ACE Limited
Trustee (technology consulting company) (insurance company);
and Captaris, Inc.
(unified messaging
provider)
-------------------------------- ----------- -------------------------------------------------- ---------------------
Albert R. Dowden-- 1941 2000 Director, Magellan Insurance Company; Member of Cortland Trust, Inc.
Trustee Advisory Board of Rotary Power International (registered
(designer, manufacturer, and seller of rotary investment company)
power engines); formerly, Director, President
and Chief Executive Officer, Volvo Group North
America, Inc.; Senior Vice President, AB Volvo
and director of various affiliated Volvo
companies
-------------------------------- ----------- -------------------------------------------------- ---------------------
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.
-------------------------------- ----------- -------------------------------------------------- ---------------------
Jack M. Fields-- 1952 1997 Chief Executive Officer, Twenty First Century Administaff
Trustee Group, Inc. (government affairs company) and
Texana Timber LP
-------------------------------- ----------- -------------------------------------------------- ---------------------
Carl Frischling-- 1937 1988 Partner, law firm of Kramer Levin Naftalis and Cortland Trust, Inc.
Trustee Frankel LLP (registered
investment company)
-------------------------------- ----------- -------------------------------------------------- ---------------------
Prema Mathai-Davis -- 1950 1998 Formerly, Chief Executive Officer, YWCA of the None
Trustee USA
-------------------------------- ----------- -------------------------------------------------- ---------------------
|
NAME, YEAR OF BIRTH AND TRUSTEE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS OTHER
POSITION(S) HELD WITH THE TRUST AND/OR DIRECTORSHIP(S)
OFFICER HELD BY TRUSTEE
SINCE
-------------------------------- ----------- -------------------------------------------------- ---------------------
Lewis F. Pennock-- 1942 1988 Partner, law firm of Pennock & Cooper None
Trustee
-------------------------------- ----------- -------------------------------------------------- ---------------------
Ruth H. Quigley-- 1935 2001 Retired None
Trustee
-------------------------------- ----------- -------------------------------------------------- ---------------------
Louis S. Sklar-- 1939 1989 Executive Vice President, Development and None
Trustee Operations, Hines Interests Limited Partnership
(real estate development company)
-------------------------------- ----------- -------------------------------------------------- ---------------------
OTHER OFFICERS
---------------------------------------------------------------------------------------------------------------------
Gary T. Crum(3)-- 1947 1988 Director, Chairman and Director of Investments, N/A
Senior Vice President A I M Capital 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;
formerly, Chief Executive Officer and President,
A I M Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
---------------------------------------------------------------------------------------------------------------------
Carol F. Relihan-- 1954 1988 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.
-------------------------------- ----------- -------------------------------------------------- ---------------------
Stuart W. Coco-- 1955 2002 Managing Director and Chief Research Officer - N/A
Vice President Fixed Income, A I M Capital Management, 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.
-------------------------------- ----------- -------------------------------------------------- ---------------------
|
(3) Information is current as of January 10, 2003.
NAME, YEAR OF BIRTH AND TRUSTEE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS OTHER
POSITION(S) HELD WITH THE TRUST AND/OR DIRECTORSHIP(S)
OFFICER HELD BY TRUSTEE
SINCE
-------------------------------- ----------- -------------------------------------------------- ---------------------
Edgar M. Larsen(3)-- 1940 1999 Vice President, A I M Advisors, Inc.; and N/A
Vice President President, Chief Executive Officer and Chief
Investment Officer, A I M Capital Management, Inc.
-------------------------------- ----------- -------------------------------------------------- ---------------------
Dana R. Sutton-- 1959 1988 Vice President and Fund Treasurer, A I M N/A
Vice President and Treasurer Advisors, Inc.
-------------------------------- ----------- -------------------------------------------------- ---------------------
|
(3) Information is current as of January 10, 2003.
TRUSTEE OWNERSHIP OF FUND SHARES AS OF DECEMBER 31, 2002
-------------------------- ------------------------------------------------------- ----------------------------------
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(R)
-------------------------- ------------------------------------------------------- ----------------------------------
Robert H. Graham Aggressive Growth Over $100,000 Over $100,000
Blue Chip Over $100,000
Capital Development Over $100,000
Charter Over $100,000
Constellation Over $100,000
Emerging Growth $50,001 - $100,000
Large Cap Core Equity Over $100,000
Large Cap Growth Over $100,000
Mid Cap Growth Over $100,000
Weingarten Over $100,000
-------------------------- ------------------------------------------------------- ----------------------------------
Mark H. Williamson [-0-] [$ - ]
-------------------------- ------------------------------------------------------- ----------------------------------
Frank S. Bayley - 0 - $10,001 - $50,000
-------------------------- ------------------------------------------------------- ----------------------------------
Bruce L. Crockett [Aggressive Growth $1 - $10,000 [$1 - $10,000]
Charter $1 - $10,000
Constellation $1 - $10,000
Weingarten $1 - $10,000]
-------------------------- ------------------------------------------------------- ----------------------------------
Albert R. Dowden Blue Chip $10,001 - $50,000 $50,001 - $100,000
Emerging Growth $10,001 - $50,000
-------------------------- ------------------------------------------------------- ----------------------------------
Edward K. Dunn, Jr. Capital Development Over $100,000 Over $100,000(4)
-------------------------- ------------------------------------------------------- ----------------------------------
|
(4) 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.
-------------------------- ------------------------------------------------------- ----------------------------------
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(R)
-------------------------- ------------------------------------------------------- ----------------------------------
Jack M. Fields [Blue Chip $10,001 - $50,000 [Over $100,000](4)
Charter $50,001 - $100,000
Constellation $50,001 - $100,000
Weingarten $50,001 - $100,000]
-------------------------- ------------------------------------------------------- ----------------------------------
Carl Frischling Aggressive Growth $50,001 - $100,000 Over $100,000(4)
Blue Chip Over $100,000
Capital Development Over $100,000
Charter Over $100,000
Constellation $50,001 - $100,000
Weingarten $50,001 - $100,000
-------------------------- ------------------------------------------------------- ----------------------------------
Prema Mathai-Davis Aggressive Growth $50,001 - $100,000 Over $100,000(4)
Blue Chip $10,001 - $50,000
Large Cap Basic Value $10,001 - $50,000
-------------------------- ------------------------------------------------------- ----------------------------------
Lewis F. Pennock Charter $10,001 - $50,000 $50,001 - $100,000
Large Cap Basic Value $1 - $10,000
--------------------------- ------------------------------------------------------ ----------------------------------
Ruth H. Quigley -0- $1 -$10,000
--------------------------- ------------------------------------------------------ ----------------------------------
Louis S. Sklar Aggressive Growth $50,001 - $100,000 Over $100,000(4)
Charter Over $100,000
Constellation Over $100,000
Weingarten Over $100,000
--------------------------- ------------------------------------------------------ ----------------------------------
|
(4) 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, 2002:
RETIREMENT
AGGREGATE BENEFITS ESTIMATED TOTAL
COMPENSATION ACCRUED ANNUAL COMPENSATION
FROM THE BY ALL BENEFITS UPON FROM ALL AIM
TRUSTEE TRUST(1) AIM FUNDS(2) RETIREMENT(3) FUNDS(4)
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Frank S. Bayley $ 25,471 $ 142,800 $ 90,000 $ 150,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Bruce L. Crockett 25,298 50,132 90,000 149,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Owen Daly II(5) 3,636 40,045 75,000 -0-
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Albert R. Dowden 25,471 57,955 90,000 150,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Edward K. Dunn, Jr. 25,298 94,149 90,000 149,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Jack M. Fields 25,471 29,153 90,000 153,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Carl Frischling(6) 25,471 74,511 90,000 150,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Prema Mathai-Davis 25,471 33,931 90,000 150,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Lewis F. Pennock 26,197 54,802 90,000 154,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Ruth H. Quigley 25,471 142,502 90,000 153,000
--------------------------------- ------------------- ----------------- ------------------- ---------------------
Louis S. Sklar 26,025 78,500 90,000 153,000
================================= =================== ================= =================== =====================
|
(1) The total amount of compensation deferred by all trustees of the Trust during the fiscal year ended October 31, 2002, including earnings, was $121,155.
(2) During the fiscal year ended October 31, 2002, the total amount of expenses allocated to the Trust in respect of such retirement benefits was $58,205.
(3) Amounts shown assume each trustee serves until his or her normal retirement date.
(4) All trustees currently serve as directors or trustees of seventeen registered investment companies advised by AIM.
(5) Mr. Daly was a trustee until December 31, 2001, when he retired.
(6) During the fiscal year ended October 31, 2002, the Trust paid $129,560 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 February 4, 2003.
AIM AGGRESSIVE GROWTH FUND
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
SHARES SHARES SHARES SHARES SHARES
------------------------------------- --------------- --------------- ---------------- --------------- ----------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD RECORD
------------------------------------- --------------- --------------- ---------------- --------------- ----------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of
Customers 8.20% - 13.85%
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
------------------------------------- --------------- --------------- ---------------- --------------- ----------------
The Manufacturers Life
Insurance Company'
C/O Manulife Financial USA 12.08% - -
Attn: Rosie Chuck SRS Acctg
250 Bloor St East, 7th Floor
Toronto, Ontario, Canada M4W IE5
------------------------------------- --------------- --------------- ---------------- --------------- ----------------
Smith Barney House Acct
Attn: Cindy Tempesta, 7th Floor 5.61% - 5.13% - -
333 West 34th Street
New York, NY 10001-2483
------------------------------------- --------------- --------------- ---------------- --------------- ----------------
First Command Bank Trust
Attn: Trust Department - - - - 94.44%
PO Box 901075
Fort Worth, TX 76101-0000
------------------------------------- --------------- --------------- ---------------- --------------- ----------------
|
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
SHARES SHARES SHARES SHARES SHARES
------------------------------------- --------------- --------------- ---------------- --------------- ----------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD RECORD
------------------------------------- --------------- --------------- ---------------- --------------- ----------------
Reliance Trust Company Custodian
FBO Olson International Ltd
401k plan - - - 31.98% -
PO Box 48524
Atlanta, GA 30362-0000
------------------------------------- --------------- --------------- ---------------- --------------- ----------------
SI Howard Glass Company Inc. PSP
Earl R. Farmer Jr. TTEE FBO
Earl R. Farmer Jr. - - - 8.50% -
379 SW Cutoff
Worcester, MA 01604-2713
------------------------------------- --------------- --------------- ---------------- --------------- ----------------
Sierra Conveyor Co Inc
401k PSP
Marjorie J or Daniel Watson - - - 6.97% -
TTEEs FBO Daniel P. Watson
Dtd 7/01/94
PO Box 1382
Roseville, CA 95678-0000
------------------------------------- --------------- --------------- ---------------- --------------- ----------------
Integrated Global Concepts Inc.
401k Profit Sharing Plan - - - 6.15% -
2800 S. River Rd. Ste 170
Des Plaines, IL 60018-6092
------------------------------------- --------------- --------------- ---------------- --------------- ----------------
Reliance Trust Company
Custodian
FBO Mecklenburg Neurological
Associates PA - - - 5.12% -
401k Plan
PO Box 48529
Atlanta, GA 30362-0000
------------------------------------- --------------- --------------- ---------------- --------------- ----------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza - - - % 5.56%
Suite 100
Houston, TX 77046
------------------------------------- --------------- --------------- ---------------- --------------- ----------------
|
AIM BASIC VALUE II FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
--------------------------------------- ----------------------- ----------------------- -----------------------
PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
--------------------------------------- ----------------------- ----------------------- -----------------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza 100.00%** 100.00%** 100.00%**
Suite 100
Houston, TX 77046
--------------------------------------- ----------------------- ----------------------- -----------------------
|
* Owned of record and beneficially.
** Presumed to be a control person because of beneficial ownership of 25% or more of the Fund.
AIM BLUE CHIP FUND
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
SHARES SHARES SHARES SHARES SHARES
------------------------------------- --------------- --------------- --------------- ---------------- ----------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD RECORD
------------------------------------- --------------- --------------- --------------- ---------------- ----------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 8.33% 8.38% 15.95%
Attn: Fund Administration
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
------------------------------------- --------------- --------------- --------------- ---------------- ----------------
Banc One Securities Corp FBO
The One Investment Solution
Attn: Wrap Processing OH1-1244 - - 7.37%
1111 Polaris Pkwy,
Suite J-2
Columbus, OH 43240-1244
------------------------------------- --------------- --------------- --------------- ---------------- ----------------
Smith Barney House Acct
Attn: Cindy Tempesta 7th Floor - 6.62% 9.07% - -
333 West 34th Street
New York, NY 10001-2483
------------------------------------- --------------- --------------- --------------- ---------------- ----------------
First Command Bank Trust
Attn: Trust Department - - - - 95.23%
PO Box 901075
Fort Worth, TX 76101-0000
------------------------------------- --------------- --------------- --------------- ---------------- ----------------
|
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
SHARES SHARES SHARES SHARES SHARES
------------------------------------- --------------- --------------- --------------- ---------------- ----------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD RECORD
------------------------------------- --------------- --------------- --------------- ---------------- ----------------
Reliance Trust Company
Custodian
FBO Mecklenburg Neurological
Associates PA - - - 52.85% -
401k Plan
PO Box 48529
Atlanta, GA 30362-0000
------------------------------------- --------------- --------------- --------------- ---------------- ----------------
Banc One Securities Corp FBO
The One Investment Solution
Attn: Wrap Processing OH1-1244 - - 7.37%
1111 Polaris Pkwy,
Suite J-2
Columbus, OH 43240-1244
------------------------------------- --------------- --------------- --------------- ---------------- ----------------
|
AIM CAPITAL DEVELOPMENT FUND
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
SHARES SHARES SHARES SHARES SHARES
------------------------------------- --------------- --------------- --------------- ---------------- ----------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD RECORD
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration 9.87% 10.63% 14.88%
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
Coastgear & Company
State Street Bank & Trust
Attn: Kevin Smith - - 7.98%
105 Rosemont Avenue
Westwood, MA 02090
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza - - - 8.60% 100.00%
Suite 100
Houston, TX 77046
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
|
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
SHARES SHARES SHARES SHARES SHARES
------------------------------------- --------------- --------------- --------------- ---------------- ----------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD RECORD
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
Smith Barney House Acct
Attn: Cindy Tempesta 7th Floor - 7.19% 6.03% - -
333 West 34th Street
New York, NY 10001-2483
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
Reliance Trust Company
Custodian
FBO Agents Assistance Corporation
of Michigan 401k - - - 78.98% -
PO Box 48529
Atlanta, GA 30362-0000
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
MCB Trust Services Cust FBO
Zcorum Inc. 401k Plan - - - 6.97% -
700 17th Street, Ste 300
Denver, CO 80202-0000
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
Smith Barney House Acct
Attn: Cindy Tempesta 7th Floor - 7.19% 6.03% - -
333 West 34th Street
New York, NY 10001-2483
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
Reliance Trust Company Custodian
FBO Agents Assistance Corporation
of Michigan 401k - - - 78.98% -
PO Box 48529
Atlanta, GA 30362-0000
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
MCB Trust Services Cust FBO
Zcorum Inc. 401k Plan
700 17th Street, Ste 300 - - - 6.97% -
Denver, CO 80202-0000
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
|
* Owned of record and beneficially.
AIM CHARTER 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 % 6.39% 14.75%
Attn: Fund Administration
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
Ruth and Ted Bauer
Family Foundation - - - 11.80%
11 Greenway Plaza, Suite 2600
Houston, TX 77046-1173
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
City National Bank
Attn: Trust Operations/Mutual Funds - - - 9.07%
P.O. Box 60520
Los Angeles, CA 90060-0520
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
City of Springfield, Trustee, FBO
City of Springfield, 457 DCP
C/O Great West, Recordkeeper - - - - 5.47%
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
Town of Watertown, Trustee
FBO: Town of Watertown
457 Deferred Compensation Plan - - - 6.88%
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
City of Cambridge, Trustee FBO
City of Cambridge 457 DCP
C/o Great West, Recordkeeper - - - - 5.41%
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
|
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
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza - - - 5.74% %
Suite 100
Houston, TX 77046
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
INVESCO Trust Company TTEE
FBO Big Horn Basin
Orthopedic Clinic PC - - - 78.22% -
401k Profit Sharing Plan
PO Box 105779
Atlanta, GA 30348
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
First Command Bank Trust
Attn: Trust Department - - - - 19.03%
PO Box 901075
Fort Worth, TX 76101-0000
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
Smith Barney House Acct
Attn: Cindy Tempesta 7th Floor
333 34th Street - 6.25% 7.51% - -
New York, NY 10001-2483
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
|
* Owned of record and beneficially.
AIM CONSTELLATION 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 11.89% 5.50% 18.28% -
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
Ohio Public
Employees Deferred Compensation - - - 63.68%
172 E. State Street
Columbus, OH 43215
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
|
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
------------------------------------- ---------------- --------------- --------------- ---------------- --------------
Wells Fargo Bank West NA Cust.
City of Houston
457 Deferred Compensation Plan - - - [ . ]%
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
Nationwide Insurance Company-DCVA
C/O IPO Portfolio Accounting - - - [ . ]%
P.O. Box 182029
Columbus, OH 43218
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
State of Vermont Deferred Comp
C/O Copeland Companies
Attn: Planned Valuation Services - - - [ . ]%
2 Tower Center
East Brunswick, NJ 08816-0000
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
Reliance Trust Custodian
FBO Stadtmauer Bailkin LLP
401k Plan - - - 46.65% -
PO Box 48529
Atlanta, GA 30362-0000
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
Reliance Trust Custodian
FBO Mecklenburg Neurological
Associates PA - - - 28.75% -
401k Plan
PO Box 48529
Atlanta, GA 30362-0000
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
Smith Barney House Acct
Attn: Cindy Tempesta 7th Floor 5.90 5.76% 7.68% - -
333 West 34th Street
New York, NY 10001-2483
------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
|
AIM CORE STRATEGIES 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
---------------------------------------- ------------------------- -------------------------- -------------------------
A I M Advisors, Inc.*
Attn: David Hessel 100.00%** 100.00%** 100.00%**
11 Greenway Plaza, Suite 100
Houston, TX 77046
---------------------------------------- ------------------------- -------------------------- -------------------------
|
** Presumed to be a control person because of beneficial ownership of 25% or more of the Fund.
AIM DENT DEMOGRAPHIC TRENDS 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 5.35% 11.82% 18.16%
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
---------------------------------------- ------------------------- -------------------------- -------------------------
Smith Barney House Acct
Attn: Cindy Tempesta 7th Floor
333 West 34th Street 5.78% 9.95% 11.29%
New York, NY 10001-2483
---------------------------------------- ------------------------- -------------------------- -------------------------
|
AIM 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
---------------------------------------- ------------------------- -------------------------- -------------------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration 8.55% 7.74% 20.49%
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
---------------------------------------- ------------------------- -------------------------- -------------------------
|
AIM LARGE CAP BASIC VALUE FUND
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES
--------------------------------- -------------------- --------------------- -------------------- ---------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
--------------------------------- -------------------- --------------------- -------------------- ---------------------
Merrill Lynch Pierce Fenner &
Smith
FBO The Sole Benefit of
Customers 26.33% 14.98% 24.88% -
Attn: Fund Administration
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
--------------------------------- -------------------- --------------------- -------------------- ---------------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza - - - 9.93%
Suite 100
Houston, TX 77046
--------------------------------- -------------------- --------------------- -------------------- ---------------------
Darse E. Crandall Solo 401k
Darse E. Crandall TTEE
FBO Darse E. Crandall - - - 27.56%
13360 Del Monte Dr. Apt. 2C
Seal Beach, CA 90740-4561
--------------------------------- -------------------- --------------------- -------------------- ---------------------
PVR Inc Solo 401k
Phillip V. Rye TTEE FBO
Phillip V. Rye - -- 12.95%
22119 Kensington Dr.
Woodhaven, MI 48183-1151
--------------------------------- -------------------- --------------------- -------------------- ---------------------
Carol's Craftique Inc Solo 401k
Hugo D. Moeckel TTEE FBO
Carol L. Moecker - - - 11.89%
1414 24th Ave S
Moorhead, MN 56560-0000
--------------------------------- -------------------- --------------------- -------------------- ---------------------
MCB Trust Services Cust FBO
ECFIRST.COM Pension Plan - - - 10.40%
700 17th Street, Ste 300
Denver, CO 80202-0000
--------------------------------- -------------------- --------------------- -------------------- ---------------------
Dr. Russell E. Forgoston PC Solo
401k Russell E. Forgoston TTEE
FBO Russell E. Forgoston - - - 8.32%
220 Sandy Springs Cir, Ste 157A
Atlanta, GA 30328-0000
--------------------------------- -------------------- --------------------- -------------------- ---------------------
|
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES
--------------------------------- -------------------- --------------------- -------------------- ---------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
--------------------------------- -------------------- --------------------- -------------------- ---------------------
ANTC Cust Solo 401k
GGB Consulting FBO
Gerard G. Boccuti - - - 5.14%
1566 Spring Meadow Lane
Boothwyn, PA 19061-0000
--------------------------------- -------------------- --------------------- -------------------- ---------------------
|
* Owned of record and beneficially.
AIM LARGE CAP CORE EQUITY 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 11.35% 23.32% 7.53%
FBO The Solo Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
---------------------------------------- ------------------------- -------------------------- -------------------------
A I M Advisors, Inc.*
Attn: David Hessel -* -* 15.21%*
11 Greenway Plaza, Suite 100
Houston, TX 77046
---------------------------------------- ------------------------- -------------------------- -------------------------
|
* Owned of record and beneficially.
AIM LARGE CAP GROWTH FUND
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES
--------------------------------- -------------------- --------------------- -------------------- ---------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
--------------------------------- -------------------- --------------------- -------------------- ---------------------
Merrill Lynch Pierce Fenner &
Smith
FBO The Sole Benefit of
Customers
Attn: Fund Administration 10.70% 10.41% 15.20% -
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
--------------------------------- -------------------- --------------------- -------------------- ---------------------
INVESCO Trust Company TTEE
FBO Big Horn Basin Orthopedic
Clinic PC - - - 95.25%
401k Profit Sharing Plan
PO Box 105779
Atlanta, GA 30348
--------------------------------- -------------------- --------------------- -------------------- ---------------------
|
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES
--------------------------------- -------------------- --------------------- -------------------- ---------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
--------------------------------- -------------------- --------------------- -------------------- ---------------------
Smith Barney House Acct
Attn: Cindy Tempesta, 7th Floor
333 West 34th Street - 7.13% 8.35% -
New York, NY 10001-2483
--------------------------------- -------------------- --------------------- -------------------- ---------------------
|
AIM MID CAP GROWTH FUND
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES
--------------------------------- -------------------- --------------------- -------------------- ---------------------
NAME AND ADDRESS OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF PERCENTAGE OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
--------------------------------- -------------------- --------------------- -------------------- ---------------------
Merrill Lynch Pierce Fenner &
Smith
FBO The Sole Benefit of
Customers
Attn: Fund Administration 7.97% 11.21% 13.65% -
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
--------------------------------- -------------------- --------------------- -------------------- ---------------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza - - - 68.71%
Suite 100
Houston, TX 77046
--------------------------------- -------------------- --------------------- -------------------- ---------------------
Premier Business Resource Solo
401k Plan Louis A. Esserman TTEE
FBO Linda M. Esserman - - - 10.82%
301 W. Platt Street, #1329
Tampa, FL 33606-0000
--------------------------------- -------------------- --------------------- -------------------- ---------------------
Lane M. Schloeder DVM
Solo 401k
Lane M. Schloeder TTEE - - - 8.47%
FBO Lane M. Schloeder
11764 Kirkwood Street
Herald, CA 95638-0000
--------------------------------- -------------------- --------------------- -------------------- ---------------------
|
* Owned of record and beneficially
AIM U.S. 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
----------------------------------------- ---------------------- ---------------------- ---------------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza 100.00%** 100.00%** 100.00%**
Suite 100
Houston, TX 77046
----------------------------------------- ---------------------- ---------------------- ---------------------
|
* Owned of record and beneficially.
** Presumed to be a control person because of beneficial ownership of 25% or more of the Fund.
AIM WEINGARTEN 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 12.00% 6.10% 17.10% - -
Attn: Fund Administration
4800 Deer Lake Dr East
2nd Floor
Jacksonville, FL 32246
-------------------------------------- --------------- ---------------- --------------- ---------------- ----------------
Sierra Conveyor Co Inc 401k PSP
Marjorie J or Daniel Watson
TTEEs FBO Marjorie J. Watson - - - 16.32% -
Dtd 7/01/94
PO Box 1382
Roseville, CA 95678-0000
-------------------------------------- --------------- ---------------- --------------- ---------------- ----------------
Sierra Conveyor Co Inc 401k PSP
Marjorie J or Daniel Watson TTEEs
FBO Marjorie J. Watson - - - 14.75% -
Dtd 7/01/94
PO Box 1382
Roseville, CA 95678-0000
-------------------------------------- --------------- ---------------- --------------- ---------------- ----------------
Sierra Conveyor Co Inc 401k PSP
Marjorie J or Daniel Watson TTEEs
FBO Marjorie J. Watson - - - 12.93% -
Dtd 7/01/94
PO Box 1382
Roseville, CA 95678-0000
-------------------------------------- --------------- ---------------- --------------- ---------------- ----------------
|
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
-------------------------------------- --------------- ---------------- --------------- ---------------- ----------------
Sierra Conveyor Co Inc 401k PSP
Marjorie J or Daniel Watson TTEEs
FBO Marjorie J. Watson - - - 10.60% -
Dtd 7/01/94
PO Box 1382
Roseville, CA 95678-0000
-------------------------------------- --------------- ---------------- --------------- ---------------- ----------------
Smith Barney House Acct
Attn: Cindy Tempesta, 7th Floor 7.53% 6.72% 6.58% - -
333 West 34th Street
New York, NY 10001-2483
-------------------------------------- --------------- ---------------- --------------- ---------------- ----------------
AIM Foundation
Attn: Patricia Lewis - - - - 21.55%
11 Greenway Plaza, Suite 2600
Houston, TX 77046
-------------------------------------- --------------- ---------------- --------------- ---------------- ----------------
First Command Bank Trust
Attn: Trust Department - - - - 12.67%
PO Box 901075
Fort Worth, TX 76101-0000
-------------------------------------- --------------- ---------------- --------------- ---------------- ----------------
David Leary, Trustee
FBO: Town of Weymouth
457 Deferred Compensation Plan - - - - 7.85%
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
-------------------------------------- --------------- ---------------- --------------- ---------------- ----------------
Town of Watertown, Trustee
FBO: Town of Watertown
457 Deferred Compensation Plan - - - - 8.50%
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
-------------------------------------- --------------- ---------------- --------------- ---------------- ----------------
A I M Advisors, Inc.*
Attn: David Hessel
11 Greenway Plaza - - - 7.12% %
Suite 100
Houston, TX 77046
-------------------------------------- --------------- ---------------- --------------- ---------------- ----------------
|
* Owned of record and beneficially.
MANAGEMENT OWNERSHIP
As of February 4, 2003, 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 4.44% of Class a shares of AIM Blue Chip Fund, 1.18% of Class A shares of AIM Emerging Growth Fund and 2.51% of Class A shares of AIM Large Cap Core Equity Fund.
APPENDIX E
MANAGEMENT FEES
For the last three fiscal years ended October 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 2002 2001
----------------- ------------------------------------------- ---------------------------------------------
MANAGEMENT MANAGEMENT NET MANAGEMENT MANAGEMENT MANAGEMENT NET MANAGEMENT
FEE PAYABLE FEE WAIVERS FEE PAID FEE PAYABLE FEE WAIVERS FEE PAID
----------- ------------ -------------- ----------- ----------- --------------
AIM Aggressive $17,081,494 $16,400 $17,065,094 $23,755,259 $7,508 $23,747,751
Growth Fund
AIM Blue Chip $24,803,281 $26,519 $24,776,762 $35,318,225 $153,216 $35,165,009
Fund
AIM Capital $7,368,692 $11,465 $7,357,227 $8,548,376 $3,281 $8,545,095
Development
Fund
AIM Charter $29,583,893 $58,255 $29,525,638 $43,928,613 $504,457 $43,424,156
Fund
AIM Constellation $63,117,935 $1,334,866 $61,783,069 $93,618,688 $3,749,927 $89,868,761
Fund
AIM Weingarten $26,086,537 $28,985 $26,057,552 $46,064,764 $584,500 $45,480,264
Fund
|
----------------- -------------------------------------------
FUND NAME 2002
----------------- -------------------------------------------
MANAGEMENT MANAGEMENT NET MANAGEMENT
FEE PAYABLE FEE WAIVERS FEE PAID
----------- ------------ --------------
AIM Aggressive $26,977,097 -0- $26,977,097
Growth Fund
AIM Blue Chip $36,923,601 $70,387 $36,853,214
Fund
AIM Capital $9,200,414 -0- $9,200,414
Development
Fund
AIM Charter $56,142,463 $1,484,073 $54,658,390
Fund
AIM $128,677,520 $6,187,566 $122,489,954
Constellation
Fund
AIM Weingarten $75,218,931 $5,181,384 $70,073,547
Fund
|
APPENDIX F
ADMINISTRATIVE SERVICES FEES
The Funds paid AIM the following amounts for administrative services for the last three fiscal years ended October 31:
---------------------------- ------------------------------ ------------------------------- --------------------------
FUND NAME 2002 2001 2000
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Aggressive Growth Fund $383,159 $276,738 $233,230
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Blue Chip Fund $441,011 $331,400 $280,996
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Capital Development $205,580 $160,775 $147,339
Fund
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Charter Fund $468,551 $383,570 $383,224
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Constellation Fund $629,514 $622,082 $731,392
---------------------------- ------------------------------ ------------------------------- --------------------------
AIM Weingarten Fund $450,564 $392,623 $473,764
---------------------------- ------------------------------ ------------------------------- --------------------------
|
APPENDIX G
BROKERAGE COMMISSIONS
Brokerage commissions(1) paid by each of the Funds listed below during the last three fiscal years ended October 31 were as follows:
FUND 2002 2001 2000
---- ---------- ---------- ----------
AIM Aggressive Growth Fund(2) $ 5,920,899 $ 6,473,868 $ 4,003,829
AIM Blue Chip Fund 4,014,589 3,838,893 3,087,012
AIM Capital Development Fund 4,525,600 4,153,032 2,924,761
AIM Charter Fund 12,272,154 12,104,855 10,479,914
AIM Constellation Fund(3) 16,936,943 23,003,818 25,382,535
AIM Weingarten Fund(4) 23,824,701 30,640,967 21,922,844
|
(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 the brokerage commissions paid by AIM Aggressive Growth Fund for the fiscal year ended October 31, 2002, as compared to the fiscal year ended October 31, 2000, was due to a significant fluctuation in asset levels and cash outflows.
(3) The variation in brokerage commissions paid by AIM Constellation Fund for the fiscal year ended October 31, 2002, as compared to the two prior fiscal years was due to a decrease in asset levels and portfolio transactions.
(4) The variation in the brokerage commissions paid by AIM Weingarten Fund for the fiscal year ended October 31, 2002, as compared to the prior fiscal year, was due to a decrease in assets and portfolio turnover.
APPENDIX H
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF
SECURITIES OF REGULAR BROKERS OR DEALERS
During the last fiscal year ended October 31, 2002, 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 Aggressive Growth Fund $ 565,103,831 $ 879,279
AIM Blue Chip Fund 482,791,925 704,507
AIM Capital Development Fund 275,926,022 559,877
AIM Charter Fund 1,750,689,258 2,288,465
AIM Constellation Fund 1,667,124,770 2,166,999
AIM Weingarten Fund 1,938,782,465 3,013,694
|
During the last fiscal year ended October 31, 2002, the Funds held securities issued by the following companies, which are "regular" brokers or dealers of one or more of the Funds identified below:
Fund/Issuer Security Market Value
----------- ------------- ------------
AIM Aggressive Growth Fund
Legg Mason Common Stock $11,615,000
AIM Blue Chip Fund
Goldman Sachs Group, Inc. (The) Common Stock 28,640,000
J.P. Morgan Chase & Co. Common Stock 18,675,000
Merrill Lynch & Co., Inc. Common Stock 28,462,500
Morgan Stanley Common Stock 35,028,000
AIM Charter Fund
Morgan Stanley Common Stock 29,190,000
AIM Constellation Fund
Goldman Sachs Group, Inc. (The) Common Stock 53,700,000
Merrill Lynch & Co., Inc. Common Stock 57,129,930
Morgan Stanley Common Stock 56,173,236
AIM Weingarten Fund
Goldman Sachs Group, Inc. (The) Common Stock 28,640,000
J.P. Morgan Chase & Co. Common Stock 20,750,000
|
APPENDIX I
PERFORMANCE DATA
The average annual total returns for each Fund, with respect to its Institutional Class shares, for the one, five and ten year periods (or since inception if less than ten years) ended October 31, are as follows:
PERIODS ENDED
OCTOBER 31, 2002
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
------ ------- -------- --------- ---------
AIM Aggressive Growth Fund N/A N/A N/A N/A 03/15/02
AIM Blue Chip Fund N/A N/A N/A N/A 03/15/02
AIM Capital Development Fund N/A N/A N/A N/A 03/15/02
AIM Charter Fund -8.15% -0.63% 7.95% N/A 07/30/91
AIM Constellation Fund -12.43% -1.80% 8.58% N/A 04/08/92
AIM Weingarten Fund -24.70% -7.03% 3.86% N/A 10/08/91
|
The cumulative total returns for each Fund, with respect to its Institutional Class shares, for the one, five and ten year periods (or since inception if less than ten years) from inception through October 31, are as follows:
PERIODS ENDED
OCTOBER 31, 2002
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
------ ------- -------- --------- ---------
AIM Aggressive Growth Fund N/A N/A N/A -23.19% 03/15/02
AIM Blue Chip Fund N/A N/A N/A -23.66% 03/15/02
AIM Capital Development Fund N/A N/A N/A -25.57% 03/15/02
AIM Charter Fund -8.15% -3.11% 114.98% N/A 07/30/91
AIM Constellation Fund -12.43% -8.67% 127.84% N/A 04/08/92
AIM Weingarten Fund -24.70% -30.55% 46.00% N/A 10/08/91
|
FINANCIAL STATEMENTS
FS
Report of Independent Auditors
To the Shareholders of AIM Aggressive Growth Fund And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Aggressive Growth Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statements of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the periods presented through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Aggressive Growth Fund as of October 31, 2002, the results of its operations for the period 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.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2002 |
FS-1
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
---------------------------------------------------------------------------
COMMON STOCKS-93.49%
Advertising-0.65%
Lamar Advertising Co.(a) 400,000 $ 13,576,000
===========================================================================
Aerospace & Defense-1.65%
Alliant Techsystems Inc.(a) 500,000 30,075,000
---------------------------------------------------------------------------
L-3 Communications Holdings, Inc.(a) 97,400 4,577,800
===========================================================================
34,652,800
===========================================================================
Air Freight & Logistics-1.76%
C.H. Robinson Worldwide, Inc. 400,000 11,828,000
---------------------------------------------------------------------------
Expeditors International of Washington, Inc. 800,000 25,208,000
===========================================================================
37,036,000
===========================================================================
Apparel Retail-2.72%
AnnTaylor Stores Corp.(a) 500,000 11,715,000
---------------------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 500,000 6,860,000
---------------------------------------------------------------------------
Pacific Sunwear of California, Inc.(a) 1,000,000 23,370,000
---------------------------------------------------------------------------
Too Inc.(a) 600,000 15,180,000
===========================================================================
57,125,000
===========================================================================
Application Software-3.88%
Activision, Inc.(a) 300,000 6,150,000
---------------------------------------------------------------------------
Electronic Arts Inc.(a) 75,000 4,884,000
---------------------------------------------------------------------------
Intuit Inc.(a) 600,000 31,152,000
---------------------------------------------------------------------------
National Instruments Corp.(a) 956,700 27,447,723
---------------------------------------------------------------------------
Reynolds & Reynolds Co. (The)-Class A 500,000 11,835,000
===========================================================================
81,468,723
===========================================================================
Auto Parts & Equipment-3.09%
Gentex Corp.(a) 1,000,000 29,480,000
---------------------------------------------------------------------------
Lear Corp.(a) 500,000 18,275,000
---------------------------------------------------------------------------
Superior Industries International, Inc. 400,000 16,988,000
===========================================================================
64,743,000
===========================================================================
Banks-1.11%
Southwest Bancorp. of Texas, Inc.(a) 300,000 8,475,000
---------------------------------------------------------------------------
TCF Financial Corp. 350,000 14,854,000
===========================================================================
23,329,000
===========================================================================
Broadcasting & Cable TV-1.87%
Hispanic Broadcasting Corp.(a) 979,800 21,065,700
---------------------------------------------------------------------------
Westwood One, Inc.(a) 500,000 18,150,000
===========================================================================
39,215,700
===========================================================================
Computer & Electronics Retail-3.16%
CDW Computer Centers, Inc.(a) 1,250,000 66,275,000
===========================================================================
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Construction & Engineering-2.55%
Jacobs Engineering Group Inc.(a) 1,768,600 $ 53,570,894
===========================================================================
Consumer Finance-0.94%
Doral Financial Corp. 750,000 19,695,000
===========================================================================
Data Processing Services-5.71%
Concord EFS, Inc.(a) 625,000 8,925,000
---------------------------------------------------------------------------
DST Systems, Inc.(a) 500,000 15,375,000
---------------------------------------------------------------------------
Fiserv, Inc.(a) 1,315,000 41,080,600
---------------------------------------------------------------------------
Iron Mountain Inc.(a) 400,000 11,284,000
---------------------------------------------------------------------------
Paychex, Inc. 1,500,000 43,230,000
===========================================================================
119,894,600
===========================================================================
Department Stores-0.56%
Kohl's Corp.(a) 200,000 11,690,000
===========================================================================
Diversified Commercial Services-3.14%
Apollo Group, Inc.-Class A(a) 125,000 5,187,500
---------------------------------------------------------------------------
ChoicePoint Inc.(a) 300,000 11,358,000
---------------------------------------------------------------------------
Cintas Corp. 500,000 23,635,000
---------------------------------------------------------------------------
H&R Block, Inc. 250,000 11,095,000
---------------------------------------------------------------------------
Regis Corp. 500,000 14,670,000
===========================================================================
65,945,500
===========================================================================
Diversified Financial Services-4.16%
Federated Investors, Inc.-Class B 500,000 13,400,000
---------------------------------------------------------------------------
Investors Financial Services Corp. 1,201,200 36,840,804
---------------------------------------------------------------------------
Legg Mason, Inc. 250,000 11,615,000
---------------------------------------------------------------------------
Moody's Corp. 219,600 10,343,160
---------------------------------------------------------------------------
SEI Investments Co. 185,000 4,937,650
---------------------------------------------------------------------------
Waddell & Reed Financial, Inc.-Class A 575,000 10,062,500
===========================================================================
87,199,114
===========================================================================
Electronic Equipment & Instruments-0.62%
Molex Inc.-Class A 560,000 13,008,800
===========================================================================
Employment Services-1.79%
Robert Half International Inc.(a) 2,250,000 37,575,000
===========================================================================
General Merchandise Stores-1.25%
Dollar Tree Stores, Inc.(a) 1,000,000 26,290,000
===========================================================================
Health Care Distributors & Services-6.48%
AmerisourceBergen Corp. 630,000 44,824,500
---------------------------------------------------------------------------
Express Scripts, Inc.(a) 1,000,000 54,180,000
---------------------------------------------------------------------------
|
FS-2
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Health Care Distributors & Services-(Continued)
Lincare Holdings Inc.(a) 750,000 $ 25,552,500
---------------------------------------------------------------------------
Patterson Dental Co.(a) 221,800 11,424,918
===========================================================================
135,981,918
===========================================================================
Health Care Equipment-4.03%
Biomet, Inc. 400,000 11,784,000
---------------------------------------------------------------------------
Fisher Scientific International Inc.(a) 1,250,000 35,750,000
---------------------------------------------------------------------------
ResMed Inc. 737,100 24,891,867
---------------------------------------------------------------------------
Varian Medical Systems, Inc.(a) 250,000 12,055,000
===========================================================================
84,480,867
===========================================================================
Health Care Facilities-3.61%
Community Health Systems Inc.(a) 1,000,000 23,500,000
---------------------------------------------------------------------------
Health Management Associates, Inc.-Class A 1,500,000 28,680,000
---------------------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 750,000 23,512,500
===========================================================================
75,692,500
===========================================================================
Industrial Machinery-2.07%
Danaher Corp. 750,000 43,387,500
===========================================================================
Insurance Brokers-0.75%
Brown & Brown, Inc. 521,000 15,838,400
===========================================================================
Internet Retail-0.53%
eBay Inc.(a) 175,000 11,070,500
===========================================================================
IT Consulting & Services-5.23%
Affiliated Computer Services, Inc.-Class A(a) 1,250,000 57,562,500
---------------------------------------------------------------------------
CACI International Inc.-Class A(a) 325,000 13,295,750
---------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 1,750,000 38,797,500
===========================================================================
109,655,750
===========================================================================
Managed Health Care-3.82%
Caremark Rx, Inc.(a) 2,000,000 35,400,000
---------------------------------------------------------------------------
First Health Group Corp.(a) 1,720,400 44,695,992
===========================================================================
80,095,992
===========================================================================
Multi-Line Insurance-1.46%
HCC Insurance Holdings, Inc. 1,250,000 30,662,500
===========================================================================
Oil & Gas Drilling-6.30%
ENSCO International Inc. 750,000 20,280,000
---------------------------------------------------------------------------
National-Oilwell, Inc.(a) 1,000,000 20,850,000
---------------------------------------------------------------------------
Patterson-UTI Energy, Inc.(a) 1,500,000 43,380,000
---------------------------------------------------------------------------
Pride International, Inc.(a) 2,250,000 31,230,000
---------------------------------------------------------------------------
Varco International, Inc.(a) 1,000,000 16,440,000
===========================================================================
132,180,000
===========================================================================
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Oil & Gas Equipment & Services-1.63%
Cal Dive International, Inc.(a) 1,000,000 $ 21,970,000
---------------------------------------------------------------------------
Cooper Cameron Corp.(a) 261,200 12,177,144
===========================================================================
34,147,144
===========================================================================
Oil & Gas Exploration & Production-0.83%
Newfield Exploration Co.(a) 500,000 17,495,000
===========================================================================
Pharmaceuticals-2.19%
Medicis Pharmaceutical Corp.-Class A(a) 1,000,000 45,900,000
===========================================================================
Property & Casualty Insurance-0.22%
ACE Ltd. (Cayman Islands) 150,000 4,612,500
===========================================================================
Restaurants-3.77%
CBRL Group, Inc. 500,000 11,715,000
---------------------------------------------------------------------------
CEC Entertainment Inc.(a) 600,000 16,680,000
---------------------------------------------------------------------------
Cheesecake Factory Inc. (The)(a) 450,000 15,255,000
---------------------------------------------------------------------------
Sonic Corp.(a) 499,950 11,633,837
---------------------------------------------------------------------------
Starbucks Corp.(a) 1,000,000 23,750,000
===========================================================================
79,033,837
===========================================================================
Semiconductors-2.98%
Linear Technology Corp. 750,000 20,730,000
---------------------------------------------------------------------------
Microchip Technology Inc. 1,000,000 24,400,000
---------------------------------------------------------------------------
QLogic Corp.(a) 500,000 17,380,000
===========================================================================
62,510,000
===========================================================================
Specialty Chemicals-0.99%
Valspar Corp. (The) 500,000 20,885,000
===========================================================================
Specialty Stores-3.39%
Bed Bath & Beyond Inc.(a) 1,000,000 35,460,000
---------------------------------------------------------------------------
Williams-Sonoma, Inc.(a) 1,500,000 35,700,000
===========================================================================
71,160,000
===========================================================================
Telecommunications Equipment-0.98%
UTStarcom, Inc.(a) 1,200,000 20,496,000
===========================================================================
Trading Companies & Distributors-1.62%
Fastenal Co. 1,000,000 33,950,000
===========================================================================
Total Common Stocks (Cost $1,815,413,949) 1,961,525,539
===========================================================================
|
FS-3
MARKET
SHARES VALUE
---------------------------------------------------------------------------
MONEY MARKET FUNDS-6.73%
STIC Liquid Assets Portfolio(b) 70,615,747 $ 70,615,747
---------------------------------------------------------------------------
STIC Prime Portfolio(b) 70,615,747 70,615,747
===========================================================================
Total Money Market Funds (Cost
$141,231,494) 141,231,494
===========================================================================
TOTAL INVESTMENTS-100.22% (Cost
$1,956,645,443)(c) 2,102,757,033
===========================================================================
OTHER ASSETS LESS LIABILITIES-(0.22%) (4,682,077)
===========================================================================
NET ASSETS-100.00% $2,098,074,956
___________________________________________________________________________
===========================================================================
|
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.
(c) The Investment Company Act of 1940 defines affiliates as those companies in
which a fund holds 5% or more of the outstanding voting securities.
Following is a summary of the transactions with affiliates for the year
ended October 31, 2002.
CHANGE IN
MARKET UNREALIZED MARKET
VALUE PURCHASES SALES APPRECIATION VALUE DIVIDEND REALIZED
10/31/2001 AT COST AT COST (DEPRECIATION) 10/31/2002 INCOME GAIN/(LOSS)
---------------------------------------------------------------------------------------------------------------------------------
Tetra Tech, Inc............. $62,112,000 $ -- $(57,037,978) $(5,074,022) $ -- $ -- $(10,809,052)
Vans, Inc................... 17,950,000 -- (18,219,064) 269,064 -- -- (3,449,586)
=================================================================================================================================
$80,062,000 $ -- $ -- $(14,258,638)
_______________________________________________________________________________________________________________________________
=================================================================================================================================
|
See Notes to Financial Statements.
FS-4
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost $1,956,645,443)* $2,102,757,033
---------------------------------------------------------------------
Receivables for:
Investments sold 32,642,285
---------------------------------------------------------------------
Fund shares sold 1,042,129
---------------------------------------------------------------------
Dividends 587,766
---------------------------------------------------------------------
Investment for deferred compensation plan 77,197
---------------------------------------------------------------------
Collateral for securities loaned 596,209,634
---------------------------------------------------------------------
Other assets 69,721
=====================================================================
Total assets 2,733,385,765
_____________________________________________________________________
=====================================================================
LIABILITIES:
Payables for:
Investments purchased 31,163,532
---------------------------------------------------------------------
Fund shares reacquired 4,848,413
---------------------------------------------------------------------
Deferred compensation plan 77,197
---------------------------------------------------------------------
Collateral upon return of securities loaned 596,209,634
---------------------------------------------------------------------
Accrued distribution fees 834,639
---------------------------------------------------------------------
Accrued trustees' fees 2,141
---------------------------------------------------------------------
Accrued transfer agent fees 1,686,114
---------------------------------------------------------------------
Accrued operating expenses 489,139
=====================================================================
Total liabilities 635,310,809
=====================================================================
Net assets applicable to shares outstanding $2,098,074,956
_____________________________________________________________________
=====================================================================
NET ASSETS:
Class A $1,798,317,504
_____________________________________________________________________
=====================================================================
Class B $ 226,806,244
_____________________________________________________________________
=====================================================================
Class C $ 72,676,014
_____________________________________________________________________
=====================================================================
Class R $ 137,084
_____________________________________________________________________
=====================================================================
Institutional Class $ 138,110
_____________________________________________________________________
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 246,501,426
_____________________________________________________________________
=====================================================================
Class B 32,199,073
_____________________________________________________________________
=====================================================================
Class C 10,319,202
_____________________________________________________________________
=====================================================================
Class R 18,811
_____________________________________________________________________
=====================================================================
Institutional Class 18,865
_____________________________________________________________________
=====================================================================
Class A:
Net asset value per share $ 7.30
---------------------------------------------------------------------
Offering price per share:
(Net asset value of $7.30 divided by 94.50%) $ 7.72
_____________________________________________________________________
=====================================================================
Class B:
Net asset value and offering price per share $ 7.04
_____________________________________________________________________
=====================================================================
Class C:
Net asset value and offering price per share $ 7.04
_____________________________________________________________________
=====================================================================
Class R:
Net asset value and offering price per share $ 7.29
_____________________________________________________________________
=====================================================================
Institutional Class:
Net asset value and offering price per share $ 7.32
_____________________________________________________________________
=====================================================================
|
* At October 31, 2002, securities with an aggregate market value of $580,852,013 were on loan to brokers. Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $22,625) $ 5,288,856
--------------------------------------------------------------------
Dividends from affiliated money market funds 1,521,952
--------------------------------------------------------------------
Interest 661
--------------------------------------------------------------------
Security lending income 1,844,648
====================================================================
Total investment income 8,656,117
====================================================================
EXPENSES:
Advisory fees 17,081,494
--------------------------------------------------------------------
Administrative services fees 383,159
--------------------------------------------------------------------
Custodian fees 236,351
--------------------------------------------------------------------
Distribution fees -- Class A 5,780,784
--------------------------------------------------------------------
Distribution fees -- Class B 2,857,330
--------------------------------------------------------------------
Distribution fees -- Class C 929,471
--------------------------------------------------------------------
Distribution fees -- Class R 69
--------------------------------------------------------------------
Transfer agent fees 10,159,914
--------------------------------------------------------------------
Transfer agent fees -- Institutional Class 32
--------------------------------------------------------------------
Trustees' fees 21,665
--------------------------------------------------------------------
Other 1,001,546
====================================================================
Total expenses 38,451,815
====================================================================
Less: Fees waived (16,400)
--------------------------------------------------------------------
Expenses paid indirectly (41,491)
====================================================================
Net expenses 38,393,924
====================================================================
Net investment income (loss) (29,737,807)
====================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES:
Net realized gain (loss) from investment securities (454,400,428)
--------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 70,396,760
====================================================================
Net gain (loss) from investment securities (384,003,668)
====================================================================
Net increase (decrease) in net assets resulting from
operations $(413,741,475)
____________________________________________________________________
====================================================================
|
See Notes to Financial Statements.
FS-5
Statement of Changes in Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (29,737,807) $ (33,053,668)
------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (454,400,428) (655,234,334)
------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities 70,396,760 (1,352,849,651)
================================================================================================
Net increase (decrease) in net assets resulting from
operations (413,741,475) (2,041,137,653)
================================================================================================
Distributions to shareholders from net realized gains:
Class A -- (805,640,320)
------------------------------------------------------------------------------------------------
Class B -- (74,578,792)
------------------------------------------------------------------------------------------------
Class C -- (23,638,642)
------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (368,156,521) 676,696,702
------------------------------------------------------------------------------------------------
Class B (19,209,543) 177,773,085
------------------------------------------------------------------------------------------------
Class C (8,446,307) 58,760,112
------------------------------------------------------------------------------------------------
Class R 133,795 --
------------------------------------------------------------------------------------------------
Institutional Class 145,043 --
================================================================================================
Net increase (decrease) in net assets (809,275,008) (2,031,765,508)
________________________________________________________________________________________________
================================================================================================
NET ASSETS:
Beginning of year 2,907,349,964 4,939,115,472
================================================================================================
End of year $ 2,098,074,956 $ 2,907,349,964
________________________________________________________________________________________________
================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 3,061,994,083 $ 3,487,258,638
------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (208,878) (202,093)
------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (1,109,821,839) (655,421,411)
------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 146,111,590 75,714,830
================================================================================================
$ 2,098,074,956 $ 2,907,349,964
________________________________________________________________________________________________
================================================================================================
|
See Notes to Financial Statements.
FS-6
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Aggressive Growth Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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. Class R shares and Institutional Class shares are sold at net asset value. 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 and commercial paper 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. 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 gain, 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 gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
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.
FS-7
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 master 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 year ended October 31, 2002, AIM waived fees of $16,400.
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 October 31, 2002, AIM was paid $383,159 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 October 31, 2002, AFS retained $4,349,971 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 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B, Class C and Class R shares paid $5,780,784, $2,857,330, $929,471, and $69, respectively.
AIM Distributors retained commissions of $401,540 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $61,820, $0, $27,024, and $0 in contingent deferred sales charges imposed on redemptions of Class A, Class B, Class C, and Class R shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 2002, the Fund paid legal fees of $11,792 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 October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $40,361 and reductions in custodian fees of $1,130 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $41,491.
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 year ended October 31,
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 October 31, 2002, securities with an aggregate value of $580,852,013 were
on loan to brokers. The loans were secured by cash collateral of $596,209,634
received by the Fund and invested in affiliated money market funds as follows:
$298,104,817 in STIC Liquid Assets Portfolio and $298,104,817 in STIC Prime
Portfolio. For the year ended October 31, 2002, the Fund received fees of
$1,844,648 for securities lending.
FS-8
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
---------------------------------------------------------------
Distributions paid from long-term
capital gain $ -- $903,857,754
_______________________________________________________________
===============================================================
|
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation -- investments $ 136,901,651
--------------------------------------------------------------
Temporary book/tax differences (208,878)
--------------------------------------------------------------
Capital loss carryforward (1,100,611,900)
--------------------------------------------------------------
Shares of beneficial interest 3,061,994,083
==============================================================
$ 2,098,074,956
______________________________________________________________
==============================================================
|
The difference between book-basis and tax-basis unrealized appreciation is due to differences in the timing of recognition of gains and losses on investments for book and tax purposes. The Fund's unrealized appreciation difference is attributable primarily to the deferral of losses on wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the deferral of trustee compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-------------------------------------------------------------
October 31, 2009 $ 636,872,876
-------------------------------------------------------------
October 31, 2010 463,739,024
=============================================================
$1,100,611,900
_____________________________________________________________
=============================================================
|
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 October 31, 2002 was $1,758,341,136 and $2,242,381,518, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 243,936,819 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (107,035,168) ============================================================= Net unrealized appreciation of investment securities $ 136,901,651 _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $1,965,855,382. |
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of the reclassification of a net operating loss and other reclassifications on October 31, 2002, undistributed net investment income (loss) was increased by $29,731,022 and shares of beneficial interest decreased by $29,731,022. This reclassification had no effect on the net assets of the Fund.
FS-9
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 44,249,623* $385,941,183* 66,113,301 $ 764,231,772
--------------------------------------------------------------------------------------------------------------------------
Class B 6,507,666 55,189,130 16,139,430 187,252,162
--------------------------------------------------------------------------------------------------------------------------
Class C 2,934,855 24,752,456 6,138,899 70,314,475
--------------------------------------------------------------------------------------------------------------------------
Class R** 18,814 133,820 -- --
--------------------------------------------------------------------------------------------------------------------------
Institutional Class*** 18,865 145,043 -- --
==========================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 59,903,743 755,374,108
--------------------------------------------------------------------------------------------------------------------------
Class B -- -- 5,828,105 71,964,367
--------------------------------------------------------------------------------------------------------------------------
Class C -- -- 1,838,406 22,685,441
==========================================================================================================================
Reacquired:
Class A (87,574,389) (754,097,704) (77,634,743) (842,909,178)
--------------------------------------------------------------------------------------------------------------------------
Class B (9,151,616)* (74,398,673)* (7,763,426) (81,443,444)
--------------------------------------------------------------------------------------------------------------------------
Class C (4,058,002) (33,198,763) (3,192,257) (34,239,804)
--------------------------------------------------------------------------------------------------------------------------
Class R** (3) (25) -- --
==========================================================================================================================
(47,054,187) $(395,533,533) 67,371,458 $ 913,229,899
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
* Includes automatic conversion of 188,487 shares of Class B shares in the amount of $1,563,408 to 182,647 shares of Class A shares in the amount of $1,563,408. ** Class R shares commenced sales on June 3, 2002. *** Institutional shares commenced sales on March 15, 2002.
FS-10
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A(a)
------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.68 $ 18.41 $ 13.90 $ 10.04 $ 12.49
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)(b) (0.09)(b) (0.13) (0.09) (0.08)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (1.29) (6.34) 11.08 4.05 (1.93)
=================================================================================================================================
Total from investment operations (1.38) (6.43) 10.95 3.96 (2.01)
=================================================================================================================================
Less distributions from net realized gains -- (3.30) (6.44) (0.10) (0.44)
=================================================================================================================================
Net asset value, end of period $ 7.30 $ 8.68 $ 18.41 $ 13.90 $ 10.04
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (15.90)% (40.51)% 47.53% 39.73% (16.36)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,798,318 $2,516,407 $4,444,515 $2,808,451 $2,638,038
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.32%(d) 1.17% 1.04% 1.09% 1.06%
=================================================================================================================================
Ratio of net investment income (loss) to average
net assets (1.00)%(d) (0.79)% (0.77)% (0.69)% (0.64)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 68% 89% 79% 75% 69%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information and distributions prior to October 31, 1999 have
been restated to reflect a 4 for 1 stock split, effected in the form of
a 300% stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles and does not include sales charges.
(d) Ratios are based on average daily net assets of $2,312,313,674.
CLASS B(a)
----------------------------------------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED) TO
-------------------------------------- OCTOBER 31,
2002 2001 2000 1999
------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.45 $ 18.12 $ 13.81 $ 10.85
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)(b) (0.17)(b) (0.29) (0.07)
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.26) (6.20) 11.04 3.03
========================================================================================================================
Total from investment operations (1.41) (6.37) 10.75 2.96
========================================================================================================================
Less distributions from net realized gains -- (3.30) (6.44) --
========================================================================================================================
Net asset value, end of period $ 7.04 $ 8.45 $ 18.12 $ 13.81
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(c) (16.69)% (40.90)% 46.29% 27.27%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $226,806 $294,303 $374,010 $24,914
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets 2.07%(d) 1.94% 1.86% 2.08%(e)
========================================================================================================================
Ratio of net investment income (loss) to average net assets (1.75)%(d) (1.55)% (1.59)% (1.68)%(e)
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate 68% 89% 79% 75%
________________________________________________________________________________________________________________________
========================================================================================================================
|
(a) Per share information and distributions prior to October 31, 1999 have
been restated to reflect a 4 for 1 stock split, effected in the form of
a 300% stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles, 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 $285,732,961.
(e) Annualized.
FS-11
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C(a)
--------------------------------------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED) TO
------------------------------------ OCTOBER 31,
2002 2001 2000 1999
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.45 $ 18.11 $ 13.81 $10.85
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)(b) (0.17)(b) (0.29) (0.07)
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.26) (6.19) 11.03 3.03
======================================================================================================================
Total from investment operations (1.41) (6.36) 10.74 2.96
======================================================================================================================
Less distributions from net realized gains -- (3.30) (6.44) --
======================================================================================================================
Net asset value, end of period $ 7.04 $ 8.45 $ 18.11 $13.81
______________________________________________________________________________________________________________________
======================================================================================================================
Total return(c) (16.69)% (40.86)% 46.21% 27.27%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $72,676 $96,640 $120,591 $6,807
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets 2.07%(d) 1.94%(d) 1.86% 2.08%(e)
======================================================================================================================
Ratio of net investment income (loss) to average net assets (1.75)%(d) (1.55)%(d) (1.59)% (1.68)%(e)
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate 68% 89% 79% 75%
______________________________________________________________________________________________________________________
======================================================================================================================
|
(a) Per share information and distributions prior to October 31, 1999 have
been restated to reflect a 4 for 1 stock split, effected in the form of
a 300% stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles, 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 $92,947,098.
(e) Annualized.
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------
Net asset value, beginning of period $ 8.89
---------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a)
---------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.56)
===========================================================================
Total from investment operations (1.60)
===========================================================================
Net asset value, end of period $ 7.29
___________________________________________________________________________
===========================================================================
Total return(b) (18.00)%
___________________________________________________________________________
===========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 137
___________________________________________________________________________
===========================================================================
Ratio of expenses to average net assets 1.62%(c)
===========================================================================
Ratio of net investment income (loss) to average net assets (1.30)%(c)
___________________________________________________________________________
===========================================================================
Portfolio turnover rate 68%
___________________________________________________________________________
===========================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $33,556.
FS-12
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
INSTITUTIONAL CLASS
-------------------
MARCH 15, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.53
---------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a)
---------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.19)
=================================================================================
Total from investment operations (2.21)
=================================================================================
Net asset value, end of period $ 7.32
_________________________________________________________________________________
=================================================================================
Total return(b) (23.19)%
_________________________________________________________________________________
=================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 138
_________________________________________________________________________________
=================================================================================
Ratio of expenses to average net assets 0.81%(c)
=================================================================================
Ratio of net investment income (loss) to average net assets (0.49)%(c)
_________________________________________________________________________________
=================================================================================
Portfolio turnover rate 68%
_________________________________________________________________________________
=================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $50,407.
FS-13
Report of Independent Auditors
To the Shareholders of AIM Blue Chip Fund And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Blue Chip Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the periods presented through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Blue Chip Fund as of October 31, 2002, 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.
Houston, Texas /s/ ERNST & YOUNG LLP
December 10, 2002
FS-14
|
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
--------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-95.34%
Aerospace & Defense-3.12%
General Dynamics Corp. 200,000 $ 15,826,000
--------------------------------------------------------------------------
Lockheed Martin Corp. 650,000 37,635,000
--------------------------------------------------------------------------
United Technologies Corp. 600,000 37,002,000
==========================================================================
90,463,000
==========================================================================
Aluminum-0.53%
Alcoa Inc. 700,000 15,442,000
==========================================================================
Apparel Retail-0.32%
Limited Brands 600,000 9,402,000
==========================================================================
Banks-5.46%
Bank of America Corp. 825,000 57,585,000
--------------------------------------------------------------------------
Fifth Third Bancorp 675,000 42,862,500
--------------------------------------------------------------------------
Wells Fargo & Co. 1,150,000 58,040,500
==========================================================================
158,488,000
==========================================================================
Biotechnology-1.24%
Amgen Inc.(a) 775,000 36,084,000
==========================================================================
Brewers-0.77%
Anheuser-Busch Cos., Inc. 425,000 22,423,000
==========================================================================
Broadcasting & Cable TV-0.96%
Clear Channel Communications, Inc.(a) 750,000 27,787,500
==========================================================================
Building Products-0.53%
Masco Corp. 750,000 15,420,000
==========================================================================
Computer Hardware-2.77%
Dell Computer Corp.(a) 1,850,000 52,928,500
--------------------------------------------------------------------------
International Business Machines Corp. 350,000 27,629,000
==========================================================================
80,557,500
==========================================================================
Data Processing Services-2.31%
First Data Corp. 1,200,000 41,928,000
--------------------------------------------------------------------------
Fiserv, Inc.(a) 800,000 24,992,000
==========================================================================
66,920,000
==========================================================================
Department Stores-0.91%
Kohl's Corp.(a) 450,000 26,302,500
==========================================================================
Diversified Chemicals-0.25%
Du Pont (E. I.) de Nemours & Co. 175,000 7,218,750
==========================================================================
Diversified Commercial Services-0.31%
H&R Block, Inc. 200,000 8,876,000
==========================================================================
|
MARKET
SHARES VALUE
--------------------------------------------------------------------------
Diversified Financial Services-11.80%
American Express Co. 900,000 $ 32,733,000
--------------------------------------------------------------------------
Citigroup Inc. 2,400,000 88,680,000
--------------------------------------------------------------------------
Fannie Mae 700,000 46,802,000
--------------------------------------------------------------------------
Freddie Mac 700,000 43,106,000
--------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 400,000 28,640,000
--------------------------------------------------------------------------
J.P. Morgan Chase & Co. 900,000 18,675,000
--------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 750,000 28,462,500
--------------------------------------------------------------------------
Morgan Stanley 900,000 35,028,000
--------------------------------------------------------------------------
SLM Corp. 200,000 20,548,000
==========================================================================
342,674,500
==========================================================================
Drug Retail-0.64%
Walgreen Co. 550,000 18,562,500
==========================================================================
Electric Utilities-1.02%
FPL Group, Inc. 250,000 14,745,000
--------------------------------------------------------------------------
Southern Co. (The) 500,000 14,850,000
==========================================================================
29,595,000
==========================================================================
Food Distributors-1.36%
SYSCO Corp. 1,250,000 39,600,000
==========================================================================
General Merchandise Stores-4.65%
Costco Wholesale Corp.(a) 450,000 15,268,500
--------------------------------------------------------------------------
Target Corp. 950,000 28,614,000
--------------------------------------------------------------------------
Wal-Mart Stores, Inc. 1,700,000 91,035,000
==========================================================================
134,917,500
==========================================================================
Health Care Distributors & Services-1.43%
Cardinal Health, Inc. 600,000 41,526,000
==========================================================================
Health Care Equipment-3.86%
Boston Scientific Corp.(a) 350,000 13,170,500
--------------------------------------------------------------------------
Medtronic, Inc. 1,175,000 52,640,000
--------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 550,000 19,585,500
--------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 650,000 26,793,000
==========================================================================
112,189,000
==========================================================================
Health Care Facilities-2.04%
HCA Inc. 900,000 39,141,000
--------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 700,000 20,125,000
==========================================================================
59,266,000
==========================================================================
Home Improvement Retail-1.84%
Home Depot, Inc. (The) 1,850,000 53,428,000
==========================================================================
|
FS-15
MARKET
SHARES VALUE
--------------------------------------------------------------------------
Hotels, Resorts & Cruise Lines-0.85%
Carnival Corp. 950,000 $ 24,814,000
==========================================================================
Household Products-2.90%
Colgate-Palmolive Co. 725,000 39,860,500
--------------------------------------------------------------------------
Procter & Gamble Co. (The) 500,000 44,225,000
==========================================================================
84,085,500
==========================================================================
Industrial Conglomerates-3.04%
General Electric Co. 3,500,000 88,375,000
==========================================================================
Industrial Gases-0.69%
Air Products & Chemicals, Inc. 450,000 19,890,000
==========================================================================
Integrated Oil & Gas-3.07%
Exxon Mobil Corp. 2,650,000 89,199,000
==========================================================================
Integrated Telecommunication Services-1.50%
AT&T Corp. 675,000 8,802,000
--------------------------------------------------------------------------
BellSouth Corp. 350,000 9,152,500
--------------------------------------------------------------------------
SBC Communications Inc. 1,000,000 25,660,000
==========================================================================
43,614,500
==========================================================================
Life & Health Insurance-0.60%
Prudential Financial, Inc.(a) 600,000 17,520,000
==========================================================================
Managed Health Care-1.49%
UnitedHealth Group Inc. 475,000 43,201,250
==========================================================================
Motorcycle Manufacturers-0.42%
Harley-Davidson, Inc. 235,000 12,290,500
==========================================================================
Movies & Entertainment-1.88%
Viacom Inc.-Class B(a) 1,225,000 54,647,250
==========================================================================
Multi-Line Insurance-1.99%
American International Group, Inc. 925,000 57,858,750
==========================================================================
Multi-Utilities & Unregulated Power-0.51%
Duke Energy Corp. 725,000 14,855,250
==========================================================================
Networking Equipment-1.73%
Cisco Systems, Inc.(a) 4,500,000 50,310,000
==========================================================================
Oil & Gas Drilling-1.63%
ENSCO International Inc. 675,000 18,252,000
--------------------------------------------------------------------------
Nabors Industries, Ltd. (Bermuda)(a) 500,000 17,485,000
--------------------------------------------------------------------------
Transocean Inc. 525,000 11,539,500
==========================================================================
47,276,500
==========================================================================
Oil & Gas Equipment & Services-0.62%
Schlumberger Ltd. (Netherlands) 450,000 18,049,500
==========================================================================
|
MARKET
SHARES VALUE
--------------------------------------------------------------------------
Pharmaceuticals-10.38%
Allergan, Inc. 400,000 $ 21,780,000
--------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 275,000 26,947,250
--------------------------------------------------------------------------
Johnson & Johnson 1,600,000 94,000,000
--------------------------------------------------------------------------
Pfizer Inc. 3,250,000 103,252,500
--------------------------------------------------------------------------
Pharmacia Corp. 625,000 26,875,000
--------------------------------------------------------------------------
Wyeth 850,000 28,475,000
==========================================================================
301,329,750
==========================================================================
Railroads-0.62%
Canadian National Railway Co. (Canada) 425,000 18,134,750
==========================================================================
Semiconductor Equipment-1.87%
Applied Materials, Inc.(a) 2,550,000 38,326,500
--------------------------------------------------------------------------
KLA-Tencor Corp.(a) 450,000 16,033,500
==========================================================================
54,360,000
==========================================================================
Semiconductors-3.65%
Analog Devices, Inc.(a) 800,000 21,440,000
--------------------------------------------------------------------------
Intel Corp. 1,400,000 24,220,000
--------------------------------------------------------------------------
Linear Technology Corp. 380,000 10,503,200
--------------------------------------------------------------------------
Microchip Technology Inc. 1,000,000 24,400,000
--------------------------------------------------------------------------
Texas Instruments Inc. 1,000,000 15,860,000
--------------------------------------------------------------------------
Xilinx, Inc.(a) 500,000 9,495,000
==========================================================================
105,918,200
==========================================================================
Soft Drinks-1.80%
Coca-Cola Co. (The) 600,000 27,888,000
--------------------------------------------------------------------------
PepsiCo, Inc. 550,000 24,255,000
==========================================================================
52,143,000
==========================================================================
Specialty Stores-0.86%
Bed Bath & Beyond Inc.(a) 700,000 24,822,000
==========================================================================
Systems Software-4.57%
Microsoft Corp.(a) 2,000,000 106,940,000
--------------------------------------------------------------------------
Oracle Corp.(a) 1,700,000 17,323,000
--------------------------------------------------------------------------
VERITAS Software Corp.(a) 550,000 8,387,500
==========================================================================
132,650,500
==========================================================================
Wireless Telecommunication Services-0.55%
Vodafone Group PLC-ADR (United Kingdom) 1,000,000 15,920,000
==========================================================================
Common Stocks & Other Equity Interests
(Cost $2,687,527,249) 2,768,407,950
==========================================================================
PRINCIPAL
AMOUNT
U.S. TREASURY BILLS-0.27%
1.63%, 12/19/02 (Cost $7,982,560)(b) $8,000,000(c) 7,982,560
==========================================================================
|
FS-16
MARKET
SHARES VALUE
--------------------------------------------------------------------------
MONEY MARKET FUNDS-4.59%
STIC Liquid Assets Portfolio(d) 66,569,490 $ 66,569,490
--------------------------------------------------------------------------
STIC Prime Portfolio(d) 66,569,490 66,569,490
==========================================================================
Total Money Market Funds (Cost
$133,138,980) 133,138,980
==========================================================================
TOTAL INVESTMENTS-100.20% (Cost
$2,828,648,789) 2,909,529,490
==========================================================================
OTHER ASSETS LESS LIABILITIES-(0.20%) (5,675,437)
==========================================================================
NET ASSETS-100.00% $2,903,854,053
__________________________________________________________________________
==========================================================================
|
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) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 7.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-17
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost $2,828,648,789)* $2,909,529,490
---------------------------------------------------------------------
Receivables for:
Investments sold 13,899,569
---------------------------------------------------------------------
Fund shares sold 2,307,628
---------------------------------------------------------------------
Dividends and interest 2,411,671
---------------------------------------------------------------------
Investment for deferred compensation plan 61,174
---------------------------------------------------------------------
Collateral for securities loaned 8,988,400
---------------------------------------------------------------------
Other assets 56,116
=====================================================================
Total assets 2,937,254,048
_____________________________________________________________________
=====================================================================
LIABILITIES:
Payables for:
Investments purchased 11,603,709
---------------------------------------------------------------------
Fund shares reacquired 7,982,722
---------------------------------------------------------------------
Deferred compensation plan 61,174
---------------------------------------------------------------------
Collateral upon return of securities loaned 8,988,400
---------------------------------------------------------------------
Variation margin 243,840
---------------------------------------------------------------------
Accrued distribution fees 2,434,100
---------------------------------------------------------------------
Accrued trustees' fees 2,651
---------------------------------------------------------------------
Accrued transfer agent fees 1,836,246
---------------------------------------------------------------------
Accrued operating expenses 247,153
=====================================================================
Total liabilities 33,399,995
=====================================================================
Net assets applicable to shares outstanding $2,903,854,053
_____________________________________________________________________
=====================================================================
NET ASSETS:
Class A $1,402,588,789
_____________________________________________________________________
=====================================================================
Class B $1,198,513,202
_____________________________________________________________________
=====================================================================
Class C $ 302,555,409
_____________________________________________________________________
=====================================================================
Class R $ 36,623
_____________________________________________________________________
=====================================================================
Institutional Class $ 160,030
_____________________________________________________________________
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 152,087,477
_____________________________________________________________________
=====================================================================
Class B 135,006,825
_____________________________________________________________________
=====================================================================
Class C 34,083,249
_____________________________________________________________________
=====================================================================
Class R 3,972
_____________________________________________________________________
=====================================================================
Institutional Class 17,280
_____________________________________________________________________
=====================================================================
Class A:
Net asset value per share $ 9.22
---------------------------------------------------------------------
Offering price per share:
(Net asset value of $9.22 divided by 94.50%) $ 9.76
_____________________________________________________________________
=====================================================================
Class B:
Net asset value and offering price per share $ 8.88
_____________________________________________________________________
=====================================================================
Class C:
Net asset value and offering price per share $ 8.88
_____________________________________________________________________
=====================================================================
Class R:
Net asset value and offering price per share $ 9.22
_____________________________________________________________________
=====================================================================
Institutional Class:
Net asset value and offering price per share $ 9.26
_____________________________________________________________________
=====================================================================
|
* At October 31, 2002, securities with an aggregate market value of $8,734,920
were on loan to brokers.
Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$192,363) $ 38,304,023
--------------------------------------------------------------------
Dividends from affiliated money market funds 2,827,516
--------------------------------------------------------------------
Interest 79,361
--------------------------------------------------------------------
Security lending income 200,425
====================================================================
Total investment income 41,411,325
====================================================================
EXPENSES:
Advisory fees 24,803,281
--------------------------------------------------------------------
Administrative services fees 441,011
--------------------------------------------------------------------
Custodian fees 227,964
--------------------------------------------------------------------
Distribution fees -- Class A 6,517,172
--------------------------------------------------------------------
Distribution fees -- Class B 16,167,462
--------------------------------------------------------------------
Distribution fees -- Class C 4,196,874
--------------------------------------------------------------------
Distribution fees -- Class R 31
--------------------------------------------------------------------
Transfer agent fees 14,152,359
--------------------------------------------------------------------
Transfer agent fees -- Institutional Class 28
--------------------------------------------------------------------
Trustees' fees 28,525
--------------------------------------------------------------------
Other 1,144,829
====================================================================
Total expenses 67,679,536
====================================================================
Less: Fees waived (26,519)
--------------------------------------------------------------------
Expenses paid indirectly (60,293)
====================================================================
Net expenses 67,592,724
====================================================================
Net investment income (loss) (26,181,399)
====================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND FUTURES
CONTRACTS:
Net realized gain (loss) from:
Investment securities (597,204,711)
--------------------------------------------------------------------
Foreign currencies (914)
--------------------------------------------------------------------
Futures contracts (8,019,257)
====================================================================
(605,224,882)
====================================================================
Change in net unrealized appreciation (depreciation)
of:
Investment securities (88,799,949)
--------------------------------------------------------------------
Foreign currencies 8,118
--------------------------------------------------------------------
Futures contracts 1,164,391
====================================================================
(87,627,440)
====================================================================
Net gain (loss) from investment securities, foreign
currencies and futures contracts (692,852,322)
====================================================================
Net increase (decrease) in net assets resulting from
operations $(719,033,721)
____________________________________________________________________
====================================================================
|
See Notes to Financial Statements.
FS-18
Statement of Changes In Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (26,181,399) $ (35,262,129)
------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and futures contracts (605,224,882) (875,780,324)
------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and futures
contracts (87,627,440) (1,586,297,713)
================================================================================================
Net increase (decrease) in net assets resulting from
operations (719,033,721) (2,497,340,166)
================================================================================================
Share transactions-net:
Class A (325,975,435) 81,644,114
------------------------------------------------------------------------------------------------
Class B (303,773,409) 98,738,160
------------------------------------------------------------------------------------------------
Class C (109,471,968) 49,072,979
------------------------------------------------------------------------------------------------
Class R 36,356 --
------------------------------------------------------------------------------------------------
Institutional Class 168,155 --
================================================================================================
Net increase (decrease) in net assets (1,458,050,022) (2,267,884,913)
================================================================================================
NET ASSETS:
Beginning of year 4,361,904,075 6,629,788,988
================================================================================================
End of year $ 2,903,854,053 $ 4,361,904,075
________________________________________________________________________________________________
================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 4,536,803,562 $ 5,301,981,761
------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (154,369) (133,954)
------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and futures contracts (1,714,840,770) (1,109,616,802)
------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 82,045,630 169,673,070
================================================================================================
$ 2,903,854,053 $ 4,361,904,075
________________________________________________________________________________________________
================================================================================================
|
See Notes to Financial Statements.
FS-19
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Blue Chip Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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. Class R shares and Institutional Class shares are sold at net asset value. 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 with a secondary objective of 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 and commercial paper 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. 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 gain, 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 gain) 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.
FS-20
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. 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 master investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of the first $350 million of the Fund's average daily net assets, plus 0.625% of the Fund's average daily net assets in excess of $350 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. 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 October 31, 2002, AIM waived fees of $26,519.
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 October 31, 2002, AIM was paid $441,011 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 October 31, 2002, AFS retained $7,192,239 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 0.35% 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B, Class C and Class R shares paid $6,517,172, $16,167,462, $4,196,874 and $31, respectively.
AIM Distributors retained commissions of $524,961 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $43,312, $2,640, $61,493 and $0 in contingent deferred sales charges imposed on redemptions of Class A, Class B, Class C and Class R shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 2002, the Fund paid legal fees of $15,064 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-21
NOTE 3--INDIRECT EXPENSES
For the year ended October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $59,304 and reductions in custodian fees of $989 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $60,293.
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 year ended October 31,
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 October 31, 2002, securities with an aggregate value of $8,734,920 were on loan to brokers. The loans were secured by cash collateral of $8,988,400 received by the Fund and invested in STIC Liquid Assets Portfolio, an affiliated money market fund. For the year ended October 31, 2002, the Fund received fees of $200,425 for securities lending.
NOTE 7--FUTURES CONTRACTS
On October 31, 2002, $3,964,000 principal amount of U.S. Treasury obligations were pledged as collateral to cover margin requirements for open futures contracts. Open futures contracts as of October 31, 2002 were as follows:
NO. OF MONTH/ MARKET UNREALIZED
CONTRACT CONTRACTS COMMITMENT VALUE APPRECIATION
---------------------------------------------------------------------------
S&P 500 Index 230 Dec-02 Long $50,910,500 $1,164,391
___________________________________________________________________________
===========================================================================
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NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid during the years ended October 31, 2002 and 2001.
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation -- investments $ 40,944,547
--------------------------------------------------------------
Temporary book/tax differences (154,369)
--------------------------------------------------------------
Capital loss carryforward (1,673,739,687)
--------------------------------------------------------------
Shares of beneficial interest 4,536,803,562
==============================================================
$ 2,903,854,053
______________________________________________________________
==============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized depreciation difference is attributable to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains on futures contracts. Amount includes appreciation on foreign currencies of $539.
The temporary book/tax differences are the result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the results of the deferral of trustee compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
October 31, 2007 $ 38,614,682
-----------------------------------------------------------
October 31, 2008 185,511,022
-----------------------------------------------------------
October 31, 2009 833,974,843
-----------------------------------------------------------
October 31, 2010 615,639,140
===========================================================
$1,673,739,687
___________________________________________________________
===========================================================
|
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 October 31, 2002 was $1,058,391,209 and $1,837,546,899, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 314,846,721 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (273,902,713) ------------------------------------------------------------- Net unrealized appreciation of investment securities $ 40,944,008 _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $2,868,585,482. |
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
As of result of differing book/tax treatment of foreign currency transactions and net operating loss reclassifications, on October 31, 2002, shares of beneficial interest was decreased by $26,161,898, undistributed net investment income was increased by $26,160,984 and undistributed net realized gains was increased by $914. This reclassification had no effect on the net assets of the Fund.
FS-22
NOTE 11--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 36,847,391* $ 400,415,874* 59,896,009 $859,547,781
-------------------------------------------------------------------------------------------------------------------------
Class B 15,784,454 168,633,848 38,414,696 544,596,082
-------------------------------------------------------------------------------------------------------------------------
Class C 5,922,957 63,436,977 15,458,538 219,941,831
-------------------------------------------------------------------------------------------------------------------------
Class R** 3,975 36,381 -- --
-------------------------------------------------------------------------------------------------------------------------
Institutional Class*** 19,795 192,879 -- --
=========================================================================================================================
Reacquired:
Class A (68,970,741) (726,391,309) (58,620,165) (777,903,667)
-------------------------------------------------------------------------------------------------------------------------
Class B (46,891,521)* (472,407,257)* (35,112,835) (445,857,922)
-------------------------------------------------------------------------------------------------------------------------
Class C (16,701,794) (172,908,945) (13,300,112) (170,868,852)
-------------------------------------------------------------------------------------------------------------------------
Class R** (3) (25) -- --
-------------------------------------------------------------------------------------------------------------------------
Institutional Class*** (2,515) (24,724) -- --
=========================================================================================================================
(73,988,002) $(739,016,301) 6,736,131 $229,455,253
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
* Includes automatic conversion of 1,170,222 shares of Class B shares in the amount of $12,298,772 to 1,132,609 shares of Class A shares in the amount of $12,298,772. ** Class R shares commenced operations as of June 3, 2002. *** Institutional Class shares commenced operations as of March 15, 2002.
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A(A)
------------------------------------------------------------------------
YEAR ENDED
OCTOBER 31,
------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.22 $ 17.29 $ 15.49 $ 12.05 $ 10.32
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(b) (0.04) (0.05)(b) 0.01 0.04(b)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.96) (6.03) 1.85 3.47 1.92
=================================================================================================================================
Total from investment operations (2.00) (6.07) 1.80 3.48 1.96
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.01) (0.02)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- (0.03) (0.21)
=================================================================================================================================
Total distributions -- -- -- (0.04) (0.23)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Net asset value, end of period $ 9.22 $ 11.22 $ 17.29 $ 15.49 $ 12.05
=================================================================================================================================
Total return(c) (17.82)% (35.11)% 11.60% 29.01% 19.36%
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,402,589 $2,067,602 $3,163,453 $2,299,551 $1,085,648
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.40%(d) 1.28% 1.19% 1.19% 1.22%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.33)%(d) (0.29)% (0.31)% 0.03% 0.33%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 28% 31% 22% 22% 27%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information for all periods prior to October 31, 2000 have
been restated to reflect a 3 for 1 stock split, effected in the form of
a 200% stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles and does not include sales charges.
(d) Ratios are based on average daily net assets of $1,862,049,115.
FS-23
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B(A)
-------------------------------------------------------------------------
YEAR ENDED
OCTOBER 31,
-------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.87 $ 16.87 $ 15.22 $ 11.91 $ 10.25
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10)(b) (0.13) (0.17)(b) (0.10)(b) (0.04)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.89) (5.87) 1.82 3.44 1.91
=================================================================================================================================
Total from investment operations (1.99) (6.00) 1.65 3.34 1.87
=================================================================================================================================
Less distributions from net realized gains -- -- -- (0.03) (0.21)
=================================================================================================================================
Net asset value, end of period $ 8.88 $ 10.87 $ 16.87 $ 15.22 $ 11.91
=================================================================================================================================
Total return(c) (18.31)% (35.57)% 10.87% 28.08% 18.52%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,198,513 $1,806,464 $2,746,149 $1,891,171 $745,862
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.05%(d) 1.94% 1.88% 1.91% 1.94%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.98)%(d) (0.94)% (1.00)% (0.68)% (0.38)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 28% 31% 22% 22% 27%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information for all periods prior to October 31, 2000 have
been restated to reflect a 3 for 1 stock split, effected in the form of
a 200% stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $1,616,746,189.
CLASS C(A)
-----------------------------------------------------------------
YEAR ENDED
OCTOBER 31,
-----------------------------------------------------------------
2002 2001 2000 1999 1998
-------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.87 $ 16.86 $ 15.21 $ 11.91 $ 10.25
-------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10)(b) (0.13) (0.17)(b) (0.10)(b) (0.04)(b)
-------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.89) (5.86) 1.82 3.43 1.91
===============================================================================================================================
Total from investment operations (1.99) (5.99) 1.65 3.33 1.87
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Less distributions:
Distributions from net realized gains -- -- -- (0.03) (0.21)
-------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.88 $ 10.87 $ 16.86 $ 15.21 $ 11.91
===============================================================================================================================
Total return(c) (18.31)% (35.53)% 10.82% 28.09% 18.52%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $302,555 $487,838 $720,186 $349,951 $ 87,554
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets 2.05%(d) 1.94% 1.88% 1.90% 1.94%
===============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.98)%(d) (0.94)% (1.00)% (0.68)% (0.38)%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 28% 31% 22% 22% 27%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
|
(a) Per share information for all periods prior to October 31, 2000 have
been restated to reflect a 3 for 1 stock split, effected in the form of
a 200% stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $419,687,377.
FS-24
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------
Net asset value, beginning of period $10.53
---------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a)
---------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.29)
===========================================================================
Total from investment operations (1.31)
===========================================================================
Net asset value, end of period $ 9.22
===========================================================================
Total return(b) (12.44)%
===========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 37
___________________________________________________________________________
===========================================================================
Ratio of expenses to average net assets 1.55%(c)
===========================================================================
Ratio of net investment income (loss) to average net assets (0.49)%(c)
___________________________________________________________________________
===========================================================================
Portfolio turnover rate 28%
___________________________________________________________________________
===========================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $15,364.
FS-25
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
INSTITUTIONAL CLASS
-------------------
MARCH 15, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.13
---------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.02(a)
---------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.89)
=================================================================================
Total from investment operations (2.87)
=================================================================================
Net asset value, end of period $ 9.26
=================================================================================
Total return(b) (23.66)%
=================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 160
_________________________________________________________________________________
=================================================================================
Ratio of expenses to average net assets 0.77%(c)
=================================================================================
Ratio of net investment income to average net assets 0.30%(c)
_________________________________________________________________________________
=================================================================================
Portfolio turnover rate 28%
_________________________________________________________________________________
=================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $57,632.
FS-26
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Capital Development Fund And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Capital Development Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the periods presented through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Capital Development Fund as of October 31, 2002, 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.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
|
FS-27
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
------------------------------------------------------------------------
DOMESTIC COMMON STOCKS & OTHER EQUITY
INTERESTS-82.50%
Advertising-1.12%
Lamar Advertising Co.(a) 284,000 $ 9,638,960
========================================================================
Air Freight & Logistics-2.12%
Robinson (C.H.) Worldwide, Inc. 371,600 10,988,212
------------------------------------------------------------------------
Ryder System, Inc. 314,500 7,217,775
========================================================================
18,205,987
========================================================================
Apparel Retail-0.76%
Ross Stores, Inc. 155,400 6,503,490
========================================================================
Application Software-1.16%
Fair, Issac and Co., Inc. 259,700 9,990,659
========================================================================
Banks-2.91%
Compass Bancshares, Inc. 293,600 9,483,280
------------------------------------------------------------------------
Huntington Bancshares Inc. 524,300 9,914,513
------------------------------------------------------------------------
Sovereign Bancorp, Inc. 400,000 5,632,000
========================================================================
25,029,793
========================================================================
Biotechnology-0.26%
Invitrogen Corp.(a) 81,300 2,261,766
========================================================================
Broadcasting & Cable TV-1.95%
Cox Radio, Inc.-Class A(a) 300,000 7,122,000
------------------------------------------------------------------------
Entercom Communications Corp.(a) 100,000 4,922,000
------------------------------------------------------------------------
Lin TV Corp.-Class A(a) 228,600 4,716,018
========================================================================
16,760,018
========================================================================
Building Products-1.01%
American Standard Cos. Inc.(a) 129,600 8,644,320
========================================================================
Casinos & Gambling-0.96%
Harrah's Entertainment, Inc.(a) 197,400 8,290,800
========================================================================
Commercial Printing-0.00%
American Bank Note Holographics, Inc.-Wts.,
expiring 06/18/03(a) 29,695 297
========================================================================
Computer & Electronics Retail-1.51%
Best Buy Co., Inc.(a) 180,300 3,715,983
------------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 173,800 9,214,876
========================================================================
12,930,859
========================================================================
Consumer Finance-1.18%
AmeriCredit Corp.(a) 902,100 6,846,939
------------------------------------------------------------------------
Saxon Capital Acquisition Corp. (Acquired
07/27/01; Cost $3,120,900)(a)(b)(c) 309,000 3,306,300
========================================================================
10,153,239
========================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Data Processing Services-6.35%
Alliance Data Systems Corp.(a) 590,200 $ 10,033,400
------------------------------------------------------------------------
BISYS Group, Inc. (The)(a) 494,100 8,844,390
------------------------------------------------------------------------
Ceridian Corp.(a) 628,600 8,662,108
------------------------------------------------------------------------
Certegy Inc.(a) 381,350 8,008,350
------------------------------------------------------------------------
Concord EFS, Inc.(a) 273,800 3,909,864
------------------------------------------------------------------------
DST Systems, Inc.(a) 146,200 4,495,650
------------------------------------------------------------------------
Iron Mountain Inc.(a) 375,000 10,578,750
========================================================================
54,532,512
========================================================================
Diversified Chemicals-0.71%
Engelhard Corp. 275,300 6,097,895
========================================================================
Diversified Financial Services-2.07%
Affiliated Managers Group, Inc.(a) 98,600 5,119,312
------------------------------------------------------------------------
LaBranche & Co. Inc.(a) 146,000 3,943,460
------------------------------------------------------------------------
Principal Financial Group, Inc. 311,000 8,723,550
========================================================================
17,786,322
========================================================================
Drug Retail-1.25%
CVS Corp. 388,500 10,773,105
========================================================================
Electric Utilities-1.02%
FPL Group, Inc. 147,900 8,723,142
========================================================================
Electrical Components & Equipment-1.12%
Rockwell Automation, Inc. 579,100 9,584,105
========================================================================
Electronic Equipment & Instruments-4.14%
Amphenol Corp.-Class A(a) 185,800 7,153,300
------------------------------------------------------------------------
Tektronix, Inc.(a) 528,400 9,336,828
------------------------------------------------------------------------
Varian Inc.(a) 350,000 10,293,500
------------------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 467,700 4,817,310
------------------------------------------------------------------------
Waters Corp.(a) 157,100 3,955,778
========================================================================
35,556,716
========================================================================
Environmental Services-1.04%
Republic Services, Inc.(a) 435,000 8,952,300
========================================================================
Food Distributors-1.03%
Performance Food Group Co.(a) 238,000 8,851,220
========================================================================
Food Retail-0.88%
Winn-Dixie Stores, Inc. 504,500 7,577,590
========================================================================
Footwear-1.02%
Reebok International Ltd.(a) 309,000 8,729,250
========================================================================
|
FS-28
MARKET
SHARES VALUE
------------------------------------------------------------------------
Forest Products-0.47%
Louisiana-Pacific Corp.(a) 593,300 $ 3,998,842
========================================================================
General Merchandise Stores-1.07%
Dollar Tree Stores, Inc.(a) 349,200 9,180,468
========================================================================
Health Care Distributors & Services-1.30%
AdvancePCS(a) 238,400 5,983,840
------------------------------------------------------------------------
Lincare Holdings Inc.(a) 153,100 5,216,117
========================================================================
11,199,957
========================================================================
Health Care Equipment-2.41%
Bard (C.R.), Inc. 222,400 12,438,832
------------------------------------------------------------------------
Fisher Scientific International Inc.(a) 290,000 8,294,000
========================================================================
20,732,832
========================================================================
Health Care Facilities-1.49%
LifePoint Hospitals, Inc.(a) 149,100 4,674,285
------------------------------------------------------------------------
Triad Hospitals, Inc.(a) 222,700 8,128,550
========================================================================
12,802,835
========================================================================
Household Appliances-2.46%
Black & Decker Corp. (The) 248,000 11,596,480
------------------------------------------------------------------------
Snap-on Inc. 364,500 9,495,225
========================================================================
21,091,705
========================================================================
Industrial Machinery-2.36%
Flowserve Corp.(a) 158,000 1,851,760
------------------------------------------------------------------------
Pall Corp. 534,100 9,277,317
------------------------------------------------------------------------
SPX Corp.(a) 217,600 9,141,376
========================================================================
20,270,453
========================================================================
Integrated Oil & Gas-0.85%
Murphy Oil Corp. 87,100 7,301,593
========================================================================
IT Consulting & Services-2.99%
Affiliated Computer Services, Inc.-Class A(a) 22,800 1,049,940
------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 224,300 4,972,731
------------------------------------------------------------------------
Titan Corp. (The)(a) 798,600 10,293,954
------------------------------------------------------------------------
Unisys Corp.(a) 1,074,600 9,381,258
========================================================================
25,697,883
========================================================================
Leisure Products-1.69%
Brunswick Corp. 315,500 6,492,990
------------------------------------------------------------------------
Hasbro, Inc. 782,700 7,999,194
========================================================================
14,492,184
========================================================================
Life & Health Insurance-0.38%
Nationwide Financial Services, Inc.-Class A 117,100 3,243,670
========================================================================
Managed Health Care-2.91%
Anthem, Inc.(a) 153,000 9,639,000
------------------------------------------------------------------------
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Managed Health Care-(Continued)
Caremark Rx, Inc.(a) 490,900 $ 8,688,930
------------------------------------------------------------------------
Coventry Health Care, Inc.(a) 200,000 6,692,000
========================================================================
25,019,930
========================================================================
Movies & Entertainment-0.25%
Macrovision Corp.(a) 165,300 2,132,370
========================================================================
Mutual Funds-1.96%
iShares Nasdaq Biotechnology Index Fund(a) 158,900 8,119,790
------------------------------------------------------------------------
S&P MidCap 400 Depositary Receipts Trust
Series 1 112,000 8,708,000
========================================================================
16,827,790
========================================================================
Networking Equipment-0.25%
Emulex Corp.(a) 119,600 2,146,820
========================================================================
Office Electronics-1.46%
Zebra Technologies Corp.-Class A(a) 203,700 12,531,624
========================================================================
Oil & Gas Drilling-2.18%
GlobalSantaFe Corp. 394,400 9,426,160
------------------------------------------------------------------------
Pride International, Inc.(a) 672,900 9,339,852
========================================================================
18,766,012
========================================================================
Oil & Gas Equipment & Services-1.57%
BJ Services Co.(a) 285,700 8,665,281
------------------------------------------------------------------------
Key Energy Services, Inc.(a) 539,500 4,817,735
========================================================================
13,483,016
========================================================================
Oil & Gas Exploration & Production-1.80%
Devon Energy Corp. 171,000 8,635,500
------------------------------------------------------------------------
Ocean Energy, Inc. 367,200 6,840,936
========================================================================
15,476,436
========================================================================
Oil & Gas Refining, Marketing &
Transportation-0.57%
Valero Energy Corp. 138,900 4,890,669
========================================================================
Paper Products-1.00%
Bowater Inc. 253,000 8,574,170
========================================================================
Pharmaceuticals-1.59%
Medicis Pharmaceutical Corp.-Class A(a) 97,600 4,479,840
------------------------------------------------------------------------
Mylan Laboratories Inc. 292,400 9,201,828
========================================================================
13,681,668
========================================================================
Property & Casualty Insurance-2.04%
PMI Group, Inc. (The) 281,500 8,388,700
------------------------------------------------------------------------
Radian Group Inc. 259,500 9,152,565
========================================================================
17,541,265
========================================================================
Publishing-2.45%
Belo Corp.-Class A 499,000 11,526,900
------------------------------------------------------------------------
|
FS-29
MARKET
SHARES VALUE
------------------------------------------------------------------------
Publishing-(Continued)
New York Times Co. (The)-Class A 197,300 $ 9,551,293
========================================================================
21,078,193
========================================================================
Real Estate Investment Trusts-2.88%
American Financial Realty Trust (Acquired
09/04/02; Cost $9,401,000)(a)(c) 940,100 10,106,075
------------------------------------------------------------------------
FBR Asset Investment Corp. 337,800 10,134,000
------------------------------------------------------------------------
Plum Creek Timber Co., Inc. 200,000 4,522,000
========================================================================
24,762,075
========================================================================
Restaurants-0.79%
Brinker International, Inc.(a) 237,700 6,748,303
========================================================================
Semiconductors-1.82%
Microchip Technology Inc. 449,762 10,974,193
------------------------------------------------------------------------
QLogic Corp.(a) 134,100 4,661,316
========================================================================
15,635,509
========================================================================
Specialty Chemicals-1.18%
International Flavors & Fragrances Inc. 301,000 10,098,550
========================================================================
Specialty Stores-1.54%
Advance Auto Parts, Inc.(a) 152,500 8,166,375
------------------------------------------------------------------------
Copart, Inc.(a) 472,700 5,043,709
========================================================================
13,210,084
========================================================================
Systems Software-1.22%
Adobe Systems Inc. 200,900 4,749,276
------------------------------------------------------------------------
Symantec Corp.(a) 143,500 5,740,000
========================================================================
10,489,276
========================================================================
Total Domestic Common Stocks & Other
Equity Interests (Cost $653,444,191) 708,680,527
========================================================================
FOREIGN STOCKS & OTHER EQUITY INTERESTS-9.75%
Bermuda-3.76%
Everest Re Group, Ltd. (Reinsurance) 158,700 9,207,774
------------------------------------------------------------------------
Platinum Underwriters Holdings, Ltd.
(Insurance Brokers)(a) 243,400 6,109,340
------------------------------------------------------------------------
Willis Group Holdings Ltd. (Insurance
Brokers)(a) 238,100 7,285,860
------------------------------------------------------------------------
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Bermuda-(Continued)
XL Capital Ltd.-Class A (Property & Casualty
Insurance) 127,900 $ 9,739,585
========================================================================
32,342,559
========================================================================
Canada-1.77%
Biovail Corp. (Pharmaceuticals)(a) 101,400 3,209,310
------------------------------------------------------------------------
Celestica Inc. (Electronic Equipment &
Instruments)(a) 143,500 1,980,300
------------------------------------------------------------------------
Potash Corp. of Saskatchewan Inc.
(Fertilizers & Agricultural Chemicals) 147,800 9,998,670
========================================================================
15,188,280
========================================================================
Cayman Islands-2.17%
ACE Ltd. (Property & Casualty Insurance) 268,617 8,259,973
------------------------------------------------------------------------
Garmin Ltd. (Consumer Electronics)(a) 495,000 10,355,400
========================================================================
18,615,373
========================================================================
France-0.49%
Business Objects S.A.-ADR (Application
Software)(a) 285,500 4,253,950
========================================================================
Germany-0.66%
Altana A.G. (Pharmaceuticals) 117,500 5,619,688
------------------------------------------------------------------------
Altana A.G.-ADR (Pharmaceuticals)(a) 1,000 48,050
========================================================================
5,667,738
========================================================================
United Kingdom-0.90%
Shire Pharmaceuticals Group PLC-ADR
(Pharmaceuticals)(a) 331,300 7,739,168
========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $81,147,708) 83,807,068
========================================================================
MONEY MARKET FUNDS-6.58%
STIC Liquid Assets Portfolio(d) 28,252,214 28,252,214
------------------------------------------------------------------------
STIC Prime Portfolio(d) 28,252,214 28,252,214
========================================================================
Total Money Market Funds (Cost
$56,504,428) 56,504,428
========================================================================
TOTAL INVESTMENTS-98.83% (Cost $791,096,327) 848,992,023
========================================================================
OTHER ASSETS LESS LIABILITIES-1.17% 10,046,397
========================================================================
NET ASSETS-100.00% $859,038,420
________________________________________________________________________
========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Wts. - Warrants |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(c) Security not registered under the Securities Act of 1933, as amended ("the
1933 Act") (e.g., the security was purchased in a Rule 144A transaction or a
Regulation D transaction); the security may be resold only pursuant to an
exemption from registration under the 1933 Act, typically to qualified
institutional buyers. The aggregate market value of these securities at
10/31/02 was $13,412,375, which represented 1.56% of the Fund's net assets.
The Fund has no rights to demand registration of these securities.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-30
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost
$791,096,327)* $ 848,992,023
-------------------------------------------------------------
Foreign currencies, at value (cost $123) 124
-------------------------------------------------------------
Receivables for:
Investments sold 36,591,218
-------------------------------------------------------------
Fund shares sold 990,971
-------------------------------------------------------------
Dividends 335,817
-------------------------------------------------------------
Investment for deferred compensation plan 35,228
-------------------------------------------------------------
Collateral for securities loaned 176,899,625
-------------------------------------------------------------
Other assets 50,717
=============================================================
Total assets 1,063,895,723
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Investments purchased 24,494,742
-------------------------------------------------------------
Fund shares reacquired 2,275,994
-------------------------------------------------------------
Deferred compensation plan 35,228
-------------------------------------------------------------
Collateral upon return of securities loaned 176,899,625
-------------------------------------------------------------
Accrued distribution fees 785,683
-------------------------------------------------------------
Accrued trustees' fees 1,128
-------------------------------------------------------------
Accrued transfer agent fees 312,124
-------------------------------------------------------------
Accrued operating expenses 52,779
=============================================================
Total liabilities 204,857,303
=============================================================
Net assets applicable to shares outstanding $ 859,038,420
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $ 456,267,590
_____________________________________________________________
=============================================================
Class B $ 346,455,510
_____________________________________________________________
=============================================================
Class C $ 56,298,292
_____________________________________________________________
=============================================================
Class R $ 9,583
_____________________________________________________________
=============================================================
Institutional Class $ 7,445
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 35,650,215
_____________________________________________________________
=============================================================
Class B 28,385,003
_____________________________________________________________
=============================================================
Class C 4,615,576
_____________________________________________________________
=============================================================
Class R 749
_____________________________________________________________
=============================================================
Institutional Class 580
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 12.80
-------------------------------------------------------------
Offering price per share:
(Net asset value of $12.80 divided by
94.50%) $ 13.54
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 12.21
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 12.20
_____________________________________________________________
=============================================================
Class R:
Net asset value and offering price per
share $ 12.79
_____________________________________________________________
=============================================================
Institutional Class:
Net asset value and offering price per
share $ 12.84
_____________________________________________________________
=============================================================
|
* At October 31, 2002, securities with an aggregate market value of $173,201,778 were on loan to brokers.
Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$23,403) $ 10,192,451
-------------------------------------------------------------
Dividends from affiliated money market funds 1,079,090
-------------------------------------------------------------
Interest 403
-------------------------------------------------------------
Security lending income 815,917
=============================================================
Total investment income 12,087,861
=============================================================
EXPENSES:
Advisory fees 7,368,692
-------------------------------------------------------------
Administrative services fees 205,580
-------------------------------------------------------------
Custodian fees 75,325
-------------------------------------------------------------
Distribution fees -- Class A 2,050,963
-------------------------------------------------------------
Distribution fees -- Class B 4,539,281
-------------------------------------------------------------
Distribution fees -- Class C 690,638
-------------------------------------------------------------
Distribution fees -- Class R 20
-------------------------------------------------------------
Transfer agent fees 3,325,906
-------------------------------------------------------------
Transfer agent fees -- Institutional Class 14
-------------------------------------------------------------
Trustees' fees 13,919
-------------------------------------------------------------
Other 447,889
=============================================================
Total expenses 18,718,227
=============================================================
Less: Fees waived and expenses reimbursed (11,473)
-------------------------------------------------------------
Expenses paid indirectly (33,031)
=============================================================
Net expenses 18,673,723
=============================================================
Net investment income (loss) (6,585,862)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (28,754,591)
-------------------------------------------------------------
Foreign currencies 43,447
-------------------------------------------------------------
Option contracts written 1,068,505
=============================================================
(27,642,639)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (101,336,943)
-------------------------------------------------------------
Foreign currencies 10,628
-------------------------------------------------------------
Option contracts written (288,959)
=============================================================
(101,615,274)
=============================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (129,257,913)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(135,843,775)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-31
Statement of Changes in Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
----------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (6,585,862) $ (6,818,556)
----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (27,642,639) (4,802,278)
----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and option
contracts (101,615,274) (306,202,141)
==============================================================================================
Net increase (decrease) in net assets resulting from
operations (135,843,775) (317,822,975)
==============================================================================================
Distributions to shareholders from net realized gains:
Class A -- (96,954,437)
----------------------------------------------------------------------------------------------
Class B -- (81,364,674)
----------------------------------------------------------------------------------------------
Class C -- (11,018,702)
----------------------------------------------------------------------------------------------
Share transactions-net:
Class A (49,872,882) 77,378,574
----------------------------------------------------------------------------------------------
Class B (51,574,661) 52,952,759
----------------------------------------------------------------------------------------------
Class C (497,034) 13,238,100
----------------------------------------------------------------------------------------------
Class R 12,300 --
----------------------------------------------------------------------------------------------
Institutional Class 10,000 --
==============================================================================================
Net increase (decrease) in net assets (237,766,052) (363,591,355)
==============================================================================================
NET ASSETS:
Beginning of year 1,096,804,472 1,460,395,827
==============================================================================================
End of year $ 859,038,420 $1,096,804,472
______________________________________________________________________________________________
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 842,029,553 $ 950,485,964
----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (70,846) (62,566)
----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (40,816,886) (13,130,799)
----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and option contracts 57,896,599 159,511,873
==============================================================================================
$ 859,038,420 $1,096,804,472
______________________________________________________________________________________________
==============================================================================================
|
See Notes to Financial Statements.
FS-32
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Capital Development Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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. Class R shares and Institutional Class shares are sold at net asset value. 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 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 and commercial paper 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. 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 gain, 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 gain) 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. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-
FS-33
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. 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.
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 master investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of the first $350 million of the Fund's average daily net assets, plus 0.625% of the Fund's average daily net assets in excess of $350 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 year ended October 31, 2002, AIM waived fees of $11,465.
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 October 31, 2002, AIM was paid $205,580 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 October 31, 2002, AFS retained $1,974,790 for such services. For the year ended October 31, 2002, AFS reimbursed fees of $8 on the Institutional Class.
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 0.35% 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B, Class C and Class R shares paid $2,050,963, $4,539,281, $690,638 and $20, respectively.
AIM Distributors retained commissions of $167,124 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $2,583, $0, $12,777 and $0 in contingent deferred sales charges imposed on redemptions of Class A, Class B, Class C and Class R shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 2002, the Fund paid legal fees of $7,589 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 October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $16,963 and reductions in custodian fees of $16,068 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $33,031.
FS-34
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 year ended October 31,
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 October 31, 2002, securities with an aggregate value of $173,201,778 were
on loan to brokers. The loans were secured by cash collateral of $176,899,625
received by the Fund and invested in affiliated money market funds as follows:
$88,449,813 in STIC Liquid Assets Portfolio and $88,449,812 in STIC Prime
Portfolio. For the year ended October 31, 2002, the Fund received fees of
$815,917 for securities lending.
NOTE 7--CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2002 are summarized as follows:
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-------------------------------------------------------------
Beginning of year 4,067 $ 1,099,367
-------------------------------------------------------------
Written 5,747 1,799,011
-------------------------------------------------------------
Closed (8,577) (2,821,687)
-------------------------------------------------------------
Expired (1,237) (76,691)
=============================================================
End of year -- $ --
_____________________________________________________________
=============================================================
|
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
----------------------------------------------------------------
Distributions paid from:
Ordinary Income $ -- $ 97,976,430
----------------------------------------------------------------
Long-Term Capital Gain -- 91,361,383
================================================================
$ -- $189,337,813
________________________________________________________________
================================================================
|
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Tax Components of Beneficial Interest:
Unrealized appreciation -- investments $ 56,060,721
-------------------------------------------------------------
Temporary book/tax differences (70,846)
-------------------------------------------------------------
Capital loss carryforward (38,981,008)
-------------------------------------------------------------
Shares of beneficial interest 842,029,553
=============================================================
$859,038,420
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation difference is attributable primarily to the tax deferral of losses on wash sales. Amount includes appreciation on foreign currencies of $901.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the deferral of trustee compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-----------------------------------------------------------
October 31, 2009 $11,152,255
-----------------------------------------------------------
October 31, 2010 27,828,753
===========================================================
$38,981,008
___________________________________________________________
===========================================================
|
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 October 31, 2002 was $1,263,469,101 and $1,362,774,725, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $107,514,652 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (51,454,832) ============================================================= Net unrealized appreciation of investment securities $ 56,059,820 _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $792,932,203. |
FS-35
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of foreign currency transactions, a net operating loss reclassification, excise tax paid and other items, on October 31, 2002, undistributed net investment income was increased by $6,577,582, undistributed net realized gains decreased by $43,448 and shares of beneficial interest decreased by $6,534,134. This reclassification had no effect on the net assets of the Fund.
NOTE 11--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 8,723,183 $ 137,031,183 10,419,720 $ 176,330,665
--------------------------------------------------------------------------------------------------------------------------
Class B 3,358,008 50,474,614 3,656,256 60,895,695
--------------------------------------------------------------------------------------------------------------------------
Class C 1,443,905 21,757,217 1,125,563 18,758,747
--------------------------------------------------------------------------------------------------------------------------
Class R* 749 12,300 -- --
--------------------------------------------------------------------------------------------------------------------------
Institutional Class** 580 10,000 -- --
==========================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 5,235,028 90,980,110
--------------------------------------------------------------------------------------------------------------------------
Class B -- -- 4,475,584 75,098,584
--------------------------------------------------------------------------------------------------------------------------
Class C -- -- 616,947 10,344,899
==========================================================================================================================
Reacquired:
Class A (12,317,285) (186,904,065) (11,277,708) (189,932,201)
--------------------------------------------------------------------------------------------------------------------------
Class B (7,163,019) (102,049,275) (5,128,289) (83,041,520)
--------------------------------------------------------------------------------------------------------------------------
Class C (1,519,831) (22,254,251) (974,815) (15,865,546)
==========================================================================================================================
(7,473,710) $(101,922,277) 8,148,286 $ 143,569,433
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
* Class R shares commenced sales on June 3, 2002. ** Institutional Class shares commenced sales on March 15, 2002.
FS-36
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 OCTOBER 31,
--------------------------------------------------------------
2002 2001 2000 1999 1998
----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.69 $ 21.79 $ 15.24 $ 12.89 $ 14.57
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.04) (0.13) (0.10)(a) (0.06)(a)
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.85) (4.27) 6.68 2.45 (1.62)
============================================================================================================================
Total from investment operations (1.89) (4.31) 6.55 2.35 (1.68)
============================================================================================================================
Less distributions from net realized gains -- (2.79) -- -- --
============================================================================================================================
Net asset value, end of period $ 12.80 $ 14.69 $ 21.79 $ 15.24 $ 12.89
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) (12.87)% (21.76)% 42.98% 18.23% (11.53)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $456,268 $576,660 $759,838 $579,514 $717,263
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 1.38%(c) 1.33% 1.28% 1.38% 1.28%
============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.29)%(c) (0.21)% (0.60)% (0.70)% (0.40)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 120% 130% 101% 117% 78%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include sales charges.
(c) Ratios are based on average daily net assets of $585,989,327.
CLASS B
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
2002 2001 2000 1999 1998
----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.10 $ 21.16 $ 14.90 $ 12.70 $ 14.46
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14)(a) (0.15) (0.26) (0.20)(a) (0.16)(a)
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.75) (4.12) 6.52 2.40 (1.60)
============================================================================================================================
Total from investment operations (1.89) (4.27) 6.26 2.20 (1.76)
============================================================================================================================
Less distributions from net realized gains -- (2.79) -- -- --
============================================================================================================================
Net asset value, end of period $ 12.21 $ 14.10 $ 21.16 $ 14.90 $ 12.70
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) (13.40)% (22.29)% 42.01% 17.32% (12.17)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $346,456 $454,018 $617,576 $451,508 $493,993
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 2.03%(c) 1.99% 1.99% 2.12% 2.02%
============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.94)%(c) (0.87)% (1.30)% (1.44)% (1.14)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 120% 130% 101% 117% 78%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $453,928,113.
FS-37
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
---------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------
2002 2001 2000 1999 1998
-----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.10 $ 21.15 $ 14.89 $ 12.69 $ 14.45
-----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14)(a) (0.14) (0.25) (0.20)(a) (0.16)
-----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.76) (4.12) 6.51 2.40 (1.60)
=======================================================================================================================
Total from investment operations (1.90) (4.26) 6.26 2.20 (1.76)
=======================================================================================================================
Less distributions from net realized gains -- (2.79) -- -- --
=======================================================================================================================
Net asset value, end of period $ 12.20 $ 14.10 $ 21.15 $ 14.89 $ 12.69
_______________________________________________________________________________________________________________________
=======================================================================================================================
Total return(b) (13.48)% (22.24)% 42.04% 17.34% (12.18)%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $56,298 $66,127 $82,982 $53,832 $48,293
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of expenses to average net assets 2.03%(c) 1.99% 1.99% 2.12% 2.02%
=======================================================================================================================
Ratio of net investment income (loss) to average net assets (0.94)%(c) (0.87)% (1.30)% (1.44)% (1.14)%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Portfolio turnover rate 120% 130% 101% 117% 78%
_______________________________________________________________________________________________________________________
=======================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $69,063,774.
CLASS R
----------------------
JUNE 3, 2002
(DATE SALES COMMENCED)
TO OCTOBER 31,
2002
------------------------------------------------------------------------------------
Net asset value, beginning of period $ 16.62
------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a)
------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.80)
====================================================================================
Total from investment operations (3.83)
====================================================================================
Net asset value, end of period $ 12.79
____________________________________________________________________________________
====================================================================================
Total return(b) (23.05)%
____________________________________________________________________________________
====================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 10
____________________________________________________________________________________
====================================================================================
Ratio of expenses to average net assets 1.54%(c)
====================================================================================
Ratio of net investment income (loss) to average net assets (0.44)%(c)
____________________________________________________________________________________
====================================================================================
Portfolio turnover rate 120%
____________________________________________________________________________________
====================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $9,839.
FS-38
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
INSTITUTIONAL CLASS
----------------------
MARCH 15, 2002
(DATE SALES COMMENCED)
TO OCTOBER 31,
2002
------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.25
------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.02(a)
------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.43)
====================================================================================
Total from investment operations (4.41)
====================================================================================
Net asset value, end of period $ 12.84
____________________________________________________________________________________
====================================================================================
Total return(b) (25.57)%
____________________________________________________________________________________
====================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 7
____________________________________________________________________________________
====================================================================================
Ratio of expenses to average net assets
With fee waivers and expenses reimbursed 0.84%(c)
------------------------------------------------------------------------------------
Without fee waivers and expenses reimbursed 0.99%(c)
====================================================================================
Ratio of net investment income (loss) to average net assets 0.25%(c)
____________________________________________________________________________________
====================================================================================
Portfolio turnover rate 120%
____________________________________________________________________________________
====================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $8,687.
FS-39
Report of Independent Auditors
To the Shareholders of AIM Charter Fund
And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Charter Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the periods presented through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Charter Fund as of October 31, 2002, the results of its operations for the year then ended, and the changes in its net assets and financial highlights for each of the two years in the period then ended in conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
|
FS-40
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
----------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-89.02%
Advertising-1.33%
Omnicom Group Inc. 800,000 $ 46,104,000
============================================================================
Aerospace & Defense-3.91%
Lockheed Martin Corp. 262,200 15,181,380
----------------------------------------------------------------------------
Northrop Grumman Corp. 560,000 57,752,800
----------------------------------------------------------------------------
Raytheon Co. 2,126,000 62,717,000
============================================================================
135,651,180
============================================================================
Apparel Retail-1.40%
Limited Brands 3,105,000 48,655,350
============================================================================
Banks-2.55%
Bank of America Corp. 530,000 36,994,000
----------------------------------------------------------------------------
Washington Mutual, Inc. 1,440,000 51,494,400
============================================================================
88,488,400
============================================================================
Biotechnology-0.80%
Amgen Inc.(a) 600,000 27,936,000
============================================================================
Brewers-1.82%
Anheuser-Busch Cos., Inc. 1,200,000 63,312,000
============================================================================
Building Products-2.25%
American Standard Cos. Inc.(a) 615,000 41,020,500
----------------------------------------------------------------------------
Masco Corp. 1,804,500 37,100,520
============================================================================
78,121,020
============================================================================
Computer & Electronics Retail-0.83%
Best Buy Co., Inc.(a) 1,400,000 28,854,000
============================================================================
Computer Hardware-2.07%
International Business Machines Corp. 910,000 71,835,400
============================================================================
Construction Materials-0.91%
Vulcan Materials Co. 940,000 31,546,400
============================================================================
Data Processing Services-2.67%
Automatic Data Processing, Inc. 1,330,000 56,564,900
----------------------------------------------------------------------------
Convergys Corp.(a) 2,420,000 36,009,600
============================================================================
92,574,500
============================================================================
Diversified Financial Services-3.71%
Citigroup Inc. 1,400,000 51,730,000
----------------------------------------------------------------------------
Morgan Stanley 750,000 29,190,000
----------------------------------------------------------------------------
Principal Financial Group, Inc. 1,715,000 48,105,750
============================================================================
129,025,750
============================================================================
|
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Electric Utilities-0.35%
TXU Corp. 850,000 $ 12,197,500
============================================================================
Electrical Components & Equipment-1.54%
Emerson Electric Co. 1,113,400 53,643,612
============================================================================
Environmental Services-1.29%
Waste Management, Inc. 1,940,000 44,658,800
============================================================================
Food Retail-2.26%
Kroger Co. (The)(a) 2,950,000 43,778,000
----------------------------------------------------------------------------
Safeway Inc.(a) 1,500,000 34,650,000
============================================================================
78,428,000
============================================================================
Footwear-1.07%
NIKE, Inc.-Class B 790,000 37,280,100
============================================================================
General Merchandise Stores-2.84%
Target Corp. 1,600,000 48,192,000
----------------------------------------------------------------------------
Wal-Mart Stores, Inc. 940,000 50,337,000
============================================================================
98,529,000
============================================================================
Health Care Distributors & Services-2.22%
IMS Health Inc. 2,956,000 44,458,240
----------------------------------------------------------------------------
Quest Diagnostics Inc.(a) 510,000 32,553,300
============================================================================
77,011,540
============================================================================
Health Care Equipment-0.90%
St. Jude Medical, Inc.(a) 880,000 31,336,800
============================================================================
Health Care Supplies-1.89%
Alcon, Inc. (Switzerland)(a) 1,600,000 65,632,000
============================================================================
Hotels, Resorts & Cruise Lines-0.82%
Carnival Corp. 1,090,000 28,470,800
============================================================================
Household Products-1.58%
Procter & Gamble Co. (The) 620,000 54,839,000
============================================================================
Housewares & Specialties-0.59%
Newell Rubbermaid Inc. 630,200 20,431,084
============================================================================
Industrial Machinery-2.71%
Dover Corp. 1,840,000 46,147,200
----------------------------------------------------------------------------
Illinois Tool Works Inc. 780,000 47,892,000
============================================================================
94,039,200
============================================================================
|
FS-41
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Integrated Oil & Gas-2.84%
ChevronTexaco Corp. 480,000 $ 32,462,400
----------------------------------------------------------------------------
Exxon Mobil Corp. 1,970,000 66,310,200
============================================================================
98,772,600
============================================================================
Leisure Products-0.73%
Mattel, Inc. 1,380,000 25,336,800
============================================================================
Life & Health Insurance-1.37%
Prudential Financial, Inc.(a) 1,630,000 47,596,000
============================================================================
Oil & Gas Drilling-1.14%
GlobalSantaFe Corp. 1,660,000 39,674,000
============================================================================
Oil & Gas Equipment & Services-1.00%
Baker Hughes Inc. 1,200,000 34,860,000
============================================================================
Oil & Gas Refining, Marketing &
Transportation-0.93%
Valero Energy Corp. 920,000 32,393,200
============================================================================
Packaged Foods & Meats-9.45%
ConAgra Foods, Inc. 2,640,000 64,020,000
----------------------------------------------------------------------------
General Mills, Inc. 1,930,000 79,747,600
----------------------------------------------------------------------------
Kellogg Co. 1,810,000 57,666,600
----------------------------------------------------------------------------
Kraft Foods Inc.-Class A 1,450,000 57,275,000
----------------------------------------------------------------------------
Sara Lee Corp. 3,045,000 69,517,350
============================================================================
328,226,550
============================================================================
Personal Products-3.43%
Avon Products, Inc. 1,370,000 66,431,300
----------------------------------------------------------------------------
Gillette Co. (The) 1,770,000 52,887,600
============================================================================
119,318,900
============================================================================
Pharmaceuticals-6.25%
Abbott Laboratories 750,000 31,402,500
----------------------------------------------------------------------------
Johnson & Johnson 815,000 47,881,250
----------------------------------------------------------------------------
Pfizer Inc. 1,670,000 53,055,900
----------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 620,000 48,006,600
----------------------------------------------------------------------------
Wyeth 1,100,000 36,850,000
============================================================================
217,196,250
============================================================================
Property & Casualty Insurance-2.28%
MGIC Investment Corp. 659,300 27,664,228
----------------------------------------------------------------------------
Travelers Property Casualty Corp.-Class A(a) 856,486 11,365,569
----------------------------------------------------------------------------
|
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Property & Casualty Insurance-(Continued)
Travelers Property Casualty Corp.-Class B(a) 1,054,271 $ 14,253,744
----------------------------------------------------------------------------
XL Capital Ltd.-Class A (Bermuda) 340,000 25,891,000
============================================================================
79,174,541
============================================================================
Publishing-1.05%
New York Times Co. (The)-Class A 750,000 36,307,500
============================================================================
Railroads-1.70%
Norfolk Southern Corp. 1,484,000 29,976,800
----------------------------------------------------------------------------
Union Pacific Corp. 490,000 28,934,500
============================================================================
58,911,300
============================================================================
Semiconductor Equipment-0.98%
KLA-Tencor Corp.(a) 960,000 34,204,800
============================================================================
Semiconductors-3.35%
Intel Corp. 3,000,000 51,900,000
----------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR (Taiwan)(a) 2,266,000 17,720,120
----------------------------------------------------------------------------
Texas Instruments Inc. 1,160,000 18,397,600
----------------------------------------------------------------------------
Xilinx, Inc.(a) 1,500,000 28,485,000
============================================================================
116,502,720
============================================================================
Soft Drinks-1.50%
Coca-Cola Co. (The) 1,120,000 52,057,600
============================================================================
Specialty Chemicals-1.01%
Rohm & Haas Co. 1,050,000 34,933,500
============================================================================
Systems Software-5.70%
Computer Associates International, Inc. 5,360,000 79,649,600
----------------------------------------------------------------------------
Microsoft Corp.(a) 1,640,000 87,690,800
----------------------------------------------------------------------------
Oracle Corp.(a) 3,000,000 30,570,000
============================================================================
197,910,400
============================================================================
Total Common Stocks & Other Equity
Interests (Cost $3,380,933,906) 3,091,978,097
============================================================================
PRINCIPAL
AMOUNT
CONVERTIBLE DEBENTURES-0.09%
Computer Hardware-0.09%
Candescent Technologies Corp., Sr. Conv.
Unsec. Gtd. Sub. Deb.,
8.00%, 05/01/03 (Acquired
04/17/98-04/19/01; Cost
$47,529,750)(b)(c)(d) $42,800,000 3,217,100
============================================================================
Total Convertible Debentures (Cost
$49,098,968) 3,217,100
============================================================================
|
FS-42
----------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
MONEY MARKET FUNDS-9.55%
STIC Liquid Assets Portfolio(e) 165,830,838 $ 165,830,838
----------------------------------------------------------------------------
STIC Prime Portfolio(e) 165,830,838 165,830,838
============================================================================
Total Money Market Funds (Cost
$331,661,676) 331,661,676
============================================================================
TOTAL INVESTMENTS-98.66% (Cost
$3,761,694,550) 3,426,856,873
============================================================================
OTHER ASSETS LESS LIABILITIES-1.34% 46,543,813
============================================================================
NET ASSETS-100.00% $3,473,400,686
____________________________________________________________________________
============================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Conv. - Convertible Deb. - Debentures Gtd. - Guaranteed Sr. - Senior Sub. - Subordinated Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction); the security may be resold only pursuant to an exemption from
registration under the 1933 Act, typically to qualified institutional
buyers. The aggregate market value of these securities at 10/31/02 was
$3,217,100, which represented 0.09% of the Fund's net assets. The Fund has
no rights to demand registration of these securities.
(c) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(d) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(e) 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
October 31, 2002
ASSETS:
Investments, at market value (cost
$3,761,694,550)* $3,426,856,873
-------------------------------------------------------------
Receivables for:
Investments sold 54,192,843
-------------------------------------------------------------
Fund shares sold 1,191,488
-------------------------------------------------------------
Dividends 4,035,682
-------------------------------------------------------------
Investment for deferred compensation plan 116,150
-------------------------------------------------------------
Collateral for securities loaned 18,062,100
-------------------------------------------------------------
Other assets 63,991
=============================================================
Total assets 3,504,519,127
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 9,109,903
-------------------------------------------------------------
Deferred compensation plan 116,150
-------------------------------------------------------------
Collateral upon return of securities
loaned 18,062,100
-------------------------------------------------------------
Accrued distribution fees 2,369,539
-------------------------------------------------------------
Accrued trustees' fees 2,478
-------------------------------------------------------------
Accrued transfer agent fees 1,154,915
-------------------------------------------------------------
Accrued operating expenses 303,356
=============================================================
Total liabilities 31,118,441
=============================================================
Net assets applicable to shares outstanding $3,473,400,686
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $2,096,865,957
_____________________________________________________________
=============================================================
Class B $1,204,617,059
_____________________________________________________________
=============================================================
Class C $ 170,444,220
_____________________________________________________________
=============================================================
Class R $ 16,387
_____________________________________________________________
=============================================================
Institutional Class $ 1,457,063
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 219,052,553
_____________________________________________________________
=============================================================
Class B 130,317,602
_____________________________________________________________
=============================================================
Class C 18,386,548
_____________________________________________________________
=============================================================
Class R 1,714
_____________________________________________________________
=============================================================
Institutional Class 148,611
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 9.57
-------------------------------------------------------------
Offering price per share:
(Net asset value of $9.57 divided
by 94.50%) $ 10.13
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 9.24
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 9.27
_____________________________________________________________
=============================================================
Class R:
Net asset value and offering price per
share $ 9.56
_____________________________________________________________
=============================================================
Institutional Class:
Net asset value and offering price per
share $ 9.80
_____________________________________________________________
=============================================================
|
* At October 31, 2002, securities with an aggregate market value of $18,300,061 were on loan to brokers.
Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$88,345) $ 54,348,250
-------------------------------------------------------------
Dividends from affiliated money market funds 6,593,048
-------------------------------------------------------------
Interest 107,071
-------------------------------------------------------------
Security lending income 165,508
=============================================================
Total investment income 61,213,877
_____________________________________________________________
=============================================================
EXPENSES:
Advisory fees 29,583,893
-------------------------------------------------------------
Administrative services fees 468,551
-------------------------------------------------------------
Custodian fees 285,376
-------------------------------------------------------------
Distribution fees -- Class A 8,613,574
-------------------------------------------------------------
Distribution fees -- Class B 15,924,539
-------------------------------------------------------------
Distribution fees -- Class C 2,261,077
-------------------------------------------------------------
Distribution fees -- Class R 23
-------------------------------------------------------------
Transfer agent fees 11,653,652
-------------------------------------------------------------
Transfer agent fees -- Institutional Class 2,686
-------------------------------------------------------------
Trustees' fees 32,769
-------------------------------------------------------------
Other 1,020,807
=============================================================
Total expenses 69,846,947
=============================================================
Less: Fees waived and expenses reimbursed (58,911)
-------------------------------------------------------------
Expenses paid indirectly (69,299)
=============================================================
Net expenses 69,718,737
=============================================================
Net investment income (loss) (8,504,860)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities 304,600,971
-------------------------------------------------------------
Foreign currencies (17,130)
=============================================================
304,583,841
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (628,244,716)
-------------------------------------------------------------
Foreign currencies 33,301
=============================================================
(628,211,415)
=============================================================
Net gain (loss) from investment securities
and foreign currencies (323,627,574)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(332,132,434)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-44
Statement of Changes in Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
--------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (8,504,860) $ (35,217,915)
--------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts 304,583,841 (1,051,836,206)
--------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (628,211,415) (2,495,895,336)
==================================================================================================
Net increase (decrease) in net assets resulting from
operations (332,132,434) (3,582,949,457)
==================================================================================================
Distributions to shareholders from net realized gains:
Class A -- (282,256,150)
--------------------------------------------------------------------------------------------------
Class B -- (155,149,624)
--------------------------------------------------------------------------------------------------
Class C -- (21,295,588)
--------------------------------------------------------------------------------------------------
Institutional Class -- (157,658)
--------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (870,998,051) (161,661,243)
--------------------------------------------------------------------------------------------------
Class B (391,079,522) (2,882,485)
--------------------------------------------------------------------------------------------------
Class C (61,301,813) 28,949,621
--------------------------------------------------------------------------------------------------
Class R 17,606 --
--------------------------------------------------------------------------------------------------
Institutional Class (60,090) (227,735)
==================================================================================================
Net increase (decrease) in net assets (1,655,554,304) (4,177,630,319)
==================================================================================================
NET ASSETS:
Beginning of year 5,128,954,990 9,306,585,309
==================================================================================================
End of year $ 3,473,400,686 $ 5,128,954,990
__________________________________________________________________________________________________
==================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 4,585,710,984 $ 5,916,415,607
--------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (2,131,563) (892,327)
--------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (775,341,125) (1,078,954,767)
--------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies (334,837,610) 292,386,477
==================================================================================================
$ 3,473,400,686 $ 5,128,954,990
__________________________________________________________________________________________________
==================================================================================================
|
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Charter Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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. Class R shares and Institutional Class shares are sold at net asset value. 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 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
FS-45
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 and commercial paper 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. 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 gain, 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 gain) 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. 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.
FS-46
NOTE 2--CHANGE IN ACCOUNTING PRINCIPLE
As required, effective November 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. Prior to November 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 $987,328 reduction in the cost of securities and a corresponding $987,328 increase in net unrealized gains and losses, based on securities held by the Fund on November 1, 2001.
The effect of this change in the current period was to decrease net investment income by $154,475 and to increase net realized gains and losses by $154,475. As a result the net investment income per share, the net realized and unrealized gains and losses per share, and the ratio of net investment income to average net assets were unchanged.
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 master investment agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of the first $30 million of the Fund's average daily net assets, plus 0.75% of the Fund's average daily net assets in excess of $30 million to and including $150 million, 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. 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 October 31, 2002, AIM waived fees of $58,255. Under the terms of a master sub-advisory agreement between AIM and A I M Capital Management, Inc. ("AIM Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to AIM.
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 October 31, 2002, AIM was paid $468,551 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 October 31, 2002, AFS retained $6,433,443 for such services. For the year ended October 31, 2002, AFS reimbursed fees of $656 on the Institutional Class.
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 0.30% 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B, Class C and Class R shares paid $8,613,574, $15,924,539, $2,261,077 and $23, respectively.
AIM Distributors retained commissions of $387,132 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $36,917, $2,641, $29,800 and $0 in contingent deferred sales charges imposed on redemptions of Class A, Class B, Class C and Class R shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 2002, the Fund paid legal fees of $17,145 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 October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $69,012 and reductions in custodian fees of $287 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $69,299.
NOTE 5--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 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) $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 year ended October 31,
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 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.
FS-47
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 October 31, 2002, securities with an aggregate value of $18,300,061 were on loan to brokers. The loans were secured by cash collateral of $18,062,100 received by the Fund and invested in STIC Liquid Assets Portfolio, an affiliated money market fund. For the year ended October 31, 2002, the Fund received fees of $165,508 for securities lending.
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
---------------------------------------------------------------
Distributions paid from long-term
capital gain $ -- $458,859,020
_______________________________________________________________
===============================================================
|
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation (depreciation) -- investments $ (340,653,684) ----------------------------------------------------------- Temporary book/tax differences (325,492) ----------------------------------------------------------- Capital loss carryforward (771,331,122) ----------------------------------------------------------- Shares of beneficial interest 4,585,710,984 =========================================================== Total Net Assets $3,473,400,686 ___________________________________________________________ =========================================================== |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales and the treatment of defaulted bonds. Amount includes appreciation on foreign currency of $66.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the results of the deferral of Trustee compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-------------------------------
October 31, 2009 $771,331,122
_______________________________
===============================
|
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 October 31, 2002 was $4,385,524,178 and $6,035,095,988, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 204,500,096 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (545,153,846) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(340,653,750) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $3,767,510,623. |
FS-48
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of foreign currency transactions, bond premium amortization, net operating loss and other items, on October 31, 2002, undistributed net investment income was increased by $8,252,952, undistributed net realized gains decreased by $970,199 and shares of beneficial interest decreased by $7,282,753. This reclassification had no effect on the net assets of the Fund.
NOTE 11--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
------------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 16,910,821* $ 182,696,524* 37,578,186 $ 517,083,181
-----------------------------------------------------------------------------------------------------------------------------
Class B 9,302,039 97,387,968 24,357,854 333,276,040
-----------------------------------------------------------------------------------------------------------------------------
Class C 2,633,061 27,700,439 7,575,697 105,353,193
-----------------------------------------------------------------------------------------------------------------------------
Class R** 1,719 17,663 -- --
-----------------------------------------------------------------------------------------------------------------------------
Institutional Class 45,275 481,439 21,223 287,988
=============================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 17,611,530 266,615,003
-----------------------------------------------------------------------------------------------------------------------------
Class B -- -- 9,886,847 146,422,053
-----------------------------------------------------------------------------------------------------------------------------
Class C -- -- 1,369,533 20,351,280
-----------------------------------------------------------------------------------------------------------------------------
Institutional Class -- -- 8,709 133,843
=============================================================================================================================
Reacquired:
Class A (99,779,666) (1,053,694,575) (74,345,004) (945,359,427)
-----------------------------------------------------------------------------------------------------------------------------
Class B (47,954,479)* (488,467,490)* (39,590,160) (482,580,578)
-----------------------------------------------------------------------------------------------------------------------------
Class C (8,599,959) (89,002,252) (7,831,344) (96,754,852)
-----------------------------------------------------------------------------------------------------------------------------
Class R** (5) (57) -- --
-----------------------------------------------------------------------------------------------------------------------------
Institutional Class (51,011) (541,529) (52,054) (649,566)
=============================================================================================================================
(127,492,205) $(1,323,421,870) (23,408,983) $(135,821,842)
_____________________________________________________________________________________________________________________________
=============================================================================================================================
|
* Includes automatic conversion of 739,880 shares of Class B shares in the amount of $7,724,451 to 717,246 shares of Class A shares in the amount of $7,724,451.
** Class R shares commenced sales on June 3, 2002.
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 OCTOBER 31,
---------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.46 $ 18.07 $ 17.16 $ 13.32 $ 13.41
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.01(a) (0.03) (0.04)(b) 0.02 0.12
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (0.90) (6.70) 2.30 4.39 1.23
=================================================================================================================================
Total from investment operations (0.89) (6.73) 2.26 4.41 1.35
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.03) (0.10)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.88) (1.35) (0.54) (1.34)
=================================================================================================================================
Total distributions -- (0.88) (1.35) (0.57) (1.44)
=================================================================================================================================
Net asset value, end of period $ 9.57 $ 10.46 $ 18.07 $ 17.16 $ 13.32
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (8.51)% (38.75)% 13.60% 34.05% 11.20%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,096,866 $3,159,304 $5,801,869 $4,948,666 $3,706,938
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.22%(d) 1.16% 1.06% 1.05% 1.08%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.22%(d) 1.17% 1.08% 1.07% 1.10%
=================================================================================================================================
Ratio of net investment income (loss) to average
net assets 0.09%(a)(d) (0.24)% (0.20)% 0.11% 0.95%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 103% 78% 80% 107% 154%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) As required, effective November 1, 2001, the Fund 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 and the
ratio of net investment income to average net assets would have remained
the same. In accordance with the AICPA Audit and Accounting Guide for
Investment Companies, per share and ratios for periods prior to November
1, 2001 have not been restated to reflect this change in presentation.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles and does not include sales charges.
(d) Ratios are based on average daily net assets of $2,871,191,238.
FS-49
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
----------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.18 $ 17.72 $ 16.97 $ 13.24 $ 13.37
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08)(a) (0.13) (0.17)(b) (0.10) 0.02
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (0.86) (6.53) 2.27 4.37 1.22
=================================================================================================================================
Total from investment operations (0.94) (6.66) 2.10 4.27 1.24
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.03)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.88) (1.35) (0.54) (1.34)
=================================================================================================================================
Total distributions -- (0.88) (1.35) (0.54) (1.37)
=================================================================================================================================
Net asset value, end of period $ 9.24 $ 10.18 $ 17.72 $ 16.97 $ 13.24
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (9.23)% (39.14)% 12.76% 33.06% 10.33%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,204,617 $1,719,470 $3,088,611 $2,206,752 $1,408,687
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.92%(d) 1.86% 1.80% 1.80% 1.84%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.92%(d) 1.87% 1.82% 1.82% 1.86%
=================================================================================================================================
Ratio of net investment income (loss) to average
net assets (0.61)%(a)(d) (0.94)% (0.94)% (0.64)% 0.19%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 103% 78% 80% 107% 154%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) As required, effective November 1, 2001, the Fund 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 and the
ratio of net investment income to average net assets would have remained
the same. In accordance with the AICPA Audit and Accounting Guide for
Investment Companies, per share and ratios for periods prior to November
1, 2001 have not been restated to reflect this change in presentation.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $1,592,453,859.
CLASS C
-------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.21 $ 17.77 $ 17.01 $ 13.27 $ 13.39
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08)(a) (0.13) (0.17)(b) (0.09) 0.02
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.86) (6.55) 2.28 4.37 1.23
=================================================================================================================================
Total from investment operations (0.94) (6.68) 2.11 4.28 1.25
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.03)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.88) (1.35) (0.54) (1.34)
=================================================================================================================================
Total distributions -- (0.88) (1.35) (0.54) (1.37)
=================================================================================================================================
Net asset value, end of period $ 9.27 $ 10.21 $ 17.77 $ 17.01 $ 13.27
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (9.21)% (39.14)% 12.78% 33.06% 10.39%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $170,444 $248,533 $412,872 $138,467 $37,846
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.92%(d) 1.86% 1.80% 1.80% 1.84%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.92%(d) 1.87% 1.82% 1.82% 1.86%
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.61)%(a)(d) (0.94)% (0.94)% (0.64)% 0.19%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 103% 78% 80% 107% 154%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) As required, effective November 1, 2001, the Fund 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 and the
ratio of net investment income to average net assets would have remained
the same. In accordance with the AICPA Audit and Accounting Guide for
Investment Companies, per share and ratios for periods prior to November
1, 2001 have not been restated to reflect this change in presentation.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $226,107,746.
FS-50
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
-------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.94
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income --(a)
-------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.38)
===============================================================================
Total from investment operations (1.38)
===============================================================================
Net asset value, end of period $ 9.56
_______________________________________________________________________________
===============================================================================
Total return(b) (12.61)%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 16
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average net assets:
With fee waivers 1.42%(c)
-------------------------------------------------------------------------------
Without fee waivers 1.42%(c)
===============================================================================
Ratio of net investment income (loss) to average net assets (0.11)%(a)(c)
_______________________________________________________________________________
===============================================================================
Portfolio turnover rate 103%
_______________________________________________________________________________
===============================================================================
|
(a) As required, effective November 1, 2001, the Fund 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 and the
ratio of net investment income to average net assets would have remained
the same. In accordance with the AICPA Audit and Accounting Guide for
Investment Companies, per share and ratios for periods prior to November
1, 2001 have not been restated to reflect this change in presentation.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $11,405.
INSTITUTIONAL CLASS
------------------------------------------------------------
YEAR ENDED OCTOBER 31
------------------------------------------------------------
2002 2001 2000 1999 1998
--------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.67 $ 18.33 $17.33 $ 13.42 $ 13.48
--------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.06(a) 0.04 0.52 0.09 0.18
--------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.93) (6.82) 1.83 4.43 1.24
==========================================================================================================================
Total from investment operations (0.87) (6.78) 2.35 4.52 1.42
==========================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.07) (0.14)
--------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.88) (1.35) (0.54) (1.34)
==========================================================================================================================
Total distributions -- (0.88) (1.35) (0.61) (1.48)
==========================================================================================================================
Net asset value, end of period $ 9.80 $ 10.67 $18.33 $ 17.33 $ 13.42
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) (8.15)% (38.46)% 14.02% 34.61% 11.69%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,457 $ 1,648 $3,234 $66,801 $43,815
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursement 0.79%(c) 0.68% 0.66% 0.65% 0.66%
--------------------------------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursement 0.83%(c) 0.69% 0.68% 0.67% 0.67%
==========================================================================================================================
Ratio of net investment income to average net assets 0.52%(a)(c) 0.25% 0.20% 0.51% 1.37%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate 103% 78% 80% 107% 154%
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
(a) As required, effective November 1, 2001, the Fund 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 and the
ratio of net investment income to average net assets would have remained
the same. In accordance with the AICPA Audit and Accounting Guide for
Investment Companies, per share and ratios prior to November 1, 2001
have not been restated to reflect this change in presentation.
(b) Includes adjustments in accordance with generally accepted accounting
principles.
(c) Ratios are based on average daily net assets of $1,665,295.
FS-51
Report of Independent Auditors
To the Shareholders of AIM Constellation Fund And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Constellation Fund (a portfolio of AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the periods presented through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Constellation Fund as of October 31, 2002, 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.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
|
FS-52
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
----------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-97.29%
Advertising-1.32%
Lamar Advertising Co.(a) 3,000,000 $ 101,820,000
============================================================================
Aerospace & Defense-4.22%
L-3 Communications Holdings, Inc.(a) 1,820,000 85,540,000
----------------------------------------------------------------------------
Lockheed Martin Corp. 3,000,000 173,700,000
----------------------------------------------------------------------------
Northrop Grumman Corp. 643,500 66,364,155
============================================================================
325,604,155
============================================================================
Airlines-0.57%
Southwest Airlines Co. 3,000,000 43,800,000
============================================================================
Apparel Retail-1.78%
Gap, Inc. (The) 658,700 7,752,899
----------------------------------------------------------------------------
Limited Brands 3,000,000 47,010,000
----------------------------------------------------------------------------
Ross Stores, Inc. 500,000 20,925,000
----------------------------------------------------------------------------
TJX Cos., Inc. (The) 3,000,000 61,560,000
============================================================================
137,247,899
============================================================================
Application Software-2.89%
Electronic Arts Inc.(a) 1,100,000 71,632,000
----------------------------------------------------------------------------
Intuit Inc.(a) 2,500,000 129,800,000
----------------------------------------------------------------------------
Mercury Interactive Corp.(a) 803,700 21,193,569
============================================================================
222,625,569
============================================================================
Banks-3.44%
Bank of America Corp. 1,250,000 87,250,000
----------------------------------------------------------------------------
Fifth Third Bancorp 1,280,000 81,280,000
----------------------------------------------------------------------------
Washington Mutual, Inc. 2,000,000 71,520,000
----------------------------------------------------------------------------
Wells Fargo & Co. 500,000 25,235,000
============================================================================
265,285,000
============================================================================
Biotechnology-2.93%
Amgen Inc.(a) 2,352,600 109,537,056
----------------------------------------------------------------------------
Cephalon, Inc.(a) 871,700 43,794,208
----------------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 1,585,900 72,983,118
============================================================================
226,314,382
============================================================================
Broadcasting & Cable TV-1.19%
Clear Channel Communications, Inc.(a) 1,000,000 37,050,000
----------------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 750,000 16,125,000
----------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 1,500,000 38,865,000
============================================================================
92,040,000
============================================================================
Casinos & Gambling-0.58%
MGM Mirage Inc.(a) 1,436,100 44,662,710
============================================================================
|
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Computer & Electronics Retail-1.33%
CDW Computer Centers, Inc.(a) 1,929,000 $ 102,275,580
============================================================================
Computer Hardware-1.48%
Dell Computer Corp.(a) 4,000,000 114,440,000
============================================================================
Construction, Farm Machinery & Heavy
Trucks-0.75%
Deere & Co. 1,250,000 57,987,500
============================================================================
Consumer Finance-0.72%
MBNA Corp. 2,714,500 55,131,495
============================================================================
Data Processing Services-3.27%
Concord EFS, Inc.(a) 1,500,000 21,420,000
----------------------------------------------------------------------------
Fiserv, Inc.(a) 6,000,000 187,440,000
----------------------------------------------------------------------------
Paychex, Inc. 1,500,000 43,230,000
============================================================================
252,090,000
============================================================================
Department Stores-0.57%
Kohl's Corp.(a) 756,500 44,217,425
============================================================================
Diversified Chemicals-0.36%
Eastman Chemical Co. 764,900 27,796,466
============================================================================
Diversified Financial Services-5.84%
Citigroup Inc. 1,200,000 44,340,000
----------------------------------------------------------------------------
Fannie Mae 500,000 33,430,000
----------------------------------------------------------------------------
Freddie Mac 750,000 46,185,000
----------------------------------------------------------------------------
Goldman Sachs Group, Inc. 750,000 53,700,000
----------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 1,505,400 57,129,930
----------------------------------------------------------------------------
Moody's Corp. 1,856,000 87,417,600
----------------------------------------------------------------------------
Morgan Stanley 1,443,300 56,173,236
----------------------------------------------------------------------------
SLM Corp. 701,000 72,020,740
============================================================================
450,396,506
============================================================================
Drug Retail-0.88%
Walgreen Co. 2,000,000 67,500,000
============================================================================
Electronic Equipment & Instruments-0.91%
Molex Inc. 1,500,000 39,615,000
----------------------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 3,000,000 30,900,000
============================================================================
70,515,000
============================================================================
Employment Services-0.29%
Robert Half International Inc.(a) 1,353,700 22,606,790
============================================================================
Food Distributors-0.51%
Sysco Corp. 1,250,000 39,600,000
============================================================================
|
FS-53
MARKET
SHARES VALUE
----------------------------------------------------------------------------
General Merchandise Stores-2.09%
Family Dollar Stores, Inc. 1,750,000 $ 53,882,500
----------------------------------------------------------------------------
Wal-Mart Stores, Inc. 2,000,000 107,100,000
============================================================================
160,982,500
============================================================================
Health Care Distributors & Services-1.54%
AdvancePCS(a) 908,200 22,795,820
----------------------------------------------------------------------------
Cardinal Health, Inc. 1,385,200 95,869,692
============================================================================
118,665,512
============================================================================
Health Care Equipment-3.27%
Biomet, Inc. 3,770,675 111,084,085
----------------------------------------------------------------------------
Medtronic, Inc. 2,500,000 112,000,000
----------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 819,000 29,164,590
============================================================================
252,248,675
============================================================================
Health Care Facilities-2.15%
HCA Inc. 1,353,200 58,850,668
----------------------------------------------------------------------------
Health Management Associates, Inc.-Class A 3,115,700 59,572,184
----------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 1,636,500 47,049,375
============================================================================
165,472,227
============================================================================
Home Improvement Retail-1.22%
Lowe's Cos., Inc. 2,250,000 93,892,500
============================================================================
Homebuilding-1.88%
Centex Corp. 600,000 27,288,000
----------------------------------------------------------------------------
D.R. Horton, Inc. 1,200,000 23,124,000
----------------------------------------------------------------------------
Lennar Corp. 600,000 33,102,000
----------------------------------------------------------------------------
NVR, Inc.(a) 100,000 33,900,000
----------------------------------------------------------------------------
Pulte Homes, Inc. 600,000 27,552,000
============================================================================
144,966,000
============================================================================
Household Products-1.26%
Procter & Gamble Co. (The) 1,100,000 97,295,000
============================================================================
Housewares & Specialties-0.76%
Newell Rubbermaid Inc. 1,800,000 58,356,000
============================================================================
Industrial Conglomerates-0.66%
3M Co. 400,000 50,776,000
============================================================================
Industrial Machinery-0.75%
Danaher Corp. 500,000 28,925,000
----------------------------------------------------------------------------
Ingersoll-Rand Co.-Class A (Bermuda) 750,000 29,250,000
============================================================================
58,175,000
============================================================================
Integrated Oil & Gas-0.40%
Exxon Mobil Corp. 920,500 30,984,030
============================================================================
Internet Retail-0.41%
eBay Inc.(a) 500,000 31,630,000
============================================================================
|
MARKET
SHARES VALUE
----------------------------------------------------------------------------
IT Consulting & Services-0.92%
Affiliated Computer Services, Inc.-Class A(a) 439,000 $ 20,215,950
----------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 2,298,500 50,957,745
============================================================================
71,173,695
============================================================================
Life & Health Insurance-0.38%
AFLAC Inc. 950,000 28,918,000
============================================================================
Managed Health Care-3.69%
Caremark Rx, Inc.(a) 5,000,000 88,500,000
----------------------------------------------------------------------------
UnitedHealth Group Inc. 850,000 77,307,500
----------------------------------------------------------------------------
WellPoint Health Networks Inc.(a) 1,583,600 119,102,556
============================================================================
284,910,056
============================================================================
Motorcycle Manufacturers-1.19%
Harley-Davidson, Inc. 1,750,000 91,525,000
============================================================================
Multi-Line Insurance-1.98%
American International Group, Inc. 2,440,800 152,672,040
============================================================================
Networking Equipment-1.16%
Cisco Systems, Inc.(a) 8,000,000 89,440,000
============================================================================
Oil & Gas Drilling-1.23%
Nabors Industries, Ltd. (Bermuda)(a) 1,000,000 34,970,000
----------------------------------------------------------------------------
Noble Corp. (Cayman Islands)(a) 1,000,000 32,320,000
----------------------------------------------------------------------------
Transocean Inc. 1,250,000 27,475,000
============================================================================
94,765,000
============================================================================
Oil & Gas Equipment & Services-0.75%
Smith International, Inc.(a) 900,000 28,134,000
----------------------------------------------------------------------------
Weatherford International Ltd. (Bermuda)(a) 750,000 30,030,000
============================================================================
58,164,000
============================================================================
Oil & Gas Exploration & Production-0.35%
Apache Corp. 500,000 27,030,000
============================================================================
Packaged Foods & Meats-0.18%
Unilever PLC (United Kingdom)(a) 1,405,150 13,887,950
============================================================================
Personal Products-0.48%
Gillette Co. (The) 1,250,000 37,350,000
============================================================================
Pharmaceuticals-6.91%
Forest Laboratories, Inc.(a)(b) 1,309,300 128,298,307
----------------------------------------------------------------------------
Johnson & Johnson 714,300 41,965,125
----------------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a)(c) 2,000,000 91,800,000
----------------------------------------------------------------------------
Pfizer Inc. 5,789,800 183,941,946
----------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 1,122,400 86,907,432
============================================================================
532,912,810
============================================================================
|
FS-54
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Property & Casualty Insurance-0.24%
XL Capital Ltd.-Class A (Bermuda) 238,000 $ 18,123,700
============================================================================
Publishing-0.49%
Gannett Co., Inc. 500,000 37,965,000
============================================================================
Restaurants-2.75%
Brinker International, Inc.(a) 2,710,600 76,953,934
----------------------------------------------------------------------------
Darden Restaurants, Inc. 1,625,800 30,857,684
----------------------------------------------------------------------------
Outback Steakhouse, Inc. 1,707,400 58,136,970
----------------------------------------------------------------------------
Wendy's International, Inc. 750,000 23,760,000
----------------------------------------------------------------------------
Yum! Brands, Inc.(a) 1,000,000 22,530,000
============================================================================
212,238,588
============================================================================
Semiconductor Equipment-4.97%
Applied Materials, Inc.(a) 8,500,000 127,755,000
----------------------------------------------------------------------------
KLA-Tencor Corp.(a) 1,739,400 61,974,822
----------------------------------------------------------------------------
Lam Research Corp.(a) 4,000,000 50,360,000
----------------------------------------------------------------------------
Novellus Systems, Inc.(a) 3,000,000 94,800,000
----------------------------------------------------------------------------
Teradyne, Inc.(a) 4,000,000 48,440,000
============================================================================
383,329,822
============================================================================
Semiconductors-8.40%
Altera Corp.(a) 5,000,000 58,600,000
----------------------------------------------------------------------------
Analog Devices, Inc.(a) 4,658,000 124,834,400
----------------------------------------------------------------------------
Integrated Device Technology, Inc.(a) 2,694,900 26,617,527
----------------------------------------------------------------------------
Intel Corp. 4,000,000 69,200,000
----------------------------------------------------------------------------
Linear Technology Corp. 3,000,000 82,920,000
----------------------------------------------------------------------------
Maxim Integrated Products, Inc. 2,000,000 63,680,000
----------------------------------------------------------------------------
Microchip Technology Inc. 6,000,052 146,401,269
----------------------------------------------------------------------------
Micron Technology, Inc.(a) 3,000,000 48,000,000
----------------------------------------------------------------------------
Texas Instruments Inc. 1,745,500 27,683,630
============================================================================
647,936,826
============================================================================
|
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Soft Drinks-1.08%
Coca-Cola Co. (The) 1,800,000 $ 83,664,000
============================================================================
Specialty Stores-3.53%
AutoZone, Inc.(a) 707,500 60,682,275
----------------------------------------------------------------------------
Bed Bath & Beyond Inc.(a) 2,600,000 92,196,000
----------------------------------------------------------------------------
CarMax, Inc.(a) 1,000,000 16,390,000
----------------------------------------------------------------------------
Office Depot, Inc.(a) 2,000,000 28,780,000
----------------------------------------------------------------------------
Staples, Inc.(a) 4,786,900 74,196,950
============================================================================
272,245,225
============================================================================
Systems Software-3.47%
Microsoft Corp.(a) 5,000,000 267,350,000
============================================================================
Tobacco-0.48%
Philip Morris Cos. Inc. 900,000 36,675,000
============================================================================
Wireless Telecommunication Services-0.44%
Nextel Communications, Inc.-Class A(a) 3,000,000 33,840,000
============================================================================
Total Common Stocks & Other Equity
Interests (Cost $7,420,902,017) 7,503,516,633
============================================================================
MONEY MARKET FUNDS-3.21%
STIC Liquid Assets Portfolio(d) 123,937,638 123,937,638
----------------------------------------------------------------------------
STIC Prime Portfolio(d) 123,937,638 123,937,638
============================================================================
Total Money Market Funds (Cost
$247,875,276) 247,875,276
============================================================================
TOTAL INVESTMENTS-100.50% (Cost
$7,668,777,293) 7,751,391,909
============================================================================
OTHER ASSETS LESS LIABILITIES-(0.50%) (38,679,071)
============================================================================
NET ASSETS-100.00% $7,712,712,838
____________________________________________________________________________
============================================================================
|
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 7.
(c) The investment Company Act of 1940 defines affiliates as those companies in
which a fund holds 5% or more of the outstanding voting securities. The Fund
has not owned enough of the outstanding voting securities of the issuer to
have control (as defined in the Investment Company Act of 1940) of that
issuer. The market value as of 10/31/02 represented 1.19% of the Fund's net
assets. The following is a summary of the transactions with affiliates for
the year ended October 31, 2002.
MARKET CHANGE IN MARKET
VALUE PURCHASES SALES UNREALIZED VALUE DIVIDEND REALIZED
10/31/2001 AT COST AT COST APPR./(DEPR.) 10/31/2002 INCOME GAIN/(LOSS)
--------------------------------------------------------------------------------------------------------------------- ------------
Lamar Advertising Co.......... $141,300,000 $ -- $ (71,607,551) $(69,692,449) $ -- $ -- $(15,840,701)
Medicis Pharmaceutical
Corp.-Class A..-............ 115,380,000 -- -- (23,580,000) 91,800,000 $ -- --
-----------------------------------------------------------------------------------------------------------------------------------
$256,680,000 $91,800,000 $ -- $(15,840,701)
-----------------------------------------------------------------------------------------------------------------------------------
|
(d) The money market fund and the Fund are affiliated by having the same investment advisor. See Notes to Financial Statements.
FS-55
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost $7,668,777,293)* $7,751,391,909
---------------------------------------------------------------------
Receivables for:
Investments sold 74,463,938
---------------------------------------------------------------------
Fund shares sold 4,847,030
---------------------------------------------------------------------
Dividends 2,968,987
---------------------------------------------------------------------
Investment for deferred compensation plan 240,854
---------------------------------------------------------------------
Collateral for securities loaned 165,293,972
---------------------------------------------------------------------
Other assets 96,627
=====================================================================
Total assets 7,999,303,317
_____________________________________________________________________
=====================================================================
LIABILITIES:
Payables for:
Investments purchased 92,727,322
---------------------------------------------------------------------
Fund shares reacquired 17,298,062
---------------------------------------------------------------------
Options written (premiums received $398,595) 275,303
---------------------------------------------------------------------
Deferred compensation plan 240,854
---------------------------------------------------------------------
Collateral upon return of securities loaned 165,293,972
---------------------------------------------------------------------
Accrued distribution fees 4,085,668
---------------------------------------------------------------------
Accrued trustees' fees 4,118
---------------------------------------------------------------------
Accrued transfer agent fees 5,381,201
---------------------------------------------------------------------
Accrued operating expenses 1,283,979
=====================================================================
Total liabilities 286,590,479
=====================================================================
Net assets applicable to shares outstanding $7,712,712,838
_____________________________________________________________________
=====================================================================
NET ASSETS:
Class A $6,780,054,557
_____________________________________________________________________
=====================================================================
Class B $ 625,293,580
_____________________________________________________________________
=====================================================================
Class C $ 184,393,109
_____________________________________________________________________
=====================================================================
Class R $ 225,741
_____________________________________________________________________
=====================================================================
Institutional Class $ 122,745,851
_____________________________________________________________________
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 394,113,108
_____________________________________________________________________
=====================================================================
Class B 38,221,650
_____________________________________________________________________
=====================================================================
Class C 11,274,294
_____________________________________________________________________
=====================================================================
Class R 13,078
_____________________________________________________________________
=====================================================================
Institutional Class 6,669,472
_____________________________________________________________________
=====================================================================
Class A:
Net asset value per share $ 17.20
---------------------------------------------------------------------
Offering price per share:
(Net asset value of $17.20 divided by 94.50%) $ 18.20
_____________________________________________________________________
=====================================================================
Class B:
Net asset value and offering price per share $ 16.36
_____________________________________________________________________
=====================================================================
Class C:
Net asset value and offering price per share $ 16.36
_____________________________________________________________________
=====================================================================
Class R:
Net asset value and offering price per share $ 17.26
_____________________________________________________________________
=====================================================================
Institutional Class:
Net asset value and offering price per share $ 18.40
_____________________________________________________________________
=====================================================================
|
* At October 31, 2002, securities with an aggregate market value of $158,495,812
were on loan to brokers.
Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$141,553) $ 46,976,801
---------------------------------------------------------------------
Dividends from affiliated money market funds 5,128,250
---------------------------------------------------------------------
Interest 1,921
---------------------------------------------------------------------
Security lending income 375,840
=====================================================================
Total investment income 52,482,812
=====================================================================
EXPENSES:
Advisory fees 63,117,935
---------------------------------------------------------------------
Administrative services fees 629,514
---------------------------------------------------------------------
Custodian fees 517,119
---------------------------------------------------------------------
Distribution fees -- Class A 26,651,431
---------------------------------------------------------------------
Distribution fees -- Class B 7,863,981
---------------------------------------------------------------------
Distribution fees -- Class C 2,406,943
---------------------------------------------------------------------
Distribution fees -- Class R 104
---------------------------------------------------------------------
Transfer agent fees 30,950,844
---------------------------------------------------------------------
Transfer agent fees -- Institutional Class 161,290
---------------------------------------------------------------------
Trustees' fees 59,978
---------------------------------------------------------------------
Other 2,613,142
=====================================================================
Total expenses 134,972,281
=====================================================================
Less: Fees waived (1,334,866)
---------------------------------------------------------------------
Expenses paid indirectly (150,045)
=====================================================================
Net expenses 133,487,370
=====================================================================
Net investment income (loss) (81,004,558)
=====================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES AND
OPTION CONTRACTS:
Net realized gain (loss) from investment
securities (1,231,119,667)
---------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 143,330,722
---------------------------------------------------------------------
Foreign currencies (17,825)
---------------------------------------------------------------------
Option contracts written 123,292
=====================================================================
143,436,189
=====================================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (1,087,683,478)
=====================================================================
Net increase (decrease) in net assets resulting
from operations $(1,168,688,036)
_____________________________________________________________________
=====================================================================
|
See Notes to Financial Statements.
FS-56
Statement of Changes in Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (81,004,558) $ (76,893,890)
------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (1,231,119,667) (1,225,239,040)
------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and option
contracts 143,436,189 (7,717,578,312)
================================================================================================
Net increase (decrease) in net assets resulting from
operations (1,168,688,036) (9,019,711,242)
================================================================================================
Distributions to shareholders from net realized gains:
Class A -- (3,284,079,983)
------------------------------------------------------------------------------------------------
Class B -- (239,710,222)
------------------------------------------------------------------------------------------------
Class C -- (79,328,549)
------------------------------------------------------------------------------------------------
Institutional Class -- (47,688,484)
------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (1,905,685,542) 1,798,697,583
------------------------------------------------------------------------------------------------
Class B (89,586,163) 360,350,428
------------------------------------------------------------------------------------------------
Class C (44,303,197) 104,195,656
------------------------------------------------------------------------------------------------
Class R 204,500 --
------------------------------------------------------------------------------------------------
Institutional Class (10,243,640) 31,147,864
================================================================================================
Net increase (decrease) in net assets (3,218,302,078) (10,376,126,949)
================================================================================================
NET ASSETS:
Beginning of year 10,931,014,916 21,307,141,865
================================================================================================
End of year $ 7,712,712,838 $10,931,014,916
________________________________________________________________________________________________
================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $10,096,779,185 $12,227,372,518
------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (770,211) (744,944)
------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (2,466,016,219) (1,234,896,552)
------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and option contracts 82,720,083 (60,716,106)
================================================================================================
$ 7,712,712,838 $10,931,014,916
________________________________________________________________________________________________
================================================================================================
|
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Constellation Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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. Class R shares and the Institutional Class shares are sold at net asset value. 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 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
FS-57
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 and commercial paper 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. 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 gain, 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 gain) 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. 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.
FS-58
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 master investment agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of the first $30 million of the Fund's average daily net assets, plus 0.75% of the Fund's average daily net assets in excess of $30 million to and including $150 million, 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. 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 October 31, 2002, AIM waived fees of $1,334,866. Under the terms of a master sub-advisory agreement between AIM and A I M Capital Management, Inc. ("AIM Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to AIM.
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 October 31, 2002, AIM was paid $629,514 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 October 31, 2002, AFS retained $13,879,506 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 0.30% 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B, Class C and Class R shares paid $26,651,431, $7,863,981, $2,406,943 and $104, respectively.
AIM Distributors retained commissions of $1,272,976 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $146,648, $851, $36,358 and $0 in contingent deferred sales charges imposed on redemptions of Class A, Class B, Class C and Class R shares, respectively.
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 2002, the Fund paid legal fees of $31,003 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 October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $147,794 and reductions in custodian fees of $2,251 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $150,045.
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 year ended October 31,
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 October 31, 2002, securities with an aggregate value of $158,495,812 were
on loan to brokers. The loans were secured by cash collateral of $165,293,972
received by the Fund and invested in affiliated money market funds as follows:
$140,355,489 in STIC Liquid Assets Portfolio and $24,938,483 in STIC Prime
Portfolio. For the year ended October 31, 2002, the Fund received fees of
$375,840 for securities lending.
FS-59
NOTE 7--CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2002 are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
----------------------------------------------------------
Beginning of year -- $ --
----------------------------------------------------------
Written 1,551 398,595
==========================================================
End of year 1,551 $398,595
__________________________________________________________
==========================================================
|
Open call options written at October 31, 2002 were as follows:
OCTOBER 31,
CONTRACT STRIKE NUMBER OF PREMIUMS 2002 UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
---------------------------------------------------------------------------------------------
Forest Laboratories,
Inc. Nov-02 $100 1,551 $398,595 $275,303 $123,292
_____________________________________________________________________________________________
=============================================================================================
|
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
------------------------
Distributions paid from long-term
capital gain $ -- $3,650,807,238
_______________________________________________________________
===============================================================
|
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation -- investments $ 64,763,381
--------------------------------------------------------------
Temporary book/tax differences (770,211)
--------------------------------------------------------------
Capital loss carryforward (2,448,059,517)
--------------------------------------------------------------
Shares of beneficial interest 10,096,779,185
==============================================================
$ 7,712,712,838
______________________________________________________________
==============================================================
|
The difference between book-basis and tax-basis unrealized appreciation is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation difference is attributable to the tax deferral of losses on wash sales. Amount includes appreciation on foreign currencies and option contacts written of $105,467.
The temporary book/tax differences are the result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the deferral of trustee compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-------------------------------------------------------------
October 31, 2009 $1,224,074,030
-------------------------------------------------------------
October 31, 2010 1,223,985,487
=============================================================
$2,448,059,517
_____________________________________________________________
=============================================================
|
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 October 31, 2002 was $5,527,191,684 and $7,640,311,238, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 1,338,956,260 -------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (1,274,298,346) ============================================================== Net unrealized appreciation of investment securities $ 64,657,914 ______________________________________________________________ ============================================================== Cost of investments for tax purposes is $7,686,733,995. |
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of a net operating loss reclassification, on October 31, 2002, undistributed net investment income was increased by $80,979,291 and shares of beneficial interest decreased by $80,979,291. This reclassification had no effect on the net assets of the Fund.
FS-60
NOTE 11--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 49,193,225* $ 974,921,543* 69,882,787 $ 1,870,548,957
--------------------------------------------------------------------------------------------------------------------------------
Class B 5,811,283 111,506,491 12,298,051 324,078,409
--------------------------------------------------------------------------------------------------------------------------------
Class C 2,391,741 46,150,281 4,478,320 117,760,474
--------------------------------------------------------------------------------------------------------------------------------
Class R** 13,083 204,591 -- --
--------------------------------------------------------------------------------------------------------------------------------
Institutional Class 6,254,346 139,801,926 1,273,391 37,026,988
================================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 107,528,397 3,125,797,826
--------------------------------------------------------------------------------------------------------------------------------
Class B -- -- 8,229,796 230,503,608
--------------------------------------------------------------------------------------------------------------------------------
Class C -- -- 2,703,433 75,693,277
--------------------------------------------------------------------------------------------------------------------------------
Institutional Class -- -- 1,529,945 47,137,606
================================================================================================================================
Reacquired:
Class A (147,108,087) (2,880,607,085) (128,320,077) (3,197,649,200)
--------------------------------------------------------------------------------------------------------------------------------
Class B (10,919,779)* (201,092,654)* (8,314,571) (194,231,589)
--------------------------------------------------------------------------------------------------------------------------------
Class C (4,824,172) (90,453,478) (3,756,367) (89,258,095)
--------------------------------------------------------------------------------------------------------------------------------
Class R** (5) (91) -- --
--------------------------------------------------------------------------------------------------------------------------------
Institutional Class (6,757,582) (150,045,566) (1,955,216) (53,016,730)
================================================================================================================================
(105,945,947) $(2,049,614,042) 65,577,889 $ 2,294,391,531
________________________________________________________________________________________________________________________________
================================================================================================================================
|
* Includes automatic conversion of 234,440 shares of Class B shares in the amount of $4,426,684 to 223,534 shares of Class A shares in the amount of $4,426,684.
** Class R shares commenced sales on June 3, 2002.
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 OCTOBER 31,
---------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 19.72 $ 43.50 $ 34.65 $ 26.37 $ 29.23
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)(a) (0.12) (0.26) (0.17) (0.14)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.37) (16.24) 12.39 9.18 (0.62)
=================================================================================================================================
Total from investment operations (2.52) (16.36) 12.13 9.01 (0.76)
=================================================================================================================================
Less distributions from net realized gains -- (7.42) (3.28) (0.73) (2.10)
=================================================================================================================================
Net asset value, end of period $ 17.20 $ 19.72 $ 43.50 $ 34.65 $ 26.37
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (12.78)% (43.10)% 36.56% 34.81% (2.30)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $6,780,055 $9,703,277 $19,268,977 $14,292,905 $12,391,844
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.26%(c) 1.14% 1.08% 1.10% 1.10%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.27%(c) 1.17% 1.11% 1.12% 1.12%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.74)%(c) (0.46)% (0.61)% (0.50)% (0.47)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 57% 75% 88% 62% 76%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include sales charges.
(c) Ratios are based on average daily net assets of $8,883,810,424.
FS-61
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
-----------------------------------------------------------------
NOVEMBER 3, 1997
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED) TO
---------------------------------------------- OCTOBER 31,
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.89 $ 42.28 $ 34.00 $ 26.11 $ 30.04
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.27)(a) (0.28) (0.58)(a) (0.42) (0.37)(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.26) (15.69) 12.14 9.04 (1.46)
=================================================================================================================================
Total from investment operations (2.53) (15.97) 11.56 8.62 (1.83)
=================================================================================================================================
Less distributions from net realized gains -- (7.42) (3.28) (0.73) (2.10)
=================================================================================================================================
Net asset value, end of period $ 16.36 $ 18.89 $ 42.28 $ 34.00 $ 26.11
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (13.39)% (43.49)% 35.51% 33.64% (5.86)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $625,294 $818,343 $1,315,524 $589,718 $275,676
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.96%(c) 1.86% 1.85% 1.98% 1.98%(d)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.97%(c) 1.89% 1.88% 2.00% 2.00%(d)
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (1.44)%(c) (1.17)% (1.38)% (1.38)% (1.36)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 57% 75% 88% 62% 76%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles, does not include contingent deferred sales charged and is
not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$786,398,084.
(d) Annualized.
CLASS C
-------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.88 $ 42.27 $ 33.99 $ 26.10 $ 29.18
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.27)(a) (0.29) (0.59)(a) (0.42) (0.37)(a)
---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.25) (15.68) 12.15 9.04 (0.61)
=====================================================================================================================
Total from investment operations (2.52) (15.97) 11.56 8.62 (0.98)
=====================================================================================================================
Less distributions from net realized gains -- (7.42) (3.28) (0.73) (2.10)
=====================================================================================================================
Net asset value, end of period $ 16.36 $ 18.88 $ 42.27 $ 33.99 $ 26.10
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(b) (13.35)% (43.51)% 35.52% 33.65% (3.12)%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $184,393 $258,786 $434,544 $161,490 $76,522
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.96%(c) 1.86% 1.85% 1.98% 1.97%
---------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.97%(c) 1.89% 1.88% 2.00% 1.99%
=====================================================================================================================
Ratio of net investment income (loss) to average net assets (1.44)%(c) (1.17)% (1.38)% (1.38)% (1.35)%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate 57% 75% 88% 62% 76%
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $240,694,256.
FS-62
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------
Net asset value, beginning of period $ 19.82
---------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a)
---------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.49)
===========================================================================
Total from investment operations (2.56)
===========================================================================
Net asset value, end of period $ 17.26
___________________________________________________________________________
===========================================================================
Total return(b) (12.92)%
___________________________________________________________________________
===========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 226
___________________________________________________________________________
===========================================================================
Ratio of expenses to average net assets:
With fee waivers 1.53%(c)
---------------------------------------------------------------------------
Without fee waivers 1.54%(c)
===========================================================================
Ratio of net investment income (loss) to average net assets (1.01)%(c)
___________________________________________________________________________
===========================================================================
Portfolio turnover rate 57%
___________________________________________________________________________
===========================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $50,620.
INSTITUTIONAL CLASS
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
2002 2001 2000 1999 1998
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 21.00 $ 45.55 $ 36.01 $ 27.25 $ 30.00
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) 0.01 (0.09) (0.01) --
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.54) (17.14) 12.91 9.50 (0.65)
======================================================================================================================
Total from investment operations (2.60) (17.13) 12.82 9.49 (0.65)
======================================================================================================================
Less distributions from net realized gains -- (7.42) (3.28) (0.73) (2.10)
======================================================================================================================
Net asset value, end of period $ 18.40 $ 21.00 $ 45.55 $ 36.01 $ 27.25
______________________________________________________________________________________________________________________
======================================================================================================================
Total return(b) (12.38)% (42.80)% 37.14% 35.46% (1.85)%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $122,746 $150,609 $288,097 $244,369 $189,039
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 0.80%(c) 0.65% 0.65% 0.64% 0.63%
----------------------------------------------------------------------------------------------------------------------
Without fee waivers 0.81%(c) 0.68% 0.68% 0.66% 0.65%
======================================================================================================================
Ratio of net investment income (loss) to average net assets (0.28)%(c) 0.03% (0.18)% (0.04)% (0.01)%
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate 57% 75% 88% 62% 76%
______________________________________________________________________________________________________________________
======================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles.
(c) Ratios are based on average daily net assets of $145,946,095.
FS-63
Report of Independent Auditors
To the Shareholders of AIM Weingarten Fund and Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Weingarten Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2002, and the related statement of operations for the year then ended, and the statements of changes in net assets and financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the periods presented through October 31, 2000 were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Weingarten Fund as of October 31, 2002, the results of its operations for the year then ended, and the changes in its net assets and financial highlights for each of the two years in the period then ended in conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
|
FS-64
FINANCIALS
Schedule of Investments
October 31, 2002
MARKET
SHARES VALUE
---------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-98.40%
Advertising-0.74%
Omnicom Group Inc. 350,000 $ 20,170,500
===========================================================================
Aerospace & Defense-1.44%
L-3 Communications Holdings, Inc.(a) 200,000 9,400,000
---------------------------------------------------------------------------
Lockheed Martin Corp. 250,000 14,475,000
---------------------------------------------------------------------------
United Technologies Corp. 250,000 15,417,500
===========================================================================
39,292,500
===========================================================================
Airlines-0.32%
Southwest Airlines Co. 600,000 8,760,000
===========================================================================
Apparel Retail-2.15%
Gap, Inc. (The) 2,065,900 24,315,643
---------------------------------------------------------------------------
Limited Brands 600,000 9,402,000
---------------------------------------------------------------------------
Ross Stores, Inc. 250,000 10,462,500
---------------------------------------------------------------------------
TJX Cos., Inc. (The) 700,000 14,364,000
===========================================================================
58,544,143
===========================================================================
Application Software-0.76%
Electronic Arts Inc.(a)(b) 150,000 9,768,000
---------------------------------------------------------------------------
PeopleSoft, Inc.(a) 600,000 10,860,000
===========================================================================
20,628,000
===========================================================================
Automobile Manufacturers-0.52%
Bayerische Motoren Werke A.G. (Germany) 400,000 14,272,916
===========================================================================
Banks-2.91%
Bank of America Corp. 600,000 41,880,000
---------------------------------------------------------------------------
Bank of New York Co., Inc. (The) 350,000 9,100,000
---------------------------------------------------------------------------
Kookmin Bank-ADR (South Korea) 400,000 12,940,000
---------------------------------------------------------------------------
Synovus Financial Corp. 750,000 15,367,500
===========================================================================
79,287,500
===========================================================================
Biotechnology-0.93%
Gilead Sciences, Inc.(a) 400,000 13,896,000
---------------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 250,000 11,505,000
===========================================================================
25,401,000
===========================================================================
Brewers-0.68%
Anheuser-Busch Cos., Inc. 350,000 18,466,000
===========================================================================
Broadcasting & Cable TV-1.28%
Clear Channel Communications, Inc.(a) 700,000 25,935,000
---------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 350,000 9,068,500
===========================================================================
35,003,500
===========================================================================
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Building Products-1.00%
American Standard Cos. Inc.(a) 100,000 $ 6,670,000
---------------------------------------------------------------------------
Masco Corp. 1,000,000 20,560,000
===========================================================================
27,230,000
===========================================================================
Computer Hardware-3.49%
Dell Computer Corp.(a) 2,000,000 57,220,000
---------------------------------------------------------------------------
Hewlett-Packard Co. 900,000 14,220,000
---------------------------------------------------------------------------
International Business Machines Corp. 300,000 23,682,000
===========================================================================
95,122,000
===========================================================================
Construction Materials-0.31%
Vulcan Materials Co. 250,000 8,390,000
===========================================================================
Consumer Finance-1.30%
Household International, Inc. 300,000 7,128,000
---------------------------------------------------------------------------
MBNA Corp. 1,400,000 28,434,000
===========================================================================
35,562,000
===========================================================================
Data Processing Services-1.78%
First Data Corp. 400,000 13,976,000
---------------------------------------------------------------------------
Fiserv, Inc.(a) 600,000 18,744,000
---------------------------------------------------------------------------
Paychex, Inc. 550,000 15,851,000
===========================================================================
48,571,000
===========================================================================
Department Stores-2.00%
Federated Department Stores, Inc.(a) 400,000 12,280,000
---------------------------------------------------------------------------
Kohl's Corp.(a) 500,000 29,225,000
---------------------------------------------------------------------------
Nordstrom, Inc. 650,000 12,948,000
===========================================================================
54,453,000
===========================================================================
Diversified Commercial Services-1.87%
Apollo Group, Inc.-Class A(a) 350,000 14,525,000
---------------------------------------------------------------------------
Cendant Corp.(a) 800,000 9,200,000
---------------------------------------------------------------------------
H&R Block, Inc. 400,000 17,752,000
---------------------------------------------------------------------------
Weight Watchers International, Inc.(a) 200,000 9,470,000
===========================================================================
50,947,000
===========================================================================
Diversified Financial Services-7.03%
American Express Co. 450,000 16,366,500
---------------------------------------------------------------------------
Charles Schwab Corp. (The) 1,500,000 13,770,000
---------------------------------------------------------------------------
Citigroup Inc. 750,000 27,712,500
---------------------------------------------------------------------------
Fannie Mae 300,000 20,058,000
---------------------------------------------------------------------------
Freddie Mac 450,000 27,711,000
---------------------------------------------------------------------------
|
FS-65
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Diversified Financial Services-(Continued)
Goldman Sachs Group, Inc. (The) 400,000 $ 28,640,000
---------------------------------------------------------------------------
J.P. Morgan Chase & Co. 1,000,000 20,750,000
---------------------------------------------------------------------------
Moody's Corp. 200,000 9,420,000
---------------------------------------------------------------------------
SLM Corp. 150,000 15,411,000
---------------------------------------------------------------------------
Stilwell Financial, Inc. 1,000,000 11,710,000
===========================================================================
191,549,000
===========================================================================
Drug Retail-1.09%
CVS Corp. 400,000 11,092,000
---------------------------------------------------------------------------
Walgreen Co. 550,000 18,562,500
===========================================================================
29,654,500
===========================================================================
Employment Services-0.40%
Robert Half International Inc.(a) 650,000 10,855,000
===========================================================================
Food Distributors-0.41%
Sysco Corp. 350,000 11,088,000
===========================================================================
Food Retail-0.78%
Kroger Co. (The)(a) 650,000 9,646,000
---------------------------------------------------------------------------
Whole Foods Market, Inc.(a) 250,000 11,663,500
===========================================================================
21,309,500
===========================================================================
Footwear-0.52%
NIKE, Inc.-Class B 300,000 14,157,000
===========================================================================
General Merchandise Stores-1.39%
Family Dollar Stores, Inc. 350,000 10,776,500
---------------------------------------------------------------------------
Target Corp. 900,000 27,108,000
===========================================================================
37,884,500
===========================================================================
Health Care Distributors & Services-2.30%
AdvancePCS(a) 400,000 10,040,000
---------------------------------------------------------------------------
AmerisourceBergen Corp. 200,000 14,230,000
---------------------------------------------------------------------------
Cardinal Health, Inc. 400,000 27,684,000
---------------------------------------------------------------------------
Express Scripts, Inc.(a) 200,000 10,836,000
===========================================================================
62,790,000
===========================================================================
Health Care Equipment-2.71%
Becton, Dickinson & Co. 400,000 11,804,000
---------------------------------------------------------------------------
Boston Scientific Corp.(a) 450,000 16,933,500
---------------------------------------------------------------------------
Medtronic, Inc. 450,000 20,160,000
---------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 300,000 10,683,000
---------------------------------------------------------------------------
Zimmer Holdings, Inc.(a)(b) 350,000 14,427,000
===========================================================================
74,007,500
===========================================================================
Health Care Facilities-1.85%
HCA Inc. 500,000 21,745,000
---------------------------------------------------------------------------
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Health Care Facilities-(Continued)
Tenet Healthcare Corp.(a) 1,000,000 $ 28,750,000
===========================================================================
50,495,000
===========================================================================
Health Care Supplies-0.90%
Alcon, Inc. (Switzerland)(a) 600,000 24,612,000
===========================================================================
Home Improvement Retail-2.35%
Home Depot, Inc. (The) 1,350,000 38,988,000
---------------------------------------------------------------------------
Lowe's Cos., Inc. 600,000 25,038,000
===========================================================================
64,026,000
===========================================================================
Hotels, Resorts & Cruise Lines-0.54%
Royal Caribbean Cruises Ltd. 800,000 14,688,000
===========================================================================
Household Appliances-0.34%
Black & Decker Corp. (The) 200,000 9,352,000
===========================================================================
Household Products-2.13%
Colgate-Palmolive Co. 250,000 13,745,000
---------------------------------------------------------------------------
Procter & Gamble Co. (The) 500,000 44,225,000
===========================================================================
57,970,000
===========================================================================
Housewares & Specialties-0.77%
Newell Rubbermaid Inc. 650,000 21,073,000
===========================================================================
Industrial Conglomerates-1.59%
Tyco International Ltd. (Bermuda) 3,000,000 43,380,000
===========================================================================
Industrial Gases-0.72%
Air Products & Chemicals, Inc. 200,000 8,840,000
---------------------------------------------------------------------------
Praxair, Inc. 200,000 10,900,000
===========================================================================
19,740,000
===========================================================================
Industrial Machinery-0.53%
Danaher Corp. 250,000 14,462,500
===========================================================================
Integrated Telecommunication Services-1.07%
AT&T Corp. 1,550,000 20,212,000
---------------------------------------------------------------------------
SBC Communications Inc. 350,000 8,981,000
===========================================================================
29,193,000
===========================================================================
Internet Retail-1.01%
Amazon.com, Inc.(a) 600,000 11,616,000
---------------------------------------------------------------------------
eBay Inc.(a) 250,000 15,815,000
===========================================================================
27,431,000
===========================================================================
Internet Software & Services-0.49%
Yahoo! Inc.(a) 900,000 13,428,000
===========================================================================
IT Consulting & Services-0.76%
Affiliated Computer Services, Inc.-Class A(a) 450,000 20,722,500
===========================================================================
|
FS-66
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Managed Health Care-2.94%
Aetna Inc. 350,000 $ 14,105,000
---------------------------------------------------------------------------
Anthem, Inc.(a) 250,000 15,750,000
---------------------------------------------------------------------------
Caremark Rx, Inc.(a) 550,000 9,735,000
---------------------------------------------------------------------------
UnitedHealth Group Inc. 300,000 27,285,000
---------------------------------------------------------------------------
WellPoint Health Networks Inc.(a) 175,000 13,161,750
===========================================================================
80,036,750
===========================================================================
Motorcycle Manufacturers-0.67%
Harley-Davidson, Inc. 350,000 18,305,000
===========================================================================
Multi-Line Insurance-1.85%
American International Group, Inc. 650,000 40,657,500
---------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 250,000 9,875,000
===========================================================================
50,532,500
===========================================================================
Networking Equipment-1.64%
Cisco Systems, Inc.(a) 4,000,000 44,720,000
===========================================================================
Office Services & Supplies-0.34%
Avery Dennison Corp. 150,000 9,336,000
===========================================================================
Oil & Gas Drilling-1.25%
ENSCO International Inc. 250,000 6,760,000
---------------------------------------------------------------------------
Nabors Industries, Ltd. (Bermuda)(a) 500,000 17,485,000
---------------------------------------------------------------------------
Transocean Inc. 450,000 9,891,000
===========================================================================
34,136,000
===========================================================================
Oil & Gas Equipment & Services-0.37%
Schlumberger Ltd. (Netherlands) 250,000 10,027,500
===========================================================================
Oil & Gas Exploration & Production-0.37%
Devon Energy Corp. 200,000 10,100,000
===========================================================================
Packaged Foods & Meats-0.34%
Sara Lee Corp. 400,000 9,132,000
===========================================================================
Personal Products-0.38%
Gillette Co. (The) 350,000 10,458,000
===========================================================================
Pharmaceuticals-9.78%
Forest Laboratories, Inc.(a) 100,000 9,799,000
---------------------------------------------------------------------------
Johnson & Johnson 950,000 55,812,500
---------------------------------------------------------------------------
Lilly (Eli) & Co. 400,000 22,200,000
---------------------------------------------------------------------------
Pfizer Inc. 1,000,000 31,770,000
---------------------------------------------------------------------------
Pharmacia Corp. 2,250,000 96,750,000
---------------------------------------------------------------------------
Wyeth 1,500,000 50,250,000
===========================================================================
266,581,500
===========================================================================
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Property & Casualty Insurance-0.42%
XL Capital Ltd.-Class A (Bermuda) 150,000 $ 11,422,500
===========================================================================
Restaurants-0.74%
Starbucks Corp.(a) 450,000 10,687,500
---------------------------------------------------------------------------
Wendy's International, Inc. 300,000 9,504,000
===========================================================================
20,191,500
===========================================================================
Semiconductor Equipment-6.45%
Applied Materials, Inc.(a) 6,500,000 97,695,000
---------------------------------------------------------------------------
KLA-Tencor Corp.(a) 400,000 14,252,000
---------------------------------------------------------------------------
Lam Research Corp.(a) 1,300,000 16,367,000
---------------------------------------------------------------------------
Novellus Systems, Inc.(a) 1,500,000 47,400,000
===========================================================================
175,714,000
===========================================================================
Semiconductors-6.95%
Analog Devices, Inc.(a) 1,250,000 33,500,000
---------------------------------------------------------------------------
Intel Corp. 1,700,000 29,410,000
---------------------------------------------------------------------------
Linear Technology Corp. 1,000,000 27,640,000
---------------------------------------------------------------------------
Maxim Integrated Products, Inc. 350,000 11,144,000
---------------------------------------------------------------------------
Microchip Technology Inc. 1,250,000 30,500,000
---------------------------------------------------------------------------
Micron Technology, Inc.(a) 1,600,000 25,600,000
---------------------------------------------------------------------------
STMicroelectronics N.V.-New York Shares
(Netherlands) 800,000 15,736,000
---------------------------------------------------------------------------
Texas Instruments Inc. 1,000,000 15,860,000
===========================================================================
189,390,000
===========================================================================
Soft Drinks-0.51%
Coca-Cola Co. (The) 300,000 13,944,000
===========================================================================
Specialty Chemicals-0.35%
Ecolab Inc. 200,000 9,650,000
===========================================================================
Specialty Stores-0.98%
Bed Bath & Beyond Inc.(a) 750,000 26,595,000
===========================================================================
Systems Software-5.22%
Computer Associates International, Inc. 1,000,000 14,860,000
---------------------------------------------------------------------------
Microsoft Corp.(a) 2,000,000 106,940,000
---------------------------------------------------------------------------
Oracle Corp.(a) 2,000,000 20,380,000
===========================================================================
142,180,000
===========================================================================
Telecommunications Equipment-0.38%
QUALCOMM Inc.(a) 300,000 10,356,000
===========================================================================
Tobacco-0.52%
Philip Morris Cos. Inc. 350,000 14,262,500
===========================================================================
|
FS-67
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Wireless Telecommunication Services-0.79%
AT&T Wireless Services Inc.(a) 1,500,000 $ 10,305,000
---------------------------------------------------------------------------
Nextel Communications, Inc.-Class A(a) 1,000,000 11,280,000
===========================================================================
21,585,000
===========================================================================
Total Common Stocks & Other Equity
Interests (Cost $2,799,876,312) 2,682,624,809
===========================================================================
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Money Market Funds-2.68%
STIC Liquid Assets Portfolio(c) 36,578,212 $ 36,578,212
---------------------------------------------------------------------------
STIC Prime Portfolio(c) 36,578,212 36,578,212
===========================================================================
Total Money Market Funds (Cost
$73,156,424) 73,156,424
===========================================================================
TOTAL INVESTMENTS-101.08% (Cost
$2,873,032,736)(d) 2,755,781,233
===========================================================================
OTHER ASSETS LESS LIABILITIES-(1.08%) (29,484,351)
===========================================================================
NET ASSETS-100.00% $2,726,296,882
___________________________________________________________________________
===========================================================================
|
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 7.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
(d) The Investment Company Act of 1940 defines affiliates as those companies in
which a fund holds 5% or more of the outstanding voting securities. The Fund
has not owned enough of the outstanding voting securities of the issuer to
have control (as defined in the Investment Company Act of 1940) of that
issuer. The following is a summary of the transactions with affiliates for
the year ended October 31, 2002.
CHANGE IN
MARKET VALUE PURCHASE SALES UNREALIZED MARKET VALUE DIVIDEND REALIZED
10/31/2001 AT COST AT COST APPR./(DEPR.) 10/31/2002 INCOME GAIN/(LOSS)
======================================================================================================
Blockbuster Inc.-Class
A $14,471,160 $66,246,373 $(78,186,855) $(2,530,678) $ - $35,090 $(11,465,501)
|
See Notes to Financial Statements.
FS-68
Statement of Assets and Liabilities
October 31, 2002
ASSETS:
Investments, at market value (cost $2,873,032,736)* $2,755,781,233
---------------------------------------------------------------------
Foreign currencies, at value (cost $127) 128
---------------------------------------------------------------------
Receivables for:
Investments sold 86,174,507
---------------------------------------------------------------------
Fund shares sold 748,513
---------------------------------------------------------------------
Dividends 1,728,725
---------------------------------------------------------------------
Investment for deferred compensation plan 159,752
---------------------------------------------------------------------
Collateral for securities loaned 48,365,000
---------------------------------------------------------------------
Other assets 498,784
=====================================================================
Total assets 2,893,456,642
_____________________________________________________________________
=====================================================================
LIABILITIES:
Payables for:
Investments purchased 105,798,488
---------------------------------------------------------------------
Fund shares reacquired 8,813,795
---------------------------------------------------------------------
Options written (premiums received $585,867) 541,250
---------------------------------------------------------------------
Deferred compensation plan 159,752
---------------------------------------------------------------------
Collateral upon return of securities loaned 48,365,000
---------------------------------------------------------------------
Accrued distribution fees 1,661,024
---------------------------------------------------------------------
Accrued trustees' fees 2,610
---------------------------------------------------------------------
Accrued transfer agent fees 1,341,608
---------------------------------------------------------------------
Accrued operating expenses 476,233
=====================================================================
Total liabilities 167,159,760
=====================================================================
Net assets applicable to shares outstanding $2,726,296,882
_____________________________________________________________________
=====================================================================
NET ASSETS:
Class A $2,104,660,220
_____________________________________________________________________
=====================================================================
Class B $ 533,223,559
_____________________________________________________________________
=====================================================================
Class C $ 86,454,751
_____________________________________________________________________
=====================================================================
Class R $ 75,548
_____________________________________________________________________
=====================================================================
Institutional Class $ 1,882,804
_____________________________________________________________________
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 222,166,712
_____________________________________________________________________
=====================================================================
Class B 60,468,715
_____________________________________________________________________
=====================================================================
Class C 9,794,273
_____________________________________________________________________
=====================================================================
Class R 7,975
_____________________________________________________________________
=====================================================================
Institutional Class 190,038
_____________________________________________________________________
=====================================================================
Class A:
Net asset value per share $ 9.47
---------------------------------------------------------------------
Offering price per share:
(Net asset value of $9.47 divided by 94.50%) $ 10.02
_____________________________________________________________________
=====================================================================
Class B:
Net asset value and offering price per share $ 8.82
_____________________________________________________________________
=====================================================================
Class C:
Net asset value and offering price per share $ 8.83
_____________________________________________________________________
=====================================================================
Class R:
Net asset value and offering price per share $ 9.47
_____________________________________________________________________
=====================================================================
Institutional Class:
Net asset value and offering price per share $ 9.91
_____________________________________________________________________
=====================================================================
|
* At October 31, 2002, securities with an aggregate market value of $47,963,220 were on loan to brokers. Statement of Operations
For the year ended October 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$167,474) $ 25,641,915
---------------------------------------------------------------------
Dividends from affiliated money market funds 2,003,666
---------------------------------------------------------------------
Interest 79,513
---------------------------------------------------------------------
Security lending income 568,605
=====================================================================
Total investment income 28,293,699
=====================================================================
EXPENSES:
Advisory fees 26,086,537
---------------------------------------------------------------------
Administrative services fees 450,564
---------------------------------------------------------------------
Custodian fees 267,075
---------------------------------------------------------------------
Distribution fees -- Class A 9,600,534
---------------------------------------------------------------------
Distribution fees -- Class B 7,658,196
---------------------------------------------------------------------
Distribution fees -- Class C 1,234,983
---------------------------------------------------------------------
Distribution fees -- Class R 43
---------------------------------------------------------------------
Transfer agent fees 14,162,876
---------------------------------------------------------------------
Transfer agent fees -- Institutional Class 2,990
---------------------------------------------------------------------
Trustees' fees 22,833
---------------------------------------------------------------------
Other 1,291,447
=====================================================================
Total expenses 60,778,078
=====================================================================
Less: Fees waived (28,985)
---------------------------------------------------------------------
Expenses paid indirectly (62,973)
=====================================================================
Net expenses 60,686,120
=====================================================================
Net investment income (loss) (32,392,421)
=====================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES, FUTURES CONTRACTS
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (810,794,403)
---------------------------------------------------------------------
Foreign currencies (315,885)
---------------------------------------------------------------------
Futures contracts 10,637,350
---------------------------------------------------------------------
Option contracts written 3,889,123
=====================================================================
(796,583,815)
=====================================================================
Change in net unrealized appreciation (depreciation)
of:
Investment securities (252,798,311)
---------------------------------------------------------------------
Foreign currencies 413,050
---------------------------------------------------------------------
Futures contracts 6,153,088
---------------------------------------------------------------------
Option contracts written 44,617
=====================================================================
(246,187,556)
=====================================================================
Net gain (loss) from investment securities, foreign
currencies, futures contracts and option contracts (1,042,771,371)
=====================================================================
Net increase (decrease) in net assets resulting from
operations $(1,075,163,792)
_____________________________________________________________________
=====================================================================
|
See Notes to Financial Statements.
FS-69
Statement of Changes in Net Assets
For the years ended October 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (32,392,421) $ (51,530,302)
------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and option
contracts (796,583,815) (2,619,839,284)
------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies, futures
contracts and option contracts (246,187,556) (2,503,372,023)
================================================================================================
Net increase (decrease) in net assets resulting from
operations (1,075,163,792) (5,174,741,609)
================================================================================================
Distributions to shareholders from net realized gains:
Class A -- (1,121,031,643)
------------------------------------------------------------------------------------------------
Class B -- (257,775,222)
------------------------------------------------------------------------------------------------
Class C -- (40,618,148)
------------------------------------------------------------------------------------------------
Institutional Class -- (2,238,331)
------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (1,064,806,254) 270,194,498
------------------------------------------------------------------------------------------------
Class B (180,109,268) 174,387,701
------------------------------------------------------------------------------------------------
Class C (30,575,415) 38,305,460
------------------------------------------------------------------------------------------------
Class R 72,385 --
------------------------------------------------------------------------------------------------
Institutional Class (5,419,461) (703,710)
================================================================================================
Net increase (decrease) in net assets (2,356,001,805) (6,114,221,004)
================================================================================================
NET ASSETS:
Beginning of year 5,082,298,687 11,196,519,691
================================================================================================
End of year $ 2,726,296,882 $ 5,082,298,687
________________________________________________________________________________________________
================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 6,266,669,716 $ 7,580,212,372
------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (437,153) (433,499)
------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures contracts and
option contracts (3,422,728,820) (2,626,460,881)
------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies, futures contracts and
option contracts (117,206,861) 128,980,695
================================================================================================
$ 2,726,296,882 $ 5,082,298,687
________________________________________________________________________________________________
================================================================================================
|
See Notes to Financial Statements.
FS-70
Notes to Financial Statements
October 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Weingarten Fund (the "Fund") is a series portfolio of AIM Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of fifteen 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. Class R shares and Institutional Class shares are sold at net asset value. 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 provide 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 and commercial paper 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. 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 gain, 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 gain) 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.
FS-71
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. 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 master investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of the first $30 million of the Fund's average daily net assets, plus 0.75% of the Fund's average daily net assets in excess of $30 million to and including $350 million, plus 0.625% of the Fund's average daily net assets in excess of $350 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. 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 October 31, 2002, AIM waived fees of $28,985. Under the terms of a master sub-advisory agreement between AIM and A I M Capital Management, Inc. ("AIM Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to AIM.
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 October 31, 2002, AIM was paid $450,564 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 October 31, 2002, AFS retained $7,929,845 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 0.30% 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. Pursuant to the master distribution agreements, for the year ended October 31, 2002, the Class A, Class B, Class C and Class R shares paid $9,600,534, $7,658,196, $1,234,983 and $43, respectively.
AIM Distributors retained commissions of $482,681 from sales of the Class A shares of the Fund during the year ended October 31, 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 year ended October 31, 2002, AIM Distributors retained $39,755, $181, $21,916 and $0 in contingent deferred sales charges imposed on redemptions of Class A, Class B, Class C and Class R shares, respectively.
FS-72
Certain officers and trustees of the Trust are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 2002, the Fund paid legal fees of $16,256 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 October 31, 2002, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $62,514 and reductions in custodian fees of $459 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $62,973.
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 year ended October 31,
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 October 31, 2002, securities with an aggregate value of $47,963,220 were on loan to brokers. The loans were secured by cash collateral of $48,365,000 received by the Fund and subsequently invested in STIC Liquid Assets Portfolio, an affiliated money market fund. For the year ended October 31, 2002, the Fund received fees of $568,605 for securities lending.
NOTE 7--CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2002 are summarized as follows:
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-------------------------------------------------------------
Beginning of year -- $ --
-------------------------------------------------------------
Written 45,149 8,998,111
-------------------------------------------------------------
Closed (40,828) (7,924,598)
-------------------------------------------------------------
Exercised (1,821) (487,646)
=============================================================
End of year 2,500 $ 585,867
_____________________________________________________________
=============================================================
|
Open call option contracts written at October 31, 2002 were as follows:
OCTOBER 31,
2002 UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
-----------------------------------------------------------------------------------
Electronic
Arts
Inc. Dec-02 $70 1,500 $378,873 $333,750 $45,123
-----------------------------------------------------------------------------------
Zimmer
Holdings,
Inc. Nov-02 40 1,000 206,994 207,500 (506)
===================================================================================
2,500 $585,867 $541,250 $44,617
___________________________________________________________________________________
===================================================================================
|
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
--------------------------------------------------------------
Distributions paid from long-term
capital gain $ -- $1,421,300,129
______________________________________________________________
==============================================================
|
Tax Components of Beneficial Interest:
As of October 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation
(depreciation) -- investments $ (217,806,596)
--------------------------------------------------------------
Temporary book/tax differences (437,153)
--------------------------------------------------------------
Capital loss carryforward (3,322,129,085)
--------------------------------------------------------------
Shares of beneficial interest 6,266,669,716
==============================================================
$ 2,726,296,882
______________________________________________________________
==============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales. Amount includes appreciation on foreign currencies and options contracts written of $44,643.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the deferral of trustee compensation and retirement plan expenses.
FS-73
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-------------------------------------------------------------
October 31, 2009 $2,559,101,338
-------------------------------------------------------------
October 31, 2010 763,027,747
=============================================================
$3,322,129,085
_____________________________________________________________
=============================================================
|
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 October 31, 2002 was $8,582,126,797 and $9,241,130,432, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 167,346,747 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (385,197,986) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(217,851,239) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $2,973,632,472. |
NOTE 10--RECLASSIFICATIONS OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of foreign currency transactions, a net operating loss reclassification, and other items, on October 31, 2002, undistributed net investment income increased by $32,388,767, undistributed net realized gains increased by $315,876 and shares of beneficial interest decreased by $32,704,643. This reclassification had no effect on the net assets of the Fund.
NOTE 11--SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2002 and 2001 were as follows:
2002 2001
------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 16,965,953* $ 203,558,830* 30,268,361 $ 534,842,502
-------------------------------------------------------------------------------------------------------------------------------
Class B 5,995,984 66,787,479 13,914,532 238,827,916
-------------------------------------------------------------------------------------------------------------------------------
Class C 1,919,777 21,362,371 4,329,075 74,411,514
-------------------------------------------------------------------------------------------------------------------------------
Class R** 7,975 72,385 -- --
-------------------------------------------------------------------------------------------------------------------------------
Institutional Class 45,598 504,589 96,341 1,778,918
===============================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 50,737,569 1,049,729,056
-------------------------------------------------------------------------------------------------------------------------------
Class B -- -- 12,575,383 245,330,006
-------------------------------------------------------------------------------------------------------------------------------
Class C -- -- 2,001,892 39,096,945
-------------------------------------------------------------------------------------------------------------------------------
Institutional Class -- -- 98,123 2,101,806
===============================================================================================================================
Reacquired:
Class A (111,225,206) (1,268,365,084) (82,325,956) (1,314,377,060)
-------------------------------------------------------------------------------------------------------------------------------
Class B (23,336,616)* (246,896,747)* (20,537,177) (309,770,221)
-------------------------------------------------------------------------------------------------------------------------------
Class C (4,815,984) (51,937,786) (4,874,492) (75,202,999)
-------------------------------------------------------------------------------------------------------------------------------
Institutional Class (438,298) (5,924,050) (254,314) (4,584,434)
===============================================================================================================================
(114,880,817) $(1,280,838,013) 6,029,337 $ 482,183,949
_______________________________________________________________________________________________________________________________
===============================================================================================================================
|
* Includes automatic conversion of 393,806 shares of Class B shares in the amount of $4,307,233 to 368,013 shares of Class A shares in the amount of $4,307,233. ** Class R shares commenced sales on June 3, 2002.
FS-74
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 OCTOBER 31,
------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.65 $ 28.16 $ 28.31 $ 21.72 $ 22.72
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a) (0.10) (0.14)(a) (0.10) 0.02
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.11) (11.87) 3.18 8.16 2.38
=================================================================================================================================
Total from investment operations (3.18) (11.97) 3.04 8.06 2.40
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.01) --
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (3.54) (3.19) (1.46) (3.40)
=================================================================================================================================
Total distributions -- (3.54) (3.19) (1.47) (3.40)
=================================================================================================================================
Net asset value, end of period $ 9.47 $ 12.65 $ 28.16 $ 28.31 $ 21.72
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (25.14)% (47.38)% 10.61% 38.62% 12.34%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,104,660 $4,001,552 $8,948,781 $8,089,739 $6,094,178
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.33%(c) 1.21% 1.03% 1.03% 1.04%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.33%(c) 1.22% 1.07% 1.08% 1.09%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.64)%(c) (0.56)% (0.45)% (0.38)% 0.07%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 217% 240% 145% 124% 125%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include sales charges.
(c) Ratios are based on average daily net assets of $3,200,178,207.
FS-75
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
---------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------
2002 2001 2000 1999 1998
-------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.86 $ 26.82 $ 27.29 $ 21.12 $ 22.34
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)(a) (0.21) (0.36)(a) (0.30)(a) (0.15)(a)
-------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (2.89) (11.21) 3.08 7.93 2.33
=========================================================================================================================
Total from investment operations (3.04) (11.42) 2.72 7.63 2.18
=========================================================================================================================
Less distributions from net realized gains -- (3.54) (3.19) (1.46) (3.40)
=========================================================================================================================
Net asset value, end of period $ 8.82 $ 11.86 $ 26.82 $ 27.29 $ 21.12
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(b) (25.63)% (47.75)% 9.76% 37.59% 11.45%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $533,224 $922,476 $1,927,514 $1,291,456 $705,750
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.04%(c) 1.92% 1.78% 1.82% 1.83%
-------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.04%(c) 1.93% 1.82% 1.87% 1.87%
=========================================================================================================================
Ratio of net investment income (loss) to average
net assets (1.34)%(c) (1.27)% (1.20)% (1.17)% (0.72)%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate 217% 240% 145% 124% 125%
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales.
(c) Ratios are based on average daily net assets of $765,819,603.
FS-76
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------
2002 2001 2000 1999 1998
------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.87 $ 26.85 $ 27.30 $ 21.14 $ 22.34
------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)(a) (0.21) (0.36)(a) (0.30)(a) (0.15)(a)
------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.89) (11.23) 3.10 7.92 2.35
==============================================================================================================================
Total from investment operations (3.04) (11.44) 2.74 7.62 2.20
==============================================================================================================================
Less distributions from net realized gains -- (3.54) (3.19) (1.46) (3.40)
==============================================================================================================================
Net asset value, end of period $ 8.83 $ 11.87 $ 26.85 $ 27.30 $ 21.14
______________________________________________________________________________________________________________________________
==============================================================================================================================
Total return(b) (25.61)% (47.77)% 9.83% 37.50% 11.54%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $86,455 $150,604 $301,590 $105,420 $23,107
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.04%(c) 1.92% 1.78% 1.82% 1.83%
------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.04%(c) 1.93% 1.82% 1.87% 1.87%
==============================================================================================================================
Ratio of net investment income (loss) to average net assets (1.34)%(c) (1.27)% (1.20)% (1.17)% (0.72)%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Portfolio turnover rate 217% 240% 145% 124% 125%
______________________________________________________________________________________________________________________________
==============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $123,498,266.
FS-77
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS R
-------------
JUNE 3, 2002
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2002
---------------------------------------------------------------------------
Net asset value, beginning of period $ 11.36
---------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a)
---------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.86)
===========================================================================
Total from investment operations (1.89)
===========================================================================
Net asset value, end of period $ 9.47
___________________________________________________________________________
===========================================================================
Total return(b) (16.64)%
___________________________________________________________________________
===========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 76
___________________________________________________________________________
===========================================================================
Ratio of expenses to average net assets:
With fee waivers 1.53%(c)
---------------------------------------------------------------------------
Without fee waivers 1.53%(c)
===========================================================================
Ratio of net investment income (loss) to average net assets (0.84)%(c)
___________________________________________________________________________
===========================================================================
Portfolio turnover rate 217%
___________________________________________________________________________
===========================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $20,882.
FS-78
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
INSTITUTIONAL CLASS
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
2002 2001 2000 1999 1998
------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.16 $ 29.00 $ 28.96 $ 22.18 $ 23.05
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a) (0.01) (0.06)(a) 0.02 0.10
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.24) (12.29) 3.29 8.32 2.43
========================================================================================================================
Total from investment operations (3.25) (12.30) 3.23 8.34 2.53
========================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.10) --
------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (3.54) (3.19) (1.46) (3.40)
========================================================================================================================
Total distributions -- (3.54) (3.19) (1.56) (3.40)
========================================================================================================================
Net asset value, end of period $ 9.91 $ 13.16 $ 29.00 $ 28.96 $ 22.18
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(b) (24.70)% (47.11)% 11.07% 39.20% 12.79%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,883 $ 7,667 $18,634 $114,076 $72,884
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 0.82%(c) 0.69% 0.64% 0.63% 0.62%
------------------------------------------------------------------------------------------------------------------------
Without fee waivers 0.82%(c) 0.70% 0.68% 0.68% 0.67%
========================================================================================================================
Ratio of net investment income (loss) to average net assets (0.12)%(c) (0.04)% (0.04)% 0.02% 0.49%
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate 217% 240% 145% 124% 125%
________________________________________________________________________________________________________________________
========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles.
(c) Ratios are based on average daily net assets of $2,341,287.
FS-79
PART C
OTHER INFORMATION
Item 23. Exhibits
a (1) - (a) Amended and Restated Agreement and Declaration of Trust of
Registrant, dated May 15, 2002.(18)
- (b) Amendment No. 1 dated June 11, 2002, to the Amended and Restated
Agreement and Declaration of Trust of Registrant, dated May 15,
2002.(19)
|
(c) Amendment No. 2 dated February 6, 2003, to the Amended and Restated Declaration of Trust of Registrant, dated May 15, 2002, as amended June 11, 2002.(21)
b - Amended and Restated By-Laws of Registrant, adopted effective May
15, 2002.(18)
c - Articles II, VI, VII, VIII and IX of the Amended and Restated
Agreement Declaration of Trust, as amended, and Articles IV, V and
VI of the Amended and Restated By-Laws define rights of holders of
shares.
d (1) - (a) Master Investment Advisory Agreement, dated June 21, 2000,
between Registrant and A I M Advisors, Inc.(13)
- (b) Amendment No. 1, dated December 28, 2001, to Master Investment
Advisory Agreement, dated June 21, 2000, between Registrant and
A I M Advisors, Inc.(17)
- (c) Amendment No. 2, dated August 29, 2002, to Master Investment
Advisory Agreement, dated June 21, 2000, between Registrant and
A I M Advisors, Inc.(21)
(2) - Master Sub-Advisory Agreement, dated June 21, 2000, between A I M
Advisors, Inc. and A I M Capital Management, Inc.(13)
(3) - Sub-Advisory Agreement, dated June 21, 2000, between A I M Advisors,
Inc. and H.S. Dent Advisors, Inc.(13)
e (1) - (a) First Amended and Restated Master Distribution Agreement, dated
July 1, 2000 between Registrant (on behalf of its Class A and Class
C shares) and A I M Distributors, Inc.(13)
- (b) Amendment No. 1, dated November 28, 2000, to the First Amended
and Restated Master Distribution Agreement dated July 1, 2000,
between Registrant (on behalf of its Class A and Class C shares) and
A I M Distributors, Inc.(13)
- (c) Amendment No. 2, dated December 28, 2001, to the First Amended
and Restated Master Distribution Agreement, dated July 1, 2000,
between Registrant (on behalf of its Class A and Class C shares) and
A I M Distributors, Inc.(17)
- (d) Amendment No. 3, dated March 15, 2002, to the First Amended and
Restated Master Distribution Agreement, dated July 1, 2000, between
Registrant (on behalf of its Class A, Class C and Institutional
Class shares) and A I M Distributors, Inc.(18)
|
- (e) Amendment No. 4, dated June 3, 2002, to the First Amended and Restated Master Distribution Agreement, dated July 1, 2000, between Registrant (on behalf of its Class A, Class C and Institutional Class shares) and A I M Distributors, Inc.(19)
- (f) Amendment No. 5, dated August 29, 2002, to the First Amended and Restated Master Distribution Agreement, dated July 1, 2000, between Registrant (on behalf of its Class A, Class C, Class R and Institutional Class shares) and A I M Distributors, Inc.(21)
(2) - (a) First Amended and Restated Master Distribution Agreement, dated December 31, 2000, between Registrant (on behalf of its Class B shares) and A I M Distributors, Inc.(13)
- (b) Amendment No. 1, dated December 28, 2001, to the First Amended and Restated Master Distribution Agreement, dated December 31, 2000, between Registrant (on behalf of its Class B shares) and A I M Distributors, Inc.(17)
- (c) Amendment No. 2, dated August 29, 2002, to the First Amended and Restated Master Distribution Agreement, dated December 31, 2000, between Registrant (on behalf of its Class B shares) and A I M Distributors, Inc.(21)
(3) - Form of Selected Dealer Agreement between A I M Distributors, Inc.
and selected dealers.(14)
(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, as
restated October 1, 2001.(16)
(2) - Form of Director Deferred Compensation Agreement for Registrant's
Directors, dated March 7, 2000, as amended September 28, 2001, and
September 26, 2002.(21)
g (1) - (a) Master Custodian Contract, dated May 1, 2000, between Registrant
and State Street Bank and Trust Company.(13)
- (b) Amendment, dated May 1, 2000 to the Custodian Contract, dated
May 1, 2000, between Registrant and State Street Bank and Trust
Company.(13)
- (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 Custodian Contract dated
May 1, 2002 between Registrant and State Street Bank and Trust
Company.(18)
(2) - (a) Subcustodian Agreement, dated September 9, 1994, between
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 between Registrant, Chase Bank of Texas, N.A. (formerly
Texas Commerce Bank), State Street and Trust Company and A I M Fund
Services, Inc.(10)
|
(3) - 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 June 21, 2000,
between Registrant and A I M Fund Services, Inc.(13)
- (b) Amendment No. 1, dated July 1, 2000, to the Transfer Agency and
Service Agreement dated June 21, 2000, between Registrant and A I M
Fund Services, Inc.(13)
- (c) Amendment No. 2, dated January 1, 2002, to the Transfer Agency
and Services Agreement dated June 21, 2000, between Registrant and
A I M Fund Services, Inc.(17)
- (d) Amendment No. 3, dated March 4, 2002, to the Transfer Agency and
Services Agreement dated June 21, 2000, between Registrant and A I M
Fund Services, Inc.(18)
(2) - Shareholder Sub-Accounting Services Agreement between Registrant,
First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.), Financial Data Services Inc. and Merrill
Lynch, Pierce, Fenner & Smith Inc., dated October 1, 1993.(1)
(3) - Preferred Registered Technology Escrow Agreement, dated September
10, 1997, between Registrant and First Data Investor Services Group,
Inc.(5)
|
(4) - (a) Master Administrative Services Agreement, dated June 21, 2000, between Registrant and A I M Advisors, Inc.(13)
- (b) Amendment No. 1, dated May 9, 2001, to the Master Administrative Services Agreement, dated June 21, 2000, between Registrant and A I M Advisors, Inc.(14)
- (c) Amendment No. 2, dated December 28, 2001, to the Master Administrative Services Agreement, dated June 21, 2000, between Registrant and A I M Advisors, Inc.(17)
- (d) Amendment No. 3, dated August 29, 2002, to the Master Administrative Services Agreement, dated June 21, 2000, between Registrant and A I M Advisors, Inc.(21)
(5) - (a) Memorandum of Agreement, regarding securities lending, dated June 21, 2000, between Registrant, on behalf of all Funds, and A I M Advisors, Inc.(13)
- (b) Memorandum of Agreement, dated July 1, 2001, between Registrant, on behalf of AIM Large Cap Basic Value Fund, and A I M Advisors, Inc.(15)
- (c) Memorandum of Agreement, dated August 29, 2002, regarding securities lending, between Registrant, on behalf of AIM Basic Value II Fund, AIM U.S. Growth Fund, and A I M Advisors, Inc.(21)
(6) - Interfund Loan Agreement, dated September 18, 2001, between all Registrant and A I M Advisors, Inc.(14)
i - None
j (1) - Consent of Ernst & Young LLP.(21)
(2) - Consent of Ballard Spahr Andrews & Ingersoll, LLP.(21)
k (1) - Omitted Financial Statements - None.
l (1) - Agreement Concerning Initial Capitalization of Registrant's AIM
Large Cap Growth Fund, dated February 26, 1999.(7)
(2) - Agreement Concerning Initial Capitalization of Registrant's AIM Dent
Demographic Trends Fund, dated June 4, 1999.(9)
(3) - Agreement Concerning Initial Capitalization of Registrant's AIM
Large Cap Basic Value Fund, dated June 29, 1999.(9)
(4) - Agreement Concerning Initial Capitalization of Registrant's AIM Mid
Cap Growth Fund, dated November 1, 1999.(10)
(5) - Agreement Concerning Initial Capitalization of Registrant's AIM
Emerging Growth Fund, dated March 30, 2001.(13)
(6) - Agreement concerning Initial Capitalization of Registrant's AIM Core
Strategies Fund and AIM Large Cap Core Equity Fund, dated December
28, 2001.(17)
(7) - Agreement concerning Initial Capitalization of Registrant's AIM
Basic Value II Fund and AIM U.S. Growth Fund, dated August 29,
2002(21)
m (1) - (a) Second Amended and Restated Master Distribution Plan, dated as
of June 3, 2002, for the Class A, Class C and Class R shares.(19)
- (b) Amendment No. 1, dated August 29, 2002, to the Second Amended
and Restated Master Distribution Plan, dated as of June 3, 2002, for
the Class A, Class C and Class R shares.(21)
(2) - (a) First Amended and Restated Master Distribution Plan, dated
December 31, 2000, for the Class B shares.(13)
- (b) Amendment No. 1, dated December 28, 2001, to Registrant's First
Amended and Restated Master Distribution Plan, dated December 31,
2000, on behalf of its Class B shares.(17)
- (c) Amendment No. 2, dated August 29, 2002, to the First Amended and
Restated Master Distribution Plan, dated December 30, 2001, for the
Class B shares.(21)
(3) - Form of Shareholder Service Agreement to be used in connection with
Registrant's Master Distribution Plan.(14)
(4) - Form of Bank Shareholder Service Agreement to be used in connection
with Registrant's Master Distribution Plan.(14)
(5) - Form of Variable Group Annuity Contract Holder Service Agreement to
be used in connection with Registrant's Master Distribution
Plan.(14)
(6) - Form of Agency Pricing Agreement to be used in connection with
Registrant's Master Distribution Plan.(14)
|
(7) - Forms of Service Agreements for Bank Trust Departments and for Brokers for Bank Trust Departments.(14)
(8) - Form of Shareholder Service Agreement for shares of the AIM Mutual Funds.(14)
n - Second Amended and Restated Multiple Class Plan of The AIM Family of
Funds--Registered Trademark--, effective December 12, 2001 as
amended and restated March 4, 2002, and as amended and restated
October 31, 2002.(21)
o - Reserved
p (1) - The A I M Management Group Code of Ethics, adopted May 1, 1981, as
last amended September 27, 2002, relating to A I M Management Group
Inc. and A I M Advisors, Inc. and its wholly owned and indirect
subsidiaries.(21)
(2) - AIM Funds Code of Ethics of the Registrant, effective September 23,
2000.(14)
(3) - H. S. Dent Advisors, Inc.- Code of Ethics, dated May 1, 1999, on
behalf of AIM Dent Demographic Trends Fund of Registrant.(19)
(1) Incorporated herein by reference to PEA No. 40, filed on February 26,
1992.
(2) Incorporated herein by reference to PEA No. 44, filed on February 24,
1995.
(3) Incorporated herein by reference to PEA No. 47, filed on December 29,
1995.
(4) Incorporated herein by reference to PEA No. 53, filed on October 8,
1997.
(5) Incorporated herein by reference to PEA No. 54, filed on February 27,
1998.
(6) Incorporated herein by reference to PEA No. 55, filed on December 11,
1998.
(7) Incorporated herein by reference to PEA No. 56, filed on February 23,
1999.
(8) Incorporated herein by reference to PEA No. 57, filed on March 24, 1999.
(9) Incorporated herein by reference to PEA No. 60, filed on July 15, 1999.
(10) Incorporated herein by reference to PEA No. 62, filed on January 6,
2000.
(11) Incorporated herein by reference to PEA No. 64, filed on March 27, 2000.
(12) Incorporated herein by reference to PEA No. 65, filed on May 25, 2000.
(13) Incorporated herein by reference to PEA No. 67, filed on February 23,
2001.
(14) Incorporated herein by reference to PEA No. 68, filed on October 12,
2001.
(15) Incorporated herein by reference to PEA No. 69, filed on December 14,
2001.
(16) Incorporated herein by reference to PEA No. 70, filed on December 28,
2001.
(17) Incorporated herein by reference to PEA No. 71, filed on April 26, 2002.
(18) Incorporated herein by reference to PEA No. 72, filed on May 22, 2002.
(19) Incorporated herein by reference to PEA No. 73, filed on June 13, 2002.
|
(20) Incorporated herein by reference to PEA No. 74, filed on August 28, 2002.
(21) 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 to 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 & Investment Advisory Professional and Directors & 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.
Section 10 of the Sub-Advisory Agreement between AIM and A I M Capital Management Inc. and Section 11 of the Sub-Advisory Agreement between AIM and H.S. Dent Advisors, Inc., (collectively, the "Sub-Advisory Agreements") provide that the Sub-advisors shall not be liable for any costs or liabilities arising from any error of judgment or mistake of law or any loss suffered by any series of the Registrant or the Registrant in connection with the matters to which the Sub-Advisory Agreements relate except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Sub-advisors in the performance by the Sub-advisors of their duties or from reckless disregard by the Sub-advisors of their obligations and duties under the Sub-Advisory Agreements.
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 the successful defense of any action, suit or proceeding) is asserted by such trustees, officer or controlling person in connection with the securities 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 will be governed by the 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 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
AIM Tax-Exempt Funds
AIM Variable Insurance Funds
(b)
Name and Principal Position and Offices with Positions and Offices
Business Address* Underwriter with Registrant
------------------ ------------------------------------ ---------------------
Michael J. Cemo Chairman, President, Chief Executive None
Officer & Director
Mark H. Williamson Director Trustee
Gary T. Crum Director Senior Vice President
|
Name and Principal Position and Offices with Positions and Offices
Business Address* Underwriter with Registrant
------------------ ------------------------------------ ---------------------
Gene L. Needles Executive Vice President & Managing None
Director of National Sales
James L. Salners Executive Vice President & Director of None
Sales Strategy & Planning
John S. Cooper Senior Vice President - Retirement None
Marilyn M. Miller Senior Vice President, Director of None
Marketing
Leslie A. Schmidt Senior Vice President - Administration None
James E. Stueve Senior Vice President & Director of None
Retail Sales
Stephen H. Bitteker First Vice President & Director of None
Offshore Funds Sales
Glenda A. Dayton First Vice President - Product None
Management
Gary K. Wendler First Vice President - Marketing None
Research & Analysis
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
Kim T. McAuliffe Vice President None
Carol F. Relihan Vice President Senior Vice President
& Secretary
Linda L. Warriner Vice President None
Rebecca Starling-Klatt Chief Compliance Officer & Assistant None
Vice President
Kathleen J. Pflueger Secretary Assistant Secretary
|
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
(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 certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and 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 24th day of February, 2003.
REGISTRANT: AIM EQUITY FUNDS
By: /s/ Robert H. Graham, President
-------------------------------
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 February 24, 2003
------------------------ (Principal Executive Officer)
(Robert H. Graham)
/s/ Frank S. Bayley Trustee February 24, 2003
------------------------
(Frank S. Bayley)
/s/ Bruce L. Crockett Trustee February 24, 2003
------------------------
(Bruce L. Crockett)
/s/ Albert R. Dowden Trustee February 24, 2003
------------------------
(Albert R. Dowden)
/s/ Edward K. Dunn, Jr. Trustee February 24, 2003
------------------------
(Edward K. Dunn, Jr.)
/s/ Jack M. Fields Trustee February 24, 2003
------------------------
(Jack M. Fields)
/s/ Carl Frischling Trustee February 24, 2003
------------------------
(Carl Frischling)
/s/ Prema Mathai-Davis Trustee February 24, 2003
------------------------
(Prema Mathai-Davis)
/s/ Lewis F. Pennock Trustee February 24, 2003
------------------------
(Lewis F. Pennock)
/s/ Ruth H. Quigley Trustee February 24, 2003
------------------------
(Ruth H. Quigley)
/s/ Louis S. Sklar Trustee February 24, 2003
------------------------
(Louis S. Sklar)
/s/ Mark H. Williamson Trustee February 24, 2003
------------------------
(Mark H. Williamson)
/s/ Dana R. Sutton Vice President & Treasurer February 24, 2003
------------------------ (Principal Financial and
(Dana R. Sutton) Accounting Officer)
|
INDEX
Exhibits
a(1)(c) (c) Amendment No. 2 dated February 6, 2003, to the Amended and Restated
Declaration of Trust of Registrant, dated May 15, 2002, as amended June
11, 2002
d(1)(c) Amendment No. 2, dated August 29, 2002, to Master Investment Advisory
Agreement, dated June 21, 2000, between Registrant and A I M Advisors,
Inc.
e(1)(f) Amendment No. 5, dated August 29, 2002, to the First Amended and
Restated Master Distribution Agreement, dated July 1, 2000, between
Registrant (on behalf of its Class A, Class C, Class R and
Institutional Class shares) and A I M Distributors, Inc.
e(2)(c) Amendment No. 2, dated August 29, 2002, to the First Amended and
Restated Master Distribution Agreement, dated December 31, 2000,
between Registrant (on behalf of its Class B shares) and A I M
Distributors, Inc.
f(2) Form of Director Deferred Compensation Agreement, dated March 7, 2000,
as amended September 28, 2001, and September 26, 2002
h(4)(d) Amendment No. 3, dated August 29, 2002, to the Master Administrative
Services Agreement, dated June 21, 2000, between Registrant and A I M
Advisors, Inc.
h(5)(c) Memorandum of Agreement, dated August 29, 2002, regarding securities
lending, between Registrant, on behalf of AIM Basic Value II Fund, AIM
U.S. Growth Fund, and A I M Advisors, Inc.
j(1) Consent of Ballard Spahr Andrews & Ingersoll, LLP
j(2) Consent of Ernst & Young LLP
l(7) Agreement concerning Initial Capitalization of Registrant's AIM Basic
Value II Fund and AIM U.S. Growth Fund, dated August 29, 2002
m(1)(b) Amendment No. 1, dated August 29, 2002, to the Second Amended and
Restated Master Distribution Plan, dated as of June 3, 2002, for the
Class A, Class C and Class R shares
m(2)(c) Amendment No. 2, dated August 29, 2002, to the First Amended and
Restated Master Distribution Plan, dated December 30, 2001, for the
Class B shares
n Second Amended and Restated Multiple Class Plan of The AIM Family of
Funds--Registered Trademark--, effective December 12, 2001 as amended
and restated March 4, 2002, and as amended and restated October 31,
2002
p(1) The A I M Management Group Code of Ethics, adopted May 1, 1981, as last
amended September 27, 2002, relating to A I M Management Group Inc. and
A I M Advisors, Inc.
|
EXHIBIT a(1)(c)
AMENDMENT NO. 2
TO
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
AIM EQUITY FUNDS
This Amendment No. 2 to the Amended and Restated Agreement and Declaration of Trust of AIM Equity Funds (this "Amendment") amends, effective as of May 2, 2003, the Amended and Restated Agreement and Declaration of Trust of AIM Equity Funds dated as of May 15, 2002, as amended June 11, 2002 (the "Agreement").
Under Section 9.7 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
NOW, THEREFORE, the Agreement is hereby amended as follows:
1. Schedule A of the Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1 to this Amendment.
2. All references in the Agreement to "this Agreement" shall mean the Agreement as amended by this Amendment and all prior amendments thereto.
3. Except as specifically provided for by this Amendment, the Agreement (including all prior amendments) is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of February 6, 2003.
/s/ ROBERT H. GRAHAM -------------------------------- Name: Robert H. Graham Title: President |
EXHIBIT 1 TO AMENDMENT NO. 2
TO
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
AIM EQUITY FUNDS
"SCHEDULE A
AIM EQUITY FUNDS
PORTFOLIOS AND CLASSES THEREOF
AIM Aggressive Growth Fund AIM Constellation Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
Class R Shares Class R Shares
Institutional Class Shares Institutional Class Shares
AIM Basic Value II Fund AIM Core Strategies Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
AIM Blue Chip Fund AIM Dent Demographic Trends Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
Class R Shares
Institutional Class Shares AIM Diversified Dividend Fund
AIM Capital Development Fund Class A Shares
Class B Shares
Class A Shares Class C Shares
Class B Shares
Class C Shares AIM Emerging Growth Fund
Class R Shares
Institutional Class Shares Class A Shares
Class B Shares
AIM Charter Fund Class C Shares
Class A Shares AIM Large Cap Basic Value Fund
Class B Shares
Class C Shares Class A Shares
Class R Shares Class B Shares
Institutional Class Shares Class C Shares
Class R Shares
|
AIM Large Cap Growth Fund
Class A Shares
Class B Shares
Class C Shares
Class R Shares
AIM Mid Cap Growth Fund
Class A Shares
Class B Shares
Class C Shares
Class R Shares
AIM U.S. Growth Fund
Class A Shares
Class B Shares
Class C Shares
AIM Weingarten Fund
Class A Shares
Class B Shares
Class C Shares
Class R Shares
Institutional Class Shares"
EXHIBIT d(1)(c)
AMENDMENT NO. 2
TO
MASTER INVESTMENT ADVISORY AGREEMENT
This Amendment dated as of August 29th, 2002, amends the Master Investment Advisory Agreement (the "Agreement"), dated June 21, 2000, between AIM Equity Funds, a Delaware business trust, and A I M Advisors, Inc., a Delaware corporation.
WITNESSETH:
WHEREAS, the parties desire to amend the Agreement to add two new portfolios, the AIM U.S. Growth Fund and the AIM Basic Value 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 Aggressive Growth Fund June 1, 2000 AIM Basic Value II Fund August 29, 2002 AIM Blue Chip Fund June 1, 2000 AIM Capital Development Fund June 1, 2000 AIM Charter Fund June 1, 2000 AIM Constellation Fund June 1, 2000 AIM Core Strategies Fund December 28, 2001 AIM Dent Demographic Trends Fund June 1, 2000 AIM Emerging Growth Fund June 1, 2000 AIM Large Cap Basic Value Fund June 1, 2000 AIM Large Cap Core Equity Fund December 28, 2001 AIM Large Cap Growth Fund June 1, 2000 AIM Mid Cap Growth Fund June 1, 2000 AIM U.S. Growth Fund August 29, 2002 AIM Weingarten Fund June 1, 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 AGGRESSIVE GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $150 million.......................................................... 0.80% Over $150 million........................................................... 0.625% |
AIM BLUE CHIP FUND
AIM CAPITAL DEVELOPMENT FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $350 million.......................................................... 0.75% Over $350 million........................................................... 0.625% |
AIM CHARTER FUND
AIM CONSTELLATION FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $ 30 million.......................................................... 1.00% Over $30 million to and including $150 million.............................. 0.75% Over $150 million........................................................... 0.625% |
AIM DENT DEMOGRAPHIC TRENDS FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $2 billion............................................................ 0.85% Over $2 billion............................................................. 0.80% |
AIM EMERGING GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $ 1 billion........................................................... 0.85% Over $ 1 billion............................................................ 0.80% |
AIM LARGE CAP BASIC VALUE FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $ 1 billion........................................................... 0.60% Over $1 billion to and including $ 2 billion................................ 0.575% Over $ 2 billion............................................................ 0.55% |
AIM CORE STRATEGIES FUND
AIM LARGE CAP CORE EQUITY FUND
AIM LARGE CAP GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $ 1 billion........................................................... 0.75% Over $1 billion to and including $ 2 billion................................ 0.70% Over $ 2 billion............................................................ 0.625% |
AIM MID CAP GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $ 1 billion........................................................... 0.80% Over $ 1 billion............................................................ 0.75% |
AIM U.S. GROWTH FUND
AIM BASIC VALUE II FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $1 billion............................................................ 0.75% Over $1 billion to and including $ 2 billion................................ 0.70% Over $2 billion............................................................. 0.65% |
AIM WEINGARTEN FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $30 million........................................................... 1.00% Over $30 million to and including $350 million.............................. 0.75% Over $350 million........................................................... 0.625%" |
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 EQUITY FUNDS
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)(f)
AMENDMENT NO. 5
TO THE FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM EQUITY FUNDS
(CLASS A SHARES, CLASS C SHARES, CLASS R AND INSTITUTIONAL CLASS SHARES)
AND
A I M DISTRIBUTORS, INC.
The First Amended and Restated Master Distribution Agreement (the "Agreement"), dated July 1, 2000, by and between AIM Equity Funds, a Delaware business trust, and A I M Distributors, Inc., a Delaware corporation, is hereby amended as follows:
1. Appendix A to the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
TO
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
OF
AIM EQUITY FUNDS
CLASS A SHARES
AIM Aggressive Growth Fund
AIM Basic Value II Fund
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund
AIM Constellation Fund
AIM Core Strategies Fund
AIM Dent Demographic Trends Fund
AIM Emerging Growth Fund
AIM Large Cap Basic Value Fund
AIM Large Cap Core Equity Fund
AIM Large Cap Growth Fund
AIM Mid Cap Growth Fund
AIM U.S. Growth Fund
AIM Weingarten Fund
CLASS C SHARES
AIM Aggressive Growth Fund
AIM Basic Value II Fund
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund
AIM Constellation Fund
AIM Core Strategies Fund
AIM Dent Demographic Trends Fund
AIM Emerging Growth Fund
AIM Large Cap Basic Value Fund
AIM Large Cap Core Equity Fund
AIM Large Cap Growth Fund
AIM Mid Cap Growth Fund
AIM U.S. Growth Fund
AIM Weingarten Fund
CLASS R SHARES
AIM Aggressive Growth Fund
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund
AIM Constellation Fund
AIM Large Cap Basic Value Fund
AIM Large Cap Growth Fund
AIM Mid Cap Growth Fund
AIM Weingarten Fund
INSTITUTIONAL CLASS SHARES
AIM Aggressive Growth Fund
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund
AIM Constellation Fund
AIM Weingarten Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: August 29th, 2002
AIM EQUITY FUNDS
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
------------------------- --------------------------------
Assistant Secretary President
A I M DISTRIBUTORS, INC.
Attest: /s/ LISA A. MOSS By: /s/ MICHAEL J. CEMO
------------------------- --------------------------------
Assistant Secretary President
|
EXHIBIT e(2)(c)
AMENDMENT NO. 2
TO THE FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM EQUITY FUNDS
(CLASS B SHARES)
AND
A I M DISTRIBUTORS, INC.
The Master Distribution Agreement (the Agreement"), dated December 31, 2000, by and between AIM Equity Funds, 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 THE FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
OF
AIM EQUITY FUNDS
CLASS B SHARES
AIM Aggressive Growth Fund
AIM Basic Value II Fund
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund
AIM Constellation Fund
AIM Core Strategies Fund
AIM Dent Demographic Trends Fund
AIM Emerging Growth Fund
AIM Large Cap Basic Value Fund
AIM Large Cap Core Equity Fund
AIM Large Cap Growth Fund
AIM Mid Cap Growth Fund
AIM U.S. Growth Fund
AIM Weingarten Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: August 29th, 2002
AIM EQUITY FUNDS
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
------------------------- --------------------------------
Assistant Secretary President
A I M DISTRIBUTORS, INC.
Attest: /s/ LISA A. MOSS By: /s/ MICHAEL J. CEMO
------------------------- --------------------------------
Assistant Secretary President
|
EXHIBIT f(2)
AIM FUNDS
DIRECTOR DEFERRED COMPENSATION AGREEMENT
As Amended March 7, 2000, September 28, 2001 and September 26, 2002
AIM FUNDS
DIRECTOR DEFERRED COMPENSATION AGREEMENT
AGREEMENT, made on this __ day of _______, 20__, by and between the registered open-end investment companies listed on Appendix A hereto (the "Funds"), and _______________________________________________________ (the "Director") residing at _______________________________________.
WHEREAS, the Funds and the Director have entered into agreements pursuant to which the Director will serve as a director/trustee of the Funds; and
WHEREAS, if the Funds and the Director have previously entered into an additional agreement whereby the Funds will provide to the Director a vehicle under which the Director can defer receipt of directors' fees payable by the Funds, they now desire to amend and restate such agreement.
NOW, THEREFORE, in consideration of the mutual covenants and obligations set forth in this Agreement, the Funds and the Director hereby agree as follows:
1. DEFINITION OF TERMS AND CONSTRUCTION
1.1 Definitions. Unless a different meaning is plainly implied by the context, the following terms as used in this Agreement shall have the following meanings:
(a) "Beneficiary" shall mean such person or persons designated pursuant to Section 4.3 hereof to receive benefits after the death of the Director.
(b) "Boards of Directors" shall mean the respective Boards of Directors of the Funds.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute.
(d) "Compensation" shall mean the amount of directors' fees paid by each of the Funds to the Director during a Deferral Year prior to reduction for Compensation Deferrals made under this Agreement.
(e) "Compensation Deferral" shall mean the amount or amounts of the Director's Compensation deferred under the provisions of Section 3 of this Agreement.
(f) "Deferral Accounts" shall mean the accounts maintained to reflect the Director's Compensation Deferrals made pursuant to Section 3 hereof (or pursuant to any prior agreement) and any other credits or debits thereto.
(g) "Deferral Year" shall mean each calendar year during which the Director makes, or is entitled to make, Compensation Deferrals under Section 3 hereof.
(h) "Retirement" shall have the same meaning as set forth under the Retirement Plan.
(i) "Retirement Plan" shall mean the "AIM Funds Retirement Plan for Eligible Directors/Trustees."
(j) "Valuation Date" shall mean the last business day of each calendar year and any other day upon which the Funds makes valuations of the Deferral Accounts.
1.2 Plurals and Gender. Where appearing in this Agreement the singular shall include the plural and the masculine shall include the feminine, and vice versa, unless the context clearly indicates a different meaning.
1.3 Directors and Trustees. Where appearing in this Agreement, "Director" shall also refer to "Trustee" and "Board of Directors" shall also refer to "Board of Trustees."
1.4 Headings. The headings and sub-headings in this Agreement are inserted for the convenience of reference only and are to be ignored in any construction of the provisions hereof.
1.5 Separate Agreement for Each Fund. This Agreement is drafted, and shall be construed, as a separate agreement between the Director and each of the Funds.
2. PERIOD DURING WHICH COMPENSATION DEFERRALS ARE PERMITTED
2.1 Commencement of Compensation Deferrals. The Director may elect, on a form provided by, and submitted to, the Presidents of the respective Funds, to commence Compensation Deferrals under Section 3 hereof for the period beginning on the later of (i) the date this Agreement is executed or (ii) the date such form is submitted to the Presidents of the Funds.
2.2 Termination of Deferrals. The Director shall not be eligible to make Compensation Deferrals after the earliest of the following dates:
(a) The date on which he ceases to serve as a Director of all of the Funds; or
(b) The effective date of the termination of this Agreement.
3. COMPENSATION DEFERRALS
3.1 Compensation Deferral Elections.
(a) On or prior to the first day of any Deferral Year, the Director may elect, on the form described in Section 2.1 hereof, to defer the receipt of all or a portion of his Compensation for such Deferral Year. Such writing shall set forth the amount of such Compensation Deferral (in whole percentage amounts). Such election shall continue in effect for all subsequent Deferral Years unless it is canceled or modified as provided below.
(b) Compensation Deferrals shall be withheld from each payment of Compensation by the Funds to the Director based upon the percentage amount elected by the Director under Section 3.1(a) hereof.
(c) The Director may cancel or modify the amount of his Compensation Deferrals on a prospective basis by submitting to the Presidents of the Funds a revised Compensation Deferral election form. Such change will be effective as of the first day of the Deferral Year following the date such revision is submitted to the Presidents of the Funds.
3.2 Valuation of Deferral Account.
(a) Each Fund shall establish a bookkeeping Deferral Account to which will be credited an amount equal to the Director's Compensation Deferrals under this Agreement made with respect to Compensation earned from each such Fund. Compensation Deferrals shall be allocated to the Deferral Accounts on the first business day following the date such Compensation Deferrals are withheld from the Director's Compensation. As of the date of this Agreement, the Deferral Accounts also shall be credited with the amounts credited to the Director under each other outstanding elective deferred compensation agreement entered into by and between the Funds and the Director which is superseded by this Agreement pursuant to Section 6.11 hereof. The Deferral Accounts shall be debited to reflect any distributions from such Accounts. Such debits shall be allocated to the Deferral Accounts as of the date such distributions are made.
(b) As of each Valuation Date, income, gain and loss equivalents (determined as if the Deferral Accounts are invested in the manner set forth under Section 3.3, below) attributable to the period following the next preceding Valuation Date shall be credited to and/or deducted from the Director's Deferral Accounts.
3.3 Investment of Deferral Account Balances.
(a) (1) The Director may select, from various options made available by the Funds, the investment media in which all or part of his Deferral Accounts shall be deemed to be invested.
(2) The Director shall make an investment designation on a form provided by the Presidents of the Funds which shall remain effective until another valid direction has been made by the Director as herein provided. The Director may amend his investment designation by giving written direction to the Presidents of the Funds in such manner and at such time as the Funds may permit, but no less frequently than quarterly on thirty (30) days' notice prior to the end of a calendar quarter. A timely change to a Director's investment designation shall become effective as soon as practicable following receipt by the Presidents of the Funds.
(3) The investment media deemed to be made available to the Director, and any limitation on the maximum or minimum percentages of the Director's Deferral Accounts that may be invested any particular medium, shall be the same as from time-to-time communicated to the Director by the Presidents of the Funds.
(b) Except as provided below, the Director's Deferral Accounts shall be deemed to be invested in accordance with his investment designations, provided such designations conform to the provisions of this Section. If -
(1) the Director does not furnish the Presidents of the Funds with complete, written investment instructions, or
(2) the written investment instructions from the Director are unclear, then the Director's election to make Compensation Deferrals hereunder shall be held in abeyance and have no force or effect until such time as the Director shall provide the Presidents of the Funds with complete investment instructions. Notwithstanding the above, the Boards of Directors, in their sole discretion, may disregard the Director's election and determine that all Compensation Deferrals shall be deemed to be invested in a fund determined by the Boards of Directors. In the event that any fund under which any portion of the Director's Deferral Accounts is deemed to be invested ceases to exist, such portion of the Deferral Accounts thereafter shall be held in the successor to such fund, subject to subsequent deemed investment elections.
The Funds shall provide an annual statement to the Director showing such information as is appropriate, including the aggregate amount in the Deferral Accounts, as of a reasonably current date.
4. DISTRIBUTIONS FROM DEFERRAL ACCOUNTS
4.1 Payment Date and Methods.
(a) Designation of Date. Each deferral direction given pursuant to
Section 3.1 shall include designation of the Payment Date for the value of the
amount deferred. Such Payment Date shall be the first day of any calendar
quarter, subject to the limitation set forth in paragraph 4.1(c).
(b) Extension Date. At least one year before the Payment Date initially designated pursuant to paragraph 4.1(a) above, the Participant may irrevocably elect to extend such Payment Date to the first day of any calendar quarter, subject to the limitation set forth in paragraph 4.1(c).
(c) Limitation. The Director shall select a Payment Date (or extended Payment Date) that is no sooner than the earlier of (i) the January 1 that follows the second anniversary of the Participant's deferral election made pursuant to paragraph 4.1(a) or (b) or (ii) the January 1 of the year after the Participant's Retirement.
(d) Methods of Payment. Distributions from the Director's Deferral Accounts shall be paid in cash in a single sum unless the Participant elects, at the time a Payment Date is selected pursuant to paragraph 4.1(a) or 4.1(b), to receive the amount payable in generally equal quarterly installments over a period not to exceed ten (10) years. In addition, at least one year before the Payment Date, a Director may change the method of payment previously selected.
(e) Irrevocability. Except as provided in paragraphs 4.1(b) and 4.1(d), a designation of a Payment Date and an election of installment payments shall be irrevocable; provided, however, that payment shall be made or begin on a different date as follows:
(1) Upon the Director's death, payment shall be made in accordance with Section 4.2,
(2) Upon the Director's ceasing to serve as a director of all of the Funds for reasons other than death or Retirement, payment shall be made or begin within three months after the end of the calendar year in which such termination occurs in accordance with the method elected by the Director pursuant to paragraph 4.1(d) provided the designation of such method had been made at least one year before such termination occurred, except that the Boards of Directors, in their sole discretion, may accelerate the distribution of such Deferral Accounts,
(3) Upon termination of this Agreement, payment shall be made in accordance with Section 5.2, and
(4) In the event of the liquidation, dissolution or winding up of a Fund or the distribution of all or substantially all of a Fund's assets and property relating to one or more series of its shares to the shareholders of such series (for this purpose a sale, conveyance or transfer of a Fund's assets to a trust, partnership, association or corporation in exchange for cash, shares or other securities with the transfer being made subject to, or with the assumption by the transferee of, the liabilities of the Fund shall not be deemed a termination of the Fund or such a distribution), all unpaid balances of the Deferral Accounts related to such Fund as of the effective date thereof shall be paid in a lump sum on such effective date.
4.2 Death Prior to Complete Distribution of Deferral Accounts. Upon the death of the Director prior to the commencement of the distribution of the amounts credited to his Deferral Accounts, the balance of such Accounts shall be distributed to his Beneficiary in accordance with the method of payment selected pursuant to paragraph 4.1(d), commencing as soon as practicable after the Director's death. In the event of the death of the Director after the commencement of such distribution, but prior to the complete distribution of his Deferral Accounts, the balance of the amounts credited to his Deferral Accounts shall be distributed to his Beneficiary over the remaining period during which such amounts were distributable to the Director under Section 4.1 hereof. Notwithstanding the above, the Boards of Directors, in their sole discretion, may accelerate the distribution of the Deferral Accounts.
4.3 Designation of Beneficiary. For purposes of Section 4.2 hereof, the
Director's Beneficiary shall be the person or persons so designated by the
Director in a written instrument submitted to the Presidents of the Funds. In
the event the Director fails to properly designate a Beneficiary, his
Beneficiary shall be the person or persons in the first of the following classes
of successive preference Beneficiaries surviving at the death of the Director:
the Director's (1) surviving spouse or (2) estate.
4.4 Payments Due Missing Persons. The Funds shall make a reasonable effort to locate all persons entitled to benefits under this Agreement. However, notwithstanding any provisions of this Agreement to the contrary, if, after a period of five (5) years from the date such
benefit shall be due, any such persons entitled to benefits have not been located, their rights under this Agreement shall stand suspended. Before this provision becomes operative, the Funds shall send a certified letter to all such persons to their last known address advising them that their benefits under this Agreement shall be suspended. Any such suspended amounts shall be held by the Funds for a period of three (3) additional years (or a total of eight (8) years from the time the benefits first become payable) and thereafter, if unclaimed, such amounts shall be forfeited.
5. AMENDMENTS AND TERMINATION
5.1 Amendments.
(a) The Funds and the Director may, by a written instrument signed by, or on behalf of, such parties, amend this Agreement at any time and in any manner.
(b) The Funds reserve the right to amend, in whole or in part, and in any manner, any or all of the provisions of this Agreement by action of their Boards of Directors for the purposes of complying with any provision of the Code or any other technical or legal requirements, provided that:
(1) No such amendment shall make it possible for any part of the Director's Deferral Accounts to be used for, or diverted to, purposes other than for the exclusive benefit of the Director or his Beneficiaries, except to the extent otherwise provided in this Agreement; and
(2) No such amendment may reduce the amount of the Director's Deferral Accounts as of the effective date of such amendment.
5.2 Termination. The Director and the Funds may, by written instrument signed by, or on behalf of, such parties, terminate this Agreement at any time. In the event of the termination of this Agreement, the Boards of Directors, in their sole discretion, may choose to pay out the Director's Deferral Accounts prior to the designated Payment Dates. Otherwise, following a termination of this Agreement, such Accounts shall continue to be maintained in accordance with the provisions of this Agreement until the time they are paid out.
6. MISCELLANEOUS.
6.1 Rights of Creditors.
(a) This Agreement is unfunded. Neither the Director nor any other persons shall have any interest in any specific asset or assets of the Funds by reason of any Deferral Accounts hereunder, nor any rights to receive distribution of his Deferral Accounts except and as to the extent expressly provided hereunder. The Funds shall not be required to purchase, hold or dispose of any investments pursuant to this Agreement; however, if in order to cover their obligations hereunder the Funds elect to purchase any investments the same shall continue for all purposes to be a part of the general assets and property of the Funds, subject to the claims of their general creditors and no person other than the Funds shall by virtue of the provisions of this Agreement have any interest in such assets other than an interest as a general creditor.
(b) The rights of the Director and the Beneficiaries to the amounts held in the Deferral Accounts are unsecured and shall be subject to the creditors of the Funds. With respect to the payment of amounts held under the Deferral Accounts, the Director and his Beneficiaries have the status of unsecured creditors of the Funds. This Agreement is executed on behalf of the Funds by an officer, or other representative, of the Funds as such and not individually. Any obligation of the Funds hereunder shall be an unsecured obligation of the Funds and not of any other person.
6.2 Agents. The Funds may employ agents and provide for such clerical, legal, actuarial, accounting, advisory or other services as it deems necessary to perform their duties under this Agreement. The Funds shall bear the cost of such services and all other expenses they incur in connection with the administration of this Agreement.
6.3 Liability and Indemnification. Except for their own gross negligence, willful misconduct or willful breach of the terms of this Agreement, the Funds shall be indemnified and held harmless by the Director against liability or losses occurring by reason of any act or omission of the Funds or any other person.
6.4 Incapacity. If the Funds shall receive evidence satisfactory to them that the Director or any Beneficiary entitled to receive any benefit under the Agreement is, at the time when such benefit becomes payable, a minor, or is physically or mentally incompetent to receive such benefit and to give a valid release therefor, and that another person or an institution is then maintaining or has custody of the Director or Beneficiary and that no guardian, committee or other representative of the estate of the Director or Beneficiary shall have been duly appointed, the Funds may make payment of such benefit otherwise payable to the Director or Beneficiary to such other person or institution, including a custodian under a Uniform Gifts to Minors Act, or corresponding legislation (who shall be an adult, a guardian of the minor or a trust company), and the release of such other person or institution shall be a valid and complete discharge for the payment of such benefit.
6.5 Cooperation of Parties. All parties to this Agreement and any person claiming any interest hereunder agree to perform any and all acts and execute any and all documents and papers which are necessary or desirable for carrying out this Agreement or any of its provisions.
6.6 Governing Law. This Agreement is made and entered into in the State of Texas and all matters concerning its validity, construction and administration shall be governed by the laws of the State of Texas.
6.7 Nonguarantee of Directorship. Nothing contained in this Agreement shall be construed as a contract or guarantee of the right of the Director to be, or remain as, a director of any of the Funds or to receive any, or any particular rate of, Compensation from any of the Funds.
6.8 Counsel. The Funds may consult with legal counsel with respect to the meaning or construction of this Agreement, their obligations or duties hereunder or with respect to any action or proceeding or any question of law, and they shall be fully protected with respect to any action taken or omitted by them in good faith pursuant to the advice of legal counsel.
6.9 Spendthrift Provision. The Director's and Beneficiaries' interests in the Deferral Accounts may not be anticipated, sold, encumbered, pledged, mortgaged, charged, transferred, alienated, assigned nor become subject to execution, garnishment or attachment and any attempt to do so by any person shall render the Deferral Accounts immediately forfeitable.
6.10 Notices. For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or mailed by United States registered or certified mail, return receipt requested, postage prepaid, or by nationally recognized overnight delivery service providing for a signed return receipt, addressed to the Director at the home address set forth in the Funds' records and to the Funds at the address set forth on the first page of this Agreement, provided that all notices to the Funds shall be directed to the attention of the Presidents of the Funds or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
6.11 Entire Agreement. This Agreement contains the entire understanding between the Funds and the Director with respect to the payment of non-qualified elective deferred compensation by the Fund to the Director. Effective as of the date hereof, this Agreement replaces, and supersedes, all other non-qualified elective deferred compensation agreements by and between the Director and the Funds.
6.12 Interpretation of Agreement. Interpretations of, and determinations (including factual determinations) related to, this Agreement made by the Funds in good faith, including any determinations of the amounts of the Deferral Accounts, shall be conclusive and binding upon all parties; and the Funds shall not incur any liability to the Director for any such interpretation or determination so made or for any other action taken by it in connection with this Agreement in good faith.
6.13 Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, the Funds and their successors and assigns and to the Director and his heirs, executors, administrators and personal representatives.
6.14 Severability. In the event any one or more provisions of this Agreement are held to be invalid or unenforceable, such illegality or unenforceability shall not affect the validity or enforceability of the other provisions hereof and such other provisions shall remain in full force and effect unaffected by such invalidity or unenforceability.
6.15 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.
The Funds
By:
------------------------ ------------------------
Witness Name:
Title:
------------------------ ----------------------------
Witness Director
|
DEFERRED COMPENSATION AGREEMENT
DEFERRAL ELECTION FORM
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation agreement (the
|
"Agreement") dated as of ________________________ by and between the undersigned and the AIM Funds, I hereby make the following elections:
Deferral of Compensation
Starting with Compensation to be paid to me with respect to services provided by me to the AIM Funds after the date this election Form is received by the AIM Funds, I hereby elect that ______ percent (_____%) of my Compensation (as defined under the Agreement) be reduced and that the Fund establish a bookkeeping account credited with amounts equal to the amount so reduced (the "Deferral Account"). The Deferral Account shall be further credited with income equivalents as provided under the Agreement. I understand that this election will remain in effect with respect to Compensation I earn in subsequent years unless I modify or revoke it. I further understand that such modification or revocation will be effective only prospectively and will apply commencing with the Compensation I earn in the calendar year that begins after the change is received by you.
Payment Date
I hereby designate ________ 1 (select the first month in any calendar quarter) in the year ______ (select a year that is at least two years after the year this election is made) as the Payment Date for the amounts credited to my Deferral Account pursuant to the election made above. If my Retirement (as defined in the Agreement) occurs sooner, I [ ] do [ ] do not (check the appropriate box) want payment of such amounts to commence effective the January 1 following my Retirement. I understand that amounts credited to my Deferral Account may be paid to me prior to the Payment Date as provided in the Agreement.
Payment Method
I hereby elect to receive the amounts credited to my Deferral Account in (check one)
[ ] a single payment in cash
[ ] annual installments for a period of ____ (select no more than 10 years)
beginning within 30 days following the payment date selected above.
I understand that the amounts credited to my Deferral Account shall remain the general assets of the AIM Funds and that, with respect to the payment of such amounts, I am merely a general creditor of the AIM Funds. I may not sell, encumber, pledge, assign or otherwise alienate the amounts credited to my Deferral Account.
I hereby agree that the terms of the Agreement are incorporated herein and are made a part hereof. Dated as of the day and year first above written.
WITNESS: DIRECTOR:
------------------------- ------------------------------
WITNESS: RECEIVED:
AIM Funds
------------------------------
By:
--------------------------
Date:
------------------------
|
DEFERRED COMPENSATION AGREEMENT
INVESTMENT DIRECTION FORM
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation Agreement (the
|
"Agreement") by and between the undersigned and the AIM Funds, I hereby elect that my Deferral Account under the Agreement be considered to be invested as follows (in multiples of 10%):
NAME OF FUND %
------------ ---
%
----------------------------------- --
%
----------------------------------- --
%
----------------------------------- --
%
----------------------------------- --
%
----------------------------------- --
%
----------------------------------- --
|
I acknowledge that I may amend this Investment Agreement in the manner, and at such time, as permitted under the Agreement. Furthermore, I acknowledge that, pursuant to Section 3.3(b) of the Agreement, the Fund has reserved the right to disregard the elections made above to consider my Deferral Account to be deemed to be invested in a fund of its choosing.
WITNESS: DIRECTOR:
------------------------- ------------------------------
WITNESS: RECEIVED:
------------------------- AIM Funds
By:
---------------------------
Date:
-------------------------
|
DEFERRED COMPENSATION AGREEMENT
BENEFICIARY DESIGNATION FORM
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation Agreement (the
|
"Agreement") by and between the undersigned and the AIM Funds, I hereby make the following beneficiary designations:
I. Primary Beneficiary
I hereby appoint the following as my Primary Beneficiary(ies) to receive at my death the amounts credited to my Deferral Account under the Agreement. In the event I am survived by more than one Primary Beneficiary, such Primary Beneficiaries shall share equally in such amounts unless I indicate otherwise on an attachment to this form:
----------------------------------------------------------------- Name Relationship ----------------------------------------------------------------- Address ----------------------------------------------------------------- City State Zip |
II. Secondary Beneficiary |
In the event I am not survived by any Primary Beneficiary, I hereby appoint the following as Secondary Beneficiary(ies) to receive death benefits under the Agreement. In the event I am survived by more than one Secondary Beneficiary, such Secondary Beneficiaries shall share equally unless I indicate otherwise on an attachment to this form:
----------------------------------------------------------------- Name Relationship ----------------------------------------------------------------- Address ----------------------------------------------------------------- City State Zip |
I understand that I may revoke or amend the above designations at any time. I further understand that if I am not survived by a Primary or Secondary Beneficiary, my Beneficiary shall be as set forth under the Agreement.
WITNESS: DIRECTOR:
------------------------- ------------------------------
WITNESS: RECEIVED:
------------------------- AIM Funds
By:
---------------------------
Date:
-------------------------
|
PAYMENT DATE ELECTION FORM
FOR PREVIOUSLY DEFERRED COMPENSATION
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation agreement (the
|
"Agreement") by and between the undersigned and the AIM Funds, pursuant to which I have previously elected to defer Compensation,
Payment Date Change:
I hereby designate ________ 1 (select the first month in any
calendar quarter) in the year ______ (select a year that is at least two years
after the year this election is made) as the Payment Date for the amounts
previously credited to my Deferral Account and amounts subsequently credited
thereto. If my Retirement (as defined in the Agreement) occurs sooner, I [ ] do
[ ] do not (check the appropriate box) want payment of such amounts to commence
effective the January 1 following my Retirement. I understand that amounts
credited to my Deferral Account may be paid to me prior to the Payment Date as
provided in the Agreement.
Payment Method Change
I hereby elect to receive the amounts credited to my Deferral Account in (check one)
[ ] a single payment in cash
[ ] annual installments for a period of ____ (select no more than 10 years)
I understand that this change in payment method will not be given effect unless my Payment Date is at least one year from the date hereof and I do not cease to be a Director within such year.
I understand that I may amend this designation in the manner, and at such time, as permitted under the Agreement.
WITNESS: DIRECTOR:
------------------------- ------------------------------
WITNESS: RECEIVED:
------------------------- AIM Funds
By:
---------------------------
Date:
-------------------------
|
DEFERRED COMPENSATION AGREEMENT
SUMMARY
Your Deferred Compensation Agreement (the "Agreement") allows you to defer some or all of your annual trustee's fees otherwise payable by the Funds. Deferred fees are deemed invested in certain mutual funds selected by you. The deferral is pre-tax, and the deferred amount and the credited gains, losses and income are not subject to tax until paid out to you.
Your deferrals (and investment experience) are posted to a bookkeeping account maintained by the Funds in your name. In order for you to enjoy the tax deferral, the payments due under the Agreement will be paid from the Funds' general assets, and you are considered a general unsecured creditor of the Funds; you may not transfer your right to receive payments under the Agreement to any other person, nor may you pledge that right to secure any debt or other obligation; finally, an election to defer must be made in writing before the first day of the calendar year for which the fees are earned (the "Election Date") and elections can be changed only prospectively, effective for the next calendar year.
An important change has been made to your Agreement to give you greater flexibility to select the time and method of payment of amounts that you defer: for amounts previously deferred and for future elections you now designate a specific Payment Date and payment method which generally may be changed with at least one year's advance notice.
PAYMENT DATE ELECTION
Deferred fees (and the income, gains and losses credited during the deferral period) generally will be paid out as elected by you in installments or a single sum in cash within 30 days of the Payment Date elected. (For payments in connection with your termination of service as a trustee, see below.)
Deferrals must be for a minimum two year period (unless your retirement date under the Retirement Plan is earlier). Thus, the Payment Date may be the first day of any calendar quarter that follows the second anniversary of the applicable Election Date or your retirement date. Thus, fees previously deferred and fees payable for the calendar year beginning January 1, 1997 may be deferred to the first day of any calendar quarter in any year from 1999.
EXTENDING A PAYMENT DATE
At least one year prior to any Payment Date, you may extend that Date, provided that the additional period of deferral is at least two years. You may make this change in Payment Date only once.
PAYMENT METHOD
The value of your deferrals (based on your election as to how your deferral account is to be considered invested) will be paid in cash, in one lump sum or in annual
installments (over a period not to exceed 10 years) as you select at the time you select your Payment Date. You may change this election, but the change will not be given effect unless it is made at least one year before your Payment Date or your ceasing to be a trustee (whichever occurs first). This one year requirement is waived in the case of your death (see Termination of Service, below).
TERMINATION OF SERVICE
Upon your death, your account under the Agreement will be paid out as elected by you in installments or in a single sum in cash as soon as practicable. Payment will be made to your designated Beneficiary or Beneficiaries or to your estate if there is no surviving Beneficiary.
Upon termination of your service as trustee for any reason other than death or your retirement (as defined in the Retirement Plan), your account will be paid to you as a single sum (or in installments if you had timely elected that method) in cash within three months following the end of the fiscal year in which you terminate, regardless of the Payment Dates you elected.
As revised September 26, 2002
APPENDIX A
For the purposes of the Deferred Compensation Agreement "AIM Funds" shall mean each of the regulated investment companies constituting classes or series of shares of the following entities:
AIM ADVISOR FUNDS
AIM EQUITY FUNDS
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
AIM TAX-EXEMPT FUNDS
AIM VARIABLE INSURANCE FUNDS
SHORT-TERM INVESTMENTS CO.
SHORT-TERM INVESTMENTS TRUST
TAX-FREE INVESTMENTS CO.
EXHIBIT (h)(4)(d)
AMENDMENT NO. 3
MASTER ADMINISTRATIVE SERVICES AGREEMENT
The Master Administrative Services Agreement (the "Agreement"), dated June 21, 2000, by and between A I M Advisors, Inc., a Delaware corporation, and AIM Equity Funds, 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 EQUITY FUNDS
PORTFOLIOS EFFECTIVE DATE OF AGREEMENT ---------- --------------------------- AIM Aggressive Growth Fund June 1, 2001 AIM Basic Value II Fund August 29, 2002 AIM Blue Chip Fund June 1, 2001 AIM Capital Development Fund June 1, 2001 AIM Charter Fund June 1, 2001 AIM Constellation Fund June 1, 2001 AIM Core Strategies Fund December 28, 2001 AIM Dent Demographic Trends Fund June 1, 2001 AIM Emerging Growth Fund June 1, 2001 AIM Large Cap Basic Value Fund June 1, 2001 AIM Large Cap Core Equity Fund December 28, 2001 AIM Large Cap Growth Fund June 1, 2001 AIM Mid Cap Growth Fund June 1, 2001 AIM U.S. Growth Fund August 29, 2002 AIM Weingarten Fund June 1, 2001" |
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: August 29, 2002
AIM ADVISORS, INC.
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
------------------------- --------------------------------
Assistant Secretary Robert H. Graham
President
A I M EQUITY FUNDS
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
------------------------- --------------------------------
Assistant Secretary Robert H. Graham
President
|
(SEAL)
EXHIBIT h(5)(c)
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement is entered into as of the date indicated on Exhibit "A" between 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 Select Real Estate Income Fund, AIM Series Trust, AIM Summit Fund, AIM Tax-Exempt Funds, AIM Variable Insurance Funds, Short-Term Investments Co., Short-Term Investments Trust, and Tax-Free Investments Co. (each a "Company" and collectively, the "Companies"), on behalf of the portfolios 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 Companies and AIM agree as follows:
1. Each Company, for itself and its Funds, and AIM agree that until the expiration date, if any, of the commitment set forth on the attached Exhibit "A" occurs, as such Exhibit "A" is amended from time to time, AIM will not charge any administrative fee under each Fund's advisory agreement in connection with securities lending activities.
2. Neither a Company nor AIM may remove or amend the fee waivers to a Company's detriment prior to requesting and receiving the approval of the Fund's Board to remove or amend such fee waiver as described on the attached Exhibit "A". AIM will not have any right to reimbursement of any amount so waived.
Unless a Company, by vote of its Board of Directors/Trustees, or AIM terminates the fee waiver, or a Company and AIM are unable to reach an agreement on the amount of the fee waiver to which the Company and AIM desire to be bound, the fee waiver will continue indefinitely with respect to such Company. Exhibit "A" will be amended to reflect the new date through which a Company and AIM agree to be bound.
Nothing in this Memorandum of Agreement is intended to affect any other memorandum of agreement executed by any Company or AIM with respect to any other fee waivers, expense reimbursements and/or expense limitations
IN WITNESS WHEREOF, each Company, on behalf of itself and its Funds listed in Exhibit "A" to this Memorandum of Agreement, and AIM have entered into this Memorandum of Agreement as of the date written above.
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 SELECT REAL ESTATE INCOME FUND
AIM SERIES TRUST
AIM SUMMIT FUND
AIM TAX-EXEMPT FUNDS
AIM VARIABLE INSURANCE FUNDS
SHORT-TERM INVESTMENTS CO.
SHORT-TERM
INVESTMENTS TRUST
TAX-FREE INVESTMENTS CO.
By: /s/ ROBERT H. GRAHAM
----------------------------------
Title: President
---------------------------------
|
A I M ADVISORS, INC.
By: /s/ ROBERT H. GRAHAM
----------------------------------
Title: President
--------------------------------
|
AS REVISED AUGUST 29, 2002
EXHIBIT "A"
AIM ADVISOR FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM International Core Equity Fund September 11, 2000 AIM Real Estate Fund September 11, 2000 |
AIM EQUITY FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM Aggressive Growth Fund June 21, 2000 AIM Basic Value II Fund August 29, 2002 AIM Blue Chip Fund June 21, 2000 AIM Capital Development Fund June 21, 2000 AIM Charter Fund June 21, 2000 AIM Constellation Fund June 21, 2000 AIM Core Strategies Fund December 28, 2001 AIM Dent Demographic Trends Fund June 21, 2000 AIM Emerging Growth Fund June 21, 2000 AIM Large Cap Basic Value Fund June 21, 2000 AIM Large Cap Core Equity Fund December 28, 2001 AIM Large Cap Growth Fund June 21, 2000 AIM Mid Cap Growth Fund June 21, 2000 AIM U.S. Growth Fund August 29, 2002 AIM Weingarten Fund June 21, 2000 |
AIM FLOATING RATE FUND
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM Floating Rate Fund September 1, 2001 |
AIM FUNDS GROUP
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM Balanced Fund June 1, 2000 AIM Basic Balanced Fund September 28, 2001 AIM European Small Company Fund August 30, 2000 AIM Global Utilities Fund June 1, 2000 AIM International Emerging Growth Fund August 30, 2000 AIM Mid Cap Basic Value Fund December 27, 2001 AIM New Technology Fund August 30, 2000 AIM Premier Equity Fund June 1, 2000 AIM Premier Equity II Fund August 30, 2000 AIM Select Equity Fund June 1, 2000 AIM Small Cap Equity Fund August 30, 2000 AIM Worldwide Spectrum Fund December 27, 2000 |
* Committed until the Company or AIM requests and receives the approval of the Company's Board to remove or amend such fee waiver. Such commitments are evergreen until amended and apply to each Fund.
AS REVISED AUGUST 29, 2002
AIM GROWTH SERIES
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM Basic Value Fund June 5, 2000 AIM Euroland Growth Fund September 1, 2001 AIM Mid Cap Core Equity Fund September 1, 2001 AIM Small Cap Growth Fund September 11, 2000 |
AIM INTERNATIONAL FUNDS, INC.
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM Asia Pacific Growth Fund June 21, 2000 AIM European Growth Fund June 21, 2000 AIM Global Aggressive Growth Fund June 21, 2000 AIM Global Growth Fund June 21, 2000 AIM Global Income Fund June 21, 2000 AIM International Growth Fund June 21, 2000 |
AIM INVESTMENT FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM Developing Markets Fund September 1, 2001 AIM Global Biotech Fund December 28, 2001 AIM Global Energy Fund September 1, 2001 AIM Global Financial Services Fund September 11, 2000 AIM Global Heath Care Fund September 1, 2001 AIM Global Infrastructure Fund September 11, 2000 AIM Global Science and Technology Fund September 1, 2001 AIM Strategic Income Fund September 1, 2001 |
AIM INVESTMENT SECURITIES FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM High Yield Fund June 1, 2000 AIM High Yield Fund II June 1, 2000 AIM Income Fund June 1, 2000 AIM Intermediate Government Fund June 1, 2000 AIM Limited Maturity Treasury Fund June 1, 2000 AIM Money Market Fund June 1, 2000 AIM Municipal Bond Fund June 1, 2000 AIM Short Term Bond Fund August 29, 2002 AIM Total Return Bond Fund December 28, 2001 |
AIM SELECT REAL ESTATE INCOME FUND
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM Select Real Estate Income Fund May 31, 2002 |
* Committed until the Company or AIM requests and receives the approval of the Company's Board to remove or amend such fee waiver. Such commitments are evergreen until amended and apply to each Fund.
AS REVISED AUGUST 29,2002
AIM SERIES TRUST
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM Global Trends Fund September 1, 2001 |
AIM SUMMIT FUND
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM Summit Fund July 24, 2000 |
AIM TAX-EXEMPT FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM High Income Municipal Fund June 1, 2000 AIM Tax-Exempt Cash Fund June 1, 2000 AIM Tax-Free Intermediate Fund June 1, 2000 |
AIM VARIABLE INSURANCE FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM V.I. Aggressive Growth Fund May 1, 2000 AIM V.I. Balanced Fund May 1, 2000 AIM V.I. Basic Value Fund September 10, 2001 AIM V.I. Blue Chip Fund May 1, 2000 AIM V.I. Capital Appreciation Fund May 1, 2000 AIM V.I. Capital Development Fund May 1, 2000 AIM V.I. Core Equity Fund May 1, 2000 AIM V.I. Dent Demographic Trends Fund May 1, 2000 AIM V.I. Diversified Income Fund May 1, 2000 AIM V.I. Global Utilities Fund May 1, 2000 AIM V.I. Government Securities Fund May 1, 2000 AIM V.I. Growth Fund May 1, 2000 AIM V.I. High Yield Fund May 1, 2000 AIM V.I. International Growth Fund May 1, 2000 AIM V.I. Mid Cap Core Equity Fund September 10, 2001 AIM V.I. Money Market Fund May 1, 2000 AIM V.I. New Technology Fund May 1, 2000 AIM V.I. Premier Equity Fund May 1, 2000 |
SHORT-TERM INVESTMENTS CO.
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- Liquid Assets Portfolio June 1, 2000 Prime Portfolio June 1, 2000 |
* Committed until the Company or AIM requests and receives the approval of the Company's Board to remove or amend such fee waiver. Such commitments are evergreen until amended and apply to each Fund.
AS REVISED AUGUST 29, 2002
SHORT-TERM INVESTMENTS TRUST
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- Government & Agency Portfolio June 1, 2000 Government Tax Advantage Portfolio June 1, 2000 Treasury Portfolio June 1, 2000 |
TAX-FREE INVESTMENTS CO.
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- Cash Reserve Portfolio June 1, 2000 |
* Committed until the Company or AIM requests and receives the approval of the Company's Board to remove or amend such fee waiver. Such commitments are evergreen until amended and apply to each Fund.
Exhibit j(1)
CONSENT OF COUNSEL
AIM EQUITY FUNDS
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" in the Statements of Additional Information for (i) the retail
classes of the fifteen series portfolios of AIM Equity Funds (the "Company") and
(ii) the institutional classes of AIM Aggressive Growth Fund, AIM Blue Chip
Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund and
AIM Weingarten Fund, each a series portfolio of the Company, which are included
in Post-Effective Amendment No. 75 to the Registration Statement under the
Securities Act of 1933, as amended (No. 2-25469), and Amendment No. 75 to the
Registration Statement under the Investment Company Act of 1940, as amended (No.
811-1424), on Form N-1A of the Company.
/s/ Ballard Spahr Andrews & Ingersoll, LLP
------------------------------------------
Ballard Spahr Andrews & Ingersoll, LLP
Philadelphia, Pennsylvania
February 18, 2003
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EXHIBIT j(2)
CONSENT OF INDEPENDENT AUDITORS
We consent to the references to our firm under the caption "Financial Highlights" in the Prospectus and "Auditors" in the Statement of Additional Information and to the use of our reports dated December 10, 2002, on the financial statements and financial highlights of the AIM Aggressive Growth Fund, AIM Basic Value II Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Core Strategies Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Core Equity Fund, AIM Large Cap Growth Fund, AIM Mid Cap Growth Fund, AIM U.S. Growth Fund, and AIM Weingarten Fund as of and for the year ended October 31, 2002 in the Post-Effective Amendment Number 75 to the Registration Statement (Form N-1A No. 2-25469).
/s/ ERNST & YOUNG LLP
Houston, Texas
February 19, 2003
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EXHIBIT l(7)
[AIM LETTERHEAD]
August 28, 2002
Board of Trustees
AIM Equity Funds
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Re: Initial Investment in New Portfolios of AIM Equity Funds (the "Fund")
Ladies and Gentlemen:
We are purchasing shares of the Fund for the purpose of providing initial investment for two new investment portfolios of the Fund. The purpose of this letter is to set out our understanding of the conditions of and our promises and representations concerning this investment.
We hereby agree to purchase shares equal to the following dollar amount for the portfolios:
FUND AMOUNT DATE
---- ------ ----
AIM U.S. Growth Fund - Class A Shares $10.00 August 28, 2002
AIM U.S. Growth Fund - Class B Shares $10.00 August 28, 2002
AIM U.S. Growth Fund - Class C Shares $10.00 August 28, 2002
AIM U.S. Growth Fund - Class A Shares $400,000 August 29, 2002
AIM U.S. Growth Fund - Class B Shares $300,000 August 29, 2002
AIM U.S. Growth Fund - Class C Shares $300,000 August 29, 2002
AIM Basic Value II Fund - Class A Shares $10.00 August 28, 2002
AIM Basic Value II Fund - Class B Shares $10.00 August 28, 2002
AIM Basic Value II Fund - Class C Shares $10.00 August 28, 2002
AIM Basic Value II Fund - Class A Shares $400,000 August 29, 2002
AIM Basic Value II Fund - Class B Shares $300,000 August 29, 2002
AIM Basic Value II Fund - Class C Shares $300,000 August 29, 2002
|
We understand that the initial net asset value per share for the portfolios named above will be $10.
We hereby represent that we are purchasing these shares solely for our own account and solely for investment purposes without any intent of distributing or reselling said shares. We further represent that disposition of said shares will only be by direct redemption to or repurchase by the Fund.
[AIM LOGO]
We further agree to provide the Fund with at least three days' advance written notice of any intended redemption and agree that we will work with the Fund with respect to the amount of such redemption so as not to place a burden on the Fund and to facilitate normal portfolio management of the Fund.
Sincerely yours,
AIM ADVISORS, INC.
/s/ ROBERT H. GRAHAM ---------------------------- Robert H. Graham President |
cc: Mark Gregson
David Hessel
Gary Trappe
EXHIBIT m(1)(b)
AMENDMENT NO. 1
SECOND AMENDED AND RESTATED MASTER DISTRIBUTION PLAN
The Second Amended and Restated Master Distribution Plan (the "Plan"), dated as of June 3, 2002, pursuant to Rule 12b-1 of AIM Equity Funds, 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
SECOND AMENDED AND RESTATED MASTER DISTRIBUTION PLAN
OF
AIM EQUITY FUNDS
(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.
MINIMUM MAXIMUM MAXIMUM
PORTFOLIO ASSET BASED SERVICE AGGREGATE
CLASS A SHARES SALES CHARGE FEE FEE
-------------- ------------ --- ---
AIM Aggressive Growth Fund 0.00% 0.25% 0.25%
AIM Basic Value II Fund 0.10% 0.25% 0.35%
AIM Blue Chip Fund 0.10% 0.25% 0.35%
AIM Capital Development Fund 0.10% 0.25% 0.35%
AIM Charter Fund 0.05% 0.25% 0.30%
AIM Constellation Fund 0.05% 0.25% 0.30%
AIM Core Strategies Fund 0.10% 0.25% 0.35%
AIM Dent Demographic Trends Fund 0.10% 0.25% 0.35%
AIM Emerging Growth Fund 0.10% 0.25% 0.35%
AIM Large Cap Basic Value Fund 0.10% 0.25% 0.35%
AIM Large Cap Core Equity Fund 0.10% 0.25% 0.35%
AIM Large Cap Growth Fund 0.10% 0.25% 0.35%
AIM Mid Cap Growth Fund 0.10% 0.25% 0.35%
AIM U.S. Growth Fund 0.10% 0.25% 0.35%
AIM Weingarten Fund 0.05% 0.25% 0.30%
|
MAXIMUM MAXIMUM MAXIMUM
PORTFOLIO ASSET BASED SERVICE AGGREGATE
CLASS C SHARES SALES CHARGE FEE FEE
-------------- ------------ --- ---
AIM Aggressive Growth Fund 0.75% 0.25% 1.00%
AIM Basic Value II Fund 0.75% 0.25% 1.00%
AIM Blue Chip Fund 0.75% 0.25% 1.00%
AIM Capital Development Fund 0.75% 0.25% 1.00%
AIM Charter Fund 0.75% 0.25% 1.00%
|
MAXIMUM MAXIMUM MAXIMUM
PORTFOLIO ASSET BASED SERVICE AGGREGATE
CLASS C SHARES SALES CHARGE FEE FEE
-------------- ------------ --- ---
AIM Constellation Fund 0.75% 0.25% 1.00%
AIM Core Strategies Fund 0.75% 0.25% 1.00%
AIM Dent Demographic Trends Fund 0.75% 0.25% 1.00%
AIM Emerging Growth Fund 0.75% 0.25% 1.00%
AIM Large Cap Basic Value Fund 0.75% 0.25% 1.00%
AIM Large Cap Core Equity Fund 0.75% 0.25% 1.00%
AIM Large Cap Growth Fund 0.75% 0.25% 1.00%
AIM Mid Cap Growth Fund 0.75% 0.25% 1.00%
AIM U.S. Growth Fund 0.75% 0.25% 1.00%
AIM Weingarten Fund 0.75% 0.25% 1.00%"
|
MAXIMUM MAXIMUM MAXIMUM
PORTFOLIO ASSET BASED SERVICE AGGREGATE
CLASS R SHARES SALES CHARGE FEE FEE
-------------- ------------ --- ---
AIM Aggressive Growth Fund 0.25% 0.25% 0.50%
AIM Blue Chip Fund 0.25% 0.25% 0.50%
AIM Capital Development Fund 0.25% 0.25% 0.50%
AIM Charter Fund 0.25% 0.25% 0.50%
AIM Constellation Fund 0.25% 0.25% 0.50%
AIM Large Cap Basic Value Fund 0.25% 0.25% 0.50%
AIM Large Cap Growth Fund 0.25% 0.25% 0.50%
AIM Mid Cap Growth Fund 0.25% 0.25% 0.50%
AIM Weingarten Fund 0.25% 0.25% 0.50%"
|
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.
Dated: August 29th, 2002
AIM EQUITY FUNDS
(on behalf of its Class A, Class C
Shares and Class R Shares)
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
------------------------------- --------------------------------
Assistant Secretary President
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EXHIBIT m(2)(c)
AMENDMENT NO. 2
TO THE FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM EQUITY FUNDS
(CLASS B SHARES)
(SECURITIZATION FEATURE)
The First Amended and Restated Master Distribution Plan (the "Plan"), dated as of December 30, 2001, pursuant to Rule 12b-1 of AIM Equity Funds, 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
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM EQUITY FUNDS
(CLASS B SHARES)
(DISTRIBUTION FEE)
MAXIMUM MAXIMUM MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE FEE
---- ------------ ---------- ---------
AIM Aggressive Growth Fund 0.75% 0.25% 1.00%
AIM Basic Value II Fund 0.75% 0.25% 1.00%
AIM Blue Chip Fund 0.75% 0.25% 1.00%
AIM Capital Development Fund 0.75% 0.25% 1.00%
AIM Charter Fund 0.75% 0.25% 1.00%
AIM Constellation Fund 0.75% 0.25% 1.00%
AIM Core Strategies Fund 0.75% 0.25% 1.00%
AIM Dent Demographic Trends Fund 0.75% 0.25% 1.00%
AIM Emerging Growth Fund 0.75% 0.25% 1.00%
AIM Large Cap Basic Value Fund 0.75% 0.25% 1.00%
AIM Large Cap Core Equity Fund 0.75% 0.25% 1.00%
AIM Large Cap Growth Fund 0.75% 0.25% 1.00%
AIM Mid Cap Growth Fund 0.75% 0.25% 1.00%
AIM U.S. Growth Fund 0.75% 0.25% 1.00%
AIM Weingarten Fund 0.75% 0.25% 1.00%"
|
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: August 29, 2002
AIM EQUITY FUNDS
(on behalf of its Class B Shares)
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
------------------------------ ------------------------------
Assistant Secretary President
|
EXHIBIT n
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.
EXHIBIT p(1)
A I M MANAGEMENT GROUP INC.
CODE OF ETHICS
(ADOPTED MAY 1, 1981)
(AS LAST AMENDED SEPTEMBER 27, 2002)
WHEREAS, the members of the AIM Management Group are A I M Management Group Inc. ("AIM Management") and A I M Advisors, Inc. ("AIM Advisors") and its wholly owned and indirect subsidiaries (individually and collectively referred to as "AIM"); and
WHEREAS, certain members of AIM provide investment advisory services to AIM's investment companies and other clients; and
WHEREAS, certain members of AIM provide distribution services as principal underwriters for AIM's investment company clients; and
WHEREAS, certain members of AIM provide shareholder services as the transfer agent, dividend disbursing agent and shareholder processing agent for AIM's investment company clients; and
WHEREAS, the investment advisory business involves decisions and information which may have at least a temporary impact on the market price of securities, thus creating a potential for conflicts of interest between the persons engaged in such business and their clients; and
WHEREAS, the members of AIM have a fiduciary relationship with respect to each portfolio under management and the interests of the client accounts and of the shareholders of AIM's investment company clients must take precedence over the personal interests of the employees of AIM, thus requiring a rigid adherence to the highest standards of conduct by such employees; and
WHEREAS, every practical step must be taken to ensure that no intentional or inadvertent action is taken by an employee of AIM which is, or appears to be, adverse to the interests of AIM or any of its client accounts, including the defining of standards of behavior for such employees, while at the same time avoiding unnecessary interference with the privacy or personal freedom of such employees; and
WHEREAS, the members of AIM originally adopted a Code of Ethics ("the Code") on May 1, 1981, and adopted amendments thereto in January 1989, October 1989, April 1991, December 6, 1994 and December 5, 1995, December 10, 1996, and now deem it advisable to update and revise said Code in light of new investment company products developed by AIM and changing circumstances in the securities markets in which AIM conducts business; and
NOW, THEREFORE, the Boards of Directors of AIM Management and AIM Advisors hereby adopt the following revised Code pursuant to the provisions of Rule 17j-1 under the Investment Company Act of 1940 ("1940 Act"), with the intention that certain provisions of the Code shall become applicable to the officers, directors and employees of AIM.
I. APPLICABILITY
A. The provisions of AIM's Code shall apply to certain officers, directors and employees (as hereinafter designated) of AIM. Unless otherwise indicated, the term "employee" as used herein means: (i) all officers, directors and employees of AIM Advisors and its wholly owned and indirect subsidiaries and (ii) officers, directors and employees of AIM Management who
have an active part in the management, portfolio selection, underwriting or shareholder functions with respect to AIM's investment company clients or provide one or more similar services for AIM's non-investment company clients. The term "employee" does not include directors of AIM Management who do not maintain an office at the home office of AIM Management and who do not regularly obtain information concerning the investment recommendations or decisions made by AIM on behalf of client accounts ("independent directors").
B. The Code shall also apply to any person or entity appointed as a
sub-advisor for an AIM investment company client account unless such
person or entity has adopted a code of ethics in compliance with
Section 17(j) of the 1940 Act; or, in the event that such person or
entity is domiciled outside of the United States, has adopted
employee standards of conduct that provide equivalent protections to
AIM's client accounts. In performing sub-advisory services, such
person or entity will be subject to the direction and supervision of
AIM, and subject to the policies and control of the Boards of
Directors/Trustees of the respective AIM investment company
client(s).
II. INTERPRETATION AND ENFORCEMENT
A. The Chief Executive Officer of AIM Management shall appoint a Code of Ethics Committee ("Committee"). The Committee shall have the responsibility for interpreting the provisions of the Code, for adopting and implementing Procedures for the enforcement of the provisions of the Code, and for determining whether a violation of the provisions of the Code, or of any such related Procedures has occurred. The Committee will appoint an officer to monitor personal investment activity by "Covered Persons" (as defined in the Procedures adopted hereunder), both before and after any trade occurs and to prepare periodic and annual reports, conduct education seminars and obtain employee certifications as deemed appropriate. In the event of a finding that a violation has occurred requiring significant remedial action, the Committee shall take such action as it deems appropriate on the imposition of sanctions or initiation of disgorgement proceedings. The Committee shall also make recommendations and submit reports to the Boards of Directors/Trustees of AIM's investment company clients.
B. If a sub-advisor has adopted a code of ethics in accordance with
Section 17(j) of the 1940 Act, then pursuant to a sub-advisory
agreement with AIM, it shall be the duty of such sub-advisor to
furnish AIM with a copy of the following:
o code of ethics and related procedures of the sub-advisor, and a statement as to its employees' compliance therewith;
o any statement or policy on insider trading adopted pursuant to
Section 204A under the 1940 Act; and the procedures designed to
prevent the misuse of material non-public information by any
person associated with such sub-advisor; and
o such other information as may reasonably be necessary for AIM to report to the Boards of Directors/Trustees of its investment company client account(s) as to such sub-advisor's adherence to the Boards' policies and controls referenced in Section I.B. above.
III. PROCEDURES ADOPTED UNDER THE CODE
From time to time, AIM's Committee shall adopt Procedures to carry out the intent of the Code. Among other things, the Procedures require certain new employees to complete an Asset Disclosure Form, a Brokerage Accounts Listing Form and such other forms as deemed appropriate by the Committee. Such Procedures are hereby incorporated into the Code and are made a part of the Code. Therefore, a violation of the Procedures shall be deemed a violation of the Code itself.
IV. COMPLIANCE WITH GOVERNING LAWS, REGULATIONS AND PROCEDURES
A. Each employee shall have and maintain knowledge of and shall comply strictly with all applicable federal and state laws and all rules and regulations of any governmental agency or self-regulatory organization governing his/her actions as an employee.
B. Each employee shall comply with all laws and regulations, and AIM's prohibition against insider trading. Trading on or communicating material non-public information, or "inside information", of any sort, whether obtained in the course of research activities, through a client relationship or otherwise, is strictly prohibited.
C. Each employee shall comply with the procedures and guidelines established by AIM to ensure compliance with applicable federal and state laws and regulations of governmental agencies and self-regulatory organizations. No employee shall knowingly participate in, assist, or condone any act in violation of any statute or regulation governing AIM or any act that would violate any provision of this Code, or of the Procedures adopted hereunder.
D. Each employee shall have and maintain knowledge of and shall comply with the provisions of this Code and any Procedures adopted hereunder.
E. Each employee having supervisory responsibility shall exercise reasonable supervision over employees subject to his/her control, with a view to preventing any violation by such persons of applicable statutes or regulations, AIM's corporate procedures, or the provisions of the Code, or the Procedures adopted hereunder.
F. Any employee obtaining evidence that an act in violation of applicable statutes, regulations or provisions of the Code or of any Procedures adopted hereunder has occurred shall immediately report such evidence to the Chief Compliance Officer of AIM. Such action by the employee will remain confidential, unless the employee waives confidentiality or federal or state authorities compel disclosure. Failure to report such evidence may result in disciplinary proceedings and may include sanctions as set forth in Section VI hereof.
V. ETHICAL STANDARDS
A. Employees shall conduct themselves in a manner consistent with the highest ethical and fiduciary standards. They shall avoid any action, whether for personal profit or otherwise, that results in an actual or potential conflict of interest with AIM or its client accounts, or which may be otherwise detrimental to the interests of the members of AIM or its client accounts.(1)
B. Employees shall act in a manner consistent with their fiduciary obligation to clients of AIM, and shall not deprive any client account of an investment opportunity in order to personally benefit from that opportunity.
C. Without the knowledge and approval of the Ethics Committee of AIM Management, employees shall not engage in a business activity or practice for compensation in competition with the members of AIM. Each employee, who is deemed to be a "Covered Person" as defined in the
Procedures adopted hereunder, shall obtain the written approval of the Ethics Committee to participate on a board of directors/trustees of any of the following organizations:
o publicly traded company, partnership or trust;
o hospital or philanthropic institution;*
o local or state municipal authority;* and/or
o charitable organization.*
* These restrictions relate to organizations that have or intend to raise proceeds in a public securities offering.
In the relatively small number of instances in which board approval is authorized, investment personnel serving as directors shall be isolated from those making investment decisions through AIM's "Chinese Wall" Procedures.
D. Each employee, in making an investment recommendation or taking any investment action, shall exercise diligence and thoroughness, and shall have a reasonable and adequate basis for any such recommendation or action.
E. Each employee shall not attempt to improperly influence for such person's personal benefit any investment strategy to be followed or investment action to be taken by the members of AIM for its client accounts.
F. Each employee shall not improperly use for such person's personal benefit any knowledge, whether obtained through such person's relationship with AIM or otherwise, of any investment recommendation made or to be made, or of any investment action taken or to be taken by AIM for its client accounts.
G. Employees shall not disclose any non-public information relating to a client account's portfolio or transactions or to the investment recommendations of AIM, nor shall any employee disclose any non-public information relating to the business or operations of the members of AIM, unless properly authorized to do so.
H. Employees shall not accept, directly or indirectly, from a broker/dealer or other vendor who transacts business with AIM or its client accounts, any gifts, gratuities or other things of more than de minimis value or significance that their acceptance might reasonably be expected to interfere with or influence the exercise of independent and objective judgment in carrying out such person's duties or otherwise gives the appearance of a possible impropriety. For this purpose, gifts, gratuities and other things of value shall not include unsolicited entertainment so long as such unsolicited entertainment is not so frequent or extensive as to raise any question of impropriety.
I. Employees who are registered representatives and/or principals of AIM shall not acquire securities for an account for which he/she has a direct or indirect beneficial interest in an initial public offering ("IPO") or on behalf of any person, entity or organization that is not an AIM client. All other employees shall not acquire securities for an account for which he/she has a direct or indirect beneficial interest offered in an IPO or on behalf of any person, entity or organization that is not an AIM client account except in those circumstances where different amounts of such offerings are specified for different investor types (e.g., private investors and institutional investors) and such transaction has been pre-cleared by the Compliance Office.
J. All personal securities transactions by employees must be conducted consistent with this Code and the Procedures adopted hereunder, and in such a manner as to avoid any actual or potential conflicts of interest or any abuse of such employee's position of trust and responsibility. Unless an exemption is available, employees who are deemed to be "Covered Persons" as defined in the Procedures adopted hereunder, shall pre-clear all personal securities transactions in securities in accordance with the Procedures adopted hereunder.
K. Each employee, who is deemed to be a "Covered Person" as defined in the Procedures adopted hereunder, (or registered representative and/or principal of AIM), shall refrain from engaging in personal securities transactions in connection with a security that is not registered under Section 12 of the Securities Act of 1933 (i.e., a private placement security) unless such transaction has been pre-approved by the Chief Compliance Officer or the Director of Investments (or their designees).
L. Employees, who are deemed to be "Covered Persons" as defined in the Procedures adopted hereunder, may not engage in a transaction in connection with the purchase or sale of a security within seven calendar days before and after an AIM investment company client trades in that same (or equivalent) security unless the de minimis exemption is available.
M. Each employee, who is deemed to be a "Covered Person" as defined in the Procedures adopted hereunder, may not purchase and voluntarily sell, or sell and voluntarily purchase the same (or equivalent) securities of the same issuer within 60 calendar days unless such employee complies with the disgorgement procedures adopted by the Code of Ethics Committee. Subject to certain limited exceptions set forth in the related Procedures, any transaction under this provision may result in disgorgement proceedings for any profits received in connection with such transaction by such employee.
VI. SANCTIONS
Employees violating the provisions of AIM's Code or any Procedures adopted hereunder may be subject to sanctions, which may include, among other things, restrictions on such person's personal securities transactions; a letter of admonition, education or formal censure; fines, suspension, re-assignment, demotion or termination of employment; or other significant remedial action. Employees may also be subject to disgorgement proceedings for transactions in securities that are inconsistent with Sections V.L. and V.M. above.
VII. ADDITIONAL DISCLOSURE
This Code and the related Procedures cannot, and do not, cover every situation in which choices and decisions must be made, because other company policies, practices and procedures (as well as good common sense) and good business judgment also apply. Every person subject to this Code should read and understand these documents thoroughly. They present important rules of conduct and operating controls for all employees. Employees are also expected to present questions to the attention of their supervisors and to the Chief Compliance Officer (or designee) and to report suspected violations as specified in these documents.
For the Boards of Directors:
The AIM Management Group and its
subsidiaries
by: /s/ Bob Graham
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Bob Graham
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