As filed with the Securities and Exchange Commission on August 24, 2005
1933 Act Registration No. 33-19338
1940 Act Registration No. 811-05426
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 74 X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
---
Amendment No. 75
--
(Check appropriate box or boxes.)
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Copy to:
Teresa A. Oxford, Esquire Martha J. Hays, Esquire A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP 11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor Houston, Texas 77046 Philadelphia, Pennsylvania 19103-7599 |
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Amendment.
It is proposed that this filing will become effective (check appropriate box)
on [Date] pursuant to paragraph (b) 60 days after filing pursuant to
--- paragraph (a)(1)
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a --- previously filed post-effective amendment.
AIM DEVELOPING MARKETS FUND
AIM TRIMARK ENDEAVOR FUND
AIM TRIMARK FUND
AIM TRIMARK SMALL COMPANIES FUND
PROSPECTUS
October 25, 2005
INSTITUTIONAL CLASSES
AIM Developing Markets Fund primarily seeks to provide long-term growth of capital with a secondary investment objective of income.
AIM Trimark Endeavor Fund, AIM Trimark Fund and AIM Trimark Small Companies Fund each seeks to provide long-term 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.
AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
INVESTMENT OBJECTIVES AND STRATEGIES 1 ------------------------------------------------------ AIM Developing Markets Fund 1 AIM Trimark Endeavor Fund 1 AIM Trimark Fund 1 AIM Trimark Small Companies Fund 2 All Funds Other Than Developing Markets 2 All Funds 2 PRINCIPAL RISKS OF INVESTING IN THE FUNDS 2 ------------------------------------------------------ All Funds Other Than Developing Markets 2 Developing Markets 2 Trimark 3 Small Companies 3 All Funds 3 PERFORMANCE INFORMATION 4 ------------------------------------------------------ Annual Total Return 4 Performance Table 7 FEE TABLE AND EXPENSE EXAMPLE 9 ------------------------------------------------------ Fee Table 9 Expense Example 9 Hypothetical Investment and Expense Information 10 DISCLOSURE OF PORTFOLIO HOLDINGS 11 ------------------------------------------------------ FUND MANAGEMENT 12 ------------------------------------------------------ The Advisor 12 Advisor Compensation 12 Portfolio Managers 13 OTHER INFORMATION 15 ------------------------------------------------------ Dividends and Distributions 15 Suitability for Investors 15 Future Limited Fund Offering (Small Companies) 15 FINANCIAL HIGHLIGHTS 16 ------------------------------------------------------ SHAREHOLDER INFORMATION A-1 ------------------------------------------------------ Purchasing Shares A-1 Excessive Short-Term Trading Activity Disclosures A-2 Redeeming Shares A-4 Exchanging Shares A-5 Pricing of Shares A-5 Taxes A-7 OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, AIM Investor, AIM Lifetime America, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of A I M Management Group Inc. AIM Trimark is a service mark of A I M Management Group Inc. and AIM Funds Management 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 DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
AIM DEVELOPING MARKETS FUND
(DEVELOPING MARKETS)
The fund's primary investment objective is to provide long-term growth of capital with a secondary investment objective of 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 companies that are in developing markets countries. In complying with this 80% investment requirement, the fund invests primarily in marketable equity securities, including convertible securities, but its investments may include other securities, such as debt securities and 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 defines developing markets countries as those countries which are not included in the Morgan Stanley Capital International (MSCI) World Index. The fund considers various factors when determining whether a company is in a developing country, including whether (1) it is organized under the laws of a developing markets country; (2) it has a principal office in a developing markets country; (3) it derives 50% or more of its total revenues from business in a developing markets country; or (4) its securities are trading principally on a stock exchange, or in an over-the-counter market, in a developing markets country. The fund will normally invest in issuers in at least four countries, but it will invest no more than 25% of its total assets in issuers in any one country. The fund also may hold no more than 40% of its total assets in any one foreign currency and securities denominated in or indexed to such currency. The fund may invest in debt securities when economic and other factors appear to favor such investments. The fund may also invest up to 50% of its total assets in lower-quality debt securities, i.e., "junk bonds."
The fund may invest up to 50% of its total assets in the following types of developing market debt securities: (1) debt securities issued or guaranteed by governments, their agencies, instrumentalities or political subdivisions, or by government owned, controlled or sponsored entities, including central banks (sovereign debt), and "Brady Bonds"; (2) interests in issuers organized and operated for the purpose of restructuring the investment characteristics of sovereign debt; (3) debt securities issued by banks and other business entities; and (4) debt securities denominated in or indexed to the currencies of emerging markets. Brady Bonds are debt restructurings that provide for the exchange of cash and loans for newly issued bonds. There is no requirement with respect to the maturity or duration of debt securities in which the fund may invest.
The portfolio managers focus on companies that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. In selecting countries in which the fund will invest, the portfolio managers also consider such factors as the prospect for relative economic growth among countries or regions, economic or political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security. The portfolio managers consider whether to sell a particular security when any of these factors materially change.
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.
AIM TRIMARK ENDEAVOR FUND (ENDEAVOR)
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 65% of its net assets in marketable equity securities, including convertible securities, of mid-capitalization companies. 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--Registered Trademark-- Index measures the performance of the 800 companies with the lowest market capitalization in the Russell 1000--Registered Trademark-- Index. The Russell 1000--Registered Trademark-- 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. The companies in the Russell Midcap--Registered Trademark-- Index are considered representative of medium-sized companies.
The fund may invest up to 25% of its total assets in foreign securities.
AIM TRIMARK FUND (TRIMARK)
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 generally by investing, normally, at least 75% of its net assets in marketable equity securities of medium- and large-sized companies, including convertible securities, of domestic issuers and foreign issuers. The fund will normally invest in the securities of companies located in at least three countries, including the United States.
The fund emphasizes investment in companies in developed countries such as the United States, the countries of Western Europe and certain countries in the Pacific Basin. The fund may also invest in companies located in developing countries, i.e., those that are in the initial stages of their industrial cycles.
AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
AIM TRIMARK SMALL COMPANIES FUND (SMALL COMPANIES)
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 marketable equity securities, including convertible securities, of small-capitalization companies. The fund considers a company to be a small-capitalization company if it has a market capitalization, at the time of purchase, no larger than the largest capitalized company included in the Russell 2000--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 2000--Registered Trademark-- Index is a widely recognized, unmanaged index of common stocks that measures the performance of the 2,000 smallest 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 companies within the Russell 2000--Registered Trademark-- Index are considered representative of small-sized 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 may invest up to 25% of its total assets in foreign securities.
ALL FUNDS OTHER THAN DEVELOPING MARKETS
In selecting securities, the portfolio managers seek to identify companies that are both attractively priced relative to their prospective earnings and cash flow, and have strong long-term growth prospects. In evaluating companies, the portfolio managers emphasize several factors such as the quality of the company's management team, their commitment to securing a competitive advantage, and the company's sustainable growth potential. The portfolio managers typically consider whether to sell a security in any of four circumstances: (1) a more compelling investment opportunity exists, (2) the full value of the investment is deemed to have been realized, (3) there has been a fundamental negative change in management strategy of the company or (4) there has been a fundamental negative change in competitive environment.
Under normal conditions, the top ten holdings may comprise up to 50% of the fund's total assets. Any percentage limitations with respect to assets of a fund are applied at the time of purchase.
Each fund may invest up to 10% of its total assets in fixed-income securities such as investment-grade debt securities, longer-term U.S. government securities and high-quality money market investments.
ALL FUNDS
For cash management purposes, each of the funds may also hold a portion of its assets in cash or cash equivalents such as U.S. Government agency discount notes, or 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, each of the funds may temporarily hold all or a portion of its assets in cash, cash equivalents or high-quality debt instruments. As a result, a fund may not achieve its investment objective.
ALL FUNDS OTHER THAN DEVELOPING MARKETS
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.
The values of the convertible securities in which the funds may invest will also 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 a fund.
Because a large percentage of each fund's assets may be invested in a limited number of securities, a change in the value of these securities could significantly affect the value of your investment in a fund.
DEVELOPING MARKETS
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, the value of its assets, general economic conditions, interest rates, investor perceptions, and market liquidity. This is especially true with respect to equity securities
AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
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. Interest rate increases may cause the price of a debt security to decrease. The longer a bond's duration, the more sensitive it is to this risk. Junk bonds are less sensitive to this risk than are higher-quality bonds.
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies and governments located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures.
Sovereign debt securities of developing country governments are generally lower-quality debt securities. Sovereign debt securities are subject to the additional risk that, under some political, diplomatic, social or economic circumstances, some developing countries that issue lower-quality debt securities may be unable or unwilling to make principal or interest payments as they come due.
Compared to higher-quality debt securities, junk bonds involve greater risk of default or price changes due to changes in the credit quality of the issuer because they are generally unsecured and may be subordinated to other creditors' claims. The value of junk bonds often fluctuates in response to company, political or economic developments and can decline significantly over short periods of time or during periods of general or regional economic difficulty. During those times, the bonds could be difficult to value or to sell at a fair price. Credit ratings on junk bonds do not necessarily reflect their actual market risk.
Because it is non-diversified, the fund may invest in fewer issuers than if it were a diversified fund. The value of the fund's shares may vary more widely, and the fund may be subject to greater investment and credit risk, than if the fund invested more broadly.
TRIMARK
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures.
SMALL COMPANIES
The prices of equity securities can change in response to many factors (as discussed above).
This is especially true with respect to equity securities of small-cap companies, whose prices may go up and down more than equity securities of larger, more-established companies. Also, since equity securities of small-cap companies may not be traded as often as equity securities of larger, more-established companies, it may be difficult or impossible for a fund to sell securities at a desirable price.
ALL FUNDS
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.
AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
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 in the bar charts shown below for Developing Markets, Endeavor, Trimark and Small Companies 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. Institutional Class shares of Endeavor, Trimark and Small Companies commenced operations on April 30, 2004. Institutional Class shares of Developing Markets commenced operations on October 25, 2005.
The following bar charts show performance of Developing Markets', Endeavor's, Trimark's and Small Companies' Class A shares from year to year. The bar charts do not reflect sales loads. If they did, the annual returns shown would be lower. Institutional Class shares are not subject to front-end or back-end sales loads.
DEVELOPING MARKETS
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
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1995................................................................... -0.95%
1996................................................................... 23.59%
1997................................................................... -8.49%
1998................................................................... -35.32%
1999................................................................... 61.50%
2000................................................................... -33.45%
2001................................................................... -1.84%
2002................................................................... -9.07%
2003................................................................... 54.73%
2004................................................................... 27.62%
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AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
ENDEAVOR
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
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2004................................................................... 21.08%
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TRIMARK
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
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2004................................................................... 10.21%
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AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
SMALL COMPANIES
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
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2004................................................................... 26.82%
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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)
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Developing Markets--Class A 34.72% September 30, 2001 -27.81 September 30, 1998
Endeavor--Class A 9.77% December 31, 2004 0.18% September 30, 2004
Trimark--Class A 11.18% December 31, 2004 -4.28% September 30, 2004
Small Companies--Class A 14.47% December 31, 2004 1.89% September 30, 2004
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The funds year-to-date total returns as of September 30, 2005, were as follows:
YEAR-TO-DATE TOTAL RETURN
(SEPTEMBER 30, 2005)
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Developing Markets--Class A
Endeavor--Class A
Trimark--Class A
Small Companies--Class A
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AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
PERFORMANCE TABLE
The following performance table compares each fund's performance to that of a broad-based securities market index, a style specific index, and a peer group index. The indices may not reflect payment of fees, expenses or taxes. The funds are not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the funds may deviate significantly from the performance of the indices shown below.
AVERAGE ANNUAL TOTAL RETURNS
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SINCE INCEPTION
(for the periods ended December 31, 2004) 1 YEAR 5 YEARS 10 YEARS INCEPTION(7) DATE
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Developing Markets--Institutional Class(1,2) 01/11/94(1)
Return Before Taxes 27.62% 3.24% 3.22% --
Return After Taxes on Distributions 27.62 3.10 2.53 --
Return After Taxes on Distributions and Sale of Fund
Shares 17.96 2.68 2.32 --
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MSCI EAFE Index(3) 20.25 (1.13) 5.62 --
MSCI Emerging Markets Index(4) 25.95 4.62 3.30 --
Lipper Emerging Markets Fund Index(5) 25.69 4.64 3.83 --
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Endeavor--Institutional Class(6) 11/04/03(6)
Return Before Taxes 21.77 -- -- 22.13%
Return After Taxes on Distributions 21.27 -- -- 22.13
Return After Taxes on Distributions and Sale of Fund
Shares 13.83 -- -- 18.85
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S&P 500 Index(8,9) 10.87 -- -- 15.00(18) 10/31/03(18)
Russell Midcap--Trademark-- Index(10) 20.22 -- -- 22.98(18) 10/31/03(18)
Lipper Mid Cap Core Fund Index(11) 15.44 -- -- 18.25(18) 10/31/03(18)
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Trimark--Institutional Class(6) 11/04/03(6)
Return Before Taxes 10.50 -- -- 12.59
Return After Taxes on Distributions 10.50 -- -- 12.59
Return After Taxes on Distributions and Sale of Fund
Shares 6.83 -- -- 10.72
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MSCI World Index(12) 14.72 -- -- 20.04(18) 10/31/03(18)
Lipper Global Multi-Cap Core Fund Index(13) 15.66 -- -- 20.28(18) 10/31/03(18)
Lipper Global Fund Index(14) 14.38 -- -- 19.85(18) 10/31/03(18)
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Small Companies--Institutional Class(6) 11/04/03(6)
Return Before Taxes 27.11 -- -- 25.18
Return After Taxes on Distributions 26.88 -- -- 24.99
Return After Taxes on Distributions and Sale of Fund
Shares 17.64 -- -- 21.35
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S&P 500 Index(8,15) 10.87 -- -- 15.00(18) 10/31/03(18)
Russell 2000--Trademark-- Index(16) 18.33 -- -- 21.09(18) 10/31/03(18)
Lipper Small Cap Core Fund Index(17) 18.37 -- -- 21.94(18) 10/31/03(18)
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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.
(1) The returns shown for these periods are the restated historical performance of the fund's Class A shares at net asset value and reflect the Rule 12b-1 fees applicable to Class A shares. If the effect of the Institutional Class total expenses were reflected, the returns would be higher than those shown because the Institutional Class has lower total expenses. The inception date shown in the table is that of the fund's Class A shares. The inception date of the fund's Institutional Class shares is October 25, 2005.
(2) A significant portion of the fund's returns during certain periods was attributable to its investments in IPOs. Although IPO investments have had a positive impact on the fund's performance in the past, there can be no assurance that the fund will have favorable IPO investment opportunities in the future. For additional information regarding the fund's performance, please see the "Financial Highlights" section of this prospectus.
(3) The Morgan Stanley Capital International Europe, Australasia, and Far East Index measures performance of global stock markets in 21 developed countries. The fund has also included the MSCI Emerging Markets Index, which the fund believes more closely reflects the performance of the types of securities in which the fund invests. In addition, the fund has included the Lipper Emerging Markets Fund Index (which may or may not include the fund) for comparison to a peer group.
(4) The Morgan Stanley Capital International Emerging Markets Index measures the performance of securities listed on the exchanges of 26 countries. The index excludes shares that are not readily purchased by non-local investors.
(5) The Lipper Emerging Markets Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Emerging Markets category. The funds seek long-term capital appreciation by investing at least 65% of total assets in emerging market equity securities, where "emerging market" is defined by a country's GNP per capita or other economic measures.
(6) The returns shown for these periods are the blended returns of the historical performance of the fund's Institutional Class shares since their inception and the restated historical performance of the fund's Class A shares (for the periods prior to the inception of the Institutional Class shares) at net asset value and reflect the Rule 12b-1 fees applicable to Class A shares. If the effect of the Institutional Class total expenses were reflected, the returns would be higher than those shown because the Institutional Class has lower total expenses. The inception date shown in the table is that of the fund's Class A shares. The inception date of the fund's Institutional Class shares is April 30, 2004.
(7) Since inception performance is only provided for a class with less than ten calendar years of performance.
(8) The Standard & Poor's 500 Index measures the performance of the 500 most widely held common stock and is considered one of the best indicators of the U.S. stock market performance.
(9) The fund has also included the Russell Midcap--Trademark-- Index which the fund believes more closely reflects the performance of the types of securities in which the fund invests. In addition, the fund has included the Lipper Mid Cap Core Fund Index (which may or may not include the fund) for comparison to a peer group.
AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
(10) The Russell Midcap--Trademark-- Index measures the performance of the 800 smallest companies in the Russell 1000--Registered Trademark-- Index. These stocks represent approximately 25% and the total market capitalization of the Russell 1000--Registered Trademark-- Index. The Russell 1000--Registered Trademark-- Index measures the performance of the 1,000 largest companies domiciled in the United States.
(11) The Lipper Mid Cap Core Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Mid Cap Core category. These funds typically invest in stocks with market capitalizations between $1 and $5 billion at the time of purchase and have an average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P MidCap 400 Index.
(12) The MSCI World Index measures the performance of securities listed on stock exchanges of 23 developed countries. In addition, the fund has included the Lipper Global Multi-Cap Core Fund Index (which may or may not include the fund) for comparison to a peer group. The fund has elected to use the Lipper Global Multi-Cap Core Fund Index for comparison to a peer group rather than the Lipper Global Fund Index because Lipper recently modified their global and international classifications to include more narrow categories. Prior to 2004, Lipper did not group these funds based on style characteristics (such as core, growth, and value), but used very broad classifications based on prospectus objectives. The new approach is a more quantitative method for classifying funds.
(13) The Lipper Global Multi-Cap Core Fund Index is an equally weighted representation of the 10 largest funds in the Lipper Global Multi-Cap Core category. This category is comprised of funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Multi-cap funds typically have 25% to 75% of their assets invested in companies both inside and outside of the U.S. with market capitalizations (on a three-year weighted basis) greater than the 500th-largest company in the S&P/Citigroup World Broad Market Index. Multi-cap core funds typically have an average price-to-cash flow ratio, price-to-book ratio, and three-year sales-per-share growth value compared to the S&P/Citigroup BMI.
(14) The Lipper Global Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Global Funds category. These funds invest at least 25% of their portfolio in securities traded outside of the U.S.
(15) The fund has also included the Russell 2000--Registered Trademark-- Index which the fund believes more closely reflects the performance of the types of securities in which the fund invests. In addition, the fund has included the Lipper Small Cap Core Fund Index (which may or may not include the fund) for comparison to a peer group.
(16) The Russell 2000--Registered Trademark-- Index measures the performance of the 2,000 smallest companies in the Russell 3000--Registered Trademark-- Index. This index is widely regarded as representative of small-cap stocks. The Russell 3000--Registered Trademark-- Index measures the performance of the 3,000 largest U.S. companies and is regarded as the standard for measuring the U.S. stock market performance.
(17) The Lipper Small Cap core Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Small Cap Core category. These funds typically invest in stocks with market capitalizations below $1 billion at the time of purchase and have an average price-to-earnings ratio, price-to-book ration, and a three year sales-per-share growth value, compared to the S&P SmallCap 600 Index.
(18) The average annual total return given is since the month end closest to the inception date of the oldest share class.
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 DEVELOPING SMALL investment) MARKETS ENDEAVOR TRIMARK COMPANIES ---------------------------------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 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 Redemption/Exchange Fee (as a percentage of amount redeemed/ exchanged) 2.00%(1) None 2.00%(1) None ---------------------------------------------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(2) ------------------------------------------------------------------------------------------ (expenses that are deducted from DEVELOPING SMALL fund assets) MARKETS ENDEAVOR TRIMARK COMPANIES ------------------------------------------------------------------------------------------ Management Fees 0.98% 0.80% 0.85% 0.85% Distribution and/or Service (12b-1) Fees None None None None Other Expenses(3) 0.42 1.86 2.55 2.01 Total Annual Fund Operating Expenses 1.40 2.66 3.40 2.86 Fee Waiver(4) -- 1.00 1.49 1.24 Net Annual Fund Operating Expenses(5) 1.40 1.66 1.91 1.62 ------------------------------------------------------------------------------------------ |
(1) You may be charged a 2.00% fee on redemptions or exchanges of Institutional Class shares held less than 30 days. See "Shareholder Information--Redeeming Shares--Redemption Fee" for more information.
(2) There is no guarantee that actual expenses will be the same as those shown in the table.
(3) Other Expenses of Developing Markets, Endeavor, Trimark and Small Companies are based on estimated amounts for the current fiscal year.
(4) Effective January 1, 2005, through June 30, 2006, the advisor has
contractually agreed to waive a portion of its advisory fees. The fee waiver
reflects this agreement. (See "Fund Management--Advisor Compensation").
Further, the fund's advisor has contractually agreed to waive advisory fees
and/or reimburse expenses to the extent necessary to limit Total Annual Fund
Operating Expenses (excluding certain items discussed below) Institutional
Class shares of Developing Markets, Endeavor, Trimark and Small Companies to
1.50%, 1.65%, 1.90% and 1.65%, respectively, of average daily net assets. In
determining the advisor's obligation to waive advisory fees and/or reimburse
expenses, the following expenses are not taken into account, and could cause
the Total Annual Fund Operating Expenses to exceed the limits stated above:
(i) interest; (ii) taxes, (iii) dividend expense on short sales; (iv)
extraordinary items (these are expenses that are not anticipated to arise
from the fund's day-to-day operations), or items designated as such by the
fund's Board of Trustees; (v) expenses related to a merger or
reorganization, as approved by the fund's Board of Trustees; and (vi)
expenses that the fund has incurred but did not actually pay because of an
expense offset arrangement. Currently, the only expense offset arrangements
from which the fund benefits are in the form of credits that the fund
receives from banks where the fund or its transfer agent has deposit
accounts in which it holds uninvested cash. Those credits are used to pay
certain expenses incurred by the fund. This expense limitation agreement is
in effect through October 31, 2005.
(5) At the request of the Trustees of AIM Investment Funds, AMVESCAP (as defined herein) has agreed to reimburse the Trust for fund expenses related to market timing matters. Net Annual Fund Operating Expenses net of this arrangement and restated for current arrangements were 1.38%, 1.64%, 1.88% and 1.60% for Developing Markets, Endeavor, Trimark and Small Companies, respectively, for the year ended October 31, 2004.
If a financial institution is managing your account you may also be charged a transaction or other fee by such financial institution.
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, that the fund's operating expenses remain the same and includes the effect of any contractual fee waivers and/or expense reimbursements, if any. To the extent fees are waived and/or expenses are reimbursed voluntarily, 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
-----------------------------------------------------------------------------------------------------
Developing Markets $143 $443 $ 766 $1,680
Endeavor 169 731 1,321 2,919
Trimark 194 906 1,641 3,585
Small Companies 165 769 1,399 3,096
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AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION
The following supplemental hypothetical investment information provides additional information in a different format from the preceding Fee Table and Expense Example about the effect of a fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. Because a fund's annual return when quoted is already reduced by the fund's fees and expenses for that year, this hypothetical expense information is intended to help you understand the annual and cumulative impact of a fund's fees and expenses on your investment. Assuming a hypothetical investment of $10,000 in the Institutional class shares of each fund and a 5% return before expenses each year, the chart shows the cumulative return before expenses, the cumulative return after expenses, the ending balance and the estimated annual expenses for each year one through ten. The chart also assumes that the current annual expense ratio stays the same throughout the 10-year period. The current annual expense ratio for each fund, which is the same as stated in the Fee Table above, is reflected in the chart and is net of any contractual fee waiver or expense reimbursement. There is no assurance that the current annual expense ratio will be the expense ratio for the fund class. To the extent that the advisor makes any waivers or reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account initial or contingent deferred sales charges, if any. You should understand that this is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
AIM DEVELOPING MARKETS FUND INSTITUTIONAL CLASS--ANNUAL EXPENSE RATIO 1.40% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 ------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% Cumulative Return After Expenses 3.60% 7.33% 11.19% 15.20% 19.34% 23.64% 28.09% End of Year Balance $10,360.00 $10,732.96 $11,119.35 $11,519.64 $11,934.35 $12,363.99 $12,809.09 Estimated Annual Expenses $ 142.52 $ 147.65 $ 152.97 $ 158.47 $ 164.18 $ 170.09 $ 176.21 ------------------------------------------------------------------------------------------------------------------------- AIM DEVELOPING MARKETS FUND INSTITUTIONAL CLASS--ANNUAL EXPENSE RATIO 1.40% YEAR 8 YEAR 9 YEAR 10 Cumulative Return Before Expenses 47.75% 55.13% 62.89% Cumulative Return After Expenses 32.70% 37.48% 42.43% End of Year Balance $13,270.22 $13,747.95 $14,242.87 Estimated Annual Expenses $ 182.56 $ 189.13 $ 195.94 ----------------------------------------------------------------------------- |
AIM TRIMARK ENDEAVOR FUND INSTITUTIONAL CLASS--ANNUAL EXPENSE RATIO 1.66% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 ------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% Cumulative Return After Expenses 3.34% 6.79% 10.36% 14.04% 17.85% 21.79% 25.86% End of Year Balance $10,334.00 $10,679.16 $11,035.84 $11,404.44 $11,785.34 $12,178.98 $12,585.75 Estimated Annual Expenses $ 168.77 $ 174.41 $ 180.23 $ 186.25 $ 192.48 $ 198.90 $ 205.55 ------------------------------------------------------------------------------------------------------------------------- AIM TRIMARK ENDEAVOR FUND INSTITUTIONAL CLASS--ANNUAL EXPENSE RATIO 1.66% YEAR 8 YEAR 9 YEAR 10 ----------------------------------------------------------------------------------------- Cumulative Return Before Expenses 47.75% 55.13% 62.89% Cumulative Return After Expenses 30.06% 34.41% 38.89% End of Year Balance $13,006.12 $13,440.52 $13,889.43 Estimated Annual Expenses $ 212.41 $ 219.51 $ 226.84 ----------------------------------------------------------------------------------------------------- |
AIM TRIMARK FUND INSTITUTIONAL CLASS--ANNUAL EXPENSE RATIO 1.91% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 ------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% Cumulative Return After Expenses 3.09% 6.28% 9.56% 12.94% 16.43% 20.03% 23.74% End of Year Balance $10,309.00 $10,627.55 $10,955.94 $11,294.48 $11,643.48 $12,003.26 $12,374.16 Estimated Annual Expenses $ 193.95 $ 199.94 $ 206.12 $ 212.49 $ 219.06 $ 225.83 $ 232.80 ------------------------------------------------------------------------------------------------------------------------- AIM TRIMARK FUND INSTITUTIONAL CLASS--ANNUAL EXPENSE RATIO 1.91% YEAR 8 YEAR 9 YEAR 10 ----------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 47.75% 55.13% 62.89% Cumulative Return After Expenses 27.57% 31.51% 35.57% End of Year Balance $12,756.52 $13,150.70 $13,557.06 Estimated Annual Expenses $ 240.00 $ 247.41 $ 255.06 ------------------------------------------------------------------------------------------------------------------------- |
AIM TRIMARK SMALL COMPANIES FUND INSTITUTIONAL CLASS--ANNUAL EXPENSE RATIO 1.62% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 ------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% Cumulative Return After Expenses 3.38% 6.87% 10.49% 14.22% 18.08% 22.07% 26.20% End of Year Balance $10,338.00 $10,687.42 $11,048.66 $11,422.10 $11,808.17 $12,207.29 $12,619.89 Estimated Annual Expenses $ 164.74 $ 170.31 $ 176.06 $ 182.01 $ 188.17 $ 194.53 $ 201.10 ------------------------------------------------------------------------------------------------------------------------- AIM TRIMARK SMALL COMPANIES FUND INSTITUTIONAL CLASS--ANNUAL EXPENSE RATIO 1.62% YEAR 8 YEAR 9 YEAR 10 ------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 47.75% 55.13% 62.89% Cumulative Return After Expenses 30.46% 34.87% 39.43% End of Year Balance $13,046.45 $13,487.42 $13,943.29 Estimated Annual Expenses $ 207.90 $ 214.92 $ 222.19 ------------------------------------------------------------------------------------------------------------------------- |
AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
DISCLOSURE OF PORTFOLIO HOLDINGS
Each fund's portfolio holdings are disclosed on a regular basis in its semi-annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of a fund's first and third fiscal quarter-ends. In addition, portfolio holdings information for each fund is available at (http://www.aiminvestments.com). To reach this information, access a fund's overview page on the website. Links to the following fund information are located in the upper right side of this website page:
---------------------------------------------------------------------------------------------------------------------------------
APPROXIMATE DATE OF INFORMATION REMAINS
INFORMATION WEBSITE POSTING POSTED ON WEBSITE
---------------------------------------------------------------------------------------------------------------------------------
Top ten holdings as of month end 15 days after month end Until posting of the following month's top
ten holdings
---------------------------------------------------------------------------------------------------------------------------------
Complete portfolio holdings as of 30 days after calendar quarter end For one year
calendar quarter end
---------------------------------------------------------------------------------------------------------------------------------
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A description of the funds' policies and procedures with respect to the disclosure of the funds' portfolio holdings is available in the funds' Statement of Additional Information, which is available at (http://www.aiminvestments.com).
AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor or AIM) serves as each fund's investment advisor and manages the investment operations of each fund and has agreed to perform or arrange for the performance of each fund's day-to-day management. The advisor supervises all aspects of Developing Markets' 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 is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. AIM Funds Management Inc. (the subadvisor for Endeavor, Trimark and Small Companies), an affiliate of the advisor, is located at 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. The subadvisor is responsible for Endeavor, Trimark and Small Companies' day-to-day management, including each fund's investment decisions and the execution of securities transactions with respect to each fund.
The advisor has acted as an investment advisor since its organization in 1976 and the subadvisor has acted as an investment advisor since 1981. Today, the advisor, together with its subsidiaries, advises or manages over 200 investment portfolios, including the funds, encompassing a broad range of investment objectives.
On October 8, 2004, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), AIM and A I M Distributors, Inc. (ADI) (the distributor of the retail AIM funds) reached final settlements with certain regulators, including the SEC, the New York Attorney General and the Colorado Attorney General, to resolve civil enforcement actions and/or investigations related to market timing and related activity in the AIM funds, including those formerly advised by IFG. As part of the settlements, a $325 million fair fund ($110 million of which is civil penalties) is being created to compensate shareholders harmed by market timing and related activity in funds formerly advised by IFG. Additionally, AIM and ADI agreed to create a $50 million fair fund ($30 million of which is civil penalties) to compensate shareholders harmed by market timing and related activity in funds advised by AIM. These two fair funds may increase as a result of contributions from third parties who reach final settlements with the SEC or other regulators to resolve allegations of market timing and/or late trading that also may have harmed applicable AIM funds. These two fair funds will be distributed in accordance with a methodology to be determined by AIM's independent distribution consultant, in consultation with AIM and the independent trustees of the AIM funds and acceptable to the staff of the SEC.
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, IFG, AIM, ADI and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; (ii) that certain funds inadequately employed fair value pricing; (iii) that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale and that the defendants adopted unlawful distribution plans; (iv) that the defendants breached their fiduciary duties by charging distribution fees while funds and/or specific share classes were closed generally to new investors and/or while other share classes of the same fund were not charged the same distribution fees; (v) that the defendants improperly used the assets of the funds to pay brokers to aggressively promote the sale of the funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions; and (vi) that the defendants breached their fiduciary duties by failing to ensure that the funds participated in class action settlements in which they were eligible to participate.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, AIM, ADI and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM funds might react by redeeming their investments. This might require the funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the funds.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2004, the advisor received compensation of 0.76% of average daily net assets for Developing Markets. With regard to Endeavor, Trimark and Small Companies, for the period November 4, 2003 (date operations commenced) through October 31, 2004, the advisor did not receive any compensation due to contractual expense limitation agreements between the advisor and the fund. The annual management fee payable to the advisor pursuant to the investment advisory agreement ranges from 0.975% to 0.90%, 0.80% to 0.75%, 0.85% to 0.80% and 0.85% to 0.80%, for Developing Markets, Endeavor, Trimark and Small Companies, respectively, of average daily net assets, based on net asset levels. The advisor has contractually agreed to advisory fee waivers for the period January 1, 2005 to June 30, 2006. The advisor will waive advisory fees to the extent necessary so that the advisory fee payable does not exceed the Advisory Fee Rates After January 1, 2005. Following are the advisory fee rates before and after January 1, 2005.
DEVELOPING MARKETS
ADVISORY FEE RATES BEFORE ADVISORY FEE RATES AFTER
JANUARY 1, 2005 WAIVER JANUARY 1, 2005 WAIVER
----------------------------------------------------------------------------------
0.975% of the first $500 million 0.935% of the first $250 million
0.95% of the next $500 million 0.91% of the next $250 million
0.925% of the next $500 million 0.885% of the next $500 million
0.90% of the next $3.5 billion 0.86% of the next $1.5 billion
0.875% of the next $5 billion* 0.835% of the next $2.5 billion
0.85% of amount over $10 billion* 0.81% of the next $2.5 billion
0.785% of the next $2.5 billion
0.76% of amount over $10 billion
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* After fee waiver. These rates include AIM's voluntary agreement to waive an amount equal to 0.025% for each $5 billion increment in net assets over $5 billion, up to a maximum of 0.175% on net assets over $35 billion.
ENDEAVOR
ADVISORY FEE RATES BEFORE ADVISORY FEE RATES AFTER
JANUARY 1, 2005 WAIVER JANUARY 1, 2005 WAIVER
----------------------------------------------------------------------------------
0.80% of the first $1 billion 0.745% of the first $250 million
0.75% of amount over $1 billion 0.73% of the next $250 million
0.715% of the next $500 million
0.70% of the next $1.5 billion
0.685% of the next $2.5 billion
0.67% of the next $2.5 billion
0.655% of the next $2.5 billion
0.64% of amount over $10 billion
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TRIMARK
ADVISORY FEE RATES BEFORE ADVISORY FEE RATES AFTER
JANUARY 1, 2005 WAIVER JANUARY 1, 2005 WAIVER
----------------------------------------------------------------------------------
0.85% of the first $1 billion 0.80% of the first $250 million
0.80% of amount over $1 billion 0.78% of the next $250 million
0.76% of the next $500 million
0.74% of the next $1.5 billion
0.72% of the next $2.5 billion
0.70% of the next $2.5 billion
0.68% of the next $2.5 billion
0.66% of amount over $10 billion
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SMALL COMPANIES
ADVISORY FEE RATES BEFORE ADVISORY FEE RATES AFTER
JANUARY 1, 2005 WAIVER JANUARY 1, 2005 WAIVER
----------------------------------------------------------------------------------
0.85% of the first $1 billion 0.745% of the first $250 million
0.80% of amount over $1 billion 0.73% of the next $250 million
0.715% of the next $500 million
0.70% of the next $1.5 billion
0.685% of the next $2.5 billion
0.67% of the next $2.5 billion
0.655% of the next $2.5 billion
0.64% of amount over $10 billion
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PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the
day-to-day management of each fund's portfolio:
DEVELOPING MARKETS
- Shuxin Cao (lead manager with respect to the fund's investments in Asia Pacific and Latin America), Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1997.
- Borge Endresen (lead manager with respect to the fund's investments in Europe, Africa and the Middle East), Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1999.
They are assisted by the advisor's Asia/Latin America and Europe/Canada Teams, which may be comprised of portfolio managers, research analysts and other investment professionals of the advisor. Team members provide research support and make securities recommendations with respect to the fund's portfolio, but do not have day-to-day management responsibilities with respect to the fund's portfolio. Members of the teams may change from time to time. More information on these portfolio managers and the teams, including biographies of other members of the teams, may be found on the advisor's website (http://www.aiminvestments.com). The website is not part of this prospectus.
ENDEAVOR
- Geoff MacDonald (lead manager), Portfolio Manager, who has been responsible
for the fund since 2003 and has been associated with the subadvisor and/or its
affiliates since 1998.
- Jeff Hyrich, Portfolio Manager, who has been responsible for the fund since
2003 and has been associated with the subadvisor and/or its affiliates since
1999.
More information on these portfolio managers may be found on our website
(http://www.aiminvestments.com). The website is not a part of this prospectus.
TRIMARK
- Tye Bousada (lead manager), Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the subadvisor and/or its affiliates since 1999.
- Dana Love, Portfolio Manager, who has been responsible for the fund since 2004 and has been associated with the subadvisor and/or its affiliates since 1999.
More information on these portfolio managers may be found on our website (http://www.aiminvestments.com). The website is not a part of this prospectus.
SMALL COMPANIES
- Robert Mikalachki, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the subadvisor and/or its affiliates since 1999.
AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
He is assisted by the subadvisor's AIM Trimark Small Companies Team, which may be comprised of portfolio managers, research analysts and other investment professionals of the subadvisor. Team members provide research support and make securities recommendations with respect to the fund's portfolio, but do not have day-to-day management responsibilities with respect to the fund's portfolio. Members of the team may change from time to time. More information on the team, including biographies of other members of the team, may be found on the advisor's website (http://www.aiminvestments.com). The website is not part of this prospectus.
The lead managers generally have final authority over all aspects of their fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which the lead managers may perform these functions, and the nature of these functions, may change from time to time.
The funds' Statement of Additional Information provides additional information about the portfolio managers' investments in the funds, a description of their compensation structure and information regarding other accounts they manage.
AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
DIVIDENDS AND DISTRIBUTIONS
Each of the funds except Developing Markets, expects that its distributions, if any, will consist primarily of capital gains. Developing Markets expects that its distributions, if any, will consist primarily of income.
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) of the Internal Revenue Code (the "Code") (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 the funds are available is $1 million.
The Institutional Classes of the 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 LIMITED FUND OFFERING (SMALL COMPANIES)
Due to the sometimes limited availability of common stocks of smaller companies that meet the investment criteria for the fund, the fund may limit public sale of its shares to certain new investors after assets reach approximately $500 million.
The fund may resume sales of shares to new investors at some future date if the Board of Trustees determines that doing so would be in the best interest of the shareholders.
AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
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).
This information for the fiscal years ended October 31, 2004, 2003, 2002, 2001 and 2000 has been audited by PricewaterhouseCoopers LLP, whose report, along with the fund's financial statements, is included in the fund's semi-annual report, which is available upon request.
Developing Markets' Institutional Class shares commenced operations on October 25, 2005 and therefore, financial information for such shares is not available.
DEVELOPING MARKETS -- CLASS A
-------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, --------------------------------------------------------------------
2005 2004 2003 2002 2001 2000
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.71 $ 10.52 $ 6.96 $ 6.32 $ 8.89 $ 9.86
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.03(a) 0.02(a) 0.04(a) (0.01)(a) 0.15(a) 0.01(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 1.35 2.19 3.52 0.74 (2.67) (0.95)
=================================================================================================================================
Total from investment operations 1.38 2.21 3.56 0.73 (2.52) (0.94)
=================================================================================================================================
Less distributions from net investment
income -- (0.02) -- (0.09) (0.05) (0.04)
=================================================================================================================================
Redemption fees added to shares of
beneficial interest 0.00 0.00 -- -- -- 0.01
=================================================================================================================================
Net asset value, end of period $ 14.09 $ 12.71 $ 10.52 $ 6.96 $ 6.32 $ 8.89
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 10.86% 21.05% 51.15% 11.37% (28.51)% (9.52)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $214,496 $197,848 $209,221 $123,812 $110,756 $136,160
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense
reimbursements 1.89%(c) 2.00% 2.00% 1.84% 1.76% 1.87%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense
reimbursements 2.05%(c) 2.22% 2.33% 2.35% 2.26% 1.95%
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets 0.41%(c) 0.16% 0.44% (0.07)% 1.95% 0.05%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(d) 19% 49% 100% 109% 144% 192%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
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(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. 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 $219,227,355.
(d) Not annualized for periods less than one year.
AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
ENDEAVOR -- INSTITUTIONAL CLASS
---------------------------------
APRIL 30, 2004
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
-----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.55 $10.88
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.02 (0.01)(a)
-----------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.38 0.68
===============================================================================================
Total from investment operations 0.40 0.67
===============================================================================================
Net asset value, end of period $ 11.95 $11.55
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 3.46% 6.16%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 2,736 $1,779
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.35%(c) 1.62%(d)
-----------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.39%(c) 2.64%(d)
===============================================================================================
Ratio of net investment income (loss) to average net assets 0.43%(c) (0.11)%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 15% 35%
_______________________________________________________________________________________________
===============================================================================================
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(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $2,369,849.
(d) Annualized.
(e) Not annualized for periods less than one year.
AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
TRIMARK -- INSTITUTIONAL CLASS
----------------------------------
APRIL 30, 2004
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.40 $10.51
------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a) (0.01)(a)
------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.64 (0.10)
================================================================================================
Total from investment operations 0.62 (0.11)
================================================================================================
Net asset value, end of period $11.02 $10.40
________________________________________________________________________________________________
================================================================================================
Total return(b) 5.96% (1.05)%
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 10 $ 10
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.90%(c) 1.90%(d)
------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.41%(c) 3.42%(d)
================================================================================================
Ratio of net investment income (loss) to average net assets (0.33)%(c) (0.18)%(d)
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate(e) 22% 38%
________________________________________________________________________________________________
================================================================================================
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(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and the returns for shareholder transactions. Not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $10,684.
(d) Annualized.
(e) Not annualized for periods less than one year.
AIM DEVELOPING MARKETS - TRIMARK ENDEAVOR - TRIMARK - TRIMARK SMALL COMPANIES
FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
SMALL COMPANIES --
INSTITUTIONAL CLASS
-------------------------------
APRIL 30, 2004
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
---------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.92 $10.56
---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a) (0.02)
---------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.77 1.38
=============================================================================================
Total from investment operations 0.75 1.36
=============================================================================================
Less distributions from net realized gains (0.07) --
=============================================================================================
Net asset value, end of period $ 12.60 $11.92
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 6.32% 12.88%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,960 $5,094
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.24%(c) 1.60%(d)
---------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.32%(c) 2.86%(d)
=============================================================================================
Ratio of net investment income (loss) to average net assets (0.28)%(c) (0.77)%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate(e) 9% 29%
_____________________________________________________________________________________________
=============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $9,182,442.
(d) Annualized.
(e) Not annualized for periods less than one year.
In addition to the fund, AIM serves as investment advisor to many other mutual funds (the funds). The following information is about the Institutional Classes of all funds, which are offered to certain eligible institutional investors. Consult the fund's Statement of Additional Information for the Institutional Class for details.
SHARES SOLD WITHOUT SALES CHARGES
You will not pay an initial or contingent deferred sales charge on purchases of any Institutional Class shares.
PURCHASING SHARES
MINIMUM INVESTMENTS PER ACCOUNT
The minimum investments for 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. Additionally, Federal law requires that the fund verify and record your identifying information.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------------------------
Through a Financial Advisor Contact your financial advisor. Same
The financial advisor should mail your
completed account application to the
transfer agent,
AIM Investment Services, Inc.,
P.O. Box 0843,
Houston, TX 77210-0843.
The financial advisor 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: AIM Investment
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.
----------------------------------------------------------------------------------------------------------------------------
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SPECIAL PLANS
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or reinvested in the same fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same fund.
ADDITIONAL PAYMENTS TO FINANCIAL ADVISORS
A I M Distributors, Inc. (ADI) or one or more of its corporate affiliates (collectively, ADI Affiliates) may make additional cash payments to financial advisors in connection with the promotion and sale of shares of the funds. These additional cash payments may include cash revenue sharing payments and other payments for certain administrative services, transaction processing services and certain other marketing support services. ADI Affiliates make these payments
INSTCL--10/05
from their own resources and from ADI's retention of underwriting concessions. In this context, "financial advisors" include any broker, dealer, bank (including bank trust departments), registered investment advisor, financial planner, retirement plan administrator and any other financial intermediary having a selling, administration or similar agreement with ADI Affiliates.
ADI Affiliates make revenue sharing payments as incentives to certain financial advisors to promote and sell shares of the funds. The benefits ADI Affiliates receive when it makes these payments include, among other things, placing the funds on the financial advisor's funds sales system, placing the funds on the financial advisor's preferred or recommended fund list, and access (in some cases on a preferential basis over other competitors) to individual members of the financial advisor's sales force or to the financial advisor's management. Revenue sharing payments are sometimes referred to as "shelf space" payments because the payments compensate the financial advisor for including the funds in its fund sales system (on its "sales shelf"). ADI Affiliates compensate financial advisors differently depending typically on the level and/or type of considerations provided by the financial advisor. The revenue sharing payments ADI Affiliates make may be calculated on the average daily net assets of the applicable funds attributable to that particular financial advisor (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.10% per annum of those assets during a defined period. Asset-Based Payments primarily create incentives to retain previously sold shares of the funds in investor accounts.
ADI Affiliates also may make other payments to certain financial advisors for processing certain transactions or account maintenance activities (such as processing purchases, redemptions or exchanges or producing customer account statements) or for providing certain other marketing support services (such as financial assistance for conferences, seminars or sales or training programs at which ADI Affiliates personnel may make presentations on the funds to the financial advisor's sales force). Financial advisors may earn profits on these payments for these services, since the amount of the payment may exceed the cost of providing the service. Certain of these payments are subject to limitations under applicable law.
ADI Affiliates are motivated to make the payments described above since they promote the sale of fund shares and the retention of those investments by clients of financial advisors. To the extent financial advisors sell more shares of the funds or retain shares of the funds in their clients' accounts, ADI Affiliates benefit from the incremental management and other fees paid to ADI Affiliates by the funds with respect to those assets.
You can find further details in the fund's Statement of Additional Information about these payments and the services provided by financial advisors. In certain cases these payments could be significant to the financial advisor. Your financial advisor may charge you additional fees or commissions other than those disclosed in this prospectus. You can ask your financial advisor about any payments it receives from ADI Affiliates or the funds, as well as about fees and/or commissions it charges.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
While the funds provide their shareholders with daily liquidity, their investment programs are designed to serve long-term investors and are not designed to accommodate excessive short-term trading activity in violation of our policies described below. Excessive short-term trading activity in the funds' shares (i.e., a purchase of fund shares followed shortly thereafter by a redemption of such shares, or vice versa) may hurt the long-term performance of certain funds by requiring them to maintain an excessive amount of cash or to liquidate portfolio holdings at a disadvantageous time, thus interfering with the efficient management of such funds by causing them to incur increased brokerage and administrative costs. Where excessive short-term trading activity seeks to take advantage of arbitrage opportunities from stale prices for portfolio securities, the value of fund shares held by long-term investors may be diluted. The Boards of Trustees have adopted policies and procedures designed to discourage excessive or short-term trading of fund shares for all funds except money market funds. However, there is the risk that these funds' policies and procedures will prove ineffective in whole or in part to detect or prevent excessive or short-term trading. These funds may alter their policies at any time without prior notice to shareholders if the advisor believes the change would be in the best interests of long-term shareholders.
AIM and its affiliates (collectively, AIM Affiliates) currently use the following tools designed to discourage excessive short-term trading in the retail funds:
(1) trade activity monitoring;
(2) trading guidelines;
(3) redemption fee on trades in certain funds; and
(4) use of fair value pricing consistent with procedures approved by the Boards of Trustees of the funds.
Each of these tools is described in more detail below. Although these tools are designed to discourage excessive short-term trading, you should understand that none of these tools alone nor all of them taken together eliminate the possibility that excessive short-term trading activity in the funds will occur. Moreover, each of these tools involves judgments that are inherently subjective. The AIM Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with long-term shareholder interests.
The Boards of Trustees of AIM Money Market Fund, AIM Tax-Exempt Cash Fund, Premier Portfolio, Premier Tax-Exempt Portfolio and Premier U.S. Government Money Portfolio (the money market funds) have not adopted any policies and procedures that would limit frequent purchases and redemptions of such funds' shares. The Boards do not believe that it is appropriate to adopt any such policies and procedures for the money market funds for the following reasons:
- The money market funds are offered to investors as cash management vehicles. Investors must perceive an investment in such funds
INSTCL--10/05
as an alternative to cash, and must be able to purchase and redeem shares regularly and frequently.
- One of the advantages of a money market fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity of the money market funds will be detrimental to the continuing operations of such funds.
- The money market funds' portfolio securities are valued on the basis of amortized cost, and such funds seeks to maintain a constant net asset value. As a result, there are no price arbitrage opportunities.
- Because the money market funds seek to maintain a constant net asset value, investors expect to receive upon redemption the amount they originally invested in such funds. Imposition of redemption fees would run contrary to investor expectations.
The Boards considered the risks of not having a specific policy that limits frequent purchases and redemptions, and it determined that those risks are minimal, especially in light of the reasons for not having such a policy as described above. Nonetheless, to the extent that the fund must maintain additional cash and/or securities with short-term durations than may otherwise be required, the fund's yield could be negatively impacted.
TRADE ACTIVITY MONITORING
The AIM Affiliates monitor selected trades on a daily basis in an effort to detect excessive short-term trading activities. If, as a result of this monitoring, the AIM Affiliates believe that a shareholder has engaged in excessive short-term trading, they will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the shareholder to take action to stop such activities or (ii) refusing to process future purchases or exchanges related to such activities in the shareholder's accounts other than exchanges into a money market fund. AIM Affiliates will use reasonable efforts to apply the fund's policies uniformly given the practical limitations described above.
The ability of the AIM Affiliates to monitor trades that are placed by the underlying shareholders of omnibus accounts maintained by brokers, retirement plan accounts and approved fee-based program accounts is severely limited or non-existent in those instances in which the broker, retirement plan administrator or fee-based program sponsor maintains the underlying shareholder accounts. This is one reason why this tool cannot eliminate the possibility of excessive short-term trading.
TRADING GUIDELINES
If you exceed four exchanges out of a fund (other than AIM Money Market Fund, AIM Tax-Exempt Cash Fund, AIM Limited Maturity Treasury Fund, Premier Portfolio, Premier Tax-Exempt Portfolio and Premier U.S. Government Money Portfolio) per calendar year, or a fund or an AIM Affiliate determines, in its sole discretion, that your short-term trading activity is excessive (regardless of whether or not you exceed such guidelines), it may, in its discretion, reject any additional purchase and exchange orders. Each fund and the AIM Affiliates reserve the discretion to accept exchanges in excess of these guidelines on a case-by-case basis if they believe that granting such exceptions would be consistent with the best interests of shareholders. An exchange is the purchase of shares in one fund which is paid for with the proceeds from a redemption of shares of another fund effectuated on the same day. The movement out of one fund (redemption) and into one or more other funds (purchase) on the same day shall be counted as one exchange. Exchanges effected as part of programs that have been determined by an AIM Affiliate to be non-discretionary, such as dollar cost averaging, portfolio rebalancing, or other automatic non-discretionary programs that involve exchanges, generally will not be counted toward the trading guidelines limitation of four exchanges out of a fund per calendar year.
The ability of the AIM Affiliates to monitor exchanges made by the underlying shareholders of omnibus accounts maintained by brokers, retirement plan accounts and approved fee-based program accounts is severely limited or non-existent in those instances in which the broker, retirement plan administrator or fee-based program sponsor maintains the underlying shareholder accounts and is unwilling or unable to implement these trading guidelines and may be further limited by systems limitations applicable to those types of accounts.
Some investments in the funds are made indirectly through vehicles such as qualified tuition plans, variable annuity and insurance contracts, and funds of funds which use the funds as underlying investments (each a conduit investment vehicle). If shares of the funds are held in the name of a conduit investment vehicle and not in the names of the individual investors who have invested in the funds through the conduit investment vehicle, the conduit investment vehicle may be considered an individual shareholder of the funds. To the extent that a conduit investment vehicle is considered an individual shareholder of the funds, the funds are likely to be limited in their ability to impose exchange limitations on individual transactions initiated by investors who have invested in the funds through the conduit investment vehicle.
REDEMPTION FEE
You may be charged a 2% redemption fee if you redeem, including redeeming by exchange, shares of certain funds within 30 days of purchase. See "Redeeming Shares -- Redemption Fee" for more information.
The ability of a fund to assess a redemption fee on the underlying shareholders of omnibus accounts maintained by brokers, retirement plan accounts and approved fee-based program accounts is severely limited or non-existent in those instances in which the broker, retirement plan administrator or fee-based program sponsor maintains the underlying shareholder accounts and is unwilling or unable to assess such fees and may be further limited by systems limitations applicable to these types of accounts.
For additional discussion of the applicability of redemption fees on shares
of the fund held through omnibus accounts, retirement plan accounts, approved
fee-based program accounts and conduit investment vehicles, see "Redeeming
Shares -- Redemption Fee".
INSTCL--10/05
FAIR VALUE PRICING
Securities owned by a fund are to be valued at current market value if market quotations are readily available. All other securities and assets of a fund for which market quotations are not readily available are to be valued at fair value determined in good faith using procedures approved by the Board of Trustees of the fund. Fair value pricing may reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially "stale" prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
See "Pricing of Shares -- Determination of Net Asset Value" for more information.
REDEEMING SHARES
REDEMPTION FEE
You may be charged a 2% redemption fee (on redemption proceeds) if you redeem,
including redeeming by exchange, shares of the following funds within 30 days of
their purchase:
AIM Asia Pacific Growth Fund AIM Global Value Fund AIM Developing Markets Fund AIM High Yield Fund AIM European Growth Fund AIM International Core Equity Fund AIM European Small Company AIM International Growth Fund Fund AIM International Small Company Fund AIM Global Aggressive Growth AIM S&P 500 Index Fund Fund AIM Trimark Fund AIM Global Equity Fund AIM Global Growth Fund AIM Global Real Estate Fund |
The redemption fee will be retained by the fund from which you are redeeming shares (including redemptions by exchange), and is intended to offset the trading costs, market impact and other costs associated with short-term money movements in and out of the fund. The redemption fee is imposed to the extent that the number of fund shares you redeem exceeds the number of fund shares that you have held for more than 30 days. In determining whether the minimum 30 day holding period has been met, only the period during which you have held shares of the fund from which you are redeeming is counted. For this purpose, shares held longest will be treated as being redeemed first and shares held shortest as being redeemed last.
The 2% redemption fee generally will not be charged on transactions involving the following:
(1) total or partial redemptions of shares by omnibus accounts maintained by brokers that do not have the systematic capability to process the redemption fee;
(2) total or partial redemptions of shares by approved fee-based programs that do not have the systematic capability to process the redemption fee;
(3) total or partial redemptions of shares held through retirement plans maintained pursuant to Sections 401, 403, 408, 408A and 457 of the Internal Revenue Code (the "Code") where the systematic capability to process the redemption fee does not exist;
(4) total or partial redemptions effectuated by funds of funds, qualified tuition plans maintained pursuant to Section 529 of the Code, and insurance company separate accounts which use the funds as underlying investments;
(5) total or partial redemptions effectuated pursuant to an automatic non-discretionary rebalancing program or a systematic withdrawal plan established with the funds or a financial intermediary;
(6) total or partial redemptions requested within 30 days following the death or
post-purchase disability of (i) any registered shareholder on an account or
(ii) the settlor of a living trust which is the registered shareholder of an
account, of shares held in the account at the time of death or initial
determination of post-purchase disability;
(7) total or partial redemption of shares acquired through investment of dividends and other distributions; or
(8) redemptions initiated by a fund.
The AIM Affiliates' goals are to apply the redemption fee on all classes of shares of the above funds regardless of the type of account in which such shares are held. This goal is not immediately achievable because of systems limitations and marketplace resistance. Brokers that maintain omnibus accounts, sponsors of fee-based program accounts and retirement plan administrators for accounts that are exempt from the redemption fee pursuant to (1) through (8) above may impose a redemption fee that has different characteristics, which may be more or less restrictive, than those set forth above.
Some investments in the funds are made indirectly through conduit investment vehicles. If shares of the funds are held in the name of a conduit investment vehicle and not in the names of the individual investors who have invested in the funds through the conduit investment vehicle, the conduit investment vehicle may be considered an individual shareholder of the funds. To the extent that a conduit investment vehicle is considered an individual shareholder of the funds, the funds are likely to be limited in their ability to assess redemption fees on individual transactions initiated by investors who have invested in the funds through the conduit investment vehicle. In these cases, the applicability of redemption fees will be determined based on the aggregate holdings and redemptions of the conduit investment vehicle in a fund.
The funds have the discretion to waive the 2% redemption fee if a fund is in jeopardy of losing its registered investment company qualification for tax purposes.
Your broker or financial advisor may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC) in addition to the redemption fee.
INSTCL--10/05
Through a Financial Advisor Contact your financial advisor.
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 that 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.
REDEMPTIONS IN KIND
Although the funds generally intend to pay redemption proceeds solely in cash,
the funds reserve the right determine in their sole discretion, whether to
satisfy redemption requests by making payment in securities or other property
(known as a redemption in kind).
REDEMPTIONS BY THE AIM FUNDS
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, or the fund is not able to
verify your identity as required by law, the fund may, at its discretion, redeem
the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under most circumstances, exchange Institutional Class shares in one fund for Institutional Class shares of another fund. An exchange is the purchase of shares in one fund which is paid for with the proceeds from a redemption of shares of another fund effectuated on the same day. Before requesting an exchange, review the prospectus of the fund you wish to acquire.
You may be charged a redemption fee on certain redemptions, including exchanges. See "Redeeming Shares -- Redemption Fee."
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- Shares of the 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 with the exception of dividends that are reinvested; and
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange.
TERMS OF EXCHANGE
Under unusual market conditions, a 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. The exchange privilege is not an option or right to purchase shares. Any of the participating funds or the distributor may modify or terminate this privilege at any time. The 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 TELEPHONE
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each fund's shares is the fund's net asset value per share. The funds value portfolio securities for which market quotations are readily available at market value. The funds value all other securities and assets for which market quotations are unavailable or unreliable at their fair value in good faith using procedures approved by the Boards of Trustees of the funds. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
INSTCL--10/05
Even when market quotations are available, they may be stale or they may be unreliable because the security is not traded frequently, trading on the security ceased before the close of the trading market or issuer specific events occurred after the security ceased trading or because of the passage of time between the close of the market on which the security trades and the close of the NYSE and when the fund calculates its net asset value. Issuer specific events may cause the last market quotation to be unreliable. Such events may include a merger or insolvency, events which affect a geographical area or an industry segment, such as political events or natural disasters, or market events, such as a significant movement in the U.S. market. Where market quotations are not readily available, including where AIM determines that the closing price of the security is unreliable, AIM will value the security at fair value in good faith using procedures approved by the Boards of Trustees. Fair value pricing may reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially "stale" prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
Fair value is that amount that the owner might reasonably expect to receive for the security upon its current sale. Fair value requires consideration of all appropriate factors, including indications of fair value available from pricing services. A fair value price is an estimated price and may vary from the prices used by other mutual funds to calculate their net asset values.
AIM may use indications of fair value from pricing services approved by the Boards of Trustees. In other circumstances, the AIM valuation committee may fair value securities in good faith using procedures approved by the Boards of Trustees. As a means of evaluating its fair value process, AIM routinely compares closing market prices, the next day's opening prices for the security in its primary market if available, and indications of fair value from other sources. Fair value pricing methods and pricing services can change from time to time as approved by the Boards of Trustees.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally available and reliable for domestic exchange traded equity securities. If market quotations are not available or are unreliable, AIM will value the security at fair value in good faith using procedures approved by the Boards of Trustees.
Foreign Securities: If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE events occur that are significant and may make the closing price unreliable, the fund may fair value the security. If an issuer specific event has occurred that AIM determines, in its judgment, is likely to have affected the closing price of a foreign security, it will price the security at fair value. AIM also relies on a screening process from a pricing vendor to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current market value as of the close of the NYSE. For foreign securities where AIM believes, at the approved degree of certainty, that the price is not reflective of current market value, AIM will use the indication of fair value from the pricing service to determine the fair value of the security. The pricing vendor, pricing methodology or degree of certainty may change from time to time.
Fund securities primarily traded on foreign markets may trade on days that are not business days of the fund. Because the net asset value of fund shares is determined only on business days of the fund, the value of the portfolio securities of a fund that invests in foreign securities may change on days when you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal bonds and convertible securities, including high yield or junk bonds, normally are valued on the basis of prices provided by independent pricing services. Prices provided by the pricing services 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, maturity and other market data. Prices received from pricing services are fair value prices. In addition, if the price provided by the pricing service and independent quoted prices are unreliable, the AIM valuation committee will fair value the security using procedures approved by the Boards of Trustees.
Short-term Securities: The funds' short-term investments are valued at amortized cost when the security has 60 days or less to maturity. AIM Money Market Fund, AIM Tax-Exempt Cash Fund, Premier Portfolio, Premier Tax-Exempt Portfolio and Premier U.S. Government Money Portfolio value all 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.
Futures and Options: Futures and options are valued on the basis of market quotations, if available.
Open-end Funds: To the extent a fund invests in other open-end funds, the investing fund will calculate its net asset value using the net asset value of the underlying fund in which it invests.
Each 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 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 on each day the NYSE is open for business, prior to the close of the customary trading session or any earlier NYSE closing time that day. The funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good order. Any applicable sales charges are applied at the time an order is processed. A fund may postpone the right of redemption only under INSTCL--10/05
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 and the type of income that the fund earns. Different tax rates apply to ordinary income, qualified dividend income, and long-term capital gain distributions. Every year, you will be sent information showing the amount of dividends and distributions you received from each fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of fund shares will be subject to federal income tax. Exchanges of shares for shares of another 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 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 fund shares is inapplicable to investors that are generally exempt from federal income tax, such as retirement plans that are qualified under Section 401, 403, 408, 408A and 457 of the Internal Revenue Code, individual retirement accounts (IRAs) and Roth IRAs. You should consult your tax advisor before investing.
INSTCL--10/05
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 the prospectus). Annual and semiannual reports to shareholders contain additional information about the funds' 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. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q.
If you have questions about the funds, 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 at AIM Investment Services, Inc., P.O. Box 4739, Houston, TX 77210-4739 or
BY TELEPHONE: (800) 659-1005
ON THE INTERNET: You can send us a request by
e-mail or download
prospectuses, SAIs, annual or
semiannual reports via our
website:
http://www.aiminvestments.com
THE FUND'S MOST RECENT PORTFOLIO HOLDINGS, AS FILED
ON FORM N-Q, ARE ALSO AVAILABLE AT
WWW.AIMINVESTMENTS.COM.
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You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q 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 Room, 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.
AIM Developing Markets Fund,
AIM Trimark Endeavor Fund, AIM Trimark Fund,
AIM Trimark Small Companies Fund
SEC 1940 Act file number: 811-05426
AIMinvestments.com AIF-PRO-1
YOUR GOALS. OUR SOLUTIONS. [AIM INVESTMENTS LOGO APPEARS HERE]
--Registered Trademark-- --Registered Trademark--
STATEMENT OF
ADDITIONAL INFORMATION
AIM INVESTMENT FUNDS
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
THIS STATEMENT OF ADDITIONAL INFORMATION RELATES TO THE INSTITUTIONAL CLASSES OF EACH PORTFOLIO (EACH A "FUND," COLLECTIVELY THE "FUNDS") OF AIM INVESTMENT 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 CLASSES OF THE FUNDS LISTED BELOW. YOU MAY OBTAIN A COPY OF A PROSPECTUS FOR THE FUNDS LISTED BELOW FROM AN AUTHORIZED DEALER OR BY WRITING TO:
AIM INVESTMENT SERVICES, INC.
P.O. BOX 4739
HOUSTON, TEXAS 77210-4739
OR BY CALLING (800) 659-1000
THIS STATEMENT OF ADDITIONAL INFORMATION, DATED OCTOBER 25, 2005 RELATES TO THE PROSPECTUS FOR THE INSTITUTIONAL CLASSES OF THE FOLLOWING FUNDS:
FUND DATED
---------------------------------- ----------------
AIM DEVELOPING MARKETS FUND OCTOBER 25, 2005
AIM TRIMARK ENDEAVOR FUND OCTOBER 25, 2005
AIM TRIMARK FUND OCTOBER 25, 2005
AIM TRIMARK SMALL COMPANIES FUND OCTOBER 25, 2005
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AIM INVESTMENT 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.......................................................................... 12
Derivatives.................................................................................... 16
Additional Securities or Investment Techniques................................................. 22
Fund Policies........................................................................................... 24
Temporary Defensive Positions........................................................................... 26
Portfolio Turnover...................................................................................... 26
Policies and Procedures for Disclosure of Fund Holdings................................................. 26
MANAGEMENT OF THE TRUST.......................................................................................... 29
Board of Trustees....................................................................................... 29
Management Information.................................................................................. 29
Trustee Ownership of Fund Shares............................................................... 32
Approval of Investment Advisory Agreements and Summary of Independent Written Fee Evaluation... 32
Approval of Sub-Advising Agreement............................................................. 38
Compensation............................................................................................ 48
Retirement Plan For Trustees................................................................... 48
Deferred Compensation Agreements............................................................... 49
Purchase of Class A Shares of the Funds at Net Asset Value..................................... 49
Codes of Ethics......................................................................................... 49
Proxy Voting Policies................................................................................... 50
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.............................................................. 50
INVESTMENT ADVISORY AND OTHER SERVICES........................................................................... 50
Investment Advisor...................................................................................... 50
Expense Limitation...................................................................................... 52
Investment Sub-Advisor......................................................................... 52
Portfolio Managers............................................................................. 53
Securities Lending Arrangements................................................................ 53
Service Agreements...................................................................................... 53
Other Service Providers................................................................................. 54
BROKERAGE ALLOCATION AND OTHER PRACTICES......................................................................... 55
Brokerage Transactions.................................................................................. 55
Commissions............................................................................................. 55
Brokerage Selection..................................................................................... 55
Directed Brokerage (Research Services).................................................................. 58
Regular Brokers......................................................................................... 58
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Allocation of Portfolio Transactions.................................................................... 59
Allocation of Equity Initial Public Offering ("IPO") Transactions....................................... 59
PURCHASE, REDEMPTION AND PRICING OF SHARES....................................................................... 59
Transactions through Financial Intermediaries........................................................... 59
Purchase and Redemption of Shares....................................................................... 60
Offering Price.......................................................................................... 61
Redemption In Kind...................................................................................... 62
Backup Withholding...................................................................................... 62
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS......................................................................... 63
Dividends and Distributions............................................................................. 63
Tax Matters............................................................................................. 63
DISTRIBUTION OF SECURITIES....................................................................................... 71
Distributor............................................................................................. 71
CALCULATION OF PERFORMANCE DATA.................................................................................. 72
PENDING LITIGATION............................................................................................... 78
APPENDICES:
RATINGS OF DEBT SECURITIES...................................................................................... A-1
EXAMPLES OF PERSONS TO WHOM AIM PROVIDES NON-PUBLIC PORTFOLIO HOLDINGS ON AN ONGOING BASIS (AS OF JULY 27,
2005)................................................................................................. B-1
TRUSTEES AND OFFICERS........................................................................................... C-1
TRUSTEE COMPENSATION TABLE...................................................................................... D-1
PROXY VOTING POLICIES........................................................................................... E-1
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES............................................................. F-1
MANAGEMENT FEES................................................................................................. G-1
PORTFOLIO MANAGERS.............................................................................................. H-1
ADMINISTRATIVE SERVICES FEES.................................................................................... I-1
BROKERAGE COMMISSIONS........................................................................................... J-1
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF SECURITIES OF REGULAR BROKERS OR DEALERS................ K-1
PERFORMANCE DATA................................................................................................ L-1
PENDING LITIGATION ALLEGING MARKET TIMING....................................................................... M-1
FINANCIAL STATEMENTS............................................................................................. FS
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GENERAL INFORMATION ABOUT THE TRUST
FUND HISTORY
AIM Investment 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 five separate portfolios: AIM Developing Markets Fund, AIM Global Health Care Fund, AIM Trimark Endeavor Fund, AIM Trimark Fund and AIM Trimark Small Companies Fund. This Statement of Additional Information relates solely to the Institutional Classes of AIM Developing Markets Fund, AIM Trimark Endeavor Fund, AIM Trimark Fund and AIM Trimark Small Companies Fund (each a "Fund" and collectively, the "Funds"). Under the Amended and Restated Agreement and Declaration of Trust, dated May 15, 2002, as amended (the "Trust Agreement"), the Board of Trustees of the Trust (the "Board") is authorized to create new series of shares without the necessity of a vote of shareholders of the Trust.
The Trust was originally organized on October 29, 1987 as a Maryland corporation. The Trust reorganized as a Delaware business trust on May 7, 1998. All historical financial and other information contained in this Statement of Additional Information for periods prior to September 8, 1998 relating to these Funds (or a class thereof), except for AIM Trimark Endeavor Fund, AIM Trimark Fund and AIM Trimark Small Companies Fund, is that of AIM Investment Funds, Inc. the Maryland corporation (or the corresponding class thereof). Each of AIM Trimark Endeavor Fund, AIM Trimark Fund and AIM Trimark Small Companies Fund commenced operations as a 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, 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 offers separate classes of shares as follows:
INSTITUTIONAL
FUND CLASS A CLASS B CLASS C CLASS R CLASS
----------------------------------------------------------------------------------------------------------------------
AIM Developing Markets Fund X X X X
----------------------------------------------------------------------------------------------------------------------
AIM Global Health Care Fund X X X
----------------------------------------------------------------------------------------------------------------------
AIM Trimark Endeavor Fund X X X X X
----------------------------------------------------------------------------------------------------------------------
AIM Trimark Fund X X X X X
----------------------------------------------------------------------------------------------------------------------
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INSTITUTIONAL
FUND CLASS A CLASS B CLASS C CLASS R CLASS
----------------------------------------------------------------------------------------------------------------------
AIM Trimark Small Companies Fund X X X X X
----------------------------------------------------------------------------------------------------------------------
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This Statement of Additional Information relates solely to the Institutional Class of these three Funds. The Institutional Class shares of the Funds are intended for use by certain eligible institutional investors, including the following:
o banks and trust companies acting in a fiduciary or similar capacity;
o bank and trust company common and collective trust funds;
o banks and trust companies investing for their own account;
o entities acting for the account of a public entity (e.g. Taft-Hartley funds, states, cities or government agencies);
o retirement plans;
o platform sponsors with which A I M Distributors, Inc. ("AIM Distributors") has entered into an agreement; and
o proprietary asset allocation funds.
Each class of shares represents an interest 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.
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, subscription rights, and are freely transferable. 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's Bylaws generally provide 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. Indemnification does not extend to judgments or amounts paid in settlement in any actions by or in the right of the Trust. The Trust's Bylaws provide for the advancement of payments to current and former trustees, officers and employees or agents of the Trust, or anyone serving at their request, in connection with the preparation and presentation of a defense to any claim, action, suit or proceeding, expenses for which such person would be entitled to indemnification; provided that any advancement of payments would be reimbursed unless it is ultimately determined that such person is entitled to indemnification for such expenses.
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 except AIM Developing Markets Fund is "diversified" for purposes of the 1940 Act.
INVESTMENT STRATEGIES AND RISKS
The table on the following pages identifies various securities and investment techniques used by AIM in managing The AIM Family of Funds--Registered Trademark--. The table has been marked to indicate those securities and investment techniques that AIM may use to manage a Fund. A Fund may not use all of these techniques at any one time. A Fund's transactions in a particular security or use of a particular technique is subject to limitations imposed by a Fund's investment objective, policies and restrictions described in that Fund's Prospectus and/or this Statement of Additional Information, as well as federal securities laws. The Funds' investment objectives, policies, strategies and practices are non-fundamental unless otherwise indicated. A more detailed description of the securities and investment techniques, as well as the risks associated with those securities and investment techniques that the Funds utilize, follows the table. The descriptions of the securities and investment techniques in this section supplement the discussion of principal investment strategies contained in each Fund's Prospectus; where a particular type of security or investment technique is not discussed in a Fund's Prospectus, that security or investment technique is not a principal investment strategy.
AIM INVESTMENT FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------------------------
FUND AIM DEVELOPING AIM TRIMARK AIM TRIMARK AIM TRIMARK
MARKETS FUND ENDEAVOR FUND FUND SMALL COMPANIES
SECURITY/ FUND
INVESTMENT
TECHNIQUE
--------------------------------------------------------------------------------------------------
EQUITY INVESTMENTS
--------------------------------------------------------------------------------------------------
Common Stock X X X X
--------------------------------------------------------------------------------------------------
Preferred Stock X X X X
--------------------------------------------------------------------------------------------------
Convertible Securities X X X X
--------------------------------------------------------------------------------------------------
Alternative Entity X X X X
Securities
--------------------------------------------------------------------------------------------------
FOREIGN INVESTMENTS
--------------------------------------------------------------------------------------------------
Foreign Securities X X X X
--------------------------------------------------------------------------------------------------
Foreign Government X X X X
Obligations
--------------------------------------------------------------------------------------------------
Foreign Exchange X X X X
Transactions
--------------------------------------------------------------------------------------------------
DEBT INVESTMENTS
--------------------------------------------------------------------------------------------------
U.S. Government X X X X
Obligations
--------------------------------------------------------------------------------------------------
Rule 2a-7 Requirements
--------------------------------------------------------------------------------------------------
Mortgage-Backed and
Asset-Backed Securities
--------------------------------------------------------------------------------------------------
Collateralized Mortgage
Obligations
--------------------------------------------------------------------------------------------------
Bank Instruments
--------------------------------------------------------------------------------------------------
Commercial Instruments
--------------------------------------------------------------------------------------------------
Participation Interests
--------------------------------------------------------------------------------------------------
Municipal Securities
--------------------------------------------------------------------------------------------------
Municipal Lease
Obligations
--------------------------------------------------------------------------------------------------
Investment Grade X X X X
Corporate Debt Obligations
--------------------------------------------------------------------------------------------------
Junk Bonds X X X X
--------------------------------------------------------------------------------------------------
Liquid Assets X X X X
--------------------------------------------------------------------------------------------------
OTHER INVESTMENTS
--------------------------------------------------------------------------------------------------
REITs X X X X
--------------------------------------------------------------------------------------------------
Other Investment X X X X
Companies
--------------------------------------------------------------------------------------------------
Defaulted Securities
--------------------------------------------------------------------------------------------------
Municipal Forward
Contracts
--------------------------------------------------------------------------------------------------
Variable or Floating Rate X
Instruments
--------------------------------------------------------------------------------------------------
Indexed Securities X
--------------------------------------------------------------------------------------------------
Zero-Coupon and X
Pay-in-Kind Securities
--------------------------------------------------------------------------------------------------
Synthetic Municipal
Instruments
--------------------------------------------------------------------------------------------------
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AIM INVESTMENT FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------------------------
FUND AIM DEVELOPING AIM TRIMARK AIM TRIMARK AIM TRIMARK
MARKETS FUND ENDEAVOR FUND FUND SMALL COMPANIES
SECURITY/ FUND
INVESTMENT
TECHNIQUE
--------------------------------------------------------------------------------------------------
INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------------------------
Delayed Delivery X X X X
Transactions
--------------------------------------------------------------------------------------------------
When-Issued Securities X X X X
--------------------------------------------------------------------------------------------------
Short Sales X X X X
--------------------------------------------------------------------------------------------------
Margin Transactions
--------------------------------------------------------------------------------------------------
Swap Agreements X X X X
--------------------------------------------------------------------------------------------------
Interfund Loans X X X X
--------------------------------------------------------------------------------------------------
Borrowing X X X X
--------------------------------------------------------------------------------------------------
Lending Portfolio X X X X
Securities
--------------------------------------------------------------------------------------------------
Repurchase Agreements X X X X
--------------------------------------------------------------------------------------------------
Reverse Repurchase X
Agreements
--------------------------------------------------------------------------------------------------
Dollar Rolls
--------------------------------------------------------------------------------------------------
Illiquid Securities X X X X
--------------------------------------------------------------------------------------------------
Rule 144A Securities X X X X
--------------------------------------------------------------------------------------------------
Unseasoned Issuers X
--------------------------------------------------------------------------------------------------
Portfolio Transactions
--------------------------------------------------------------------------------------------------
Sale of Money Market
Securities
--------------------------------------------------------------------------------------------------
Standby Commitments
--------------------------------------------------------------------------------------------------
DERIVATIVES
--------------------------------------------------------------------------------------------------
Equity-Linked Derivatives X X X X
--------------------------------------------------------------------------------------------------
Put Options X X X X
--------------------------------------------------------------------------------------------------
Call Options X X X X
--------------------------------------------------------------------------------------------------
Straddles X X X X
--------------------------------------------------------------------------------------------------
Warrants X X X X
--------------------------------------------------------------------------------------------------
Futures Contracts and X X X X
Options on Futures
Contracts
--------------------------------------------------------------------------------------------------
Forward Currency Contracts X X X X
--------------------------------------------------------------------------------------------------
Cover X X X X
--------------------------------------------------------------------------------------------------
ADDITIONAL SECURITIES OR INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------------------------
Loan Participations and X
Assignments
--------------------------------------------------------------------------------------------------
Privatizations X X X X
--------------------------------------------------------------------------------------------------
Indexed Commercial Paper X
--------------------------------------------------------------------------------------------------
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AIM INVESTMENT FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------------------------
FUND AIM DEVELOPING AIM TRIMARK AIM TRIMARK AIM TRIMARK
MARKETS FUND ENDEAVOR FUND FUND SMALL COMPANIES
SECURITY/ FUND
INVESTMENT
TECHNIQUE
--------------------------------------------------------------------------------------------------
Samurai and Yankee Bonds X
--------------------------------------------------------------------------------------------------
Premium Securities X
--------------------------------------------------------------------------------------------------
Structured Investments X
--------------------------------------------------------------------------------------------------
Stripped Income Securities X
--------------------------------------------------------------------------------------------------
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Equity Investments
COMMON STOCK. Common stock is issued by companies principally to raise cash for business purposes and represents a residual interest in the issuing company. A Fund participates in the success or failure of any company in which it holds stock. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
PREFERRED STOCK. Preferred stock, unlike common stock, often offers a stated dividend rate payable from a corporation's earnings. If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of preferred stocks to decline. Preferred stock may have mandatory sinking fund provisions, as well as call/redemption provisions prior to maturity, a negative feature when interest rates decline. Dividends on some preferred stock may be "cumulative," requiring all or a portion of prior unpaid dividends to be paid before dividends are paid on the issuer's common stock. Preferred stock also generally has a preference over common stock on the distribution of a corporation's assets in the event of liquidation of the corporation, and may be "participating," which means that it may be entitled to a dividend exceeding the stated dividend in certain cases. In some cases an issuer may offer auction rate preferred stock, which means that the interest to be paid is set by auction and will often be reset at stated intervals. The rights of preferred stocks on the distribution of a corporation's assets in the event of a liquidation are generally subordinate to the rights associated with a corporation's debt securities.
CONVERTIBLE SECURITIES. Convertible securities include bonds, debentures, notes, preferred stocks and other securities that may be converted into a prescribed amount of common stock or other equity securities at a specified price and time. The holder of convertible securities is entitled to receive interest paid or accrued on debt, or dividends paid or accrued on preferred stock, until the security matures or is converted.
The value of a convertible security depends on interest rates, the yield of similar nonconvertible securities, the financial strength of the issuer and the seniority of the security in the issuer's capital structure. Convertible securities may be illiquid, and may be required to convert at a time and at a price that is unfavorable to the Fund.
The Funds will invest in a convertible debt security based primarily on the characteristics of the equity security into which it converts, and without regard to the credit rating of the convertible security (even if the credit rating is below investment grade). To the extent that a Fund invests in convertible debt securities with credit ratings below investment grade, such securities may have a higher likelihood of default, although this may be somewhat offset by the convertibility feature. See also "Debt Investments - Junk Bonds" below.
ALTERNATIVE ENTITY SECURITIES. Companies that are formed as limited partnerships, limited liability companies, business trusts or other non-corporate entities may issue equity securities that are similar to common or preferred stock of corporations.
Foreign Investments
FOREIGN SECURITIES. Foreign securities are equity or debt securities issued by issuers outside the United States, and include securities in the form of American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or other securities representing underlying securities of foreign issuers. Depositary Receipts are typically issued by a bank or trust company and evidence ownership of underlying securities issued by foreign corporations.
AIM Trimark Fund may invest up to 100% of its total assets in foreign securities. AIM Trimark Endeavor Fund and AIM Trimark Small Companies Fund may each invest up to 25% 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.
Risks of Developing Countries. AIM Developing Markets Fund, AIM Trimark Endeavor Fund and AIM Trimark Fund may each invest up to 15% and AIM Trimark Small Companies Fund may each invest up to 5% of their respective total assets in securities of companies located in developing countries. Developing countries are those countries which are not included in the MSCI World Index. The Funds consider various factors when determining whether a company is in a developing country, including whether (1) it is organized under the laws of a developing country; (2) it has a principal office in a developing country; (3) it derives 50% or more of its total revenues from business in a developing country; or (4) its securities are traded principally on a stock exchange, or in an over-the-counter market, in a developing country. Investments in developing countries present risks greater than, and in addition to, those presented by investments in foreign issuers in general. A number of developing countries restrict, to varying degrees, foreign investment in stocks. Repatriation of investment income, capital, and the proceeds of sales by foreign investors may require governmental registration and/or approval in some developing countries. A number of the currencies of developing countries have experienced significant declines against the U.S. dollar in recent years, and devaluation may occur subsequent to investments in these currencies by the Funds. Inflation and rapid fluctuations in inflation rates have had and may continue to have negative effects on the economies and securities markets of certain emerging market countries. Many of the developing securities markets are relatively small or less diverse, have low trading volumes, suffer periods of relative illiquidity, and are characterized by significant price volatility. There is a risk in developing countries that a future economic or political crisis could lead to price controls, forced mergers of companies, expropriation or confiscatory taxation, seizure, nationalization, or creation of government monopolies, any of which may have a detrimental effect on the Funds 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 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, in which case, if the issuer were to default, the Funds holding securities of such issuer might not be able to recover their investment from the U.S. Government.
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.
JUNK BONDS. Each of the funds may invest in junk bonds. Junk bonds are lower-rated or non-rated debt securities. Junk bonds are considered speculative with respect to their capacity to pay interest and repay principal in accordance with the terms of the obligation. While generally providing greater income and opportunity for gain, non-investment grade debt securities are subject to greater risks than higher-rated securities.
Companies that issue junk bonds are often highly leveraged, and may not have more traditional methods of financing available to them. During an economic downturn or recession, highly leveraged issuers of high yield securities may experience financial stress, and may not have sufficient revenues to meet their interest payment obligations. Economic downturns tend to disrupt the market for junk bonds, lowering their values, and increasing their price volatility. The risk of issuer default is higher with respect to junk bonds because such issues are generally unsecured and are often subordinated to other creditors of the issuer.
The credit rating of a junk bond does not necessarily address its market value risk, and ratings may from time to time change to reflect developments regarding the issuer's financial condition. The lower the rating of a junk bond, the more speculative its characteristics.
The Funds may have difficulty selling certain junk bonds because they may have a thin trading market. The lack of a liquid secondary market may have an adverse effect on the market price and a Fund's ability to dispose of particular issues and may also make it more difficult for the Fund to obtain accurate market quotations in valuing these assets. In the event a Fund experiences an unexpected level of net redemptions, the Fund could be forced to sell its junk bonds at an unfavorable price. Prices of junk bonds have been found to be less sensitive to fluctuations in interest rates, and more sensitive to adverse economic changes and individual corporate developments than those of higher-rated debt securities. AIM Trimark Endeavor Fund, AIM Trimark Fund and AIM Trimark Small Companies Fund may each invest up to 5% of total assets, and AIM Developing Markets Fund may invest up to 50% of its total assets in junk bonds.
Descriptions of debt securities ratings are found in Appendix A.
LIQUID ASSETS. 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, and municipal obligations).
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.
VARIABLE OR FLOATING RATE INSTRUMENTS. The Fund may invest in securities which have variable or floating interest rates which are readjusted on set dates (such as the last day of the month or calendar quarter) in the case of variable rates or whenever a specified interest rate change occurs in the case of a floating rate instrument. Variable or floating interest rates generally reduce changes in the market price of securities from their original purchase price because, upon readjustment, such rates approximate market rates. Accordingly, as interest rates decrease or increase, the potential for capital appreciation or depreciation is less for variable or floating rate securities than for fixed rate obligations. Many securities with variable or floating interest rates purchased by a Fund are subject to payment of principal and accrued interest (usually within seven days) on the Fund's demand. The terms of such demand instruments require payment of principal and accrued interest by the issuer, a guarantor, and/or a liquidity provider. All variable or floating rate instruments will meet the applicable quality standards of a Fund. AIM will monitor the pricing, quality and liquidity of the variable or floating rate securities held by the Funds.
INDEXED SECURITIES. The Fund may invest in indexed securities the value of which is linked to interest rates, commodities, indices or other financial indicators. Most indexed securities are short to intermediate term fixed income securities whose values at maturity (principal value) or interest rates rise or fall according to changes in the value of one or more specified underlying instruments. Indexed securities may be positively or negatively indexed (i.e., their principal value or interest rates may increase or decrease if the underlying instrument appreciates), and may have return characteristics similar to direct investments in the underlying instrument or to one or more options on the underlying instrument. Indexed securities may be more volatile than the underlying instrument itself and could involve the loss of all or a portion of the principal amount of the indexed security.
ZERO-COUPON AND PAY-IN-KIND SECURITIES. The Fund may, but does not currently intend to, invest in zero-coupon or pay-in-kind securities. These securities are debt securities that do not make regular cash interest payments. Zero-coupon securities are sold at a deep discount to their face value. Pay-in-kind securities pay interest through the issuance of additional securities. Because zero-coupon and pay-in-kind securities do not pay current cash income, the price of these securities can be volatile when interest rates fluctuate. While these securities do not pay current cash income, federal tax law requires the holders of zero-coupon and pay-in-kind securities to include in income each year the portion of the original issue discount (or deemed discount) and other non-cash income on such securities accrued during that year. In order to qualify as a "regulated investment company" under the Internal Revenue Code of 1986, as amended (the "Code") and to avoid certain excise taxes, the Fund may be required to distribute a portion of such discount and income, and may be required to dispose of other portfolio securities, which could occur during periods of adverse market prices, in order to generate sufficient cash to meet these distribution requirements.
Investment Techniques
DELAYED DELIVERY TRANSACTIONS. Delayed delivery transactions, also referred to as forward commitments, involve commitments by a Fund to dealers or issuers to acquire or sell securities at a specified future date beyond the customary settlement for such securities. These commitments may fix the payment price and interest rate to be received or paid on the investment. A Fund may purchase securities on a delayed delivery basis to the extent it can anticipate having available cash on settlement date. Delayed delivery agreements will not be used as a speculative or leveraging technique.
Investment in securities on a delayed delivery basis may increase a Fund's exposure to market fluctuation and may increase the possibility that the Fund will incur short-term gains subject to federal taxation or short-term losses if the Fund must engage in portfolio transactions in order to honor a delayed delivery commitment. Until the settlement date, a Fund will segregate liquid assets of a dollar value sufficient at all times to make payment for the delayed delivery transactions. Such segregated liquid assets will be marked-to-market daily, and the amount segregated will be increased if necessary to maintain adequate coverage of the delayed delivery commitments. No additional delayed delivery agreements or when-issued commitments (as described below) will be made by a Fund if, as a result, more than 25% of the Fund's total assets would become so committed.
The delayed delivery securities, which will not begin to accrue interest or dividends until the settlement date, will be recorded as an asset of a Fund and will be subject to the risk of market fluctuation. The purchase price of the delayed delivery securities is a liability of a Fund until settlement. Absent extraordinary circumstances, a Fund will not sell or otherwise transfer the delayed delivery basis securities prior to settlement.
A Fund may enter into buy/sell back transactions (a form of delayed delivery agreement). In a buy/sell back transaction, a Fund enters a trade to sell securities at one price and simultaneously enters a trade to buy the same securities at another price for settlement at a future date.
WHEN-ISSUED SECURITIES. Purchasing securities on a "when-issued" basis means that the date for delivery of and payment for the securities is not fixed at the date of purchase, but is set after the securities are issued. The payment obligation and, if applicable, the interest rate that will be received on the securities are fixed at the time the buyer enters into the commitment. A Fund will only make commitments to purchase such securities with the intention of actually acquiring such securities, but the Fund may sell these securities before the settlement date if it is deemed advisable.
Securities purchased on a when-issued basis and the securities held in a Fund's portfolio are subject to changes in market value based upon the public's perception of the creditworthiness of the issuer and, if applicable, changes in the level of interest rates. Therefore, if a Fund is to remain substantially fully invested at the same time that it has purchased securities on a when-issued basis, there will be a possibility that the market value of the Fund's assets will fluctuate to a greater degree. Furthermore, when the time comes for the Fund to meet its obligations under when-issued commitments,
the Fund will do so by using then available cash flow, by sale of the segregated liquid assets, by sale of other securities or, although it would not normally expect to do so, by directing the sale of the when-issued securities themselves (which may have a market value greater or less than the Fund's payment obligation).
Investment in securities on a when-issued basis may increase a Fund's exposure to market fluctuation and may increase the possibility that the Fund will incur short-term gains subject to federal taxation or short-term losses if the Fund must sell another security in order to honor a when-issued commitment. If a Fund purchases a when-issued security, the Fund 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 in an amount equal 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 funds advised by AIM (the "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 borrowings 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.
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. The Fund would receive income in lieu of dividends on loaned securities and would, at the same time, earn interest on the loan collateral or on the investment of any cash collateral. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the loaned securities increases and the collateral is not increased accordingly, or in the event of a default by the borrower. The Fund could also experience delays and costs in gaining access to the collateral.
Any cash received as collateral for loaned securities will be invested, in accordance with a Fund's investment guidelines, in short-term money market instruments or Affiliated Money Market Funds. For purposes of determining whether a Fund is complying with its investment policies, strategies and restrictions, the Fund will consider the loaned securities as assets of the Fund, but will not consider any collateral received as a Fund asset.
REPURCHASE AGREEMENTS. Repurchase agreements are agreements under which a Fund acquires ownership of a security from a broker-dealer or bank that agrees to repurchase the security at a mutually agreed upon time and price (which is higher than the purchase price), thereby determining the yield during the Fund's holding period. A Fund may, however, enter into a "continuing contract" or "open" repurchase agreement under which the seller is under a continuing obligation to repurchase the underlying obligation from the Fund on demand and the effective interest rate is negotiated on a daily basis. Each of the Funds may engage in repurchase agreement transactions involving the types of securities in which it is permitted to invest.
If the seller of a repurchase agreement fails to repurchase the security in accordance with the terms of the agreement, a Fund might incur expenses in enforcing its rights, and could experience losses, including a decline in the value of the underlying security and loss of income. The securities underlying a repurchase agreement will be marked-to-market every business day so that the value of such securities is at least equal to the investment value of the repurchase agreement, including any accrued interest thereon.
The Funds 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.
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 under the 1933 Act, 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, 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. AIM Trimark Small Companies Fund may invest in equity securities of 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 the time of the investment, the aggregate premiums paid for the options will exceed 5% of the Fund's total assets.
Pursuant to federal securities rules and regulations, if a Fund writes options it may be required to set aside assets to reduce the risks associated with writing those options. This process is described in more detail below in the section "Cover."
Writing Options. A Fund may write put and call options in an attempt to realize, through the receipt of premiums, a greater current return than would be realized on the underlying security, contract, or foreign currency alone. 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 below 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 the call option is exercised, a Fund will realize a gain or loss from the sale of the underlying security, contract or currency, which will be increased or offset by the premium received. A Fund would write a put option at an exercise price that, reduced by the premium received on the option, reflects the price it is willing to pay for the underlying security, contract or currency. The obligation imposed upon the writer of an option is terminated upon the expiration of the option, or such earlier time at which a Fund effects a closing purchase transaction by purchasing an option (put or call as the case may be) identical to that previously sold.
Writing call options can serve as a limited hedge because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. Closing transactions may be effected in order to realize a profit on an outstanding call option, to prevent an underlying security, contract or currency from being called or to permit the sale of the underlying security, contract or currency. Furthermore, effecting a closing transaction will permit a Fund to write another call option on the underlying security, contract or currency with either a different exercise price or expiration date, or both.
Purchasing Options. A Fund may purchase a call option for the purpose of acquiring the underlying security, contract or currency for its portfolio. 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. A 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 a 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
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Fund may purchase participations in corporate loans. Participation interests generally will be acquired from a commercial bank or other financial institution (a "Lender") or from other holders of a participation interest (a "Participant"). The purchase of a participation interest either from a Lender or a Participant will not result in any direct contractual relationship with the borrowing company (the "Borrower"). The Fund generally will have no right directly to enforce compliance by the Borrower with the terms of the credit agreement. Instead, the Fund will be required to rely on the Lender or the Participant that sold the participation interest both for the enforcement of the Fund's rights against the Borrower and for the receipt and processing of payments due to the Fund under the loans. Under the terms of a participation interest, a Fund may be regarded as a creditor of the Participant and thus a Fund is subject to the credit risk of both the Borrower and Lender or a Participant. Participation interests are generally subject to restrictions on resale. The Fund considers participation interests to be illiquid and therefore subject to the Fund's percentage limitation for investments in illiquid securities.
PRIVATIZATIONS. Each of the funds may invest in privatizations. The governments of some foreign countries have been engaged in 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 intends to invest assets of the Funds in privatizations in appropriate circumstances. In certain foreign countries, the ability of foreign entities such as the Funds to participate 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.
INDEXED COMMERCIAL PAPER. The Fund may invest without limitation in commercial paper which is indexed to certain specific foreign currency exchange rates. The terms of such commercial paper provide that its principal amount is adjusted upwards or downwards (but not below zero) at maturity to reflect changes in the exchange rate between two currencies while the obligation is outstanding. The Fund will purchase such commercial paper with the currency in which it is denominated and, at maturity,
will receive interest and principal payments thereon in that currency, but the amount of principal payable by the issuer at maturity will change in proportion to the change (if any) in the exchange rate between the two specified currencies between the date the instrument is issued and the date the instrument matures. While such commercial paper entails the risk of loss of principal, the potential for realizing gains as a result of changes in foreign currency exchange rates enables the funds to hedge against a decline in the U.S. dollar value of investments denominated in foreign currencies while seeking to provide an attractive money market rate of return. The Fund will not purchase such commercial paper for speculation.
SAMURAI AND YANKEE BONDS. Subject to their fundamental investment restrictions, the Fund may invest in yen-denominated bonds sold in Japan by non-Japanese issuers ("Samurai bonds"), and may invest in dollar-denominated bonds sold in the United States by non-U.S. issuers ("Yankee bonds"). As compared with bonds issued in their countries of domicile, such bond issues normally carry a higher interest rate but are less actively traded. It is the policy of the Fund to invest in Samurai or Yankee bond issues only after taking into account considerations of quality and liquidity, as well as yield.
PREMIUM SECURITIES. The Fund may invest in income securities bearing coupon rates higher than prevailing market rates. Such "premium" securities are typically purchased at prices greater than the principal amounts payable on maturity. The Fund will not amortize the premium paid for such securities in calculating its net investment income. As a result, in such cases the purchase of such securities provides the Fund a higher level of investment income distributable to shareholders on a current basis than if the Fund purchased securities bearing current market rates of interest. If securities purchased by the Fund at a premium are called or sold prior to maturity, the Fund will realize a loss to the extent the call or sale price is less than the purchase price. Additionally, the Fund will realize a loss if it holds such securities to maturity.
STRUCTURED INVESTMENTS. The Fund may invest a portion of its assets in interests in entities organized and operated solely for the purpose of restructuring the investment characteristics of Sovereign Debt. This type of restructuring involves the deposit with or purchase by an entity, such as a corporation or trust, of specified instruments (such as commercial bank loans or Brady Bonds) and the issuance by that entity of one or more classes of securities ("Structured Investments") backed by, or representing interests in, the underlying instruments. The cash flow on the underlying instruments may be apportioned among the newly issued Structured Investments to create securities with different investment characteristics such as varying maturities, payment priorities and interest rate provisions, and the extent of the payments made with respect to Structured Investments is dependent on the extent of the cash flow on the underlying instruments. Because Structured Investments of the type in which the Fund anticipates it will invest typically involve no credit enhancement, their credit risk generally will be equivalent to that of the underlying instruments.
Each Fund is permitted to invest in a class of Structured Investments that is either subordinated or not subordinated to the right of payment of another class. Subordinated Structured Investments typically have higher yields and present greater risks than unsubordinated Structured Investments.
Certain issuers of Structured Investments may be deemed to be
"investment companies" as defined in the 1940 Act. As a result, each Fund's
investment in these Structured Investments may be limited by the restrictions
contained in the 1940 Act described below under "Investment Strategies and Risks
- Other Investment Companies." Structured Investments are typically sold in
private placement transactions, and there currently is no active trading market
for Structured Investments.
STRIPPED INCOME SECURITIES. The Fund may invest a portion of its assets in stripped income securities, which are obligations representing an interest in all or a portion of the income or principal components of an underlying or related security, a pool of securities or other assets. In the most extreme case, one class will receive all of the interest (the "interest only class" or the "IO class"), while the other class will receive all of the principal (the "principal-only class" or the "PO class"). The market values of stripped income securities tend to be more volatile in response to changes in interest rates than are conventional income securities.
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 Developing Markets 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 the 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.
NON-FUNDAMENTAL RESTRICTIONS. The following non-fundamental investment restrictions apply to each of the Funds, except that AIM Developing Markets 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 AIM Funds, 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?% of its total assets (including the amount borrowed) less liabilities (other than borrowings). The Fund may borrow from banks, broker-dealers or an AIM Fund. The Fund may not borrow for leveraging, but may borrow for temporary or emergency purposes, in anticipation of or in response to adverse market conditions, or for cash management purposes. The Fund may not purchase additional securities when any borrowings from banks exceed 5% of the Fund's total assets or when any borrowings from an AIM 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?% of its total assets and may lend money to an AIM 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.
(7) The Fund may not acquire any securities of registered open-end investment companies or registered unit investment trusts in reliance on Sections 12(d)(1)(F) or 12(d)(1)(G) of the 1940 Act.
ADDITIONAL NON-FUNDAMENTAL POLICY. As non-fundamental policies:
(1) AIM Developing Markets Fund normally invests at least 80% of its assets in securities of companies that are in developing markets countries. 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 Trimark Small Companies Fund normally invests at least 80% of its assets in marketable equity securities of small capitalization companies. For purposes of the foregoing sentence, "assets" means net assets, plus the amount of any borrowings for investment purposes. The Fund will provide written notice to its shareholders prior to any change to this policy, as required by the 1940 Act Laws, Interpretations and Exemptions.
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 its assets in cash, cash equivalents or high-quality debt instruments. Each of the Funds may also invest up to 25% of its total assets in Affiliated Money Market Funds for these purposes.
PORTFOLIO TURNOVER
AIM Developing Markets Fund's portfolio turnover rate decreased from 100% in 2003 to 49% in 2004. This variation can be attributed to the realignment of the Fund's portfolio to fit the investment process of the current management team that assumed management of the Fund in May of 2003.
POLICIES AND PROCEDURES FOR DISCLOSURE OF FUND HOLDINGS
The Board has adopted policies and procedures with respect to the disclosure of the Funds' portfolio holdings (the "Holdings Disclosure Policy"). AIM and the Board may amend the Holdings Disclosure Policy at any time without prior notice. Details of the Holdings Disclosure Policy and a description of the basis on which employees of AIM and its affiliates may release information about portfolio securities in certain contexts are provided below.
PUBLIC RELEASE OF PORTFOLIO HOLDINGS. The Funds disclose the following portfolio holdings information on www.aiminvestments.com(1):
APPROXIMATE DATE OF INFORMATION REMAINS
INFORMATION WEBSITE POSTING POSTED ON WEBSITE
----------------------------------- ---------------------------------- ----------------------------------
Top ten holdings as of month end 15 days after month end Until replaced with the
following month's top ten
holdings
Select holdings included in the 29 days after calendar quarter Until replaced with the
Fund's Quarterly Performance end following quarter's Quarterly
Update Performance Update
Complete portfolio holdings as of 30 days after calendar quarter end For one year
calendar quarter end
Complete portfolio holdings as of 60-70 days after fiscal quarter For one year
fiscal quarter end end
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These holdings are listed along with the percentage of the Fund's net assets they represent. Generally, employees of AIM and its affiliates may not disclose such portfolio holdings until one day after they have been posted on http://www.aiminvestments.com. You may also obtain the publicly available portfolio holdings information described above by contacting us at 1-800-959-4246.
SELECTIVE DISCLOSURE OF PORTFOLIO HOLDINGS PURSUANT TO NON-DISCLOSURE AGREEMENT. Employees of AIM and its affiliates may disclose non-public full portfolio holdings on a selective basis only if the Internal Compliance Controls Committee (the "ICCC") of A I M Management Group Inc. ("AIM Management") approves the parties to whom disclosure of non-public full portfolio holdings will be made. The ICCC must determine that the proposed selective disclosure will be made for legitimate business purposes of the applicable Fund and address any perceived conflicts of interest between shareholders of such Fund and AIM or its affiliates as part of granting its approval.
The Board exercises continuing oversight of the disclosure of Fund portfolio holdings by (1) overseeing the implementation and enforcement of the Holdings Disclosure Policy and the AIM Funds Code of Ethics by the Chief Compliance Officer (or her designee) of AIM and the AIM Funds and (2) considering reports and recommendations by the Chief Compliance Officer concerning any material compliance matters (as defined in Rule 38a-1 under the 1940 Act and Rule 206(4)-7 under the Investment Advisers Act of 1940, as amended) that may arise in connection with the Holdings Disclosure Policy. Pursuant to the Holdings Disclosure Policy, the Board reviews the types of situations in which AIM provides selective disclosure and approves situations involving perceived conflicts of interest between shareholders of the applicable Fund and AIM or its affiliates brought to the Board's attention by AIM.
AIM discloses non-public full portfolio holdings information to the following persons in connection with the day-to-day operations and management of the AIM Funds:
o Attorneys and accountants;
o Securities lending agents;
o Lenders to the AIM Funds;
o Rating and rankings agencies;
o Persons assisting in the voting of proxies;
o AIM Funds' custodians;
o The AIM Funds' transfer agent(s) (in the event of a redemption in kind);
o Pricing services, market makers, or other persons who provide systems or software support in connection with AIM Funds' operations (to determine the price of securities held by an AIM Fund);
o Financial printers;
o Brokers identified by the AIM Funds' portfolio management team who provide execution and research services to the team; and
o Analysts hired to perform research and analysis to the AIM Funds' portfolio management team.
In many cases, AIM will disclose current portfolio holdings on a daily basis to these persons. In these situations, AIM has entered into non-disclosure agreements which provide that the recipient of the portfolio holdings will maintain the confidentiality of such portfolio holdings and will not trade on such information ("Non-disclosure Agreements"). Please refer to Appendix B for a list of examples of persons to whom AIM provides non-public portfolio holdings on an ongoing basis.
AIM will also disclose non-public portfolio holdings information if such disclosure is required by applicable laws, rules or regulations, or by regulatory authorities having jurisdiction over AIM and its affiliates or the Funds.
The Holdings Disclosure Policy provides that AIM will not request, receive or accept any compensation (including compensation in the form of the maintenance of assets in any Fund or other mutual fund or account managed by AIM or one of its affiliates) for the selective disclosure of portfolio holdings information.
DISCLOSURE OF CERTAIN PORTFOLIO HOLDINGS AND RELATED INFORMATION WITHOUT NON-DISCLOSURE AGREEMENT. AIM and its affiliates that provide services to the Funds, and the Funds' subadvisors, if applicable, and each of their employees may receive or have access to portfolio holdings as part of the day to day operations of the Funds.
From time to time, employees of AIM and its affiliates may express their views orally or in writing on one or more of the Funds' portfolio securities or may state that a Fund has recently purchased or sold, or continues to own, one or more securities. The securities subject to these views and statements may be ones that were purchased or sold since a Fund's most recent quarter-end and therefore may not be reflected on the list of the Fund's most recent quarter-end portfolio holdings disclosed on the website. Such views and statements may be made to various persons, including members of the press, brokers and other financial intermediaries that sell shares of the Funds, shareholders in the applicable Fund, persons considering investing in the applicable Fund or representatives of such shareholders or potential shareholders, such as fiduciaries of a 401(k) plan or a trust and their advisers, and other entities for which AIM or its affiliates provides or may provide investment advisory services. The nature and content of the views and statements provided to each of these persons may differ.
From time to time, employees of AIM and its affiliates also may provide oral or written information ("portfolio commentary") about a Fund, including, but not limited to, how the Fund's investments are divided among various sectors, industries, countries, investment styles and capitalization sizes, and among stocks, bonds, currencies and cash, security types, bond maturities, bond coupons and bond credit quality ratings. This portfolio commentary may also include information on how these various weightings and factors contributed to Fund performance. AIM may also provide oral or written information ("statistical information") about various financial characteristics of a Fund or its underlying portfolio securities including, but not limited to, alpha, beta, R-squared, coefficient of determination, duration, maturity, information ratio, sharpe ratio, earnings growth, payout ratio, price/book value, projected earnings growth, return on equity, standard deviation, tracking error, weighted average quality, market capitalization, percent debt to equity, price to cash flow, dividend yield or growth, default rate, portfolio turnover, and risk and style characteristics. This portfolio commentary and statistical information about a Fund may be based on the Fund's portfolio as of the most recent quarter-end or the end of some other interim period, such as month-end. The portfolio commentary and statistical information may be provided to various persons, including those described in the preceding paragraph. The nature and content of the information provided to each of these persons may differ.
DISCLOSURE OF PORTFOLIO HOLDINGS BY TRADERS. Additionally, employees of AIM and its affiliates may disclose one or more of the portfolio securities of a Fund when purchasing and selling securities through broker-dealers, requesting bids on securities, obtaining price quotations on securities, or in connection with litigation involving the Funds' portfolio securities. AIM does not enter into formal Non-disclosure Agreements in connection with these situations; however, the Funds would not continue to conduct business with a person who AIM believed was misusing the disclosed information.
DISCLOSURE OF PORTFOLIO HOLDINGS OF OTHER AIM-MANAGER PRODUCTS. AIM and its affiliates manage products sponsored by companies other than AIM, including investment companies, offshore funds, and separate accounts. In many cases, these other products are managed in a similar fashion to certain AIM Funds (as defined herein) and thus have similar portfolio holdings. The sponsors of these other products managed by AIM and its affiliates may disclose the portfolio holdings of their products at different times than AIM discloses portfolio holdings for the AIM Funds.
AIM provides portfolio holdings information for portfolios of AIM Variable Insurance Funds (the "Insurance Funds") to insurance companies whose variable annuity and variable life insurance accounts invest in the Insurance Funds ("Insurance Companies"). AIM may disclose portfolio holdings information for the Insurance Funds to Insurance Companies with which AIM has entered into Non-disclosure Agreements up to five days prior to the scheduled dates for AIM's disclosure of similar portfolio holdings information for other AIM Funds on http://www.aiminvestments.com. AIM provides portfolio holdings information for the Insurance Funds to such Insurance Companies to allow them to disclose this information on their websites at approximately the same time that AIM discloses portfolio holdings information for the other AIM Funds on its website. AIM manages the Insurance Funds in a similar fashion to certain other AIM Funds and thus the Insurance Funds and such other AIM Funds have similar portfolio holdings. AIM does not disclose the portfolio holdings information for the Insurance Funds on its website, and not all Insurance Companies disclose this information on their websites.
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. The Board 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. Certain trustees and officers of the Trust are affiliated with AIM and AIM Management, the parent corporation of AIM. All of the Trust's executive officers hold similar offices with some or all of the other AIM Funds.
MANAGEMENT INFORMATION
The trustees and officers of the Trust and their principal occupations during at least the last five years and certain other information concerning them are set forth in Appendix C.
The standing committees of the Board are the Audit Committee, the Compliance Committee, the Governance Committee, the Investments Committee, the Valuation Committee and the Special Market Timing Litigation Committee.
The members of the Audit Committee are Bob R. Baker, James T. Bunch, Edward K. Dunn, Jr. (Chair), Lewis F. Pennock, Dr. Larry Soll, Dr. Prema Mathai-Davis and Ruth H. Quigley (Vice Chair). The Audit Committee's primary purposes are to: (i) assist the Board in oversight of the independent registered public accountant's qualifications, independence and performance; (ii) appoint independent registered public accountants for the Funds; (iii) to the extent required by Section 10A(h) and (i) of the Exchange Act, to pre-approve all permissible non-audit services that are provided to Funds by their independent registered public accountants; (iv) pre-approve, in accordance with Rule 2-01(c)(7)(ii) of Regulation S-X, certain non-audit services provided by the Funds' independent registered public accountants to the Funds' investment adviser and certain other affiliated entities; (v) to oversee the financial reporting process for the Funds; (vi) the extent required by Regulation 14A under the Exchange Act, to prepare an audit committee report for inclusion in any proxy statement issued by a Fund; (vii) assist the Board's oversight of the performance of the Funds' internal audit function to the extent an internal audit function exists; (viii) assist the Board's oversight of the integrity of the Funds' financial
statements; and (ix) assist the Board's oversight of the Funds' compliance with legal and regulatory requirements. During the fiscal year ended October 31, 2004, the Audit Committee held eight meetings.
The members of the Compliance Committee are Frank S. Bayley, Bruce L.
Crockett (Chair), Albert R. Dowden (Vice Chair) and Mr. Dunn. The Compliance
Committee is responsible for: (i) recommending to the Board and the independent
trustees the appointment, compensation and removal of the Funds' Chief
Compliance Officer; (ii) recommending to the independent trustees the
appointment, compensation and removal of the Funds' Senior Officer appointed
pursuant to the terms of the Assurances of Discontinuance entered into by the
New York Attorney General, AIM and INVESCO Funds Group, Inc. ("IFG"); (iii)
recommending to the independent trustees the appointment and removal of AIM's
independent Compliance Consultant (the "Compliance Consultant") and reviewing
the report prepared by the Compliance Consultant upon its compliance review of
AIM (the "Report") and any objections made by AIM with respect to the Report;
(iv) reviewing any report prepared by a third party who is not an interested
person of AIM, upon the conclusion by such third party of a compliance review of
AIM; (v) reviewing all reports on compliance matters from the Funds' Chief
Compliance Officer, (vi) reviewing all recommendations made by the Senior
Officer regarding AIM's compliance procedures, (vii) reviewing all reports from
the Senior Officer of any violations of state and federal securities laws, the
Colorado Consumer Protection Act, or breaches of AIM's fiduciary duties to Fund
shareholders and of AIM's Code of Ethics; (viii) overseeing all of the
compliance policies and procedures of the Funds and their service providers
adopted pursuant to Rule 38a-1 of the 1940 Act; (ix) from time to time,
reviewing certain matters related to redemption fee waivers and recommending to
the Board whether or not to approve such matters; (x) receiving and reviewing
quarterly reports on the activities of AIM's Internal Compliance Controls
Committee; (xi) reviewing all reports made by AIM's Chief Compliance Officer;
(xii) reviewing and recommending to the independent trustees whether to approve
procedures to investigate matters brought to the attention of AIM's ombudsman;
(xiii) risk management oversight with respect to the Funds and, in connection
therewith, receiving and overseeing risk management reports from AMVESCAP PLC
that are applicable to the Funds or their service providers; and (xiv)
overseeing potential conflicts of interest that are reported to the Compliance
Committee by AIM, the Chief Compliance Officer, the Senior Officer and/or the
Compliance Consultant. During the fiscal year ended October 31, 2004, the
Compliance Committee held two meetings.
The members of the Governance Committee are Messrs. Bayley, Crockett,
Dowden (Chair), Jack M. Fields (Vice Chair) and Gerald J. Lewis. The Governance
Committee is responsible for: (i) nominating persons who will qualify as
independent trustees for (a) election as trustees in connection with meetings of
shareholders of the Funds that are called to vote on the election of trustees,
(b) appointment by the Board as trustees in connection with filling vacancies
that arise in between meetings of shareholders; (ii) reviewing the size of the
Board, and recommending to the Board whether the size of the Board shall be
increased or decreased; (iii) nominating the Chair of the Board; (iv) monitoring
the composition of the Board and each committee of the Board, and monitoring the
qualifications of all trustees; (v) recommending persons to serve as members of
each committee of the Board (other than the Compliance Committee), as well as
persons who shall serve as the chair and vice chair of each such committee; (vi)
reviewing and recommending the amount of compensation payable to the independent
trustees; (vii) overseeing the selection of independent legal counsel to the
independent trustees; (viii) reviewing and approving the compensation paid to
independent legal counsel and other advisers, if any, to the Audit Committee of
the Board; (ix) reviewing and approving the compensation paid to counsel and
other advisers, if any, to the Audit Committee of the Board; and (x) reviewing
as they deem appropriate administrative and/or logistical matters pertaining to
the operations of the Board.
The Governance Committee 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 Governance Committee or the Board, as applicable, shall make the
final determination of persons to be nominated. During the fiscal year ended
October 31, 2004, the Governance Committee held seven meetings.
Notice procedures set forth in the Trust's bylaws require that any shareholder of a Fund desiring to nominate a trustee for election at a shareholder meeting must submit to the Trust's Secretary the nomination in writing not later than the close of business on the later of the 90th day prior to such shareholder meeting or the tenth day following the day on which public announcement is made of the shareholder meeting and not earlier than the close of business on the 120th day prior to the shareholder meeting.
The members of the Investments Committee are Messrs. Baker (Vice Chair), Bayley (Chair), Bunch, Crockett, Dowden, Dunn, Fields, Lewis, Pennock, Soll and Carl Frischling, Dr. Mathai-Davis (Vice Chair) and Miss Quigley (Vice Chair). The Investments Committee's primary purposes are to: (i) assist the Board in its oversight of the investment management services provided by AIM as well as any sub-advisers; and (ii) review all proposed and existing advisory, sub-advisory and distribution arrangements for the Funds, and to recommend what action the Boards and the independent trustees take regarding the approval of all such proposed arrangements and the continuance of all such existing arrangements. During the fiscal year ended October 31, 2004, the Investments Committee held eight meetings.
The members of the Valuation Committee are Messrs. Bunch, Pennock (Vice Chair), Soll, and Mark Williamson (Chair) and Miss Quigley. The Valuation Committee is responsible for: (i) developing a sufficient knowledge of the valuation process and of AIM's Procedures for Valuing Securities (Pricing Procedures) (the "Pricing Procedures") in order to carry out their responsibilities; (ii) periodically reviewing information provided by AIM or other advisers regarding industry developments in connection with valuation and pricing, and making recommendations to the Board with respect to the Pricing Procedures based upon such review; (iii) reviewing the reports described in the Pricing Procedures and other information from AIM regarding fair value determinations made pursuant to the Pricing Procedures by AIM's internal valuation committee, and reporting to and making recommendations to the Board in connection with such reports; (iv) receiving the reports of AIM's internal valuation committee requesting approval of any changes to pricing vendors or pricing methodologies as required by the Pricing Procedures, receiving the annual report of AIM evaluating the pricing vendors, and approving changes to pricing vendors and pricing methodologies as provided in the Pricing Procedures and recommending the pricing vendors for approval by the Board annually; (v) upon request of AIM, assisting AIM's internal valuation committee and/or the Board in resolving particular fair valuation issues; (vi) receiving any reports of concerns by AIM's internal valuation committee regarding actual or potential conflicts of interest by investment personnel or others that could color their input or recommendations regarding pricing issues, and receiving information from AIM disclosing differences between valuation and pricing procedures used for the Funds and private funds, if any, advised by AIM for which AIM Fund Administration has exclusive accounting responsibility, and the reasons for such differences; and (vii) in each of the foregoing areas, making regular reports to the Board. During the fiscal year ended March 31, 2005, the Valuation Committee held one meeting.
The members of the Special Market Timing Litigation Committee are
Messrs. Crockett, Dowden (Vice Chair), Dunn and Lewis (Chair). The Special
Market Timing Litigation Committee is responsible: (i) for receiving reports
from time to time from management, counsel for management, counsel for the AIM
Funds and special counsel for the independent trustees, as applicable, related
to (a) the civil lawsuits, including purported class action and shareholder
derivative suits, that have been filed against the AIM Funds concerning alleged
excessive short term trading in shares of the AIM Funds ("market timing") and
(b) the civil enforcement actions and investigations related to market timing
activity in the AIM Funds that were settled with certain regulators, including
without limitation the SEC, the New York Attorney General and the Colorado
Attorney General, and for recommending to the independent trustees what actions,
if any, should be taken by the AIM Funds in light of all such reports; (ii) for
overseeing the investigation(s) on behalf of the independent trustees by special
counsel for the independent trustees and the independent trustees' financial
expert of market timing activity in the AIM Funds, and for recommending to the
independent trustees what actions, if any, should be taken by the AIM Funds in
light of the results of such investigation(s); (iii) for (a) reviewing the
methodology developed by AIM's Independent Distribution Consultant (the
"Distribution Consultant") for the monies ordered to be paid under the
settlement order with the SEC, and making recommendations to the independent
trustees as to the acceptability of such methodology and (b) recommending to the
independent trustees whether to
consent to any firm with which the Distribution Consultant is affiliated entering into any employment, consultant, attorney-client, auditing or other professional relationship with AIM, or any of its present or former affiliates, directors, officers, employees or agents acting in their capacity as such for the period of the Distribution Consultant's engagement and for a period of two years after the engagement; and (iv) for taking reasonable steps to ensure that any AIM Fund which the Special Market Timing Litigation Committee determines was harmed by improper market timing activity receives what the Special Market Timing Litigation Committee deems to be full restitution. During the fiscal year ended October 31, 2005, the Special Market Timing Litigation Committee held six meetings.
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 C.
Approval of Investment Advisory Agreements and Summary of Independent Written Fee Evaluation
The Board oversees the management of each Fund and, as required by law, determines annually whether to approve the continuance of each Fund's advisory agreement with AIM. Based upon the recommendation of the Investments Committee of the Board, which is comprised solely of independent trustees, at a meeting held on June 30, 2005, the Board, including all of the independent trustees, approved the continuance of the advisory agreement (the "Advisory Agreement") between each Fund and AIM for another year, effective July 1, 2005.
The Board considered the factors discussed below in evaluating the fairness and reasonableness of each Fund's Advisory Agreement at the meeting on June 30, 2005 and as part of the Board's ongoing oversight of each Fund. In their deliberations, the Board and the independent trustees did not identify any particular factor that was controlling, and each trustee attributed different weights to the various factors.
One of the responsibilities of the Senior Officer of the Funds, who is independent of AIM and AIM's affiliates, is to manage the process by which the Funds' proposed management fees are negotiated to ensure that they are negotiated in a manner which is at arm's length and reasonable. To that end, the Senior Officer must either supervise a competitive bidding process or prepare an independent written evaluation. The Senior Officer has recommended an independent written evaluation in lieu of a competitive bidding process and, upon the direction of the Board, has prepared such an independent written evaluation. Such written evaluation also considered certain of the factors discussed below. In addition, as discussed below, the Senior Officer made certain recommendations to the Board in connection with such written evaluation.
The discussion below serves as a summary of the Senior Officer's independent written evaluation and recommendations to the Board in connection therewith, as well as a discussion of the material factors and the conclusions with respect thereto that formed the basis for the Board's approval of each Fund's Advisory Agreement. After consideration of all of the factors below and based on its informed business judgment, the Board determined that each Fund's Advisory Agreement is in the best interests of the Fund and its shareholders and that the compensation to AIM under each Fund's Advisory Agreement is fair and reasonable and would have been obtained through arm's length negotiations.
AIM DEVELOPING MARKETS FUND
o The nature and extent of the advisory services to be provided by AIM. The Board reviewed the services to be provided by AIM under the Advisory Agreement. Based on such review, the Board concluded that the range of services to be provided by AIM under the Advisory Agreement was appropriate and that AIM currently is providing services in accordance with the terms of the Advisory Agreement.
o The quality of services to be provided by AIM. The Board reviewed the credentials and experience of the officers and employees of AIM who will provide investment advisory services to the Fund. In reviewing the qualifications of AIM to provide investment advisory services, the Board reviewed the qualifications of AIM's investment personnel and considered such issues as AIM's portfolio and product review process, various back office support functions provided by AIM and AIM's equity and fixed income trading operations. Based on the review of these and other factors, the Board concluded that the quality of services to be provided by AIM was appropriate and that AIM currently is providing satisfactory services in accordance with the terms of the Advisory Agreement.
o The performance of the Fund relative to comparable funds. The Board reviewed the performance of the Fund during the past one, three and five calendar years against the performance of funds advised by other advisors with investment strategies comparable to those of the Fund. The Board noted that the Fund's performance for the three and five year periods was below the median performance of such comparable funds and above such median performance for the one year period. Based on this review, the Board concluded that no changes should be made to the Fund and that it was not necessary to change the Fund's portfolio management team at this time.
o The performance of the Fund relative to indices. The Board reviewed the performance of the Fund during the past one, three and five calendar years against the performance of the Lipper Emerging Market Fund Index. The Board noted that the Fund's performance for the one and three year periods was comparable to the performance of such Index and below such Index for the five year period. Based on this review, the Board concluded that no changes should be made to the Fund and that it was not necessary to change the Fund's portfolio management team at this time.
o Meeting with the Fund's portfolio managers and investment personnel. With respect to the Fund, the Board is meeting periodically with such Fund's portfolio managers and/or other investment personnel and believes that such individuals are competent and able to continue to carry out their responsibilities under the Advisory Agreement.
o Overall performance of AIM. The Board considered the overall performance of AIM in providing investment advisory and portfolio administrative services to the Fund and concluded that such performance was satisfactory.
o Fees relative to those of clients of AIM with comparable investment strategies. The Board noted that AIM does not serve as an advisor to other mutual funds or other clients with investment strategies comparable to those of the Fund.
o Fees relative to those of comparable funds with other advisors. The Board reviewed the advisory fee rate for the Fund under the Advisory Agreement. The Board compared effective contractual advisory fee rates at a common asset level and noted that the Fund's rate was below the median rate of the funds advised by other advisors with investment strategies comparable to those of the Fund that the Board reviewed. The Board noted that AIM has agreed to waive advisory fees of the Fund and to limit the Fund's total operating expenses, as discussed below. Based on this review, the Board concluded that the advisory fee rate for the Fund under the Advisory Agreement was fair and reasonable.
o Expense limitations and fee waivers. The Board noted that AIM has contractually agreed to waive advisory fees of the Fund through June 30, 2006 to the extent necessary so that the advisory fees payable by the Fund do not exceed a specified maximum advisory fee rate, which maximum rate includes breakpoints and is based on net asset levels. The Board considered the contractual nature of this fee waiver and noted that it remains in effect until June 30, 2006. The Board also noted that AIM has contractually agreed to waive fees and/or limit expenses of the Fund through October 31, 2005 in an amount necessary to limit total annual operating expenses
to a specified percentage of average daily net assets for each class of the Fund. The Board considered the contractual nature of this fee waiver/expense limitation and noted that it remains in effect until October 31, 2005. The Board considered the effect these fee waivers/expense limitations would have on the Fund's estimated expenses and concluded that the levels of fee waivers/expense limitations for the Fund were fair and reasonable.
o Breakpoints and economies of scale. The Board reviewed the structure of the Fund's advisory fee under the Advisory Agreement, noting that it includes three breakpoints. The Board reviewed the level of the Fund's advisory fees, and noted that such fees, as a percentage of the Fund's net assets, would decrease as net assets increase because the Advisory Agreement includes breakpoints. The Board noted that, due to the Fund's current asset levels and the way in which the advisory fee breakpoints have been structured, the Fund has yet to benefit from the breakpoints. The Board noted that AIM has contractually agreed to waive advisory fees of the Fund through June 30, 2006 to the extent necessary so that the advisory fees payable by the Fund do not exceed a specified maximum advisory fee rate, which maximum rate includes breakpoints and is based on net asset levels. The Board concluded that the Fund's fee levels under the Advisory Agreement therefore would reflect economies of scale at higher asset levels and that it was not necessary to change the advisory fee breakpoints in the Fund's advisory fee schedule.
o Investments in affiliated money market funds. The Board also took into account the fact that uninvested cash and cash collateral from securities lending arrangements (collectively, "cash balances") of the Fund may be invested in money market funds advised by AIM pursuant to the terms of an SEC exemptive order. The Board found that the 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 the Fund will not receive reduced services if it invests its cash balances in such money market funds. The Board noted that, to the extent the Fund invests in affiliated money market funds, AIM has voluntarily agreed to waive a portion of the advisory fees it receives from the Fund attributable to such investment. The Board further determined that the proposed securities lending program and related procedures with respect to the lending Fund is in the best interests of the lending Fund and its respective shareholders. The Board therefore concluded that the investment of cash collateral received in connection with the securities lending program in the money market funds according to the procedures is in the best interests of the lending Fund and its respective shareholders.
o Independent written evaluation and recommendations of the Fund's Senior Officer. The Board noted that, upon their direction, the Senior Officer of the Fund had prepared an independent written evaluation in order to assist the Board in determining the reasonableness of the proposed management fees of the AIM Funds, including the Fund. The Board noted that the Senior Officer's written evaluation had been relied upon by the Board in this regard in lieu of a competitive bidding process. In determining whether to continue the Advisory Agreement for the Fund, the Board considered the Senior Officer's written evaluation and the recommendation made by the Senior Officer to the Board that the Board consider implementing a process to assist them in more closely monitoring the performance of the AIM Funds. The Board concluded that it would be advisable to implement such a process as soon as reasonably practicable.
o Profitability of AIM and its affiliates. The Board reviewed information concerning the profitability of AIM's (and its affiliates') investment advisory and other activities and its financial condition. The Board considered the overall profitability of AIM, as well as the profitability of AIM in connection with managing the Fund. The Board noted that AIM's operations remain profitable, although increased expenses in recent years have reduced AIM's profitability. Based on the review of the profitability of AIM's and its affiliates' investment advisory and other activities and its financial condition, the Board concluded that the compensation to be paid by the Fund to AIM under its Advisory Agreement was not excessive.
o Benefits of soft dollars to AIM. The Board considered the benefits realized by AIM as a result of brokerage transactions executed through "soft dollar" arrangements. Under these arrangements, brokerage commissions paid by the Fund and/or other funds advised by AIM are used to pay for research and execution services. This research is used by AIM in making investment decisions for the Fund. The Board concluded that such arrangements were appropriate.
o AIM's financial soundness in light of the Fund's needs. The Board considered whether AIM is financially sound and has the resources necessary to perform its obligations under the Advisory Agreement, and concluded that AIM has the financial resources necessary to fulfill its obligations under the Advisory Agreement.
o Historical relationship between the Fund and AIM. In determining whether to continue the Advisory Agreement for the Fund, the Board also considered the prior relationship between AIM and the Fund, as well as the Board's knowledge of AIM's operations, and concluded that it was beneficial to maintain the current relationship, in part, because of such knowledge. The Board also reviewed the general nature of the non-investment advisory services currently performed by AIM and its affiliates, such as administrative, transfer agency and distribution services, and the fees received by AIM and its affiliates for performing such services. In addition to reviewing such services, the trustees also considered the organizational structure employed by AIM and its affiliates to provide those services. Based on the review of these and other factors, the Board concluded that AIM and its affiliates were qualified to continue to provide non-investment advisory services to the Fund, including administrative, transfer agency and distribution services, and that AIM and its affiliates currently are providing satisfactory non-investment advisory services.
o Other factors and current trends. In determining whether to continue the Advisory Agreement for the Fund, the Board considered the fact that AIM, along with others in the mutual fund industry, is subject to regulatory inquiries and litigation related to a wide range of issues. The Board also considered the governance and compliance reforms being undertaken by AIM and its affiliates, including maintaining an internal controls committee and retaining an independent compliance consultant, and the fact that AIM has undertaken to cause the Fund to operate in accordance with certain governance policies and practices. The Board concluded that these actions indicated a good faith effort on the part of AIM to adhere to the highest ethical standards, and determined that the current regulatory and litigation environment to which AIM is subject should not prevent the Board from continuing the Advisory Agreement for the Fund.
AIM TRIMARK FUND
o The nature and extent of the advisory services to be provided by AIM. The Board reviewed the services to be provided by AIM under the Advisory Agreement. Based on such review, the Board concluded that the range of services to be provided by AIM under the Advisory Agreement was appropriate and that AIM currently is providing services in accordance with the terms of the Advisory Agreement.
o The quality of services to be provided by AIM. The Board reviewed the credentials and experience of the officers and employees of AIM who will provide investment advisory services to the Fund. In reviewing the qualifications of AIM to provide investment advisory services, the Board reviewed the qualifications of AIM's investment personnel and considered such issues as AIM's portfolio and product review process, various back office support functions provided by AIM and AIM's equity and fixed income trading operations. Based on the review of these and other factors, the Board concluded that the quality of services to be provided by AIM was appropriate and that AIM currently is providing satisfactory services in accordance with the terms of the Advisory Agreement.
o The performance of the Fund relative to comparable funds. The Board reviewed the performance of the Fund during the past one calendar year against the performance of funds advised by other
advisors with investment strategies comparable to those of the Fund. The Board noted that the Fund's performance in such period was below the median performance of such comparable funds. The Board noted that, because the Fund has recently commenced operations, comparative performance information was only available for one year and that more time was needed to adequately assess whether the Fund was under-performing. Based on this review, the Board concluded that no changes should be made to the Fund and that it was not necessary to change the Fund's portfolio management team at this time.
o The performance of the Fund relative to indices. The Board reviewed the performance of the Fund during the past one calendar year against the performance of the Lipper Global Multi-Cap Growth Index. The Board noted that the Fund's performance in such period was below the performance of such Index. The Board noted that, because the Fund has recently commenced operations, comparative performance information was only available for one year and that more time was needed to adequately assess whether the Fund was under-performing. Based on this review, the Board concluded that no changes should be made to the Fund and that it was not necessary to change the Fund's portfolio management team at this time.
o Meeting with the Fund's portfolio managers and investment personnel. With respect to the Fund, the Board is meeting periodically with such Fund's portfolio managers and/or other investment personnel and believes that such individuals are competent and able to continue to carry out their responsibilities under the Advisory Agreement.
o Overall performance of AIM. The Board considered the overall performance of AIM in providing investment advisory and portfolio administrative services to the Fund and concluded that such performance was satisfactory.
o Fees relative to those of clients of AIM with comparable investment strategies. The Board noted that AIM does not serve as an advisor to other mutual funds or other clients with investment strategies comparable to those of the Fund.
o Fees relative to those of comparable funds with other advisors. The Board reviewed the advisory fee rate for the Fund under the Advisory Agreement. The Board compared effective contractual advisory fee rates at a common asset level and noted that the Fund's rate was below the median rate of the funds advised by other advisors with investment strategies comparable to those of the Fund that the Board reviewed. The Board noted that AIM has agreed to waive advisory fees of the Fund and to limit the Fund's total operating expenses, as discussed below. Based on this review, the Board concluded that the advisory fee rate for the Fund under the Advisory Agreement was fair and reasonable.
o Expense limitations and fee waivers. The Board noted that AIM has contractually agreed to waive advisory fees of the Fund through June 30, 2006 to the extent necessary so that the advisory fees payable by the Fund do not exceed a specified maximum advisory fee rate, which maximum rate includes breakpoints and is based on net asset levels. The Board considered the contractual nature of this fee waiver and noted that it remains in effect until June 30, 2006. The Board also noted that AIM has contractually agreed to waive fees and/or limit expenses of the Fund through October 31, 2005 so that total annual operating expenses are limited to a specified percentage of average daily net assets for each class of the Fund. The Board considered the contractual nature of this fee waiver/expense limitation and noted that it remains in effect until October 31, 2005. The Board considered the effect these fee waivers/expense limitations would have on the Fund's estimated expenses for the Fund.
o Breakpoints and economies of scale. The Board reviewed the structure of the Fund's advisory fee under the Advisory Agreement, noting that it includes one breakpoint. The Board reviewed the level of the Fund's advisory fees, and noted that such fees, as a percentage of the Fund's net assets, would decrease as net assets increase because the Advisory Agreement includes a
breakpoint. The Board noted that, due to the Fund's current asset levels and the way in which the advisory fee breakpoints have been structured, the Fund has yet to benefit from the breakpoint. The Board noted that AIM has contractually agreed to waive advisory fees of the Fund through June 30, 2006 to the extent necessary so that the advisory fees payable by the Fund do not exceed a specified maximum advisory fee rate, which maximum rate includes breakpoints and is based on net asset levels. The Board concluded that the Fund's fee levels under the Advisory Agreement therefore would reflect economies of scale at higher asset levels and that it was not necessary to change the advisory fee breakpoints in the Fund's advisory fee schedule.
o Investments in affiliated money market funds. The Board also took into account the fact that uninvested cash and cash collateral from securities lending arrangements (collectively, "cash balances") of the Fund may be invested in money market funds advised by AIM pursuant to the terms of an SEC exemptive order. The Board found that the 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 the Fund will not receive reduced services if it invests its cash balances in such money market funds. The Board noted that, to the extent the Fund invests in affiliated money market funds, AIM has voluntarily agreed to waive a portion of the advisory fees it receives from the Fund attributable to such investment. The Board further determined that the proposed securities lending program and related procedures with respect to the lending Fund is in the best interests of the lending Fund and its respective shareholders. The Board therefore concluded that the investment of cash collateral received in connection with the securities lending program in the money market funds according to the procedures is in the best interests of the lending Fund and its respective shareholders.
o Independent written evaluation and recommendations of the Fund's Senior Officer. The Board noted that, upon their direction, the Senior Officer of the Fund had prepared an independent written evaluation in order to assist the Board in determining the reasonableness of the proposed management fees of the AIM Funds, including the Fund. The Board noted that the Senior Officer's written evaluation had been relied upon by the Board in this regard in lieu of a competitive bidding process. In determining whether to continue the Advisory Agreement for the Fund, the Board considered the Senior Officer's written evaluation and the recommendation made by the Senior Officer to the Board that the Board consider implementing a process to assist them in more closely monitoring the performance of the AIM Funds. The Board concluded that it would be advisable to implement such a process as soon as reasonably practicable.
o Profitability of AIM and its affiliates. The Board reviewed information concerning the profitability of AIM's (and its affiliates') investment advisory and other activities and its financial condition. The Board considered the overall profitability of AIM, as well as the profitability of AIM in connection with managing the Fund. The Board noted that AIM's operations remain profitable, although increased expenses in recent years have reduced AIM's profitability. Based on the review of the profitability of AIM's and its affiliates' investment advisory and other activities and its financial condition, the Board concluded that the compensation to be paid by the Fund to AIM under its Advisory Agreement was not excessive.
o Benefits of soft dollars to AIM. The Board considered the benefits realized by AIM as a result of brokerage transactions executed through "soft dollar" arrangements. Under these arrangements, brokerage commissions paid by the Fund and/or other funds advised by AIM are used to pay for research and execution services. This research is used by AIM in making investment decisions for the Fund. The Board concluded that such arrangements were appropriate.
o AIM's financial soundness in light of the Fund's needs. The Board considered whether AIM is financially sound and has the resources necessary to perform its obligations under the Advisory
Agreement, and concluded that AIM has the financial resources necessary to fulfill its obligations under the Advisory Agreement.
o Historical relationship between the Fund and AIM. In determining whether to continue the Advisory Agreement for the Fund, the Board also considered the prior relationship between AIM and the Fund, as well as the Board's knowledge of AIM's operations, and concluded that it was beneficial to maintain the current relationship, in part, because of such knowledge. The Board also reviewed the general nature of the non-investment advisory services currently performed by AIM and its affiliates, such as administrative, transfer agency and distribution services, and the fees received by AIM and its affiliates for performing such services. In addition to reviewing such services, the trustees also considered the organizational structure employed by AIM and its affiliates to provide those services. Based on the review of these and other factors, the Board concluded that AIM and its affiliates were qualified to continue to provide non-investment advisory services to the Fund, including administrative, transfer agency and distribution services, and that AIM and its affiliates currently are providing satisfactory non-investment advisory services.
o Other factors and current trends. In determining whether to continue the Advisory Agreement for the Fund, the Board considered the fact that AIM, along with others in the mutual fund industry, is subject to regulatory inquiries and litigation related to a wide range of issues. The Board also considered the governance and compliance reforms being undertaken by AIM and its affiliates, including maintaining an internal controls committee and retaining an independent compliance consultant, and the fact that AIM has undertaken to cause the Fund to operate in accordance with certain governance policies and practices. The Board concluded that these actions indicated a good faith effort on the part of AIM to adhere to the highest ethical standards, and determined that the current regulatory and litigation environment to which AIM is subject should not prevent the Board from continuing the Advisory Agreement for the Fund.
Approval of Sub-Advisory Agreement
The Board oversees the management of the Fund and, as required by law, determines annually whether to approve the continuance of the Fund's sub-advisory agreement. Based upon the recommendation of the Investments Committee of the Board, which is comprised solely of independent trustees, at a meeting held on June 30, 2005, the Board, including all of the independent trustees, approved the continuance of the sub-advisory agreement (the "Sub-Advisory Agreement") between AIM Funds Management Inc. (the "Sub-Advisor") and AIM with respect to the Fund for another year, effective July 1, 2005.
The Board considered the factors discussed below in evaluating the fairness and reasonableness of the Sub-Advisory Agreement at the meeting on June 30, 2005 and as part of the Board's ongoing oversight of the Fund. In their deliberations, the Board and the independent trustees did not identify any particular factor that was controlling, and each trustee attributed different weights to the various factors.
The discussion below serves as a discussion of the material factors and the conclusions with respect thereto that formed the basis for the Board's approval of the Sub-Advisory Agreement. After consideration of all of the factors below and based on its informed business judgment, the Board determined that the Sub-Advisory Agreement is in the best interests of the Fund and its shareholders.
o The nature and extent of the advisory services to be provided by the Sub-Advisor. The Board reviewed the services to be provided by the Sub-Advisor under the Sub-Advisory Agreement. Based on such review, the Board concluded that the range of services to be provided by the Sub-Advisor under the Sub-Advisory Agreement was appropriate and that the Sub-Advisor currently is providing services in accordance with the terms of the Sub-Advisory Agreement.
o The quality of services to be provided by the Sub-Advisor. The Board reviewed the credentials and experience of the officers and employees of the Sub-Advisor who will provide investment
advisory services to the Fund. Based on the review of these and other factors, the Board concluded that the quality of services to be provided by the Sub-Advisor was appropriate, and that the Sub-Advisor currently is providing satisfactory services in accordance with the terms of the Sub-Advisory Agreement.
o The performance of the Fund relative to comparable funds. The Board reviewed the performance of the Fund during the past one calendar year against the performance of funds advised by other advisors with investment strategies comparable to those of the Fund. The Board noted that the Fund's performance in such period was below the median performance of such comparable funds. The Board noted that, because the Fund has recently commenced operations, comparative performance information was only available for one year and that more time was needed to adequately assess whether the Fund was under-performing. Based on this review, the Board concluded that no changes should be made to the Fund and that it was not necessary to change the Fund's portfolio management team at this time.
o The performance of the Fund relative to indices. The Board reviewed the performance of the Fund during the past one calendar year against the performance of the Lipper Global Multi-Cap Growth Index. The Board noted that the Fund's performance in such period was below the performance of such Index. The Board noted that, because the Fund has recently commenced operations, comparative performance information was only available for one year and that more time was needed to adequately assess whether the Fund was under-performing. Based on this review, the Board concluded that no changes should be made to the Fund and that it was not necessary to change the Fund's portfolio management team at this time.
o Meetings with the Fund's portfolio managers and investment personnel. The Board is meeting periodically with the Fund's portfolio managers and/or other investment personnel and believes that such individuals are competent and able to continue to carry out their responsibilities under the Sub-Advisory Agreement.
o Overall performance of the Sub-Advisor. The Board considered the overall performance of the Sub-Advisor in providing investment advisory services to the Fund and concluded that such performance was satisfactory.
o Advisory fees, expense limitations and fee waivers, and breakpoints and economies of scale. In reviewing these factors, the Board considered only the advisory fees charged to the Fund by AIM and did not consider the sub-advisory fees paid by AIM to the Sub-Advisor. The Board believes that this approach is appropriate because the sub-advisory fees have no effect on the Fund or its shareholders, as they are paid by AIM rather than the Fund. Furthermore, AIM and the Sub-Advisor are affiliates and the Board believes that the allocation of fees between them is a business matter, provided that the advisory fees charged to the Fund are fair and reasonable.
o Profitability of AIM and its affiliates. The Board reviewed information concerning the profitability of AIM's (and its affiliates') investment advisory and other activities and its financial condition. The Board considered the overall profitability of AIM, as well as the profitability of AIM in connection with managing the Fund. The Board noted that AIM's operations remain profitable, although increased expenses in recent years have reduced AIM's profitability. Based on the review of the profitability of AIM's and its affiliates' investment advisory and other activities and its financial condition, the Board concluded that the compensation to be paid by the Fund to AIM under its Advisory Agreement was not excessive.
o The Sub-Advisor's financial soundness in light of the Fund's needs. The Board considered whether the Sub-Advisor is financially sound and has the resources necessary to perform its obligations under the Sub-Advisory Agreement, and concluded that the Sub-Advisor has the financial resources necessary to fulfill its obligations under the Sub-Advisory Agreement.
AIM TRIMARK ENDEAVOR FUND
o The nature and extent of the advisory services to be provided by AIM. The Board reviewed the services to be provided by AIM under the Advisory Agreement. Based on such review, the Board concluded that the range of services to be provided by AIM under the Advisory Agreement was appropriate and that AIM currently is providing services in accordance with the terms of the Advisory Agreement.
o The quality of services to be provided by AIM. The Board reviewed the credentials and experience of the officers and employees of AIM who will provide investment advisory services to the Fund. In reviewing the qualifications of AIM to provide investment advisory services, the Board reviewed the qualifications of AIM's investment personnel and considered such issues as AIM's portfolio and product review process, various back office support functions provided by AIM and AIM's equity and fixed income trading operations. Based on the review of these and other factors, the Board concluded that the quality of services to be provided by AIM was appropriate and that AIM currently is providing satisfactory services in accordance with the terms of the Advisory Agreement.
o The performance of the Fund relative to comparable funds. The Board reviewed the performance of the Fund during the past one calendar year against the performance of funds advised by other advisors with investment strategies comparable to those of the Fund. The Board noted that the Fund's performance in such period was above the median performance of such comparable funds. Based on this review, the Board concluded that no changes should be made to the Fund and that it was not necessary to change the Fund's portfolio management team at this time.
o The performance of the Fund relative to indices. The Board reviewed the performance of the Fund during the past one calendar year against the performance of the Lipper Mid-Cap Core Index. The Board noted that the Fund's performance in such period was above the performance of such Index. Based on this review, the Board concluded that no changes should be made to the Fund and that it was not necessary to change the Fund's portfolio management team at this time.
o Meeting with the Fund's portfolio managers and investment personnel. With respect to the Fund, the Board is meeting periodically with such Fund's portfolio managers and/or other investment personnel and believes that such individuals are competent and able to continue to carry out their responsibilities under the Advisory Agreement.
o Overall performance of AIM. The Board considered the overall performance of AIM in providing investment advisory and portfolio administrative services to the Fund and concluded that such performance was satisfactory.
o Fees relative to those of clients of AIM with comparable investment strategies. The Board noted that AIM does not serve as an advisor to other mutual funds or other clients with investment strategies comparable to those of the Fund.
o Fees relative to those of comparable funds with other advisors. The Board reviewed the advisory fee rate for the Fund under the Advisory Agreement. The Board compared effective contractual advisory fee rates at a common asset level and noted that the Fund's rate was below the median rate of the funds advised by other advisors with investment strategies comparable to those of the Fund that the Board reviewed. The Board noted that AIM has agreed to waive advisory fees of the Fund and to limit the Fund's total operating expenses, as discussed below. Based on this review, the Board concluded that the advisory fee rate for the Fund under the Advisory Agreement was fair and reasonable.
o Expense limitations and fee waivers. The Board noted that AIM has contractually agreed to waive advisory fees of the Fund through June 30, 2006 to the extent necessary so that the advisory fees payable by the Fund do not exceed a specified maximum advisory fee rate, which maximum rate includes breakpoints and is based on net asset levels. The Board considered the contractual nature of this fee waiver and noted that it remains in effect until June 30, 2006. The Board also noted that AIM has contractually agreed to waive fees and/or limit expenses of the Fund through October 31, 2005 so that total annual operating expenses are limited to a specified percentage of average daily net assets for each class of the Fund. The Board considered the contractual nature of this fee waiver/expense limitation and noted that it remains in effect until October 31, 2005. The Board considered the effect these fee waivers/expense limitations would have on the Fund's estimated expenses for the Fund.
o Breakpoints and economies of scale. The Board reviewed the structure of the Fund's advisory fee under the Advisory Agreement, noting that it includes one breakpoint. The Board reviewed the level of the Fund's advisory fees, and noted that such fees, as a percentage of the Fund's net assets, would decrease as net assets increase because the Advisory Agreement includes a breakpoint. The Board noted that, due to the Fund's current asset levels and the way in which the advisory fee breakpoints have been structured, the Fund has yet to benefit from the breakpoint. The Board noted that AIM has contractually agreed to waive advisory fees of the Fund through June 30, 2006 to the extent necessary so that the advisory fees payable by the Fund do not exceed a specified maximum advisory fee rate, which maximum rate includes breakpoints and is based on net asset levels. The Board concluded that the Fund's fee levels under the Advisory Agreement therefore would reflect economies of scale at higher asset levels and that it was not necessary to change the advisory fee breakpoints in the Fund's advisory fee schedule.
o Investments in affiliated money market funds. The Board also took into account the fact that uninvested cash and cash collateral from securities lending arrangements (collectively, "cash balances") of the Fund may be invested in money market funds advised by AIM pursuant to the terms of an SEC exemptive order. The Board found that the 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 the Fund will not receive reduced services if it invests its cash balances in such money market funds. The Board noted that, to the extent the Fund invests in affiliated money market funds, AIM has voluntarily agreed to waive a portion of the advisory fees it receives from the Fund attributable to such investment. The Board further determined that the proposed securities lending program and related procedures with respect to the lending Fund is in the best interests of the lending Fund and its respective shareholders. The Board therefore concluded that the investment of cash collateral received in connection with the securities lending program in the money market funds according to the procedures is in the best interests of the lending Fund and its respective shareholders.
o Independent written evaluation and recommendations of the Fund's Senior Officer. The Board noted that, upon their direction, the Senior Officer of the Fund had prepared an independent written evaluation in order to assist the Board in determining the reasonableness of the proposed management fees of the AIM Funds, including the Fund. The Board noted that the Senior Officer's written evaluation had been relied upon by the Board in this regard in lieu of a competitive bidding process. In determining whether to continue the Advisory Agreement for the Fund, the Board considered the Senior Officer's written evaluation and the recommendation made by the Senior Officer to the Board that the Board consider implementing a process to assist them in more closely monitoring the performance of the AIM Funds. The Board concluded that it would be advisable to implement such a process as soon as reasonably practicable.
o Profitability of AIM and its affiliates. The Board reviewed information concerning the profitability of AIM's (and its affiliates') investment advisory and other activities and its financial condition.
The Board considered the overall profitability of AIM, as well as the profitability of AIM in connection with managing the Fund. The Board noted that AIM's operations remain profitable, although increased expenses in recent years have reduced AIM's profitability. Based on the review of the profitability of AIM's and its affiliates' investment advisory and other activities and its financial condition, the Board concluded that the compensation to be paid by the Fund to AIM under its Advisory Agreement was not excessive.
o Benefits of soft dollars to AIM. The Board considered the benefits realized by AIM as a result of brokerage transactions executed through "soft dollar" arrangements. Under these arrangements, brokerage commissions paid by the Fund and/or other funds advised by AIM are used to pay for research and execution services. This research is used by AIM in making investment decisions for the Fund. The Board concluded that such arrangements were appropriate.
o AIM's financial soundness in light of the Fund's needs. The Board considered whether AIM is financially sound and has the resources necessary to perform its obligations under the Advisory Agreement, and concluded that AIM has the financial resources necessary to fulfill its obligations under the Advisory Agreement.
o Historical relationship between the Fund and AIM. In determining whether to continue the Advisory Agreement for the Fund, the Board also considered the prior relationship between AIM and the Fund, as well as the Board's knowledge of AIM's operations, and concluded that it was beneficial to maintain the current relationship, in part, because of such knowledge. The Board also reviewed the general nature of the non-investment advisory services currently performed by AIM and its affiliates, such as administrative, transfer agency and distribution services, and the fees received by AIM and its affiliates for performing such services. In addition to reviewing such services, the trustees also considered the organizational structure employed by AIM and its affiliates to provide those services. Based on the review of these and other factors, the Board concluded that AIM and its affiliates were qualified to continue to provide non-investment advisory services to the Fund, including administrative, transfer agency and distribution services, and that AIM and its affiliates currently are providing satisfactory non-investment advisory services.
o Other factors and current trends. In determining whether to continue the Advisory Agreement for the Fund, the Board considered the fact that AIM, along with others in the mutual fund industry, is subject to regulatory inquiries and litigation related to a wide range of issues. The Board also considered the governance and compliance reforms being undertaken by AIM and its affiliates, including maintaining an internal controls committee and retaining an independent compliance consultant, and the fact that AIM has undertaken to cause the Fund to operate in accordance with certain governance policies and practices. The Board concluded that these actions indicated a good faith effort on the part of AIM to adhere to the highest ethical standards, and determined that the current regulatory and litigation environment to which AIM is subject should not prevent the Board from continuing the Advisory Agreement for the Fund.
Approval of Sub-Advisory Agreement
The Board oversees the management of the Fund and, as required by law, determines annually whether to approve the continuance of the Fund's sub-advisory agreement. Based upon the recommendation of the Investments Committee of the Board, which is comprised solely of independent trustees, at a meeting held on June 30, 2005, the Board, including all of the independent trustees, approved the continuance of the sub-advisory agreement (the "Sub-Advisory Agreement") between AIM Funds Management Inc. (the "Sub-Advisor") and AIM with respect to the Fund for another year, effective July 1, 2005.
The Board considered the factors discussed below in evaluating the fairness and reasonableness of the Sub-Advisory Agreement at the meeting on June 30, 2005 and as part of the Board's ongoing
oversight of the Fund. In their deliberations, the Board and the independent trustees did not identify any particular factor that was controlling, and each trustee attributed different weights to the various factors.
The discussion below serves as a discussion of the material factors and the conclusions with respect thereto that formed the basis for the Board's approval of the Sub-Advisory Agreement. After consideration of all of the factors below and based on its informed business judgment, the Board determined that the Sub-Advisory Agreement is in the best interests of the Fund and its shareholders.
o The nature and extent of the advisory services to be provided by the Sub-Advisor. The Board reviewed the services to be provided by the Sub-Advisor under the Sub-Advisory Agreement. Based on such review, the Board concluded that the range of services to be provided by the Sub-Advisor under the Sub-Advisory Agreement was appropriate and that the Sub-Advisor currently is providing services in accordance with the terms of the Sub-Advisory Agreement.
o The quality of services to be provided by the Sub-Advisor. The Board reviewed the credentials and experience of the officers and employees of the Sub-Advisor who will provide investment advisory services to the Fund. Based on the review of these and other factors, the Board concluded that the quality of services to be provided by the Sub-Advisor was appropriate, and that the Sub-Advisor currently is providing satisfactory services in accordance with the terms of the Sub-Advisory Agreement.
o The performance of the Fund relative to comparable funds. The Board reviewed the performance of the Fund during the past one calendar year against the performance of funds advised by other advisors with investment strategies comparable to those of the Fund. The Board noted that the Fund's performance in such period was above the median performance of such comparable funds. Based on this review, the Board concluded that no changes should be made to the Fund and that it was not necessary to change the Fund's portfolio management team at this time.
o The performance of the Fund relative to indices. The Board reviewed the performance of the Fund during the past one calendar year against the performance of the Lipper Mid-Cap Core Index. The Board noted that the Fund's performance in such period was above the performance of such Index. Based on this review, the Board concluded that no changes should be made to the Fund and that it was not necessary to change the Fund's portfolio management team at this time.
o Meetings with the Fund's portfolio managers and investment personnel. The Board is meeting periodically with the Fund's portfolio managers and/or other investment personnel and believes that such individuals are competent and able to continue to carry out their responsibilities under the Sub-Advisory Agreement.
o Overall performance of the Sub-Advisor. The Board considered the overall performance of the Sub-Advisor in providing investment advisory services to the Fund and concluded that such performance was satisfactory.
o Advisory fees, expense limitations and fee waivers, and breakpoints and economies of scale. In reviewing these factors, the Board considered only the advisory fees charged to the Fund by AIM and did not consider the sub-advisory fees paid by AIM to the Sub-Advisor. The Board believes that this approach is appropriate because the sub-advisory fees have no effect on the Fund or its shareholders, as they are paid by AIM rather than the Fund. Furthermore, AIM and the Sub-Advisor are affiliates and the Board believes that the allocation of fees between them is a business matter, provided that the advisory fees charged to the Fund are fair and reasonable.
o Profitability of AIM and its affiliates. The Board reviewed information concerning the profitability of AIM's (and its affiliates') investment advisory and other activities and its financial condition. The Board considered the overall profitability of AIM, as well as the profitability of AIM in
connection with managing the Fund. The Board noted that AIM's operations remain profitable, although increased expenses in recent years have reduced AIM's profitability. Based on the review of the profitability of AIM's and its affiliates' investment advisory and other activities and its financial condition, the Board concluded that the compensation to be paid by the Fund to AIM under its Advisory Agreement was not excessive.
o The Sub-Advisor's financial soundness in light of the Fund's needs. The Board considered whether the Sub-Advisor is financially sound and has the resources necessary to perform its obligations under the Sub-Advisory Agreement, and concluded that the Sub-Advisor has the financial resources necessary to fulfill its obligations under the Sub-Advisory Agreement.
AIM TRIMARK SMALL COMPANIES FUND
o The nature and extent of the advisory services to be provided by AIM. The Board reviewed the services to be provided by AIM under the Advisory Agreement. Based on such review, the Board concluded that the range of services to be provided by AIM under the Advisory Agreement was appropriate and that AIM currently is providing services in accordance with the terms of the Advisory Agreement.
o The quality of services to be provided by AIM. The Board reviewed the credentials and experience of the officers and employees of AIM who will provide investment advisory services to the Fund. In reviewing the qualifications of AIM to provide investment advisory services, the Board reviewed the qualifications of AIM's investment personnel and considered such issues as AIM's portfolio and product review process, various back office support functions provided by AIM and AIM's equity and fixed income trading operations. Based on the review of these and other factors, the Board concluded that the quality of services to be provided by AIM was appropriate and that AIM currently is providing satisfactory services in accordance with the terms of the Advisory Agreement.
o The performance of the Fund relative to comparable funds. The Board reviewed the performance of the Fund during the past one calendar year against the performance of funds advised by other advisors with investment strategies comparable to those of the Fund. The Board noted that the Fund's performance in such period was above the median performance of such comparable funds. Based on this review, the Board concluded that no changes should be made to the Fund and that it was not necessary to change the Fund's portfolio management team at this time.
o The performance of the Fund relative to indices. The Board reviewed the performance of the Fund during the past one calendar year against the performance of the Lipper Small-Cap Core Index. The Board noted that the Fund's performance in such period was above the performance of such Index. Based on this review, the Board concluded that no changes should be made to the Fund and that it was not necessary to change the Fund's portfolio management team at this time.
o Meeting with the Fund's portfolio managers and investment personnel. With respect to the Fund, the Board is meeting periodically with such Fund's portfolio managers and/or other investment personnel and believes that such individuals are competent and able to continue to carry out their responsibilities under the Advisory Agreement.
o Overall performance of AIM. The Board considered the overall performance of AIM in providing investment advisory and portfolio administrative services to the Fund and concluded that such performance was satisfactory.
o Fees relative to those of clients of AIM with comparable investment strategies. The Board noted that AIM does not serve as an advisor to other mutual funds or other clients with investment strategies comparable to those of the Fund.
o Fees relative to those of comparable funds with other advisors. The Board reviewed the advisory fee rate for the Fund under the Advisory Agreement. The Board compared effective contractual advisory fee rates at a common asset level and noted that the Fund's rate was comparable to the median rate of the funds advised by other advisors with investment strategies comparable to those of the Fund that the Board reviewed. The Board noted that AIM has agreed to waive advisory fees of the Fund and to limit the Fund's total operating expenses, as discussed below. Based on this review, the Board concluded that the advisory fee rate for the Fund under the Advisory Agreement was fair and reasonable.
o Expense limitations and fee waivers. The Board noted that AIM has contractually agreed to waive advisory fees of the Fund through June 30, 2006 to the extent necessary so that the advisory fees payable by the Fund do not exceed a specified maximum advisory fee rate, which maximum rate includes breakpoints and is based on net asset levels. The Board considered the contractual nature of this fee waiver and noted that it remains in effect until June 30, 2006. The Board also noted that AIM has contractually agreed to waive fees and/or limit expenses of the Fund through October 31, 2005 so that total annual operating expenses are limited to a specified percentage of average daily net assets for each class of the Fund. The Board considered the contractual nature of this fee waiver/expense limitation and noted that it remains in effect until October 31, 2005. The Board considered these effect these fee waivers/expense limitations would have on the Fund's estimated expenses and concluded that the levels of fee waivers/expense limitations for the Fund were fair and reasonable.
o Breakpoints and economies of scale. The Board reviewed the structure of the Fund's advisory fee under the Advisory Agreement, noting that it includes one breakpoint. The Board reviewed the level of the Fund's advisory fees, and noted that such fees, as a percentage of the Fund's net assets, would decrease as net assets increase because the Advisory Agreement includes a breakpoint. The Board noted that, due to the Fund's current asset levels and the way in which the advisory fee breakpoints have been structured, the Fund has yet to benefit from the breakpoint. The Board noted that AIM has contractually agreed to waive advisory fees of the Fund through June 30, 2006 to the extent necessary so that the advisory fees payable by the Fund do not exceed a specified maximum advisory fee rate, which maximum rate includes breakpoints and is based on net asset levels. The Board concluded that the Fund's fee levels under the Advisory Agreement therefore would reflect economies of scale at higher asset levels and that it was not necessary to change the advisory fee breakpoints in the Fund's advisory fee schedule.
o Investments in affiliated money market funds. The Board also took into account the fact that uninvested cash and cash collateral from securities lending arrangements (collectively, "cash balances") of the Fund may be invested in money market funds advised by AIM pursuant to the terms of an SEC exemptive order. The Board found that the 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 the Fund will not receive reduced services if it invests its cash balances in such money market funds. The Board noted that, to the extent the Fund invests in affiliated money market funds, AIM has voluntarily agreed to waive a portion of the advisory fees it receives from the Fund attributable to such investment. The Board further determined that the proposed securities lending program and related procedures with respect to the lending Fund is in the best interests of the lending Fund and its respective shareholders. The Board therefore concluded that the investment of cash collateral received in connection with the securities lending program in the money market funds according to the procedures is in the best interests of the lending Fund and its respective shareholders.
o Independent written evaluation and recommendations of the Fund's Senior Officer. The Board noted that, upon their direction, the Senior Officer of the Fund had prepared an independent written evaluation in order to assist the Board in determining the reasonableness of the proposed
management fees of the AIM Funds, including the Fund. The Board noted that the Senior Officer's written evaluation had been relied upon by the Board in this regard in lieu of a competitive bidding process. In determining whether to continue the Advisory Agreement for the Fund, the Board considered the Senior Officer's written evaluation and the recommendation made by the Senior Officer to the Board that the Board consider implementing a process to assist them in more closely monitoring the performance of the AIM Funds. The Board concluded that it would be advisable to implement such a process as soon as reasonably practicable.
o Profitability of AIM and its affiliates. The Board reviewed information concerning the profitability of AIM's (and its affiliates') investment advisory and other activities and its financial condition. The Board considered the overall profitability of AIM, as well as the profitability of AIM in connection with managing the Fund. The Board noted that AIM's operations remain profitable, although increased expenses in recent years have reduced AIM's profitability. Based on the review of the profitability of AIM's and its affiliates' investment advisory and other activities and its financial condition, the Board concluded that the compensation to be paid by the Fund to AIM under its Advisory Agreement was not excessive.
o Benefits of soft dollars to AIM. The Board considered the benefits realized by AIM as a result of brokerage transactions executed through "soft dollar" arrangements. Under these arrangements, brokerage commissions paid by the Fund and/or other funds advised by AIM are used to pay for research and execution services. This research is used by AIM in making investment decisions for the Fund. The Board concluded that such arrangements were appropriate.
o AIM's financial soundness in light of the Fund's needs. The Board considered whether AIM is financially sound and has the resources necessary to perform its obligations under the Advisory Agreement, and concluded that AIM has the financial resources necessary to fulfill its obligations under the Advisory Agreement.
o Historical relationship between the Fund and AIM. In determining whether to continue the Advisory Agreement for the Fund, the Board also considered the prior relationship between AIM and the Fund, as well as the Board's knowledge of AIM's operations, and concluded that it was beneficial to maintain the current relationship, in part, because of such knowledge. The Board also reviewed the general nature of the non-investment advisory services currently performed by AIM and its affiliates, such as administrative, transfer agency and distribution services, and the fees received by AIM and its affiliates for performing such services. In addition to reviewing such services, the trustees also considered the organizational structure employed by AIM and its affiliates to provide those services. Based on the review of these and other factors, the Board concluded that AIM and its affiliates were qualified to continue to provide non-investment advisory services to the Fund, including administrative, transfer agency and distribution services, and that AIM and its affiliates currently are providing satisfactory non-investment advisory services.
o Other factors and current trends. In determining whether to continue the Advisory Agreement for the Fund, the Board considered the fact that AIM, along with others in the mutual fund industry, is subject to regulatory inquiries and litigation related to a wide range of issues. The Board also considered the governance and compliance reforms being undertaken by AIM and its affiliates, including maintaining an internal controls committee and retaining an independent compliance consultant, and the fact that AIM has undertaken to cause the Fund to operate in accordance with certain governance policies and practices. The Board concluded that these actions indicated a good faith effort on the part of AIM to adhere to the highest ethical standards, and determined that the current regulatory and litigation environment to which AIM is subject should not prevent the Board from continuing the Advisory Agreement for the Fund.
Approval of Sub-Advisory Agreement
The Board oversees the management of the Fund and, as required by law, determines annually whether to approve the continuance of the Fund's sub-advisory agreement. Based upon the recommendation of the Investments Committee of the Board, which is comprised solely of independent trustees, at a meeting held on June 30, 2005, the Board, including all of the independent trustees, approved the continuance of the sub-advisory agreement (the "Sub-Advisory Agreement") between AIM Funds Management Inc. (the "Sub-Advisor") and AIM with respect to the Fund for another year, effective July 1, 2005.
The Board considered the factors discussed below in evaluating the fairness and reasonableness of the Sub-Advisory Agreement at the meeting on June 30, 2005 and as part of the Board's ongoing oversight of the Fund. In their deliberations, the Board and the independent trustees did not identify any particular factor that was controlling, and each trustee attributed different weights to the various factors.
The discussion below serves as a discussion of the material factors and the conclusions with respect thereto that formed the basis for the Board's approval of the Sub-Advisory Agreement. After consideration of all of the factors below and based on its informed business judgment, the Board determined that the Sub-Advisory Agreement is in the best interests of the Fund and its shareholders.
o The nature and extent of the advisory services to be provided by the Sub-Advisor. The Board reviewed the services to be provided by the Sub-Advisor under the Sub-Advisory Agreement. Based on such review, the Board concluded that the range of services to be provided by the Sub-Advisor under the Sub-Advisory Agreement was appropriate and that the Sub-Advisor currently is providing services in accordance with the terms of the Sub-Advisory Agreement.
o The quality of services to be provided by the Sub-Advisor. The Board reviewed the credentials and experience of the officers and employees of the Sub-Advisor who will provide investment advisory services to the Fund. Based on the review of these and other factors, the Board concluded that the quality of services to be provided by the Sub-Advisor was appropriate, and that the Sub-Advisor currently is providing satisfactory services in accordance with the terms of the Sub-Advisory Agreement.
o The performance of the Fund relative to comparable funds. The Board reviewed the performance of the Fund during the past one calendar year against the performance of funds advised by other advisors with investment strategies comparable to those of the Fund. The Board noted that the Fund's performance in such period was above the median performance of such comparable funds. Based on this review, the Board concluded that no changes should be made to the Fund and that it was not necessary to change the Fund's portfolio management team at this time.
o The performance of the Fund relative to indices. The Board reviewed the performance of the Fund during the past one calendar year against the performance of the Lipper Small-Cap Core Index. The Board noted that the Fund's performance in such period was above the performance of such Index. Based on this review, the Board concluded that no changes should be made to the Fund and that it was not necessary to change the Fund's portfolio management team at this time.
o Meetings with the Fund's portfolio managers and investment personnel. The Board is meeting periodically with the Fund's portfolio managers and/or other investment personnel and believes that such individuals are competent and able to continue to carry out their responsibilities under the Sub-Advisory Agreement.
o Overall performance of the Sub-Advisor. The Board considered the overall performance of the Sub-Advisor in providing investment advisory services to the Fund and concluded that such performance was satisfactory.
o Advisory fees, expense limitations and fee waivers, and breakpoints and economies of scale. In reviewing these factors, the Board considered only the advisory fees charged to the Fund by AIM and did not consider the sub-advisory fees paid by AIM to the Sub-Advisor. The Board believes that this approach is appropriate because the sub-advisory fees have no effect on the Fund or its shareholders, as they are paid by AIM rather than the Fund. Furthermore, AIM and the Sub-Advisor are affiliates and the Board believes that the allocation of fees between them is a business matter, provided that the advisory fees charged to the Fund are fair and reasonable.
o Profitability of AIM and its affiliates. The Board reviewed information concerning the profitability of AIM's (and its affiliates') investment advisory and other activities and its financial condition. The Board considered the overall profitability of AIM, as well as the profitability of AIM in connection with managing the Fund. The Board noted that AIM's operations remain profitable, although increased expenses in recent years have reduced AIM's profitability. Based on the review of the profitability of AIM's and its affiliates' investment advisory and other activities and its financial condition, the Board concluded that the compensation to be paid by the Fund to AIM under its Advisory Agreement was not excessive.
o The Sub-Advisor's financial soundness in light of the Fund's needs. The Board considered whether the Sub-Advisor is financially sound and has the resources necessary to perform its obligations under the Sub-Advisory Agreement, and concluded that the Sub-Advisor has the financial resources necessary to fulfill its obligations under the Sub-Advisory Agreement.
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. The Chair of the Board and Chairs and Vice Chairs of certain committees receive additional compensation for their services.
Information regarding compensation paid or accrued for each trustee of the Trust who was not affiliated with AIM during the year ended December 31, 2004 is found in Appendix D.
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. Notwithstanding the foregoing, the amount of benefits will exclude any additional compensation paid to the Chair of the Board and the Chairs and Vice Chairs of certain committees, whether such amounts are paid directly to the Trustee or deferred. 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. Crockett, Dunn, Fields, Frischling and Sklar and Drs. Mathai-Davis and Soll (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 and deemed to be invested in one or more AIM Funds selected by the Deferring Trustees. 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 Board, 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 AIM 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.
CODES OF ETHICS
AIM, the Trust, AIM Distributors, and AIM Funds Management Inc. (the sub-advisor to AIM Trimark Endeavor Fund, AIM Trimark Fund and AIM Trimark Small Companies Fund) 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, including personal trading in most of the funds within The AIM Family of Funds--Registered Trademark-- ("affiliated funds"). Personal trading, including personal trading involving securities that may be purchased or held by a Fund and in affiliated funds, 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.
PROXY VOTING POLICIES
The Board has delegated responsibility for decisions regarding proxy voting securities held by AIM Developing Markets Fund to AIM. The Board has delegated responsibility for decisions regarding proxy voting for securities held by AIM Trimark Endeavor Fund, AIM Trimark Fund and AIM Trimark Small Companies Fund to AIM Funds Management, Inc., the "Sub-Advisor". AIM and the Sub-Advisor will vote such proxies in accordance with its proxy policies and procedures, which have been reviewed and approved by the Board, and which are found in Appendix E.
Any material changes to the proxy policies and procedures will be submitted to the Board for approval. The Board will be supplied with a summary quarterly report of each Fund's proxy voting record.
Information regarding how the Funds voted proxies related to their portfolio securities during the 12 months ended June 30, 2005 is available at our Web site, http://www.AIMinvestments.com. This information is also available at the SEC Web site, http://www.sec.gov.
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 F. 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 200 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. AMVESCAP 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 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 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 believed to be competent to perform all supervisory and administrative services required by the Funds, in the judgment of the trustees, to conduct their respective businesses effectively, as well as the offices, equipment and other facilities necessary for their operations. Such functions include the maintenance of each Fund's accounts and records, and the preparation of all requisite corporate documents such as tax returns and reports to the SEC and shareholders.
The Advisory Agreement provides that a 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, 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 the Advisory Agreement with the Trust, AIM receives a monthly fee from each Fund calculated at the following annual rates indicated in the second column below, based on the average daily net assets of each Fund during the year. Effective January 1, 2005 the advisor has contractually agreed to waive advisory fees to the extent necessary so that the advisory fees payable by each Fund do not exceed the maximum advisory fee rate set forth in the third column below. The maximum advisory fee rates are effective through the Committed Until Date set forth in the fourth column.
MAXIMUM
ADVISORY FEE
ANNUAL RATE/NET ASSETS MAXIMUM ADVISORY FEE RATES COMMITTED
FUND NAME PER ADVISORY AGREEMENT RATE AFTER JANUARY 1, 2005 UNTIL DATE
-------------------------------------------------- ----------------------------- --------------------------- ------------------
AIM Developing Markets Fund 0.975% of first $500M 0.935% of first $250M June 30, 2006
0.95% of next $500M 0.91% of next $250M
0.925% of next $500M 0.885% of next $500M
0.90% on amount thereafter 0.86% of next $1.5B
0.835% of next $2.5B
0.81% of next $2.5B
0.785% of next $2.5B
0.76% of amount over $10B
AIM Trimark Endeavor Fund 0.80% of first $1B 0.745% of first $250M June 30, 2006
0.75% on amount thereafter 0.73% of next $250M
0.715% of next $500M
0.70% of next $1.5B
0.685% of next $2.5B
0.67% of next $2.5B
0.655% of next $2.5B
0.64% of amount over $10B
AIM Trimark Fund 0.85% of first $1B 0.80% of first $250M June 30, 2006
0.80% on amount thereafter 0.78% of next $250M
0.76% of next $500M
0.74% of next $1.5B
0.72% of next $2.5B
0.70% of next $2.5B
0.68% of next $2.5B
0.66% of amount over $10B
AIM Trimark Small Companies Fund 0.85% of first $1B 0.745% of first $250M June 30, 2006
0.80% on amount thereafter 0.73% of next $250M
0.715% of next $500M
0.70% of next $1.5B
0.685% of next $2.5B
0.67% of next $2.5B
0.655% of next $2.5B
0.64% of amount over $10B
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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 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. Termination of this agreement requires approval by the Board. See "Description of the Funds and Their Investments and Risks - Investment Strategies and Risks - Other Investments - Other Investment Companies."
AIM has contractually agreed through October 31, 2005, to limit total annual fund operating expenses (excluding (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items (these are expenses that are not anticipated to arise from each Fund's day-to-day operations, or items designated as such by each Fund's Board; (v) expenses related to a merger or reorganization, as approved by each Fund's Board; and (vi) expenses that each Fund has incurred but did not actually pay because of an expense offset arrangement) for the following Funds' Institutional Class shares to the extent necessary to limit the total operating expenses as follows:
FUND EXPENSE LIMITATION
---- ------------------
AIM Developing Markets Fund
Institutional Class Shares 1.50%
AIM Trimark Endeavor Fund
AIM Trimark Small Companies Fund
Institutional Class Shares 1.65%
AIM Trimark Fund
Institutional Class Shares 1.90%
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Such contractual fee waivers or reductions are set forth in the Fee Table to each Fund's Prospectus and may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Fund.
Investment Sub-Advisor
AIM has entered into a Sub-Advisory Agreement with the Sub-Advisor to provide investment sub-advisory services to AIM Trimark Endeavor Fund, AIM Trimark Fund and AIM Trimark Small Companies Fund.
The Sub-Advisor is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the "Advisers Act").
The Sub-Advisor is located at, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7 and has provided investment management and/or administrative services to pension funds, insurance funds, unit trusts, offshore funds and a variety of institutional accounts since 1981.
AIM and the Sub-Advisor are indirect wholly owned subsidiaries of
AMVESCAP PLC (formerly, AMVESCO PLC and INVESCO PLC).
For the services to be rendered by the Sub-Advisor under the Sub-Advisory Agreement, AIM will pay to the Sub-Advisor 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 each Fund. (See "Computation of Net Asset Value.") On an annual basis, the sub-advisory fee is equal to 40% of AIM's compensation in respect of the sub-advised assets per year, for each of AIM Trimark Endeavor Fund, AIM Trimark Fund and AIM Trimark Small Companies Fund.
The management fees payable by each Fund, the amounts waived by AIM and the fees paid by each Fund for the last fiscal period ended October 31 is found in Appendix G.
Portfolio Managers
Appendix H contains the following information regarding the portfolio managers identified in each Fund's prospectus:
o The dollar range of the manager's investments in each Fund.
o A description of the manager's compensation structure.
o Information regarding other accounts managed by the manager and potential conflicts of interest that might arise from the management of multiple accounts.
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 Board, 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. 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 fiscal period ended October 31 is found in Appendix I.
OTHER SERVICE PROVIDERS
TRANSFER AGENT. AIM Investment Services, Inc. ("AIS") (formerly A I M Fund Services, Inc.), 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 (the "TA Agreement") between the Trust and AIS provides that AIS will perform certain shareholder services for the Funds. For servicing accounts holding Institutional Class Shares, the TA Agreement provides that the Trust, on behalf of the Funds, will pay AIS a fee equal to $2.00 per trade executed to be billed monthly plus certain out of pocket expenses. In addition, for servicing accounts holding Institutional Class Shares, the Trust, on behalf of the Funds, is required to reimburse AIS for servicing such accounts to the extent that an account is serviced by a third party pursuant to a sub-transfer agency, omnibus account service, sub-accounting, or networking agreement. AIS has agreed to waive the right to collect any fee or reimbursement to which it is entitled, to the extent that such fee or reimbursement would cause the fees and expenses incurred by the Institutional Class Shares to exceed 0.10% of the average net assets attributable to such class of the Funds.
It is anticipated that most investors will perform their own sub-accounting.
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 purchases of shares of the Funds. The Bank of New York, 2 Hanson Place, Brooklyn, New York 11217-1431, 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 registered public accounting firm is responsible for auditing the financial statements of the Funds. The Audit Committee of the Board has appointed PricewaterhouseCoopers LLP, 1201 Louisiana Street, Suite 2900, Houston, TX 77002, as the independent registered public accountants to audit the financial statements of the Funds. Such appointment was ratified and approved by the independent trustees of Board.
COUNSEL TO THE TRUST. Legal matters for the Trust have been passed upon by Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania 19103-7599.
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 or the Sub-Advisor, as applicable makes decisions to buy and sell securities for each Fund, selects broker-dealers (each a "Broker"), 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 best execution, which AIM defines as prompt and efficient execution of the transaction at the best obtainable price with payment or commissions, mark-ups or mark-downs which are reasonable in relation to the value of the brokerage services provided by the Broker. 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 on a principal basis at net prices without commissions, but which include compensation to the Broker 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, including electronic communication networks. Purchases of underwritten issues include a commission or concession paid by the issuer (not the Funds) to the underwriter. Purchases of money market instruments may be made directly from issuers without the payment of commissions.
Traditionally, commission rates have not been negotiated on stock markets outside the United States. Although in recent years many overseas stock markets have adopted a system of negotiated rates, a number of markets maintain an established schedule of minimum commission rates.
Brokerage commissions paid by each of the Funds during the last three fiscal years ended October 31 are found in Appendix J.
COMMISSIONS
During the last three fiscal years ended October 31, 2004, none of the Funds paid brokerage commissions to Brokers affiliated with the Funds, AIM, AIM Distributors, or any affiliates of such entities prior to that date.
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 certain other Funds or accounts (and may invest in Affiliated Money Market Funds) provided the Funds follow procedures adopted by the Boards 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
AIM's primary consideration in selecting Brokers to execute portfolio transactions for a Fund is to obtain best execution. In selecting a Broker to execute a portfolio transaction in equity securities for a Fund, AIM considers the full range and quality of a Broker's services, including the value of research and/or brokerage services provided, execution capability, commission rate, willingness to commit capital, anonymity and responsiveness. AIM's primary consideration when selecting a Broker to execute a portfolio transaction in fixed income securities for a Fund is the Broker's ability to deliver or sell the relevant fixed income securities; however, AIM will also consider the various factors listed above. In each
case, the determinative factor is not the lowest commission or spread available but whether the transaction represents the best qualitative execution for the Fund. AIM will not select Brokers based upon their promotion or sale of Fund shares.
In choosing Brokers to execute portfolio transactions for the Funds, AIM may select Brokers that provide brokerage and/or research services ("Soft Dollar Products") to the Funds and/or the other accounts over which AIM and its affiliates have investment discretion. Section 28(e) of the Securities Exchange Act of 1934, as amended, 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, the Fund may pay a Broker higher commissions than those available from another Broker in recognition of such Broker's provision of Soft Dollar Products to AIM. AIM Trimark does not use client trades to obtain Soft Dollar Products.
AIM faces a potential conflict of interest when it uses client trades to obtain Soft Dollar Products. This conflict exists because AIM is able to use the Soft Dollar Products to manage client accounts without paying cash for the Soft Dollar Products, which reduces AIM's expenses to the extent that AIM would have purchased such products had they not been provided by Brokers. Section 28(e) permits AIM to use Soft Dollar Products for the benefit of any account it manages. Certain AIM-managed accounts may generate soft dollars used to purchase Soft Dollar Products that ultimately benefit other AIM-managed accounts, effectively cross subsidizing the other AIM-managed accounts that benefit directly from the product. AIM may not use all of the Soft Dollar Products provided by Brokers through which a Fund effects securities transactions in connection with managing such Fund.
AIM and certain of its affiliates presently engage in the following instances of cross-subsidization:
1. Fixed income funds normally do not generate soft dollar commissions to pay for Soft Dollar Products. Therefore, soft dollar commissions used to pay for Soft Dollar Products which are used to manage the fixed income AIM Funds are generated entirely by equity AIM Funds and other equity client accounts managed by AIM or A I M Capital Management ("AIM Capital"), a subsidiary of AIM. In other words, the fixed income AIM Funds are cross-subsidized by the equity AIM Funds, in that the fixed income AIM Funds receive the benefit of Soft Dollar Products services for which they do not pay.
2. The investment models used to manage many of the AIM Funds are also used to manage other accounts of AIM and/or AIM Capital. The Soft Dollar Products obtained through the use of soft dollar commissions generated by the transactions of the AIM Funds and/or other accounts managed by AIM and/or AIM Capital are used to maintain the investment models relied upon by both of these advisory affiliates.
This type of cross-subsidization occurs in both directions. For example, soft dollar commissions generated by transactions of the AIM Funds and/or other accounts managed by AIM are used for Soft Dollar Products which may benefit those AIM Funds and/or accounts as well as accounts managed by AIM Capital. Additionally, soft dollar commissions generated by transactions of accounts managed by AIM Capital are used for Soft Dollar Products which may benefit those accounts as well as accounts managed by AIM. In certain circumstances, AIM Capital accounts may indicate that their transactions should not be used to generate soft dollar commissions but may still receive the benefits of Soft Dollar Products received by AIM or AIM Capital.
3. Some of the common investment models used to manage various Funds and other accounts of AIM and/or AIM Capital are also used to manage accounts of AIM Private Asset Management, Inc. ("APAM"), another AIM subsidiary. The Soft Dollar Products obtained through the use of
soft dollar commissions generated by the transactions of the Funds and/or other accounts managed by AIM and/or AIM Capital are used to maintain the investment models relied upon by AIM, AIM Capital and APAM. This cross-subsidization occurs in only one direction. Most of APAM's accounts do not generate soft dollar commissions which can be used to purchase Soft Dollar Products. The soft dollar commissions generated by transactions of the Funds and/or other accounts managed by AIM and/or AIM Capital are used for Soft Dollar Products which may benefit the accounts managed by AIM, AIM Capital and APAM; however, APAM does not provide any soft dollar research benefit to the Funds and/or other accounts managed by AIM or AIM Capital.
AIM and AIM Capital attempt to reduce or eliminate the potential conflicts of interest concerning the use of Soft Dollar Products by directing client trades for Soft Dollar Products only if AIM and AIM Capital conclude that the Broker supplying the product is capable of providing best execution.
Certain Soft Dollar Products may be available directly from a vendor on a hard dollar basis; other Soft Dollar Products are available only through Brokers in exchange for soft dollars. AIM uses soft dollars to purchase two types of Soft Dollar Products:
o proprietary research created by the Broker executing the trade, and
o other products created by third parties that are supplied to AIM through the Broker executing the trade.
Proprietary research consists primarily of traditional research reports, recommendations and similar materials produced by the in house research staffs of broker-dealer firms. This research includes evaluations and recommendations of specific companies or industry groups, as well as analyses of general economic and market conditions and trends, market data, contacts and other related information and assistance. AIM periodically rates the quality of proprietary research produced by various Brokers. Based on the evaluation of the quality of information that AIM receives from each Broker, AIM develops an estimate of each Broker's share of AIM clients' commission dollars. AIM attempts to direct trades to the firms to meet these estimates.
AIM also uses soft dollars to acquire products from third parties that are supplied to AIM through Brokers executing the trades or other Brokers who "step in" to a transaction and receive a portion of the brokerage commission for the trade. AIM may from time to time instruct the executing Broker to allocate or "step out" a portion of a transaction to another Broker. The Broker to which AIM has "stepped out" would then settle and complete the designated portion of the transaction, and the executing Broker would settle and complete the remaining portion of the transaction that has not been "stepped out." Each Broker may receive a commission or brokerage fee with respect to that portion of the transaction that it settles and completes.
Soft Dollar Products received from Brokers supplement AIM's own research (and the research of certain of its affiliates), and may include the following types of products and services:
o Database Services - comprehensive databases containing current and/or historical information on companies and industries and indices. Examples include historical securities prices, earnings estimates and financial data. These services may include software tools that allow the user to search the database or to prepare value-added analyses related to the investment process (such as forecasts and models used in the portfolio management process).
o Quotation/Trading/News Systems - products that provide real time market data information, such as pricing of individual securities and information on current trading, as well as a variety of news services.
o Economic Data/Forecasting Tools - various macro economic forecasting tools, such as economic data or currency and political forecasts for various countries or regions.
o Quantitative/Technical Analysis - software tools that assist in quantitative and technical analysis of investment data.
o Fundamental/Industry Analysis - industry specific fundamental investment research.
o Fixed Income Security Analysis - data and analytical tools that pertain specifically to fixed income securities. These tools assist in creating financial models, such as cash flow projections and interest rate sensitivity analyses, which are relevant to fixed income securities.
o Other Specialized Tools - other specialized products, such as consulting analyses, access to industry experts, and distinct investment expertise such as forensic accounting or custom built investment-analysis software.
If AIM determines that any service or product has a mixed use (i.e., it also serves functions that do not assist the investment decision-making or trading process), AIM will allocate the costs of such service or product accordingly in its reasonable discretion. AIM will allocate brokerage commissions to Brokers only for the portion of the service or product that AIM determines assists it in the investment decision-making or trading process and will pay for the remaining value of the product or service in cash.
Outside research assistance is useful to AIM since the Brokers used by AIM tend to provide more in-depth analysis of a broader universe of securities and other matters than AIM's staff follows. In addition, such services provide AIM with a diverse perspective on financial markets. Some Brokers 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 is not under any obligation to deal with any Broker in the execution of transactions in portfolio securities. In some cases, Soft Dollar Products are available only from the Broker providing them. In other cases, Soft Dollar Products may be obtainable from alternative sources in return for cash payments. AIM believes that because Broker research supplements rather than replaces AIM's research, the receipt of such research tends to improve the quality of AIM's investment advice. The advisory fee paid by the Funds is not reduced because AIM receives such services. To the extent the Funds' portfolio transactions are used to obtain Soft Dollar Products, the brokerage commissions obtained by the Funds might exceed those that might otherwise have been paid.
AIM may determine target levels of brokerage 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; and (2) the research services provided by the Broker. Portfolio Transactions may be effected through Brokers that recommend the Funds to their clients, or that act as agent in the purchase of a Fund's shares for their clients, provided that AIM believes such Brokers provide best execution and such transactions are executed in compliance with AIM's policy against using directed brokerage to compensate Brokers for promoting or selling AIM Fund shares. AIM will not enter into a binding commitment with Brokers to place trades with such brokers involving brokerage commissions in precise amounts.
DIRECTED BROKERAGE (RESEARCH SERVICES)
Directed brokerage (research services) paid by the Funds during the last fiscal year ended October 31, 2004 are found in Appendix K.
REGULAR BROKERS
Information concerning the Funds' acquisition of securities of its regular Brokers or dealers during the last fiscal year ended October 31, 2004 is found in Appendix K.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage numerous AIM Funds and other accounts. Some of these accounts may have investment objectives similar to the Funds. Occasionally, identical securities will be appropriate for investment by the Funds and by another Fund or one or more other accounts. However, the position of each account in the same security and the length of time that each account may hold its investment in the same security 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 and one or more other accounts, and is considered at or about the same time, AIM will allocate transactions in such securities among the Funds and these accounts on a pro rata basis based on order size or in such other manner believed by AIM to be fair and equitable. 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.
ALLOCATION OF EQUITY INITIAL PUBLIC OFFERING ("IPO") TRANSACTIONS
Certain of the AIM Funds or other accounts managed by AIM may become interested in participating in equity IPOs. Purchases of equity IPOs by one AIM Fund or other accounts may also be considered for purchase by one or more other AIM Funds or accounts. It shall be AIM's practice to specifically shall combine or otherwise bunch indications of interest for equity IPOs for all AIM Funds and accounts participating in purchase transactions for that IPO., and, when When the full amount of all IPO orders for such AIM Funds and accounts cannot be filled completely, to AIM shall 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 equity IPO by reviewing a number of factors, including market capitalization/liquidity suitability and sector/style suitability or account's of the investment with the AIM Fund's or account's investment objective, policies, and strategies and current holdings. The allocation of AIM will allocate securities issued in equity IPOs will be made to eligible AIM Funds and accounts on a pro rata basis based on order size.
PURCHASE, REDEMPTION AND PRICING OF SHARES
TRANSACTIONS THROUGH FINANCIAL INTERMEDIARIES
If you are investing indirectly in a Fund through a financial intermediary such as a broker-dealer, a bank (including a bank trust department), an insurance company separate account, an investment advisor, an administrator or trustee of a retirement plan or a qualified tuition plan or a sponsor of a fee-based program that maintains a master account (an omnibus account) with the Fund for trading on behalf of its customers, different guidelines, conditions and restrictions may apply than if you held your shares of the Fund directly. These differences may include, but are not limited to: (i) different eligibility standards to purchase and sell shares, different eligibility standards to invest in funds with limited offering status and different eligibility standards to exchange shares by telephone; (ii) different minimum and maximum initial and subsequent purchase amounts; and (iii) system inability to provide Letter of Intent privileges. The financial intermediary through whom you are investing may also choose to adopt different exchange and/or transfer limit guidelines and restrictions, including different trading restrictions designed to discourage excessive or short-term trading. The financial intermediary through whom you are investing may also choose to impose a redemption fee that has different characteristics, which may be more or less restrictive, than the redemption fee currently imposed on certain Funds.
If the financial intermediary is managing your account, you may also be charged a transaction or other fee by such financial intermediary, including service fees for handling redemption transactions. Consult with your financial intermediary (or, in the case of a retirement plan, your plan sponsor) to
determine what fees, guidelines, conditions and restrictions, including any of the above, may be applicable to you.
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 AIM Investment 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 AIS.
Purchase and redemption orders must be received in good order. To be in good order, the financial intermediary must give AIS 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 AIS for correction of transactions involving Fund shares. If AIS 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 AIS, an investor may change the bank account designated to receive redemption proceeds. AIS may request additional documentation.
AIS 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.
Platform sponsors that provide investment vehicles to fund Section 401 defined contribution plans and have entered into written agreements with AIM Distributors to waive applicable investment minimums may purchase Institutional Class shares for accounts within such plans.
AUTHORIZED AGENTS. AIS and AIM Distributors may authorize agents to accept purchase and redemption orders that are in good form on behalf of the AIM Funds. In certain cases, these authorized agents are authorized to designate other intermediaries to accept purchase and redemption orders on a Fund's behalf. A Fund will be deemed to have received the purchase or redemption order when the Fund's authorized agent or its designee accepts the order. The order will be priced at the net asset value next determined after the order is accepted by a Fund's authorized agent or its designee.
ABANDONED PROPERTY. It is the responsibility of the investor to ensure that AIS maintains a correct address for his account(s). An incorrect address may cause an investor's account statements and other mailings to be returned to AIS. Upon receiving returned mail, AIS will attempt to locate the investor or rightful owner of the account. If unsuccessful, AIS will retain a shareholder locator service with a national information database to conduct periodic searches for the investor. If the search firm is unable to locate the investor, the search firm will determine whether the investor's account has legally been abandoned. AIS is legally obligated to escheat (or transfer) abandoned property to the appropriate state's unclaimed property administrator in accordance with statutory requirements. The investor's last known address of record determines which state has jurisdiction.
OFFERING PRICE
Shares of the Institutional Class of a Fund are offered 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, futures and option contracts generally will be valued 15 minutes after the close of the customary trading session of the NYSE. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. 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. The net asset value for shareholder transactions may be different than the net asset value reported in the Fund's financial statement due to adjustments required by generally accepted accounting principles made to the net assets of the Fund at period end.
Each equity 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 equity security traded in the over-the-counter market (but not including securities reported on the NASDAQ National Market System) is valued on the basis of prices furnished by independent pricing services vendors or market makers. Each security reported on the NASDAQ National Market System is valued at the NASDAQ Official Closing Price ("NOCP") or absent a NOCP, at the closing bid price on that day. Debt securities (including convertible bonds) are fair valued using an evaluated quote provided by an independent pricing vendor. Evaluated quotes provided by the pricing vendor 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, including situations where market quotations are unreliable, are valued at fair value as determined in good faith by or under the supervision of the Trust's officers in accordance with procedures approved by the Board. Short-term investments are valued at amortized cost when the security has 60 days or less to maturity.
Generally, trading in 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 the a Fund's shares are determined at such times. 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. If AIM believes a development/event has actually caused a closing price to no longer reflect current market value, the closing price may be adjusted to reflect the fair value of the affected security as of the close of the NYSE as determined in good faith using procedures approved by the Board.
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the NYSE. Trading in certain 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 each 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. If an issuer specific event has occurred that AIM determines, in its judgment, is likely to have affected the closing price of a foreign security, it will price the security at fair value. Issuer specific events may include a merger or insolvency, events which affect a geographical area or an industry segment, such as political events or natural disasters, or market events, such as a significant movement in the U.S. market. AIM also relies on a screening process from a pricing vendor to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current market value as of the close of the NYSE. For foreign securities where AIM believes, at the approved degree of certainty, that the price is not reflective of current market value, AIM will use the indication of fair value from the pricing vendor to determine the fair value of the security. The pricing vendor, pricing methodology or degree of certainty may change from time to time. Multiple factors may be considered by the pricing vendor in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs, domestic and foreign index futures, and exchange-traded funds.
Fund securities primarily traded in foreign markets may be traded in such markets on days that 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 value of the portfolio securities of a Fund that invests in foreign securities may change on days when an investor cannot exchange or redeem shares of the Fund.
REDEMPTION IN KIND
Although the Funds generally intend to pay redemption proceeds solely in cash, the Funds reserve the right to determine, in their sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind). For instance, a Fund may make a redemption in kind, if a cash redemption would disrupt its operations or performance. Securities that will be delivered as payment in redemptions in kind will be valued using the same methodologies that the Fund typically utilizes in valuing such securities. Shareholders receiving such securities are likely to incur transaction and brokerage costs on their subsequent sales of such securities, and the securities may increase or decrease in value until the shareholder sells them. The Trust, on behalf of the Funds made an election under Rule 18f-1 under the 1940 Act (a "Rule 18f-1 Election"), and therefore, the Trust, on behalf of a 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. The Rule 18f-1 Election is irrevocable while Rule 18f-1 under the 1940 Act is in effect unless the SEC by order permits withdrawal of such Rule 18f-1 Election.
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 28% 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.
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 AIS 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. In determining the amount of capital gains, if any, available for distribution, capital gains generally 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 Institutional Class 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.
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 an amount equal to (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.
Treasury regulations permit a regulated investment company, in determining its investment company taxable income and net capital gain (i.e., the excess of net long-term capital gain over net short-term capital loss) for any taxable year, to elect (unless it has made a taxable year election for excise tax purposes as discussed below) to treat all or part of any net capital loss, any net long-term capital loss or any net foreign currency loss incurred after October 31 as if it had been incurred in the succeeding year.
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, 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), other income (including, but not limited to, gains from options, futures or forward contracts) derived from its business of investing in such stock, securities or currencies and (for Fund taxable years beginning after October 22, 2004) net income derived from certain publicly traded partnerships) (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), of two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses, or of
securities of certain publicly traded partnerships (for Fund taxable years beginning after October 22, 2004).
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.
Under an IRS revenue procedure, a Fund may treat its position as lender under a repurchase agreement as a U.S. Government security for purposes of the Asset Diversification where the repurchase agreement is fully collateralized (under applicable SEC standards) with securities that constitute U.S. Government securities.
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 (to the extent discussed below) in the case of corporate shareholders and will be included in the qualified dividend income of noncorporate shareholders. See "Fund Distributions" below.
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. In certain cases, a fund may make an election to treat such gains or loss as capital.
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.
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 or be less than its book income. Accordingly, the amount which must be distributed to shareholders and which will be taxed to shareholders as ordinary income, qualified dividend 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 described 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 and character of income with respect to PFIC stock, as well as subject the Funds themselves to tax on certain income from PFIC stock. For these reasons the amount that must be distributed to shareholders, and which will be taxed to shareholders as ordinary income or long-term capital gain, may be increased or decreased substantially as compared to a fund that did not invest in PFIC stock.
SWAP AGREEMENTS. Each Fund may enter into swap agreements. The rules governing the tax aspects of swap agreements are in a developing stage and are not entirely clear in certain respects. Accordingly, while a Fund intends to account for such transactions in a manner deemed to be appropriate, the IRS might not accept such treatment. If it did not, the status of a Fund as a regulated investment company might be affected. Each Fund intends to monitor developments in this area. Certain requirements that must be met under the Code in order for a Fund to qualify as a regulated investment company may limit the extent to which the Fund will be able to engage in swap agreements.
FUND DISTRIBUTIONS. Each Fund anticipates distributing substantially all of its investment company taxable income for each taxable year. Such distributions will be taxable to shareholders as ordinary income and treated as dividends for federal income tax purposes, but they will qualify for the 70% dividends received deduction for corporations and as qualified dividend income for individuals and other noncorporate taxpayers 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 15% 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.
Ordinary income dividends paid by a Fund to individuals and other noncorporate taxpayers will be treated as qualified dividend income that is subject to tax at a maximum rate of 15% to the extent of the amount of qualifying dividends received by the Fund from domestic corporations and from foreign corporations that are either incorporated in a possession of the United States, or are eligible for benefits under certain income tax treaties with the United States that include an exchange of information program. In addition, qualifying dividends include dividends paid with respect to stock of a foreign corporation that is readily tradable on an established securities market in the United States. However, dividends received by the Fund from foreign personal holding companies, foreign investment companies or PFICs are not qualifying dividends. If the qualifying dividend income received by a Fund is equal to 95% (or a greater percentage) of the Fund's gross income (exclusive of net capital gain) in any taxable year, all of the ordinary income dividends paid by the Fund will be qualifying dividend income.
Dividends paid by a Fund will not be eligible for the dividends received deduction when received by a corporation that has not held its shares of the Fund for at least 46 days during the 91-day period beginning 45 days before the date on which the shares become ex-dividend and will not be treated as qualified dividend income when received by an individual or other noncorporate shareholder who has not held its shares of the Fund for at least 61 days during the 121-day period beginning 60 days before the date on which the shares become ex-dividend.
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. However, the AMT on capital gain dividends and qualified dividend income paid by a Fund to a noncorporate shareholder may not exceed a maximum rate of 15%. 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 dividends 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 are not made from 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 under the wash sale rules if the shareholder purchases other shares of the Fund within 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 15%. 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.
BACKUP WITHHOLDING. The Funds may be required to withhold 28% of taxable distributions and/or redemption payments. 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 and short-term capital gain and of certain types of interest income) will be subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount of the distribution to the extent discussed below. 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.
As a consequence of the enactment of the American Jobs Creation Act of 2004, such a foreign shareholder will also generally be exempt from U.S. federal income tax on distributions that a Fund designates as "short-term capital gain dividends" or as "interest-related dividends" for Fund taxable years beginning after December 31, 2004 and before January 1, 2008. The aggregate amount that may be designated as short-term capital gain dividends for a Fund's taxable year is generally equal to the excess (if any) of the Fund's net short-term capital gain over its net long-term capital loss. The aggregate amount designated as interest-related dividends for any Fund taxable year is generally limited to the excess of the amount of "qualified interest income" of the Fund over allocable expenses. Qualified interest income is generally equal to the sum of a Fund's U.S.-source income that constitutes (1) bank deposit interest; (2) short-term original issue discount that is exempt from withholding tax; (3) interest on a debt obligation which is in registered form, unless it is earned on a debt obligation issued by a corporation or partnership in which the Fund holds a 10-percent ownership interest or its payment is contingent on certain events; and (4) interest-related dividends received from another regulated investment company.
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, short-term capital gain dividends, interest-related 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 28% on distributions 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 the foreign tax election (as defined below) 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 adviser 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. Estates of decedents dying after December 31, 2004 and before January 1, 2008 will be able to exempt from federal estate tax the proportion of the value of a Fund's shares attributable to "qualifying assets" held by the Fund at the end of the quarter immediately preceding the decedent's death (or such other time as the Internal Revenue Service may designate in regulations). Qualifying assets include bank deposits and other debt obligations that pay interest or accrue original issue discount that is exempt from withholding tax, debt obligations of a domestic corporation that are treated as giving rise to foreign source income, and other investments that are not treated for tax purposes as being within the United States. Shareholders will be advised annually of the portion of a Fund's assets that constituted qualifying assets at the end of each quarter of its taxable year.
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, and the portion of foreign source income consisting of qualified dividend income is reduced by approximately 57% to account for the tax rate differential. 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 February 21, 2005. 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 ordinary income, qualified dividend 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 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.
The Trust (on behalf of the Institutional Classes) or AIM Distributors may terminate the Distribution Agreement on 60 days' written notice without penalty. The Distribution Agreement will terminate automatically in the event of its assignment.
AIM Distributors or one or more of its corporate affiliates (collectively, the "ADI Affiliates") may make additional cash payments to financial advisors in connection with the promotion and sale of shares of AIM Funds. ADI Affiliates make these payments from their own resources, from AIM Distributors' retention of underwriting concessions. These additional cash payments are described below. The categories described below are not mutually exclusive. The same financial advisor may receive payments under more than one or all categories. Most financial advisors that sell shares of AIM Funds receive one or more types of these cash payments. Financial advisors negotiate the cash payments to be paid on an individual basis. Where services are provided, the costs of providing the services and the overall package of services provided may vary from one financial advisor to another. ADI Affiliates do not make an independent assessment of the cost of providing such services.
In this context, "financial advisors" include any broker, dealer, bank (including bank trust departments), registered investment advisor, financial planner, retirement plan administrator and any other financial intermediary having a selling, administration or similar agreement with AIM.
REVENUE SHARING PAYMENTS. ADI Affiliates make revenue sharing payments as incentives to certain financial advisors to promote and sell shares of AIM Funds. The benefits ADI Affiliates receive when they make these payments include, among other things, placing AIM Funds on the financial advisor's funds sales system, placing AIM Funds on the financial advisor's preferred or recommended fund list, and access (in some cases on a preferential basis over other competitors) to individual members of the financial advisor's sales force or to the financial advisor's management. Revenue sharing payments are sometimes referred to as "shelf space" payments because the payments compensate the financial advisor for including AIM Funds in its fund sales system (on its "sales shelf"). ADI Affiliates compensate financial advisors differently depending typically on the level and/or type of considerations provided by the financial advisor.
The revenue sharing payments ADI Affiliates make may be calculated on the average daily net assets of the applicable AIM Funds attributable to that particular financial advisor ("Asset-Based Payments"), in which case the total amount of such cash payments shall not exceed 0.10% per annum of those assets during a defined period. Asset-Based Payments primarily create incentives to retain previously sold shares of AIM Funds in investor accounts.
ADMINISTRATIVE AND PROCESSING SUPPORT PAYMENTS. ADI Affiliates also may make payments to certain financial advisors that sell AIM Fund shares for certain administrative services, including record keeping and sub-accounting shareholder accounts. Payments for these services typically do not exceed 0.10% of average annual assets.
OTHER CASH PAYMENTS. From time to time, ADI Affiliates, at their expense, may provide additional compensation to financial advisors which sell or arrange for the sale of shares of the Fund. Such compensation provided by ADI Affiliates may include financial assistance to financial advisors that enable ADI Affiliates to participate in and/or present at conferences or seminars, sales or training programs for invited registered representatives and other employees, client entertainment, client and investor events, and other financial advisor-sponsored events, and travel expenses, including lodging incurred by registered representatives and other employees in connection with client prospecting, retention and due diligence trips. Other compensation may be offered to the extent not prohibited by state laws or any self-regulatory agency, such as the NASD, Inc. ADI Affiliates make payments for entertainment events they deem appropriate, subject to ADI Affiliates guidelines and applicable law. These payments may vary depending upon the nature of the event or the relationship.
ADI Affiliates are motivated to make the payments described above since they promote the sale of AIM Fund shares and the retention of those investments by clients of financial advisors. To the extent financial advisors sell more shares of AIM Funds or retain shares of AIM Funds in their clients' accounts, ADI Affiliates benefit from the incremental management and other fees paid to ADI Affiliates by the AIM Funds with respect to those assets.
In certain cases these payments could be significant to the financial advisor. Your financial advisor may charge you additional fees or commissions other than those disclosed in the prospectus. You can ask your financial advisor about any payments it receives from ADI Affiliates or the AIM Funds, as well as about fees and/or commissions it charges.
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
made at the beginning of the one, five and ten year periods
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 one, five and ten year periods (or since inception if less than ten years) ended April 30 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 Institutional Class shares does not reflect a deduction of any sales charge since that class is sold and redeemed at net asset value.
A Fund's total return shows its overall change in value, including changes in share price and assuming all the Fund's dividends and capital gain distributions are reinvested. A cumulative total return reflects the Fund's performance over a stated period of time. An average annual total return reflects the hypothetical compounded annual rate of return that would have produced the same cumulative total return if the Fund's performance had been constant over the entire period. Because average annual returns tend to even out variations in the Fund's return, investors should recognize that such returns are not the same as actual year-by-year results. To illustrate the components of overall performance, a Fund may separate its cumulative and average annual returns into income results and capital gains or losses.
Alternative Total Return Quotations
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, average annual total return may
be calculated without assuming payment of the full sales load according to the
following formula:
n
P(1+U) =ERV
Where P = a hypothetical initial payment of $1,000;
U = average annual total return assuming payment of only a
stated portion of, or none of, the applicable maximum sales
load at the beginning of the stated period;
n = number of years; 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 Institutional Class shares, for the one, five and ten year periods (or since inception if less than ten years) ended April 30 are found in Appendix L.
Calculation of Certain Performance Data
The Funds may use a restated or a blended performance calculation to derive certain performance data shown for their Institutional Class shares in this Statement of Additional Information and in the Funds' advertisements and other sales material. If the Funds' Institutional Class shares were not offered to the public during the performance period covered, the performance data shown will be the restated historical performance of the Funds' Class A shares at net asset value and reflecting the Rule 12b-1 fees applicable to the Class A shares. If the Funds' Institutional Class shares were offered to the public only during a portion of the performance period covered, the performance data shown will be the blended returns of the historical performance of the Funds' Institutional Class shares since their inception and the restated historical performance of the Funds' Class A shares (for periods prior to inception of the Institutional Class shares) at net asset value and reflecting the Rule 12b-1 fees applicable to the Class A shares. If the Funds' Institutional Class shares were offered to the public during the entire performance period covered, the performance data shown will be the historical performance of the Funds' Institutional Class shares.
A restated or blended performance calculation may be used to derive (i)
the Funds' standardized average annual total returns over a stated period and
(ii) the Funds' 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:
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
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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 Institutional Class shares does not reflect a deduction of any sales charges since that class is 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 or distribution) 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 April 30 are found in Appendix L.
Average Annual Total Return (After Taxes on Distributions and Sale of Fund Shares) Quotation
A Fund's average annual total return (after taxes on distributions and sale of Fund shares) shows its overall change in value, including changes in share price and assuming all the Fund's dividends and capital gain distributions are reinvested. It reflects the deduction of federal income taxes on both distributions and proceeds. Average annual total returns (after taxes on distributions and redemption) are calculated by determining the after-tax growth or decline in value of a hypothetical investment in a Fund over a stated period of time, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. Because average annual total returns (after taxes on distributions and redemption) tend to even out variations in the Fund's return, investors should recognize that such returns are not the same as actual year-by-year results. To illustrate the components of overall performance, a Fund may separate its average annual total returns (after taxes on distributions and redemption) into income results and capital gains or losses.
The standard formula for calculating average annual total return (after taxes on distributions and redemption) is:
n
P(1+T) = ATV
DR
Where P = a hypothetical initial payment of $1,000;
T = average annual total return (after taxes on distributions
and redemption);
n = number of years; and
ATV = ending value of a hypothetical $1,000 payment made at 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.
|
Standardized average annual total return (after taxes on distributions and redemption) for Institutional Class shares does not reflect a deduction of any sales charges since that class is 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 Institutional Class shares for the one, five and ten year periods (or since inception if less than 10 years) ended April 30, are found in Appendix L.
Performance Information
All advertisements for 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.
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 Financial World New York Times Barron's Forbes Pension World Best's Review Fortune Pensions & Investments Bloomberg Hartford Courant Inc. Personal Investor Broker World Institutional Investor Philadelphia Inquirer Business Week Insurance Forum The Bond Buyer Changing Times Insurance Week USA Today Christian Science Monitor Investor's Business Daily U.S. News & World Report Consumer Reports Journal of the American Wall Street Journal Economist Society of CLU & ChFC Washington Post FACS of the Week Kiplinger Letter CNN Financial Planning Money CNBC Financial Product News Mutual Fund Forecaster PBS Financial Services Week Nation's Business |
Each Fund may also compare its performance to performance data of similar mutual funds as published by the following services:
Bank Rate Monitor Morningstar, Inc. Bloomberg Standard & Poor's Factset Data Systems Strategic Insight Lipper, Inc. Thompson Financial |
Each Fund's performance may also be compared in advertising to the performance of comparative benchmarks such as the following:
Lipper Global Fund Index MSCI World Index Lipper Global Multi-Cap Growth Index Russell 2000(R) Index Lipper Mid-Cap Core Fund Index Standard & Poor's Composite Index Lipper Small-Cap Core Fund 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.
PENDING LITIGATION
Regulatory Action Alleging Market Timing
On April 12, 2005, the Attorney General of the State of West Virginia
("WVAG") filed a civil lawsuit against AIM, INVESCO Funds Group, Inc. ("IFG")
(the former investment advisor to certain AIM Funds) and ADI, as well as
numerous unrelated mutual fund complexes and financial institutions. None of the
AIM Funds has been named as a defendant in this lawsuit. The WVAG complaint,
filed in the Circuit Court of Marshall County, West Virginia [Civil Action No.
05-C-81], alleges, in substance, that AIM, IFG and ADI engaged in unfair
competition and/or unfair or deceptive trade practices by failing to disclose in
the prospectuses for the AIM Funds, including those formerly advised by IFG,
that they had entered into certain arrangements permitting market timing of such
Funds. As a result of the foregoing, the WVAG alleges violations of W. Va. Code
Section 46A-1-101, et seq. (the West Virginia Consumer Credit and Protection
Act). The WVAG complaint is seeking injunctive relief; civil monetary penalties;
a writ of quo warranto against the defendants; pre-judgment and post-judgment
interest; costs and expenses, including counsel fees; and other relief.
If AIM is unsuccessful in its defense of the WVAG lawsuit, it could be barred from serving as an investment adviser for any investment company registered under the Investment Company Act of 1940, as amended (a "registered investment company"). Such results could affect the ability of AIM or any other investment advisor directly or indirectly owned by AMVESCAP PLC ("AMVESCAP"), from serving as an investment advisor to any registered investment company, including your Fund. Your Fund has been informed by AIM that, if these results occur, AIM will seek exemptive relief from the SEC to permit it to continue to serve as your Fund's investment advisor. There is no assurance that such exemptive relief will be granted.
On May 31, 2005, the defendants removed this lawsuit to the U.S. District Court for the Northern District of West Virginia at Wheeling. On June 13, 2005, the MDL Court (as defined below) issued a Conditional Transfer Order transferring this lawsuit to the MDL Court. On June 29, 2005 the WVAG filed a Notice of Opposition to this Conditional Transfer Order. On July 7, 2005, the Supreme Court of West Virginia ruled in the context of a separate lawsuit that the WVAG does not have authority pursuant to W. Va. Code Section 46A-6-104 of the West Virginia Consumer Credit and Protection Act to bring an action based upon conduct that is ancillary to the purchase or sale of securities. AIM intends to seek dismissal of the WVAG's lawsuit against it, IFG and ADI in light of this ruling.
Private Civil Actions Alleging Market Timing
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, certain AIM Funds, IFG, AIM, AIM Management, AMVESCAP, the parent company of IFG and AIM, certain related entities, certain of their current and former officers and/or certain unrelated third parties) based on allegations of improper market timing and related activity in the AIM Funds. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal and state securities laws; (ii) violation of various provisions of ERISA; (iii) breach of fiduciary duty; and/or (iv) breach of contract. These lawsuits were initiated in both Federal and state courts and seek such remedies as compensatory damages; restitution; injunctive relief; disgorgement of management fees; imposition of a constructive trust; removal of certain directors and/or employees; various corrective measures under ERISA; rescission of certain Funds' advisory agreements; interest; and attorneys' and experts' fees. A list identifying such lawsuits that have been served on IFG, AIM, the AIM Funds or related entities, or for which service of process has been waived, as of August 19, 2005 is set forth in Appendix M-1.
All lawsuits based on allegations of market timing, late trading, and related issues have been transferred to the United States District Court for the District of Maryland (the "MDL Court") for consolidated or coordinated pre-trial proceedings, with one exception. Pursuant to an Order of the MDL Court, plaintiffs consolidated their claims for pre-trial purposes into three amended complaints against various AIM- and IFG-related parties. A list identifying the amended complaints in the MDL Court is included in Appendix M-1. Plaintiffs in two of the underlying lawsuits transferred to the MDL Court
continue to seek remand of their action to state court. One lawsuit based on allegations of market-timing, late trading and related issues has not been transferred to the MDL Court. These lawsuits are identified in Appendix M-1.
Private Civil Actions Alleging Improper Use of Fair Value Pricing
Multiple civil class action lawsuits have been filed against various
parties (including, depending on the lawsuit, certain AIM Funds, IFG and/or AIM)
alleging that certain AIM Funds inadequately employed fair value pricing. These
lawsuits allege a variety of theories of recovery, including but not limited to:
(i) violations of various provisions of the Federal securities laws; (ii) common
law breach of duty; and (iii) common law negligence and gross negligence. These
lawsuits have been filed in both Federal and state courts and seek such remedies
as compensatory and punitive damages; interest; and attorneys' fees and costs. A
list identifying such lawsuits that have been served on IFG, AIM, the AIM Funds
or related entities, or for which service of process has been waived, as of
August 19, 2005 is set forth in Appendix M-2.
Private Civil Actions Alleging Excessive Advisory and/or Distribution Fees
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, IFG, AIM, INVESCO Institutional (N.A.), Inc. ("IINA"), ADI and/or INVESCO Distributors, Inc. ("INVESCO Distributors")) alleging that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale. Certain of these lawsuits also allege that the defendants adopted unlawful distribution plans. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal securities laws; (ii) breach of fiduciary duty; and/or (iii) breach of contract. These lawsuits have been filed in Federal courts and seek such remedies as damages; injunctive relief; rescission of certain Funds' advisory agreements and distribution plans; interest; prospective relief in the form of reduced fees; and attorneys' and experts' fees. A list identifying such lawsuits that have been served on IFG, AIM, the AIM Funds or related entities, or for which service of process has been waived, as of August 19, 2005 is set forth in Appendix M-3.
Private Civil Actions Alleging Improper Charging of Distribution Fees on Limited Offering Funds or Share Classes
Multiple civil lawsuits, including shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, IFG, AIM, ADI and/or certain of the trustees of the AIM Funds) alleging that the defendants breached their fiduciary duties by charging distribution fees while AIM Funds and/or specific share classes were closed generally to new investors and/or while other share classes of the same AIM Fund were not charged the same distribution fees. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal securities laws; and (ii) breach of fiduciary duty. These lawsuits have been filed in Federal courts and seek such remedies as damages; injunctive relief; and attorneys' and experts' fees. A list identifying such lawsuits that have been served on IFG, AIM, the AIM Funds or related entities, or for which service of process has been waived, as of August 19, 2005 is set forth in Appendix M-4.
Private Civil Actions Alleging Improper Mutual Fund Sales Practices and Directed-Brokerage Arrangements
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, AIM Management, IFG, AIM, AIM Investment Services, Inc. ("AIS") and/or certain of the trustees of the AIM Funds) alleging that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively promote the sale of the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal securities laws; (ii) breach of fiduciary duty; and (iii) aiding and abetting a breach of fiduciary duty. These lawsuits have been
filed in Federal courts and seek such remedies as compensatory and punitive damages; rescission of certain Funds' advisory agreements and distribution plans and recovery of all fees paid; an accounting of all fund-related fees, commissions and soft dollar payments; restitution of all unlawfully or discriminatorily obtained fees and charges; and attorneys' and experts' fees. A list identifying such lawsuits that have been served on IFG, AIM, the AIM Funds or related entities, or for which service of process has been waived, as of June 20, 2005 is set forth in Appendix M-5.
Private Civil Action Alleging Failure to Ensure Participation in Class Action Settlements
A civil lawsuit, purporting to be a class action lawsuit, has been filed against AIM, IINA, A I M Capital Management, Inc. ("AIM Capital") and the trustees of the AIM Funds alleging that the defendants breached their fiduciary duties by failing to ensure that the AIM Funds participated in class action settlements in which they were eligible to participate. This lawsuit alleges as theories of recovery: (i) violation of various provisions of the Federal securities laws; (ii) common law breach of fiduciary duty; and (iii) common law negligence. This lawsuit has been filed in Federal court and seeks such remedies as compensatory and punitive damages; forfeiture of all commissions and fees paid by the class of plaintiffs; and costs and attorneys' fees. Such lawsuit, which was dismissed by the Court on August 12, 2005.
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 LONG-TERM DEBT RATINGS
Moody's corporate ratings are as follows:
Aaa: Bonds and preferred stock 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-edged." 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 and preferred stock 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 in Aa rated bonds appear somewhat larger than those securities rated Aaa.
A: Bonds and preferred stock 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 and preferred stock 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 and preferred stock 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 and preferred stock 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 and preferred stock 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 and preferred stock 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 and preferred stock 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. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.
MOODY'S SHORT-TERM PRIME RATING SYSTEM
Moody's short-term ratings are opinions of the ability of issuers to honor senior financial obligations and contracts. Such obligations generally have an original maturity not exceeding one year, unless explicitly noted.
Moody's employs the following designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers.
PRIME-1: Issuers (or supporting institutions) rated Prime-1 have a superior
ability for repayment of senior short-term obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries; high rates of return on
funds employed; conservative capitalization structure 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 (or supporting institutions) rated Prime-2 have a strong ability to repay senior short-term debt 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, may 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 (or supporting institutions) rated Prime-3 have an acceptable ability for repayment of senior short-term debt obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require 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: In addition, in certain countries the prime rating may be modified by the issuer's or guarantor's senior unsecured long-term debt rating.
Moody's municipal ratings are as follows:
MOODY'S U.S. LONG-TERM MUNICIPAL BOND RATING DEFINITIONS
Municipal ratings are opinions of the investment quality of issuers and issues in the US municipal and tax-exempt markets. As such, these ratings incorporate Moody's assessment of the default probability and loss severity of these issuers and issues.
Municipal Ratings are based upon the analysis of four primary factors relating to municipal finance: economy, debt, finances, and administration/management strategies. Each of the factors is evaluated individually and for its effect on the other factors in the context of the municipality's ability to repay its debt.
Aaa: Issuers or issues rated Aaa demonstrate the strongest creditworthiness relative to other US municipal or tax-exempt issuers or issues.
Aa: Issuers or issues rated Aa demonstrate very strong creditworthiness relative to other US municipal or tax-exempt issuers or issues.
A: Issuers or issues rated A present above-average creditworthiness relative to other US municipal or tax-exempt issuers or issues.
Baa: Issuers or issues rated Baa represent average creditworthiness relative to other US municipal or tax-exempt issuers or issues.
Ba: Issuers or issues rated Ba demonstrate below-average creditworthiness relative to other US municipal or tax-exempt issuers or issues.
B: Issuers or issues rated B demonstrate weak creditworthiness relative to other US municipal or tax-exempt issuers or issues.
Caa: Issuers or issues rated Caa demonstrate very weak creditworthiness relative to other US municipal or tax-exempt issuers or issues.
Ca: Issuers or issues rated Ca demonstrate extremely weak creditworthiness relative to other US municipal or tax-exempt issuers or issues.
C: Issuers or issues rated C demonstrate the weakest creditworthiness relative to other US municipal or tax-exempt issuers or issues.
Note: Also, Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa to Caa. 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 MIG/VMIG US SHORT-TERM RATINGS
In municipal debt issuance, there are three rating categories for short-term obligations that are considered investment grade. These ratings are designated as Moody's Investment Grade (MIG) and are divided into three levels - MIG 1 through MIG 3.
In addition, those short-term obligations that are of speculative quality are designated SG, or speculative grade.
In the case of variable rate demand obligations (VRDOs), a two-component rating is assigned. The first element represents Moody's evaluation of the degree of risk associated with scheduled principal and interest payments. The second element represents Moody's evaluation of the degree of risk associated with the demand feature, using the MIG rating scale.
The short-term rating assigned to the demand feature of VRDOs is designated as VMIG. When either the long- or short-term aspect of a VRDO is not rated, that piece is designated NR, e.g., Aaa/NR or NR/VMIG 1.
MIG ratings expire at note maturity. By contrast, VMIG rating expirations will be a function of each issue's specific structural or credit features.
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 superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support or demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2: This designation denotes strong credit quality. Margins of protection are ample although not as large as in the preceding group.
MIG 3/VMIG 3: This designation denotes acceptable credit quality. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established.
SG: This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection.
STANDARD & POOR'S LONG-TERM CORPORATE AND MUNICIPAL RATINGS
Issue credit ratings are based in varying degrees, on the following considerations: likelihood of payment - capacity and willingness of the obligor to meet its financial commitment on an obligation 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.
The issue ratings definitions are expressed in terms of default risk. As such, they pertain to senior obligations of an entity. Junior obligations are typically rated lower than senior obligations, to reflect the lower priority in bankruptcy, as noted above.
S&P describes its ratings for corporate and municipal 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 meet its financial commitments 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 exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to meet its financial commitment on the obligation.
BB-B-CCC-CC-C: Debt rated BB, B, CCC, CC and C is regarded as having significant speculative characteristics with respect to capacity to pay interest and repay principal. BB indicates the least degree of speculation and C the highest. While such debt will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.
NR: Not Rated.
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 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.
These 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 rated 'B' 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 rated 'D' 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 Standard & Poor's believes such payments will be made during such grace period.
S&P SHORT-TERM MUNICIPAL RATINGS
An S&P note rating reflect the liquidity factors and market-access risks
unique to notes. Notes due 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 it will be treated as a note); and source of payment
(the more dependant the issue is on the market for its refinancing, the more
likely it will be treated as a note).
Note rating symbols are as follows:
SP-1: Strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is 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.
FITCH LONG-TERM CREDIT RATINGS
Fitch Ratings provides an opinion on the ability of an entity or of a securities issue to meet financial commitments, such as interest, preferred dividends, or repayment of principal, on a timely basis. These credit ratings apply to a variety of entities and issues, including but not limited to sovereigns, governments, structured financings, and corporations; debt, preferred/preference stock, bank loans, and counterparties; as well as the financial strength of insurance companies and financial guarantors.
Credit ratings are used by investors as indications of the likelihood of
getting their money back in accordance with the terms on which they invested.
Thus, the use of credit ratings defines their function: "investment grade"
ratings (international Long-term 'AAA' - 'BBB' categories; Short-term 'F1' -
'F3') indicate a relatively low probability of default, while those in the
"speculative" or "non-investment grade" categories (international Long-term 'BB'
- 'D'; Short-term 'B' - 'D') either signal a higher probability of default or
that a default has already occurred. Ratings imply no specific prediction of
default probability. However, for example, it is relevant to note that over the
long term, defaults on 'AAA' rated U.S. corporate bonds have averaged less than
0.10% per annum, while the equivalent rate for 'BBB' rated bonds was 0.35%, and
for 'B' rated bonds, 3.0%.
Fitch ratings do not reflect any credit enhancement that may be provided by insurance policies or financial guaranties unless otherwise indicated.
Entities or issues 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 credit and research 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 of any security.
The ratings are based on information obtained from issuers, other obligors, underwriters, their experts, and other sources Fitch Ratings believes to be reliable. Fitch Ratings does not audit or verify the truth or accuracy of such information. Ratings may be changed or withdrawn as a result of changes in, or the unavailability of, information or for other reasons.
Our program ratings relate only to standard issues made under the program concerned; it should not be assumed that these ratings apply to every issue made under the program. In particular, in the case of non-standard issues, i.e., those that are linked to the credit of a third party or linked to the performance of an index, ratings of these issues may deviate from the applicable program rating.
Credit ratings do not directly address any risk other than credit risk. In particular, these ratings do not deal with the risk of loss due to changes in market interest rates and other market considerations.
AAA: Bonds considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong capacity for timely payment of financial commitments, which is unlikely to be affected by foreseeable events.
AA: Bonds considered to be investment grade and of very high credit quality. The obligor has a very strong capacity for timely payment of financial commitments which is not significantly vulnerable to foreseeable events.
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 good credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances are more likely to impair this capacity.
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.
WITHDRAWN: A rating will be withdrawn when an issue matures or is called or refinanced and at Fitch's discretion, when Fitch Ratings deems the amount of information available to be inadequate for ratings purposes.
RATINGWATCH: Ratings are placed on RatingWatch to notify investors that there is a reasonable possibility of 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," if ratings may be raised, lowered or maintained. RatingWatch is typically resolved over a relatively short period.
FITCH SPECULATIVE GRADE BOND RATINGS
BB: Bonds are considered speculative. There is a possibility of credit risk developing, particularly as the result of adverse economic changes over time. However, business and financial alternatives may be available to allow financial commitments to be met. ' B: Bonds are considered highly speculative. Significant credit risk is present but a limited margin of safety remains. While bonds in this class are currently meeting financial commitments, the capacity for continued payment is contingent upon a sustained, favorable business and economic environment.
CCC: Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic developments.
CC: Default of some kind appears probable.
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 are valued on the basis of their prospects for achieving partial or full 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 categories below CCC.
FITCH SHORT-TERM CREDIT RATINGS
The following ratings scale applies to foreign currency and local currency ratings. A Short-term rating has a time horizon of less than 12 months for most obligations, or up to three years for U.S. public finance securities, and thus places greater emphasis on the liquidity necessary to meet financial commitments in a timely manner.
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 in the case of the higher 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 result in a reduction to non-investment grade.
B: Speculative. Minimal capacity for timely payment of financial commitments, plus vulnerability to near-term adverse changes in financial and economic conditions.
C: High default risk. Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon a sustained, favorable business and economic environment.
D: Default. Issues assigned this rating are in actual or imminent payment default.
APPENDIX B
EXAMPLES OF PERSONS TO WHOM AIM PROVIDES
NON-PUBLIC PORTFOLIO HOLDINGS ON AN ONGOING BASIS
(AS OF JULY 27, 2005)
SERVICE PROVIDER DISCLOSURE CATEGORY
---------------- -------------------
Ballard Spahr Andrews & Ingersoll, LLP Legal Counsel
Foley & Lardner LLP Legal Counsel (for certain AIM Funds)
Kramer, Levin Naftalis & Frankel LLP Legal Counsel
Ernst & Young LLP Independent Registered Public
Accounting Firm (for certain AIM Funds)
PricewaterhouseCoopers LLP Independent Registered Public
Accounting Firm (for certain AIM Funds)
Brown Brothers Harriman & Co. Securities Lender (for certain AIM Funds)
Fitch, Inc. Rating & Ranking Agency (for certain AIM Funds)
iMoneyNet Ranking Agency (for certain AIM funds)
Lipper Inc. Rating & Ranking Agency (for certain AIM Funds)
Moody's Investors Service Rating & Ranking Agency (for certain
AIM Funds)
Institutional Shareholder Services, Inc. Proxy Voting Service
State Street Bank and Trust Company Custodian (for certain AIM Funds),
Software Provider, Securities Lender
(for certain AIM Funds)
The Bank of New York Custodian (for certain AIM Funds)
AIM Investment Services, Inc. Transfer Agent
Bloomberg System Provider (for certain AIM Funds)
Reuters America Inc. Pricing Service (for certain AIM Funds)
The MacGregor Group, Inc. Software Provider
Thomson Financial, Inc. Software Provider
Xcitek Solutions Plus Software Provider
Bowne & Co., Inc. Financial Printer
CENVEO Financial Printer
Classic Printers Inc. Financial Printer
Color Dynamics Financial Printer
Earth Color Houston Financial Printer
EMCO Press Financial Printer
Grover Printing Financial Printer
Gulfstream Graphics Corp. Financial Printer
Signature Financial Printer
Southwest Precision Printers, Inc. Financial Printer
ABN Amro Financial Services, Inc. Broker (for certain AIM Funds)
BB&T Capital Markets Broker (for certain AIM Funds)
Belle Haven Investments L.P. Broker (for certain AIM Funds)
BOSC, Inc. Broker (for certain AIM Funds)
Cabrera Capital Markets Broker (for certain AIM Funds)
|
SERVICE PROVIDER DISCLOSURE CATEGORY
---------------- -------------------
Coastal Securities, LP Broker (for certain AIM Funds)
Duncan-Williams, Inc. Broker (for certain AIM Funds)
Fidelity Investments Broker (for certain AIM Funds)
First Albany Capital Broker (for certain AIM Funds)
First Tryon Securities Broker (for certain AIM Funds)
Anglemyer & Co. Analyst (for certain AIM Funds)
Empirical Research Partners Analyst (for certain AIM Funds)
Factset Research Systems, Inc. Analyst (for certain AIM Funds)
Global Trend Alert Analyst (for certain AIM Funds)
J.P. Morgan Chase Analyst (for certain AIM Funds)
Kevin Dann & Partners Analyst (for certain AIM Funds)
Muzea Insider Consulting Services, LLC Analyst (for certain AIM Funds)
Noah Financial, LLC Analyst (for certain AIM Funds)
Piper Jaffray Analyst (for certain AIM Funds)
|
APPENDIX C
TRUSTEES AND OFFICERS
As of July 31, 2005
The address of each trustee and officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees 109 portfolios in the AIM Funds complex. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust's organizational documents. Column two below includes length of time served with any predecessor entities, if any.
TRUSTEE
NAME, YEAR OF BIRTH AND AND/OR OTHER
POSITION(S) HELD WITH THE OFFICER TRUSTEESHIPS HELD
TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS BY TRUSTEE
----- ----- ------------------------------------------- ----------
INTERESTED PERSONS
Robert H. Graham(1) -- 1946 1998 Director and Chairman, A I M Management Group None
Trustee, Vice Chair, and Inc. (financial services holding company);
President Director and Vice Chairman, AMVESCAP PLC and
Chairman of AMVESCAP PLC - AIM Division (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), AIM Investment
Services, Inc. (registered transfer agent), and
Fund Management Company (registered broker
dealer); and Chief Executive Officer, AMVESCAP
PLC - Managed Products
Mark H. Williamson(2) -- 1951 2003 Director, President and Chief Executive Officer, None
Trustee and Executive Vice A I M Management Group Inc. (financial services
President holding company); Director, Chairman and
President, A I M Advisors, Inc. (registered
investment advisor); Director, A I M Capital
Management, Inc. (registered investment advisor)
and A I M Distributors, Inc. (registered broker
dealer); Director and Chairman, AIM Investment
Services, Inc. (registered transfer agent), Fund
Management Company (registered broker dealer)
and INVESCO Distributors, Inc. (registered
broker dealer); and Chief Executive Officer,
AMVESCAP PLC - AIM Division (parent of AIM and a
global investment management firm)
Formerly: Director, Chairman, President and
Chief Executive Officer, INVESCO Funds Group,
Inc.; President and Chief Executive Officer,
INVESCO Distributors, Inc.; Chief Executive
Officer, AMVESCAP PLC - Managed Products
|
(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 OTHER
POSITION(S) HELD WITH THE OFFICER TRUSTEESHIPS HELD
TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS BY TRUSTEE
----- ----- ------------------------------------------- ----------
INDEPENDENT TRUSTEES
Bruce L. Crockett(3) -- 1944 2001 Chairman, Crockett Technology Associates ACE Limited
Trustee and Chair (technology consulting company) (insurance
company); and
Captaris, Inc.
(unified messaging
provider)
Bob R. Baker -- 1936 2003 Retired None
Trustee
Frank S. Bayley -- 1939 1987 Retired Badgley Funds, Inc.
Trustee Formerly: Partner, law firm of Baker & McKenzie (registered
investment company
(2 portfolios))
James T. Bunch -- 1942 2003 Co-President and Founder, Green, Manning & None
Trustee Bunch Ltd. (investment banking firm); and
Director, Policy Studies, Inc. and Van Gilder
Insurance Corporation
Albert R. Dowden -- 1941 2001 Director of a number of public and private None
Trustee business corporations, including the Boss Group,
Ltd. (private investment and management);
Cortland Trust, Inc. (Chairman) (registered
investment company (3 portfolios)); Annuity and
Life Re (Holdings), Ltd. (insurance company);
and CompuDyne Corporation (provider of products
and services to the public security market)
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 2001 Retired None
Trustee
Jack M. Fields -- 1952 2001 Chief Executive Officer, Twenty First Century Administaff ; and
Trustee Group, Inc. (government affairs company) and; Discovery Global
Owner, Dos Angelos Ranch, L.P. Education Fund
(non-profit)
Formerly: Chief Executive Officer, Texana
Timber LP (sustainable forestry company)
Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Naftalis and Cortland Trust,
Trustee Frankel LLP Inc. (registered
investment company
(3 portfolios))
|
TRUSTEE
NAME, YEAR OF BIRTH AND AND/OR OTHER
POSITION(S) HELD WITH THE OFFICER TRUSTEESHIPS HELD
TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS BY TRUSTEE
----- ----- ------------------------------------------- ----------
Gerald J. Lewis -- 1933 2003 Chairman, Lawsuit Resolution Services (San General Chemical
Trustee Diego, California) Group, Inc.,
Formerly: Associate Justice of the California
Court of Appeals
Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA of the None
Trustee USA
Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None
Trustee
Ruth H. Quigley -- 1935 1987 Retired None
Trustee
Larry Soll -- 1942 2003 Retired None
Trustee
OTHER OFFICERS
Lisa O. Brinkley(4) -- 1959 2004 Senior Vice President, A I M Management Group N/A
Senior Vice President and Inc. (financial services holding company);
Chief Compliance Officer Senior Vice President and Chief Compliance
Officer, A I M Advisors, Inc.; Vice President
and Chief Compliance Officer, A I M Capital
Management, Inc.; and Vice President, A I M
Distributors, Inc., AIM Investment Services,
Inc. and Fund Management Company.
Formerly: Senior Vice President and Compliance
Director, Delaware Investments Family of Funds;
and Chief Compliance Officer, A I M
Distributors, Inc.
Russell C. Burk(5) -- 1958 2005 Formerly: Director of Compliance and Assistant
Senior Vice President General Counsel, ICON Advisers, Inc.; Financial
(Senior Officer) Consultants, Merrill Lynch; General Counsel and
Director of Compliance, ALPS Mutual Funds, Inc.
|
(5) Mr. Burk was elected Senior Vice President of the Trust effective February 15, 2005
TRUSTEE
NAME, YEAR OF BIRTH AND AND/OR OTHER
POSITION(S) HELD WITH THE OFFICER TRUSTEESHIPS HELD
TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS BY TRUSTEE
----- ----- ------------------------------------------- ----------
Kevin M. Carome -- 1956 2003 Director, Senior Vice President, Secretary and N/A
Secretary and Senior Vice General Counsel, A I M Management Group Inc.
President, Chief Legal Officer (financial services holding company) and A I M
Advisors, Inc.; Director and Vice President,
INVESCO Distributors, Inc.; Vice President, A I
M Capital Management, Inc., and AIM Investment
Services, Inc.; and Director, Vice President and
General Counsel, Fund Management Company; and
Senior Vice President, A I M Distributors, Inc.
Formerly: Senior Vice President and General
Counsel, Liberty Financial Companies, Inc.; and
Senior Vice President and General Counsel,
Liberty Funds Group, LLC; and Vice President, A
I M Distributors, Inc., and Director, Fund
Management Company.
Sidney M. Dilgren -- 1961 2004 Vice President and Fund Treasurer, A I M N/A
Vice President and Advisors, Inc.
Treasurer Formerly: Senior Vice President, AIM Investment
Services, Inc.; and Vice President, A I M
Distributors, Inc.
J. Philip Ferguson(6) -- 1945 2005 Senior Vice President and Chief Investment N/A
Vice President Officer, A I M Advisors Inc.; Director,
Chairman, Chief Executive Officer, President and
Chief Investment Officer, A I M Capital
Management, Inc; Executive Vice President, A I M
Management Group Inc.; Director, Chairman and
President, AIM Alternative Asset Advisors, Inc.;
Director and President, AIM Alternative Asset
Management Company, Inc.; and Chairman and Chief
Executive Officer, AIM Private Asset Management,
Inc.
Formerly: Senior Vice President, AIM Private
Asset Management, Inc.; Chief Equity Officer,
and Senior Investment Officer, A I M Capital
Management, Inc.; and Managing Partner, Beutel,
Goodman Capital Management
Karen Dunn Kelley -- 1960 2004 Director of Cash Management, Managing Director N/A
Vice President and Chief Cash Management Officer, A I M Capital
Management, Inc.; Director and President, Fund
Management Company; and Vice President, A I M
Advisors, Inc.
|
TRUSTEE OWNERSHIP OF FUND SHARES AS OF DECEMBER 31, 2004
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL REGISTERED
INVESTMENT COMPANIES OVERSEEN BY
DOLLAR RANGE OF EQUITY SECURITIES TRUSTEE IN THE AIM FAMILY OF
NAME OF TRUSTEE PER FUND FUNDS--Registered Trademark--
------------------- ----------------------------------------------------- --------------------------------
Robert H. Graham AIM Developing Markets Fund Over $100,000 Over $100,000
-0-
Mark H. Williamson -0- Over $100,000
Bob R. Baker -0- Over $100,000
Frank S. Bayley AIM Developing Markets Fund $1 - $10,000 Over $100,000
AIM Trimark Small Companies Fund $10,001 - $50,000
James T. Bunch -0- Over $100,000
Bruce L. Crockett -0- $10,001 - $50,000(7)
Albert R. Dowden -0- Over $100,000
Edward K. Dunn, Jr. AIM Trimark Endeavor Fund $10,001 - $50,000 Over $100,000(7)
Jack M. Fields -0- Over $100,000(7)
Carl Frischling AIM Developing Markets Fund Over $100,000 Over $100,000(7)
AIM Trimark Small Companies Fund $50,001 - $100,000
Gerald J. Lewis -0- Over $100,000(7)
Prema Mathai-Davis -0- $1 - $10,0007
Lewis F. Pennock -0- Over $100,000
Ruth H. Quigley AIM Developing Markets Fund $1 - $10,000 $10,001 - $50,000
Larry Soll AIM Developing Markets Fund $1 - $10,000 Over $100,000(7)
|
(7) 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 D
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, 2004:
RETIREMENT ESTIMATED
AGGREGATE BENEFITS ANNUAL TOTAL
COMPENSATION ACCRUED BENEFITS UPON COMPENSATION
FROM THE BY ALL RETIREMENT FROM FROM ALL AIM
TRUSTEE TRUST(1)(2) AIM FUNDS(3) ALL AIM FUNDS(4) FUNDS(5)(6)
------- ----------- ------------ ---------------- -----------
Bob R. Baker $5,696 $198,871 $144,786 $189,750
Frank S. Bayley 5,666 175,241 112,500 193,500
James T. Bunch 5,696 143,455 112,500 186,000
Bruce L. Crockett 5,666 75,638 112,500 223,500
Albert R. Dowden 5,634 93,210 112,500 192,500
Edward K. Dunn, Jr. 5,666 133,390 112,500 193,500
Jack M. Fields 5,666 48,070 112,500 186,000
Carl Frischling(7) 5,633 62,040 112,500 185,000
Gerald J. Lewis 5,696 143,455 112,500 186,000
Prema Mathai-Davis 5,666 55,768 112,500 189,750
Lewis F. Pennock 5,666 80,777 112,500 186,000
Ruth H. Quigley 5,666 154,767 112,500 189,750
Louis S. Sklar(8) 5,666 115,160 112,500 186,000
Larry Soll 5,696 184,356 130,823 186,000
|
(1) Amounts shown are based on the fiscal year ended October 31, 2004. The total amount of compensation deferred by all trustees of the Trust during the fiscal year ended October 31, 2004, including earnings was $19,101.
(2) At the request of the trustees, AMVESCAP has agreed to reimburse the Trust for Fund expenses related to market timing matters. "Aggregate Compensation From the Trust" above does not include $1,463 of trustee compensation which, pursuant to such agreement, was reimbursed by AMVESCAP during the fiscal year ended October 31, 2004.
(3) During the fiscal year ended October 31, 2004, the total amount of expenses allocated to the Trust in respect of such retirement benefits was $10,092.
(4) These amounts represent the estimated annual benefits payable by the AIM Funds upon the trustee's retirement and assumes each trustee serves until his or her normal retirement date.
(5) All trustees currently serve as trustees of 18 registered investment companies advised by AIM.
(6) At the request of the trustees, AMVESCAP has agreed to reimburse the Trust for Fund expenses related to market timing matters. "Total Compensation From All AIM Funds" above does not include $44,000 of trustee compensation which pursuant to such agreement was reimbursed by AMVESCAP during the calendar year ended December 31, 2004.
(7) During the fiscal year ended October 31, 2004, the Trust paid $24,001 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
(8) Mr. Sklar retired as a trustee on December 31, 2004.
APPENDIX E
PROXY VOTING POLICIES
PROXY POLICIES AND PROCEDURES
(AS AMENDED SEPTEMBER 16, 2004)
A. PROXY POLICIES
Each of A I M Advisors, Inc., A I M Capital Management, Inc., AIM Private Asset Management, Inc. and AIM Alternative Asset Management Company (each an "AIM Advisor" and collectively "AIM") has the fiduciary obligation to, at all times, make the economic best interest of advisory clients the sole consideration when voting proxies of companies held in client accounts. As a general rule, each AIM Advisor shall vote against any actions that would reduce the rights or options of shareholders, reduce shareholder influence over the board of directors and management, reduce the alignment of interests between management and shareholders, or reduce the value of shareholders' investments. At the same time, AIM believes in supporting the management of companies in which it invests, and will accord proper weight to the positions of a company's board of directors, and the AIM portfolio managers who chose to invest in the companies. Therefore, on most issues, our votes have been cast in accordance with the recommendations of the company's board of directors, and we do not currently expect that trend to change. Although AIM's proxy voting policies are stated below, AIM's proxy committee considers all relevant facts and circumstances, and retains the right to vote proxies as deemed appropriate.
I. BOARDS OF DIRECTORS
A board that has at least a majority of independent directors is integral to good corporate governance. Key board committees, including audit, compensation and nominating committees, should be completely independent.
There are some actions by directors that should result in votes being withheld. These instances include directors who:
- Are not independent directors and (a) sit on the board's audit, compensation or nominating committee, or (b) sit on a board where the majority of the board is not independent;
- Attend less than 75 percent of the board and committee meetings without a valid excuse;
- Implement or renew a dead-hand or modified dead-hand poison pill;
- Sit on the boards of an excessive number of companies;
- Enacted egregious corporate governance or other policies or failed to replace management as appropriate;
- Have failed to act on takeover offers where the majority of the shareholders have tendered their shares; or
- Ignore a shareholder proposal that is approved by a majority of the shares outstanding.
Votes in a contested election of directors must be evaluated on a case-by-case basis, considering the following factors:
- Long-term financial performance of the target company relative to its industry;
Management's track record;
- Portfolio manager's assessment;
- Qualifications of director nominees (both slates);
- Evaluation of what each side is offering shareholders as well as the likelihood that the proposed objectives and goals can be met; and
- Background to the proxy contest.
II. INDEPENDENT AUDITORS
A company should limit its relationship with its auditors to the audit engagement, and certain closely related activities that do not, in the aggregate, raise an appearance of impaired independence. We will support the reappointment of the company's auditors unless:
- It is not clear that the auditors will be able to fulfill their function;
- There is reason to believe the independent auditors have rendered an opinion that is neither accurate nor indicative of the company's financial position; or
- The auditors have a significant professional or personal relationship with the issuer that compromises the auditors' independence.
III. COMPENSATION PROGRAMS
Appropriately designed equity-based compensation plans, approved by shareholders, can be an effective way to align the interests of long-term shareholders and the interests of management, employees and directors. Plans should not substantially dilute shareholders' ownership interests in the company, provide participants with excessive awards or have objectionable structural features. We will consider all incentives, awards and compensation, and compare them to a company-specific adjusted allowable dilution cap and a weighted average estimate of shareholder wealth transfer and voting power dilution.
- We will generally vote against equity-based plans where the total dilution (including all equity-based plans) is excessive.
- We will support the use of employee stock purchase plans to increase company stock ownership by employees, provided that shares purchased under the plan are acquired for no less than 85% of their market value.
- We will vote against plans that have any of the following structural features: ability to re-price underwater options without shareholder approval, ability to issue options with an exercise price below the stock's current market price, ability to issue reload options, or automatic share replenishment ("evergreen") feature.
- We will vote for proposals to reprice options if there is a value-for-value (rather than a share-for-share) exchange.
- We will generally support the board's discretion to determine and grant appropriate cash compensation and severance packages.
IV. CORPORATE MATTERS
We will review management proposals relating to changes to capital structure, reincorporation, restructuring and mergers and acquisitions on a case by case basis, considering the impact of the changes on corporate governance and shareholder rights, anticipated financial and operating benefits, portfolio manager views, level of dilution, and a company's industry and performance in terms of shareholder returns.
- We will vote for merger and acquisition proposals that the proxy committee and relevant portfolio managers believe, based on their review of the materials, will result in financial and operating benefits, have a fair offer price, have favorable prospects for the combined companies, and will not have a negative impact on corporate governance or shareholder rights.
- We will vote against proposals to increase the number of authorized shares of any class of stock that has superior voting rights to another class of stock.
- We will vote for proposals to increase common share authorization for a stock split, provided that the increase in authorized shares would not result in excessive dilution given a company's industry and performance in terms of shareholder returns.
- We will vote for proposals to institute open-market share repurchase plans in which all shareholders participate on an equal basis.
V. SHAREHOLDER PROPOSALS
Shareholder proposals can be extremely complex, and the impact on
share value can rarely be anticipated with any high degree of
confidence. The proxy committee reviews shareholder proposals on a
case-by-case basis, giving careful consideration to such factors as:
the proposal's impact on the company's short-term and long-term
share value, its effect on the company's reputation, the economic
effect of the proposal, industry and regional norms applicable to
the company, the company's overall corporate governance provisions,
and the reasonableness of the request.
- We will generally abstain from shareholder social and environmental proposals.
- We will generally support the board's discretion regarding shareholder proposals that involve ordinary business practices.
- We will generally vote for shareholder proposals that are designed to protect shareholder rights if the company's corporate governance standards indicate that such additional protections are warranted.
- We will generally vote for proposals to lower barriers to shareholder action.
- We will generally vote for proposals to subject shareholder rights plans to a shareholder vote. In evaluating these plans, we give favorable consideration to the presence of "TIDE" provisions (short-term sunset provisions, qualified bid/permitted offer provisions, and/or mandatory review by a committee of independent directors at least every three years).
VI. OTHER
- We will vote against any proposal where the proxy materials lack sufficient information upon which to base an informed decision.
- We will vote against any proposals to authorize the proxy to conduct any other business that is not described in the proxy statement.
- We will vote any matters not specifically covered by these proxy policies and procedures in the economic best interest of advisory clients.
AIM's proxy policies, and the procedures noted below, may be amended from time to time.
B. PROXY COMMITTEE PROCEDURES
The proxy committee currently consists of representatives from the Legal and Compliance Department, the Investments Department and the Finance Department.
The committee members review detailed reports analyzing the proxy issues and have access to proxy statements and annual reports. Committee members may also speak to management of a company regarding proxy issues and should share relevant considerations with the proxy committee. The committee then discusses the issues and determines the vote. The committee shall give appropriate and significant weight to portfolio managers' views regarding a proposal's impact on shareholders. A proxy committee meeting requires a quorum of three committee members, voting in person or by e-mail.
AIM's proxy committee shall consider its fiduciary responsibility to all clients when addressing proxy issues and vote accordingly. The proxy committee may enlist the services of reputable outside professionals and/or proxy evaluation services, such as Institutional Shareholder Services or any of its subsidiaries ("ISS"), to assist with the analysis of voting issues and/or to carry out the actual voting process. To the extent the services of ISS or another provider are used, the proxy committee shall periodically review the policies of that provider. The proxy committee shall prepare a report for the Funds' Board of Trustees on a periodic basis regarding issues where AIM's votes do not follow the recommendation of ISS or another provider because AIM's proxy policies differ from those of such provider.
In addition to the foregoing, the following shall be strictly adhered to unless contrary action receives the prior approval of the Funds' Board of Trustees:
1. Other than by voting proxies and participating in Creditors' committees, AIM shall not engage in conduct that involves an attempt to change or influence the control of a company.
2. AIM will not publicly announce its voting intentions and the reasons therefore.
3. AIM shall not participate in a proxy solicitation or otherwise seek proxy-voting authority from any other public company shareholder.
4. All communications regarding proxy issues between the proxy committee and companies or their agents, or with fellow shareholders shall be for the sole purpose of expressing and discussing AIM's concerns for its advisory clients' interests and not for an attempt to influence or control management.
C. BUSINESS/DISASTER RECOVERY
If the proxy committee is unable to meet due to a temporary business interruption, such as a power outage, a sub-committee of the proxy committee may vote proxies in accordance with the policies stated herein. If the sub-committee of the proxy committee is not able to vote proxies, the sub-committee shall authorize ISS to vote proxies by default in accordance with ISS' proxy policies and procedures, which may vary slightly from AIM's.
D. RESTRICTIONS AFFECTING VOTING
If a country's laws allow a company in that country to block the sale of the company's shares by a shareholder in advance of a shareholder meeting, AIM will not vote in shareholder meetings held in that country, unless the company represents that it will not block the sale of its shares in connection with the meeting. Administrative or other procedures, such as securities lending, may also cause AIM to refrain from voting. Although AIM considers proxy voting to be an important shareholder right, the proxy committee will not impede a portfolio manager's ability to trade in a stock in order to vote at a shareholder meeting.
E. CONFLICTS OF INTEREST
The proxy committee reviews each proxy to assess the extent to which there may be a material conflict between AIM's interests and those of advisory clients. A potential conflict of interest situation may include where AIM or an affiliate manages assets for, administers an employee benefit plan for, provides other financial products or services to, or otherwise has a material business relationship with, a company whose management is soliciting proxies, and failure to vote proxies in favor of management of the company may harm AIM's relationship with the company. In order to avoid even the appearance of impropriety, the proxy committee will not take AIM's relationship with the company into account, and will vote the company's proxies in the best interest of the advisory clients, in accordance with these proxy policies and procedures.
In the event that AIM's proxy policies and voting record do not guide the proxy committee's vote in a situation where a conflict of interest exists, the proxy committee will vote the proxy in the best interest of the advisory clients, and will provide information regarding the issue to the Funds' Board of Trustees in the next quarterly report.
To the extent that a committee member has any conflict of interest with respect to a company or an issue presented, that committee member should inform the proxy committee of such conflict and abstain from voting on that company or issue.
F. FUND OF FUNDS
When an AIM Fund that invests in another AIM Fund(s) has the right to vote on the proxy of the underlying AIM Fund, AIM will seek guidance from the Board of Trustees of the investing AIM Fund on how to vote such proxy.
AIM TRIMARK INVESTMENTS
PROXY VOTING GUIDELINES
JANUARY 14, 2005
PURPOSE AND BACKGROUND
In its trusteeship and management of mutual funds, AIM Trimark acts as fiduciary to the unitholders and must act in their best interests.
APPLICATION
AIM Trimark will make every effort to exercise all voting rights with respect to securities held in the mutual funds that it manages in Canada or to which it provides sub-advisory services, including a Fund registered under and governed by the US Investment Company Act of 1940, as amended (the "US Funds") (collectively, the "Funds"). Proxies for the funds distributed by Aim Trimark Investments and managed by an affiliate or a third party (a "Sub-Advisor") will be voted in accordance with the Sub-Advisor's policy, unless the sub-advisory agreement provides otherwise.
The portfolio managers have responsibility for exercising all proxy votes and in doing so, for acting in the best interest of the Fund. Portfolio managers must vote proxies in accordance with the Guidelines, as amended from time to time, a copy of which is attached to this policy.
When a proxy is voted against management's recommendation, the portfolio manager will provide to the CIO the reasons in writing for any vote in opposition to management's recommendation.
AIM Trimark may delegate to a third party the responsibility to vote proxies on behalf of all or certain Funds, in accordance with the Guidelines.
RECORDS MANAGEMENT
The Investment Department will endeavor to ensure that all proxies and notices are received from all issuers on a timely basis, and will maintain for all Funds
- A record of all proxies received;
- a record of votes cast;
- a copy of the reasons for voting against management; and
for the US Funds
- the documents mentioned above; and
- a copy of any document created by AIM Trimark that was material to making a decision how to vote proxies on behalf of a US Fund and that memorializes the basis of that decision.
If AIM Trimark relies on a third party to vote proxies, the third party shall retain on behalf of AIM Trimark
- a copy of the proxy statements; and
- a record of the vote cast
and the third party shall undertake to provide AIM Trimark with a copy of the proxy statements and the record promptly upon request.
All documents must be maintained and preserved in an easily accessible place i) for a period of 2 years where AIM Trimark carries on business in Canada and ii) for a period of 3 years thereafter at the same location or at any another location. If proxy voting has been delegated to a third party, the proxy statements and record of the vote cast must be available to Aim Trimark for a period of 6 years.
REPORTING
The CIO will report on proxy voting to the Fund Boards on an annual basis with respect to all Funds managed in Canada except the US Funds. The CIO will report on proxy voting to the Board of Directors of the US Funds as required from time to time.
Compliance will review the proxy voting records held by AIM Trimark on an annual basis.
AIM TRIMARK INVESTMENTS
PROXY VOTING GUIDELINES
PURPOSE
The purpose of this document is to describe AIM Trimark's general guidelines for voting proxies received from companies held in AIM Trimark's Toronto-based funds. Proxy voting for the funds managed on behalf of AIM Trimark on a sub-advised basis (i.e. by other AMVESCAP business units or on a third party basis) are subject to the proxy voting policies & procedures of those other entities. As part of its regular due diligence, AIM Trimark will review the proxy voting policies & procedures of any new sub-advisors to ensure that they are appropriate in the circumstances.
INTRODUCTION
AIM Trimark has the fiduciary obligation to ensure that the long-term economic best interest of unitholders is the key consideration when voting proxies of portfolio companies.
As a general rule, AIM Trimark shall vote against any actions that would:
- reduce the rights or options of shareholders,
- reduce shareholder influence over the board of directors and management,
- reduce the alignment of interests between management and shareholders, or
- reduce the value of shareholders' investments.
At the same time, since AIM Trimark's Toronto-based portfolio managers follow an investment discipline that includes investing in companies that are believed to have strong management teams, the portfolio managers will generally support the management of companies in which it invests, and will accord proper weight to the positions of a company's board of directors. Therefore, in most circumstances, votes will be cast in accordance with the recommendations of the company's board of directors.
While AIM Trimark's proxy voting guidelines are stated below, the portfolio managers will take into consideration all relevant facts and circumstances (including country specific considerations), and retain the right to vote proxies as deemed appropriate.
These guidelines may be amended from time to time.
CONFLICTS OF INTEREST
When voting proxies, AIM Trimark's portfolio managers assess whether there are material conflicts of interest between AIM Trimark's interests and those of unitholders. A potential conflict of interest situation may include where AIM Trimark or an affiliate manages assets for, provides other financial services to, or otherwise has a material business relationship with, a company whose management is soliciting proxies, and failure to vote in favour of management of the company may harm AIM Trimark's relationship with the company. In all situations, the portfolio managers will not take AIM Trimark's relationship with the company into account, and will vote the proxies in the best interest of the unitholders. To the extent that a portfolio manager has any conflict of interest with respect to a company or an issue presented, that portfolio manager should abstain from voting on that company or issue. Portfolio managers are required to report to the Chief Investment Officer any such conflicts of interest and / or attempts by outside parties to improperly influence the voting process.
I. BOARDS OF DIRECTORS
We believe that a board that has at least a majority of independent directors is integral to good corporate governance. Unless there are restrictions specific to a company's home jurisdiction, key board committees, including audit and compensation committees, should be completely independent.
A) VOTING ON DIRECTOR NOMINEES IN UNCONTESTED ELECTIONS
Votes in an uncontested election of directors are evaluated on a case-by-case basis, considering factors that may include:
- Long-term company performance relative to a market index,
- Composition of the board and key board committees,
- Nominee's attendance at board meetings,
- Nominee's investments in the company,
- Whether the chairman is also serving as CEO, and
- Whether a retired CEO sits on the board.
B) VOTING ON DIRECTOR NOMINEES IN CONTESTED ELECTIONS
Votes in a contested election of directors are evaluated on a case-by-case basis, considering factors that may include:
- Long-term financial performance of the target company relative to its industry,
- Management's track record,
- Background to the proxy contest,
- Qualifications of director nominees (both slates),
- Evaluation of what each side is offering shareholders as well as the likelihood that the proposed objectives and goals can be met, and
- Stock ownership positions.
C) REIMBURSEMENT OF PROXY SOLICITATION EXPENSES
Decisions to provide reimbursement for dissidents waging a proxy contest are made on a case-by-case basis.
D) SEPARATING CHAIRMAN AND CEO
Shareholder proposals to separate the chairman and CEO positions should be evaluated on a case-by-case basis.
While we generally support these proposals, some companies have governance structures in place that can satisfactorily counterbalance a combined position. Voting decisions will take into account factors such as:
- Designated lead director, appointed from the ranks of the independent board members with clearly delineated duties;
- Majority of independent directors;
- All-independent key committees;
- Committee chairpersons nominated by the independent directors;
- CEO performance is reviewed annually by a committee of outside directors; and
- Established governance guidelines.
E) MAJORITY OF INDEPENDENT DIRECTORS
While we generally support shareholder proposals asking that a majority of directors be independent, each proposal should be evaluated on a case-by-case basis.
We generally vote for shareholder proposals that request that the board's audit, compensation, and/or nominating committees be composed exclusively of independent directors.
F) STOCK OWNERSHIP REQUIREMENTS
We believe that individual directors should be appropriately compensated and motivated to act in the best interests of shareholders. Share ownership by directors better aligns their interests with those of other shareholders. Therefore, we believe that meaningful share ownership by directors is in the best interest of the company.
We generally vote for proposals that require a certain percentage of a director's compensation to be in the form of common stock.
G) SIZE OF BOARDS OF DIRECTORS
We believe that the number of directors is important to ensuring the board's effectiveness in maximizing long-term shareholder value. The board must be large enough to allow it to adequately discharge its responsibilities, without being so large that it becomes cumbersome.
While we will we prefer a board of no fewer than 5 and no more than 16 members, each situation will be considered on a case-by-case basis taking into consideration the specific company circumstances.
H) CLASSIFIED OR STAGGERED BOARDS
In a classified or staggered board, directors are typically elected in two or more "classes", serving terms greater than one year.
We prefer the annual election of all directors and will generally not support proposals that provide for staggered terms for board members. We recognize that there may be jurisdictions where staggered terms for board members is common practice and, in such situations, we will review the proposals on a case-by-case basis.
I) DIRECTOR INDEMNIFICATION AND LIABILITY PROTECTION
We recognize that many individuals may be reluctant to serve as corporate directors if they were to be personally liable for all lawsuits and legal costs. As a result, limitations on directors' liability can benefit the corporation and its shareholders by helping to attract and retain qualified directors while providing recourse to shareholders on areas of misconduct by directors.
We generally vote for proposals that limit directors' liability and provide indemnification as long as the arrangements are limited to the director acting honestly and in good faith with a view to the best interests of the corporation and, in criminal matters, are limited to the director having reasonable grounds for believing the conduct was lawful.
II. AUDITORS
A strong audit process is a requirement for good corporate governance. A significant aspect of the audit process is a strong relationship with a knowledgeable and independent set of auditors.
a) Ratification of Auditors
We believe a company should limit its relationship with its auditors to the audit engagement, and certain closely related activities that do not, in the aggregate, raise an appearance of impaired independence.
We generally vote for the reappointment of the company's auditors unless:
- It is not clear that the auditors will be able to fulfill their function;
- There is reason to believe the auditors have rendered an opinion that is neither accurate nor indicative of the company's financial position; or
- The auditors have a significant professional or personal relationship with the issuer that compromises their independence.
B) DISCLOSURE OF AUDIT VS. NON-AUDIT FEES
Understanding the fees earned by the auditors is important for assessing auditor independence. Our support for the re-appointment of the auditors will take into consideration whether the management information circular contains adequate disclosure about the amount and nature of audit vs. non-audit fees.
There may be certain jurisdictions that do not currently require disclosure of audit vs. non-audit fees. In these circumstances, we will generally support proposals that call for this disclosure.
III. COMPENSATION PROGRAMS
Appropriately designed equity-based compensation plans, approved by shareholders, can be an effective way to align the interests of long-term shareholders and the interests of management, employees and directors. Plans should not substantially dilute shareholders' ownership interests in the company, provide participants with excessive awards or have objectionable structural features. We will consider each compensation plan in its entirety (including all incentives, awards and other compensation) to determine if the plan provides the right incentives to managers and directors and is reasonable on the whole.
The following are specific guidelines dealing with some of the more common features of compensation programs (features not specifically itemized below will be considered on a case-by-case basis taking into consideration the general principles described above):
A) CASH COMPENSATION AND SEVERANCE PACKAGES
We will generally support the board's discretion to determine and grant appropriate cash compensation and severance packages.
B) EQUITY BASED PLANS - DILUTION
We will generally vote against equity-based plans where the total dilution (including all equity-based plans) is excessive.
C) EMPLOYEE STOCK PURCHASE PLANS
We will generally vote for the use of employee stock purchase plans to increase company stock ownership by employees, provided that shares purchased under the plan are acquired for no less than 85% of their market value. It is recognized that country specific circumstances may exist (e.g. tax issues) that require proposals to be reviewed on a case-by-case basis.
D) LOANS TO EMPLOYEES
We will vote against the corporation making loans to employees to allow employees to pay for stock or stock options.
E) STOCK OPTION PLANS - BOARD DISCRETION
We will vote against stock option plans that give the board broad discretion in setting the terms and conditions of the programs. Such programs should be submitted with detail and be reasonable in the circumstances regarding their cost, scope, frequency and schedule for exercising the options.
F) STOCK OPTION PLANS - INAPPROPRIATE FEATURES
We will generally vote against plans that have any of the following structural features:
- ability to re-price "underwater" options without shareholder approval,
- ability to issue options with an exercise price below the stock's current market price,
- ability to issue "reload" options, or
- automatic share replenishment ("evergreen") features.
G) STOCK OPTION PLANS - DIRECTOR ELIGIBILITY
We will generally support stock option plans for directors as long as the terms and conditions of director options are clearly defined and are reasonable.
H) STOCK OPTION PLANS - REPRICING
We will vote for proposals to re-price options if there is a value-for-value (rather than a share-for-share) exchange.
I) STOCK OPTION PLANS - VESTING
We will vote against stock option plans that are 100% vested when granted.
J) STOCK OPTION PLANS - AUTHORIZED ALLOCATIONS
We will generally vote against stock option plans that authorize allocation of 25% or more of the available options to any one individual.
K) STOCK OPTION PLANS - CHANGE IN CONTROL PROVISIONS
We will vote against stock option plans with change in control provisions that allow option holders to receive more for their options than shareholders would receive for their shares.
L) STOCK OPTION PLANS - EXPENSING
We will consider proposals that deal with the expensing of the costs associated with stock option plans on a case-by-case basis.
IV. CORPORATE MATTERS
We will review management proposals relating to changes to capital structure, reincorporation, restructuring and mergers & acquisitions on a case-by-case basis, taking into consideration the impact of the changes on corporate governance and shareholder rights, anticipated financial and operating benefits, portfolio manager views, level of dilution, and a company's industry and performance in terms of shareholder returns.
A) COMMON STOCK AUTHORIZATION
We will review proposals to increase the number of shares of common stock authorized for issue on a case-by-case basis.
B) DUAL CLASS SHARE STRUCTURES
Dual class share structures involve the creation of a second class of common stock with either superior or inferior voting rights to those of the existing class of stock. Such share structures violates the principle of "one share, one vote", leading to the possibility that the company may take actions or fail to take actions without the support of a true majority of shareholders.
We will generally vote against proposals to create or extend dual class share structures where certain stockholders have superior or inferior voting rights to another class of stock.
C) STOCK SPLITS
We will vote for proposals to increase common share authorization for a stock split, provided that the increase in authorized shares would not result in excessive dilution given a company's industry and performance in terms of shareholder returns.
D) REVERSE STOCK SPLITS
We will vote for management proposals to implement a reverse stock split, provided that the reverse split does not result in an increase of authorized but unissued shares of more than 100% after giving effect to the shares needed for the reverse split.
E) SHARE REPURCHASE PROGRAMS
We will vote against proposals to institute open-market share repurchase plans if all shareholders do not participate on an equal basis.
F) REINCORPORATION
Reincorporation involves re-establishing the company in a different legal jurisdiction.
We will generally vote for proposals to reincorporate the company provided that the board and management have demonstrated sound financial or business reasons for the move. Proposals to reincorporate will not be supported if solely as part of an anti-takeover defense or as a way to limit directors' liability.
G) MERGERS & ACQUISITIONS
We will vote for merger & acquisition proposals that the relevant portfolio managers believe, based on their review of the materials:
- will result in financial and operating benefits,
- have a fair offer price,
- have favorable prospects for the combined companies, and
- will not have a negative impact on corporate governance or shareholder rights.
V. SHAREHOLDER PROPOSALS
We recognize that to effectively manage a corporation, directors and management must consider not only the interests of shareholders, but the interests of employees, customers, suppliers, creditors and the general community as well. Shareholder proposals can be extremely complex, and the impact on the interests of all stakeholders can rarely be anticipated with a high degree of confidence.
Shareholder proposals will be reviewed on a case-by-case basis with consideration of factors such as:
- the proposal's impact on the company's short-term and long-term share value,
- its effect on the company's reputation,
- the economic effect of the proposal,
- industry and regional norms applicable to the company,
- the company's overall corporate governance provisions, and
- the reasonableness of the request.
We will generally not support proposals that place arbitrary or artificial constraints on the board, management or the company.
A) ORDINARY BUSINESS PRACTICES
We will generally support the board's discretion regarding shareholder proposals that involve ordinary business practices.
B) PROTECTION OF SHAREHOLDER RIGHTS
We will generally vote for shareholder proposals that are designed to protect shareholder rights if the company's corporate governance standards indicate that such additional protections are warranted.
C) BARRIERS TO SHAREHOLDER ACTION
We will generally vote for proposals to lower barriers to shareholder action.
D) SHAREHOLDER RIGHTS PLANS
We will generally vote for proposals to subject shareholder rights plans to a shareholder vote.
VI. OTHER
a) We will vote against any proposal where the proxy materials lack sufficient information upon which to base an informed decision.
b) We will vote against any proposals to authorize the company to conduct any other business that is not described in the proxy statement.
APPENDIX F
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 August 15, 2005.
AIM DEVELOPING MARKETS FUND
INSTITUTIONAL
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS SHARES(1)
-------------- -------------- -------------- ---------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
-------------------------------------- -------------- -------------- -------------- ---------------
Citigroup Global Markets House Account
Attn: Cindy Tempesta, 7th Floor
333 West 34th Street
NY, NY 10001-2402 12.09% -- 5.67%
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484 6.08% -- 13.88%
|
(1) As of the date of this Statement of Additional Information Institutional Class shares have not commenced operations.
AIM GLOBAL HEALTH CARE 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
-------------------------------------- ------------------- ------------------- -------------------
Citigroup Global Markets House Account
Attn: Cindy Tempesta, 7th Floor
333 West 34th Street
New York, NY 10001-2402 7.42% 6.49% --
|
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
4800 Deer Lake Dr. East, 2nd Floor 7.30% 5.01% 10.40%
Jacksonville, FL 32246-6484
|
AIM TRIMARK ENDEAVOR FUND
INSTITUTIONAL
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES CLASS SHARES
-------------- -------------- -------------- -------------- ---------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF PERCENTAGE
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD OWNED OF RECORD
-------------------------------------- -------------- -------------- -------------- -------------- ---------------
A I M Advisors, Inc.(1)
Attn: David Hessel
11 Greenway Plaza, Suite 100
Houston, TX 77046-1103 -- -- -- 12.23% --
AIM Conservative Asset Allocation
Fund Omnibus Account
c/o AIM Advisors -- -- -- -- 99.54%
11 E. Greenway Plz, Suite 100
Houston, TX 77046-1113
Merrill Lynch Pierce Fenner & Smith
FBO the Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr East 20.20% -- 26.84% -- --
2nd Floor
Jacksonville, FL 32246-6484
MCB Trust Services Cust. FBO
Continental Agency of Florida, Inc.
700 17th Street, Suite 300 -- -- -- 22.62% --
Denver, CO 80202-3531
Golden Security Mortgage
Vasili Raptis
3444 Camino Del Rio N #102 -- -- -- 11.61% --
San Diego, CA 92108-1711
Golden Security Mortgage
Jennifer Raptis
3444 Camino Del Rio N #102 -- -- -- 10.65% --
San Diego, CA 92108-1711
JimyJet
James H. Brown
56 Macfie St. -- -- -- 9.89% --
Pickerington, OH 43147-9851
|
INSTITUTIONAL
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES CLASS SHARES
-------------- -------------- -------------- -------------- ---------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF PERCENTAGE
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD OWNED OF RECORD
-------------------------------------- -------------- -------------- -------------- -------------- ---------------
AMVESCAP National Trust Company
Bay Farm Montessori Academy
Marcia Gardere
145 Loring St. -- -- -- 5.06% --
Duxbury, MA 02332-4823
|
AIM TRIMARK FUND
INSTITUTIONAL
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES CLASS SHARES
-------------- -------------- -------------- -------------- ---------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF PERCENTAGE
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD OWNED OF RECORD
-------------------------------------- -------------- -------------- -------------- -------------- ---------------
A I M Advisors, Inc.(1)
Attn: Corporate Controller
11 Greenway Plaza, Suite 100
Houston, TX 77046-1103 -- -- -- 32.38% 100%
Coinage of America
Gregory A. Howe
2219 E. Thousand Oaks Blvd. #251
Thousand Oaks, CA 91362-2930 -- -- -- 23.49% --
Chisholm Trail Financial Services
Larry F. Cain
4100 S. Medford Dr., Suite B
Lufkin, TX 75901-5617 -- -- -- 8.72% --
MCB Trust Services Cust. FBO
Liberty Homes 401K
700 17th St. Ste. 300
Denver, Co 80202-3531 -- -- -- 11.24% --
Boynton -- -- -- 7.75% --
Realty Group Inc.
William A. Hanrahan
5418 Greenwood Dr.
Delray Beach, FL 33484-1133
Yuri Bast Interior Design Inc. -- -- -- 6.07% --
Yuri C. Bast
6 Andaluz
Aliso Viejo, CA 92656-6061
Yuri Bast Interior Design Inc. -- -- -- 5.98% --
Edward O. Bast
6 Andaluz
Aliso Viejo, CA 92656-6061
|
(1) Owned of record and beneficially.
AIM TRIMARK SMALL COMPANIES FUND
INSTITUTIONAL
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES CLASS SHARES
-------------- -------------- -------------- -------------- ----------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF PERCENTAGE OWNED
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD OF RECORD
-------------------------------------- -------------- -------------- -------------- -------------- ----------------
AIM Moderate Asset Allocation Fund
Omnibus Account
c/o AIM Advisors
11 E. Greenway Plz, Suite 100 -- -- -- -- 100%
Houston, TX 77046-1113
Reliance Trust Co. FBO
Kraft Construction Co. Inc. 401K
PSP -- -- -- 79.93% --
P.O. Box 48529
Atlanta, GA 30362-1529
Reliance Trust Company Custodian
FBO R&H Motor Cars Ltd
401K Profit Sharing Plan
P.O. Box 48529 -- -- -- 8.84% --
Atlanta, GA 30362-1529
|
(1) Owned of record and beneficially.
MANAGEMENT OWNERSHIP
As of August 15, 2005, the trustees and officers as a group owned less than 1% of the outstanding shares of each class of each Fund.
APPENDIX G
MANAGEMENT FEES
For the last fiscal period 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:
2004 2003 2002
-------------------------------------- ----------------------------------- -----------------------------------
NET NET NET
MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT
FUND NAME FEE PAYABLE FEE WAIVERS FEE PAYABLE FEE PAYABLE FEE WAIVERS FEE PAYABLE FEE PAYABLE FEE WAIVERS FEE PAYABLE
----------------- ----------- ----------- -------------- ----------- ----------- ----------- ----------- ----------- -----------
AIM Developing
Markets Fund $ 2,305,531 $ 480,137 $ 1,825,394 $ 1,755,280 $ 598,343 $ 1,156,937 $ 1,984,365 $ 1,032,501 $ 951,864
AIM Trimark
Endeavor Fund 104,953 104,953 N/A N/A N/A N/A N/A N/A N/A
AIM Trimark Fund 87,385 87,385 N/A N/A N/A N/A N/A N/A N/A
AIM Trimark Small
Companies Fund 93,787 93,787 N/A N/A N/A N/A N/A N/A N/A
|
APPENDIX H
PORTFOLIO MANAGERS
As of October 31, 2004
INVESTMENTS IN EACH FUND
NAME OF PORTFOLIO MANAGER DOLLAR RANGE OF INVESTMENTS IN EACH FUND(1)
------------------------- -------------------------------------------
AIM DEVELOPING MARKETS FUND
---------------------------
Shuxin Cao $1.00 - $10,000
Borge Endresen None
AIM TRIMARK ENDEAVOR FUND
Jeff Hyrich None(2)
Geoff MacDonald None(2)
AIM TRIMARK FUND
Tye Bousada None(2)
Dana Love None(2)
AIM TRIMARK SMALL COMPANIES FUND
Robert Mikalachki None(2)
|
DESCRIPTION OF COMPENSATION STRUCTURE
AIM Funds Management Inc.'s compensation practices for its Investment team are aimed at retaining and motivating employees in order to maximize investment performance. Accordingly, the compensation packages offered to the portfolio managers are competitive with opportunities in the best managed firms in the investment management industry. Portfolio managers receive a competitive base salary, an incentive bonus opportunity, equity compensation and a benefits package. Total cash compensation, as described below, is set for each portfolio manager relative to his or her performance. Portfolio manager compensation is reviewed and modified each year as appropriate. Each portfolio manager's compensation consists of the following elements:
- BASE SALARY. Each portfolio manager is paid a base salary. In setting the base salary, AIM Funds Management Inc.'s intention is to be competitive in light of the particular portfolio manager's experience and responsibilities.
- ANNUAL BONUS. Each portfolio manager is eligible to receive an annual cash bonus which has quantitative and qualitative components. Generally, 75% of the bonus is quantitatively determined, based primarily on the 3 and 5-year investment results of the funds for which the portfolio manager has day-to-day responsibility. In instances where a portfolio manager has responsibility for more than one fund, consideration is given to both the overall assets under management as well as the individual fund performances.
(2) Shares of the Funds are not sold in Canada, where the portfolio management team is domiciled. Accordingly, no portfolio manager may invest in the Funds.
The remaining 25% portion of the bonus is discretionary as determined by AIM Funds Management Inc. and takes into account other subjective factors.
- EQUITY-BASED COMPENSATION. Portfolio managers may be awarded options to purchase common shares and/or may be granted restricted shares of AMVESCAP stock from pools determined by the Remuneration Committee of the AMVESCAP Board of Directors. Awards of equity-based compensation typically vest over time, so as to create incentives to retain key talent.
- PARTICIPATION IN GROUP INSURANCE PROGRAMS. Portfolio managers are provided life insurance coverage in the form of a group term life insurance policy. They also have the opportunity of purchasing optional life insurance for their spouse and dependents.
Portfolio managers also participate in benefit plans and programs available generally to all employees.
OTHER MANAGED ACCOUNTS
As of October 31, 2004
AIM's portfolio managers develop investment models which are used in connection with the management of certain AIM funds as well as other mutual funds for which AIM or an affiliate acts as sub-advisor, other pooled investment vehicles that are not registered mutual funds, and other accounts managed for organizations and individuals. The following chart reflects information regarding accounts other than the Fund for which each portfolio manager has day-to-day management responsibilities. Accounts are grouped into three categories: (i) mutual funds, (ii) other pooled investment vehicles, and (iii) other accounts. To the extent that any of these accounts pay advisory fees that are based on account performance ("performance-based fees"), information on those accounts is specifically broken out. In addition, any assets denominated in foreign currencies have been converted into U.S. Dollars using the exchange rates as of the applicable dates.
NAME OF PORTFOLIO
MANAGER NUMBER OF ACCOUNTS MANAGED BY EACH PORTFOLIO MANAGER AND TOTAL ASSETS BY CATEGORY
------- ---------------------------------------------------------------------------------
AIM DEVELOPING MARKETS FUND
Shuxin Cao 7 Registered Mutual Funds with $3,761,280,832 in total assets under management
2 Unregistered Pooled Investment Vehicles with $38,531,888 in total assets under management
32 Other Accounts with $12,811,029 in total assets under management (5)
Borge Endresen 4 Registered Mutual Funds with $1,959,396,818 in total assets under management
3 Unregistered Pooled Investment Vehicles with $89,630,639 in total assets under management
AIM TRIMARK ENDEAVOR FUND
Jeff Hyrich 2 Unregistered Pooled Investment Vehicles with $413,203,617 in total assets under management
Geoff MacDonald 5 Unregistered Pooled Investment Vehicles with $6,120,207,827 in total assets under management
AIM TRIMARK FUND
Tye Bousada 1 Registered Mutual Funds with $18,621,013 in total assets under management
8 Unregistered Pooled Investment Vehicles with $3,890,773,810 in total assets under management
Dana Love 1 Registered Mutual Funds with $18,621,013 in total assets under management
10 Unregistered Pooled Investment Vehicles with $4,225,213,656
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in total assets under management
AIM TRIMARK SMALL COMPANIES FUND
Robert Mikalachki 2 Unregistered Pooled Investment Vehicles with $284,425,496 in total assets under management
|
POTENTIAL CONFLICTS OF INTEREST
Actual or apparent conflicts of interest may arise when a portfolio manager has day-today management responsibilities with respect to more than one Fund or other account. More specifically, portfolio managers who manage multiple Funds and/or other accounts are presented with the following potential conflicts:
- The management of multiple Funds and/or other accounts may result in a portfolio manager devoting unequal time and attention to the management of each Fund and/or other account. AIM seeks to manage such competing interests for the time and attention of portfolio managers by having portfolio managers focus on a particular investment discipline. Most other accounts managed by a portfolio manager are managed using the same investment models that are used in connection with the management of the Funds.
- If a portfolio manager identifies a limited investment opportunity which may be suitable for more than one Fund or other account, a Fund may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible Funds and other accounts. To deal with these situations, AIM and the Funds have adopted procedures for allocating portfolio transactions across multiple accounts.
AIM and the Funds have adopted certain compliance procedures which are designed to address these types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.
APPENDIX I
ADMINISTRATIVE SERVICES FEES
The Funds paid AIM the following amounts for administrative services for the last fiscal period ended October 31:
FUND NAME 2004 2003 2002
--------- ---- ---- ----
AIM Developing Markets Fund $74,387 $50,000 $50,000
AIM Trimark Endeavor Fund 50,000 N/A N/A
AIM Trimark Fund 50,000 N/A N/A
AIM Trimark Small Companies Fund 50,000 N/A N/A
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APPENDIX J
BROKERAGE COMMISSIONS
Brokerage commissions(1) paid by each of the Funds listed below during the last fiscal period ended October 31 were as follows:
FUND NAME 2004 2003 2002
--------- ---- ---- ----
AIM Developing Markets Fund $784,157 $858,656 $770,314
AIM Trimark Endeavor Fund 26,199 N/A N/A
AIM Trimark Fund 17,546 N/A N/A
AIM Trimark Small Companies Fund 33,485 N/A N/A
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1 Disclosure regarding brokerage commissions is limited to commissions paid on agency trades and designated as such on the trade confirm.
APPENDIX K
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF
SECURITIES OF REGULAR BROKERS OR DEALERS
During the last fiscal period ended October 31, 2004, each Fund allocated the following amount of transactions to broker-dealers that provided AIM with certain research, statistics and other information:
RELATED
FUND TRANSACTIONS(1) BROKERAGE COMMISSIONS(1)
---- -------------- ------------------------
AIM Developing Markets Fund $242,835,239 $896,450
AIM Trimark Endeavor Fund 3,502,779 6,936
AIM Trimark Fund 5,674,701 7,396
AIM Trimark Small Companies Fund 1,516,028 6,691
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1 Amount is inclusive of commissions paid to, and brokerage transactions placed with, certain brokers that provide execution, research and other services.
During the last fiscal period ended October 31, 2004, the Funds did not hold securities issued by "regular" brokers or dealers of the Funds
APPENDIX L
PERFORMANCE DATA
AVERAGE ANNUAL TOTAL RETURNS
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 April 30 are as follows:
PERIODS ENDED
APRIL 30, 2005
SINCE INCEPTION
INSTITUTIONAL CLASS SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
--------------------------- ------ ------- -------- --------- ----
AIM Developing Markets Fund(1) 24.69% 6.15% 4.37% N/A 01/11/1994(3)
AIM Trimark Endeavor Fund(2) 9.83% N/A N/A 12.72% 11/04/2003(3)
AIM Trimark Fund(2) 4.85% N/A N/A 6.75% 11/04/2003(3)
AIM Trimark Small Companies Fund(2) 20.01% N/A N/A 17.26% 11/04/2003(3)
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(1) The returns shown for these periods are the restated historical performance of AIM Developing Markets Fund's Class A shares at the net asset value, and reflect the Rule 12b-1 fees applicable to Class A shares.
(2) The returns shown since inception are the blended returns of AIM Trimark Endeavor Fund's, AIM Trimark Fund's and AIM Trimark Small Companies Fund's Institutional Class shares since April 30, 2004 and reflect the Rule 12b-1 fees applicable to the Class A shares.
(3) The inception dates shown in the table are those of each Fund's Class A shares. The inception date of the AIM Trimark Endeavor Fund's, AIM Trimark Fund's and AIM Trimark Small Companies Fund's Institutional Class shares is April 30, 2004. As of the date of this Statement of Additional Information, the Institutional Class Shares of AIM Developing Markets Fund had not yet commenced operations.
CUMULATIVE TOTAL RETURNS
The cumulative total returns 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 April 30 are as follows:
PERIODS ENDED
APRIL 30, 2005
SINCE INCEPTION
INSTITUTIONAL CLASS SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
--------------------------- ------ ------- -------- --------- ----
AIM Developing Markets Fund(1) 24.69% 34.80% 53.44% N/A 01/11/1994(3)
AIM Trimark Endeavor Fund(2) 9.83% N/A N/A 19.50% 11/04/2003(3)
AIM Trimark Fund(2) 4.85% N/A N/A 10.20% 11/04/2003(3)
AIM Trimark Small Companies Fund(2) 20.01% N/A N/A 26.73% 11/04/2003(3)
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(1) The returns shown for these periods are the restated historical performance of AIM Developing Markets Fund's Class A shares at the net asset value, and reflect the Rule 12b-1 fees applicable to Class A shares.
(2) The returns shown since inception are the blended returns of AIM Trimark Endeavor Fund's, AIM Trimark Fund's and AIM Trimark Small Companies Fund's Institutional Class shares since April 30, 2004 and reflect the Rule 12b-1 fees applicable to the Class A shares.
(3) The inception dates shown in the table are those of each Fund's Class A shares. The inception date of the AIM Trimark Endeavor Fund's, AIM Trimark Fund's and AIM Trimark Small Companies Fund's Institutional Class shares is April 30, 2004. As of the date of this Statement of Additional Information, the Institutional Class Shares of AIM Developing Markets Fund had not yet commenced operations.
AVERAGE ANNUAL TOTAL RETURN (AFTER TAXES ON DISTRIBUTIONS)
The average annual total returns (after taxes on distributions) 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 April 30 are as follows:
PERIODS ENDED
APRIL 30, 2005
SINCE INCEPTION
INSTITUTIONAL CLASS SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
--------------------------- ------ ------- -------- --------- ----
AIM Developing Markets Fund (1) 24.69% 6.01% 3.68% N/A 01/11/1994(3)
AIM Trimark Endeavor Fund (2) 9.83% N/A N/A 12.72% 11/04/2003(3)
AIM Trimark Fund (2) 4.85% N/A N/A 6.75% 11/04/2003(3)
AIM Trimark Small Companies Fund (2) 19.79% N/A N/A 17.12% 11/04/2003(3)
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(1) The returns shown for these periods are the restated historical performance of AIM Developing Markets Fund's Class A shares at the net asset value, and reflect the Rule 12b-1 fees applicable to Class A shares.
(2) The returns shown since inception are the blended returns of AIM Trimark Endeavor Fund's, AIM Trimark Fund's and AIM Trimark Small Companies Fund's Institutional Class shares since April 30, 2004 and reflect the Rule 12b-1 fees applicable to the Class A shares.
(3) The inception dates shown in the table are those of each Fund's Class A shares. The inception date of the AIM Trimark Endeavor Fund's, AIM Trimark Fund's and AIM Trimark Small Companies Fund's Institutional Class shares is April 30, 2004. As of the date of this Statement of Additional Information, the Institutional Class Shares of AIM Developing Markets Fund had not yet commenced operations.
AVERAGE ANNUAL TOTAL RETURNS (AFTER TAXES ON DISTRIBUTIONS AND REDEMPTIONS)
The average annual total returns (after taxes on distributions and redemption) 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 April 30 are as follows:
PERIODS ENDED
APRIL 30, 2005
SINCE INCEPTION
INSTITUTIONAL CLASS SHARES: 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
--------------------------- ------ ------- -------- --------- ----
AIM Developing Markets Fund (1) 16.05% 5.21% 3.33% N/A 01/11/1994(3)
AIM Trimark Endeavor Fund (2) 6.39% N/A N/A 10.86% 11/04/2003(3)
AIM Trimark Fund (2) 3.15% N/A N/A 5.75% 11/04/2003(3)
AIM Trimark Small Companies Fund (2) 13.03% N/A N/A 14.68% 11/04/2003(3)
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(1) The returns shown for these periods are the restated historical performance of AIM Developing Markets Fund's Class A shares at the net asset value, and reflect the Rule 12b-1 fees applicable to Class A shares.
(2) The returns shown since inception are the blended returns of AIM Trimark Endeavor Fund's, AIM Trimark Fund's and AIM Trimark Small Companies Fund's Institutional Class shares since April 30, 2004 and reflect the Rule 12b-1 fees applicable to the Class A shares.
(3) The inception dates shown in the table are those of each Fund's Class A shares. The inception date of the AIM Trimark Endeavor Fund's, AIM Trimark Fund's and AIM Trimark Small Companies Fund's Institutional Class shares is April 30, 2004. As of the date of this Statement of Additional Information, the Institutional Class Shares of AIM Developing Markets Fund had not yet commenced operations.
APPENDIX M-1
PENDING LITIGATION ALLEGING MARKET TIMING
The following civil lawsuits, including purported class action and shareholder derivative suits, involve, depending on the lawsuit, one or more AIM Funds, IFG, AIM, AIM Management, AMVESCAP, certain related entities, certain of their current and former officers and/or certain unrelated third parties and are based on allegations of improper market timing and related activity in the AIM Funds. These lawsuits either have been served or have had service of process waived as of August 19, 2005 (with the exception of the Sayegh lawsuit discussed below).
RICHARD LEPERA, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, V.
INVESCO FUNDS GROUP, INC., INVESCO STOCK FUNDS, INC., INVESCO BOND FUNDS,
INC., INVESCO SECTOR FUNDS, INC. AND DOE DEFENDANTS 1-100, in the District
Court, City and County of Denver, Colorado, (Civil Action No. 03-CV-7600),
filed on October 2, 2003. This claim alleges: common law breach of
fiduciary duty; common law breach of contract; and common law tortious
interference with contract. The plaintiff in this case is seeking:
compensatory and punitive damages; injunctive relief; disgorgement of
revenues and profits; and costs and expenses, including counsel fees and
expert fees.
MIKE SAYEGH, ON BEHALF OF THE GENERAL PUBLIC, V. JANUS CAPITAL CORPORATION, JANUS CAPITAL MANAGEMENT LLC, JANUS INVESTMENT FUND, EDWARD J. STERN, CANARY CAPITAL PARTNERS LLC, CANARY INVESTMENT MANAGEMENT LLC, CANARY CAPITAL PARTNERS LTD., KAPLAN & CO. SECURITIES INC., BANK ONE
CORPORATION, BANC ONE INVESTMENT ADVISORS, THE ONE GROUP MUTUAL FUNDS,
BANK OF AMERICA CORPORATION, BANC OF AMERICA CAPITAL MANAGEMENT LLC, BANC
OF AMERICA ADVISORS LLC, NATIONS FUND INC., ROBERT H. GORDON, THEODORE H.
SIHPOL III, CHARLES D. BRYCELAND, SECURITY TRUST COMPANY, STRONG CAPITAL
MANAGEMENT INC., JB OXFORD & COMPANY, ALLIANCE CAPITAL MANAGEMENT HOLDING
L.P., ALLIANCE CAPITAL MANAGEMENT L.P., ALLIANCE CAPITAL MANAGEMENT
CORPORATION, AXA FINANCIAL INC., ALLIANCEBERNSTEIN REGISTRANTS, GERALD
MALONE, CHARLES SCHAFFRAN, MARSH & MCLENNAN COMPANIES, INC., PUTNAM
INVESTMENTS TRUST, PUTNAM INVESTMENT MANAGEMENT LLC, PUTNAM INVESTMENT
FUNDS, AND DOES 1-500, in the Superior Court of the State of California,
County of Los Angeles (Case No. BC304655), filed on October 22, 2003 and
amended on December 17, 2003 to substitute INVESCO Funds Group, Inc. and
Raymond R. Cunningham for unnamed Doe defendants. This claim alleges
unfair business practices and violations of Sections 17200 and 17203 of
the California Business and Professions Code. The plaintiff in this case
is seeking: injunctive relief; restitution, including pre-judgment
interest; an accounting to determine the amount to be returned by the
defendants and the amount to be refunded to the public; the creation of an
administrative process whereby injured customers of the defendants receive
their losses; and counsel fees.
RAJ SANYAL, DERIVATIVELY ON BEHALF OF NATIONS INTERNATIONAL EQUITY FUND, V. WILLIAM P. CARMICHAEL, WILLIAM H. GRIGG, THOMAS F. KELLER, CARL E. MUNDY, JR., CORNELIUS J. PINGS, A. MAX WALKER, CHARLES B. WALKER, EDMUND L. BENSON, III, ROBERT H. GORDON, JAMES B. SOMMERS, THOMAS S. WORD, JR., EDWARD D. BEDARD, GERALD MURPHY, ROBERT B. CARROLL, INVESCO GLOBAL ASSET
MANAGEMENT, PUTNAM INVESTMENT MANAGEMENT, BANK OF AMERICA CORPORATION, MARSICO CAPITAL MANAGEMENT, LLC, BANC OF AMERICA ADVISORS, LLC, BANC OF AMERICA CAPITAL
MANAGEMENT, LLC, AND NATIONS FUNDS TRUST, in the Superior Court Division, State of North Carolina (Civil Action No. 03-CVS-19622), filed on November 14, 2003. This claim alleges common law breach of fiduciary duty; abuse of control; gross mismanagement; waste of fund assets; and unjust enrichment. The plaintiff in this case is seeking: injunctive relief, including imposition of a constructive trust; damages; restitution and disgorgement; and costs and expenses, including counsel fees and expert fees.
L. SCOTT KARLIN, DERIVATIVELY ON BEHALF OF INVESCO FUNDS GROUP, INC. V.
AMVESCAP, PLC, INVESCO, INC., CANARY CAPITAL PARTNERS, LLC, CANARY
INVESTMENT MANAGEMENT, LLC, AND CANARY CAPITAL PARTNERS, LTD., in the
United States District Court, District of Colorado (Civil Action No.
03-MK-2406), filed on November 28, 2003. This claim alleges violations of
Section 36(b) of the Investment Company Act of 1940 ("Investment Company
Act"), and common law breach of fiduciary duty. The plaintiff in this case
is seeking damages and costs and expenses, including counsel fees and
expert fees.
RICHARD RAVER, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED, V. INVESCO FUNDS GROUP, INC., INVESCO STOCK FUNDS, INC, AIM
MANAGEMENT GROUP, INC., AIM STOCK FUNDS, AIM STOCK FUNDS, INC., AMVESCAP
PLC, INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND,
INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES
FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND,
INVESCO INTERNATIONAL CORE EQUITY FUND, INVESCO LEISURE FUND, INVESCO
MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, INVESCO S&P 500 INDEX
FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO
TOTAL RETURN FUND, INVESCO UTILITIES FUND, INVESCO ADVANTAGE FUND, INVESCO
BALANCED FUND, INVESCO EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO HIGH
YIELD FUND, INVESCO GROWTH & INCOME FUND, INVESCO INTERNATIONAL BLUE CHIP
VALUE FUND, INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO SELECT FUND,
INVESCO TAX-FREE BOND FUND, INVESCO TELECOMMUNICATIONS FUND, INVESCO U.S.
GOVERNMENT SECURITIES FUND, INVESCO VALUE FUND, EDWARD J. STERN, CANARY
INVESTMENT MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., CANARY CAPITAL
PARTNERS, LLC, AND DOES 1-100, in the United States District Court,
District of Colorado (Civil Action No. 03-F-2441), filed on December 2,
2003. This claim alleges violations of: Sections 11 and 15 of the
Securities Act of 1933 (the "Securities Act"); Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 (the "Exchange Act"); Rule 10b-5 under
the Exchange Act; and Sections 34(b), 36(a) and 36(b) of the Investment
Company Act. The claim also alleges common law breach of fiduciary duty.
The plaintiffs in this case are seeking: damages; pre-judgment and
post-judgment interest; counsel fees and expert fees; and other relief.
JERRY FATTAH, CUSTODIAN FOR BASIM FATTAH, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, V. INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND (FORMERLY KNOWN AS INTERNATIONAL BLUE CHIP VALUE FUND), INVESCO LEISURE FUND, INVESCO MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, AIM INVESCO S&P 500 INDEX FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND, INVESCO UTILITIES FUND, AIM MONEY MARKET FUND, AIM INVESCO TAX-FREE MONEY FUND, AIM INVESCO TREASURER'S MONEY MARKET RESERVE
FUND, AIM INVESCO TREASURER'S TAX-EXEMPT RESERVE FUND, AIM INVESCO U.S.
GOVERNMENT MONEY FUND, INVESCO ADVANTAGE FUND, INVESCO BALANCED FUND,
INVESCO EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO HIGH YIELD FUND,
INVESCO GROWTH & INCOME FUND, INVESCO REAL ESTATE OPPORTUNITY FUND,
INVESCO SELECT INCOME FUND, INVESCO TAX-FREE BOND FUND, INVESCO
TELECOMMUNICATIONS FUND, INVESCO U.S. GOVERNMENT SECURITIES FUND, INVESCO
VALUE FUND, INVESCO, INVESCO LATIN AMERICAN GROWTH FUND (COLLECTIVELY
KNOWN AS THE "INVESCO FUNDS"), AIM STOCK FUNDS, AIM COUNSELOR SERIES
TRUST, AIM SECTOR FUNDS INC., AIM BOND FUNDS INC., AIM COMBINATION STOCK
AND BOND FUNDS INC., AIM MONEY MARKET FUNDS INC., AIM INTERNATIONAL FUNDS
INC. (COLLECTIVELY KNOWN AS THE "INVESCO FUNDS REGISTRANTS"), AMVESCAP
PLC, INVESCO FUNDS GROUP INC., TIMOTHY MILLER, RAYMOND CUNNINGHAM, THOMAS
KOLBE, EDWARD STERN, AMERICAN SKANDIA INC., BREAN MURRAY & CO., INC.,
CANARY CAPITAL PARTNERS, LLC, CANARY INVESTMENT MANAGEMENT, LLC, CANARY
CAPITAL PARTNERS, LTD., AND JOHN DOES 1-100, in the United States District
Court, District of Colorado (Civil Action No. 03-F-2456), filed on
December 4, 2003. This claim alleges violations of: Sections 11 and 15 of
Securities Act; Sections 10(b) and 20(a) of the Exchange Act; Rule 10b-5
under the Exchange Act; and Section 206 of the Investment Advisers Act of
1940, as amended (the "Advisers Act"). The plaintiffs in this case are
seeking: compensatory damages; rescission; return of fees paid; accounting
for wrongfully gotten gains, profits and compensation; restitution and
disgorgement; and other costs and expenses, including counsel fees and
expert fees.
EDWARD LOWINGER AND SHARON LOWINGER, INDIVIDUALLY AND ON BEHALF OF ALL
OTHERS SIMILARLY SITUATED, V. INVESCO ADVANTAGE HEALTH SCIENCES FUND,
INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND,
INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND,
INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND
(FORMERLY KNOWN AS INTERNATIONAL BLUE CHIP VALUE FUND), INVESCO LEISURE
FUND, INVESCO MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, AIM INVESCO
S&P 500 INDEX FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY
FUND, INVESCO TOTAL RETURN FUND, INVESCO UTILITIES FUND, AIM MONEY MARKET
FUND, AIM INVESCO TAX-FREE MONEY FUND, AIM INVESCO TREASURER'S MONEY
MARKET RESERVE FUND, AIM INVESCO TREASURER'S TAX-EXEMPT RESERVE FUND, AIM
INVESCO U.S. GOVERNMENT MONEY FUND, INVESCO ADVANTAGE FUND, INVESCO
BALANCED FUND, INVESCO EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO
HIGH-YIELD FUND, INVESCO GROWTH & INCOME FUND, INVESCO REAL ESTATE
OPPORTUNITY FUND, INVESCO SELECT INCOME FUND, INVESCO TAX-FREE BOND FUND,
INVESCO TELECOMMUNICATIONS FUND, INVESCO U.S. GOVERNMENT SECURITIES FUND,
INVESCO VALUE FUND, INVESCO; INVESCO LATIN AMERICAN GROWTH FUND
(COLLECTIVELY KNOWN AS THE "INVESCO FUNDS"), AIM STOCK FUNDS, AIM
COUNSELOR SERIES TRUST, AIM SECTOR FUNDS INC., AIM BOND FUNDS INC., AIM
COMBINATION STOCK AND BOND FUNDS INC., AIM MONEY MARKET FUNDS INC., AIM
INTERNATIONAL FUNDS INC. (COLLECTIVELY KNOWN AS THE "INVESCO FUNDS
REGISTRANTS"), AMVESCAP PLC, INVESCO FUNDS GROUP, INC., TIMOTHY MILLER,
RAYMOND CUNNINGHAM, THOMAS KOLBE, EDWARD J. STERN, AMERICAN SKANDIA INC.,
BREAN MURRAY & CO., INC., CANARY CAPITAL PARTNERS, LLC, CANARY INVESTMENT
MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., AND JOHN DOES 1-100, in
the United States District Court, Southern District of New York (Civil
Action No. 03-CV-9634), filed on December 4, 2003. This claim alleges
violations of: Sections 11 and 15 of the Securities Act; Sections 10(b)
and 20(a) of the Exchange Act; Rule 10b-5 under the Exchange Act; and
Section 206 of the Advisers Act. The plaintiffs in this case are seeking:
compensatory damages; rescission; return of fees
paid; accounting for wrongfully gotten gains, profits and compensation; restitution and disgorgement; and other costs and expenses, including counsel fees and expert fees.
JOEL GOODMAN, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, V. INVESCO FUNDS GROUP, INC. AND RAYMOND R. CUNNINGHAM, in the District Court, City and County of Denver, Colorado (Case Number 03CV9268), filed on December 5, 2003. This claim alleges common law breach of fiduciary duty and aiding and abetting breach of fiduciary duty. The plaintiffs in this case are seeking: injunctive relief; accounting for all damages and for all profits and any special benefits obtained; disgorgement; restitution and damages; costs and disbursements, including counsel fees and expert fees; and equitable relief.
STEVEN B. EHRLICH, CUSTODIAN FOR ALEXA P. EHRLICH, UGTMA/FLORIDA, AND
DENNY P. JACOBSON, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED, V. INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY
FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL
SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH
SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND (FORMERLY KNOWN AS
INTERNATIONAL BLUE CHIP VALUE FUND), INVESCO LEISURE FUND, INVESCO MID-CAP
GROWTH FUND, INVESCO MULTI-SECTOR FUND, AIM INVESCO S&P 500 INDEX FUND,
INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL
RETURN FUND, INVESCO UTILITIES FUND, AIM MONEY MARKET FUND, AIM INVESCO
TAX-FREE MONEY FUND, AIM INVESCO TREASURERS MONEY MARKET RESERVE FUND, AIM
INVESCO TREASURERS TAX-EXEMPT RESERVE FUND, AIM INVESCO US GOVERNMENT
MONEY FUND, INVESCO ADVANTAGE FUND, INVESCO BALANCED FUND, INVESCO
EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO HIGH-YIELD FUND, INVESCO
GROWTH & INCOME FUND, INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO SELECT
INCOME FUND, INVESCO TAX-FREE BOND FUND, INVESCO TELECOMMUNICATIONS FUND,
INVESCO U.S. GOVERNMENT SECURITIES FUND, INVESCO VALUE FUND, INVESCO LATIN
AMERICAN GROWTH FUND (COLLECTIVELY KNOWN AS THE "INVESCO FUNDS"), AIM
STOCK FUNDS, AIM COUNSELOR SERIES TRUST, AIM SECTOR FUNDS INC., AIM BOND
FUNDS INC., AIM COMBINATION STOCK AND BOND FUNDS INC., AIM MONEY MARKET
FUNDS INC., AIM INTERNATIONAL FUNDS INC. (COLLECTIVELY KNOWN AS THE
"INVESCO FUNDS REGISTRANTS"), AMVESCAP PLC, INVESCO FUNDS GROUP, INC.,
TIMOTHY MILLER, RAYMOND CUNNINGHAM, THOMAS KOLBE, EDWARD J. STERN,
AMERICAN SKANDIA INC., BREAN MURRAY & CO., INC., CANARY CAPITAL PARTNERS,
LLC, CANARY INVESTMENT MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., AND
JOHN DOES 1-100, in the United States District Court, District of Colorado
(Civil Action No. 03-N-2559), filed on December 17, 2003. This claim
alleges violations of: Sections 11 and 15 of the Securities Act; Sections
10(b) and 20(a) of the Exchange Act; Rule 10b-5 under the Exchange Act;
and Section 206 of the Advisers Act. The plaintiffs in this case are
seeking: compensatory damages; rescission; return of fees paid; accounting
for wrongfully gotten gains, profits and compensation; restitution and
disgorgement; and other costs and expenses, including counsel fees and
expert fees.
JOSEPH R. RUSSO, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, V. INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND (FORMERLY KNOWN AS INTERNATIONAL BLUE CHIP VALUE FUND), INVESCO LEISURE FUND, INVESCO MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, AIM INVESCO S&P 500 INDEX FUND, INVESCO SMALL COMPANY
GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND, INVESCO
UTILITIES FUND, AIM MONEY MARKET FUND, AIM INVESCO TAX-FREE MONEY FUND,
AIM INVESCO TREASURERS MONEY MARKET RESERVE FUND, AIM INVESCO TREASURERS
TAX-EXEMPT RESERVE FUND, AIM INVESCO US GOVERNMENT MONEY FUND, INVESCO
ADVANTAGE FUND, INVESCO BALANCED FUND, INVESCO EUROPEAN FUND, INVESCO
GROWTH FUND, INVESCO HIGH-YIELD FUND, INVESCO GROWTH & INCOME FUND,
INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO SELECT INCOME FUND, INVESCO
TAX-FREE BOND FUND, INVESCO TELECOMMUNICATIONS FUND, INVESCO U.S.
GOVERNMENT SECURITIES FUND, INVESCO VALUE FUND, INVESCO LATIN AMERICAN
GROWTH FUND (COLLECTIVELY KNOWN AS THE "INVESCO FUNDS"), AIM STOCK FUNDS,
AIM COUNSELOR SERIES TRUST, AIM SECTOR FUNDS INC., AIM BOND FUNDS INC.,
AIM COMBINATION STOCK AND BOND FUNDS INC., AIM MONEY MARKET FUNDS INC.,
AIM INTERNATIONAL FUNDS INC. (COLLECTIVELY KNOWN AS THE "INVESCO FUNDS
REGISTRANTS"), AMVESCAP PLC, INVESCO FUNDS GROUP, INC., TIMOTHY MILLER,
RAYMOND CUNNINGHAM, THOMAS KOLBE, EDWARD J. STERN, AMERICAN SKANDIA INC.,
BREAN MURRAY & CO., INC., CANARY CAPITAL PARTNERS, LLC, CANARY INVESTMENT
MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., AND JOHN DOES 1-100, in
the United States District Court, Southern District of New York (Civil
Action No. 03-CV-10045), filed on December 18, 2003. This claim alleges
violations of: Sections 11 and 15 of the Securities Act; Sections 10(b)
and 20(a) of the Exchange Act; Rule 10b-5 under the Exchange Act; and
Section 206 of the Advisers Act. The plaintiffs in this case are seeking:
compensatory damages; rescission; return of fees paid; accounting for
wrongfully gotten gains, profits and compensation; restitution and
disgorgement; and other costs and expenses, including counsel fees and
expert fees.
MIRIAM CALDERON, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED, V. AMVESCAP PLC, AVZ, INC., AMVESCAP RETIREMENT, INC., AMVESCAP
NATIONAL TRUST COMPANY, ROBERT F. MCCULLOUGH, GORDON NEBEKER, JEFFREY G.
CALLAHAN, INVESCO FUNDS GROUP, INC., RAYMOND R. CUNNINGHAM, AND DOES
1-100, in the United States District Court, District of Colorado (Civil
Action No. 03-M-2604), filed on December 24, 2003. This claim alleges
violations of Sections 404, 405 and 406B of the Employee Retirement Income
Security Act ("ERISA"). The plaintiffs in this case are seeking:
declarations that the defendants breached their ERISA fiduciary duties and
that they are not entitled to the protection of Section 404(c)(1)(B) of
ERISA; an order compelling the defendants to make good all losses to a
particular retirement plan described in this case (the "Retirement Plan")
resulting from the defendants' breaches of their fiduciary duties,
including losses to the Retirement Plan resulting from imprudent
investment of the Retirement Plan's assets, and to restore to the
Retirement Plan all profits the defendants made through use of the
Retirement Plan's assets, and to restore to the Retirement Plan all
profits which the participants would have made if the defendants had
fulfilled their fiduciary obligations; damages on behalf of the Retirement
Plan; imposition of a constructive trust, injunctive relief, damages
suffered by the Retirement Plan, to be allocated proportionately to the
participants in the Retirement Plan; restitution and other costs and
expenses, including counsel fees and expert fees.
PAT B. GORSUCH AND GEORGE L. GORSUCH V. INVESCO FUNDS GROUP, INC. AND AIM
ADVISER, INC., in the United States District Court, District of Colorado
(Civil Action No. 03-MK-2612), filed on December 24, 2003. This claim
alleges violations of Sections 15(a), 20(a) and 36(b) of the Investment
Company Act. The plaintiffs in this case are seeking: rescission and/or
voiding of the investment advisory agreements; return of fees paid;
damages; and other costs and expenses, including counsel fees and expert
fees.
LORI WEINRIB, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
V. INVESCO FUNDS GROUP, INC., AIM STOCK FUNDS, AIM COUNSELOR SERIES TRUST,
AIM SECTOR FUNDS INC., AIM BOND FUNDS INC., AIM COMBINATION STOCK AND BOND
FUNDS INC., AIM MONEY MARKET FUNDS INC., AIM INTERNATIONAL FUNDS INC.,
AMVESCAP PLC, TIMOTHY MILLER, RAYMOND CUNNINGHAM, THOMAS KOLBE, EDWARD J.
STERN, AMERICAN SKANDIA INC., BREAN MURRAY & CO., INC., CANARY CAPITAL
PARTNERS, LLC, CANARY INVESTMENT MANAGEMENT, LLC, CANARY CAPITAL PARTNERS,
LTD., AND JOHN DOES 1-100, in the United States District Court, Southern
District of New York (Civil Action No. 04-CV-00492), filed on January 21,
2004. This claim alleges violations of: Sections 11 and 15 of the 1933
Act; Sections 10(b) and 20(a) of the Exchange Act; Rule 10b-5 under the
Exchange Act; and Section 206 of the Advisers Act. The plaintiffs in this
case are seeking: compensatory damages; rescission; return of fees paid;
accounting for wrongfully gotten gains, profits and compensation;
restitution and disgorgement; and other costs and expenses, including
counsel fees and expert fees.
ROBERT S. BALLAGH, JR., INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED, V. INVESCO FUNDS GROUP, INC., INVESCO STOCK FUNDS, INC., AIM
MANAGEMENT GROUP, INC., AIM STOCK FUNDS, AIM STOCK FUNDS, INC., AMVESCAP
PLC, INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND,
INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES
FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND,
INVESCO INTERNATIONAL CORE EQUITY FUND, INVESCO LEISURE FUND, INVESCO
MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, INVESCO S&P 500 INDEX
FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO
TOTAL RETURN FUND, INVESCO UTILITIES FUND, INVESCO ADVANTAGE FUND, INVESCO
BALANCED FUND, INVESCO EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO HIGH
YIELD FUND, INVESCO GROWTH & INCOME FUND, INVESCO INTERNATIONAL BLUE CHIP
VALUE FUND, INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO SELECT FUND,
INVESCO TAX-FREE BOND FUND, INVESCO TELECOMMUNICATIONS FUND, INVESCO U.S.
GOVERNMENT SECURITIES FUND, INVESCO VALUE FUND, EDWARD J. STERN, CANARY
INVESTMENT MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., CANARY CAPITAL
PARTNERS, LLC, AND DOES 1-100, in the United States District Court,
District of Colorado (Civil Action No. 04-MK-0152), filed on January 28,
2004. This claim alleges violations of: Sections 11 and 15 of the
Securities Act; Sections 10(b) and 20(a) of the Exchange Act; Rule 10b-5
under the Exchange Act; and Sections 34(b), 36(a) and 36(b) of the
Investment Company Act. The claim also alleges common law breach of
fiduciary duty. The plaintiffs in this case are seeking: damages;
pre-judgment and post-judgment interest; counsel fees and expert fees; and
other relief.
JONATHAN GALLO, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, V. INVESCO FUNDS GROUP, INC., INVESCO STOCK FUNDS, INC., AIM MANAGEMENT GROUP, INC., AIM STOCK FUNDS, AIM STOCK FUNDS, INC., AMVESCAP PLC, INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND, INVESCO LEISURE FUND, INVESCO MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, INVESCO S&P 500 INDEX FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND, INVESCO UTILITIES FUND, INVESCO ADVANTAGE FUND, INVESCO BALANCED FUND, INVESCO EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO HIGH YIELD FUND, INVESCO GROWTH & INCOME FUND, INVESCO INTERNATIONAL BLUE CHIP VALUE FUND, INVESCO REAL ESTATE
OPPORTUNITY FUND, INVESCO SELECT FUND, INVESCO TAX-FREE BOND FUND, INVESCO
TELECOMMUNICATIONS FUND, INVESCO U.S. GOVERNMENT SECURITIES FUND, INVESCO
VALUE FUND, EDWARD J. STERN, CANARY INVESTMENT MANAGEMENT, LLC, CANARY
CAPITAL PARTNERS, LTD., CANARY CAPITAL PARTNERS, LLC, AND DOES 1-100, in
the United States District Court, District of Colorado (Civil Action No.
04-MK-0151), filed on January 28, 2004. This claim alleges violations of:
Sections 11 and 15 of the Securities Act; Sections 10(b) and 20(a) of the
Exchange Act; Rule 10b-5 under the Exchange Act; and Sections 34(b), 36(a)
and 36(b) of the Investment Company Act. The claim also alleges common law
breach of fiduciary duty. The plaintiffs in this case are seeking:
damages; pre-judgment and post-judgment interest; counsel fees and expert
fees; and other relief.
EILEEN CLANCY, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED, V. INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY
FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL
SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH
SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND (FORMERLY KNOWN AS
INTERNATIONAL BLUE CHIP VALUE FUND), INVESCO LEISURE FUND, INVESCO MID-CAP
GROWTH FUND, INVESCO MULTI-SECTOR FUND, AIM INVESCO S&P 500 INDEX FUND,
INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL
RETURN FUND, INVESCO UTILITIES FUND, AIM MONEY MARKET FUND, AIM INVESCO
TAX-FREE MONEY FUND, AIM INVESCO TREASURER'S MONEY MARKET RESERVE FUND,
AIM INVESCO TREASURER'S TAX-EXEMPT RESERVE FUND, AIM INVESCO US GOVERNMENT
MONEY FUND, INVESCO ADVANTAGE FUND, INVESCO BALANCED FUND, INVESCO
EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO HIGH-YIELD FUND, INVESCO
GROWTH & INCOME FUND, INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO SELECT
INCOME FUND, INVESCO TAX-FREE BOND FUND, INVESCO TELECOMMUNICATIONS FUND,
INVESCO U.S. GOVERNMENT SECURITIES FUND, INVESCO VALUE FUND, INVESCO,
INVESCO LATIN AMERICAN GROWTH FUND (COLLECTIVELY KNOWN AS THE "INVESCO
FUNDS"), AIM STOCK FUNDS, AIM COUNSELOR SERIES TRUST, AIM SECTOR FUNDS
INC., AIM BOND FUNDS INC., AIM COMBINATION STOCK AND BOND FUNDS INC., AIM
MONEY MARKET FUNDS INC., AIM INTERNATIONAL FUNDS INC. (COLLECTIVELY KNOWN
AS THE "INVESCO FUNDS REGISTRANTS"), AMVESCAP PLC, INVESCO FUNDS GROUP,
INC., TIMOTHY MILLER, RAYMOND CUNNINGHAM AND THOMAS KOLBE, in the United
States District Court, Southern District of New York (Civil Action No.
04-CV-0713), filed on January 30, 2004. This claim alleges violations of
Sections 11 and 15 of the Securities Act. The plaintiffs in this case are
seeking: compensatory damages, rescission; return of fees paid; and other
costs and expenses, including counsel fees and expert fees.
SCOTT WALDMAN, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, V.
INVESCO FUNDS GROUP, INC., INVESCO DYNAMICS FUND, INVESCO EUROPEAN FUND,
INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, AIM STOCK
FUNDS, AIM COUNSELOR SERIES TRUST, AIM SECTOR FUNDS INC., AIM BOND FUNDS
INC., AIM COMBINATION STOCK AND BOND FUNDS INC., AIM MONEY MARKET FUNDS
INC., AIM INTERNATIONAL FUNDS INC., AMVESCAP PLC, AND RAYMOND CUNNINGHAM,
in the United States District Court, Southern District of New York (Civil
Action No. 04-CV-00915), filed on February 3, 2004. This claim alleges
violations of Sections 11 and 15 of the Securities Act and common law
breach of fiduciary duty. The plaintiffs in this case are seeking
compensatory damages; injunctive relief; and costs and expenses, including
counsel fees and expert fees.
CARL E. VONDER HAAR AND MARILYN P. MARTIN, ON BEHALF OF THEMSELVES AND ALL
OTHERS SIMILARLY SITUATED, V. INVESCO FUNDS GROUP, INC., INVESCO STOCK
FUNDS, INC. AND DOE DEFENDANTS 1-100, in the United States District Court,
District of Colorado (Civil Action No. 04-CV-812), filed on February 5,
2004. This claim alleges: common law breach of fiduciary duty; breach of
contract; and tortious interference with contract. The plaintiffs in this
case are seeking: injunctive relief; damages; disgorgement; and costs and
expenses, including counsel fees and expert fees.
HENRY KRAMER, DERIVATIVELY ON BEHALF OF INVESCO ENERGY FUND, INVESCO STOCK
FUNDS, INC., AND INVESCO MUTUAL FUNDS V. AMVESCAP, PLC, INVESCO FUNDS
GROUP, INC., CANARY CAPITAL PARTNERS, LLC, CANARY INVESTMENT MANAGEMENT,
LLC, AND CANARY CAPITAL PARTNERS, LTD., DEFENDANTS, AND INVESCO ENERGY
FUND, INVESCO STOCK FUNDS, INC., AND INVESCO MUTUAL FUNDS, NOMINAL
DEFENDANTS, in the United States District Court, District of Colorado
(Civil Action No. 04-MK-0397), filed on March 4, 2004. This claim alleges
violations of Section 36(b) of the Investment Company Act and common law
breach of fiduciary duty. The plaintiff in this case is seeking damages
and costs and expenses, including counsel fees and expert fees.
CYNTHIA L. ESSENMACHER, DERIVATIVELY ON BEHALF OF THE INVESCO DYNAMICS FUND AND THE REMAINING "INVESCO FUNDS" V. INVESCO FUNDS GROUPS, INC., AMVESCAP PLC, AIM MANAGEMENT GROUP, INC., RAYMOND CUNNINGHAM, TIMOTHY MILLER, THOMAS KOLBE AND MICHAEL LEGOSKI, DEFENDANTS, AND INVESCO DYNAMICS FUND AND THE "INVESCO FUNDS", NOMINAL DEFENDANTS, in the United States District Court, District of Delaware (Civil Action No. 04-CV-188), filed on March 29, 2004. This claim alleges: violations of Section 36(b) of the Investment Company Act; violations of Section 206 of the Advisers Act; common law breach of fiduciary duty; and civil conspiracy. The plaintiff in this case is seeking: damages; injunctive relief; and costs and expenses, including counsel fees and expert fees.
ANNE G. PERENTESIS (WIDOW) V. AIM INVESTMENTS, ET AL (INVESCO FUNDS GROUP,
INC.), in the District Court of Maryland for Baltimore County (Case No.
080400228152005), filed on July 21, 2005. This claim alleges financial
losses, mental anguish and emotional distress as a result of unlawful
market timing and related activity by the defendants. The plaintiff in
this case is seeking damages and costs and expenses.
Pursuant to an Order of the MDL Court, plaintiffs in the above lawsuits
(with the exception of Carl E. Vonder Haar, et al. v. INVESCO Funds Group, Inc.
et al. and Mike Sayegh v. Janus Capital Corporation, et al. and Anne G.
Perentesis (Widow) v. AIM Investments, et al.) consolidated their claims for
pre-trial purposes into three amended complaints against various AIM- and
IFG-related parties: (i) a Consolidated Amended Class Action Complaint
purportedly brought on behalf of shareholders of the AIM Funds (the Lepera
lawsuit discussed below); (ii) a Consolidated Amended Fund Derivative Complaint
purportedly brought on behalf of the AIM Funds and fund registrants (the
Essenmacher lawsuit discussed below); and (iii) an Amended Class Action
Complaint for Violations of the Employee Retirement Income Securities Act
("ERISA") purportedly brought on behalf of participants in AMVESCAP's 401(k)
plan (the Calderon lawsuit discussed below). The plaintiffs in the Vonder Haar
and Sayegh lawsuits continue to seek remand of their lawsuits to state court.
Set forth below is detailed information about these three amended complaints.
RICHARD LEPERA, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED (LEAD PLAINTIFF: CITY OF CHICAGO DEFERRED COMPENSATION PLAN), V.
INVESCO FUNDS GROUP, INC., AMVESCAP, PLC, AIM INVESTMENTS, AIM ADVISORS, INC., INVESCO INSTITUTIONAL (N.A.), INC., INVESCO ASSETS
MANAGEMENT LIMITED, INVESCO GLOBAL ASSETS MANAGEMENT (N.A.), AIM STOCK
FUNDS, AIM MUTUAL FUNDS, AIM COMBINATION STOCK & BOND FUNDS, AIM SECTOR
FUNDS, AIM TREASURER'S SERIES TRUST, INVESCO DISTRIBUTORS, INC., AIM
DISTRIBUTORS, INC., RAYMOND R. CUNNINGHAM, TIMOTHY J. MILLER, THOMAS A.
KOLBE, MICHAEL D. LEGOSKI, MICHAEL K. BRUGMAN, MARK WILLIAMSON, EDWARD J.
STERN, CANARY CAPITAL PARTNERS, LLC, CANARY INVESTMENT MANAGEMENT, LLC,
CANARY CAPITAL PARTNERS, LTD., RYAN GOLDBERG, MICHAEL GRADY, CITIGROUP,
INC., CITIGROUP GLOBAL MARKETS HOLDINGS, INC., SALOMON SMITH BARNEY, INC.,
MORGAN STANLEY DW, ANNA BRUGMAN, ANB CONSULTING, LLC, KAPLAN & CO.
SECURITIES INC., SECURITY TRUST COMPANY, N.A., GRANT D. SEEGER, JB OXFORD
HOLDINGS, INC., NATIONAL CLEARING CORPORATION, JAMES G. LEWIS, KRAIG L.
KIBBLE, JAMES Y. LIN, BANK OF AMERICA CORPORATION, BANC OF AMERICA
SECURITIES LLC, THEODORE C. SIHPOL, III, BEAR STEARNS & CO., INC., BEAR
STEARNS SECURITIES CORP., CHARLES SCHWAB & CO., CREDIT SUISSE FIRST BOSTON
(USA) INC., PRUDENTIAL FINANCIAL, INC., PRUDENTIAL SECURITIES, INC.,
CANADIAN IMPERIAL BANK OF COMMERCE, JP MORGAN CHASE AND CO., AND JOHN DOE
DEFENDANTS 1-100, in the MDL Court (Case No. 04-MD-15864; No.
04-CV-00814-JFM) (originally in the United States District Court for the
District of Colorado), filed on September 29, 2004. This lawsuit alleges
violations of Sections 11, 12(a) (2), and 15 of the Securities Act;
Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder;
Section 20(a) of the Exchange Act; Sections 34(b), 36(a), 36(b) and 48(a)
of the Investment Company Act; breach of fiduciary duty/constructive
fraud; aiding and abetting breach of fiduciary duty; and unjust
enrichment. The plaintiffs in this lawsuit are seeking: compensatory
damages, including interest; and other costs and expenses, including
counsel and expert fees.
CYNTHIA ESSENMACHER, SILVANA G. DELLA CAMERA, FELICIA BERNSTEIN AS CUSTODIAN FOR DANIELLE BROOKE BERNSTEIN, EDWARD CASEY, TINA CASEY, SIMON DENENBERG, GEORGE L. GORSUCH, PAT B. GORSUCH, L. SCOTT KARLIN, HENRY KRAMER, JOHN E. MORRISEY, HARRY SCHIPPER, BERTY KREISLER, GERSON SMITH, CYNTHIA PULEO, ZACHARY ALAN STARR, JOSHUA GUTTMAN, AND AMY SUGIN, DERIVATIVELY ON BEHALF OF THE MUTUAL FUNDS, TRUSTS AND CORPORATIONS COMPRISING THE INVESCO AND AIM FAMILY OF MUTUAL FUNDS V. AMVESCAP, PLC, INVESCO FUNDS GROUP, INC., INVESCO DISTRIBUTORS, INC., INVESCO INSTITUTIONAL (N.A.), INC., INVESCO ASSETS MANAGEMENT LIMITED, INVESCO GLOBAL ASSETS MANAGEMENT (N.A.), AIM MANAGEMENT GROUP, INC., AIM ADVISERS, INC., AIM INVESTMENT SERVICES, INC., AIM DISTRIBUTORS, INC., FUND
MANAGEMENT COMPANY, MARK H. WILLIAMSON, RAYMOND R. CUNNINGHAM, TIMOTHY MILLER, THOMAS KOLBE, MICHAEL LEGOSKI, MICHAEL BRUGMAN, FRED A. DEERING, VICTOR L. ANDREWS, BOB R. BAKER, LAWRENCE H. BUDNER, JAMES T. BUNCH, GERALD J. LEWIS, JOHN W. MCINTYRE, LARRY SOLL, RONALD L. GROOMS, WILLIAM J. GALVIN, JR., ROBERT H. GRAHAM, FRANK S. BAYLEY, BRUCE L. CROCKETT, ALBERT R. DOWDEN, EDWARD K. DUNN, JACK M. FIELDS, CARL FRISCHILING, PREMA MATHAI-DAVIS, LEWIS F. PENNOCK, RUTH H. QUIGLEY, LOUIS S. SKLAR, OWEN DALY II, AURUM SECURITIES CORP., AURUM CAPITAL MANAGEMENT CORP., GOLDEN GATE FINANCIAL GROUP, LLC, BANK OF AMERICA CORP., BANC OF AMERICA SECURITIES LLC, BANK OF AMERICA, N.A., BEAR STEARNS & CO., INC., CANARY CAPITAL PARTNERS, LLC, CANARY CAPITAL PARTNERS, LTD., CANARY INVESTMENT MANAGEMENT, LLC, EDWARD J. STERN, CANADIAN IMPERIAL BANK OF COMMERCE, CIRCLE TRUST COMPANY, RYAN GOLDBERG, MICHAEL GRADY, KAPLAN & CO. SECURITIES, INC., JP MORGAN CHASE & CO., OPPENHEIMER & CO., INC., PRITCHARD CAPITAL PARTNERS LLC, TIJA MANAGEMENT, TRAUTMAN WASSERMAN & COMPANY, INC., DEFENDANTS, AND
THE INVESCO FUNDS AND THE AIM FUNDS AND ALL TRUSTS AND CORPORATIONS THAT
COMPRISE THE INVESCO FUNDS AND AIM FUNDS THAT WERE MANAGED BY INVESCO AND
AIM, NOMINAL DEFENDANTS, in the MDL Court (Case No. 04-MD-15864-FPS; No.
04-819), filed on September 29, 2004. This lawsuit alleges violations of
Sections 206 and 215 of the Investment Advisers Act; Sections 36(a), 36(b)
and 47 of the Investment Company Act; control person liability under
Section 48 of the Investment Company Act; breach of fiduciary duty; aiding
and abetting breach of fiduciary duty; breach of contract; unjust
enrichment; interference with contract; and civil conspiracy. The
plaintiffs in this lawsuit are seeking: removal of director defendants;
removal of adviser, sub-adviser and distributor defendants; rescission of
management and other contracts between the Funds and defendants;
rescission of 12b-1 plans; disgorgement of management fees and other
compensation/profits paid to adviser defendants; compensatory and punitive
damages; and fees and expenses, including attorney and expert fees.
MIRIAM CALDERON, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, V. AVZ, INC., AMVESCAP RETIREMENT, INC., AMVESCAP NATIONAL TRUST COMPANY, INVESCO FUNDS GROUP, INC., AMVESCAP, ROBERT F. MCCULLOUGH, GORDON NEBEKER, JEFFREY G. CALLAHAN, AND RAYMOND R. CUNNINGHAM, in the MDL Court (Case No. 1:04-MD-15864-FPS), filed on September 29, 2004. This lawsuit alleges violations of ERISA Sections 404, 405 and 406. The plaintiffs in this lawsuit are seeking: declaratory judgment; restoration of losses suffered by the plan; disgorgement of profits; imposition of a constructive trust; injunctive relief; compensatory damages; costs and attorneys' fees; and equitable restitution.
APPENDIX M-2
PENDING LITIGATION ALLEGING INADEQUATELY EMPLOYED FAIR VALUE PRICING
The following civil class action lawsuits involve, depending on the lawsuit, one or more AIM Funds, IFG and/or AIM and allege that the defendants inadequately employed fair value pricing. These lawsuits either have been served or have had service of process waived as of August 19, 2005.
T.K. PARTHASARATHY, EDMUND WOODBURY, STUART ALLEN SMITH AND SHARON SMITH, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, V. T. ROWE PRICE INTERNATIONAL FUNDS, INC., T. ROWE PRICE INTERNATIONAL, INC., ARTISAN FUNDS, INC., ARTISAN PARTNERS LIMITED PARTNERSHIP, AIM INTERNATIONAL FUNDS, INC. AND AIM ADVISORS, INC., in the Third Judicial Circuit Court for Madison County, Illinois (Case No. 2003-L-001253), filed on September 23, 2003. This claim alleges: common law breach of duty and common law negligence and gross negligence. The plaintiffs in these cases are seeking: compensatory and punitive damages; interest; and attorneys' fees and costs. The Third Judicial Circuit Court for Madison County, Illinois has issued an order severing the claims of plaintiff Parthasarathy from the claims of the other plaintiffs against AIM and other defendants. As a result, AIM is a defendant in the following severed action: EDMUND WOODBURY, STUART ALLEN SMITH and SHARON SMITH, Individually and On Behalf of All Others Similarly Situated, v. AIM INTERNATIONAL FUNDS, INC., ET AL., in the Third Judicial Circuit Court for Madison County, Illinois (Case No. 03-L-1253A). The claims made by plaintiffs and the relief sought in the Woodbury lawsuit are identical to those in the Parthasarathy lawsuit. On April 22, 2005, Defendants in the Woodbury lawsuit removed the action to Federal Court (U.S. District Court, Southern District of Illinois, No. 05-CV-302-DRH). Based on a recent Federal appellate court decision (the "Kircher" case), AIM and the other defendants in the Woodbury lawsuit removed the action to Federal court (U.S. District Court, Southern District of Illinois, Cause No. 05-CV-302-DRH) on April 22, 2005. On April 26, 2005, AIM and the other defendants filed their Motion to Dismiss the plaintiffs' state law based claims. On June 10, 2005, the Court dismissed the Woodbury lawsuit based upon the Kircher ruling and ordered the court clerk to close this case. Plaintiffs filed a Motion to Amend the Judgment arguing that the Kircher ruling does not apply to require the dismissal of the claims against AIM in the Woodbury lawsuit. On July 7, 2005, the Court denied this Motion.
JOHN BILSKI, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
V. AIM INTERNATIONAL FUNDS, INC., AIM ADVISORS, INC., INVESCO
INTERNATIONAL FUNDS, INC., INVESCO FUNDS GROUP, INC., T. ROWE PRICE
INTERNATIONAL FUNDS, INC. AND T. ROWE PRICE INTERNATIONAL, INC., in the
United States District Court, Southern District of Illinois (East St.
Louis) (Case No. 03-772), filed on November 19, 2003. This claim alleges:
violations of Sections 36(a) and 36(b) of the Investment Company Act of
1940; common law breach of duty; and common law negligence and gross
negligence. The plaintiff in this case is seeking: compensatory and
punitive damages; interest; and attorneys' fees and costs. This lawsuit
has been transferred to the MDL Court by order of the United States
District Court, Southern District of Illinois (East St. Louis).
APPENDIX M-3
PENDING LITIGATION ALLEGING EXCESSIVE ADVISORY AND/OR DISTRIBUTION FEES
The following civil lawsuits, including purported class action and shareholder derivative suits, involve, depending on the lawsuit, one or more of IFG, AIM, IINA, ADI and/or INVESCO Distributors and allege that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale and, in some cases, also allege that the defendants adopted unlawful distribution plans. These lawsuits either have been served or have had service of process waived as of August 19, 2005.
All of the lawsuits discussed below have been transferred to the United States District Court for the Southern District of Texas, Houston Division by order of the applicable United States District Court in which they were initially filed. By order of the United States District Court for the Southern District of Texas, Houston Division, the Kondracki and Papia lawsuits discussed below have been consolidated for pre-trial purpose into the Berdat lawsuit discussed below and administratively closed.
RONALD KONDRACKI V. AIM ADVISORS, INC. AND AIM DISTRIBUTOR, INC., in the
United States District Court for the Southern District of Illinois (Civil
Action No. 04-CV-263-DRH), filed on April 16, 2004. This claim alleges
violations of Section 36(b) of the Investment Company Act of 1940 (the
"Investment Company Act"). The plaintiff in this case is seeking: damages;
injunctive relief; prospective relief in the form of reduced fees;
rescission of the investment advisory agreements and distribution plans;
and costs and expenses, including counsel fees.
DOLORES BERDAT, MARVIN HUNT, MADELINE HUNT, RANDAL C. BREVER AND RHONDA
LECURU V. INVESCO FUNDS GROUP, INC., INVESCO INSTITUTIONAL (N.A.), INC.,
INVESCO DISTRIBUTORS, INC., AIM ADVISORS, INC. AND AIM DISTRIBUTORS, INC.,
in the United States District Court for the Middle District of Florida,
Tampa Division (Case No. 8:04-CV-978-T24-TBM), filed on April 29, 2004.
This claim alleges violations of Sections 36(b) and 12(b) of the
Investment Company Act. The plaintiffs in this case are seeking: damages;
injunctive relief; rescission of the investment advisory agreements and
distribution plans; and costs and expenses, including counsel fees.
FERDINANDO PAPIA, FRED DUNCAN, GRACE GIAMANCO, JEFFREY S. THOMAS, COURTNEY
KING, KATHLEEN BLAIR, HENRY BERDAT, RUTH MOCCIA, MURRAY BEASLEY AND
FRANCES J. BEASLEY V. A I M ADVISORS, INC. AND A I M DISTRIBUTORS, INC.,
in the United States District Court for the Middle District of Florida,
Tampa Division (Case No. 8:04-CV-977-T17-MSS), filed on April 29, 2004.
This claim alleges violations of Sections 36(b) and 12(b) of the
Investment Company Act. The plaintiffs in this case are seeking: damages;
injunctive relief; rescission of the investment advisory agreements and
distribution plans; and costs and expenses, including counsel fees.
APPENDIX M-4
PENDING LITIGATION ALLEGING IMPROPER CHARGING OF DISTRIBUTION FEES
ON LIMITED OFFERING FUNDS OR SHARE CLASSES
The following civil lawsuits, including shareholder derivative suits, involve, depending on the lawsuit, one or more of IFG, AIM, ADI and/or certain of the trustees of the AIM Funds and allege that the defendants breached their fiduciary duties by charging distribution fees while AIM Funds and/or specific share classes were closed generally to new investors and/or while other share classes of the same AIM Fund were not charged the same distribution fees. These lawsuits either have been served or have had service of process waived as of August 19, 2005.
By order of the United States District Court for the Southern District of Texas, Houston Division, the Lieber lawsuit discussed below has been consolidated for pre-trial purposes into the Zucker lawsuit discussed below and administratively closed.
LAWRENCE ZUCKER, ON BEHALF OF AIM SMALL CAP GROWTH FUND AND AIM LIMITED
MATURITY TREASURY FUND, V. A I M ADVISORS, INC., in the United States
District Court, Southern District of Texas, Houston Division (Civil Action
No. H-03-5653), filed on December 10, 2003. This claim alleges violations
of Section 36(b) of the Investment Company Act of 1940 (the "Investment
Company Act") and common law breach of fiduciary duty. The plaintiff in
this case is seeking: damages; injunctive relief; and costs and expenses,
including counsel fees. In March 2005, the parties entered a Stipulation
whereby, among other things, the plaintiff agreed to dismiss without
prejudice all claims against all of the individual defendants and his
claims based on state law causes of action. This effectively limits this
case to alleged violations of Section 36(b) against ADI.
STANLEY LIEBER, ON BEHALF OF INVESCO BALANCED FUND, INVESCO CORE EQUITY
FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO EUROPEAN FUND,
INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND,
INVESCO GROWTH & INCOME FUND, INVESCO GROWTH FUND, INVESCO HEALTH SCIENCE
FUND, INVESCO HIGH YIELD FUND, INVECO INTERNATIONAL BLUE CHIP VALUE FUND,
INVESCO LEISURE FUND, INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO S&P
500 INDEX FUND, INVESCO SELECT INCOME FUND, INVESCO TAX FREE BOND FUND,
INVESCO TECHNOLOGY FUND, INVESCO TELECOMMUNICATIONS FUND, INVESCO TOTAL
RETURN FUND, INVESCO US GOVERNMENT SECURITIES FUND, INVESCO UTILITIES
FUND, INVESCO VALUE EQUITY FUND, V. INVESCO FUNDS GROUP, INC. AND A I M
ADVISORS, INC., in the United States District Court, Southern District of
Texas, Houston Division (Civil Action No. H-03-5744), filed on December
17, 2003. This claim alleges violations of Section 36(b) of the Investment
Company Act and common law breach of fiduciary duty. The plaintiff in this
case is seeking: damages; injunctive relief; and costs and expenses,
including counsel fees. In March 2005, the parties entered a Stipulation
whereby, among other things, the plaintiff agreed to dismiss without
prejudice all claims against all of the individual defendants and his
claims based on state law causes of action. This effectively limits this
case to alleged violations of Section 36(b) against ADI.
HERMAN C. RAGAN, DERIVATIVELY, AND ON BEHALF OF HIMSELF AND ALL OTHERS
SIMILARLY SITUATED, V. INVESCO FUNDS GROUP, INC., AND A I M DISTRIBUTORS,
INC., in the United States District Court for the Southern District of
Georgia, Dublin Division (Civil Action No. CV304-031), filed on May 6,
2004. This claim alleges violations of: Section 10(b) of the Securities
Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 thereunder;
Sections 17(a) (2) and 17(a) (3) of the Securities Act of 1933; and
Section 36(b) of the Investment Company Act. This claim also alleges
controlling person
liability, within the meaning of Section 20 of the Exchange Act against ADI. The plaintiff in this case is seeking: damages and costs and expenses, including counsel fees.
APPENDIX M-5
PENDING LITIGATION ALLEGING IMPROPER MUTUAL FUND SALES PRACTICES
AND DIRECTED-BROKERAGE ARRANGEMENTS
The following civil lawsuits, including purported class action and shareholder derivative suits, involve, depending on the lawsuit, one or more of AIM Management, IFG, AIM, AIS and/or certain of the trustees of the AIM Funds and allege that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively push the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions. These lawsuits either have been served or have had service of process waived as of August 19, 2005.
By order of the United States District Court for the Southern District of Texas, Houston Division, the claims made in the Beasley, Kehlbeck Trust, Fry, Apu and Bendix lawsuits discussed below were consolidated into the Boyce lawsuit discussed below and these other lawsuits were administratively closed. On June 7, 2005, plaintiffs filed their Consolidated Amended Complaint in which they make substantially identical allegations to those of the individual underlying lawsuits. However, the City of Chicago Deferred Compensation Plan has been joined as an additional plaintiff in the Consolidated Amended Complaint. Plaintiffs added defendants, including current and former directors/trustees of the AIM Funds formerly advised by IFG.
JOY D. BEASLEY AND SHEILA MCDAID, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, V. AIM MANAGEMENT GROUP INC., INVESCO FUNDS GROUP, INC., AIM INVESTMENT SERVICES, INC., AIM ADVISORS, INC., ROBERT H. GRAHAM, MARK H. WILLIAMSON, FRANK S. BAYLEY, BRUCE L. CROCKETT, ALBERT R. DOWDEN, EDWARD K. DUNN, JR., JACK M. FIELDS, CARL FRISCHLING, PREMA MATHAI-DAVIS, LEWIS F. PENNOCK, RUTH H. QUIGLEY, AND LOUIS S. SKLAR, AND JOHN DOES 1-100, DEFENDANTS, AND AIM AGGRESSIVE GROWTH FUND, AIM ASIA PACIFIC GROWTH FUND, AIM BALANCED FUND, AIM BASIC BALANCED FUND, AIM BASIC VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM DENT DEMOGRAPHIC TRENDS FUND, AIM DEVELOPING MARKETS FUND, AIM DIVERSIFIED DIVIDEND FUND, AIM EMERGING GROWTH FUND, AIM EUROPEAN GROWTH FUND, AIM EUROPEAN SMALL COMPANY FUND, AIM FLOATING RATE FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL EQUITY FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL VALUE FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EMERGING GROWTH FUND, AIM INTERNATIONAL GROWTH FUND, AIM LARGE CAP BASIC VALUE FUND, AIM LARGE CAP GROWTH FUND, AIM LIBRA FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP BASIC VALUE FUND, AIM MID CAP CORE EQUITY FUND, AIM MID CAP GROWTH FUND, AIM MUNICIPAL BOND FUND, AIM OPPORTUNITIES I FUND, AIM OPPORTUNITIES II FUND, AIM OPPORTUNITIES III FUND, AIM PREMIER EQUITY FUND, AIM REAL ESTATE FUND, AIM SELECT EQUITY FUND, AIM SHORT TERM BOND FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP GROWTH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM TOTAL RETURN BOND FUND, AIM TRIMARK ENDEAVOR FUND, AIM TRIMARK FUND, AIM TRIMARK SMALL COMPANIES FUND, AIM WEINGARTEN FUND, INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND, INVESCO LEISURE FUND, INVESCO MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, INVESCO S&P 500 INDEX FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND,
INVESCO UTILITIES FUND, NOMINAL DEFENDANTS, in the United States District Court for the District of Colorado (Civil Action No. 04-B-0958), filed on May 10, 2004. The plaintiffs voluntarily dismissed this case in Colorado and re-filed it on July 2, 2004 in the United States District Court for the Southern District of Texas, Houston Division (Civil Action H-04-2589). This claim alleges violations of Sections 34(b), 36(b) and 48(a) of the Investment Company Act of 1940 (the "Investment Company Act") and violations of Sections 206 and 215 of the Investment Advisers Act of 1940 (the "Advisers Act"). The claim also alleges common law breach of fiduciary duty. The plaintiffs in this case are seeking: compensatory and punitive damages; rescission of certain Funds' advisory agreements and distribution plans and recovery of all fees paid; an accounting of all fund-related fees, commissions and soft dollar payments; restitution of all unlawfully or discriminatorily obtained fees and charges; and attorneys' and experts' fees.
RICHARD TIM BOYCE V. AIM MANAGEMENT GROUP INC., INVESCO FUNDS GROUP, INC.,
AIM INVESTMENT SERVICES, INC., AIM ADVISORS, INC., ROBERT H. GRAHAM, MARK
H. WILLIAMSON, FRANK S. BAYLEY, BRUCE L. CROCKETT, ALBERT R. DOWDEN,
EDWARD K. DUNN, JR., JACK M. FIELDS, CARL FRISCHLING, PREMA MATHAI-DAVIS,
LEWIS F. PENNOCK, RUTH H. QUIGLEY, AND LOUIS S. SKLAR, AND JOHN DOES
1-100, DEFENDANTS, AND AIM AGGRESSIVE GROWTH FUND, AIM ASIA PACIFIC GROWTH
FUND, AIM BALANCED FUND, AIM BASIC BALANCED FUND, AIM BASIC VALUE FUND,
AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM
CONSTELLATION FUND, AIM DENT DEMOGRAPHIC TRENDS FUND, AIM DEVELOPING
MARKETS FUND, AIM DIVERSIFIED DIVIDEND FUND, AIM EMERGING GROWTH FUND, AIM
EUROPEAN GROWTH FUND, AIM EUROPEAN SMALL COMPANY FUND, AIM FLOATING RATE
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL EQUITY FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL VALUE FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EMERGING GROWTH FUND, AIM
INTERNATIONAL GROWTH FUND, AIM LARGE CAP BASIC VALUE FUND, AIM LARGE CAP
GROWTH FUND, AIM LIBRA FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID
CAP BASIC VALUE FUND, AIM MID CAP CORE EQUITY FUND, AIM MID CAP GROWTH
FUND, AIM MUNICIPAL BOND FUND, AIM OPPORTUNITIES I FUND, AIM OPPORTUNITIES
II FUND, AIM OPPORTUNITIES III FUND, AIM PREMIER EQUITY FUND, AIM REAL
ESTATE FUND, AIM SELECT EQUITY FUND, AIM SHORT TERM BOND FUND, AIM SMALL
CAP EQUITY FUND, AIM SMALL CAP GROWTH FUND, AIM TAX-FREE INTERMEDIATE
FUND, AIM TOTAL RETURN BOND FUND, AIM TRIMARK ENDEAVOR FUND, AIM TRIMARK
FUND, AIM TRIMARK SMALL COMPANIES FUND, AIM WEINGARTEN FUND, INVESCO
ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND, INVESCO DYNAMICS
FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD &
PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL
CORE EQUITY FUND, INVESCO LEISURE FUND, INVESCO MID-CAP GROWTH FUND,
INVESCO MULTI-SECTOR FUND, INVESCO S&P 500 INDEX FUND, INVESCO SMALL
COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND,
INVESCO UTILITIES FUND, NOMINAL DEFENDANTS, in the United States District
Court for the District of Colorado (Civil Action No. 04-N-0989), filed on
May 13, 2004. The plaintiff voluntarily dismissed this case in Colorado
and re-filed it on July 1, 2004 in the United States District Court for
the Southern District of Texas, Houston Division (Civil Action H-04-2587).
This claim alleges violations of Sections 34(b), 36(b) and 48(a) of the
Investment Company Act and violations of Sections 206 and 215 of the
Advisers Act. The claim also alleges common law breach of fiduciary duty.
The plaintiff in this case is seeking: compensatory and punitive damages;
rescission of certain Funds' advisory agreements and distribution plans
and recovery of all fees paid; an accounting of all fund-related fees,
commissions and soft dollar payments; restitution of all unlawfully or
discriminatorily obtained fees and charges; and attorneys' and experts'
fees.
KEHLBECK TRUST DTD 1-25-93, BILLY B. KEHLBECK AND DONNA J. KEHLBECK, TTEES V. AIM MANAGEMENT GROUP INC., INVESCO FUNDS GROUP, INC., AIM INVESTMENT SERVICES, INC., AIM ADVISORS, INC., ROBERT H. GRAHAM, MARK H. WILLIAMSON, FRANK S. BAYLEY, BRUCE L. CROCKETT, ALBERT R. DOWDEN, EDWARD K. DUNN, JR., JACK M. FIELDS, CARL FRISCHLING, PREMA MATHAI-DAVIS, LEWIS F. PENNOCK, RUTH H. QUIGLEY, AND LOUIS S. SKLAR, AND JOHN DOES 1-100, DEFENDANTS, AND AIM AGGRESSIVE GROWTH FUND, AIM ASIA PACIFIC GROWTH FUND, AIM BALANCED FUND, AIM BASIC BALANCED FUND, AIM BASIC VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM DENT
DEMOGRAPHIC TRENDS FUND, AIM DEVELOPING MARKETS FUND, AIM DIVERSIFIED
DIVIDEND FUND, AIM EMERGING GROWTH FUND, AIM EUROPEAN GROWTH FUND, AIM
EUROPEAN SMALL COMPANY FUND, AIM FLOATING RATE FUND, AIM GLOBAL AGGRESSIVE
GROWTH FUND, AIM GLOBAL EQUITY FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL
HEALTH CARE FUND, AIM GLOBAL VALUE FUND, AIM HIGH INCOME MUNICIPAL FUND,
AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND,
AIM INTERNATIONAL EMERGING GROWTH FUND, AIM INTERNATIONAL GROWTH FUND, AIM
LARGE CAP BASIC VALUE FUND, AIM LARGE CAP GROWTH FUND, AIM LIBRA FUND, AIM
LIMITED MATURITY TREASURY FUND, AIM MID CAP BASIC VALUE FUND, AIM MID CAP
CORE EQUITY FUND, AIM MID CAP GROWTH FUND, AIM MUNICIPAL BOND FUND, AIM
OPPORTUNITIES I FUND, AIM OPPORTUNITIES II FUND, AIM OPPORTUNITIES III
FUND, AIM PREMIER EQUITY FUND, AIM REAL ESTATE FUND, AIM SELECT EQUITY
FUND, AIM SHORT TERM BOND FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP
GROWTH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM TOTAL RETURN BOND FUND,
AIM TRIMARK ENDEAVOR FUND, AIM TRIMARK FUND, AIM TRIMARK SMALL COMPANIES
FUND, AIM WEINGARTEN FUND, INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO
CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO
FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO
HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND, INVESCO
LEISURE FUND, INVESCO MULTI-SECTOR FUND, INVESCO MID-CAP GROWTH FUND,
INVESCO S&P 500 INDEX FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO
TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND, INVESCO UTILITIES FUND,
NOMINAL DEFENDANTS, in the United States District Court for the Southern
District of Texas, Houston Division (Civil Action No. H-04-2802), filed on
July 9, 2004. This claim alleges violations of Sections 34(b), 36(b) and
48(a) of the Investment Company Act and violations of Sections 206 and 215
of the Advisers Act. The claim also alleges common law breach of fiduciary
duty. The plaintiff in this case is seeking: compensatory and punitive
damages; rescission of certain Funds' advisory agreements and distribution
plans and recovery of all fees paid; an accounting of all fund-related
fees, commissions and soft dollar payments; restitution of all unlawfully
or discriminatorily obtained fees and charges; and attorneys' and experts'
fees.
JANICE R. FRY, BOB J. FRY, JAMES P. HAYES, VIRGINIA L. MAGBUAL, HENRY W. MEYER AND GEORGE ROBERT PERRY V. AIM MANAGEMENT GROUP INC., INVESCO FUNDS
GROUP, INC., AIM INVESTMENT SERVICES, INC., AIM ADVISORS, INC., ROBERT H. GRAHAM, MARK H. WILLIAMSON, FRANK S. BAYLEY, BRUCE L. CROCKETT, ALBERT R. DOWDEN, EDWARD K. DUNN, JR., JACK M. FIELDS, CARL FRISCHLING, PREMA MATHAI-DAVIS, LEWIS F. PENNOCK, RUTH H. QUIGLEY, AND LOUIS S. SKLAR, AND JOHN DOES 1-100, DEFENDANTS, AND AIM AGGRESSIVE GROWTH FUND, AIM ASIA PACIFIC GROWTH FUND, AIM BALANCED FUND, AIM BASIC BALANCED FUND, AIM BASIC VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM DENT DEMOGRAPHIC TRENDS FUND, AIM DEVELOPING MARKETS FUND, AIM DIVERSIFIED DIVIDEND FUND, AIM EMERGING GROWTH FUND, AIM EUROPEAN GROWTH FUND, AIM EUROPEAN SMALL COMPANY FUND, AIM FLOATING RATE FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL EQUITY FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL VALUE FUND, AIM GROUP INCOME FUND, AIM GROUP VALUE FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EMERGING GROWTH FUND, AIM INTERNATIONAL GROWTH FUND, AIM LARGE CAP BASIC VALUE FUND, AIM LARGE CAP GROWTH FUND, AIM LIBRA FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP BASIC VALUE FUND, AIM MID CAP CORE EQUITY FUND, AIM MID CAP GROWTH FUND,
AIM MUNICIPAL BOND FUND, AIM OPPORTUNITIES I FUND, AIM OPPORTUNITIES II FUND, AIM OPPORTUNITIES III FUND, AIM PREMIER EQUITY FUND, AIM REAL ESTATE FUND, AIM SELECT EQUITY FUND, AIM SHORT TERM BOND FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP GROWTH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM TOTAL RETURN BOND FUND, AIM TRIMARK ENDEAVOR FUND, AIM TRIMARK FUND, AIM TRIMARK SMALL COMPANIES FUND, AIM WEINGARTEN FUND, INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND, INVESCO LEISURE FUND, INVESCO MULTI-SECTOR FUND, INVESCO MID-CAP GROWTH FUND, INVESCO S&P 500 INDEX FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND, INVESCO UTILITIES FUND, NOMINAL DEFENDANTS, in the United States District Court for the Southern District of Texas, Houston Division (Civil Action No. H-04-2832), filed on July 12, 2004. This claim alleges violations of Sections 34(b), 36(b) and 48(a) of the Investment Company Act and violations of Sections 206 and 215 of the Advisers Act. The claim also alleges common law breach of fiduciary duty. The plaintiff in this case is seeking: compensatory and punitive damages; rescission of certain Funds' advisory agreements and distribution plans and recovery of all fees paid; an accounting of all fund-related fees, commissions and soft dollar payments; restitution of all unlawfully or discriminatorily obtained fees and charges; and attorneys' and experts' fees.
ROBERT P. APU, SUZANNE K. APU, MARINA BERTI, KHANH DINH, FRANK KENDRICK, EDWARD A. KREZEL, DAN B. LESIUK, JOHN B. PERKINS, MILDRED E. RUEHLMAN, LOUIS E. SPERRY, J. DORIS WILLSON AND ROBERT W. WOOD V. AIM MANAGEMENT GROUP INC., INVESCO FUNDS GROUP, INC., AIM INVESTMENT SERVICES, INC., AIM ADVISORS, INC., ROBERT H. GRAHAM, MARK H. WILLIAMSON, FRANK S. BAYLEY, BRUCE L. CROCKETT, ALBERT R. DOWDEN, EDWARD K. DUNN, JR., JACK M. FIELDS, CARL FRISCHLING, PREMA MATHAI-DAVIS, LEWIS F. PENNOCK, RUTH H. QUIGLEY, AND LOUIS S. SKLAR, AND JOHN DOES 1-100, DEFENDANTS, AND AIM AGGRESSIVE GROWTH FUND, AIM ASIA PACIFIC GROWTH FUND, AIM BALANCED FUND, AIM BASIC BALANCED FUND, AIM BASIC VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM DENT DEMOGRAPHIC TRENDS FUND, AIM DEVELOPING MARKETS FUND, AIM DIVERSIFIED DIVIDEND FUND, AIM EMERGING GROWTH FUND, AIM EUROPEAN GROWTH FUND, AIM EUROPEAN SMALL COMPANY FUND, AIM FLOATING RATE FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL EQUITY FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL VALUE FUND, AIM GROUP INCOME FUND, AIM GROUP VALUE FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EMERGING GROWTH FUND, AIM INTERNATIONAL GROWTH FUND, AIM LARGE CAP BASIC VALUE FUND, AIM LARGE CAP GROWTH FUND, AIM LIBRA FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP BASIC VALUE FUND, AIM MID CAP CORE EQUITY FUND, AIM MID CAP GROWTH FUND, AIM MUNICIPAL BOND FUND, AIM OPPORTUNITIES I FUND, AIM OPPORTUNITIES II FUND, AIM OPPORTUNITIES III FUND, AIM PREMIER EQUITY FUND, AIM REAL ESTATE FUND, AIM SELECT EQUITY FUND, AIM SHORT TERM BOND FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP GROWTH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM TOTAL RETURN BOND FUND, AIM TRIMARK ENDEAVOR FUND, AIM TRIMARK FUND, AIM TRIMARK SMALL COMPANIES FUND, AIM WEINGARTEN FUND, INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL
SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND, INVESCO LEISURE FUND, INVESCO MULTI-SECTOR FUND, INVESCO MID-CAP GROWTH FUND, INVESCO S&P 500 INDEX FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND, INVESCO UTILITIES FUND, NOMINAL DEFENDANTS, in the United States District Court for the Southern District of Texas, Houston Division (Civil Action No. H-04-2884), filed on July 15, 2004. This claim alleges violations of Sections 34(b), 36(b) and 48(a) of the Investment Company Act and violations of Sections 206 and 215 of the Advisers Act. The claim also alleges common law breach of fiduciary duty. The plaintiff in this case is seeking: compensatory and punitive damages; rescission of certain Funds' advisory agreements and distribution plans and recovery of all fees paid; an accounting of all fund-related fees, commissions and soft dollar payments; restitution of all unlawfully or discriminatorily obtained fees and charges; and attorneys' and experts' fees.
HARVEY R. BENDIX, CVETAN GEORGIEV, DAVID M. LUCOFF, MICHAEL E. PARMELEE, TRUSTEE OF THE HERMAN S. AND ESPERANZA A.. DRAYER RESIDUAL TRUST U/A 1/22/83 AND STANLEY S. STEPHENSON, TRUSTEE OF THE STANLEY J. STEPHENSON TRUST V. AIM MANAGEMENT GROUP INC., INVESCO FUNDS GROUP, INC., AIM
INVESTMENT SERVICES, INC., AIM ADVISORS, INC., ROBERT H. GRAHAM, MARK H. WILLIAMSON, FRANK S. BAYLEY, BRUCE L. CROCKETT, ALBERT R. DOWDEN, EDWARD K. DUNN, JR., JACK M. FIELDS, CARL FRISCHLING, PREMA MATHAI-DAVIS, LEWIS F. PENNOCK, RUTH H. QUIGLEY, AND LOUIS S. SKLAR, AND JOHN DOES 1-100, DEFENDANTS, AND AIM AGGRESSIVE GROWTH FUND, AIM ASIA PACIFIC GROWTH FUND, AIM BALANCED FUND, AIM BASIC BALANCED FUND, AIM BASIC VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM DENT DEMOGRAPHIC TRENDS FUND, AIM DEVELOPING MARKETS FUND, AIM DIVERSIFIED DIVIDEND FUND, AIM EMERGING GROWTH FUND, AIM EUROPEAN GROWTH FUND, AIM EUROPEAN SMALL COMPANY FUND, AIM FLOATING RATE FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL EQUITY FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL VALUE FUND, AIM GROUP INCOME FUND, AIM GROUP VALUE FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EMERGING GROWTH FUND, AIM INTERNATIONAL GROWTH FUND, AIM LARGE CAP BASIC VALUE FUND, AIM LARGE CAP GROWTH FUND, AIM LIBRA FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP BASIC VALUE FUND, AIM MID CAP CORE EQUITY FUND, AIM MID CAP GROWTH FUND, AIM MUNICIPAL BOND FUND, AIM OPPORTUNITIES I FUND, AIM OPPORTUNITIES II FUND, AIM OPPORTUNITIES III FUND, AIM PREMIER EQUITY FUND, AIM REAL ESTATE FUND, AIM SELECT EQUITY FUND, AIM SHORT TERM BOND FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP GROWTH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM TOTAL RETURN BOND FUND, AIM TRIMARK ENDEAVOR FUND, AIM TRIMARK FUND, AIM TRIMARK SMALL COMPANIES FUND, AIM WEINGARTEN FUND, INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND, INVESCO LEISURE FUND, INVESCO MULTI-SECTOR FUND, INVESCO MID-CAP GROWTH FUND, INVESCO S&P 500 INDEX FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND, INVESCO UTILITIES FUND, NOMINAL DEFENDANTS, in the United States District Court for the Southern District of Texas, Houston Division (Civil Action No. H-04-3030), filed on July 27, 2004. This claim alleges violations of Sections 34(b), 36(b) and 48(a) of the Investment Company
Act and violations of Sections 206 and 215 of the Advisers Act. The claim also alleges common law breach of fiduciary duty. The plaintiff in this case is seeking: compensatory and punitive damages; rescission of certain Funds' advisory agreements and distribution plans and recovery of all fees paid; an accounting of all fund-related fees, commissions and soft dollar payments; restitution of all unlawfully or discriminatorily obtained fees and charges; and attorneys' and experts' fees.
APPENDIX M-6
PENDING LITIGATION ALLEGING FAILURE TO ENSURE PARTICIPATION IN
CLASS ACTION SETTLEMENTS
The following civil lawsuit, purporting to be a class action lawsuit, has been filed against AIM, IINA, AIM Capital and the trustees of the AIM Funds alleging that the defendants breached their fiduciary duties by failing to ensure that the AIM Funds participated in class action settlements in which the AIM Funds were eligible to participate. This lawsuit was dismissed by the court on August 12, 2005.
AVO HOGAN AND JULIAN W. MEADOWS, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, V. BOB R. BAKER, FRANK S. BAYLEY, JAMES T. BUNCH, BRUCE L. CROCKETT, ALBERT R. DOWDEN, EDWARD K. DUNN, JR., JACK M. FIELDS, CARL FRISCHLING, ROBERT H. GRAHAM, GERALD J. LEWIS, PREMA MATHAI-DAVIS, LEWIS F. PENNOCK, RUTH H. QUIGLEY, LOUIS S. SKLAR, LARRY SOLL, PH.D, MARK H. WILLIAMSON, AIM INVESTMENTS, LTD., AIM ADVISORS, INC., AIM CAPITAL MANAGEMENT, INC., INVESCO INSTITUTIONAL (N.A.), INC. AND JOHN DOES NO. 1 THROUGH 100, in the United States District Court, Northern District of Texas (Civil Action No. 3:05-CV-73-P), filed on January 11, 2005. This claim alleges violations of Sections 36(a), 36(b) and 47(b) of the Investment Company Act. The claim also alleges common law breach of fiduciary duty and negligence. The plaintiffs in this case are seeking: compensatory and punitive damages; forfeiture of all commissions and fees paid by the class of plaintiffs; and costs and counsel fees.
FINANCIAL STATEMENTS
Pursuant to Rule 3-03(d) of Regulation S-X, unaudited financials for the period ended April 30, 2005, for Registrant's portfolios have been included in addition to the portfolios' audited financials for the period ended October 31, 2004. Such financials reflect all adjustments which are of a normal recurring nature and which are in the opinion of management, necessary to a fair statement of the results for the period presented.
FS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of AIM Developing Markets Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Developing Markets Fund (the "Fund") at October 31, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP December 20, 2004 Houston, Texas |
FS-1
FINANCIALS
SCHEDULE OF INVESTMENTS
October 31, 2004
MARKET
SHARES VALUE
--------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-96.66%
BERMUDA-1.09%
Central European Media Enterprises Ltd.-Class
A (Broadcasting & Cable TV)(a) 40,000 $ 1,415,600
--------------------------------------------------------------------------
Texwinca Holdings Ltd. (Textiles)(b) 1,212,000 1,098,780
==========================================================================
2,514,380
==========================================================================
BRAZIL-7.02%
Banco Itau Holding Financeira S.A.-Pfd.
(Diversified Banks)(a) 29,100 3,521,413
--------------------------------------------------------------------------
Companhia Brasileira de Distribuicao Grupo
Pao de Acucar-ADR (Hypermarkets & Super
Centers) 93,800 2,232,440
--------------------------------------------------------------------------
Companhia de Bebidas das Americas-ADR
(Brewers) 81,600 2,023,680
--------------------------------------------------------------------------
Grendene S.A.(Apparel Accessories & Luxury
Goods)(a) 86,000 1,045,204
--------------------------------------------------------------------------
Natura Cosmeticos S.A. (Household Products)
(Acquired 05/25/04-10/21/04; Cost
$849,758)(c) 57,200 1,160,304
--------------------------------------------------------------------------
Petroleo Brasileiro S.A.-ADR (Integrated Oil
& Gas) 132,200 4,309,720
--------------------------------------------------------------------------
Tele Norte Leste Participacoes S.A.-ADR
(Integrated Telecommunication Services) 144,234 1,886,581
--------------------------------------------------------------------------
Telesp Celular Participacoes S.A.-Pfd.
(Wireless Telecommunication Services)(a) 1 2
==========================================================================
16,179,344
==========================================================================
CANADA-0.58%
PetroKazakhstan Inc.-Class A
(Integrated Oil & Gas) 36,000 1,330,158
==========================================================================
CAYMAN ISLANDS-4.59%
China Mengniu Dairy Co. Ltd. (Packaged Foods
& Meats)(a) 2,032,000 1,683,870
--------------------------------------------------------------------------
Global Bio-chem Technology Group Co. Ltd.
(Biotechnology)(b) 1,730,000 1,359,504
--------------------------------------------------------------------------
Global Bio-chem Technology Group Co., Ltd.-
Wts., expiring 05/31/07 (Biotechnology)(d) 193,500 13,425
--------------------------------------------------------------------------
Golden Meditech Co. Ltd. (Health Care
Equipment) 3,894,800 940,737
--------------------------------------------------------------------------
Luen Thai Holdings Ltd. (Distributors)
(Acquired 08/19/04-10/07/04; Cost
$1,095,086)(a)(c) 2,488,000 1,278,602
--------------------------------------------------------------------------
Sa Sa International Holdings Ltd.
(Specialty Stores)(b) 2,586,000 1,080,520
--------------------------------------------------------------------------
|
MARKET
SHARES VALUE
--------------------------------------------------------------------------
CAYMAN ISLANDS-(CONTINUED)
Shanda Interactive Entertainment Ltd.-ADR
(Leisure Products)(a)(e) 100,200 $ 3,044,978
--------------------------------------------------------------------------
Solomon Systech International Ltd.
(Semiconductors) 4,618,000 1,168,814
==========================================================================
10,570,450
==========================================================================
CHINA-3.71%
China Petroleum and Chemical Corp.
(Sinopec)-Class H (Integrated Oil & Gas)(b) 4,252,000 1,623,439
--------------------------------------------------------------------------
China Shipping Development Co. Ltd.-Class H
(Marine)(b) 1,418,000 1,187,455
--------------------------------------------------------------------------
PICC Property & Casualty Co. Ltd.-Class H
(Property & Casualty Insurance)(a)(b) 3,000,000 1,082,856
--------------------------------------------------------------------------
Ping An Insurance Co. of China Ltd.-Class H
(Life & Health Insurance)(a) 1,132,000 1,781,589
--------------------------------------------------------------------------
Tong Ren Tang Technologies Co. Ltd.-Class H
(Pharmaceuticals) 421,000 924,918
--------------------------------------------------------------------------
Weiqiao Textile Co. Ltd.-Class H (Textiles)
(Acquired 09/19/03-08/31/04; Cost
$1,751,982)(b)(c) 1,338,500 1,954,788
==========================================================================
8,555,045
==========================================================================
CZECH REPUBLIC-0.54%
Komercni Banka A.S.-GDR (Diversified Banks) 29,700 1,247,400
==========================================================================
EGYPT-1.40%
Orascom Construction Industries (Construction
& Engineering) 278,212 3,221,990
==========================================================================
GREECE-0.26%
Coca-Cola Hellenic Bottling Co. S.A. (Soft
Drinks)(b) 26,675 596,463
==========================================================================
HONG KONG-0.85%
CNOOC Ltd. (Oil & Gas Exploration &
Production)(b) 3,813,000 1,964,330
==========================================================================
HUNGARY-2.47%
OTP Bank Rt. (Diversified Banks)(b) 126,400 3,211,343
--------------------------------------------------------------------------
OTP Bank Rt.-GDR REGS (Diversified Banks)
(Acquired 01/14/03-04/15/03; Cost
$1,017,884)(c)(e) 49,100 2,479,550
--------------------------------------------------------------------------
Technoimpex (Multi-Sector Holdings) (Acquired
11/22/90; Cost $2,989,406)(a)(c)(f)(g) 1,400 0
==========================================================================
5,690,893
==========================================================================
|
FS-2
MARKET
SHARES VALUE
--------------------------------------------------------------------------
INDIA-6.81%
HDFC Bank Ltd.-ADR (Diversified Banks)(e) 101,061 $ 3,554,315
--------------------------------------------------------------------------
Infosys Technologies Ltd.-ADR (IT Consulting
& Services)(e) 94,800 6,304,200
--------------------------------------------------------------------------
Ranbaxy Laboratories Ltd.-GDR
(Pharmaceuticals) (Acquired 10/22/03; Cost
$1,258,200)(c)(f)(g) 54,000 1,309,500
--------------------------------------------------------------------------
Ranbaxy Laboratories Ltd.-GDR
(Pharmaceuticals) 48,000 1,164,000
--------------------------------------------------------------------------
Tata Motors Ltd.-ADR (Automobile
Manufacturers)(a)(e) 232,000 2,134,400
--------------------------------------------------------------------------
Tata Motors Ltd.-GDR (Automobile
Manufacturers) (Acquired 10/22/03-01/27/04;
Cost $1,246,879)(c)(f)(g) 134,000 1,232,800
==========================================================================
15,699,215
==========================================================================
INDONESIA-1.53%
PT Astra Agro Lestari TBK (Agricultural
Products)(b) 4,710,500 1,515,922
--------------------------------------------------------------------------
PT Telekomunikasi Indonesia (Integrated
Telecommunication Services)(b) 4,199,000 2,011,985
==========================================================================
3,527,907
==========================================================================
ISRAEL-0.69%
Teva Pharmaceutical Industries Ltd.-ADR
(Pharmaceuticals) 61,500 1,599,000
==========================================================================
LUXEMBOURG-1.26%
Millicom International Cellular S.A.
(Wireless Telecommunication Services)(a) 62,200 1,235,914
--------------------------------------------------------------------------
Tenaris S.A. (Oil & Gas Equipment & Services) 5 22
--------------------------------------------------------------------------
Tenaris S.A.-ADR (Oil & Gas Equipment &
Services) 37,068 1,659,534
==========================================================================
2,895,470
==========================================================================
MALAYSIA-3.26%
Genting Berhad (Casinos & Gaming)(b) 334,000 1,485,835
--------------------------------------------------------------------------
IOI Corp. Berhad (Agricultural Products)(b) 666,000 1,666,618
--------------------------------------------------------------------------
Maxis Communications Berhad (Wireless
Telecommunications Services)(b) 1,378,100 3,116,558
--------------------------------------------------------------------------
Public Bank Berhad (Diversified Banks)(b) 684,000 1,251,311
==========================================================================
7,520,322
==========================================================================
MEXICO-8.84%
Alfa, S.A.-Class A (Industrial Conglomerates) 774,000 3,008,398
--------------------------------------------------------------------------
America Movil S.A. de C.V.-Series L-ADR
(Wireless Telecommunication Services) 122,700 5,398,800
--------------------------------------------------------------------------
Consorcio ARA, S.A. de C.V. (Homebuilding)(a) 508,900 1,358,360
--------------------------------------------------------------------------
Corporacion GEO, S.A. de C.V.-Series B
(Homebuilding)(a) 877,900 1,377,068
--------------------------------------------------------------------------
Grupo Financiero Banorte S.A. de C.V.-Class O
(Diversified Banks) 472,700 2,220,326
--------------------------------------------------------------------------
|
MARKET
SHARES VALUE
--------------------------------------------------------------------------
MEXICO-(CONTINUED)
Grupo Televisa S.A.-ADR (Broadcasting & Cable
TV) 42,228 $ 2,322,540
--------------------------------------------------------------------------
Urbi, Desarrollos Urbanos, S.A. de C.V.
(Homebuilding)(a) 313,700 1,169,001
--------------------------------------------------------------------------
Wal-Mart de Mexico S.A. de C.V.-Series V
(Hypermarkets & Super Centers) 1,077,100 3,519,081
==========================================================================
20,373,574
==========================================================================
NETHERLANDS-0.44%
Efes Breweries International-GDR REGS
(Brewers) (Acquired 10/15/04; Cost
$857,925)(a)(c)(f)(g) 36,900 1,023,975
==========================================================================
PHILIPPINES-2.65%
Philippine Long Distance Telephone Co.
(Integrated Telecommunication
Services)(a)(b) 196,500 4,896,436
--------------------------------------------------------------------------
SM Prime Holdings (Real Estate Management &
Development) 9,095,000 1,212,020
==========================================================================
6,108,456
==========================================================================
RUSSIA-7.71%
AO VimpelCom-ADR (Wireless Telecommunication
Services)(a)(e) 39,200 4,468,800
--------------------------------------------------------------------------
LUKOIL-ADR (Integrated Oil & Gas)(h) 57,158 7,112,742
--------------------------------------------------------------------------
Mobile Telesystems-ADR (Wireless
Telecommunication Services) 42,700 6,196,624
==========================================================================
17,778,166
==========================================================================
SOUTH AFRICA-11.63%
Barloworld Ltd. (Industrial Conglomerates) 121,900 1,710,649
--------------------------------------------------------------------------
Foschini Ltd. (Apparel Retail) 658,400 3,294,025
--------------------------------------------------------------------------
Impala Platinum Holdings Ltd. (Precious
Metals & Minerals)(b) 14,101 1,138,999
--------------------------------------------------------------------------
JD Group Ltd. (Home Improvement Retail) 210,000 1,963,502
--------------------------------------------------------------------------
Massmart Holdings Ltd. (Hypermarkets & Super
Centers)(a) 559,800 3,930,193
--------------------------------------------------------------------------
Naspers Ltd.-Class N (Broadcasting & Cable
TV) 447,000 4,120,796
--------------------------------------------------------------------------
Standard Bank Group Ltd. (Diversified Banks) 722,586 6,376,892
--------------------------------------------------------------------------
Telkom South Africa Ltd. (Integrated
Telecommunication Services) (Acquired
11/25/03-06/18/04; Cost $3,233,413)(c) 299,700 4,262,291
==========================================================================
26,797,347
==========================================================================
SOUTH KOREA-15.56%
Cheil Communications Inc. (Advertising)(b) 15,100 1,999,279
--------------------------------------------------------------------------
CJ Corp. (Packaged Foods & Meats)(b) 63,000 3,506,676
--------------------------------------------------------------------------
Hana Bank (Diversified Banks)(b) 334,200 8,356,679
--------------------------------------------------------------------------
Hankook Tire Co. Ltd. (Tires & Rubber)(b) 174,700 1,620,185
--------------------------------------------------------------------------
|
FS-3
MARKET
SHARES VALUE
--------------------------------------------------------------------------
SOUTH KOREA-(CONTINUED)
Hyundai Department Store Co., Ltd.
(Department Stores)(b) 88,700 $ 2,580,181
--------------------------------------------------------------------------
Hyundai Motor Co. (Automobile
Manufacturers)(b) 19,600 953,251
--------------------------------------------------------------------------
POSCO-ADR (Steel) 94,200 3,522,138
--------------------------------------------------------------------------
Samsung Electronics Co., Ltd.-GDR REGS
(Electronic Equipment Manufacturers)
(Acquired 11/03/00-08/29/01; Cost
$2,632,053)(b)(c)(f) 32,023 6,296,936
--------------------------------------------------------------------------
Samsung Electronics Co., Ltd.-Pfd.
(Electronic Equipment Manufacturers)(b) 11,300 3,032,823
--------------------------------------------------------------------------
Shinhan Financial Group Co., Ltd.
(Diversified Banks)(b) 78,800 1,557,674
--------------------------------------------------------------------------
Shinsegae Co., Ltd. (Hypermarkets & Super
Centers)(b) 8,700 2,449,497
==========================================================================
35,875,319
==========================================================================
TAIWAN-7.36%
Asia Optical Co., Inc. (Photographic
Products)(b) 469,463 2,226,053
--------------------------------------------------------------------------
Catcher Technology Co., Ltd. (Computer
Storage & Peripherals)(b) 757,400 2,322,796
--------------------------------------------------------------------------
Chinatrust Financial Holding Co. Ltd.
(Diversified Banks)(b) 2,658,540 3,035,818
--------------------------------------------------------------------------
Hon Hai Precision Industry Co., Ltd.
(Electronic Equipment Manufacturers)(b) 310,959 1,143,450
--------------------------------------------------------------------------
Hon Hai Precision Industry Co., Ltd.-GDR REGS
(Electronic Equipment Manufacturers)
(Acquired 08/14/02-03/10/03; Cost
$1,083,796)(b)(c)(e)(f) 205,994 1,569,851
--------------------------------------------------------------------------
Ichia Technologies, Inc. (Computer Storage &
Peripherals)(b) 929,061 1,416,538
--------------------------------------------------------------------------
Merry Electronics Co., Ltd. (Consumer
Electronics)(b) 1,015,581 2,297,176
--------------------------------------------------------------------------
Novatek Microelectronics Corp., Ltd.
(Semiconductors)(b) 74,801 182,093
--------------------------------------------------------------------------
President Chain Store Corp. (Food Retail)(b) 683,086 1,020,687
--------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co.
Ltd.-Equity Participation Ctfs., expiring
01/14/05 (ABN AMRO) (Semiconductors)
(Acquired 01/02/03-06/14/04; Cost
$1,332,392)(c) 1,330,489 1,744,005
==========================================================================
16,958,467
==========================================================================
THAILAND-2.53%
Bangkok Bank PCL-NVDR (Diversified
Banks)(a)(g) 481,000 1,096,389
--------------------------------------------------------------------------
Kasikornbank PCL (Diversified Banks)(a)(b) 1,527,000 1,750,528
--------------------------------------------------------------------------
|
MARKET
SHARES VALUE
--------------------------------------------------------------------------
THAILAND-(CONTINUED)
Siam Cement PCL (The) (Construction
Materials)(b) 230,000 $ 1,437,621
--------------------------------------------------------------------------
Siam Commercial Bank PCL (Diversified
Banks)(b) 1,480,600 1,554,343
==========================================================================
5,838,881
==========================================================================
TURKEY-1.79%
Haci Omer Sabanci Holding A.S. (Multi-Sector
Holdings) 413,100,000 1,496,334
--------------------------------------------------------------------------
Koc Holding A.S. (Industrial Conglomerates) 434,400,000 2,632,282
==========================================================================
4,128,616
==========================================================================
UNITED KINGDOM-2.09%
Anglo American PLC (Diversified Metals &
Mining)(b) 219,200 4,813,387
==========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $139,107,681) 222,808,555
==========================================================================
PRINCIPAL
AMOUNT
BONDS-0.00%
BRAZIL-0.00%
Companhia Vale do Rio Doce (Diversified
Metals & Mining), Sub. Deb., 0.00%,
(Acquired 01/22/99; Cost
$0)(c)(f)(g)(i)(j)(k) BRL 276 0
==========================================================================
SHARES
MONEY MARKET FUNDS-1.02%
Liquid Assets Portfolio-Institutional
Class(l) 1,179,829 1,179,829
--------------------------------------------------------------------------
STIC Prime Portfolio-Institutional Class(l) 1,179,829 1,179,829
==========================================================================
Total Money Market Funds (Cost
$2,359,658) 2,359,658
==========================================================================
TOTAL INVESTMENTS-97.68% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $141,467,339) 225,168,213
==========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-5.64%
Liquid Assets Portfolio-Institutional
Class(l)(m) 6,498,615 6,498,615
--------------------------------------------------------------------------
STIC Prime Portfolio-Institutional
Class(l)(m) 6,498,615 6,498,615
==========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $12,997,230) 12,997,230
==========================================================================
TOTAL INVESTMENTS-103.32% (Cost $154,464,569) 238,165,443
==========================================================================
OTHER ASSETS LESS LIABILITIES-(3.32%) (7,649,490)
==========================================================================
NET ASSETS-100.00% $230,515,953
__________________________________________________________________________
==========================================================================
|
FS-4
Investment Abbreviations:
ADR - American Depositary Receipt BRL - Brazilian Real Ctfs. - Certificates Deb. - Debentures GDR - Global Depositary Receipt NVDR - Non-Voting Depositary Receipt Pfd. - Preferred REGS - Regulation S Sub. - Subordinated Wts. - Warrants |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) In accordance with the procedures established by the Board of Trustees, the
foreign security is fair valued using adjusted closing market prices. The
aggregate market value of these securities at October 31, 2004 was
$89,366,664, which represented 37.52% of the Fund's Total Investments. See
Note 1A.
(c) 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 Fund has no rights to demand registration of these securities.
The aggregate market value of these securities at October 31, 2004 was
$24,312,602, which represented 10.55% of the Fund's net assets. Unless
otherwise indicated, these securities are not considered to be illiquid.
(d) Non-income producing security acquired through a corporate action.
(e) All or a portion of this security has been pledged as collateral for
security lending transactions at October 31, 2004.
(f) Security considered to be illiquid. The aggregate market value of these
securities considered illiquid at October 31, 2004 was $11,433,062, which
represented 4.96% of the Fund's net assets.
(g) Security fair valued in good faith in accordance with the procedures
established by the Board of Trustees. The aggregate market value of these
securities at October 31, 2004 was $4,662,664, which represented 1.96% of
the Fund's Total Investments. See Note 1A.
(h) In accordance with the procedures established by the Board of Trustees,
security fair valued based on an evaluated quote provided by an independent
pricing service. The aggregate market value of these securities at October
31, 2004 was $7,112,742, which represented 2.99% of the Fund's Total
Investments. See Note 1A.
(i) Foreign denominated security. Par value is denominated in currency
indicated.
(j) Zero coupon bond issued at a discount and acquired through a corporate
action.
(k) Perpetual bond with no specified maturity date.
(l) The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
(m) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 8.
See accompanying notes which are an integral part of the financial statements.
FS-5
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2004
ASSETS:
Investments, at market value (cost
$139,107,681)* $222,808,555
-----------------------------------------------------------
Investments in affiliated money market funds
(cost $15,356,888) 15,356,888
===========================================================
Total investments (cost $154,464,569) 238,165,443
===========================================================
Foreign currencies, at value (cost
$4,872,861) 4,962,157
-----------------------------------------------------------
Receivables for:
Investments sold 1,809,548
-----------------------------------------------------------
Fund shares sold 198,309
-----------------------------------------------------------
Dividends 559,493
-----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 14,134
-----------------------------------------------------------
Other assets 24,605
===========================================================
Total assets 245,733,689
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 978,217
-----------------------------------------------------------
Fund shares reacquired 405,844
-----------------------------------------------------------
Trustee deferred compensation and
retirement plans 18,721
-----------------------------------------------------------
Collateral upon return of securities loaned 12,997,230
-----------------------------------------------------------
Accrued distribution fees 153,555
-----------------------------------------------------------
Accrued trustees' fees 950
-----------------------------------------------------------
Accrued transfer agent fees 98,473
-----------------------------------------------------------
Accrued operating expenses 564,746
===========================================================
Total liabilities 15,217,736
===========================================================
Net assets applicable to shares outstanding $230,515,953
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $385,694,171
-----------------------------------------------------------
Undistributed net investment income (15,136)
-----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities and foreign
currencies (238,936,715)
-----------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 83,773,633
===========================================================
$230,515,953
___________________________________________________________
===========================================================
NET ASSETS:
Class A $197,847,726
___________________________________________________________
===========================================================
Class B $ 26,446,697
___________________________________________________________
===========================================================
Class C $ 6,221,530
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 15,568,200
___________________________________________________________
===========================================================
Class B 2,119,959
___________________________________________________________
===========================================================
Class C 499,144
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 12.71
-----------------------------------------------------------
Offering price per share:
(Net asset value of $12.71 divided by
95.25%) $ 13.34
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 12.48
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 12.46
___________________________________________________________
===========================================================
|
* At October 31, 2004, securities with an aggregate market value of $12,421,446 were on loan to brokers.
See accompanying notes which are an integral part of the financial statements.
FS-6
STATEMENT OF OPERATIONS
For the year ended October 31, 2004
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $652,851) $ 4,977,762
-------------------------------------------------------------------------
Dividends from affiliated money market funds (including
security lending income of $73,121)* 119,062
-------------------------------------------------------------------------
Interest 9,670
=========================================================================
Total investment income 5,106,494
=========================================================================
EXPENSES:
Advisory fees 2,305,531
-------------------------------------------------------------------------
Administrative services fees 74,387
-------------------------------------------------------------------------
Custodian fees 364,353
-------------------------------------------------------------------------
Distribution fees:
Class A 976,226
-------------------------------------------------------------------------
Class B 291,650
-------------------------------------------------------------------------
Class C 57,331
-------------------------------------------------------------------------
Transfer agent fees 1,030,697
-------------------------------------------------------------------------
Trustees' fees and retirement benefits 16,291
-------------------------------------------------------------------------
Other 313,051
=========================================================================
Total expenses 5,429,517
=========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangement (519,317)
=========================================================================
Net expenses 4,910,200
=========================================================================
Net investment income 196,294
=========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities (net of tax on sale of foreign
investment of $384,223 -- Note 1G) 24,335,455
-------------------------------------------------------------------------
Foreign currencies (456,059)
=========================================================================
23,879,396
=========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (net of change in estimated tax on
foreign investment held of $(111,468) -- Note 1G) 17,885,672
-------------------------------------------------------------------------
Foreign currencies 86,913
=========================================================================
17,972,585
=========================================================================
Net gain from investment securities and foreign currencies 41,851,981
=========================================================================
Net increase in net assets resulting from operations $42,048,275
_________________________________________________________________________
=========================================================================
|
* Dividends from affiliated money market funds are net of income rebate paid to security lending counterparties.
See accompanying notes which are an integral part of the financial statements.
FS-7
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2004 and 2003
2004 2003
------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 196,294 $ 631,951
------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currencies 23,879,396 5,656,632
------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 17,972,585 73,571,951
==========================================================================================
Net increase in net assets resulting from operations 42,048,275 79,860,534
==========================================================================================
Distributions to shareholders from net investment income:
Class A (387,540) --
==========================================================================================
Share transactions-net:
Class A (47,208,187) 18,123,053
------------------------------------------------------------------------------------------
Class B (8,761,469) (12,324,655)
------------------------------------------------------------------------------------------
Class C 1,131,796 200,503
==========================================================================================
Net increase (decrease) in net assets resulting from
share transactions (54,837,860) 5,998,901
==========================================================================================
Net increase (decrease) in net assets (13,177,125) 85,859,435
==========================================================================================
NET ASSETS:
Beginning of year 243,693,078 157,833,643
==========================================================================================
End of year (including undistributed net investment income
of $(15,136) and $375,049, respectively) $230,515,953 $243,693,078
__________________________________________________________________________________________
==========================================================================================
|
NOTES TO FINANCIAL STATEMENTS
October 31, 2004
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Developing Markets Fund (the "Fund") is a separate series of AIM Investment Funds (the "Trust"). The Trust is organized as 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 consisting of six separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The Fund currently offers multiple classes of shares. 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 income. Companies are listed in the Schedule of Investments based on the country in which they are organized.
Under the Trust's organizational documents, the Fund's officers, trustees, employees and agents are indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts.
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 on the basis of prices furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the NASDAQ Official Closing Price ("NOCP") as of the close of the customary trading session on the valuation date or absent a NOCP, at the closing bid price.
Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. 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").
FS-8
Investments in open-end registered investment companies and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in closed-end registered investment companies that trade on an exchange are valued at the last sales price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes 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 specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations having 60 days or less to maturity and commercial paper are valued at amortized cost which approximates market value.
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.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable 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 ordinarily be reflected in the computation of the Fund's net asset value. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current market value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current market value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs, domestic and foreign index futures and exchange-traded funds.
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value.
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.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
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 Subchapter M 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 -- Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets.
F. REDEMPTION FEES -- The Fund has instituted a 2% redemption fee on certain share classes that is to be retained by the Fund to offset transaction costs and other expenses associated with short-term redemptions and exchanges. The fee, subject to certain exceptions, is imposed on certain redemptions, including exchanges of shares held less than 30 days. The redemption fee is accounted for as an addition to shares of beneficial interest by the Fund and is allocated among the share classes based on the relative net assets of each class.
G. 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 (net of foreign taxes withheld on disposition) 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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from, (i) sales of foreign currencies, (ii) currency gains or losses realized between the trade and settlement dates on securities transactions, and (iii) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.
FS-9
H. 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.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO 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 0.975% on the first
$500 million of the Fund's average daily net assets, plus 0.95% on the next $500
million of the Fund's average daily net assets, plus 0.925% on the next $500
million of the Fund's average daily net assets, plus 0.90% on the Fund's average
daily net assets in excess of $1.5 billion. AIM has contractually agreed to
waive advisory fees and/or reimburse expenses to the extent necessary to limit
Total Annual Operating Expenses (excluding certain items discussed below) of
Class A, Class B and Class C shares to 2.00%, 2.50% and 2.50% of average daily
net assets, respectively, through October 31, 2005. In determining the advisor's
obligation to waive advisory fees and/or reimburse expenses, the following
expenses are not taken into account, and could cause the Total Annual Fund
Operating Expenses to exceed the caps stated above: (i) interest; (ii) taxes;
(iii) dividend expense on short sales; (iv) extraordinary items (these are
expenses that are not anticipated to arise from the Fund's day-to-day
operations), or items designated as such by the Fund's Board of Trustees; (v)
expenses related to a merger or reorganization, as approved by the Fund's Board
of Trustees; and (vi) expenses that the Fund has incurred but did not actually
pay because of an expense offset arrangement. Currently, the only expense offset
arrangements from which the Fund benefits are in the form of credits that the
Fund receives from banks where the Fund or its transfer agent has deposit
accounts in which it holds uninvested cash. Those credits are used to pay
certain expenses incurred by the Fund. Further, AIM has voluntarily agreed to
waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM
receives from the affiliated money market funds on investments by the Fund in
such affiliated money market funds (excluding investments made in affiliated
money market funds with cash collateral from securities loaned by the fund).
Voluntary fee waivers or reimbursements may be modified or discontinued at any
time upon consultation with the Board of Trustees without further notice to
investors. For the year ended October 31, 2004, AIM waived fees of $480,137.
For the year ended October 31, 2004, at the request of the Trustees of the Trust, AMVESCAP PLC ("AMVESCAP") agreed to assume $35,206 of expenses incurred by the Fund in connection with matters related to recently settled regulatory actions and investigations concerning market timing activity in the AIM Funds, including legal, audit, shareholder servicing, communication and trustee expenses. These expenses along with the related expense reimbursement, are included in the Statement of Operations.
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, 2004, AIM was paid $74,387 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay AIM Investment Services, Inc. ("AISI") a fee for providing transfer agency and shareholder services to the Fund and reimburse AISI for certain expenses incurred by AISI in the course of providing such services. For the year ended October 31, 2004, the Fund paid AISI $1,030,697. AISI may make payments to intermediaries to provide omnibus account services, sub-accounting services and/or networking 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, Class B and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.50% 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, up to 0.25% of the average daily net assets of the Class A, Class B or Class C shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. 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. Rule 12b-1 Plan fees on Class A shares issued as a result of conversion of shares from G.T. Developing Markets Fund, Inc. on October 31, 1997 and in connection with the AIM Eastern Europe Fund reorganization on September 10, 1999 are limited to 0.25% of the average net assets of the Fund's Class A shares issued in connection with such transactions. Pursuant to the Plans, for the year ended October 31, 2004, the Class A, Class B and Class C shares paid $976,226, $291,650 and $57,331 respectively.
Front-end sales commissions and contingent deferred sales charges ("CDSC") (collectively the "sales charges") are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended October 31, 2004, AIM Distributors advised the Fund that it retained $27,772 in front-end sales commissions from the sale of Class A shares and $119,828, $2,725, and $4,183 from Class A, Class B and Class C shares, respectively, for CDSC imposed upon redemption by shareholders.
Certain officers and trustees of the Trust are officers and directors of AIM, AISI and/or AIM Distributors.
FS-10
NOTE 3--INVESTMENTS IN AFFILIATES
The Fund is permitted, pursuant to an exemptive order from the Securities and Exchange Commission ("SEC"), to invest daily available cash balances and cash collateral from securities lending transactions in affiliated money market funds. The Fund and the money market funds below have the same investment advisor and therefore, are considered to be affiliated. The tables below show the transactions in and earnings from investments in affiliated money market funds for the year ended October 31, 2004.
INVESTMENTS OF DAILY AVAILABLE CASH BALANCES:
UNREALIZED
MARKET VALUE PURCHASES PROCEEDS APPRECIATION MARKET VALUE DIVIDEND REALIZED
FUND 10/31/03 AT COST FROM SALES (DEPRECIATION) 10/31/04 INCOME GAIN (LOSS)
----------------------------------------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $2,260,107 $41,634,626 $(42,714,904) $ -- $1,179,829 $23,221 $ --
----------------------------------------------------------------------------------------------------------------------------------
STIC Prime
Portfolio-Institutional
Class 2,260,107 41,634,626 (42,714,904) -- 1,179,829 22,720 --
==================================================================================================================================
Subtotal $4,520,214 $83,269,252 $(85,429,808) $ -- $2,359,658 $45,941 $ --
__________________________________________________________________________________________________________________________________
==================================================================================================================================
|
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
UNREALIZED
MARKET VALUE PURCHASES PROCEEDS APPRECIATION MARKET VALUE DIVIDEND REALIZED
FUND 10/31/03 AT COST FROM SALES (DEPRECIATION) 10/31/04 INCOME* GAIN (LOSS)
----------------------------------------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $ 6,672,818 $ 45,523,886 $ (45,698,089) $ -- $ 6,498,615 $ 36,911 $ --
----------------------------------------------------------------------------------------------------------------------------------
STIC Prime
Portfolio-Institutional
Class 6,672,817 45,523,887 (45,698,089) -- 6,498,615 36,210 --
==================================================================================================================================
Subtotal $13,345,635 $ 91,047,773 $ (91,396,178) $ -- $12,997,230 $ 73,121 $ --
==================================================================================================================================
Total $17,865,849 $174,317,025 $(176,825,986) $ -- $15,356,888 $119,062 $ --
__________________________________________________________________________________________________________________________________
==================================================================================================================================
|
* Dividend income is net of income rebate paid to security lending counterparties.
NOTE 4--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
The Fund is permitted to purchase or sell securities from or to certain other AIM Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment advisor (or affiliated investment advisors), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures each transaction is effected at the current market price. Pursuant to these procedures, during the year ended October 31, 2004, the Fund engaged in purchases and sales of securities of $0 and $83,840, respectively.
NOTE 5--EXPENSE OFFSET ARRANGEMENT
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended October 31, 2004, the Fund received credits in transfer agency fees of $3,974 under an expense offset arrangement, which resulted in a reduction of the Fund's total expenses of $3,974.
NOTE 6--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each Trustee of the Trust who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested.
Current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees that also participate in a retirement plan and receive benefits under such plan.
Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
During the year ended October 31, 2004, the Fund paid legal fees of $5,070 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 7--BORROWINGS
Pursuant to an exemptive order from the SEC, the Fund may participate in an interfund lending facility that AIM has established for temporary borrowings by the AIM Funds. An interfund loan will be made under this facility only if the loan rate (an average of the rate available on bank loans and the rate
FS-11
available on investments in overnight repurchase agreements) is favorable to both the lending fund and the borrowing fund. A loan will be secured by collateral if the Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total assets. To the extent that the loan is required to be secured by collateral, the collateral is marked to market daily to ensure that the market value is at least 102% of the outstanding principal value of the loan.
The Fund is a participant in an uncommitted unsecured revolving credit facility with State Street Bank and Trust Company ("SSB"). The Fund may borrow up to the lesser of (i) $125,000,000, or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the credit facility can borrow on a first come, first served basis. Principal on each loan outstanding shall bear interest at the bid rate quoted by SSB at the time of the request for the loan.
During the year ended October 31, 2004, the Fund did not borrow or lend under the interfund lending facility or borrow under the uncommitted unsecured revolving credit facility.
Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds in the account so the custodian can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank. In either case, the custodian bank will be compensated at an amount equal to the Federal Funds rate plus 100 basis points.
NOTE 8--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities having a market value up to one-third of the Fund's total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds. 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, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. 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. The Fund could also experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to a loss on the collateral invested.
At October 31, 2004, securities with an aggregate value of $12,421,446 were on loan to brokers. The loans were secured by cash collateral of $12,997,230 received by the Fund and subsequently invested in affiliated money market funds. For the year ended October 31, 2004, the Fund received dividends on cash collateral net of income rebate paid to counterparties of $73,121 for securities lending transactions.
NOTE 9--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years ended October 31, 2004 and 2003 was as follows:
2004 2003
-------------------------------------------------------------------------------
Distributions paid from ordinary income $387,540 $ --
_______________________________________________________________________________
===============================================================================
|
TAX COMPONENTS OF NET ASSETS:
As of October 31, 2004, the components of net assets on a tax basis were as follows:
2004
---------------------------------------------------------------------------
Unrealized appreciation -- investments $ 83,217,174
---------------------------------------------------------------------------
Temporary book/tax differences (15,136)
---------------------------------------------------------------------------
Capital loss carryforward (238,380,256)
---------------------------------------------------------------------------
Shares of beneficial interest 385,694,171
===========================================================================
Total net assets $ 230,515,953
___________________________________________________________________________
===========================================================================
|
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 losses the tax deferral of on wash sales. The tax-basis unrealized appreciation on investments amount includes appreciation on foreign currencies of $72,759.
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 trustee deferral of compensation and retirement plan expenses.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions. Under these limitation rules, the Fund is limited as of October 31, 2004 to utilizing $200,504,228 of capital loss carryforward in the fiscal year ended October 31, 2005.
FS-12
The Fund utilized $24,445,479 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of October 31, 2004 which expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
-----------------------------------------------------------------------------
October 31, 2005 $ 70,744,735
-----------------------------------------------------------------------------
October 31, 2006 76,692,697
-----------------------------------------------------------------------------
October 31, 2007 9,273,499
-----------------------------------------------------------------------------
October 31, 2008 15,085,807
-----------------------------------------------------------------------------
October 31, 2009 59,191,538
-----------------------------------------------------------------------------
October 31, 2010 7,382,000
-----------------------------------------------------------------------------
October 31, 2012 9,980
=============================================================================
Total capital loss carryforward $238,380,256
_____________________________________________________________________________
=============================================================================
|
* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 10--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities and money market funds) purchased and sold by the Fund during the year ended October 31, 2004 was $111,099,377 and $161,728,801, respectively.
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS ------------------------------------------------------------------------------- Aggregate unrealized appreciation of investment securities $86,623,654 ------------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (3,479,239) =============================================================================== Net unrealized appreciation of investment securities $83,144,415 _______________________________________________________________________________ =============================================================================== Cost of investments for tax purposes is $155,021,028. |
NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of foreign currency transactions, net operating losses and foreign capital gain tax, on October 31, 2004, undistributed net investment income was decreased by $198,939, undistributed net realized gain (loss) was increased by $840,282 and shares of beneficial interest decreased by $641,343. This reclassification had no effect on the net assets of the Fund.
FS-13
NOTE 12--SHARE INFORMATION
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 CDSC. Under certain circumstances, Class A shares are subject to CDSC. Generally, Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase.
CHANGES IN SHARES OUTSTANDING(a)
------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
2004 2003
-------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 3,161,632 $ 37,179,879 21,378,062 $ 175,888,823
------------------------------------------------------------------------------------------------------------------------
Class B 642,088 7,399,135 687,629 5,832,379
------------------------------------------------------------------------------------------------------------------------
Class C 934,253 10,692,654 3,620,023 28,027,976
========================================================================================================================
Issued as reinvestment of dividends:
Class A 29,076 314,212 -- --
========================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 587,037 6,828,510 1,240,782 9,667,175
------------------------------------------------------------------------------------------------------------------------
Class B (596,411) (6,828,510) (1,256,198) (9,667,175)
========================================================================================================================
Reacquired:(b)
Class A (8,100,696) (91,530,788) (20,514,740) (167,432,945)
------------------------------------------------------------------------------------------------------------------------
Class B (832,457) (9,332,094) (1,090,836) (8,489,859)
------------------------------------------------------------------------------------------------------------------------
Class C (856,693) (9,560,858) (3,569,799) (27,827,473)
========================================================================================================================
(5,032,171) $(54,837,860) 494,923 $ 5,998,901
________________________________________________________________________________________________________________________
========================================================================================================================
|
(a) There are two entities that are each record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate they own 19% of the
outstanding shares of the Fund. AIM Distributors has an agreement with these
entities to sell Fund shares. The Fund, AIM, and/or AIM affiliates may make
payments to these entities, which are considered to be related to the Fund,
for providing services to the Fund, AIM and/or AIM affiliates including but
not limited to services such as, securities brokerage, distribution, third
party record keeping and account servicing. The trust has no knowledge as to
whether all or any portion of the shares owned of record by these
shareholders are also owned beneficially.
(b) Amount is net of redemption fees of $33,118, $4,843 and $957 for Class A,
Class B and Class C shares for 2004.
FS-14
NOTE 13--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------
2004 2003 2002 2001 2000
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.52 $ 6.96 $ 6.32 $ 8.89 $ 9.86
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.02(a) 0.04(a) (0.01)(a) 0.15(a) 0.01(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 2.19 3.52 0.74 (2.67) (0.95)
=================================================================================================================================
Total from investment operations 2.21 3.56 0.73 (2.52) (0.94)
=================================================================================================================================
Less distributions from net investment income (0.02) -- (0.09) (0.05) (0.04)
---------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to shares of beneficial interest 0.00 -- -- -- 0.01
=================================================================================================================================
Net asset value, end of period $ 12.71 $ 10.52 $ 6.96 $ 6.32 $ 8.89
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 21.05% 51.15% 11.37% (28.51)% (9.52)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $197,848 $209,221 $123,812 $110,756 $136,160
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.00%(c) 2.00% 1.84% 1.76% 1.87%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.22%(c) 2.33% 2.35% 2.26% 1.95%
=================================================================================================================================
Ratio of net investment income (loss) to average net assets 0.16%(c) 0.44% (0.07)% 1.95% 0.05%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 49% 100% 109% 144% 192%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges.
(c) Ratios are based on average daily net assets of $201,566,562.
CLASS B
----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------
2004 2003 2002 2001 2000
------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.36 $ 6.89 $ 6.25 $ 8.79 $ 9.79
------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.01)(a) (0.05)(a) 0.11(a) (0.06)(a)
------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 2.16 3.48 0.73 (2.65) (0.94)
==============================================================================================================================
Total from investment operations 2.12 3.47 0.68 (2.54) (1.00)
==============================================================================================================================
Less distributions from net investment income -- -- (0.04) -- --
------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to shares of beneficial interest 0.00 -- -- -- --
==============================================================================================================================
Net asset value, end of period $ 12.48 $ 10.36 $ 6.89 $ 6.25 $ 8.79
______________________________________________________________________________________________________________________________
==============================================================================================================================
Total return(b) 20.46% 50.36% 10.85% (28.90)% (10.21)%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $26,447 $30,111 $31,465 $ 51,040 $79,754
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.52%(c) 2.53% 2.38% 2.35% 2.47%
------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.74%(c) 2.86% 2.89% 2.85% 2.55%
==============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.36)%(c) (0.08)% (0.61)% 1.36% (0.56)%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Portfolio turnover rate 49% 100% 109% 144% 192%
______________________________________________________________________________________________________________________________
==============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges.
(c) Ratios are based on average daily net assets of $29,165,039.
FS-15
NOTE 13--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------
2004 2003 2002 2001 2000
--------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.34 $ 6.88 $ 6.25 $ 8.79 $ 9.79
--------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.01)(a) (0.05)(a) 0.10(a) (0.06)(a)
--------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 2.16 3.47 0.72 (2.64) (0.94)
==========================================================================================================================
Total from investment operations 2.12 3.46 0.67 (2.54) (1.00)
==========================================================================================================================
Less distributions from net investment income -- -- (0.04) -- --
--------------------------------------------------------------------------------------------------------------------------
Redemption fees added to shares of beneficial interest 0.00 -- -- -- --
==========================================================================================================================
Net asset value, end of period $12.46 $10.34 $ 6.88 $ 6.25 $ 8.79
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) 20.50% 50.29% 10.69% (28.90)% (10.21)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $6,222 $4,361 $2,557 $1,682 $1,618
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.52%(c) 2.53% 2.38% 2.35% 2.47%
--------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.74%(c) 2.86% 2.89% 2.85% 2.55%
==========================================================================================================================
Ratio of net investment income (loss) to average net assets (0.36)%(c) (0.08)% (0.61)% 1.36% (0.56)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate 49% 100% 109% 144% 192%
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges.
(c) Ratios are based on average daily net assets of $5,733,151.
NOTE 14--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note.
The mutual fund industry as a whole is currently subject to regulatory inquiries and litigation related to a wide range of issues. These issues include, among others, market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost securityholders.
As described more fully below, INVESCO Funds Group, Inc. ("IFG"), the former investment advisor to certain AIM Funds, A I M Advisors, Inc. ("AIM"), the Fund's investment advisor, and A I M Distributors, Inc. ("ADI"), the distributor of the retail AIM Funds and a wholly owned subsidiary of AIM, reached final settlements with the Securities and Exchange Commission ("SEC"), the New York Attorney General ("NYAG"), the Colorado Attorney General ("COAG"), the Colorado Division of Securities ("CODS") and the Secretary of State of the State of Georgia to resolve civil enforcement actions and investigations related to market timing activity and related issues in the AIM Funds, including those formerly advised by IFG.
In addition, as described more fully below, IFG and AIM are the subject of a number of ongoing regulatory inquiries and civil lawsuits related to one or more of the issues currently being scrutinized by various Federal and state regulators, including but not limited to those issues described above. Additional regulatory actions and/or civil lawsuits related to the above or other issues may be filed against the AIM Funds, IFG, AIM and/or related entities and individuals in the future. Additional regulatory inquiries related to the above or other issues also may be received by the AIM Funds, IFG, AIM and/or related entities and individuals in the future.
As a result of the matters discussed below, investors in the AIM Funds might react by redeeming their investments. This might require the Funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the Funds.
Settled Enforcement Actions and Investigations Related to Market Timing
On October 8, 2004, AMVESCAP PLC ("AMVESCAP"), the parent company of IFG and AIM, announced that final settlements had been reached with the SEC, the NYAG, the COAG and the Secretary of State of Georgia to resolve civil enforcement actions and investigations related to market timing activity and related issues in the AIM Funds, including those formerly advised by IFG. A final settlement also has been reached with the Colorado Division of Securities ("CODS") with respect to this matter. In their enforcement actions and investigations, these regulators alleged, in substance, that IFG and AIM failed to disclose in the prospectuses for the AIM Funds that they advised and to the independent directors/trustees of such Funds that IFG and AIM had entered into certain arrangements permitting market timing of such Funds, thereby breaching their fiduciary duties to such Funds. As a result of the foregoing, the regulators alleged that IFG, AIM and ADI breached various Federal and state securities, business and consumer protection laws. Under the terms of the settlements, IFG, AIM and ADI consent to the entry of settlement orders or assurances of discontinuance, as applicable, by the regulators containing certain terms, some of which are described below, without admitting or denying any wrongdoing.
FS-16
NOTE 14--LEGAL PROCEEDINGS (CONTINUED)
Under the terms of the settlements, IFG agreed to pay a total of $325 million, of which $110 million is civil penalties. Of the $325 million total payment, half will be paid on or before December 31, 2004 and the remaining half will be paid on or before December 31, 2005. AIM and ADI agreed to pay a total of $50 million, of which $30 million is civil penalties. The entire $50 million payment by AIM and ADI has been paid.
The entire $325 million IFG settlement payment will be available for distribution to the shareholders of those AIM Funds that IFG formerly advised that were harmed by market timing activity, and the entire $50 million settlement payment by AIM and ADI will be available for distribution to the shareholders of those AIM Funds advised by AIM that were harmed by market timing activity, all as to be determined by an independent distribution consultant to be appointed under the settlements. The settlement payments will be distributed in accordance with a methodology to be determined by the independent distribution consultant, in consultation with AIM and the independent trustees of the AIM Funds and acceptable to the staff of the SEC.
Under the settlements with the NYAG and COAG, AIM has agreed to reduce management fees on the AIM Funds by $15 million per year for the next five years, based upon effective fee rates and assets under management as of July 1, 2004, and not to increase certain management fees. IFG will also pay $1.5 million to the COAG to be used for investor education purposes and to reimburse the COAG for actual costs. Finally, IFG and AIM will pay $175,000 to the Secretary of State of Georgia to be used for investor education purposes and to reimburse the Secretary of State for actual costs.
None of the costs of the settlements will be borne by the AIM Funds or by Fund shareholders.
Under the terms of the settlements, AIM will make certain governance reforms, including maintaining an internal controls committee and retaining an independent compliance consultant, a corporate ombudsman and, as stated above, an independent distribution consultant. Also, commencing in 2007 and at least once every other year thereafter, AIM will undergo a compliance review by an independent third party.
In addition, under the terms of the settlements, AIM has undertaken to cause the AIM Funds to operate in accordance with certain governance policies and practices, including retaining a full-time independent senior officer whose duties will include monitoring compliance and managing the process by which proposed management fees to be charged the AIM Funds are negotiated. Also, commencing in 2008 and not less than every fifth calendar year thereafter, the AIM Funds will hold shareholder meetings at which their Boards of Trustees will be elected.
On October 8, 2004, the SEC announced that it had settled a market timing enforcement action against Raymond R. Cunningham, the former president and chief executive officer of IFG and a former member of the board of directors of the AIM Funds formerly advised by IFG. As part of the settlement, the SEC ordered Mr. Cunningham to pay $1 in restitution and civil penalties in the amount of $500,000. In addition, the SEC prohibited Mr. Cunningham from associating with an investment advisor, broker, dealer or investment company for a period of two years and further prohibited him from serving as an officer or director of an investment advisor, broker, dealer or investment company for a period of five years.
On August 31, 2004, the SEC announced that it had settled market timing enforcement actions against Timothy J. Miller, the former chief investment officer and a former portfolio manager for IFG, Thomas A. Kolbe, the former national sales manager of IFG, and Michael D. Legoski, a former assistant vice president in IFG's sales department. As part of the settlements, the SEC ordered Messrs. Miller, Kolbe and Legoski to pay $1 in restitution each and civil penalties in the amounts of $150,000, $150,000 and $40,000, respectively. In addition, the SEC prohibited each of them from associating with an investment advisor or investment company for a period of one year, prohibited Messrs. Miller and Kolbe from serving as an officer or director of an investment advisor or investment company for three years and two years, respectively, and prohibited Mr. Legoski from associating with a broker or dealer for a period of one year.
As referenced by the SEC in the SEC's settlement order, one former officer of ADI and one current officer of AIM (who has taken a voluntary leave of absence) have received regulatory inquiries in the form of subpoenas or other oral or written requests for information and/or documents related to market timing activity in the AIM Funds.
At the request of the trustees of the AIM Funds, AMVESCAP has agreed to pay all of the expenses incurred by such Funds related to the market timing investigations, including expenses incurred in connection with the regulatory complaints against IFG alleging market timing and the market timing investigations with respect to IFG and AIM.
The payments made in connection with the above-referenced settlements by IFG, AIM and ADI will total approximately $375 million (not including AIM's agreement to reduce management fees on the AIM Funds by $15 million per year for the next five years, based upon effective fee rates and assets under management as of July 1, 2004). The manner in which the settlement payments will be distributed is unknown at the present time and will be determined by an independent distribution consultant to be appointed under the settlement agreements. Therefore, management of AIM and the Fund are unable at the present time to estimate the impact, if any, that the distribution of the settlement amounts may have on the Fund or whether such distribution will have an impact on the Fund's financial statements in the future.
At the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the outcome of the ongoing matters described below may have on AIM, ADI or the Fund.
Ongoing Regulatory Inquiries Concerning IFG and AIM
IFG, certain related entities, certain of their current and former officers and/or certain of the AIM Funds formerly advised by IFG have received regulatory inquiries in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, some of which concern one or more such Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, and investments in securities of other registered investment companies. These regulators include the SEC, the NASD, Inc. ("NASD"), the Florida Department of Financial Services, the Attorney General of the State of West Virginia, the West Virginia Securities Commission and the Bureau of Securities of the State of New Jersey. IFG and certain of these other parties also have received more limited inquiries from the United States Department of Labor ("DOL") and the United States Attorney's Office for the Southern District of New York, some of which concern one or more of the AIM Funds formerly advised by IFG. IFG is providing full cooperation with respect to these inquiries.
AIM, certain related entities, certain of their current and former officers and/or certain of the AIM Funds have received regulatory inquiries in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, some of which concern one or more AIM Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales
FS-17
NOTE 14--LEGAL PROCEEDINGS (CONTINUED)
practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost securityholders. These regulators include the SEC, the NASD, the Department of Banking for the State of Connecticut, the Attorney General of the State of West Virginia, the West Virginia Securities Commission and the Bureau of Securities of the State of New Jersey. AIM and certain of these other parties also have received more limited inquiries from the SEC, the NASD, the DOL, the Internal Revenue Service, the New York Stock Exchange, the United States Attorney's Office for the Southern District of New York, the United States Attorney's Office for the Central District of California, the United States Attorney's Office for the District of Massachusetts, the Massachusetts Securities Division and the U.S. Postal Inspection Service, some of which concern one or more AIM Funds. AIM is providing full cooperation with respect to these inquiries.
Private Civil Actions Alleging Market Timing
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, certain AIM Funds, IFG, AIM, A I M Management Group Inc. ("AIM Management"), AMVESCAP, certain related entities, certain of their current and former officers and/or certain unrelated third parties) making allegations that are similar in many respects to those in the settled regulatory actions brought by the SEC, the NYAG and the COAG concerning market timing activity in the AIM Funds. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal and state securities laws; (ii) violation of various provisions of ERISA; (iii) breach of fiduciary duty; and/or (iv) breach of contract. These lawsuits were initiated in both Federal and state courts and seek such remedies as compensatory damages; restitution; injunctive relief; disgorgement of management fees; imposition of a constructive trust; removal of certain directors and/or employees; various corrective measures under ERISA; rescission of certain Funds' advisory agreements; interest; and attorneys' and experts' fees.
All lawsuits based on allegations of market timing, late trading, and related issues have been transferred to the United States District Court for the District of Maryland (the "MDL Court") for consolidated or coordinated pre-trial proceedings. Pursuant to an Order of the MDL Court, plaintiffs consolidated their claims for pre-trial purposes into three amended complaints against various AIM- and IFG-related parties: (i) a Consolidated Amended Class Action Complaint purportedly brought on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative Complaint purportedly brought on behalf of the AIM Funds and fund registrants; and (iii) an Amended Class Action Complaint for Violations of the Employee Retirement Income Securities Act purportedly brought on behalf of participants in AMVESCAP's 401(k) plan. Plaintiffs in one of the underlying lawsuits transferred to the MDL Court continue to seek remand of their action to state court.
Private Civil Actions Alleging Improper Use of Fair Value Pricing
Multiple civil class action lawsuits have been filed against various parties
(including, depending on the lawsuit, certain AIM Funds, IFG and/or AIM)
alleging that certain AIM Funds inadequately employed fair value pricing. These
lawsuits allege a variety of theories of recovery, including but not limited to:
(i) violations of various provisions of the Federal securities laws; (ii) common
law breach of duty; and (iii) common law negligence and gross negligence. These
lawsuits have been filed in both Federal and state courts and seek such remedies
as compensatory and punitive damages; interest; and attorneys' fees and costs.
Private Civil Actions Alleging Excessive Advisory and/or Distribution Fees
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, IFG, AIM, INVESCO Institutional (N.A.), Inc., ADI and/or INVESCO Distributors, Inc.) alleging that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale. Certain of these lawsuits also allege that the defendants adopted unlawful distribution plans. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal securities laws; (ii) breach of fiduciary duty; and/or (iii) breach of contract. These lawsuits have been filed in Federal courts and seek such remedies as damages; injunctive relief; rescission of certain Funds' advisory agreements and distribution plans; interest; prospective relief in the form of reduced fees; and attorneys' and experts' fees.
Private Civil Actions Alleging Improper Charging of Distribution Fees on Closed Funds or Share Classes
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, IFG, AIM, ADI and/or certain of the trustees of the AIM Funds) alleging that the defendants breached their fiduciary duties by charging distribution fees while funds and/or specific share classes were closed generally to new investors and/or while other share classes of the same fund were not charged the same distribution fees. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal securities laws; and (ii) breach of fiduciary duty. These lawsuits have been filed in Federal courts and seek such remedies as damages; injunctive relief; and attorneys' and experts' fees.
Private Civil Actions Alleging Improper Mutual Fund Sales Practices and Directed-Brokerage Arrangements
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, AIM Management, IFG, AIM, AIM Investment Services, Inc. and/or certain of the trustees of the AIM Funds) alleging that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively promote the sale of the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal securities laws; (ii) breach of fiduciary duty; and (iii) aiding and abetting a breach of fiduciary duty. These lawsuits have been filed in Federal courts and seek such remedies as compensatory and punitive damages; rescission of certain Funds' advisory agreements and distribution plans and recovery of all fees paid; an accounting of all fund-related fees, commissions and soft dollar payments; restitution of all unlawfully or discriminatorily obtained fees and charges; and attorneys' and experts' fees.
FS-18
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of AIM Trimark Endeavor Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Trimark Endeavor Fund (the "Fund") at October 31, 2004, the results of its operations, the changes in its net assets and the financial highlights for the period November 4, 2003 (date operations commenced) through October 31, 2004, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at October 31, 2004 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP December 20, 2004 Houston, Texas |
FS-19
FINANCIALS
SCHEDULE OF INVESTMENTS
October 31, 2004
MARKET
SHARES VALUE
-----------------------------------------------------------------------
DOMESTIC COMMON STOCKS-60.01%
APPAREL RETAIL-6.39%
Ross Stores, Inc. 95,300 $ 2,503,531
=======================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-5.92%
Liz Claiborne, Inc. 56,700 2,317,896
=======================================================================
AUTO PARTS & EQUIPMENT-3.11%
Superior Industries International, Inc. 44,700 1,218,969
=======================================================================
EMPLOYMENT SERVICES-5.37%
Manpower Inc. 46,500 2,104,125
=======================================================================
HEALTH CARE EQUIPMENT-12.60%
Cytyc Corp.(a) 61,800 1,612,362
-----------------------------------------------------------------------
DENTSPLY International Inc. 33,900 1,763,139
-----------------------------------------------------------------------
Fisher Scientific International Inc.(a) 27,124 1,555,833
=======================================================================
4,931,334
=======================================================================
INSURANCE BROKERS-2.71%
Arthur J. Gallagher & Co. 37,800 1,062,180
=======================================================================
LEISURE PRODUCTS-4.82%
Polaris Industries Inc. 31,800 1,887,330
=======================================================================
MANAGED HEALTH CARE-5.06%
WellPoint Health Networks Inc.(a) 20,300 1,982,498
=======================================================================
PHARMACEUTICALS-3.81%
Endo Pharmaceuticals Holdings Inc.(a) 68,500 1,493,300
=======================================================================
REGIONAL BANKS-5.64%
North Fork Bancorp., Inc. 50,100 2,209,410
=======================================================================
RESTAURANTS-2.22%
Krispy Kreme Doughnuts, Inc.(a) 81,900 868,140
=======================================================================
SPECIALTY STORES-1.34%
AutoZone, Inc.(a) 6,400 523,584
=======================================================================
STEEL-1.02%
Nucor Corp. 9,400 396,962
=======================================================================
Total Domestic Common Stocks (Cost
$22,502,881) 23,499,259
=======================================================================
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-24.79%
AUSTRALIA-2.26%
Cochlear Ltd. (Health Care Equipment) 47,600 $ 883,884
=======================================================================
CANADA-1.12%
Molson Inc.-Class A (Brewers) 17,000 437,597
=======================================================================
FRANCE-1.45%
Zodiac S.A. (Aerospace & Defense)(b) 14,600 568,529
=======================================================================
GERMANY-3.74%
Hugo Boss A.G.-Pfd. (Apparel, Accessories &
Luxury Goods)(b) 33,300 889,098
-----------------------------------------------------------------------
Medion A.G. (Distributors)(b) 33,000 573,649
=======================================================================
1,462,747
=======================================================================
IRELAND-4.29%
Kingspan Group PLC (Building Products)(b) 111,200 877,450
-----------------------------------------------------------------------
Ryanair Holdings PLC-ADR (Airlines)(a) 27,900 802,962
=======================================================================
1,680,412
=======================================================================
JAPAN-2.05%
Nintendo Co., Ltd. (Home Entertainment
Software)(b) 7,100 801,230
=======================================================================
MEXICO-4.46%
Grupo Modelo, S.A. de C.V.-Series C (Brewers) 323,500 829,847
-----------------------------------------------------------------------
Grupo Televisa S.A.-ADR (Broadcasting & Cable
TV) 16,700 918,500
=======================================================================
1,748,347
=======================================================================
NETHERLANDS-2.12%
Fugro N.V.-Dutch Ctfs. (Oil & Gas Equipment &
Services)(b) 10,616 829,178
=======================================================================
SWEDEN-3.30%
Munters A.B. (Industrial Machinery)(b) 31,400 783,176
-----------------------------------------------------------------------
Swedish Match A.B. (Tobacco)(b) 46,000 509,608
=======================================================================
1,292,784
=======================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $8,950,640) 9,704,708
=======================================================================
|
FS-20
MARKET
SHARES VALUE
-----------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-14.06%
FEDERAL HOME LOAN BANK (FHLB)-14.06%
Unsec. Disc. Notes,
1.69%, 11/01/04 (Cost $5,507,000)(c) $5,507,000 $ 5,507,000
=======================================================================
TOTAL INVESTMENTS-98.86% (Cost $36,960,521) 38,710,967
=======================================================================
OTHER ASSETS LESS LIABILITIES-1.14% 445,029
=======================================================================
NET ASSETS-100.00% $39,155,996
_______________________________________________________________________
=======================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Ctfs. - Certificates Disc. - Discounted Pfd. - Preferred Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) In accordance with the procedures established by the Board of Trustees, the
foreign security is fair valued using adjusted closing market prices. The
aggregate market value of these securities at October 31, 2004 was
$5,831,918, which represented 15.07% of the Fund's Total Investments. See
Note 1A.
(c) Security is traded on a discount basis. The interest rate shown represents
the discount rate at the time of purchase by the Fund.
See accompanying notes which are an integral part of the financial statements.
FS-21
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2004
ASSETS:
Investments, at market value (cost $36,960,521) $38,710,967
------------------------------------------------------------------------------
Cash 1,208
------------------------------------------------------------------------------
Receivables for:
Fund shares sold 472,703
------------------------------------------------------------------------------
Dividends 31,414
------------------------------------------------------------------------------
Amount due from advisor 35,214
------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 1,882
------------------------------------------------------------------------------
Other assets 55,308
==============================================================================
Total assets 39,308,696
______________________________________________________________________________
==============================================================================
LIABILITIES:
Payables for:
Fund shares reacquired 37,371
------------------------------------------------------------------------------
Foreign currency contracts outstanding 34,968
------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 1,881
------------------------------------------------------------------------------
Accrued distribution fees 14,686
------------------------------------------------------------------------------
Accrued trustees' fees 1,091
------------------------------------------------------------------------------
Accrued transfer agent fees 7,943
------------------------------------------------------------------------------
Accrued operating expenses 54,760
==============================================================================
Total liabilities 152,700
==============================================================================
Net assets applicable to shares outstanding $39,155,996
______________________________________________________________________________
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $37,474,318
------------------------------------------------------------------------------
Undistributed net investment income 33,045
------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and foreign currency contracts (67,136)
------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and foreign currency contracts 1,715,769
==============================================================================
$39,155,996
______________________________________________________________________________
==============================================================================
NET ASSETS:
Class A $24,995,705
______________________________________________________________________________
==============================================================================
Class B $ 6,403,234
______________________________________________________________________________
==============================================================================
Class C $ 5,943,642
______________________________________________________________________________
==============================================================================
Class R $ 34,463
______________________________________________________________________________
==============================================================================
Institutional Class $ 1,778,952
______________________________________________________________________________
==============================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER
OF SHARES AUTHORIZED:
Class A 2,168,034
______________________________________________________________________________
==============================================================================
Class B 558,488
______________________________________________________________________________
==============================================================================
Class C 518,407
______________________________________________________________________________
==============================================================================
Class R 2,994
______________________________________________________________________________
==============================================================================
Institutional Class 154,078
______________________________________________________________________________
==============================================================================
Class A:
Net asset value per share $ 11.53
------------------------------------------------------------------------------
Offering price per share:
(Net asset value of $11.53 divided by 94.50%) $ 12.20
______________________________________________________________________________
==============================================================================
Class B:
Net asset value and offering price per share $ 11.47
______________________________________________________________________________
==============================================================================
Class C:
Net asset value and offering price per share $ 11.47
______________________________________________________________________________
==============================================================================
Class R:
Net asset value and offering price per share $ 11.51
______________________________________________________________________________
==============================================================================
Institutional Class:
Net asset value and offering price per share $ 11.55
______________________________________________________________________________
==============================================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-22
STATEMENT OF OPERATIONS
For the period November 4, 2003 (date operations commenced) through October 31, 2004
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $5,137) $ 169,382
------------------------------------------------------------------------
Interest 28,712
========================================================================
Total investment income 198,094
========================================================================
EXPENSES:
Advisory fees 104,953
------------------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------------------
Custodian fees 32,625
------------------------------------------------------------------------
Distribution fees:
Class A 28,445
------------------------------------------------------------------------
Class B 26,731
------------------------------------------------------------------------
Class C 19,309
------------------------------------------------------------------------
Class R 38
------------------------------------------------------------------------
Transfer agent fees -- Class A, B, C and R 4,791
------------------------------------------------------------------------
Transfer agent fees -- Institutional Class 110
------------------------------------------------------------------------
Trustees' fees and retirement benefits 11,929
------------------------------------------------------------------------
Registration and filing fees 55,959
------------------------------------------------------------------------
Professional fees 58,177
------------------------------------------------------------------------
Other 31,843
========================================================================
Total expenses 424,910
========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (133,777)
========================================================================
Net expenses 291,133
========================================================================
Net investment income (loss) (93,039)
========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY
CONTRACTS:
Net realized gain (loss) from:
Investment securities 34,618
------------------------------------------------------------------------
Foreign currencies (6,591)
========================================================================
28,027
========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities 1,750,446
------------------------------------------------------------------------
Foreign currencies 291
------------------------------------------------------------------------
Foreign currency contracts (34,968)
========================================================================
1,715,769
========================================================================
Net gain from investment securities, foreign currencies and
foreign currency contracts 1,743,796
========================================================================
Net increase in net assets resulting from operations $1,650,757
________________________________________________________________________
========================================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-23
STATEMENT OF CHANGES IN NET ASSETS
For the period November 4, 2003 (date operations commenced) through October 31, 2004
OCTOBER 31,
2004
---------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (93,039)
---------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currencies 28,027
---------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies and foreign currency
contracts 1,715,769
===========================================================================
Net increase in net assets resulting from operations 1,650,757
===========================================================================
Share transactions-net:
Class A 23,942,293
---------------------------------------------------------------------------
Class B 6,102,509
---------------------------------------------------------------------------
Class C 5,729,384
---------------------------------------------------------------------------
Class R 33,159
---------------------------------------------------------------------------
Institutional Class 1,697,894
===========================================================================
Net increase in net assets resulting from share
transactions 37,505,239
===========================================================================
Net increase in net assets 39,155,996
===========================================================================
NET ASSETS:
Beginning of period --
===========================================================================
End of period (including undistributed net investment
income of $33,045) $39,155,996
___________________________________________________________________________
===========================================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-24
NOTES TO FINANCIAL STATEMENTS
October 31, 2004
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Trimark Endeavor Fund (the "Fund") is a separate series of AIM Investment Funds (the "Trust"). The Trust is organized as 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 consisting of six separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The Fund currently offers multiple classes of shares. 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 commenced operations on November 4, 2003.
The Fund's investment objective is long-term growth of capital. Each company listed in the Schedule of Investments is organized in the United States of America unless otherwise noted.
Under the Trust's organizational documents, the Fund's officers, trustees, employees and agents are indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts.
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 on the basis of prices furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the NASDAQ Official Closing Price ("NOCP") as of the close of the customary trading session on the valuation date or absent a NOCP, at the closing bid price.
Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. 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").
Investments in open-end registered investment companies and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in closed-end registered investment companies that trade on an exchange are valued at the last sales price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes 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 specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations having 60 days or less to maturity and commercial paper are valued at amortized cost which approximates market value.
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.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable 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 ordinarily be reflected in the computation of the Fund's net asset value. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current market value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current market value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs, domestic and foreign index futures and exchange-traded funds.
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of
FS-25
brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
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 Subchapter M 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 -- Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.
F. FOREIGN CURRENCY TRANSLATIONS -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) 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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from, (i) sales of foreign currencies, (ii) currency gains or losses realized between the trade and settlement dates on securities transactions, and (iii) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.
G. 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.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.80% of the first $1
billion of the Fund's average daily net assets, plus 0.75% of the Fund's average
daily net assets in excess of $1 billion. AIM has contractually agreed to waive
advisory fees and/or reimburse expenses to the extent necessary to limit Total
Annual Operating Expenses (excluding certain items discussed below) of Class A,
Class B, Class C, Class R and Institutional Class shares to 2.00%, 2.65%, 2.65%,
2.15% and 1.65% of average daily net assets, respectively, through October 31,
2005. In determining the advisor's obligation to waive advisory fees and/or
reimburse expenses, the following expenses are not taken into account, and could
cause the Total Annual Fund Operating Expenses to exceed the caps stated above:
(i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv)
extraordinary items (these are expenses that are not anticipated to arise from
the Fund's day-to-day operations), or items designated as such by the Fund's
Board of Trustees; (v) expenses related to a merger or reorganization, as
approved by the Fund's Board of Trustees; and (vi) expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement.
Currently, the only expense offset arrangements from which the Fund benefits are
in the form of credits that the Fund receives from banks where the Fund or its
transfer agent has deposit accounts in which it holds uninvested cash. Those
credits are used to pay certain expenses incurred by the Fund. Further, AIM has
voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of
the advisory fee AIM receives from the affiliated money market funds on
investments by the Fund in such affiliated money market funds. Voluntary fee
waivers or reimbursements may be modified or discontinued at any time upon
consultation with the Board of Trustees without further notice to investors. For
the
FS-26
period November 4, 2003 (date operations commenced) through October 31, 2004, AIM waived fees of $104,953 and reimbursed expenses of $26,327. Under the terms of a master sub-advisory agreement between AIM and AIM Funds Management Inc. ("AIM Funds Management"), AIM pays AIM Funds Management 40% of the amount paid by the Fund to AIM.
For the period November 4, 2003 (date operations commenced) through October 31, 2004, at the request of the Trustees of the Trust, AMVESCAP PLC ("AMVESCAP") agreed to assume $2,155 of expenses incurred by the Fund in connection with matters related to recently settled regulatory actions and investigations concerning market timing activity in the AIM Funds, including legal, audit, shareholder servicing, communication and trustee expenses. These expenses along with the related expense reimbursement, are included in the Statement of Operations.
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 November 4, 2003 (date operations commenced) through October 31, 2004, AIM was paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay AIM Investment Services, Inc. ("AISI") a fee for providing transfer agency and shareholder services to the Fund and reimburse AISI for certain expenses incurred by AISI in the course of providing such services. For the Institutional Class, the transfer agent has contractually agreed to reimburse class specific transfer agent fees and expenses to the extent necessary to limit transfer agent fees to 0.10% of the average net assets. For the period November 4, 2003 (date operations commenced) through October 31, 2004, the Fund paid AISI $4,791 for Class A, Class B, Class C and Class R shares and $110 for Institutional Class shares. AISI may make payments to intermediaries to provide omnibus account services, sub-accounting services and/or networking 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 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, Class B, Class C 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, up to 0.25% of the average daily net assets of the Class A, Class B, Class C or Class R shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. 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 Plans, for the period November 4, 2003 (date operations commenced) through October 31, 2004, the Class A, Class B, Class C and Class R shares paid $28,445, $26,731, $19,309 and $38, respectively.
Front-end sales commissions and contingent deferred sales charges ("CDSC") (collectively the "sales charges") are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the period November 4, 2003 (date operations commenced) through October 31, 2004, AIM Distributors advised the Fund that it retained $26,908 in front-end sales commissions from the sale of Class A shares and $215, $4,905, $532 and $0 from Class A, Class B, Class C and Class R shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of AIM, AISI and/or AIM Distributors.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions and (ii) custodian credits which result from periodic overnight cash balances at the custodian. For the period November 4, 2003 (date operations commenced) through October 31, 2004, the Fund received credits in transfer agency fees of $176 and credits in custodian fees of $166 under expense offset arrangements, which resulted in a reduction of the Fund's total expenses of $342.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each Trustee of the Trust who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested.
Current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees that also participate in a retirement plan and receive benefits under such plan.
Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
During the period November 4, 2003 (date operations commenced) through October 31, 2004, the Fund paid legal fees of $2,484 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 5--BORROWINGS
Pursuant to an exemptive order from the SEC, the Fund may participate in an interfund lending facility that AIM has established for temporary borrowings by the AIM Funds. An interfund loan will be made under this facility only if the loan rate (an average of the rate available on bank loans and the rate available on investments in overnight repurchase agreements) is favorable to both the lending fund and the borrowing fund. A loan will be secured by
FS-27
collateral if the Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total assets. To the extent that the loan is required to be secured by collateral, the collateral is marked to market daily to ensure that the market value is at least 102% of the outstanding principal value of the loan.
The Fund is a participant in an uncommitted unsecured revolving credit facility with State Street Bank and Trust Company ("SSB"). The Fund may borrow up to the lesser of (i) $125,000,000, or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the credit facility can borrow on a first come, first served basis. Principal on each loan outstanding shall bear interest at the bid rate quoted by SSB at the time of the request for the loan.
During the period November 4, 2003 (date operations commenced) through October 31, 2004, the Fund did not borrow or lend under the interfund lending facility or borrow under the uncommitted unsecured revolving credit facility.
Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds in the account so the custodian can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank. In either case, the custodian bank will be compensated at an amount equal to the Federal Funds rate plus 100 basis points.
NOTE 6--FOREIGN CURRENCY CONTRACTS
OPEN FOREIGN CURRENCY CONTRACTS AT PERIOD END
--------------------------------------------------------------------------------
CONTRACT TO UNREALIZED
SETTLEMENT -------------------- APPRECIATION
DATE CURRENCY DELIVER RECEIVE VALUE (DEPRECIATION)
--------------------------------------------------------------------------------
01/12/05 EUR* $ 79,170 $100,000 $101,296 $ (1,296)
--------------------------------------------------------------------------------
04/14/05 EUR* 416,910 500,000 533,672 (33,672)
================================================================================
$496,080 $600,000 $634,968 $(34,968)
________________________________________________________________________________
================================================================================
|
* EUR -- Euro
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
There were no ordinary income or long-term capital gain distributions paid during the period November 4, 2003 (date operations commenced) through October 31, 2004.
TAX COMPONENTS OF NET ASSETS:
As of October 31, 2004, the components of net assets on a tax basis were as follows:
Unrealized appreciation -- investments $ 1,683,600 ------------------------------------------------------------------------------- Temporary book/tax differences (1,922) ------------------------------------------------------------------------------- Shares of beneficial interest 37,474,318 =============================================================================== Total net assets $ 39,155,996 _______________________________________________________________________________ =============================================================================== |
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 losses on wash sales and the tax recognition of unrealized losses on certain forward contracts. The tax-basis unrealized appreciation on investments amount includes appreciation on foreign currencies of $291.
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 trustee deferral of compensation expenses.
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities and money market funds) purchased and sold by the Fund during the period November 4, 2003 (date operations commenced) through October 31, 2004 was $35,861,737 and $4,442,834, respectively.
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS ------------------------------------------------------------------------------- Aggregate unrealized appreciation of investment securities $ 2,965,661 ------------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (1,282,352) =============================================================================== Net unrealized appreciation of investment securities $ 1,683,309 _______________________________________________________________________________ =============================================================================== Cost of investments for tax purposes is $37,027,658. |
FS-28
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of organizational expenses, foreign currency transactions and net operating losses, on October 31, 2004, undistributed net investment income (loss) was increased by $126,084, undistributed net realized gains (losses) decreased by $95,163 and shares of beneficial interest decreased by $30,921. This reclassification had no effect on the net assets of the Fund.
NOTE 10--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A shares, Class B shares, Class C shares, Class R shares and Institutional Class shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with CDSC. Class R shares and Institutional Class shares are sold at net asset value. Under certain circumstances, Class A shares and Class R shares are subject to CDSC. Generally, Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase.
CHANGES IN SHARES OUTSTANDING(a)
------------------------------------------------------------------------------
NOVEMBER 4, 2003
(DATE OPERATIONS
COMMENCED)
THROUGH
OCTOBER 31, 2004
------------------------
SHARES AMOUNT
------------------------------------------------------------------------------
Sold:
Class A 2,289,460 $25,304,459
------------------------------------------------------------------------------
Class B 638,445 6,985,762
------------------------------------------------------------------------------
Class C 563,891 6,235,662
------------------------------------------------------------------------------
Class R(b) 3,090 34,259
------------------------------------------------------------------------------
Institutional Class(b) 159,465 1,758,356
==============================================================================
Automatic conversion of Class B shares to Class A
shares:
Class A 3,316 36,925
------------------------------------------------------------------------------
Class B (3,331) (36,925)
==============================================================================
Reacquired:
Class A (124,742) (1,399,091)
------------------------------------------------------------------------------
Class B (76,626) (846,328)
------------------------------------------------------------------------------
Class C (45,484) (506,278)
------------------------------------------------------------------------------
Class R(b) (96) (1,100)
------------------------------------------------------------------------------
Institutional Class(b) (5,387) (60,462)
==============================================================================
3,402,001 $37,505,239
______________________________________________________________________________
==============================================================================
|
(a) There is one entity that is a record owner of more than 5% of the
outstanding shares of the Fund and owns 24% of the outstanding shares of
the Fund. AIM Distributors has an agreement with this entity to sell
Fund shares. The Fund, AIM and/or AIM affiliates may make payments to
this entity, which is considered to be related to the Fund, for
providing services to the Fund, AIM and/or AIM affiliates including but
not limited to services such as, securities brokerage, distribution,
third party record keeping and account servicing. The Trust has no
knowledge as to whether all or any portion of the shares owned of record
by this shareholder are also owned beneficially.
(b) Class R shares and Institutional Class shares commenced sales on April
30, 2004.
FS-29
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
----------------
NOVEMBER 4, 2003
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2004
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a)
--------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.58
================================================================================
Total from investment operations 1.53
================================================================================
Net asset value, end of period $ 11.53
________________________________________________________________________________
================================================================================
Total return(b) 15.30%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $24,996
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.00%(c)
--------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.02%(c)
================================================================================
Ratio of net investment income (loss) to average net assets (0.49)%
________________________________________________________________________________
================================================================================
Portfolio turnover rate(d) 35%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$8,194,237.
(d) Not annualized for periods less than one year.
FS-30
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
----------------
NOVEMBER 4, 2003
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2004
--------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13)(a)
--------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.60
================================================================================
Total from investment operations 1.47
================================================================================
Net asset value, end of period $11.47
________________________________________________________________________________
================================================================================
Total return(b) 14.70%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $6,403
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.65%(c)
--------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.67%(c)
================================================================================
Ratio of net investment income (loss) to average net assets (1.14)%(c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate(d) 35%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. 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
$2,695,175.
(d) Not annualized for periods less than one year.
CLASS C
----------------
NOVEMBER 4, 2003
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2004
------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13)(a)
------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.60
==============================================================================
Total from investment operations 1.47
==============================================================================
Net asset value, end of period $11.47
______________________________________________________________________________
==============================================================================
Total return(b) 14.70%
______________________________________________________________________________
==============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $5,944
______________________________________________________________________________
==============================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.65%(c)
------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.67%(c)
==============================================================================
Ratio of net investment income (loss) to average net assets (1.14)%(c)
______________________________________________________________________________
==============================================================================
Portfolio turnover rate(d) 35%
______________________________________________________________________________
==============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. 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
$1,946,841.
(d) Not annualized for periods less than one year.
FS-31
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS R
--------------
APRIL 30, 2004
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2004
------------------------------------------------------------------------------
Net asset value, beginning of period $10.88
------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a)
------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.67
==============================================================================
Total from investment operations 0.63
==============================================================================
Net asset value, end of period $11.51
______________________________________________________________________________
==============================================================================
Total return(b) 5.79%
______________________________________________________________________________
==============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 34
______________________________________________________________________________
==============================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.15%(c)
------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.17%(c)
==============================================================================
Ratio of net investment income (loss) to average net assets (0.64)%(c)
______________________________________________________________________________
==============================================================================
Portfolio turnover rate(d) 35%
______________________________________________________________________________
==============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $14,900.
(d) Not annualized for periods less than one year.
INSTITUTIONAL CLASS
-------------------
APRIL 30, 2004
(DATE SALES
COMMENCED) TO
OCTOBER 31, 2004
-----------------------------------------------------------------------------------
Net asset value, beginning of period $10.88
-----------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a)
-----------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.68
===================================================================================
Total from investment operations 0.67
===================================================================================
Net asset value, end of period $11.55
___________________________________________________________________________________
===================================================================================
Total return(b) 6.16%
___________________________________________________________________________________
===================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,779
___________________________________________________________________________________
===================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.62%(c)
-----------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.64%(c)
===================================================================================
Ratio of net investment income (loss) to average net assets (0.11)%(c)
___________________________________________________________________________________
===================================================================================
Portfolio turnover rate(d) 35%
___________________________________________________________________________________
===================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $752,987.
(d) Not annualized for periods less than one year.
FS-32
NOTE 12--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note.
The mutual fund industry as a whole is currently subject to regulatory inquiries and litigation related to a wide range of issues. These issues include, among others, market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost securityholders.
As described more fully below, INVESCO Funds Group, Inc. ("IFG"), the former investment advisor to certain AIM Funds, A I M Advisors, Inc. ("AIM"), the Fund's investment advisor, and A I M Distributors, Inc. ("ADI"), the distributor of the retail AIM Funds and a wholly owned subsidiary of AIM, reached final settlements with the Securities and Exchange Commission ("SEC"), the New York Attorney General ("NYAG"), the Colorado Attorney General ("COAG"), the Colorado Division of Securities ("CODS") and the Secretary of State of the State of Georgia to resolve civil enforcement actions and investigations related to market timing activity and related issues in the AIM Funds, including those formerly advised by IFG.
In addition, as described more fully below, IFG and AIM are the subject of a number of ongoing regulatory inquiries and civil lawsuits related to one or more of the issues currently being scrutinized by various Federal and state regulators, including but not limited to those issues described above. Additional regulatory actions and/or civil lawsuits related to the above or other issues may be filed against the AIM Funds, IFG, AIM and/or related entities and individuals in the future. Additional regulatory inquiries related to the above or other issues also may be received by the AIM Funds, IFG, AIM and/or related entities and individuals in the future.
As a result of the matters discussed below, investors in the AIM Funds might react by redeeming their investments. This might require the Funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the Funds.
Settled Enforcement Actions and Investigations Related to Market Timing
On October 8, 2004, AMVESCAP PLC ("AMVESCAP"), the parent company of IFG and AIM, announced that final settlements had been reached with the SEC, the NYAG, the COAG and the Secretary of State of Georgia to resolve civil enforcement actions and investigations related to market timing activity and related issues in the AIM Funds, including those formerly advised by IFG. A final settlement also has been reached with the Colorado Division of Securities ("CODS") with respect to this matter. In their enforcement actions and investigations, these regulators alleged, in substance, that IFG and AIM failed to disclose in the prospectuses for the AIM Funds that they advised and to the independent directors/trustees of such Funds that IFG and AIM had entered into certain arrangements permitting market timing of such Funds, thereby breaching their fiduciary duties to such Funds. As a result of the foregoing, the regulators alleged that IFG, AIM and ADI breached various Federal and state securities, business and consumer protection laws. Under the terms of the settlements, IFG, AIM and ADI consent to the entry of settlement orders or assurances of discontinuance, as applicable, by the regulators containing certain terms, some of which are described below, without admitting or denying any wrongdoing.
Under the terms of the settlements, IFG agreed to pay a total of $325 million, of which $110 million is civil penalties. Of the $325 million total payment, half will be paid on or before December 31, 2004 and the remaining half will be paid on or before December 31, 2005. AIM and ADI agreed to pay a total of $50 million, of which $30 million is civil penalties. The entire $50 million payment by AIM and ADI has been paid.
The entire $325 million IFG settlement payment will be available for distribution to the shareholders of those AIM Funds that IFG formerly advised that were harmed by market timing activity, and the entire $50 million settlement payment by AIM and ADI will be available for distribution to the shareholders of those AIM Funds advised by AIM that were harmed by market timing activity, all as to be determined by an independent distribution consultant to be appointed under the settlements. The settlement payments will be distributed in accordance with a methodology to be determined by the independent distribution consultant, in consultation with AIM and the independent trustees of the AIM Funds and acceptable to the staff of the SEC.
Under the settlements with the NYAG and COAG, AIM has agreed to reduce management fees on the AIM Funds by $15 million per year for the next five years, based upon effective fee rates and assets under management as of July 1, 2004, and not to increase certain management fees. IFG will also pay $1.5 million to the COAG to be used for investor education purposes and to reimburse the COAG for actual costs. Finally, IFG and AIM will pay $175,000 to the Secretary of State of Georgia to be used for investor education purposes and to reimburse the Secretary of State for actual costs.
None of the costs of the settlements will be borne by the AIM Funds or by Fund shareholders.
Under the terms of the settlements, AIM will make certain governance reforms, including maintaining an internal controls committee and retaining an independent compliance consultant, a corporate ombudsman and, as stated above, an independent distribution consultant. Also, commencing in 2007 and at least once every other year thereafter, AIM will undergo a compliance review by an independent third party.
In addition, under the terms of the settlements, AIM has undertaken to cause the AIM Funds to operate in accordance with certain governance policies and practices, including retaining a full-time independent senior officer whose duties will include monitoring compliance and managing the process by which proposed management fees to be charged the AIM Funds are negotiated. Also, commencing in 2008 and not less than every fifth calendar year thereafter, the AIM Funds will hold shareholder meetings at which their Boards of Trustees will be elected.
On October 8, 2004, the SEC announced that it had settled a market timing enforcement action against Raymond R. Cunningham, the former president and chief executive officer of IFG and a former member of the board of directors of the AIM Funds formerly advised by IFG. As part of the settlement, the SEC ordered Mr. Cunningham to pay $1 in restitution and civil penalties in the amount of $500,000. In addition, the SEC prohibited Mr. Cunningham from associating with an investment advisor, broker, dealer or investment company for a period of two years and further prohibited him from serving as an officer or director of an investment advisor, broker, dealer or investment company for a period of five years.
On August 31, 2004, the SEC announced that it had settled market timing enforcement actions against Timothy J. Miller, the former chief investment officer and a former portfolio manager for IFG, Thomas A. Kolbe, the former national sales manager of IFG, and Michael D. Legoski, a former assistant
FS-33
NOTE 12--LEGAL PROCEEDINGS (CONTINUED)
vice president in IFG's sales department. As part of the settlements, the SEC ordered Messrs. Miller, Kolbe and Legoski to pay $1 in restitution each and civil penalties in the amounts of $150,000, $150,000 and $40,000, respectively. In addition, the SEC prohibited each of them from associating with an investment advisor or investment company for a period of one year, prohibited Messrs. Miller and Kolbe from serving as an officer or director of an investment advisor or investment company for three years and two years, respectively, and prohibited Mr. Legoski from associating with a broker or dealer for a period of one year.
As referenced by the SEC in the SEC's settlement order, one former officer of ADI and one current officer of AIM (who has taken a voluntary leave of absence) have received regulatory inquiries in the form of subpoenas or other oral or written requests for information and/or documents related to market timing activity in the AIM Funds.
At the request of the trustees of the AIM Funds, AMVESCAP has agreed to pay all of the expenses incurred by such Funds related to the market timing investigations, including expenses incurred in connection with the regulatory complaints against IFG alleging market timing and the market timing investigations with respect to IFG and AIM.
The payments made in connection with the above-referenced settlements by IFG, AIM and ADI will total approximately $375 million (not including AIM's agreement to reduce management fees on the AIM Funds by $15 million per year for the next five years, based upon effective fee rates and assets under management as of July 1, 2004). The manner in which the settlement payments will be distributed is unknown at the present time and will be determined by an independent distribution consultant to be appointed under the settlement agreements. Therefore, management of AIM and the Fund are unable at the present time to estimate the impact, if any, that the distribution of the settlement amounts may have on the Fund or whether such distribution will have an impact on the Fund's financial statements in the future.
At the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the outcome of the ongoing matters described below may have on AIM, ADI or the Fund.
Ongoing Regulatory Inquiries Concerning IFG and AIM
IFG, certain related entities, certain of their current and former officers and/or certain of the AIM Funds formerly advised by IFG have received regulatory inquiries in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, some of which concern one or more such Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, and investments in securities of other registered investment companies. These regulators include the SEC, the NASD, Inc. ("NASD"), the Florida Department of Financial Services, the Attorney General of the State of West Virginia, the West Virginia Securities Commission and the Bureau of Securities of the State of New Jersey. IFG and certain of these other parties also have received more limited inquiries from the United States Department of Labor ("DOL") and the United States Attorney's Office for the Southern District of New York, some of which concern one or more of the AIM Funds formerly advised by IFG. IFG is providing full cooperation with respect to these inquiries.
AIM, certain related entities, certain of their current and former officers and/or certain of the AIM Funds have received regulatory inquiries in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, some of which concern one or more AIM Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost securityholders. These regulators include the SEC, the NASD, the Department of Banking for the State of Connecticut, the Attorney General of the State of West Virginia, the West Virginia Securities Commission and the Bureau of Securities of the State of New Jersey. AIM and certain of these other parties also have received more limited inquiries from the SEC, the NASD, the DOL, the Internal Revenue Service, the New York Stock Exchange, the United States Attorney's Office for the Southern District of New York, the United States Attorney's Office for the Central District of California, the United States Attorney's Office for the District of Massachusetts, the Massachusetts Securities Division and the U.S. Postal Inspection Service, some of which concern one or more AIM Funds. AIM is providing full cooperation with respect to these inquiries.
Private Civil Actions Alleging Market Timing
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, certain AIM Funds, IFG, AIM, A I M Management Group Inc. ("AIM Management"), AMVESCAP, certain related entities, certain of their current and former officers and/or certain unrelated third parties) making allegations that are similar in many respects to those in the settled regulatory actions brought by the SEC, the NYAG and the COAG concerning market timing activity in the AIM Funds. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal and state securities laws; (ii) violation of various provisions of ERISA; (iii) breach of fiduciary duty; and/or (iv) breach of contract. These lawsuits were initiated in both Federal and state courts and seek such remedies as compensatory damages; restitution; injunctive relief; disgorgement of management fees; imposition of a constructive trust; removal of certain directors and/or employees; various corrective measures under ERISA; rescission of certain Funds' advisory agreements; interest; and attorneys' and experts' fees.
All lawsuits based on allegations of market timing, late trading, and related issues have been transferred to the United States District Court for the District of Maryland (the "MDL Court") for consolidated or coordinated pre-trial proceedings. Pursuant to an Order of the MDL Court, plaintiffs consolidated their claims for pre-trial purposes into three amended complaints against various AIM- and IFG-related parties: (i) a Consolidated Amended Class Action Complaint purportedly brought on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative Complaint purportedly brought on behalf of the AIM Funds and fund registrants; and (iii) an Amended Class Action Complaint for Violations of the Employee
FS-34
NOTE 12--LEGAL PROCEEDINGS (CONTINUED)
Retirement Income Securities Act purportedly brought on behalf of participants in AMVESCAP's 401(k) plan. Plaintiffs in one of the underlying lawsuits transferred to the MDL Court continue to seek remand of their action to state court.
Private Civil Actions Alleging Improper Use of Fair Value Pricing
Multiple civil class action lawsuits have been filed against various parties
(including, depending on the lawsuit, certain AIM Funds, IFG and/or AIM)
alleging that certain AIM Funds inadequately employed fair value pricing. These
lawsuits allege a variety of theories of recovery, including but not limited to:
(i) violations of various provisions of the Federal securities laws; (ii) common
law breach of duty; and (iii) common law negligence and gross negligence. These
lawsuits have been filed in both Federal and state courts and seek such remedies
as compensatory and punitive damages; interest; and attorneys' fees and costs.
Private Civil Actions Alleging Excessive Advisory and/or Distribution Fees
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, IFG, AIM, INVESCO Institutional (N.A.), Inc., ADI and/or INVESCO Distributors, Inc.) alleging that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale. Certain of these lawsuits also allege that the defendants adopted unlawful distribution plans. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal securities laws; (ii) breach of fiduciary duty; and/or (iii) breach of contract. These lawsuits have been filed in Federal courts and seek such remedies as damages; injunctive relief; rescission of certain Funds' advisory agreements and distribution plans; interest; prospective relief in the form of reduced fees; and attorneys' and experts' fees.
Private Civil Actions Alleging Improper Charging of Distribution Fees on Closed Funds or Share Classes
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, IFG, AIM, ADI and/or certain of the trustees of the AIM Funds) alleging that the defendants breached their fiduciary duties by charging distribution fees while funds and/or specific share classes were closed generally to new investors and/or while other share classes of the same fund were not charged the same distribution fees. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal securities laws; and (ii) breach of fiduciary duty. These lawsuits have been filed in Federal courts and seek such remedies as damages; injunctive relief; and attorneys' and experts' fees.
Private Civil Actions Alleging Improper Mutual Fund Sales Practices and Directed-Brokerage Arrangements
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, AIM Management, IFG, AIM, AIM Investment Services, Inc. and/or certain of the trustees of the AIM Funds) alleging that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively promote the sale of the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal securities laws; (ii) breach of fiduciary duty; and (iii) aiding and abetting a breach of fiduciary duty. These lawsuits have been filed in Federal courts and seek such remedies as compensatory and punitive damages; rescission of certain Funds' advisory agreements and distribution plans and recovery of all fees paid; an accounting of all fund-related fees, commissions and soft dollar payments; restitution of all unlawfully or discriminatorily obtained fees and charges; and attorneys' and experts' fees.
FS-35
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of AIM Trimark Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Trimark Fund (the "Fund") at October 31, 2004, the results of its operations, the changes in its net assets and the financial highlights for the period November 4, 2003 (date operations commenced) through October 31, 2004, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at October 31, 2004 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP December 20, 2004 Houston, Texas |
FS-36
FINANCIALS
SCHEDULE OF INVESTMENTS
October 31, 2004
MARKET
SHARES VALUE
-----------------------------------------------------------------------
DOMESTIC COMMON STOCKS & OTHER EQUITY
INTERESTS-55.35%
ASSET MANAGEMENT & CUSTODY BANKS-2.88%
State Street Corp. 11,600 $ 522,580
=======================================================================
BROADCASTING & CABLE TV-2.63%
Clear Channel Communications, Inc. 14,300 477,620
=======================================================================
CASINOS & GAMING-3.35%
Harrah's Entertainment, Inc. 10,400 608,608
=======================================================================
COMPUTER & ELECTRONICS RETAIL-2.82%
RadioShack Corp. 17,100 511,803
=======================================================================
CONSTRUCTION MATERIALS-2.27%
Vulcan Materials Co. 8,300 413,174
=======================================================================
CONSUMER FINANCE-4.09%
American Express Co. 14,000 742,980
=======================================================================
DATA PROCESSING & OUTSOURCED SERVICES-1.29%
Sabre Holdings Corp.-Class A 10,900 234,459
=======================================================================
DIVERSIFIED CHEMICALS-1.96%
Engelhard Corp. 12,600 356,580
=======================================================================
ELECTRONIC MANUFACTURING SERVICES-1.98%
Molex Inc.-Class A 14,000 360,080
=======================================================================
EMPLOYMENT SERVICES-1.00%
Manpower Inc. 4,000 181,000
=======================================================================
HEALTH CARE SERVICES-2.59%
IMS Health Inc. 22,200 470,196
=======================================================================
HOME IMPROVEMENT RETAIL-2.54%
Sherwin-Williams Co. (The) 10,800 461,376
=======================================================================
HYPERMARKETS & SUPER CENTERS-2.03%
Costco Wholesale Corp. 7,700 369,138
=======================================================================
INTERNET RETAIL-2.39%
IAC/InterActiveCorp(a) 20,100 434,562
=======================================================================
MANAGED HEALTH CARE-2.92%
Anthem, Inc.(a) 6,600 530,640
=======================================================================
MOVIES & ENTERTAINMENT-2.08%
Walt Disney Co. (The) 15,000 378,300
=======================================================================
PROPERTY & CASUALTY INSURANCE-2.73%
Progressive Corp. (The) 5,300 495,815
=======================================================================
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
PUBLISHING-1.99%
Meredith Corp. 7,400 $ 362,600
=======================================================================
REAL ESTATE-2.31%
Equity Residential 12,600 420,210
=======================================================================
SPECIALIZED FINANCE-1.75%
Moody's Corp. 4,100 319,021
=======================================================================
SPECIALTY CHEMICALS-2.39%
Sigma-Aldrich Corp. 7,800 433,992
=======================================================================
SPECIALTY STORES-1.07%
Weight Watchers International, Inc.(a) 5,400 193,968
=======================================================================
SYSTEMS SOFTWARE-3.10%
Oracle Corp.(a) 44,500 563,370
=======================================================================
TRADING COMPANIES & DISTRIBUTORS-1.19%
W.W. Grainger, Inc. 3,700 216,783
=======================================================================
Total Domestic Common Stocks & Other
Equity Interests (Cost $9,916,860) 10,058,855
=======================================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-38.31%
DENMARK-0.71%
Novozymes A.S.-Class B (Specialty
Chemicals)(b) 2,900 129,547
=======================================================================
FRANCE-0.62%
Societe BIC S.A. (Office Services &
Supplies)(b) 2,400 112,086
=======================================================================
IRELAND-3.95%
Kerry Group PLC-Class A (Packaged Foods &
Meats)(b) 20,900 470,607
-----------------------------------------------------------------------
Ryanair Holdings PLC-ADR (Airlines)(a) 8,600 247,508
=======================================================================
718,115
=======================================================================
ITALY-2.12%
Luxottica Group S.p.A.-ADR (Apparel,
Accessories & Luxury Goods) 20,700 385,848
=======================================================================
JAPAN-4.84%
Canon Inc. (Office Electronics)(b) 12,000 593,921
-----------------------------------------------------------------------
Murata Manufacturing Co., Ltd. (Electronic
Equipment Manufacturers)(b) 6,000 286,222
=======================================================================
880,143
=======================================================================
MEXICO-5.92%
Cemex S.A. de C.V.-ADR (Construction
Materials) 21,308 617,506
-----------------------------------------------------------------------
Grupo Modelo S.A. de C.V.-Series C (Brewers) 73,300 188,030
-----------------------------------------------------------------------
Grupo Televisa S.A.-ADR (Broadcasting & Cable
TV) 4,900 269,500
=======================================================================
1,075,036
=======================================================================
|
FS-37
MARKET
SHARES VALUE
-----------------------------------------------------------------------
NETHERLANDS-1.97%
Vedior N.V. (Employment Services)(b) 24,200 $ 358,046
=======================================================================
UNITED KINGDOM-18.18%
Compass Group PLC (Restaurants)(b) 114,100 472,726
-----------------------------------------------------------------------
GlaxoSmithKline PLC (Pharmaceuticals)(b) 13,264 279,741
-----------------------------------------------------------------------
Reed Elsevier PLC (Publishing)(b) 82,100 735,237
-----------------------------------------------------------------------
Smiths Group PLC (Industrial
Conglomerates)(b) 36,100 495,149
-----------------------------------------------------------------------
Tesco PLC (Food Retail)(b) 96,819 511,016
-----------------------------------------------------------------------
WPP Group PLC (Advertising)(b) 80,500 809,970
=======================================================================
3,303,839
=======================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $7,007,235) 6,962,660
=======================================================================
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-6.58%
FEDERAL HOME LOAN BANK-6.58%
Unsec. Disc. Notes,
1.69%, 11/01/04 (Cost $1,195,999)(c) $1,196,000 $ 1,195,888
=======================================================================
TOTAL INVESTMENTS-100.24% (Cost $18,120,094) 18,217,403
=======================================================================
OTHER ASSETS LESS LIABILITIES-(0.24%) (43,329)
=======================================================================
NET ASSETS-100.00% $18,174,074
_______________________________________________________________________
=======================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Disc. - Discounted Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) In accordance with the procedures established by the Board of Trustees, the
foreign security is fair valued using adjusted closing market prices. The
aggregate market value of these securities at October 31, 2004 was
$5,254,268, which represented 28.84% of the Fund's Total Investments. See
Note 1A.
(c) Security traded on a discount basis. The interest rate shown represents the
discount rate at the time of purchase by the Fund.
See accompanying notes which are an integral part of the financial statements.
FS-38
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2004
ASSETS:
Investments, at market value (cost
$18,120,094) $18,217,403
-----------------------------------------------------------
Foreign currencies, at value (cost $2,034) 2,118
-----------------------------------------------------------
Cash 186
-----------------------------------------------------------
Receivables for:
Investments sold 200,481
-----------------------------------------------------------
Fund shares sold 91,945
-----------------------------------------------------------
Dividends 26,107
-----------------------------------------------------------
Amount due from advisor 11,336
-----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 1,884
-----------------------------------------------------------
Other assets 53,078
===========================================================
Total assets 18,604,538
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 365,578
-----------------------------------------------------------
Trustee deferred compensation and retirement
plans 1,884
-----------------------------------------------------------
Accrued distribution fees 7,358
-----------------------------------------------------------
Accrued trustees' fees 1,195
-----------------------------------------------------------
Accrued transfer agent fees 1,655
-----------------------------------------------------------
Accrued operating expenses 52,794
===========================================================
Total liabilities 430,464
===========================================================
Net assets applicable to shares outstanding $18,174,074
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $18,266,121
-----------------------------------------------------------
Undistributed net investment income (loss) (1,873)
-----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities and foreign currencies (187,479)
-----------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 97,305
===========================================================
$18,174,074
___________________________________________________________
===========================================================
NET ASSETS:
Class A $ 9,757,173
___________________________________________________________
===========================================================
Class B $ 4,357,602
___________________________________________________________
===========================================================
Class C $ 4,039,537
___________________________________________________________
===========================================================
Class R $ 9,868
___________________________________________________________
===========================================================
Institutional Class $ 9,894
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 939,950
___________________________________________________________
===========================================================
Class B 422,567
___________________________________________________________
===========================================================
Class C 391,697
___________________________________________________________
===========================================================
Class R 952
___________________________________________________________
===========================================================
Institutional Class 951
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 10.38
-----------------------------------------------------------
Offering price per share:
(Net asset value of $10.38 divided by
94.50%) $ 10.98
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per share $ 10.31
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per share $ 10.31
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per share $ 10.37
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per share $ 10.40
___________________________________________________________
===========================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-39
STATEMENT OF OPERATIONS
For the period November 4, 2003 (date operations commenced) through October 31, 2004
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $7,787) $ 163,191
-----------------------------------------------------------------------
Interest 13,587
=======================================================================
Total investment income 176,778
=======================================================================
EXPENSES:
Advisory fees 87,385
-----------------------------------------------------------------------
Administrative services fees 50,000
-----------------------------------------------------------------------
Custodian fees 45,259
-----------------------------------------------------------------------
Distribution fees:
Class A 20,295
-----------------------------------------------------------------------
Class B 23,509
-----------------------------------------------------------------------
Class C 21,213
-----------------------------------------------------------------------
Class R 25
-----------------------------------------------------------------------
Transfer agent fees -- Class A, B, C and R 21,602
-----------------------------------------------------------------------
Transfer agent fees -- Institutional Class 6
-----------------------------------------------------------------------
Trustees' fees and retirement benefits 12,026
-----------------------------------------------------------------------
Registration and filing fees 57,802
-----------------------------------------------------------------------
Professional fees 62,436
-----------------------------------------------------------------------
Other 22,057
=======================================================================
Total expenses 423,615
=======================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (163,355)
=======================================================================
Net expenses 260,260
=======================================================================
Net investment income (loss) (83,482)
=======================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities (187,658)
-----------------------------------------------------------------------
Foreign currencies (9,047)
=======================================================================
(196,705)
=======================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities 97,309
-----------------------------------------------------------------------
Foreign currencies (4)
=======================================================================
97,305
=======================================================================
Net gain (loss) from investment securities and foreign
currencies (99,400)
=======================================================================
Net increase (decrease) in net assets resulting from
operations $(182,882)
_______________________________________________________________________
=======================================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-40
STATEMENT OF CHANGES IN NET ASSETS
For the period November 4, 2003 (date operations commenced) through October 31, 2004
2004
---------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (83,482)
---------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (196,705)
---------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 97,305
===========================================================================
Net increase (decrease) in net assets resulting from
operations (182,882)
===========================================================================
Share transactions-net:
Class A 9,842,778
---------------------------------------------------------------------------
Class B 4,399,603
---------------------------------------------------------------------------
Class C 4,094,575
---------------------------------------------------------------------------
Class R 10,000
---------------------------------------------------------------------------
Institutional Class 10,000
===========================================================================
Net increase (decrease) in net assets resulting from
share transactions 18,356,956
===========================================================================
Net increase in net assets 18,174,074
===========================================================================
NET ASSETS:
Beginning of Period --
===========================================================================
End of period (including undistributed net investment
income (loss) of $(1,873)) $18,174,074
___________________________________________________________________________
===========================================================================
|
NOTES TO FINANCIAL STATEMENTS
October 31, 2004
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Trimark Fund (the "Fund") is a separate series of AIM Investment Funds (the "Trust"). The Trust is organized as 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 consisting of six separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The Fund currently offers multiple classes of shares. 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 commenced operations on November 4, 2003.
The Fund's investment objective is long-term growth of capital. Each company listed in the Schedule of Investments is organized in the United States of America unless otherwise noted.
Under the Trust's organizational documents, the Fund's officers, trustees, employees and agents are indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts.
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 on the basis of prices furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the NASDAQ Official Closing Price ("NOCP") as of the close of the customary trading session on the valuation date or absent a NOCP, at the closing bid price.
Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued
FS-41
by an independent source at the mean between the last bid and ask prices. 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").
Investments in open-end registered investment companies and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in closed-end registered investment companies that trade on an exchange are valued at the last sales price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes 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 specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations having 60 days or less to maturity and commercial paper are valued at amortized cost which approximates market value.
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.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable 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 ordinarily be reflected in the computation of the Fund's net asset value. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current market value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current market value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs, domestic and foreign index futures and exchange-traded funds.
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
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 Subchapter M 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 -- Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder record keeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.
F. REDEMPTION FEES -- The Fund has instituted a 2% redemption fee on certain share classes that is to be retained by the Fund to offset transaction costs and other expenses associated with short-term redemptions and exchanges. The fee, subject to certain exceptions, is imposed on certain redemptions, including exchanges of shares held less than 30 days. The redemption fee is accounted for as an addition to shares of beneficial interest by the Fund and is allocated among the share classes based on the relative net assets of each class.
G. 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 (net of foreign taxes withheld on disposition) 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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the
FS-42
Statement of Operations. Reported net realized foreign currency gains or losses arise from, (i) sales of foreign currencies, (ii) currency gains or losses realized between the trade and settlement dates on securities transactions, and (iii) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.
H. 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.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.85% of the first $1
billion of the Fund's average daily net assets, plus 0.80% of the Fund's average
daily net assets in excess of $1 billion. AIM has contractually agreed to waive
advisory fees and/or reimburse expenses to the extent necessary to limit Total
Annual Operating Expenses (excluding certain items discussed below) of Class A,
Class B, Class C, Class R and Institutional Class shares to 2.25%, 2.90%, 2.90%,
2.40% and 1.90% of average daily net assets, respectively, through October 31,
2005. In determining the advisor's obligation to waive advisory fees and/or
reimburse expenses, the following expenses are not taken into account, and could
cause the Total Annual Fund Operating Expenses to exceed the caps stated above:
(i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv)
extraordinary items (these are expenses that are not anticipated to arise from
the Fund's day-to-day operations), or items designated as such by the Fund's
Board of Trustees; (v) expenses related to a merger or reorganization, as
approved by the Fund's Board of Trustees; and (vi) expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement.
Currently, the only expense offset arrangements from which the Fund benefits are
in the form of credits that the Fund receives from banks where the Fund or its
transfer agent has deposit accounts in which it holds uninvested cash. Those
credits are used to pay certain expenses incurred by the Fund. Further, AIM has
voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of
the advisory fee AIM receives from the affiliated money market funds on
investments by the Fund in such affiliated money market funds. Voluntary fee
waivers or reimbursements may be modified or discontinued at any time upon
consultation with the Board of Trustees without further notice to investors. For
the period November 4, 2003 (date operations commenced) through October 31,
2004, AIM waived fees of $87,385 and reimbursed expenses of $58,745. Under the
terms of a master sub-advisory agreement between AIM and AIM Funds Management
Inc. ("AIM Funds Management"), AIM pays AIM Funds Management 40% of the amount
paid by the Fund to AIM.
For the period November 4, 2003 (date operations commenced) through October 31, 2004, at the request of the Trustees of the Trust, AMVESCAP PLC ("AMVESCAP") agreed to assume $2,639 of expenses incurred by the Fund in connection with matters related to recently settled regulatory actions and investigations concerning market timing activity in the AIM Funds, including legal, audit, shareholder servicing, communication and trustee expenses. These expenses along with the related expense reimbursement, are included in the Statement of Operations.
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 November 4, 2003 (date operations commenced) through October 31, 2004, AIM was paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay AIM Investment Services, Inc. ("AISI") a fee for providing transfer agency and shareholder services to the Fund and reimburse AISI for certain expenses incurred by AISI in the course of providing such services. For the Institutional Class, the transfer agent has contractually agreed to reimburse class specific transfer agent fees and expenses to the extent necessary to limit transfer agent fees to 0.10% of the average net assets. For the period November 4, 2003 (date operations commenced) through October 31, 2004, the Fund paid AISI $21,602 for Class A, Class B, Class C and Class R shares and $6 for Institutional Class shares and reimbursed fees for Class A, Class B, Class C and Class R shares of $14,412 and Institutional Class shares of $3. AISI may make payments to intermediaries to provide omnibus account services, sub-accounting services and/or networking 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 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, Class B, Class C 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, up to 0.25% of the average daily net assets of the Class A, Class B, Class C or Class R shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. 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 Plans, for the period November 4, 2003 (date operations commenced) through October 31, 2004, the Class A, Class B, Class C and Class R shares paid $20,295, $23,509, $21,213 and $25, respectively.
Front-end sales commissions and contingent deferred sales charges ("CDSC") (collectively the "sales charges") are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the period November 4, 2003 (date operations commenced) through October 31, 2004, AIM Distributors advised the Fund that it retained $23,974 in front-end sales commissions from the sale of Class A shares and $0, $1,082, $438 and $0 from Class A, Class B, Class C and Class R shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of AIM, AISI and/or AIM Distributors.
FS-43
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions and (ii) custodian credits which result from periodic overnight cash balances at the custodian. For the period November 4, 2003 (date operations commenced) through October 31, 2004, the Fund received credits in transfer agency fees of $145 and credits in custodian fees of $26 under expense offset arrangements, which resulted in a reduction of the Fund's total expenses of $171.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each Trustee of the Trust who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested.
Current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees that also participate in a retirement plan and receive benefits under such plan.
Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
During the period November 4, 2003 (date operations commenced) through October 31, 2004, the Fund paid legal fees of $2,484 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 5--BORROWINGS
Pursuant to an exemptive order from the SEC, the Fund may participate in an interfund lending facility that AIM has established for temporary borrowings by the AIM Funds. An interfund loan will be made under this facility only if the loan rate (an average of the rate available on bank loans and the rate available on investments in overnight repurchase agreements) is favorable to both the lending fund and the borrowing fund. A loan will be secured by collateral if the Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total assets. To the extent that the loan is required to be secured by collateral, the collateral is marked to market daily to ensure that the market value is at least 102% of the outstanding principal value of the loan.
The Fund is a participant in an uncommitted unsecured revolving credit facility with State Street Bank and Trust Company ("SSB"). The Fund may borrow up to the lesser of (i) $125,000,000, or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the credit facility can borrow on a first come, first served basis. Principal on each loan outstanding shall bear interest at the bid rate quoted by SSB at the time of the request for the loan.
During the period November 4, 2003 (date operations commenced) through October 31, 2004, the Fund did not borrow or lend under the interfund lending facility or borrow under the uncommitted unsecured revolving credit facility.
Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds in the account so the custodian can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank. In either case, the custodian bank will be compensated at an amount equal to the Federal Funds rate plus 100 basis points.
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
There were no ordinary income or long-term capital gain distributions paid during the period November 4, 2003 (date operations commenced) through October 31, 2004.
TAX COMPONENTS OF NET ASSETS:
As of October 31, 2004, the components of net assets on a tax basis were as follows:
2004
---------------------------------------------------------------------------
Unrealized appreciation -- investments $ 64,007
---------------------------------------------------------------------------
Temporary book/tax differences (1,924)
---------------------------------------------------------------------------
Capital loss carryforward (154,130)
---------------------------------------------------------------------------
Shares of beneficial interest 18,266,121
===========================================================================
Total net assets $18,174,074
___________________________________________________________________________
===========================================================================
|
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 losses on wash sales. The tax-basis unrealized appreciation (depreciation) on investments amount includes appreciation (depreciation) on foreign currencies of $(4).
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 trustee deferral of compensation and retirement plan expenses.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
FS-44
The Fund has a capital loss carryforward as of October 31, 2004 which expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
-----------------------------------------------------------------------------
October 31, 2012 $154,130
_____________________________________________________________________________
=============================================================================
|
* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities and money market funds) purchased and sold by the Fund during the period November 4, 2003 (date operations commenced) through October 31, 2004 was $20,522,907 and $3,411,155, respectively.
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS ------------------------------------------------------------------------------- Aggregate unrealized appreciation of investment securities $ 719,045 ------------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (655,034) =============================================================================== Net unrealized appreciation of investment securities $ 64,011 _______________________________________________________________________________ =============================================================================== Cost of investments for tax purposes is $18,153,392. |
NOTE 8--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of foreign currency transactions, non-deductible stock issuance costs and net operating losses, on October 31, 2004, undistributed net investment income (loss) was increased by $81,609, undistributed net realized gain (loss) was increased by $9,226 and shares of beneficial interest decreased by $90,835. This reclassification had no effect on the net assets of the Fund.
FS-45
NOTE 9--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A shares, Class B shares, Class C shares, Class R shares and Institutional Class shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with CDSC. Class R shares and Institutional Class shares are sold at net asset value. Under certain circumstances, Class A shares and Class R shares are subject to CDSC. Generally, Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase.
CHANGES IN SHARES OUTSTANDING(a)
--------------------------------------------------------------------------------------
NOVEMBER 4, 2003
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31, 2004
------------------------
SHARES AMOUNT
--------------------------------------------------------------------------------------
Sold:
Class A 1,037,741 $10,842,516
--------------------------------------------------------------------------------------
Class B 441,749 4,598,409
--------------------------------------------------------------------------------------
Class C 404,000 4,219,660
--------------------------------------------------------------------------------------
Class R(b) 952 10,000
--------------------------------------------------------------------------------------
Institutional Class(b) 951 10,000
======================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 5,961 62,836
--------------------------------------------------------------------------------------
Class B (5,984) (62,836)
======================================================================================
Reacquired:(c)
Class A (103,752) (1,062,574)
--------------------------------------------------------------------------------------
Class B (13,198) (135,970)
--------------------------------------------------------------------------------------
Class C (12,303) (125,085)
======================================================================================
1,756,117 $18,356,956
______________________________________________________________________________________
======================================================================================
|
(a) There is one entity that is a record owner of more than 5% of the
outstanding shares of the Fund and owns 11% of the outstanding shares of the
Fund. AIM Distributors has an agreement with this entity to sell Fund
shares. The Fund, AIM and/or AIM affiliates may make payments to this
entity, which is considered to be related to the Fund, for providing
services to the Fund, AIM and/or AIM Affiliates including but not limited to
services such as, securities brokerage, distribution, third party record
keeping and account servicing. The Trust has no knowledge as to whether all
or any portion of the shares owned of record by this shareholder are also
owned beneficially.
(b) Class R and Institutional Class shares commenced sales on April 30, 2004.
(c) Amount is net of redemption fees of $193, $64, $59 and $0 for Class A, Class
B, Class C and Class R shares for 2004, respectively.
FS-46
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
----------------
NOVEMBER 4, 2003
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2004
--------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a)
================================================================================
Net gains on securities (both realized and unrealized) 0.43
================================================================================
Total from investment operations 0.38
================================================================================
Redemption fees added to shares of beneficial interest 0.00
================================================================================
Net asset value, end of period $10.38
________________________________________________________________________________
================================================================================
Total return(b) 3.80%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $9,757
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.25%(c)
--------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.84%(c)
================================================================================
Ratio of net investment income (loss) to average net assets (0.53)%(c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate(d) 38%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and the returns for
shareholder transactions. 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
$5,846,389.
(d) Not annualized for periods of less than one year.
FS-47
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
----------------
NOVEMBER 4, 2003
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2004
--------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.12)(a)
================================================================================
Net gains on securities (both realized and unrealized) 0.43
================================================================================
Total from investment operations 0.31
================================================================================
Redemption fees added to shares of beneficial interest 0.00
================================================================================
Net asset value, end of period $10.31
________________________________________________________________________________
================================================================================
Total return(b) 3.10%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $4,358
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.90%(c)
--------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 4.49%(c)
================================================================================
Ratio of net investment income (loss) to average net assets (1.18)%(c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate(d) 38%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and the returns for
shareholder transactions. 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
$2,370,339.
(d) Not annualized for periods of less than one year.
FS-48
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
----------------
NOVEMBER 4, 2003
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2004
--------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.12)(a)
================================================================================
Net gains on securities (both realized and unrealized) 0.43
================================================================================
Total from investment operations 0.31
================================================================================
Redemption fees added to shares of beneficial interest 0.00
================================================================================
Net asset value, end of period $10.31
________________________________________________________________________________
================================================================================
Total return(b) 3.10%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $4,040
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.90%(c)
--------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 4.49%(c)
================================================================================
Ratio of net investment income (loss) to average net assets (1.18)%(c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate(d) 38%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and the returns for
shareholder transactions. 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
$2,138,835.
(d) Not annualized for periods of less than one year.
FS-49
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS R
--------------
APRIL 30, 2004
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2004
------------------------------------------------------------------------------
Net asset value, beginning of period $10.51
------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a)
==============================================================================
Net losses on securities (both realized and unrealized) (0.10)
==============================================================================
Total from investment operations (0.14)
==============================================================================
Redemption fees added to shares of beneficial interest 0.00
==============================================================================
Net asset value, end of period $10.37
______________________________________________________________________________
==============================================================================
Total return(b) (1.33)%
______________________________________________________________________________
==============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 10
______________________________________________________________________________
==============================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.40%(c)
------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.99%(c)
==============================================================================
Ratio of net investment income (loss) to average net assets (0.68)%(c)
______________________________________________________________________________
==============================================================================
Portfolio turnover rate(d) 38%
______________________________________________________________________________
==============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and the returns for
shareholder transactions. Not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $9,826.
(d) Not annualized for periods less than one year.
FS-50
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
INSTITUTIONAL CLASS
-------------------
APRIL 30, 2004
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2004
-----------------------------------------------------------------------------------
Net asset value, beginning of period $10.51
-----------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a)
===================================================================================
Net gains on securities (both realized and unrealized) (0.10)
===================================================================================
Total from investment operations (0.11)
===================================================================================
Net asset value, end of period $10.40
___________________________________________________________________________________
===================================================================================
Total return(b) (1.05)%
___________________________________________________________________________________
===================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 10
___________________________________________________________________________________
===================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.90%(c)
-----------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.42%(c)
===================================================================================
Ratio of net investment income (loss) to average net assets (0.18)%(c)
_________________________________________________________________________________ )
===================================================================================
Portfolio turnover rate(d) 38%
___________________________________________________________________________________
===================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and the returns for
shareholder transactions. Not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $9,838.
(d) Not annualized for periods less than one year.
NOTE 11--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note.
The mutual fund industry as a whole is currently subject to regulatory inquiries and litigation related to a wide range of issues. These issues include, among others, market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost securityholders.
As described more fully below, INVESCO Funds Group, Inc. ("IFG"), the former investment advisor to certain AIM Funds, A I M Advisors, Inc. ("AIM"), the Fund's investment advisor, and A I M Distributors, Inc. ("ADI"), the distributor of the retail AIM Funds and a wholly owned subsidiary of AIM, reached final settlements with the Securities and Exchange Commission ("SEC"), the New York Attorney General ("NYAG"), the Colorado Attorney General ("COAG"), the Colorado Division of Securities ("CODS") and the Secretary of State of the State of Georgia to resolve civil enforcement actions and investigations related to market timing activity and related issues in the AIM Funds, including those formerly advised by IFG.
In addition, as described more fully below, IFG and AIM are the subject of a number of ongoing regulatory inquiries and civil lawsuits related to one or more of the issues currently being scrutinized by various Federal and state regulators, including but not limited to those issues described above. Additional regulatory actions and/or civil lawsuits related to the above or other issues may be filed against the AIM Funds, IFG, AIM and/or related entities and individuals in the future. Additional regulatory inquiries related to the above or other issues also may be received by the AIM Funds, IFG, AIM and/or related entities and individuals in the future.
As a result of the matters discussed below, investors in the AIM Funds might react by redeeming their investments. This might require the Funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the Funds.
Settled Enforcement Actions and Investigations Related to Market Timing
On October 8, 2004, AMVESCAP PLC ("AMVESCAP"), the parent company of IFG and AIM, announced that final settlements had been reached with the SEC, the NYAG, the COAG and the Secretary of State of Georgia to resolve civil enforcement actions and investigations related to market timing activity and related issues in the AIM Funds, including those formerly advised by IFG. A final settlement also has been reached with the Colorado Division of Securities ("CODS") with respect to this matter. In their enforcement actions and investigations, these regulators alleged, in substance, that IFG and AIM failed to disclose in the prospectuses for the AIM Funds that they advised and to the independent directors/trustees of such Funds that IFG and AIM had entered into certain arrangements permitting market timing of such Funds, thereby breaching their fiduciary duties to such Funds. As a result of the foregoing, the regulators alleged that IFG, AIM and ADI breached various Federal and state securities, business and consumer protection laws. Under the terms of the settlements, IFG, AIM and ADI consent to the entry of settlement orders or assurances of discontinuance, as applicable, by the regulators containing certain terms, some of which are described below, without admitting or denying any wrongdoing.
FS-51
NOTE 11--LEGAL PROCEEDINGS (CONTINUED)
Under the terms of the settlements, IFG agreed to pay a total of $325 million, of which $110 million is civil penalties. Of the $325 million total payment, half will be paid on or before December 31, 2004 and the remaining half will be paid on or before December 31, 2005. AIM and ADI agreed to pay a total of $50 million, of which $30 million is civil penalties. The entire $50 million payment by AIM and ADI has been paid.
The entire $325 million IFG settlement payment will be available for distribution to the shareholders of those AIM Funds that IFG formerly advised that were harmed by market timing activity, and the entire $50 million settlement payment by AIM and ADI will be available for distribution to the shareholders of those AIM Funds advised by AIM that were harmed by market timing activity, all as to be determined by an independent distribution consultant to be appointed under the settlements. The settlement payments will be distributed in accordance with a methodology to be determined by the independent distribution consultant, in consultation with AIM and the independent trustees of the AIM Funds and acceptable to the staff of the SEC.
Under the settlements with the NYAG and COAG, AIM has agreed to reduce management fees on the AIM Funds by $15 million per year for the next five years, based upon effective fee rates and assets under management as of July 1, 2004, and not to increase certain management fees. IFG will also pay $1.5 million to the COAG to be used for investor education purposes and to reimburse the COAG for actual costs. Finally, IFG and AIM will pay $175,000 to the Secretary of State of Georgia to be used for investor education purposes and to reimburse the Secretary of State for actual costs.
None of the costs of the settlements will be borne by the AIM Funds or by Fund shareholders.
Under the terms of the settlements, AIM will make certain governance reforms, including maintaining an internal controls committee and retaining an independent compliance consultant, a corporate ombudsman and, as stated above, an independent distribution consultant. Also, commencing in 2007 and at least once every other year thereafter, AIM will undergo a compliance review by an independent third party.
In addition, under the terms of the settlements, AIM has undertaken to cause the AIM Funds to operate in accordance with certain governance policies and practices, including retaining a full-time independent senior officer whose duties will include monitoring compliance and managing the process by which proposed management fees to be charged the AIM Funds are negotiated. Also, commencing in 2008 and not less than every fifth calendar year thereafter, the AIM Funds will hold shareholder meetings at which their Boards of Trustees will be elected.
On October 8, 2004, the SEC announced that it had settled a market timing enforcement action against Raymond R. Cunningham, the former president and chief executive officer of IFG and a former member of the board of directors of the AIM Funds formerly advised by IFG. As part of the settlement, the SEC ordered Mr. Cunningham to pay $1 in restitution and civil penalties in the amount of $500,000. In addition, the SEC prohibited Mr. Cunningham from associating with an investment advisor, broker, dealer or investment company for a period of two years and further prohibited him from serving as an officer or director of an investment advisor, broker, dealer or investment company for a period of five years.
On August 31, 2004, the SEC announced that it had settled market timing enforcement actions against Timothy J. Miller, the former chief investment officer and a former portfolio manager for IFG, Thomas A. Kolbe, the former national sales manager of IFG, and Michael D. Legoski, a former assistant vice president in IFG's sales department. As part of the settlements, the SEC ordered Messrs. Miller, Kolbe and Legoski to pay $1 in restitution each and civil penalties in the amounts of $150,000, $150,000 and $40,000, respectively. In addition, the SEC prohibited each of them from associating with an investment advisor or investment company for a period of one year, prohibited Messrs. Miller and Kolbe from serving as an officer or director of an investment advisor or investment company for three years and two years, respectively, and prohibited Mr. Legoski from associating with a broker or dealer for a period of one year.
As referenced by the SEC in the SEC's settlement order, one former officer of ADI and one current officer of AIM (who has taken a voluntary leave of absence) have received regulatory inquiries in the form of subpoenas or other oral or written requests for information and/or documents related to market timing activity in the AIM Funds.
At the direction of the trustees of the AIM Funds, AMVESCAP has agreed to pay all of the expenses incurred by such Funds related to the market timing investigations, including expenses incurred in connection with the regulatory complaints against IFG alleging market timing and the market timing investigations with respect to IFG and AIM.
The payments made in connection with the above-referenced settlements by IFG, AIM and ADI will total approximately $375 million (not including AIM's agreement to reduce management fees on the AIM Funds by $15 million per year for the next five years, based upon effective fee rates and assets under management as of July 1, 2004). The manner in which the settlement payments will be distributed is unknown at the present time and will be determined by an independent distribution consultant to be appointed under the settlements. Therefore, management of AIM and the Fund are unable at the present time to estimate the impact, if any, that the distribution of the settlement amounts may have on the Fund or whether such distribution will have an impact on the Fund's financial statements in the future.
At the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the outcome of the ongoing matters described below may have on AIM, ADI or the Fund.
Ongoing Regulatory Inquiries Concerning IFG and AIM
IFG, certain related entities, certain of their current and former officers and/or certain of the AIM Funds formerly advised by IFG have received regulatory inquiries in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, some of which concern one or more such Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, and investments in securities of other registered investment companies. These regulators include the SEC, the NASD, Inc. ("NASD"), the Florida Department of Financial Services, the Attorney General of the State of West Virginia, the West Virginia Securities Commission and the Bureau of Securities of the State of New Jersey. IFG and certain of these other parties also have received more limited inquiries from the United States Department of Labor ("DOL") and the United States Attorney's Office for the Southern District of New York, some of which concern one or more of the AIM Funds formerly advised by IFG. IFG is providing full cooperation with respect to these inquiries.
AIM, certain related entities, certain of their current and former officers and/or certain of the AIM Funds have received regulatory inquiries in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, some of which concern one or more AIM Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales General of the State of West Virginia, the West Virginia Securities Commission and the Bureau of Securities of the State of New Jersey. IFG and certain of
FS-52
NOTE 11--LEGAL PROCEEDINGS (CONTINUED)
these other parties also have received more limited inquiries from the United States Department of Labor ("DOL") and the United States Attorney's Office for the Southern District of New York, some of which concern one or more of the AIM Funds formerly advised by IFG. IFG is providing full cooperation with respect to these inquiries.
AIM, certain related entities, certain of their current and former officers and/or certain of the AIM Funds have received regulatory inquiries in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, some of which concern one or more AIM Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost securityholders. These regulators include the SEC, the NASD, the Department of Banking for the State of Connecticut, the Attorney General of the State of West Virginia, the West Virginia Securities Commission and the Bureau of Securities of the State of New Jersey. AIM and certain of these other parties also have received more limited inquiries from the SEC, the NASD, the DOL, the Internal Revenue Service, the New York Stock Exchange, the United States Attorney's Office for the Southern District of New York, the United States Attorney's Office for the Central District of California, the United States Attorney's Office for the District of Massachusetts, the Massachusetts Securities Division and the U.S. Postal Inspection Service, some of which concern one or more AIM Funds. AIM is providing full cooperation with respect to these inquiries.
Private Civil Actions Alleging Market Timing
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, certain AIM Funds, IFG, AIM, A I M Management Group Inc. ("AIM Management"), AMVESCAP, certain related entities, certain of their current and former officers and/or certain unrelated third parties) making allegations that are similar in many respects to those in the settled regulatory actions brought by the SEC, the NYAG and the COAG concerning market timing activity in the AIM Funds. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal and state securities laws; (ii) violation of various provisions of ERISA; (iii) breach of fiduciary duty; and/or (iv) breach of contract. These lawsuits were initiated in both Federal and state courts and seek such remedies as compensatory damages; restitution; injunctive relief; disgorgement of management fees; imposition of a constructive trust; removal of certain directors and/or employees; various corrective measures under ERISA; rescission of certain Funds' advisory agreements; interest; and attorneys' and experts' fees.
All lawsuits based on allegations of market timing, late trading, and related issues have been transferred to the United States District Court for the District of Maryland (the "MDL Court") for consolidated or coordinated pre-trial proceedings. Pursuant to an Order of the MDL Court, plaintiffs consolidated their claims for pre-trial purposes into three amended complaints against various AIM- and IFG-related parties: (i) a Consolidated Amended Class Action Complaint purportedly brought on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative Complaint purportedly brought on behalf of the AIM Funds and fund registrants; and (iii) an Amended Class Action Complaint for Violations of the Employee Retirement Income Securities Act purportedly brought on behalf of participants in AMVESCAP's 401(k) plan. Plaintiffs in one of the underlying lawsuits transferred to the MDL Court continue to seek remand of their action to state court.
Private Civil Actions Alleging Improper Use of Fair Value Pricing
Multiple civil class action lawsuits have been filed against various parties
(including, depending on the lawsuit, certain AIM Funds, IFG and/or AIM)
alleging that certain AIM Funds inadequately employed fair value pricing. These
lawsuits allege a variety of theories of recovery, including but not limited to:
(i) violations of various provisions of the Federal securities laws; (ii) common
law breach of duty; and (iii) common law negligence and gross negligence. These
lawsuits have been filed in both Federal and state courts and seek such remedies
as compensatory and punitive damages; interest; and attorneys' fees and costs.
Private Civil Actions Alleging Excessive Advisory and/or Distribution Fees
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, IFG, AIM, INVESCO Institutional (N.A.), Inc., ADI and/or INVESCO Distributors, Inc.) alleging that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale. Certain of these lawsuits also allege that the defendants adopted unlawful distribution plans. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal securities laws; (ii) breach of fiduciary duty; and/or (iii) breach of contract. These lawsuits have been filed in Federal courts and seek such remedies as damages; injunctive relief; rescission of certain Funds' advisory agreements and distribution plans; interest; prospective relief in the form of reduced fees; and attorneys' and experts' fees.
Private Civil Actions Alleging Improper Charging of Distribution Fees on Closed Funds or Share Classes
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, IFG, AIM, ADI and/or certain of the trustees of the AIM Funds) alleging that the defendants breached their fiduciary duties by charging distribution fees while funds and/or specific share classes were closed generally to new investors and/or while other share classes of the same fund were not charged the same distribution fees. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal securities laws; and (ii) breach of fiduciary duty. These lawsuits have been filed in Federal courts and seek such remedies as damages; injunctive relief; and attorneys' and experts' fees.
Private Civil Actions Alleging Improper Mutual Fund Sales Practices and Directed-Brokerage Arrangements
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, AIM Management, IFG, AIM, AIM Investment Services, Inc. and/or certain of the trustees of the AIM Funds) alleging that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively promote the sale of the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal securities laws; (ii) breach of fiduciary duty; and (iii) aiding and abetting a breach of fiduciary duty. These lawsuits have been filed in Federal courts and seek such remedies as compensatory and punitive damages; rescission of certain Funds' advisory agreements and distribution plans and recovery of all fees paid; an accounting of all fund-related fees, commissions and soft dollar payments; restitution of all unlawfully or discriminatorily obtained fees and charges; and attorneys' and experts' fees.
FS-53
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of AIM Trimark Small Companies Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Trimark Small Companies Fund (the "Fund") at October 31, 2004, the results of its operations, the changes in its net assets and the financial highlights for the period November 4, 2003 (date operations commenced) through October 31, 2004, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at October 31, 2004 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP December 20, 2004 Houston, Texas |
FS-54
FINANCIALS
SCHEDULE OF INVESTMENTS
October 31, 2004
MARKET
SHARES VALUE
-----------------------------------------------------------------------
DOMESTIC COMMON STOCKS-70.77%
ADVERTISING-4.41%
ADVO, Inc. 31,900 $ 1,019,205
-----------------------------------------------------------------------
Harte-Hanks, Inc. 25,600 658,944
=======================================================================
1,678,149
=======================================================================
AGRICULTURAL PRODUCTS-2.22%
Delta & Pine Land Co. 32,200 847,504
=======================================================================
AIR FREIGHT & LOGISTICS-7.00%
Dynamex Inc.(a) 56,700 1,173,690
-----------------------------------------------------------------------
Pacer International, Inc.(a) 84,200 1,494,550
=======================================================================
2,668,240
=======================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-2.55%
Hampshire Group, Ltd.(a) 31,800 971,172
=======================================================================
AUTO PARTS & EQUIPMENT-2.19%
Superior Industries International, Inc. 30,600 834,462
=======================================================================
CASINOS & GAMING-1.54%
Argosy Gaming Co.(a) 14,800 585,932
=======================================================================
COMMUNICATIONS EQUIPMENT-4.51%
SpectraLink Corp. 140,700 1,716,540
=======================================================================
DATA PROCESSING & OUTSOURCED SERVICES-3.16%
Sabre Holdings Corp.-Class A 56,000 1,204,560
=======================================================================
DIVERSIFIED COMMERCIAL SERVICES-4.93%
FTI Consulting, Inc.(a) 68,600 1,286,936
-----------------------------------------------------------------------
Learning Tree International, Inc.(a) 42,900 591,162
=======================================================================
1,878,098
=======================================================================
HEALTH CARE EQUIPMENT-1.46%
DENTSPLY International Inc. 10,700 556,507
=======================================================================
HEALTH CARE FACILITIES-2.54%
Alderwoods Group, Inc.(a) 95,400 966,402
=======================================================================
HEALTH CARE SUPPLIES-10.50%
Cooper Cos., Inc. (The) 13,000 914,550
-----------------------------------------------------------------------
Inverness Medical Innovations, Inc.(a) 19,200 397,056
-----------------------------------------------------------------------
Ocular Sciences, Inc.(a) 8,300 405,455
-----------------------------------------------------------------------
Sola International Inc.(a) 88,900 1,705,102
-----------------------------------------------------------------------
Sybron Dental Specialties, Inc.(a) 17,800 579,746
=======================================================================
4,001,909
=======================================================================
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
LEISURE PRODUCTS-6.16%
Oakley, Inc. 82,800 $ 1,051,560
-----------------------------------------------------------------------
Polaris Industries Inc. 21,800 1,293,830
=======================================================================
2,345,390
=======================================================================
OFFICE SERVICES & SUPPLIES-2.21%
HNI Corp. 20,800 840,320
=======================================================================
PAPER PACKAGING-1.43%
Longview Fibre Co. 35,400 545,160
=======================================================================
PHARMACEUTICALS-5.14%
Endo Pharmaceuticals Holdings Inc.(a) 89,900 1,959,820
=======================================================================
REGIONAL BANKS-1.98%
Alabama National BanCorp. 11,800 754,020
=======================================================================
RESTAURANTS-1.93%
IHOP Corp. 19,200 735,360
=======================================================================
SPECIALTY CHEMICALS-2.38%
MacDermid, Inc. 28,700 905,772
=======================================================================
SPECIALTY STORES-2.53%
Lithia Motors, Inc.-Class A 42,600 967,155
=======================================================================
Total Domestic Common Stocks (Cost
$24,676,239) 26,962,472
=======================================================================
FOREIGN STOCKS-13.91%
CANADA-13.91%
Cymat Corp. (Aluminum)(a) 655,100 290,462
-----------------------------------------------------------------------
FirstService Corp. (Diversified Commercial
Services)(a) 74,700 2,024,058
-----------------------------------------------------------------------
Husky Injection Molding Systems Ltd.
(Industrial Machinery)(a) 234,300 871,483
-----------------------------------------------------------------------
Sleeman Breweries Ltd. (Brewers)(a) 94,700 1,179,570
-----------------------------------------------------------------------
Vincor International Inc. (Distillers &
Vintners)(a) 36,200 933,609
=======================================================================
Total Foreign Stocks (Cost $4,765,203) 5,299,182
=======================================================================
PRINCIPAL
AMOUNT
U.S. GOVERNMENT AGENCY SECURITIES-12.98%
FEDERAL HOME LOAN BANK-12.98%
Unsec. Disc. Notes,
1.20%, 11/01/04 (Cost $4,944,000)(b) $4,944,000 4,944,000
=======================================================================
TOTAL INVESTMENTS-97.66% (Cost $34,385,442) 37,205,654
=======================================================================
OTHER ASSETS LESS LIABILITIES-2.34% 891,899
=======================================================================
NET ASSETS-100.00% $38,097,553
_______________________________________________________________________
=======================================================================
|
Investment Abbreviations:
Disc. - Discounted Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security traded on a discount basis. Unless otherwise indicated, the
interest rate shown represents the discount rate at the time of purchase by
the Fund.
See accompanying notes which are an integral part of the financial statements.
FS-55
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2004
ASSETS:
Investments, at market value (cost
$34,385,442) $37,205,654
-----------------------------------------------------------
Receivables for:
Investments sold 1,262,699
-----------------------------------------------------------
Fund shares sold 891,726
-----------------------------------------------------------
Dividends 16,229
-----------------------------------------------------------
Amount due from advisor 30,666
-----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 1,882
-----------------------------------------------------------
Other assets 56,041
===========================================================
Total assets 39,464,897
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 1,157,342
-----------------------------------------------------------
Fund shares reacquired 139,779
-----------------------------------------------------------
Dividends 2
-----------------------------------------------------------
Trustee deferred compensation and retirement
plans 1,881
-----------------------------------------------------------
Accrued distribution fees 12,120
-----------------------------------------------------------
Accrued trustees' fees 1,047
-----------------------------------------------------------
Accrued transfer agent fees 5,464
-----------------------------------------------------------
Accrued operating expenses 49,709
===========================================================
Total liabilities 1,367,344
===========================================================
Net assets applicable to shares outstanding $38,097,553
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $34,954,637
-----------------------------------------------------------
Undistributed net investment income (loss) (1,922)
-----------------------------------------------------------
Undistributed net realized gain from
investment securities and foreign currencies 326,675
-----------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 2,818,163
===========================================================
$38,097,553
___________________________________________________________
===========================================================
NET ASSETS:
Class A $21,861,627
___________________________________________________________
===========================================================
Class B $ 6,557,957
___________________________________________________________
===========================================================
Class C $ 4,550,153
___________________________________________________________
===========================================================
Class R $ 34,005
___________________________________________________________
===========================================================
Institutional Class $ 5,093,811
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 1,836,967
___________________________________________________________
===========================================================
Class B 554,086
___________________________________________________________
===========================================================
Class C 384,605
___________________________________________________________
===========================================================
Class R 2,860
___________________________________________________________
===========================================================
Institutional Class 427,200
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 11.90
-----------------------------------------------------------
Offering price per share:
(Net asset value of $11.90 divided
by 94.50%) $ 12.59
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per share $ 11.84
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per share $ 11.83
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per share $ 11.89
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per share $ 11.92
___________________________________________________________
===========================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-56
STATEMENT OF OPERATIONS
For the period November 4, 2003 (Date operations commenced) through October 31, 2004
INVESTMENT INCOME:
Dividends $ 68,637
------------------------------------------------------------------------
Interest 23,014
========================================================================
Total investment income 91,651
========================================================================
EXPENSES:
Advisory fees 93,787
------------------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------------------
Custodian fees 16,346
------------------------------------------------------------------------
Distribution fees:
Class A 21,405
------------------------------------------------------------------------
Class B 23,038
------------------------------------------------------------------------
Class C 15,195
------------------------------------------------------------------------
Class R 48
------------------------------------------------------------------------
Transfer agent fees -- Class A, B, C, and R 8,875
------------------------------------------------------------------------
Transfer agent fees -- Institutional Class 383
------------------------------------------------------------------------
Trustees' fees and retirement benefits 11,871
------------------------------------------------------------------------
Registration and filing fees 58,210
------------------------------------------------------------------------
Professional fees 57,821
------------------------------------------------------------------------
Other 23,385
========================================================================
Total expenses 380,364
========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (138,804)
========================================================================
Net expenses 241,560
========================================================================
Net investment income (loss) (149,909)
========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities 475,450
------------------------------------------------------------------------
Foreign currencies (17,343)
========================================================================
458,107
========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities 2,820,212
------------------------------------------------------------------------
Foreign currencies (2,049)
========================================================================
2,818,163
========================================================================
Net gain from investment securities and foreign currencies 3,276,270
========================================================================
Net increase in net assets resulting from operations $3,126,361
________________________________________________________________________
========================================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-57
STATEMENT OF CHANGES IN NET ASSETS
For the period November 4, 2003 (Date operations commenced) through October 31, 2004
OCTOBER 31,
2004
---------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (149,909)
---------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currencies 458,107
---------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 2,818,163
===========================================================================
Net increase in net assets resulting from operations 3,126,361
===========================================================================
Share transactions-net:
Class A 20,158,818
---------------------------------------------------------------------------
Class B 5,987,958
---------------------------------------------------------------------------
Class C 4,134,003
---------------------------------------------------------------------------
Class R 30,917
---------------------------------------------------------------------------
Institutional Class 4,659,496
===========================================================================
Net increase in net assets resulting from share
transactions 34,971,192
===========================================================================
Net increase in net assets 38,097,553
===========================================================================
NET ASSETS:
Beginning of period --
===========================================================================
End of period (including undistributed net investment
income (loss) of $(1,922)). $38,097,553
___________________________________________________________________________
===========================================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-58
NOTES TO FINANCIAL STATEMENTS
October 31, 2004
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Trimark Small Companies Fund (the "Fund") is a separate series of AIM Investment Funds (the "Trust"). The Trust is organized as 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 consisting of six separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The Fund currently offers multiple classes of shares. 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 commenced operations on November 4, 2003.
The Fund's investment objective is long-term growth of capital. Each company listed in the Schedule of Investments is organized in the United States of America unless otherwise noted.
Under the Trust's organizational documents, the Fund's officers, trustees, employees and agents are indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts.
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 on the basis of prices furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the NASDAQ Official Closing Price ("NOCP") as of the close of the customary trading session on the valuation date or absent a NOCP, at the closing bid price.
Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. 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").
Investments in open-end registered investment companies and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in closed-end registered investment companies that trade on an exchange are valued at the last sales price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes 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 specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations having 60 days or less to maturity and commercial paper are valued at amortized cost which approximates market value.
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.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable 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 ordinarily be reflected in the computation of the Fund's net asset value. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current market value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current market value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs, domestic and foreign index futures and exchange-traded funds.
FS-59
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor. The Fund allocates income
and realized and unrealized capital gains and losses to a class based on
the relative net assets of each class.
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 Subchapter M 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 -- Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.
F. FOREIGN CURRENCY TRANSLATIONS -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) 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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from, (i) sales of foreign currencies, (ii) currency gains or losses realized between the trade and settlement dates on securities transactions, and (iii) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.
G. 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.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.85% of the first $1
billion of the Fund's average daily net assets, plus 0.80% of the Fund's average
daily net assets in excess of $1 billion. AIM has contractually agreed to waive
advisory fees and/or reimburse expenses to the extent necessary to limit Total
Annual Operating Expenses (excluding certain items discussed below) of Class A,
Class B, Class C, Class R and Institutional Class shares to 2.00%, 2.65%, 2.65%,
2.15% and 1.65% of average daily net assets, respectively, through October 31,
2005. In determining the advisor's obligation to waive advisory fees and/or
reimburse expenses, the following expenses are not taken into account, and could
cause the Total Annual Fund Operating Expenses to exceed the caps stated above:
(i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv)
extraordinary items (these are expenses that are not anticipated to arise from
the Fund's day-to-day operations), or items designated as such by the Fund's
Board of Trustees; (v) expenses related to a merger or reorganization, as
approved by the Fund's Board of Trustees; and (vi) expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement.
Currently, the only expense offset arrangements from which the Fund benefits are
in the form of credits that the Fund receives from banks where the Fund or its
transfer agent has deposit accounts in which it holds uninvested cash. Those
credits are used to pay certain expenses incurred by the Fund. Further, AIM has
voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of
the advisory fee AIM
FS-60
receives from the affiliated money market funds on investments by the Fund in such affiliated money market funds. Voluntary fee waivers or reimbursements may be modified or discontinued at any time upon consultation with the Board of Trustees without further notice to investors. For the period November 4, 2003 (date operations commenced) through October 31, 2004, AIM waived fees of $93,787 and reimbursed expenses of $42,443. Under the terms of a master sub-advisory agreement between AIM and AIM Funds Management Inc. ("AIM Funds Management"), AIM pays AIM Funds Management 40% of the amount paid by the Fund to AIM.
For the period November 4, 2003 (date operations commenced) through October 31, 2004, at the request of the Trustees of the Trust, AMVESCAP PLC ("AMVESCAP") agreed to assume $2,300 of expenses incurred by the Fund in connection with matters related to recently settled regulatory actions and investigations concerning market timing activity in the AIM Funds, including legal, audit, shareholder servicing, communication and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations.
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 November 4, 2003 (date operations commenced) through October 31, 2004, AIM was paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay AIM Investment Services, Inc. ("AISI") a fee for providing transfer agency and shareholder services to the Fund and reimburse AISI for certain expenses incurred by AISI in the course of providing such services. For the Institutional Class, the transfer agent has contractually agreed to reimburse class specific transfer agent fees and expenses to the extent necessary to limit transfer agent fees to 0.10% of the average net assets. For the period November 4, 2003 (date operations commenced) through October 31, 2004, the Fund paid AISI $8,875 for Class A, Class B, Class C and Class R shares and $383 for Institutional Class shares. AISI may make payments to intermediaries to provide omnibus account services, sub-accounting services and/or networking 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 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, Class B, Class C 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, up to 0.25% of the average daily net assets of the Class A, Class B, Class C or Class R shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. 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 Plans, for the period November 4, 2003 (date commenced) through October 31, 2004, the Class A, Class B, Class C and Class R shares paid $21,405, $23,038, $15,195 and $48, respectively.
Front-end sales commissions and contingent deferred sales charges ("CDSC") (collectively the "sales charges") are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the period November 4, 2003 (date operations commenced) through October 31, 2004, AIM Distributors advised the Fund that it retained $23,572 in front-end sales commissions from the sale of Class A shares and $192, $448, $166 and $0 from Class A, Class B, Class C and Class R shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of AIM, AISI and/or AIM Distributors.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions and (ii) custodian credits which result from periodic overnight cash balances at the custodian. For the period November 4, 2003 (date operations commenced) through October 31, 2004, the Fund received credits in transfer agency fees of $156 and credits in custodian fees of $118 under expense offset arrangements, which resulted in a reduction of the Fund's total expenses of $274.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each Trustee of the Trust who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested.
Current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees that also participate in a retirement plan and receive benefits under such plan.
Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
During the period November 4, 2003 (date operations commenced) through October 31, 2004, the Fund paid legal fees of $2,481 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 5--BORROWINGS
Pursuant to an exemptive order from the SEC, the Fund may participate in an interfund lending facility that AIM has established for temporary borrowings by the AIM Funds. An interfund loan will be made under this facility only if the loan rate (an average of the rate available on bank loans and the rate available on investments in overnight repurchase agreements) is favorable to both the lending fund and the borrowing fund. A loan will be secured by
FS-61
collateral if the Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total assets. To the extent that the loan is required to be secured by collateral, the collateral is marked to market daily to ensure that the market value is at least 102% of the outstanding principal value of the loan.
The Fund is a participant in an uncommitted unsecured revolving credit facility with State Street Bank and Trust Company ("SSB"). The Fund may borrow up to the lesser of (i) $125,000,000, or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the credit facility can borrow on a first come, first served basis. Principal on each loan outstanding shall bear interest at the bid rate quoted by SSB at the time of the request for the loan.
During the period November 4, 2003 (date operations commenced) through October 31, 2004, the Fund did not borrow or lend under the interfund lending facility or borrow under the uncommitted unsecured revolving credit facility.
Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds in the account so the custodian can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank. In either case, the custodian bank will be compensated at an amount equal to the Federal Funds rate plus 100 basis points.
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
There were no ordinary income or long-term capital gain distributions paid during the period November 4, 2003 (date operations commenced) through October 31, 2004.
TAX COMPONENTS OF NET ASSETS:
As of October 31, 2004, the components of net assets on a tax basis were as follows:
2004
---------------------------------------------------------------------------
Undistributed short-term gain $ 326,675
---------------------------------------------------------------------------
Unrealized appreciation -- investments 2,818,163
---------------------------------------------------------------------------
Temporary book/tax differences (1,922)
---------------------------------------------------------------------------
Shares of beneficial interest 34,954,637
===========================================================================
Total net assets $38,097,553
___________________________________________________________________________
===========================================================================
|
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 tax-basis unrealized appreciation on investments amount includes appreciation (depreciation) on foreign currencies of $(2,049).
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 trustee deferral of compensation.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund has no capital loss carryforward as of October 31, 2004.
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities and money market funds) purchased and sold by the Fund during the period November 4, 2003 (date operations commenced) through October 31, 2004 was $31,839,503 and $2,875,778, respectively.
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS ------------------------------------------------------------------------------ Aggregate unrealized appreciation of investment securities $3,143,546 ------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (323,334) ============================================================================== Net unrealized appreciation of investment securities $2,820,212 ______________________________________________________________________________ ============================================================================== Cost of investments is the same for tax and financial statement purposes. |
NOTE 8--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of foreign currency transactions, nondeductible stock issuance costs and net operating losses, on October 31, 2004, undistributed net investment income was increased by $147,987, undistributed net realized gain (loss) was decreased by $131,432 and shares of beneficial interest decreased by $16,555. This reclassification had no effect on the net assets of the Fund.
FS-62
NOTE 9--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A shares, Class B shares, Class C shares, Class R shares and Institutional Class shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with CDSC. Class R shares and Institutional Class shares are sold at net asset value. Under certain circumstances, Class A shares and Class R shares are subject to CDSC. Generally, Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase.
CHANGES IN SHARES OUTSTANDING
--------------------------------------------------------------------------------------
NOVEMBER 4, 2003
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31, 2004
------------------------
SHARES AMOUNT
--------------------------------------------------------------------------------------
Sold:
Class A 2,059,644 $22,545,293
--------------------------------------------------------------------------------------
Class B 593,305 6,419,319
--------------------------------------------------------------------------------------
Class C 420,237 4,528,577
--------------------------------------------------------------------------------------
Class R(a) 2,956 32,022
--------------------------------------------------------------------------------------
Institutional Class(a) 431,390 4,705,451
======================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 8,450 94,770
--------------------------------------------------------------------------------------
Class B (8,485) (94,770)
======================================================================================
Reacquired:
Class A (231,127) (2,481,245)
--------------------------------------------------------------------------------------
Class B (30,734) (336,591)
--------------------------------------------------------------------------------------
Class C (35,632) (394,574)
--------------------------------------------------------------------------------------
Class R(a) (96) (1,105)
--------------------------------------------------------------------------------------
Institutional Class(a) (4,190) (45,955)
======================================================================================
3,205,718 $34,971,192
______________________________________________________________________________________
======================================================================================
|
(a) Class R shares and Institutional Class shares commenced sales on April 30, 2004.
FS-63
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the period indicated.
CLASS A
----------------
NOVEMBER 4, 2003
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2004
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)
================================================================================
Net gains on securities (both realized and unrealized) 1.94
================================================================================
Total from investment operations 1.90
================================================================================
Net asset value, end of period $ 11.90
________________________________________________________________________________
================================================================================
Total return(a) 19.00%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $21,862
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.01%(b)
--------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.26%(b)
================================================================================
Ratio of net investment income (loss) to average net assets (1.17)%(b)
________________________________________________________________________________
================================================================================
Portfolio turnover rate(c) 29%
________________________________________________________________________________
================================================================================
|
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for a period less than one year.
(b) Ratios are annualized and based on average daily net assets of
$6,166,407.
(c) Not annualized for a period less than one year.
CLASS B
----------------
NOVEMBER 4, 2003
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2004
--------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08)
================================================================================
Net gains on securities (both realized and unrealized) 1.92
================================================================================
Total from investment operations 1.84
================================================================================
Net asset value, end of period $11.84
________________________________________________________________________________
================================================================================
Total return(a) 18.40%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $6,558
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.66%(b)
--------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.91%(b)
================================================================================
Ratio of net investment income (loss) to average net assets (1.82)%(b)
________________________________________________________________________________
================================================================================
Portfolio turnover rate(c) 29%
________________________________________________________________________________
================================================================================
|
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for a period less than one year.
(b) Ratios are annualized and based on average daily net assets of
$2,322,823.
(c) Not annualized for a period less than one year.
FS-64
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
----------------
NOVEMBER 4, 2003
(DATE OPERATIONS
COMMENCED) TO
OCTOBER 31,
2004
--------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)
================================================================================
Net gains on securities (both realized and unrealized) 1.90
================================================================================
Total from investment operations 1.83
================================================================================
Net asset value, end of period $11.83
________________________________________________________________________________
================================================================================
Total return(a) 18.30%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $4,550
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.66%(b)
--------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.91%(b)
================================================================================
Ratio of net investment income (loss) to average net assets (1.82)%(b)
________________________________________________________________________________
================================================================================
Portfolio turnover rate(c) 29%
________________________________________________________________________________
================================================================================
|
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for a period less than one year.
(b) Ratios are annualized and based on average daily net assets of
$1,532,060.
(c) Not annualized for a period less than one year.
CLASS R
----------------
APRIL 30, 2004
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2004
--------------------------------------------------------------------------------
Net asset value, beginning of period $10.56
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)
================================================================================
Net gains on securities (both realized and unrealized) 1.37
================================================================================
Total from investment operations 1.33
================================================================================
Net asset value, end of period $11.89
________________________________________________________________________________
================================================================================
Total return(a) 12.59%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 34
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.16%(b)
--------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.41%(b)
================================================================================
Ratio of net investment income (loss) to average net assets (1.32)%(b)
________________________________________________________________________________
================================================================================
Portfolio turnover rate(c) 29%
________________________________________________________________________________
================================================================================
|
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net value for
financial reporting purposes and the returns based upon those net values
may differ from the net asset value and returns for shareholder
transactions. Not annualized for a period less than one year.
(b) Ratios are annualized and based on average daily net assets of $18,853.
(c) Not annualized for a period of less than one year.
FS-65
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
INSTITUTIONAL CLASS
-------------------
APRIL 30, 2004
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2004
-----------------------------------------------------------------------------------
Net asset value, beginning of period $10.56
-----------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)
===================================================================================
Net gains on securities (both realized and unrealized) 1.38
===================================================================================
Total from investment operations 1.36
===================================================================================
Net asset value, end of period $11.92
___________________________________________________________________________________
===================================================================================
Total return(a) 12.88%
___________________________________________________________________________________
===================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $5,094
___________________________________________________________________________________
===================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.60%(b)
-----------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.86%(b)
===================================================================================
Ratio of net investment income (loss) to average net assets (0.77)%(b)
___________________________________________________________________________________
===================================================================================
Portfolio turnover rate(c) 29%
___________________________________________________________________________________
===================================================================================
|
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Not annualized for a period less than one
year.
(b) Ratios are annualized and based on average daily net assets of
$2,146,788.
(c) Not annualized for a period of less than one year.
NOTE 11--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note.
The mutual fund industry as a whole is currently subject to regulatory inquiries and litigation related to a wide range of issues. These issues include, among others, market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost securityholders.
As described more fully below, INVESCO Funds Group, Inc. ("IFG"), the former investment advisor to certain AIM Funds, A I M Advisors, Inc. ("AIM"), the Fund's investment advisor, and A I M Distributors, Inc. ("ADI"), the distributor of the retail AIM Funds and a wholly owned subsidiary of AIM, reached final settlements with the Securities and Exchange Commission ("SEC"), the New York Attorney General ("NYAG"), the Colorado Attorney General ("COAG"), the Colorado Division of Securities ("CODS") and the Secretary of State of the State of Georgia to resolve civil enforcement actions and investigations related to market timing activity and related issues in the AIM Funds, including those formerly advised by IFG.
In addition, as described more fully below, IFG and AIM are the subject of a number of ongoing regulatory inquiries and civil lawsuits related to one or more of the issues currently being scrutinized by various Federal and state regulators, including but not limited to those issues described above. Additional regulatory actions and/or civil lawsuits related to the above or other issues may be filed against the AIM Funds, IFG, AIM and/or related entities and individuals in the future. Additional regulatory inquiries related to the above or other issues also may be received by the AIM Funds, IFG, AIM and/or related entities and individuals in the future.
As a result of the matters discussed below, investors in the AIM Funds might react by redeeming their investments. This might require the Funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the Funds.
Settled Enforcement Actions and Investigations Related to Market Timing
On October 8, 2004, AMVESCAP PLC ("AMVESCAP"), the parent company of IFG and AIM, announced that final settlements had been reached with the SEC, the NYAG, the COAG and the Secretary of State of Georgia to resolve civil enforcement actions and investigations related to market timing activity and related issues in the AIM Funds, including those formerly advised by IFG. A final settlement also has been reached with the Colorado Division of Securities ("CODS") with respect to this matter. In their enforcement actions and investigations, these regulators alleged, in substance, that IFG and AIM failed to disclose in the prospectuses for the AIM Funds that they advised and to the independent directors/trustees of such Funds that IFG and AIM had entered into certain arrangements permitting market timing of such Funds, thereby breaching their fiduciary duties to such Funds. As a result of the foregoing, the regulators alleged that IFG, AIM and ADI breached various Federal and state securities, business and consumer protection laws. Under the terms of the
FS-66
NOTE 11--LEGAL PROCEEDINGS (CONTINUED)
settlements, IFG, AIM and ADI consent to the entry of settlement orders or assurances of discontinuance, as applicable, by the regulators containing certain terms, some of which are described below, without admitting or denying any wrongdoing.
Under the terms of the settlements, IFG agreed to pay a total of $325 million, of which $110 million is civil penalties. Of the $325 million total payment, half will be paid on or before December 31, 2004 and the remaining half will be paid on or before December 31, 2005. AIM and ADI agreed to pay a total of $50 million, of which $30 million is civil penalties. The entire $50 million payment by AIM and ADI has been paid.
The entire $325 million IFG settlement payment will be available for distribution to the shareholders of those AIM Funds that IFG formerly advised that were harmed by market timing activity, and the entire $50 million settlement payment by AIM and ADI will be available for distribution to the shareholders of those AIM Funds advised by AIM that were harmed by market timing activity, all as to be determined by an independent distribution consultant to be appointed under the settlements. The settlement payments will be distributed in accordance with a methodology to be determined by the independent distribution consultant, in consultation with AIM and the independent trustees of the AIM Funds and acceptable to the staff of the SEC.
Under the settlements with the NYAG and COAG, AIM has agreed to reduce management fees on the AIM Funds by $15 million per year for the next five years, based upon effective fee rates and assets under management as of July 1, 2004, and not to increase certain management fees. IFG will also pay $1.5 million to the COAG to be used for investor education purposes and to reimburse the COAG for actual costs. Finally, IFG and AIM will pay $175,000 to the Secretary of State of Georgia to be used for investor education purposes and to reimburse the Secretary of State for actual costs.
None of the costs of the settlements will be borne by the AIM Funds or by Fund shareholders.
Under the terms of the settlements, AIM will make certain governance reforms, including maintaining an internal controls committee and retaining an independent compliance consultant, a corporate ombudsman and, as stated above, an independent distribution consultant. Also, commencing in 2007 and at least once every other year thereafter, AIM will undergo a compliance review by an independent third party.
In addition, under the terms of the settlements, AIM has undertaken to cause the AIM Funds to operate in accordance with certain governance policies and practices, including retaining a full-time independent senior officer whose duties will include monitoring compliance and managing the process by which proposed management fees to be charged the AIM Funds are negotiated. Also, commencing in 2008 and not less than every fifth calendar year thereafter, the AIM Funds will hold shareholder meetings at which their Boards of Trustees will be elected.
On October 8, 2004, the SEC announced that it had settled a market timing enforcement action against Raymond R. Cunningham, the former president and chief executive officer of IFG and a former member of the board of directors of the AIM Funds formerly advised by IFG. As part of the settlement, the SEC ordered Mr. Cunningham to pay $1 in restitution and civil penalties in the amount of $500,000. In addition, the SEC prohibited Mr. Cunningham from associating with an investment advisor, broker, dealer or investment company for a period of two years and further prohibited him from serving as an officer or director of an investment advisor, broker, dealer or investment company for a period of five years.
On August 31, 2004, the SEC announced that it had settled market timing enforcement actions against Timothy J. Miller, the former chief investment officer and a former portfolio manager for IFG, Thomas A. Kolbe, the former national sales manager of IFG, and Michael D. Legoski, a former assistant vice president in IFG's sales department. As part of the settlements, the SEC ordered Messrs. Miller, Kolbe and Legoski to pay $1 in restitution each and civil penalties in the amounts of $150,000, $150,000 and $40,000, respectively. In addition, the SEC prohibited each of them from associating with an investment advisor or investment company for a period of one year, prohibited Messrs. Miller and Kolbe from serving as an officer or director of an investment advisor or investment company for three years and two years, respectively, and prohibited Mr. Legoski from associating with a broker or dealer for a period of one year.
As referenced by the SEC in the SEC's settlement order, one former officer of ADI and one current officer of AIM (who has taken a voluntary leave of absence) have received regulatory inquiries in the form of subpoenas or other oral or written requests for information and/or documents related to market timing activity in the AIM Funds.
At the request of the trustees of the AIM Funds, AMVESCAP has agreed to pay all of the expenses incurred by such Funds related to the market timing investigations, including expenses incurred in connection with the regulatory complaints against IFG alleging market timing and the market timing investigations with respect to IFG and AIM.
The payments made in connection with the above-referenced settlements by IFG, AIM and ADI will total approximately $375 million (not including AIM's agreement to reduce management fees on the AIM Funds by $15 million per year for the next five years, based upon effective fee rates and assets under management as of July 1, 2004). The manner in which the settlement payments will be distributed is unknown at the present time and will be determined by an independent distribution consultant to be appointed under the settlement agreements. Therefore, management of AIM and the Fund are unable at the present time to estimate the impact, if any, that the distribution of the settlement amounts may have on the Fund or whether such distribution will have an impact on the Fund's financial statements in the future.
At the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the outcome of the ongoing matters described below may have on AIM, ADI or the Fund.
Ongoing Regulatory Inquiries Concerning IFG and AIM
IFG, certain related entities, certain of their current and former officers and/or certain of the AIM Funds formerly advised by IFG have received regulatory inquiries in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, some of which concern one or more such Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, and investments in securities of other registered investment companies. These regulators include the SEC, the NASD, Inc. ("NASD"), the Florida Department of Financial Services, the Attorney
FS-67
NOTE 11--LEGAL PROCEEDINGS (CONTINUED)
General of the State of West Virginia, the West Virginia Securities Commission and the Bureau of Securities of the State of New Jersey. IFG and certain of these other parties also have received more limited inquiries from the United States Department of Labor ("DOL") and the United States Attorney's Office for the Southern District of New York, some of which concern one or more of the AIM Funds formerly advised by IFG. IFG is providing full cooperation with respect to these inquiries.
AIM, certain related entities, certain of their current and former officers and/or certain of the AIM Funds have received regulatory inquiries in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, some of which concern one or more AIM Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost securityholders. These regulators include the SEC, the NASD, the Department of Banking for the State of Connecticut, the Attorney General of the State of West Virginia, the West Virginia Securities Commission and the Bureau of Securities of the State of New Jersey. AIM and certain of these other parties also have received more limited inquiries from the SEC, the NASD, the DOL, the Internal Revenue Service, the New York Stock Exchange, the United States Attorney's Office for the Southern District of New York, the United States Attorney's Office for the Central District of California, the United States Attorney's Office for the District of Massachusetts, the Massachusetts Securities Division and the U.S. Postal Inspection Service, some of which concern one or more AIM Funds. AIM is providing full cooperation with respect to these inquiries.
Private Civil Actions Alleging Market Timing
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, certain AIM Funds, IFG, AIM, A I M Management Group Inc. ("AIM Management"), AMVESCAP, certain related entities, certain of their current and former officers and/or certain unrelated third parties) making allegations that are similar in many respects to those in the settled regulatory actions brought by the SEC, the NYAG and the COAG concerning market timing activity in the AIM Funds. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal and state securities laws; (ii) violation of various provisions of ERISA; (iii) breach of fiduciary duty; and/or (iv) breach of contract. These lawsuits were initiated in both Federal and state courts and seek such remedies as compensatory damages; restitution; injunctive relief; disgorgement of management fees; imposition of a constructive trust; removal of certain directors and/or employees; various corrective measures under ERISA; rescission of certain Funds' advisory agreements; interest; and attorneys' and experts' fees.
All lawsuits based on allegations of market timing, late trading, and related issues have been transferred to the United States District Court for the District of Maryland (the "MDL Court") for consolidated or coordinated pre-trial proceedings. Pursuant to an Order of the MDL Court, plaintiffs consolidated their claims for pre-trial purposes into three amended complaints against various AIM- and IFG-related parties: (i) a Consolidated Amended Class Action Complaint purportedly brought on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative Complaint purportedly brought on behalf of the AIM Funds and fund registrants; and (iii) an Amended Class Action Complaint for Violations of the Employee Retirement Income Securities Act purportedly brought on behalf of participants in AMVESCAP's 401(k) plan. Plaintiffs in one of the underlying lawsuits transferred to the MDL Court continue to seek remand of their action to state court.
Private Civil Actions Alleging Improper Use of Fair Value Pricing
Multiple civil class action lawsuits have been filed against various parties
(including, depending on the lawsuit, certain AIM Funds, IFG and/or AIM)
alleging that certain AIM Funds inadequately employed fair value pricing. These
lawsuits allege a variety of theories of recovery, including but not limited to:
(i) violations of various provisions of the Federal securities laws; (ii) common
law breach of duty; and (iii) common law negligence and gross negligence. These
lawsuits have been filed in both Federal and state courts and seek such remedies
as compensatory and punitive damages; interest; and attorneys' fees and costs.
Private Civil Actions Alleging Excessive Advisory and/or Distribution Fees
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, IFG, AIM, INVESCO Institutional (N.A.), Inc., ADI and/or INVESCO Distributors, Inc.) alleging that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale. Certain of these lawsuits also allege that the defendants adopted unlawful distribution plans. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal securities laws; (ii) breach of fiduciary duty; and/or (iii) breach of contract. These lawsuits have been filed in Federal courts and seek such remedies as damages; injunctive relief; rescission of certain Funds' advisory agreements and distribution plans; interest; prospective relief in the form of reduced fees; and attorneys' and experts' fees.
Private Civil Actions Alleging Improper Charging of Distribution Fees on Closed Funds or Share Classes
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, IFG, AIM, ADI and/or certain of the trustees of the AIM Funds) alleging that the defendants breached their fiduciary duties by charging distribution fees while funds and/or specific share classes were closed generally to new investors and/or while other share classes of the same fund were not charged the same distribution fees. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal securities laws; and (ii) breach of fiduciary duty. These lawsuits have been filed in Federal courts and seek such remedies as damages; injunctive relief; and attorneys' and experts' fees.
FS-68
NOTE 11--LEGAL PROCEEDINGS (CONTINUED)
Private Civil Actions Alleging Improper Mutual Fund Sales Practices and Directed-Brokerage Arrangements
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, AIM Management, IFG, AIM, AIM Investment Services, Inc. and/or certain of the trustees of the AIM Funds) alleging that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively promote the sale of the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal securities laws; (ii) breach of fiduciary duty; and (iii) aiding and abetting a breach of fiduciary duty. These lawsuits have been filed in Federal courts and seek such remedies as compensatory and punitive damages; rescission of certain Funds' advisory agreements and distribution plans and recovery of all fees paid; an accounting of all fund-related fees, commissions and soft dollar payments; restitution of all unlawfully or discriminatorily obtained fees and charges; and attorneys' and experts' fees.
FS-69
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2005
(Unaudited)
MARKET
SHARES VALUE
------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-96.83%
AUSTRIA-1.03%
Raiffeisen International Bank-Holding A.G.
(Regional Banks) (Acquired 04/22/05; Cost
$2,121,519)(a)(b) 50,000 $ 2,573,600
========================================================================
BRAZIL-8.19%
Banco Itau Holding Financeira S.A.-Pfd.
(Diversified Banks) 23,700 4,142,931
------------------------------------------------------------------------
Companhia Brasileira de Distribuicao Grupo
Pao de Acucar-ADR (Hypermarkets & Super
Centers) 43,500 874,350
------------------------------------------------------------------------
Companhia de Bebidas das Americas-ADR
(Brewers) 81,600 2,211,360
------------------------------------------------------------------------
Lojas Americanas S.A.-Pfd. (General
Merchandise Stores) 75,700 1,278,382
------------------------------------------------------------------------
Natura Cosmeticos S.A. (Personal Products)
(Acquired 05/25/04-03/01/05; Cost
$1,526,676)(b) 86,300 2,593,608
------------------------------------------------------------------------
Perdigao S.A.-Pfd. (Packaged Foods & Meats) 74,000 1,396,006
------------------------------------------------------------------------
Petroleo Brasileiro S.A.-ADR (Integrated Oil
& Gas) 132,200 4,858,350
------------------------------------------------------------------------
Sadia S.A.-Pfd. (Packaged Foods & Meats) 633,300 1,011,877
------------------------------------------------------------------------
Tele Norte Leste Participacoes S.A.-ADR
(Integrated Telecommunication Services) 144,234 2,134,663
========================================================================
20,501,527
========================================================================
CANADA-1.15%
PetroKazakhstan Inc.-Class A (Integrated Oil
& Gas) 48,000 1,390,011
------------------------------------------------------------------------
Sherritt International Corp. (Diversified
Metals & Mining)(a) 200,000 1,489,252
========================================================================
2,879,263
========================================================================
CAYMAN ISLANDS-3.81%
China Mengniu Dairy Co. Ltd. (Packaged Foods
& Meats)(a)(c) 2,032,000 1,352,586
------------------------------------------------------------------------
Global Bio-chem Technology Group Co. Ltd.
(Agricultural Products)(c) 2,158,000 1,413,554
------------------------------------------------------------------------
Global Bio-chem Technology Group Co.
Ltd.-Wts., expiring 05/31/07 (Agricultural
Products)(d) 193,500 8,564
------------------------------------------------------------------------
Luen Thai Holdings Ltd. (Distributors)(a)(c) 2,488,000 936,077
------------------------------------------------------------------------
Norstar Founders Group Ltd. (Auto Parts &
Equipment)(c) 5,224,000 1,212,307
------------------------------------------------------------------------
Sa Sa International Holdings Ltd. (Specialty
Stores)(c) 814,000 373,240
------------------------------------------------------------------------
Shanda Interactive Entertainment Ltd.-ADR
(Home Entertainment Software)(a) 75,900 2,441,703
------------------------------------------------------------------------
Solomon Systech International Ltd.
(Semiconductors)(c) 5,524,000 1,809,913
========================================================================
9,547,944
========================================================================
CHINA-4.19%
China Petroleum and Chemical Corp. (Sinopec)-
Class H (Integrated Oil & Gas)(c) 4,252,000 1,672,489
------------------------------------------------------------------------
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
CHINA-(CONTINUED)
China Shipping Development Co. Ltd.-Class H
(Marine)(c) 1,418,000 $ 1,247,571
------------------------------------------------------------------------
Ping An Insurance Co. of China Ltd.-Class H
(Life & Health Insurance)(a)(c) 1,298,000 1,987,029
------------------------------------------------------------------------
Shanghai Electric Group Co. Ltd.-Class H
(Industrial Machinery)(a) 10,486,000 2,259,914
------------------------------------------------------------------------
Shanghai Forte Land Co. Ltd.-Class H (Real
Estate Management & Development)(c) 4,616,000 1,215,801
------------------------------------------------------------------------
Weiqiao Textile Co. Ltd.-Class H
(Textiles)(c) 1,060,500 1,399,095
------------------------------------------------------------------------
Yantai North Andre Juice Co. Ltd.-Class H
(Packaged Foods & Meats)(c) 7,365,000 710,333
========================================================================
10,492,232
========================================================================
EGYPT-2.38%
Orascom Construction Industries (Construction
& Engineering) 262,412 5,969,562
========================================================================
HONG KONG-0.54%
CNOOC Ltd. (Oil & Gas Exploration &
Production)(c) 2,492,000 1,340,692
========================================================================
HUNGARY-4.56%
EGIS Rt. (Pharmaceuticals)(c) 39,500 3,107,928
------------------------------------------------------------------------
MOL Magyar Olaj-es Gazipari Rt.(Integrated
Oil & Gas)(c) 17,300 1,421,731
------------------------------------------------------------------------
OTP Bank Rt. (Diversified Banks)(c) 126,400 3,881,178
------------------------------------------------------------------------
OTP Bank Rt.-GDR REGS (Diversified Banks)
(Acquired 01/14/03-04/15/03; Cost
$1,017,884)(b)(e) 49,100 3,014,740
------------------------------------------------------------------------
Technoimpex (Multi-Sector Holdings) (Acquired
11/22/90; Cost $2,989,406)(a)(b)(f)(g) 1,400 0
========================================================================
11,425,577
========================================================================
INDIA-5.27%
HDFC Bank Ltd.-ADR (Diversified Banks) 101,061 4,387,058
------------------------------------------------------------------------
Infosys Technologies Ltd.-ADR (IT Consulting
& Other Services) 94,800 5,612,160
------------------------------------------------------------------------
Ranbaxy Laboratories Ltd.-GDR
(Pharmaceuticals) 48,000 1,010,400
------------------------------------------------------------------------
Tata Motors Ltd.-ADR (Construction, Farm
Machinery & Heavy Trucks)(a) 232,000 2,192,400
========================================================================
13,202,018
========================================================================
INDONESIA-1.31%
PT Astra Agro Lestari TBK (Agricultural
Products)(c) 3,710,500 1,399,619
------------------------------------------------------------------------
PT Telekomunikasi Indonesia-Series B
(Integrated Telecommunication Services)(c) 4,199,000 1,886,057
========================================================================
3,285,676
========================================================================
ISRAEL-0.55%
Teva Pharmaceutical Industries Ltd.-ADR
(Pharmaceuticals) 43,900 1,371,436
========================================================================
|
FS-70
MARKET
SHARES VALUE
------------------------------------------------------------------------
LUXEMBOURG-1.36%
Millicom International Cellular S.A.
(Wireless Telecommunication Services)(a) 71,900 $ 1,280,539
------------------------------------------------------------------------
Tenaris S.A. (Oil & Gas Equipment & Services) 5 28
------------------------------------------------------------------------
Tenaris S.A.-ADR (Oil & Gas Equipment &
Services) 37,068 2,118,436
========================================================================
3,399,003
========================================================================
MALAYSIA-2.72%
IOI Corp. Berhad (Agricultural Products)(c) 666,000 1,606,121
------------------------------------------------------------------------
Maxis Communications Berhad (Wireless
Telecommunication Services)(c) 1,055,100 2,680,124
------------------------------------------------------------------------
Public Bank Berhad (Diversified Banks)(c) 684,000 1,244,255
------------------------------------------------------------------------
SP Setia Berhad (Real Estate Management &
Development)(c) 1,216,000 1,284,607
========================================================================
6,815,107
========================================================================
MEXICO-8.10%
Alfa, S.A.-Class A (Industrial
Conglomerates)(e) 584,200 2,958,938
------------------------------------------------------------------------
America Movil S.A. de C.V.-Series L-ADR
(Wireless Telecommunication Services) 93,200 4,627,380
------------------------------------------------------------------------
Consorcio ARA, S.A. de C.V. (Homebuilding)(a) 424,700 1,309,854
------------------------------------------------------------------------
Corporacion GEO, S.A. de C.V.-Series B
(Homebuilding)(a)(e) 872,600 1,818,377
------------------------------------------------------------------------
Grupo Financiero Banorte S.A. de C.V.-Class O
(Diversified Banks) 397,800 2,568,912
------------------------------------------------------------------------
Grupo Televisa S.A.-ADR (Broadcasting & Cable
TV) 25,328 1,422,927
------------------------------------------------------------------------
Urbi, Desarrollos Urbanos, S.A. de C.V.
(Homebuilding)(a)(e) 382,700 1,869,126
------------------------------------------------------------------------
Wal-Mart de Mexico S.A. de C.V.-Series V
(Hypermarkets & Super Centers) 999,800 3,707,518
========================================================================
20,283,032
========================================================================
PHILIPPINES-2.52%
Philippine Long Distance Telephone Co.
(Integrated Telecommunication Services)(c) 196,500 5,068,772
------------------------------------------------------------------------
SM Prime Holdings, Inc. (Real Estate
Management & Development)(c) 9,095,000 1,252,698
========================================================================
6,321,470
========================================================================
RUSSIA-6.07%
AO VimpelCom-ADR (Wireless Telecommunication
Services)(a) 82,000 2,683,040
------------------------------------------------------------------------
LUKOIL-ADR (Integrated Oil & Gas)(h) 49,758 6,777,040
------------------------------------------------------------------------
Mobile TeleSystems-ADR (Wireless
Telecommunication Services) 170,800 5,738,880
========================================================================
15,198,960
========================================================================
SOUTH AFRICA-11.82%
Barloworld Ltd. (Industrial Conglomerates)(c) 121,900 1,847,638
------------------------------------------------------------------------
Foschini Ltd. (Apparel Retail)(c) 541,300 3,180,285
------------------------------------------------------------------------
Impala Platinum Holdings Ltd. (Precious
Metals & Minerals)(c) 11,001 915,360
------------------------------------------------------------------------
JD Group Ltd. (Home Improvement Retail)(c) 210,000 2,160,079
------------------------------------------------------------------------
Massmart Holdings Ltd. (Hypermarkets & Super
Centers)(c) 502,500 3,629,336
------------------------------------------------------------------------
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
SOUTH AFRICA-(CONTINUED)
Naspers Ltd.-Class N (Broadcasting & Cable
TV)(c) 447,000 $ 5,403,342
------------------------------------------------------------------------
Standard Bank Group Ltd. (Diversified
Banks)(c) 722,586 7,241,046
------------------------------------------------------------------------
Telkom South Africa Ltd. (Integrated
Telecommunication Services) (Acquired
11/25/03-06/18/04; Cost $3,233,413)(b)(c) 299,700 5,228,660
========================================================================
29,605,746
========================================================================
SOUTH KOREA-15.84%
CJ Corp. (Packaged Foods & Meats)(c) 58,350 4,187,242
------------------------------------------------------------------------
Core Logic Inc. (Semiconductors)(c) 51,090 1,825,253
------------------------------------------------------------------------
Daekyo Co., Ltd. (Publishing)(c) 18,500 1,068,503
------------------------------------------------------------------------
Gravity Co. Ltd.-ADR (Casinos & Gaming)(a) 159,400 1,425,036
------------------------------------------------------------------------
Hana Bank (Diversified Banks)(c) 240,400 6,067,970
------------------------------------------------------------------------
Hankook Tire Co. Ltd. (Tires & Rubber)(c) 174,700 1,784,850
------------------------------------------------------------------------
Hyundai Department Store Co., Ltd.
(Department Stores)(c) 88,700 3,907,742
------------------------------------------------------------------------
Hyundai Mipo Dockyard Co., Ltd.
(Construction, Farm Machinery & Heavy
Trucks)(c) 45,300 2,928,210
------------------------------------------------------------------------
Kiryung Electronics Co., Ltd. (Communications
Equipments)(c) 349,000 2,377,991
------------------------------------------------------------------------
KT Freetel Co., Ltd. (Wireless
Telecommunication Services)(c) 72,500 1,672,613
------------------------------------------------------------------------
POSCO-ADR (Steel) 38,600 1,757,458
------------------------------------------------------------------------
Samsung Electronics Co., Ltd.-GDR REGS
(Electronic Equipment Manufacturers)
(Acquired 11/03/00-08/29/01; Cost
$1,423,508)(b)(c) 17,723 4,034,370
------------------------------------------------------------------------
Samsung Electronics Co., Ltd.-Pfd.
(Electronic Equipment Manufacturers)(c) 11,300 3,387,994
------------------------------------------------------------------------
Shinhan Financial Group Co., Ltd.
(Diversified Banks)(c) 69,900 1,824,261
------------------------------------------------------------------------
Shinsegae Co., Ltd. (Hypermarkets & Super
Centers)(c) 4,380 1,405,578
========================================================================
39,655,071
========================================================================
TAIWAN-8.78%
Asia Optical Co., Inc. (Photographic
Products)(c) 382,463 2,363,966
------------------------------------------------------------------------
Catcher Technology Co., Ltd. (Computer
Storage & Peripherals)(c) 757,400 4,029,202
------------------------------------------------------------------------
Chinatrust Financial Holding Co. Ltd.
(Diversified Banks)(c) 2,658,540 3,053,010
------------------------------------------------------------------------
Hon Hai Precision Industry Co., Ltd.
(Electronic Equipment Manufacturers)(c) 433,959 2,060,836
------------------------------------------------------------------------
Hon Hai Precision Industry Co., Ltd.-GDR REGS
(Electronic Equipment Manufacturers)
(Acquired 08/14/02-03/10/03; Cost
$1,083,791)(b)(c)(e) 205,993 1,936,727
------------------------------------------------------------------------
Hotai Motor Co. Ltd. (Automobile
Manufacturers)(c) 790,000 1,766,320
------------------------------------------------------------------------
Merry Electronics Co., Ltd. (Consumer
Electronics)(c) 652,581 1,485,311
------------------------------------------------------------------------
Novatek Microelectronics Corp., Ltd.
(Semiconductors)(c) 269,801 1,203,531
------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. Ltd.
(Semiconductors)(c) 1,123,000 1,867,475
------------------------------------------------------------------------
|
FS-71
MARKET
SHARES VALUE
------------------------------------------------------------------------
TAIWAN-(CONTINUED)
Taiwan Semiconductor Manufacturing Co. Ltd.-
Equity Participation Ctfs., expiring
01/13/06 (ABN AMRO) (Acquired
01/02/03-06/14/04; Cost $1,332,392)(b) 1,330,489 $ 2,207,813
========================================================================
21,974,191
========================================================================
THAILAND-3.37%
Bangkok Bank PCL-NVDR (Diversified Banks)(f) 481,000 1,208,734
------------------------------------------------------------------------
Kasikornbank PCL (Diversified Banks)(c) 1,697,000 2,390,761
------------------------------------------------------------------------
Siam Cement PCL (The) (Construction
Materials)(c) 230,000 1,386,158
------------------------------------------------------------------------
Siam Commercial Bank PCL (Diversified
Banks)(c) 2,013,600 2,409,611
------------------------------------------------------------------------
Thai Oil PCL (Oil & Gas Refining &
Marketing)(c) 629,000 1,030,825
========================================================================
8,426,089
========================================================================
TURKEY-1.95%
Haci Omer Sabanci Holding A.S. (Multi-Sector
Holdings)(c) 413,100 1,203,336
------------------------------------------------------------------------
Koc Holding A.S. (Industrial
Conglomerates)(c) 434,400 1,626,140
------------------------------------------------------------------------
Koc Holding A.S.-Bonus Shares (Industrial
Conglomerates)(a) 115,647 417,210
------------------------------------------------------------------------
Tupras-Turkiye Petrol Rafinerileri A.S. (Oil
& Gas Refining, Marketing &
Transportation)(a)(c) 130,814 1,646,714
========================================================================
4,893,400
========================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
UNITED KINGDOM-1.32%
Anglo American PLC (Diversified Metals &
Mining)(c) 149,200 $ 3,303,220
========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $149,722,498) 242,464,816
========================================================================
MONEY MARKET FUNDS-2.03%
Liquid Assets Portfolio-Institutional
Class(i) 2,537,891 2,537,891
------------------------------------------------------------------------
STIC Prime Portfolio-Institutional Class(i) 2,537,891 2,537,891
========================================================================
Total Money Market Funds (Cost
$5,075,782) 5,075,782
========================================================================
TOTAL INVESTMENTS-98.86% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $154,798,280) 247,540,598
========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-5.86%
Liquid Assets Portfolio-Institutional
Class(i)(j) 7,337,521 7,337,521
------------------------------------------------------------------------
STIC Prime Portfolio-Institutional
Class(i)(j) 7,337,521 7,337,521
========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $14,675,042) 14,675,042
========================================================================
TOTAL INVESTMENTS-104.72% (Cost $169,473,322) 262,215,640
========================================================================
OTHER ASSETS LESS LIABILITIES-(4.72%) (11,813,631)
========================================================================
NET ASSETS-100.00% $250,402,009
________________________________________________________________________
========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Ctfs. - Certificates GDR - Global Depositary Receipt NVDR - Non-Voting Depositary Receipt Pfd. - Preferred REGS - Regulation S Wts. - Warrants |
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 Fund has no rights to demand registration of these securities.
The aggregate market value of these securities at April 30, 2005 was
$21,589,518, which represented 8.62% of the Fund's Net Assets. Unless
otherwise indicated, these securities are not considered to be illiquid.
(c) In accordance with the procedures established by the Board of Trustees, the
foreign security is fair valued using adjusted closing market prices. The
aggregate market value of these securities at April 30, 2005 was
$142,345,243, which represented 54.29% of the Fund's Total Investments. See
Note 1A.
(d) Non-income producing security acquired through a corporate action.
(e) All or a portion of this security has been pledged as collateral for
securities lending transactions at April 30, 2005.
(f) Security fair valued in good faith in accordance with the procedures
established by the Board of Trustees. The aggregate market value of these
securities at April 30, 2005 was $1,208,734, which represented 0.46% of the
Fund's Total Investments. See Note 1A.
(g) Security considered to be illiquid; the portfolio is limited to investing
15% of net assets in illiquid securities. The market value of this security
considered illiquid at April 30, 2005 represented 0% of the Fund's Net
Assets.
(h) In accordance with the procedures established by the Board of Trustees,
security fair valued based on an evaluated quote provided by an independent
pricing service. The market value of this security at April 30, 2005
represented 2.58% of the Fund's Total Investments. See Note 1A.
(i) The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
(j) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 7.
See accompanying notes which are an integral part of the financial statements.
FS-72
DEVELOPING MARKETS FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005
(Unaudited)
ASSETS:
Investments, at market value (cost
$149,722,498)* $ 242,464,816
------------------------------------------------------------
Investments in affiliated money market funds
(cost $19,750,824) 19,750,824
============================================================
Total investments (cost $169,473,322) 262,215,640
============================================================
Foreign currencies, at market value (cost
$2,391,874) 2,466,611
------------------------------------------------------------
Receivables for:
Investments sold 789,597
------------------------------------------------------------
Fund shares sold 103,434
------------------------------------------------------------
Dividends 781,797
------------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 13,162
------------------------------------------------------------
Other assets 22,834
============================================================
Total assets 266,393,075
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 534,993
------------------------------------------------------------
Trustee deferred compensation and
retirement plans 20,251
------------------------------------------------------------
Collateral upon return of securities loaned 14,675,042
------------------------------------------------------------
Accrued distribution fees 141,152
------------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 1,503
------------------------------------------------------------
Accrued transfer agent fees 149,151
------------------------------------------------------------
Accrued operating expenses 468,974
============================================================
Total liabilities 15,991,066
============================================================
Net assets applicable to shares outstanding $ 250,402,009
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 380,757,834
------------------------------------------------------------
Undistributed net investment income 394,907
------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities and foreign
currencies (223,556,208)
------------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 92,805,476
============================================================
$ 250,402,009
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 214,496,225
____________________________________________________________
============================================================
Class B $ 28,051,193
____________________________________________________________
============================================================
Class C $ 7,854,591
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 15,219,735
____________________________________________________________
============================================================
Class B 2,033,300
____________________________________________________________
============================================================
Class C 569,972
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 14.09
------------------------------------------------------------
Offering price per share:
(Net asset value of $14.09 divided by
95.25%) $ 14.79
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 13.80
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 13.78
____________________________________________________________
============================================================
|
* At April 30, 2005, securities with an aggregate market value of $14,453,972 were on loan to brokers.
See accompanying notes which are an integral part of the financial statements.
FS-73
STATEMENT OF OPERATIONS
For the six months ended April 30, 2005
(Unaudited)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $385,792) $ 2,782,080
-------------------------------------------------------------------------
Dividends from affiliated money market funds (including
securities lending income of $84,624 after rebates of
$70,177) 151,963
-------------------------------------------------------------------------
Interest 4,787
=========================================================================
Total investment income 2,938,830
=========================================================================
EXPENSES:
Advisory fees 1,244,254
-------------------------------------------------------------------------
Administrative services fees 39,269
-------------------------------------------------------------------------
Custodian fees 233,434
-------------------------------------------------------------------------
Distribution fees:
Class A 424,382
-------------------------------------------------------------------------
Class B 144,884
-------------------------------------------------------------------------
Class C 44,146
-------------------------------------------------------------------------
Transfer agent fees 466,489
-------------------------------------------------------------------------
Trustees' and officer's fees and benefits 11,732
-------------------------------------------------------------------------
Other 128,346
=========================================================================
Total expenses 2,736,936
=========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (208,149)
=========================================================================
Net expenses 2,528,787
=========================================================================
Net investment income 410,043
=========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain from:
Investment securities 15,173,321
-------------------------------------------------------------------------
Foreign currencies 207,186
=========================================================================
15,380,507
=========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (net of change in estimated tax on
foreign investment held of $67,798 -- Note 1G) 9,041,443
-------------------------------------------------------------------------
Foreign currencies (9,600)
=========================================================================
9,031,843
=========================================================================
Net gain from investment securities and foreign currencies 24,412,350
=========================================================================
Net increase in net assets resulting from operations $24,822,393
_________________________________________________________________________
=========================================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-74
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2005 and the year ended October 31, 2004
(Unaudited)
APRIL 30, OCTOBER 31,
2005 2004
------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 410,043 $ 196,294
------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currencies 15,380,507 23,879,396
------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 9,031,843 17,972,585
==========================================================================================
Net increase in net assets resulting from operations 24,822,393 42,048,275
==========================================================================================
Distributions to shareholders from net investment income:
Class A -- (387,540)
==========================================================================================
Share transactions-net:
Class A (4,728,947) (47,208,187)
------------------------------------------------------------------------------------------
Class B (1,190,009) (8,761,469)
------------------------------------------------------------------------------------------
Class C 982,619 1,131,796
==========================================================================================
Net increase (decrease) in net assets resulting from
share transactions (4,936,337) (54,837,860)
==========================================================================================
Net increase (decrease) in net assets 19,886,056 (13,177,125)
==========================================================================================
NET ASSETS:
Beginning of period 230,515,953 243,693,078
==========================================================================================
End of period (including undistributed net investment
income of $394,907 and $(15,136), respectively) $250,402,009 $230,515,953
__________________________________________________________________________________________
==========================================================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-75
NOTES TO FINANCIAL STATEMENTS
April 30, 2005
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Developing Markets Fund (the "Fund") is a separate series of AIM Investment Funds (the "Trust"). The Trust is organized as 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 consisting of six separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The Fund currently offers multiple classes of shares. 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 investment objective of income. Companies are listed in the Schedule of Investments based on the country in which they are organized.
Under the Trust's organizational documents, each Trustee, officer, employee or other agent of the Trust (including the Trust's investment manager) is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts.
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 on the basis of prices furnished by independent pricing services, which may be considered fair valued, or market makers. Each security reported on the NASDAQ National Market System is valued at the NASDAQ Official Closing Price ("NOCP") as of the close of the customary trading session on the valuation date or absent a NOCP, at the closing bid price.
Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. 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").
Investments in open-end registered investment companies and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in closed-end registered investment companies that trade on an exchange are valued at the last sales price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes 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 specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations having 60 days or less to maturity and commercial paper are valued at amortized cost which approximates market value.
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.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable 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 ordinarily be reflected in the computation of the Fund's net asset value. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current market value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current market value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs and domestic and foreign index futures.
FS-76
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value.
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.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities.' Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
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 Subchapter M 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 -- Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets.
F. REDEMPTION FEES -- The Fund has instituted a 2% redemption fee on certain share classes that is to be retained by the Fund to offset transaction costs and other expenses associated with short-term redemptions and exchanges. The fee, subject to certain exceptions, is imposed on certain redemptions, including exchanges of shares held less than 30 days. The redemption fee is accounted for as an addition to shares of beneficial interest by the Fund and is allocated among the share classes based on the relative net assets of each class.
G. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. 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 (net of foreign taxes withheld on disposition) 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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from, (i) sales of foreign currencies, (ii) currency gains or losses realized between the trade and settlement dates on securities transactions, and (iii) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.
H. 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.
FS-77
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO 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 based on the annual rate of the Fund's average daily net assets as follows:
AVERAGE NET ASSETS RATE ---------------------------------------------------------------------- First $500 million 0.975% ---------------------------------------------------------------------- Next $500 million 0.95% ---------------------------------------------------------------------- Next $500 million 0.925% ---------------------------------------------------------------------- Over $1.5 billion 0.90% ______________________________________________________________________ ====================================================================== |
Effective January 1, 2005 through June 30, 2006, AIM has contractually agreed to waive advisory fees to the extent necessary so that the advisory fees payable by the Fund (based on the Fund's average daily net assets) do not exceed the annual rate of:
AVERAGE NET ASSETS RATE ---------------------------------------------------------------------- First $250 million 0.935% ---------------------------------------------------------------------- Next $250 million 0.91% ---------------------------------------------------------------------- Next $500 million 0.885% ---------------------------------------------------------------------- Next $1.5 billion 0.86% ---------------------------------------------------------------------- Next $2.5 billion 0.835% ---------------------------------------------------------------------- Next $2.5 billion 0.81% ---------------------------------------------------------------------- Next $2.5 billion 0.785% ---------------------------------------------------------------------- Over $10 billion 0.76% ______________________________________________________________________ ====================================================================== |
AIM has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Class A, Class B and Class C shares
to 2.00%, 2.50% and 2.50% of average daily net assets, respectively, through
October 31, 2005. In determining the advisor's obligation to waive advisory fees
and/or reimburse expenses, the following expenses are not taken into account,
and could cause the total annual fund operating expenses to exceed the limits
stated above: (i) interest; (ii) taxes; (iii) dividend expense on short sales;
(iv) extraordinary items (these are expenses that are not anticipated to arise
from the Fund's day-to-day operations), or items designated as such by the
Fund's Board of Trustees; (v) expenses related to a merger or reorganization, as
approved by the Fund's Board of Trustees; and (vi) expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement.
Currently, in addition to the expense reimbursement arrangement with AMVESCAP
PLC ("AMVESCAP") described more fully below, the only expense offset
arrangements from which the Fund may benefit are in the form of credits that the
Fund receives from banks where the Fund or its transfer agent has deposit
accounts in which it holds uninvested cash. Those credits are used to pay
certain expenses incurred by the Fund. To the extent that the annualized expense
ratio does not exceed the expense limitation, AIM will retain its ability to be
reimbursed for such fee waivers or reimbursements prior to the end of each
fiscal year.
Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market funds on investments by the Fund in such affiliated money market funds (excluding investments made in affiliated money market funds with cash collateral from securities loaned by the fund). AIM is also voluntarily waiving a portion of the advisory fee payable by the Fund equal to the difference between the income earned from investing in the affiliated money market fund and the hypothetical income earned from investing in an appropriate comparative benchmark. Voluntary fee waivers or reimbursements may be modified or discontinued at any time upon consultation with the Board of Trustees without further notice to investors.
For the six months ended April 30, 2005, AIM waived fees of $192,428.
For the six months ended April 30, 2005, at the request of the Trustees of the Trust, AMVESCAP agreed to reimburse $12,508 of expenses incurred by the Fund in connection with market timing matters in the AIM Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement, are included in the Statement of Operations.
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. Pursuant to such agreement, for the six months ended April 30, 2005, AIM was paid $39,269.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay AIM Investment Services, Inc. ("AISI") a fee for providing transfer agency and shareholder services to the Fund and reimburse AISI for certain expenses incurred by AISI in the course of providing such services. AISI may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. For the six months ended April 30, 2005, the Fund paid AISI $466,489.
The Trust has entered into master distribution agreements with A I M Distributors, Inc. ("ADI") 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, Class B and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays ADI 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. Prior to January 1, 2005, the Fund paid ADI 0.50% of the average daily net assets of Class A shares. Of these amounts, up to 0.25% of the average daily net assets of the Class A, Class B or Class C shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid
FS-78
as a service fee under the Plans would constitute an asset-based sales charge. NASD Rules 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. Rule 12b-1 Plan fees on Class A shares issued as a result of conversion of shares from G.T. Developing Markets Fund, Inc. on October 31, 1997 and in connection with the AIM Eastern Europe Fund reorganization on September 10, 1999 are limited to 0.25% of the average net assets of the Fund's Class A shares issued in connection with such transactions. Pursuant to the Plans, for the six months ended April 30, 2005, the Class A, Class B and Class C shares paid $424,382, $144,884 and $44,146, respectively.
Front-end sales commissions and contingent deferred sales charges ("CDSC") (collectively the "sales charges") are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended April 30, 2005, ADI advised the Fund that it retained $21,404 in front-end sales commissions from the sale of Class A shares and $3, $10,649, and $4,760 from Class A, Class B and Class C shares, respectively, for CDSC imposed upon redemption by shareholders.
Certain officers and trustees of the Trust are officers and directors of AIM, AISI and/or ADI.
NOTE 3--INVESTMENTS IN AFFILIATES
The Fund is permitted, pursuant to an exemptive order from the Securities and Exchange Commission ("SEC"), to invest daily available cash balances and cash collateral from securities lending transactions in affiliated money market funds. The Fund and the money market funds below have the same investment advisor and therefore, are considered to be affiliated. The tables below show the transactions in and earnings from investments in affiliated money market funds for the six months ended April 30, 2005.
INVESTMENTS OF DAILY AVAILABLE CASH BALANCES:
MARKET PROCEEDS UNREALIZED MARKET
VALUE PURCHASES FROM APPRECIATION VALUE DIVIDEND REALIZED
FUND 10/31/04 AT COST SALES (DEPRECIATION) 04/30/05 INCOME GAIN (LOSS)
----------------------------------------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-
Institutional
Class $ 1,179,829 $20,132,130 $(18,774,068) $ -- $ 2,537,891 $ 33,393 $ --
----------------------------------------------------------------------------------------------------------------------------------
STIC Prime
Portfolio-
Institutional
Class 1,179,829 20,132,130 (18,774,068) -- 2,537,891 33,946 --
==================================================================================================================================
Subtotal $ 2,359,658 $40,264,260 $(37,548,136) $ -- $ 5,075,782 $ 67,339 $ --
==================================================================================================================================
|
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
MARKET PROCEEDS UNREALIZED MARKET
VALUE PURCHASES FROM APPRECIATION VALUE DIVIDEND REALIZED
FUND 10/31/04 AT COST SALES (DEPRECIATION) 04/30/05 INCOME* GAIN (LOSS)
----------------------------------------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-
Institutional
Class $ 6,498,615 $24,806,160 $(23,967,254) $ -- $ 7,337,521 $ 41,888 $ --
----------------------------------------------------------------------------------------------------------------------------------
STIC Prime
Portfolio-
Institutional
Class 6,498,615 24,346,526 (23,507,620) -- 7,337,521 42,736 --
==================================================================================================================================
Subtotal $12,997,230 $49,152,686 $(47,474,874) $ -- $14,675,042 $ 84,624 $ --
==================================================================================================================================
Total $15,356,888 $89,416,946 $(85,023,010) $ -- $19,750,824 $151,963 $ --
__________________________________________________________________________________________________________________________________
==================================================================================================================================
|
* Net of rebates.
NOTE 4--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions and (ii) custodian credits which result from periodic overnight cash balances at the custodian. For the six months ended April 30, 2005, the Fund received credits from these arrangements which resulted in the reduction of the Fund's total expenses of $3,213.
FS-79
NOTE 5--TRUSTEES' AND OFFICER'S FEES AND BENEFITS
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to pay remuneration to each Trustee of the Fund who is not an "interested person" of the AIM Funds. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
In addition to the above, "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to pay remuneration to the Senior Officer of the AIM Funds.
During the six months ended April 30, 2005, the Fund paid legal fees of $2,269 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6--BORROWINGS
Pursuant to an exemptive order from the SEC, the Fund may participate in an interfund lending facility that AIM has established for temporary borrowings by the AIM Funds. An interfund loan will be made under this facility only if the loan rate (an average of the rate available on bank loans and the rate available on investments in overnight repurchase agreements) is favorable to both the lending fund and the borrowing fund. A loan will be secured by collateral if the Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total assets. To the extent that the loan is required to be secured by collateral, the collateral is marked to market daily to ensure that the market value is at least 102% of the outstanding principal value of the loan.
The Fund is a participant in an uncommitted unsecured revolving credit facility with State Street Bank and Trust Company ("SSB"). The Fund may borrow up to the lesser of (i) $125,000,000, or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the credit facility can borrow on a first come, first served basis. Principal on each loan outstanding shall bear interest at the bid rate quoted by SSB at the time of the request for the loan.
During the six months ended April 30, 2005, the Fund did not borrow or lend under the interfund lending facility or borrow under the uncommitted unsecured revolving credit facility.
Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds in the account so the custodian can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank. In either case, the custodian bank will be compensated at an amount equal to the Federal Funds rate plus 100 basis points.
NOTE 7--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities having a market value up to one-third of the Fund's total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds. 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, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. 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. The Fund could also experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to a loss on the collateral invested.
At April 30, 2005, securities with an aggregate value of $14,453,972 were on loan to brokers. The loans were secured by cash collateral of $14,675,042 received by the Fund and subsequently invested in affiliated money market funds. For the six months ended April 30, 2005, the Fund received dividends on cash collateral of $84,624 for securities lending transactions, which are net of rebates.
FS-80
NOTE 8--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions. Under these limitation rules, the Fund is limited as of October 31, 2004 to utilizing $200,504,228 of capital loss carryforward in the fiscal year ended October 31, 2005.
The Fund had a capital loss carryforward as of October 31, 2004 which expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
-----------------------------------------------------------------------------
October 31, 2005 $ 70,744,735
-----------------------------------------------------------------------------
October 31, 2006 76,692,697
-----------------------------------------------------------------------------
October 31, 2007 9,273,499
-----------------------------------------------------------------------------
October 31, 2008 15,085,807
-----------------------------------------------------------------------------
October 31, 2009 59,191,538
-----------------------------------------------------------------------------
October 31, 2010 7,382,000
-----------------------------------------------------------------------------
October 31, 2012 9,980
=============================================================================
Total capital loss carryforward $238,380,256
_____________________________________________________________________________
=============================================================================
|
* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 9--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities and money market funds) purchased and sold by the Fund during the six months ended April 30, 2005 was $46,920,602 and $51,424,645, respectively. For interim reporting periods, the cost of investments for tax purposes includes reversals of certain tax items, such as, wash sales that have occurred since the prior fiscal year-end.
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS ------------------------------------------------------------------------------- Aggregate unrealized appreciation of investment securities $99,314,401 ------------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (7,093,496) =============================================================================== Net unrealized appreciation of investment securities $92,220,905 _______________________________________________________________________________ =============================================================================== Cost of investments for tax purposes is $169,994,735. |
FS-81
NOTE 10--SHARE INFORMATION
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 CDSC. Under certain circumstances, Class A shares are subject to CDSC. Generally, Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase.
CHANGES IN SHARES OUTSTANDING(A)
------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
2005 2004
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 1,547,280 $ 21,959,666 3,161,632 $ 37,179,879
------------------------------------------------------------------------------------------------------------------------
Class B 378,788 5,267,246 642,088 7,399,135
------------------------------------------------------------------------------------------------------------------------
Class C 557,794 7,646,258 934,253 10,692,654
========================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 29,076 314,212
========================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 207,624 2,954,972 587,037 6,828,510
------------------------------------------------------------------------------------------------------------------------
Class B (211,831) (2,954,972) (596,411) (6,828,510)
========================================================================================================================
Reacquired:(b)
Class A (2,103,369) (29,643,585) (8,100,696) (91,530,788)
------------------------------------------------------------------------------------------------------------------------
Class B (253,616) (3,502,283) (832,457) (9,332,094)
------------------------------------------------------------------------------------------------------------------------
Class C (486,966) (6,663,639) (856,693) (9,560,858)
========================================================================================================================
(364,296) $ (4,936,337) (5,032,171) $(54,837,860)
________________________________________________________________________________________________________________________
========================================================================================================================
|
(a) There are two entities that are each record owners of more than 5% of
the outstanding shares of the Fund and in the aggregate they own 18% of
the outstanding shares of the Fund. AIM Distributors has an agreement
with these entities to sell Fund shares. The Fund, AIM and/or AIM
affiliates may make payments to these entities, which are considered to
be related to the Fund, for providing services to the Fund, AIM and/or
AIM affiliates including but not limited to services such as, securities
brokerage, distribution, third party record keeping and account
servicing. The Trust has no knowledge as to whether all or any portion
of the shares owned of record by these shareholders are also owned
beneficially.
(b) Amount is net of redemption fees of $10,724, $1,410 and $465 for Class
A, Class B and Class C shares, respectively, for the six months ended
April 30, 2005 and $33,118, $4,843 and $957 for Class A, Class B and
Class C shares, respectively, for the year ended October 31, 2004.
FS-82
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
-------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, --------------------------------------------------------------------
2005 2004 2003 2002 2001 2000
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.71 $ 10.52 $ 6.96 $ 6.32 $ 8.89 $ 9.86
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.03(a) 0.02(a) 0.04(a) (0.01)(a) 0.15(a) 0.01(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 1.35 2.19 3.52 0.74 (2.67) (0.95)
=================================================================================================================================
Total from investment operations 1.38 2.21 3.56 0.73 (2.52) (0.94)
=================================================================================================================================
Less distributions from net investment
income -- (0.02) -- (0.09) (0.05) (0.04)
=================================================================================================================================
Redemption fees added to shares of
beneficial interest 0.00 0.00 -- -- -- 0.01
=================================================================================================================================
Net asset value, end of period $ 14.09 $ 12.71 $ 10.52 $ 6.96 $ 6.32 $ 8.89
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 10.86% 21.05% 51.15% 11.37% (28.51)% (9.52)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $214,496 $197,848 $209,221 $123,812 $110,756 $136,160
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense
reimbursements 1.89%(c) 2.00% 2.00% 1.84% 1.76% 1.87%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense
reimbursements 2.05%(c) 2.22% 2.33% 2.35% 2.26% 1.95%
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets 0.41%(c) 0.16% 0.44% (0.07)% 1.95% 0.05%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(d) 19% 49% 100% 109% 144% 192%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. 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
$219,227,355.
(d) Not annualized for periods less than one year.
FS-83
NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS B
----------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, --------------------------------------------------------------
2005 2004 2003 2002 2001 2000
------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.48 $ 10.36 $ 6.89 $ 6.25 $ 8.79 $ 9.79
------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a) (0.04)(a) (0.01)(a) (0.05)(a) 0.11(a) (0.06)(a)
------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 1.33 2.16 3.48 0.73 (2.65) (0.94)
==============================================================================================================================
Total from investment operations 1.32 2.12 3.47 0.68 (2.54) (1.00)
==============================================================================================================================
Less distributions from net investment
income -- -- -- (0.04) -- --
==============================================================================================================================
Redemption fees added to shares of
beneficial interest 0.00 0.00 -- -- -- --
==============================================================================================================================
Net asset value, end of period $ 13.80 $ 12.48 $ 10.36 $ 6.89 $ 6.25 $ 8.79
______________________________________________________________________________________________________________________________
==============================================================================================================================
Total return(b) 10.58% 20.46% 50.36% 10.85% (28.90)% (10.21)%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $28,051 $26,447 $30,111 $31,465 $51,040 $79,754
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense
reimbursements 2.50%(c) 2.52% 2.53% 2.38% 2.35% 2.47%
------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense
reimbursements 2.66%(c) 2.74% 2.86% 2.89% 2.85% 2.55%
==============================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.20)%(c) (0.36)% (0.08)% (0.61)% 1.36% (0.56)%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Portfolio turnover rate(d) 19% 49% 100% 109% 144% 192%
______________________________________________________________________________________________________________________________
==============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. 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
$29,216,911.
(d) Not annualized for periods less than one year.
FS-84
NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS C
-------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ------------------------------------------------------------
2005 2004 2003 2002 2001 2000
---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $12.46 $10.34 $ 6.88 $ 6.25 $ 8.79 $ 9.79
---------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income (loss) (0.01)(a) (0.04)(a) (0.01)(a) (0.05)(a) 0.10(a) (0.06)(a)
---------------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized
and unrealized) 1.33 2.16 3.47 0.72 (2.64) (0.94)
===============================================================================================================
Total from investment
operations 1.32 2.12 3.46 0.67 (2.54) (1.00)
===============================================================================================================
Less distributions from net
investment income -- -- -- (0.04) -- --
===============================================================================================================
Redemption fees added to
shares of beneficial
interest 0.00 0.00 -- -- -- --
===============================================================================================================
Net asset value, end of period $13.78 $12.46 $10.34 $ 6.88 $ 6.25 $ 8.79
_______________________________________________________________________________________________________________
===============================================================================================================
Total return(b) 10.59% 20.50% 50.29% 10.69% (28.90)% (10.21)%
_______________________________________________________________________________________________________________
===============================================================================================================
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $7,855 $6,222 $4,361 $2,557 $ 1,682 $ 1,618
_______________________________________________________________________________________________________________
===============================================================================================================
Ratio of expenses to average
net assets:
With fee waivers and/or
expense reimbursements 2.50%(c) 2.52% 2.53% 2.38% 2.35% 2.47%
---------------------------------------------------------------------------------------------------------------
Without fee waivers and/or
expense reimbursements 2.66%(c) 2.74% 2.86% 2.89% 2.85% 2.55%
===============================================================================================================
Ratio of net investment income
(loss) to average net assets (0.20)%(c) (0.36)% (0.08)% (0.61)% 1.36% (0.56)%
_______________________________________________________________________________________________________________
===============================================================================================================
Portfolio turnover rate(d) 19% 49% 100% 109% 144% 192%
_______________________________________________________________________________________________________________
===============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$8,902,464.
(d) Not annualized for periods less than one year.
NOTE 12--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note.
SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING
On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment advisor to certain AIM Funds), A I M Advisors, Inc. ("AIM") (the Fund's investment advisor) and A I M Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached final settlements with certain regulators, including, among others, the Securities and Exchange Commission ("SEC"), the New York Attorney General ("NYAG") and the Colorado Attorney General ("COAG"), to resolve civil enforcement actions and/or investigations related to market timing activity and related issues in the AIM Funds, including those formerly advised by IFG.
As part of the settlements, IFG agreed to pay a total of $325 million (including $110 million in civil penalties). Additionally, AIM and ADI agreed to pay a total of $50 million (including $30 million in civil penalties). These settlement funds will be made available for distribution to the shareholders of the applicable AIM Funds that were harmed by market timing activity, and may (or may not) increase as a result of contributions from third parties who reach final settlements with the SEC or other regulators to resolve allegations of market timing and/or late trading. The settlement funds will be distributed in accordance with a methodology to be determined by AIM's independent distribution consultant, in consultation with AIM and the independent trustees of the AIM Funds and acceptable to the staff of the SEC. As the methodology is unknown at the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the distribution of these settlement funds may have on the Fund or whether such distribution will have an impact on the Fund's financial statements in the future.
At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"), the parent company of IFG and AIM, has agreed to reimburse expenses incurred by the AIM Funds related to market timing matters.
REGULATORY INQUIRIES AND PENDING LITIGATION
IFG, AIM, ADI and/or related entities and individuals have received inquiries from numerous regulators in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, some of which concern one or more AIM Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to
FS-85
NOTE 12--LEGAL PROCEEDINGS--(CONTINUED)
Section 529 college savings plans and procedures for locating lost securityholders. IFG, AIM and ADI are providing full cooperation with respect to these inquiries. As described more fully below, the AIM Funds, IFG, AIM, ADI and/or related entities and individuals are defendants in numerous civil lawsuits related to one or more of these issues. Regulatory actions and/or additional civil lawsuits related to these or other issues may be filed against the AIM Funds, IFG, AIM and/or related entities and individuals in the future.
On April 12, 2005, the Attorney General of the State of West Virginia ("WVAG") filed civil proceedings against AIM, IFG and ADI, as well as numerous unrelated mutual fund complexes and financial institutions. None of the AIM Funds has been named as a defendant in these proceedings. The WVAG complaint, filed in the Circuit Court of Marshall County, West Virginia [Civil Action No. 05-C-81], alleges, in substance, that AIM, IFG and ADI engaged in unfair competition and/or unfair or deceptive trade practices by failing to disclose in the prospectuses for the AIM Funds, including those formerly advised by IFG, that they had entered into certain arrangements permitting market timing of such Funds. As a result of the foregoing, the WVAG alleges violations of W. Va. Code sec. 46A-1-101, et seq. (the West Virginia Consumer Credit and Protection Act). The WVAG complaint is seeking, among other things, injunctive relief, civil monetary penalties and a writ of quo warranto against the defendants. If AIM is unsuccessful in its defense of the WVAG proceedings, it could be barred from serving as an investment advisor for any investment company registered under the Investment Company Act of 1940, as amended (a "registered investment company"). Such results could affect the ability of AIM or any other investment advisor directly or indirectly owned by AMVESCAP, from serving as an investment advisor to any registered investment company, including the Fund. The Fund has been informed by AIM that, if these results occur, AIM will seek exemptive relief from the SEC to permit it to continue to serve as the Fund's investment advisor. There is no assurance that such exemptive relief will be granted.
Civil lawsuits, including purported class action and shareholder derivative suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or related entities and individuals, depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related issues in the AIM Funds;
- that certain AIM Funds inadequately employed fair value pricing;
- that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale and that the defendants adopted unlawful distribution plans;
- that the defendants breached their fiduciary duties by charging distribution fees while funds and/or specific share classes were closed generally to new investors and/or while other share classes of the same fund were not charged the same distribution fees;
- that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively promote the sale of the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions; and
- that the defendants breached their fiduciary duties by failing to ensure that the AIM Funds participated in class action settlements in which the AIM Funds were eligible to participate.
These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and ERISA, negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid, an accounting of all fund-related fees, commissions and soft dollar payments, restitution of all commissions and fees paid, and prospective relief in the form of reduced fees.
At the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the outcome of the Regulatory Inquiries and Pending Litigation described above may have on AIM, ADI or the Fund.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
As a result of the matters discussed above, investors in the AIM Funds might react by redeeming their investments. This might require the AIM Funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AIM Funds.
FS-86
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2005
(Unaudited)
MARKET
SHARES VALUE
------------------------------------------------------------------------
DOMESTIC COMMON STOCKS-59.96%
APPAREL RETAIL-4.60%
Ross Stores, Inc. 131,600 $ 3,516,352
========================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-4.50%
Liz Claiborne, Inc. 97,200 3,443,796
========================================================================
BREWERS-3.37%
Molson Coors Brewing Co.-Class B 41,704 2,575,222
========================================================================
EMPLOYMENT SERVICES-4.57%
Manpower Inc. 90,700 3,496,485
========================================================================
HEALTH CARE EQUIPMENT-7.69%
Cytyc Corp.(a) 126,800 2,702,108
------------------------------------------------------------------------
Fisher Scientific International Inc.(a) 53,624 3,184,193
========================================================================
5,886,301
========================================================================
HEALTH CARE SUPPLIES-4.39%
DENTSPLY International Inc. 61,500 3,361,590
========================================================================
INSURANCE BROKERS-4.59%
Arthur J. Gallagher & Co. 126,000 3,507,840
========================================================================
LEISURE PRODUCTS-3.96%
Polaris Industries Inc. 52,700 3,033,412
========================================================================
MANAGED HEALTH CARE-5.06%
WellPoint, Inc.(a) 30,300 3,870,825
========================================================================
PHARMACEUTICALS-4.49%
Endo Pharmaceuticals Holdings Inc.(a) 173,200 3,438,020
========================================================================
REGIONAL BANKS-4.95%
North Fork Bancorp., Inc. 134,550 3,787,583
========================================================================
RESTAURANTS-5.24%
Wendy's International, Inc. 93,400 4,009,662
========================================================================
SPECIALTY STORES-2.55%
AutoZone, Inc.(a) 23,500 1,950,500
========================================================================
Total Domestic Common Stocks (Cost
$45,884,361) 45,877,588
========================================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-22.99%
AUSTRALIA-2.63%
Cochlear Ltd. (Health Care Equipment)(b) 83,700 2,014,388
========================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
FRANCE-1.66%
Zodiac S.A. (Aerospace & Defense)(b) 26,200 $ 1,274,618
========================================================================
GERMANY-2.41%
Hugo Boss A.G.-Pfd. (Apparel, Accessories &
Luxury Goods)(b) 53,900 1,534,287
------------------------------------------------------------------------
Medion A.G. (Distributors) 20,600 312,000
========================================================================
1,846,287
========================================================================
IRELAND-4.54%
Kingspan Group PLC (Building Products) 162,700 1,817,265
------------------------------------------------------------------------
Ryanair Holdings PLC-ADR (Airlines)(a) 41,200 1,654,180
========================================================================
3,471,445
========================================================================
JAPAN-2.02%
Nintendo Co., Ltd. (Home Entertainment
Software)(b) 13,600 1,542,890
========================================================================
MEXICO-4.70%
Grupo Modelo, S.A. de C.V.-Series C (Brewers) 593,700 1,691,468
------------------------------------------------------------------------
Grupo Televisa S.A.-ADR (Broadcasting & Cable
TV) 33,900 1,904,502
========================================================================
3,595,970
========================================================================
NETHERLANDS-1.98%
Fugro N.V. (Oil & Gas Equipment &
Services)(b) 16,316 1,517,846
========================================================================
SWEDEN-3.05%
Hoganas A.B.-Class B (Steel)(b) 40,500 1,069,950
------------------------------------------------------------------------
Munters A.B. (Industrial Machinery)(b) 52,900 1,260,742
========================================================================
2,330,692
========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $15,279,222) 17,594,136
========================================================================
PRINCIPAL
AMOUNT
U.S. GOVERNMENT AGENCY SECURITIES-17.09%
FEDERAL HOME LOAN BANK (FHLB)-17.09%
Unsec. Disc. Notes,
2.80%, 05/02/05 (Cost $13,075,983)(c) $13,077,000 13,075,983
========================================================================
TOTAL INVESTMENTS-100.04% (Cost $74,239,566) 76,547,707
========================================================================
OTHER ASSETS LESS LIABILITIES-(0.04%) (27,317)
========================================================================
NET ASSETS-100.00% $76,520,390
________________________________________________________________________
========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Disc. - Discounted |
Pfd. - Preferred Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) In accordance with the procedures established by the Board of Trustees, the
foreign security is fair valued using adjusted closing market prices. The
aggregate market value of these securities at April 30, 2005 was
$10,214,721, which represented 13.34% of the Fund's Total Investments. See
Note 1A.
(c) Security traded on a discount basis. The interest rate shown represents the
discount rate at the time of purchase by the Fund.
See accompanying notes which are an integral part of the financial statements.
FS-87
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005
(Unaudited)
ASSETS:
Investments, at market value (cost
$74,239,566) $76,547,707
-----------------------------------------------------------
Foreign currencies, at market value (cost
$25,078) 24,945
-----------------------------------------------------------
Receivables for:
Investments sold 1,554
-----------------------------------------------------------
Fund shares sold 455,892
-----------------------------------------------------------
Dividends 65,500
-----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 3,656
-----------------------------------------------------------
Other assets 30,634
===========================================================
Total assets 77,129,888
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 453,551
-----------------------------------------------------------
Fund shares reacquired 54,640
-----------------------------------------------------------
Foreign currency contracts outstanding 3,902
-----------------------------------------------------------
Trustee deferred compensation and retirement
plans 3,891
-----------------------------------------------------------
Accrued distribution fees 32,485
-----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 1,282
-----------------------------------------------------------
Accrued transfer agent fees 3,045
-----------------------------------------------------------
Accrued operating expenses 56,702
===========================================================
Total liabilities 609,498
===========================================================
Net assets applicable to shares outstanding $76,520,390
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $74,763,271
-----------------------------------------------------------
Undistributed net investment income (loss) (29,722)
-----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and foreign currency contracts (518,034)
-----------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and foreign
currency contracts 2,304,875
===========================================================
$76,520,390
___________________________________________________________
===========================================================
NET ASSETS:
Class A $48,838,086
___________________________________________________________
===========================================================
Class B $12,012,330
___________________________________________________________
===========================================================
Class C $12,858,043
___________________________________________________________
===========================================================
Class R $ 75,545
___________________________________________________________
===========================================================
Institutional Class $ 2,736,386
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 4,100,073
___________________________________________________________
===========================================================
Class B 1,017,323
___________________________________________________________
===========================================================
Class C 1,088,943
___________________________________________________________
===========================================================
Class R 6,357
___________________________________________________________
===========================================================
Institutional Class 228,899
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 11.91
-----------------------------------------------------------
Offering price per share:
(Net asset value of $11.91 divided by
94.50%) $ 12.60
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per share $ 11.81
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per share $ 11.81
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per share $ 11.88
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per share $ 11.95
___________________________________________________________
===========================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-88
STATEMENT OF OPERATIONS
For the six months ended April 30, 2005
(Unaudited)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $30,854) $ 390,728
-----------------------------------------------------------------------
Interest 156,784
=======================================================================
Total investment income 547,512
=======================================================================
EXPENSES:
Advisory fees 247,101
-----------------------------------------------------------------------
Administrative services fees 24,795
-----------------------------------------------------------------------
Custodian fees 21,387
-----------------------------------------------------------------------
Distribution fees:
Class A 69,304
-----------------------------------------------------------------------
Class B 49,100
-----------------------------------------------------------------------
Class C 49,714
-----------------------------------------------------------------------
Class R 150
-----------------------------------------------------------------------
Transfer agent fees -- Class A, B, C and R 41,128
-----------------------------------------------------------------------
Transfer agent fees -- Institutional Class 628
-----------------------------------------------------------------------
Trustees' and officer's fees and benefits 7,801
-----------------------------------------------------------------------
Registration and filing fees 52,896
-----------------------------------------------------------------------
Professional services fees 34,955
-----------------------------------------------------------------------
Other 25,034
=======================================================================
Total expenses 623,993
=======================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (13,714)
=======================================================================
Net expenses 610,279
=======================================================================
Net investment income (loss) (62,767)
=======================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY
CONTRACTS:
Net realized gain (loss) from:
Investment securities (409,973)
-----------------------------------------------------------------------
Foreign currencies 3,195
-----------------------------------------------------------------------
Foreign currency contracts (44,120)
=======================================================================
(450,898)
=======================================================================
Change in net unrealized appreciation of:
Investment securities 557,694
-----------------------------------------------------------------------
Foreign currencies 346
-----------------------------------------------------------------------
Foreign currency contracts 31,066
=======================================================================
589,106
=======================================================================
Net gain from investment securities, foreign currencies and
foreign currency contracts 138,208
=======================================================================
Net increase in net assets resulting from operations $ 75,441
_______________________________________________________________________
=======================================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-89
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2005 and the period November 4, 2003 (date
operations commenced) through ended October 31, 2004
(Unaudited)
APRIL 30, OCTOBER 31,
2005 2004
----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (62,767) $ (93,039)
----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and foreign currency contracts (450,898) 28,027
----------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies and foreign currency
contracts 589,106 1,715,769
========================================================================================
Net increase in net assets resulting from operations 75,441 1,650,757
========================================================================================
Share transactions-net:
Class A 23,777,457 23,942,293
----------------------------------------------------------------------------------------
Class B 5,589,158 6,102,509
----------------------------------------------------------------------------------------
Class C 6,970,127 5,729,384
----------------------------------------------------------------------------------------
Class R 41,394 33,159
----------------------------------------------------------------------------------------
Institutional Class 910,817 1,697,894
========================================================================================
Net increase in net assets resulting from share
transactions 37,288,953 37,505,239
========================================================================================
Net increase in net assets 37,364,394 39,155,996
========================================================================================
NET ASSETS:
Beginning of period 39,155,996 --
========================================================================================
End of period (including undistributed net investment
income (loss) of $(29,722) and $33,045, respectively). $76,520,390 $39,155,996
________________________________________________________________________________________
========================================================================================
|
NOTES TO FINANCIAL STATEMENTS
April 30, 2005
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Trimark Endeavor Fund (the "Fund") is a separate series of AIM Investment Funds (the "Trust"). The Trust is organized as 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 consisting of six separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The Fund currently offers multiple classes of shares. 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. Each company listed in the Schedule of Investments is organized in the United States of America unless otherwise noted.
Under the Trust's organizational documents, each Trustee, officer, employee or other agent of the Trust (including the Trust's investment manager) is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts.
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 on the basis of prices furnished by independent pricing services, which may be considered fair valued, or market makers. Each security reported on the NASDAQ National Market System is valued at the NASDAQ Official Closing Price ("NOCP") as of the close of the customary trading session on the valuation date or absent a NOCP, at the closing bid price.
FS-90
Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. 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").
Investments in open-end registered investment companies and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in closed-end registered investment companies that trade on an exchange are valued at the last sales price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes 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 specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations having 60 days or less to maturity and commercial paper are valued at amortized cost which approximates market value.
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.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable 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 ordinarily be reflected in the computation of the Fund's net asset value. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current market value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current market value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs and domestic and foreign index futures.
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
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 Subchapter M 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 -- Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.
F. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. 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 (net of foreign taxes withheld on disposition) and income items denominated in foreign
FS-91
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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from, (i) sales of foreign currencies, (ii) currency gains or losses realized between the trade and settlement dates on securities transactions, and (iii) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.
G. 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.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO 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 based on the annual rate of the Fund's average daily net assets as follows:
AVERAGE NET ASSETS RATE ---------------------------------------------------------------------- First $1 billion 0.80% ---------------------------------------------------------------------- Over $1 billion 0.75% ______________________________________________________________________ ====================================================================== |
Effective January 1, 2005 through December 31, 2009, AIM has contractually agreed to waive advisory fees to the extent necessary so that the advisory fees payable by the Fund based on the Fund's average daily net assets do not exceed the annual rate of:
AVERAGE NET ASSETS RATE ---------------------------------------------------------------------- First $250 million 0.745% ---------------------------------------------------------------------- Next $250 million 0.73% ---------------------------------------------------------------------- Next $500 million 0.715% ---------------------------------------------------------------------- Next $1.5 billion 0.70% ---------------------------------------------------------------------- Next $2.5 billion 0.685% ---------------------------------------------------------------------- Next $2.5 billion 0.67% ---------------------------------------------------------------------- Next $2.5 billion 0.655% ---------------------------------------------------------------------- Over $10 billion 0.64% ______________________________________________________________________ ====================================================================== |
Under the terms of a master sub-advisory agreement between AIM and AIM Funds Management Inc. ("AIM Funds Management"), AIM pays AIM Funds Management 40% of the amount of AIM's compensation on the sub-advised assets.
AIM has contractually agreed to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual operating expenses (excluding certain items discussed below) of Class A, Class B. Class C, Class R and Institutional Class shares to 2.00%, 2.65%, 2.65%, 2.15% and 1.65% of average daily net assets, respectively, through October 31, 2005. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses to exceed the limits stated above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items (these are expenses that are not anticipated to arise from the Fund's day-to-day operations), or items designated as such by the Fund's Board of Trustees; (v) expenses related to a merger or reorganization, as approved by the Fund's Board of Trustees; and (vi) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Currently, in addition to the expense reimbursement arrangement with AMVESCAP PLC ("AMVESCAP") described more fully below, the only expense offset arrangements from which the Fund may benefit are in the form of credits that the Fund receives from banks where the Fund or its transfer agent has deposit accounts in which it holds uninvested cash. Those credits are used to pay certain expenses incurred by the Fund. To the extent that the annualized expense ratio does not exceed the expense limitation, AIM will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year. AIM did not waive fees and/or reimburse expenses during the period under this expense limitation.
For the six months ended April 30, 2005, AIM waived fees of $12,536.
For the six months ended April 30, 2005, at the request of the Trustees of the Trust, AMVESCAP agreed to reimburse $157 of expenses incurred by the Fund in connection with market timing matters in the AIM Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement, are included in the Statement of Operations.
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. Pursuant to such agreement, for the six months ended April 30, 2005, AIM was paid $24,795.
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The Fund, pursuant to a transfer agency and service agreement, has agreed to pay AIM Investment Services, Inc. ("AISI") a fee for providing transfer agency and shareholder services to the Fund and reimburse AISI for certain expenses incurred by AISI in the course of providing such services. AISI may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. For the six months ended April 30, 2005, the Fund paid AISI $41,128 for Class A, Class B, Class C and Class R share classes and $628 for Institutional Class shares.
The Trust has entered into master distribution agreements with A I M Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class B, Class C, Class R and 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, Class B, Class C and Class R shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays ADI 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, up to 0.25% of the average daily net assets of the Class A, Class B, Class C or Class R shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. NASD Rules 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 Plans, for the six months ended April 30, 2005, the Class A, Class B, Class C and Class R shares paid $69,304, $49,100, $49,714 and $150, respectively.
Front-end sales commissions and contingent deferred sales charges ("CDSC") (collectively the "sales charges") are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended April 30, 2005, ADI advised the Fund that it retained $35,497 in front-end sales commissions from the sale of Class A shares and $1,000, $2,935, $1,259 and $0 from Class A, Class B, Class C and Class R shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of AIM, AISI and/or ADI.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions and (ii) custodian credits which result from periodic overnight cash balances at the custodian. For the six months ended April 30, 2005, the Fund received credits from these arrangements which resulted in the reduction of the Fund's total expenses of $1,021.
NOTE 4--TRUSTEES' AND OFFICER'S FEES AND BENEFITS
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to pay remuneration to each Trustee of the Fund who is not an "interested person" of the AIM Funds. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
In addition to the above, "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to pay remuneration to the Senior Officer of the AIM Funds.
During the six months ended April 30, 2005, the Fund paid legal fees of $1,914 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 5--BORROWINGS
Pursuant to an exemptive order from the SEC, the Fund may participate in an interfund lending facility that AIM has established for temporary borrowings by the AIM Funds. An interfund loan will be made under this facility only if the loan rate (an average of the rate available on bank loans and the rate available on investments in overnight repurchase agreements) is favorable to both the lending fund and the borrowing fund. A loan will be secured by collateral if the Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total assets. To the extent that the loan is required to be secured by collateral, the collateral is marked to market daily to ensure that the market value is at least 102% of the outstanding principal value of the loan.
The Fund is a participant in an uncommitted unsecured revolving credit facility with State Street Bank and Trust Company ("SSB"). The Fund may borrow up to the lesser of (i) $125,000,000, or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the credit facility can borrow on a first come, first served basis. Principal on each loan outstanding shall bear interest at the bid rate quoted by SSB at the time of the request for the loan.
During the six months ended April 30, 2005, the Fund did not borrow or lend under the interfund lending facility or borrow under the uncommitted unsecured revolving credit facility.
Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds in the account so the custodian can be compensated by earning
FS-93
the additional interest; or (ii) compensate by paying the custodian bank. In either case, the custodian bank will be compensated at an amount equal to the Federal Funds rate plus 100 basis points.
NOTE 6--FOREIGN CURRENCY CONTRACTS
OPEN FOREIGN CURRENCY CONTRACTS AT PERIOD END
------------------------------------------------------------------------------
CONTRACT TO
SETTLEMENT ----------------------- UNREALIZED
DATE CURRENCY DELIVER RECEIVE VALUE DEPRECIATION
------------------------------------------------------------------------------
11/15/05 EUR* $3,000,000 $3,884,700 $3,888,602 $(3,902)
______________________________________________________________________________
==============================================================================
|
* EUR -- Euro
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund's fiscal year-end.
The Fund did not have a capital loss carryforward as of October 31, 2004.
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities and money market funds) purchased and sold by the Fund during the six months ended April 30, 2005 was $37,691,061 and $7,570,933, respectively. For interim reporting periods, the cost of investments for tax purposes includes reversals of certain tax items, such as, wash sales that have occurred since the prior fiscal year-end.
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS ------------------------------------------------------------------------------- Aggregate unrealized appreciation of investment securities $ 4,423,106 ------------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (2,179,936) =============================================================================== Net unrealized appreciation of investment securities $ 2,243,170 _______________________________________________________________________________ =============================================================================== Cost of investments for tax purposes is $74,304,537. |
FS-94
NOTE 9--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A shares, Class B shares, Class C shares, Class R shares and Institutional Class shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with CDSC. Class R shares and Institutional Class shares are sold at net asset value. Under certain circumstances, Class A shares and Class R shares are subject to CDSC. Generally, Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase.
CHANGES IN SHARES OUTSTANDING(A)
--------------------------------------------------------------------------------------------------------------------
NOVEMBER 4, 2003
(DATE OPERATIONS
SIX MONTHS ENDED COMMENCED) THROUGH
APRIL 30, 2005 OCTOBER 31, 2004
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------
Sold:
Class A 2,233,312 $27,507,007 2,289,460 $25,304,459
--------------------------------------------------------------------------------------------------------------------
Class B 551,457 6,724,371 638,445 6,985,762
--------------------------------------------------------------------------------------------------------------------
Class C 637,795 7,781,964 563,891 6,235,662
--------------------------------------------------------------------------------------------------------------------
Class R(b) 3,634 44,690 3,090 34,259
--------------------------------------------------------------------------------------------------------------------
Institutional Class(b) 115,235 1,418,198 159,465 1,758,356
====================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 25,898 317,480 3,316 36,925
--------------------------------------------------------------------------------------------------------------------
Class B (26,087) (317,480) (3,331) (36,925)
====================================================================================================================
Reacquired:
Class A (327,171) (4,047,030) (124,742) (1,399,091)
--------------------------------------------------------------------------------------------------------------------
Class B (66,535) (817,733) (76,626) (846,328)
--------------------------------------------------------------------------------------------------------------------
Class C (67,259) (811,837) (45,484) (506,278)
--------------------------------------------------------------------------------------------------------------------
Class R(b) (271) (3,296) (96) (1,100)
--------------------------------------------------------------------------------------------------------------------
Institutional Class(b) (40,414) (507,381) (5,387) (60,462)
====================================================================================================================
3,039,594 $37,288,953 3,402,001 $37,505,239
____________________________________________________________________________________________________________________
====================================================================================================================
|
(a) There is one entity that is a record owner of more than 5% of the outstanding shares of the Fund and it owns 20% of the outstanding shares of the Fund. AIM Distributors has an agreement with this entity to sell Fund shares. The Fund, AIM, and/or AIM affiliates may make payments to this entity, which is considered to be related to the Fund, for providing services to the Fund, AIM and/or AIM affiliates including but not limited to services such as, securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by this entity are also owned beneficially.
(b) Class R shares and Institutional Class shares commenced sales on April 30, 2004.
FS-95
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
---------------------------------
NOVEMBER 4, 2003
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
-----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.53 $ 10.00
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) (0.05)(a)
-----------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.39 1.58
===============================================================================================
Total from investment operations 0.38 1.53
===============================================================================================
Net asset value, end of period $ 11.91 $ 11.53
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 3.30% 15.30%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $48,838 $24,996
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.79%(c) 2.00%(d)
-----------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.83%(c) 3.02%(d)
===============================================================================================
Ratio of net investment income (loss) to average net assets (0.01)%(c) (0.49)%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 15% 35%
_______________________________________________________________________________________________
===============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. 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
$39,930,113.
(d) Annualized.
(e) Not annualized for periods less than one year.
CLASS B
---------------------------------
NOVEMBER 4, 2003
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
-----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.47 $10.00
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.13)(a)
-----------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.38 1.60
===============================================================================================
Total from investment operations 0.34 1.47
===============================================================================================
Net asset value, end of period $ 11.81 $11.47
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 2.96% 14.70%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,012 $6,403
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.44%(c) 2.65%(d)
-----------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.48%(c) 3.67%(d)
===============================================================================================
Ratio of net investment income (loss) to average net assets (0.66)%(c) (1.14)%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 15% 35%
_______________________________________________________________________________________________
===============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$9,901,449.
(d) Annualized.
(e) Not annualized for periods less than one year.
FS-96
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS C
---------------------------------
NOVEMBER 4, 2003
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
-----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.47 $10.00
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.13)(a)
-----------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.38 1.60
===============================================================================================
Total from investment operations 0.34 1.47
===============================================================================================
Net asset value, end of period $ 11.81 $11.47
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 2.96% 14.70%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,858 $5,944
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.44%(c) 2.65%(d)
-----------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.48%(c) 3.67%(d)
===============================================================================================
Ratio of net investment income (loss) to average net assets (0.66)%(c) (1.14)%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 15% 35%
_______________________________________________________________________________________________
===============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. 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
$10,025,176.
(d) Annualized.
(e) Not annualized for periods less than one year.
CLASS R
---------------------------------
APRIL 30. 2004
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
-----------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.51 $10.88
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) (0.04)(a)
-----------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.38 0.67
===============================================================================================
Total from investment operations 0.37 0.63
===============================================================================================
Net asset value, end of period $11.88 $11.51
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 3.21% 5.79%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 76 $ 34
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.94%(c) 2.15%(d)
-----------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.98%(c) 3.17%(d)
===============================================================================================
Ratio of net investment income (loss) to average net assets (0.16)%(c) (0.64)%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 15% 35%
_______________________________________________________________________________________________
===============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $60,547.
(d) Annualized.
(e) Not annualized for periods less than one year.
FS-97
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
INSTITUTIONAL CLASS
---------------------------------
APRIL 30. 2004
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
-----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.55 $10.88
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.02 (0.01)(a)
-----------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.38 0.68
===============================================================================================
Total from investment operations 0.40 0.67
===============================================================================================
Net asset value, end of period $ 11.95 $11.55
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 3.46% 6.16%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 2,736 $1,779
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.35%(c) 1.62%(d)
-----------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.39%(c) 2.64%(d)
===============================================================================================
Ratio of net investment income (loss) to average net assets 0.43%(c) (0.11)%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 15% 35%
_______________________________________________________________________________________________
===============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$2,369,849.
(d) Annualized.
(e) Not annualized for periods less than one year.
NOTE 11--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note.
SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING
On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment advisor to certain AIM Funds), A I M Advisors, Inc. ("AIM") (the Fund's investment advisor) and A I M Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached final settlements with certain regulators, including, among others, the Securities and Exchange Commission ("SEC"), the New York Attorney General ("NYAG") and the Colorado Attorney General ("COAG"), to resolve civil enforcement actions and/or investigations related to market timing activity and related issues in the AIM Funds, including those formerly advised by IFG.
As part of the settlements, IFG agreed to pay a total of $325 million (including $110 million in civil penalties). Additionally, AIM and ADI agreed to pay a total of $50 million (including $30 million in civil penalties). These settlement funds will be made available for distribution to the shareholders of the applicable AIM Funds that were harmed by market timing activity, and may (or may not) increase as a result of contributions from third parties who reach final settlements with the SEC or other regulators to resolve allegations of market timing and/or late trading. The settlement funds will be distributed in accordance with a methodology to be determined by AIM's independent distribution consultant, in consultation with AIM and the independent trustees of the AIM Funds and acceptable to the staff of the SEC. As the methodology is unknown at the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the distribution of these settlement funds may have on the Fund or whether such distribution will have an impact on the Fund's financial statements in the future.
At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"), the parent company of IFG and AIM, has agreed to reimburse expenses incurred by the AIM Funds related to market timing matters.
REGULATORY INQUIRIES AND PENDING LITIGATION
IFG, AIM, ADI and/or related entities and individuals have received inquiries from numerous regulators in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, some of which concern one or more AIM Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost securityholders. IFG, AIM and ADI are providing full cooperation with respect to these
FS-98
NOTE 11--LEGAL PROCEEDINGS--(CONTINUED)
inquiries. As described more fully below, the AIM Funds, IFG, AIM, ADI and/or related entities and individuals are defendants in numerous civil lawsuits related to one or more of these issues. Regulatory actions and/or additional civil lawsuits related to these or other issues may be filed against the AIM Funds, IFG, AIM and/or related entities and individuals in the future.
On April 12, 2005, the Attorney General of the State of West Virginia ("WVAG") filed civil proceedings against AIM, IFG and ADI, as well as numerous unrelated mutual fund complexes and financial institutions. None of the AIM Funds has been named as a defendant in these proceedings. The WVAG complaint, filed in the Circuit Court of Marshall County, West Virginia [Civil Action No. 05-C-81], alleges, in substance, that AIM, IFG and ADI engaged in unfair competition and/or unfair or deceptive trade practices by failing to disclose in the prospectuses for the AIM Funds, including those formerly advised by IFG, that they had entered into certain arrangements permitting market timing of such Funds. As a result of the foregoing, the WVAG alleges violations of W. Va. Code sec. 46A-1-101, et seq. (the West Virginia Consumer Credit and Protection Act). The WVAG complaint is seeking, among other things, injunctive relief, civil monetary penalties and a writ of quo warranto against the defendants. If AIM is unsuccessful in its defense of the WVAG proceedings, it could be barred from serving as an investment advisor for any investment company registered under the Investment Company Act of 1940, as amended (a "registered investment company"). Such results could affect the ability of AIM or any other investment advisor directly or indirectly owned by AMVESCAP, from serving as an investment advisor to any registered investment company, including the Fund. The Fund has been informed by AIM that, if these results occur, AIM will seek exemptive relief from the SEC to permit it to continue to serve as the Fund's investment advisor. There is no assurance that such exemptive relief will be granted.
Civil lawsuits, including purported class action and shareholder derivative suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or related entities and individuals, depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related issues in the AIM Funds;
- that certain AIM Funds inadequately employed fair value pricing;
- that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale and that the defendants adopted unlawful distribution plans;
- that the defendants breached their fiduciary duties by charging distribution fees while funds and/or specific share classes were closed generally to new investors and/or while other share classes of the same fund were not charged the same distribution fees;
- that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively promote the sale of the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions; and
- that the defendants breached their fiduciary duties by failing to ensure that the AIM Funds participated in class action settlements in which the AIM Funds were eligible to participate.
These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and ERISA, negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid, an accounting of all fund-related fees, commissions and soft dollar payments, restitution of all commissions and fees paid, and prospective relief in the form of reduced fees.
At the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the outcome of the Regulatory Inquiries and Pending Litigation described above may have on AIM, ADI or the Fund.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
As a result of the matters discussed above, investors in the AIM Funds might react by redeeming their investments. This might require the AIM Funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AIM Funds.
FS-99
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2005
(Unaudited)
MARKET
SHARES VALUE
------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-53.34%
BERMUDA-2.36%
Willis Group Holdings Ltd. (Insurance
Brokers) 19,400 $ 648,930
========================================================================
DENMARK-0.64%
Novozymes A.S.-Class B (Specialty
Chemicals)(a) 3,600 175,239
========================================================================
FRANCE-0.14%
Societe BIC S.A. (Office Services &
Supplies)(a) 700 37,860
========================================================================
IRELAND-6.67%
Anglo Irish Bank Corp. PLC (Diversified
Banks)(a) 41,400 479,083
------------------------------------------------------------------------
Kerry Group PLC-Class A (Packaged Foods &
Meats)(a) 32,600 790,567
------------------------------------------------------------------------
Ryanair Holdings PLC-ADR (Airlines)(b) 14,000 562,100
========================================================================
1,831,750
========================================================================
ITALY-1.83%
Luxottica Group S.p.A. (Apparel, Accessories
& Luxury Goods)(a) 25,200 503,087
========================================================================
JAPAN-5.46%
Canon Inc. (Office Electronics)(a) 19,000 988,255
------------------------------------------------------------------------
Nintendo Co., Ltd. (Home Entertainment
Software)(a) 4,500 510,515
========================================================================
1,498,770
========================================================================
MEXICO-8.77%
Cemex S.A. de C.V.-ADR (Construction
Materials) 30,108 1,083,888
------------------------------------------------------------------------
Grupo Modelo S.A. de C.V.-Series C (Brewers) 163,500 465,816
------------------------------------------------------------------------
Grupo Televisa S.A.-ADR (Broadcasting & Cable
TV) 15,300 859,554
========================================================================
2,409,258
========================================================================
NETHERLANDS-2.93%
Vedior N.V. (Employment Services)(a) 52,300 804,426
========================================================================
SWEDEN-2.07%
Telefonaktiebolaget LM Ericsson-Class B
(Communications Equipment)(a) 192,000 568,206
========================================================================
SWITZERLAND-1.33%
Schindler Holding A.G. (Industrial
Machinery)(a) 300 109,809
------------------------------------------------------------------------
Schindler Holding A.G.-Participation Ctfs.
(Industrial Machinery)(a) 700 254,213
========================================================================
364,022
========================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
UNITED KINGDOM-21.14%
Compass Group PLC (Restaurants)(a) 210,900 $ 944,467
------------------------------------------------------------------------
GlaxoSmithKline PLC (Pharmaceuticals)(a) 20,328 513,390
------------------------------------------------------------------------
Reed Elsevier PLC (Publishing)(a) 130,300 1,276,775
------------------------------------------------------------------------
Smiths Group PLC (Industrial
Conglomerates)(a) 59,400 975,262
------------------------------------------------------------------------
Tesco PLC (Food Retail)(a) 147,546 871,088
------------------------------------------------------------------------
WPP Group PLC (Advertising)(a) 112,700 1,224,903
========================================================================
5,805,885
========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $14,021,162) 14,647,433
========================================================================
DOMESTIC COMMON STOCKS-43.36%
ASSET MANAGEMENT & CUSTODY BANKS-3.18%
State Street Corp. 18,900 873,747
========================================================================
BROADCASTING & CABLE TV-2.76%
Clear Channel Communications, Inc. 23,700 756,978
========================================================================
CASINOS & GAMING-1.93%
Harrah's Entertainment, Inc. 8,100 531,522
========================================================================
COMPUTER & ELECTRONICS RETAIL-2.35%
RadioShack Corp. 25,800 644,226
========================================================================
CONSTRUCTION MATERIALS-2.90%
Vulcan Materials Co. 15,000 795,600
========================================================================
CONSUMER FINANCE-3.09%
American Express Co. 16,100 848,470
========================================================================
DATA PROCESSING & OUTSOURCED SERVICES-1.16%
Sabre Holdings Corp.-Class A 16,300 318,828
========================================================================
DIVERSIFIED CHEMICALS-2.41%
Engelhard Corp. 21,600 661,608
========================================================================
ELECTRONIC MANUFACTURING SERVICES-2.44%
Molex Inc.-Class A 29,300 670,677
========================================================================
HEALTH CARE SERVICES-2.51%
IMS Health Inc. 28,700 688,226
========================================================================
HOME IMPROVEMENT RETAIL-2.86%
Sherwin-Williams Co. (The) 17,600 784,432
========================================================================
|
FS-100
MARKET
SHARES VALUE
------------------------------------------------------------------------
HYPERMARKETS & SUPER CENTERS-2.32%
Costco Wholesale Corp. 15,700 $ 637,106
========================================================================
INTERNET RETAIL-2.56%
IAC/InterActiveCorp(b) 32,400 704,376
========================================================================
MANAGED HEALTH CARE-4.37%
WellPoint, Inc.(b) 9,400 1,200,850
========================================================================
MOVIES & ENTERTAINMENT-0.25%
Walt Disney Co. (The) 2,600 68,640
========================================================================
PUBLISHING-1.61%
Meredith Corp. 9,400 441,800
========================================================================
SPECIALTY CHEMICALS-2.51%
Sigma-Aldrich Corp. 11,800 689,474
========================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
SYSTEMS SOFTWARE-2.15%
Oracle Corp.(b) 51,000 $ 589,560
========================================================================
Total Domestic Common Stocks (Cost
$11,840,587) 11,906,120
========================================================================
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-5.85%
FEDERAL HOME LOAN BANK (FHLB)-5.85%
Unsec. Disc. Notes,
2.80%, 05/02/05 (Cost $1,605,870)(c) $1,606,000 $ 1,605,750
========================================================================
TOTAL INVESTMENTS-102.55% (Cost $27,467,619) 28,159,303
========================================================================
OTHER ASSETS LESS LIABILITIES-(2.55%) (699,525)
========================================================================
NET ASSETS-100.00% $27,459,778
________________________________________________________________________
========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Ctfs. - Certificates Disc. - Discounted Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) In accordance with the procedures established by the Board of Trustees, the
foreign security is fair valued using adjusted closing market prices. The
aggregate market value of these securities at April 30, 2005 was
$11,027,145, which represented 39.16% of the Fund's Total Investments. See
Note 1A.
(b) Non-income producing security.
(c) Security traded on a discount basis. Unless otherwise indicated, the
interest rate shown represents the discount rate at the time of purchase by
the Fund.
See accompanying notes which are an integral part of the financial statements.
FS-101
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005
(Unaudited)
ASSETS:
Investments, at market value (cost
$27,467,619) $28,159,303
-----------------------------------------------------------
Foreign currencies, at market value (cost
$13,146) 13,138
-----------------------------------------------------------
Cash 27,657
-----------------------------------------------------------
Receivables for:
Fund shares sold 106,130
-----------------------------------------------------------
Dividends 48,205
-----------------------------------------------------------
Amount due from advisor 24,746
-----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 3,266
-----------------------------------------------------------
Other assets 22,368
===========================================================
Total assets 28,404,813
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 846,089
-----------------------------------------------------------
Fund shares reacquired 30,733
-----------------------------------------------------------
Trustee deferred compensation and retirement
plans 3,266
-----------------------------------------------------------
Accrued distribution fees 11,509
-----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 930
-----------------------------------------------------------
Accrued transfer agent fees 7,893
-----------------------------------------------------------
Accrued operating expenses 44,615
===========================================================
Total liabilities 945,035
===========================================================
Net assets applicable to shares outstanding $27,459,778
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $26,714,131
-----------------------------------------------------------
Undistributed net investment income (loss) (113,158)
-----------------------------------------------------------
Undistributed net realized gain from
investment securities and foreign currencies 167,286
-----------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 691,519
===========================================================
$27,459,778
___________________________________________________________
===========================================================
NET ASSETS:
Class A $15,761,480
___________________________________________________________
===========================================================
Class B $ 5,847,766
___________________________________________________________
===========================================================
Class C $ 5,815,993
___________________________________________________________
===========================================================
Class R $ 24,056
___________________________________________________________
===========================================================
Institutional Class $ 10,483
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 1,435,580
___________________________________________________________
===========================================================
Class B 537,863
___________________________________________________________
===========================================================
Class C 534,903
___________________________________________________________
===========================================================
Class R 2,193
___________________________________________________________
===========================================================
Institutional Class 951
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 10.98
-----------------------------------------------------------
Offering price per share:
(Net asset value of $10.98 divided by
94.50%) $ 11.62
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per share $ 10.87
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per share $ 10.87
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per share $ 10.97
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per share $ 11.02
___________________________________________________________
===========================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-102
STATEMENT OF OPERATIONS
For the six months ended April 30, 2005
(Unaudited)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $2,621) $ 165,804
-----------------------------------------------------------------------
Interest 15,191
=======================================================================
Total investment income 180,995
=======================================================================
EXPENSES:
Advisory fees 97,923
-----------------------------------------------------------------------
Administrative services fees 24,795
-----------------------------------------------------------------------
Custodian fees 23,978
-----------------------------------------------------------------------
Distribution fees:
Class A 22,490
-----------------------------------------------------------------------
Class B 26,204
-----------------------------------------------------------------------
Class C 24,592
-----------------------------------------------------------------------
Class R 48
-----------------------------------------------------------------------
Transfer agent fees -- Class A, B, C and R 23,591
-----------------------------------------------------------------------
Trustees' and officer's fees and benefits 6,965
-----------------------------------------------------------------------
Registration and filing fees 51,441
-----------------------------------------------------------------------
Reports to shareholders 34,802
-----------------------------------------------------------------------
Professional services fees 32,505
-----------------------------------------------------------------------
Other 5,677
=======================================================================
Total expenses 375,011
=======================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (82,731)
=======================================================================
Net expenses 292,280
=======================================================================
Net investment income (loss) (111,285)
=======================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities 357,701
-----------------------------------------------------------------------
Foreign currencies (2,936)
=======================================================================
354,765
=======================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities 594,375
-----------------------------------------------------------------------
Foreign currencies (161)
=======================================================================
594,214
=======================================================================
Net gain from investment securities and foreign currencies 948,979
=======================================================================
Net increase in net assets resulting from operations $ 837,694
_______________________________________________________________________
=======================================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-103
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2005 and the year ended October 31, 2004
(Unaudited)
APRIL 30, OCTOBER 31,
2005 2004
----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (111,285) $ (83,482)
----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies 354,765 (196,705)
----------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 594,214 97,305
========================================================================================
Net increase (decrease) in net assets resulting from
operations 837,694 (182,882)
========================================================================================
Share transactions-net:
Class A 5,556,564 9,842,778
----------------------------------------------------------------------------------------
Class B 1,285,518 4,399,603
----------------------------------------------------------------------------------------
Class C 1,592,158 4,094,575
----------------------------------------------------------------------------------------
Class R 13,770 10,000
----------------------------------------------------------------------------------------
Institutional Class -- 10,000
========================================================================================
Net increase in net assets resulting from share
transactions 8,448,010 18,356,956
========================================================================================
Net increase in net assets 9,285,704 18,174,074
========================================================================================
NET ASSETS:
Beginning of period 18,174,074 --
========================================================================================
End of period (including undistributed net investment
income (loss) of $(113,158) and $(1,873), respectively) $27,459,778 $18,174,074
________________________________________________________________________________________
========================================================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-104
NOTES TO FINANCIAL STATEMENTS
April 30, 2005
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Trimark Fund (the "Fund") is a separate series of AIM Investment Funds (the "Trust"). The Trust is organized as 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 consisting of six separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The Fund currently offers multiple classes of shares. 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. Companies are listed in the Schedule of Investments based on the country in which they are organized.
Under the Trust's organizational documents, each Trustee, officer, employee or other agent of the Trust (including the Trust's investment manager) is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts.
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 on the basis of prices furnished by independent pricing services, which may be considered fair valued, or market makers. Each security reported on the NASDAQ National Market System is valued at the NASDAQ Official Closing Price ("NOCP") as of the close of the customary trading session on the valuation date or absent a NOCP, at the closing bid price.
Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. 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").
Investments in open-end registered investment companies and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in closed-end registered investment companies that trade on an exchange are valued at the last sales price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes 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 specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations having 60 days or less to maturity and commercial paper are valued at amortized cost which approximates market value.
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.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable 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 ordinarily be reflected in the computation of the Fund's net asset value. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current market value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current market value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs and domestic and foreign index futures.
FS-105
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
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 Subchapter M 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 -- Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.
F. REDEMPTION FEES -- The Fund has instituted a 2% redemption fee on certain share classes that is to be retained by the Fund to offset transaction costs and other expenses associated with short-term redemptions and exchanges. The fee, subject to certain exceptions, is imposed on certain redemptions, including exchanges of shares held less than 30 days. The redemption fee is accounted for as an addition to shares of beneficial interest by the Fund and is allocated among the share classes based on the relative net assets of each class.
G. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. 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 (net of foreign taxes withheld on disposition) 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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from, (i) sales of foreign currencies, (ii) currency gains or losses realized between the trade and settlement dates on securities transactions, and (iii) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.
H. 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.
FS-106
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of a master sub-advisory agreement between AIM and AIM Funds Management Inc. ("AIM Funds Management"), AIM pays AIM Funds Management 40% of the amount of AIM'S compensation on the sub-advised assets.
AVERAGE NET ASSETS RATE --------------------------------------------------------------------- First $1 billion 0.85% --------------------------------------------------------------------- Over $1 billion 0.80% _____________________________________________________________________ ===================================================================== |
Effective January 1, 2005 through June 30, 2006, AIM has contractually agreed to waive advisory fees to the extent necessary so that the advisory fees payable by the Fund based on the Fund's average daily net assets do not exceed the annual rate of:
AVERAGE NET ASSETS RATE --------------------------------------------------------------------- First $250 million 0.80% --------------------------------------------------------------------- Next $250 million 0.78% --------------------------------------------------------------------- Next $500 million 0.76% --------------------------------------------------------------------- Next $1.5 billion 0.74% --------------------------------------------------------------------- Next $2.5 billion 0.72% --------------------------------------------------------------------- Next $2.5 billion 0.70% --------------------------------------------------------------------- Next $2.5 billion 0.68% --------------------------------------------------------------------- Over $10 billion 0.66% _____________________________________________________________________ ===================================================================== |
AIM has contractually agreed to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual operating expenses (excluding certain items discussed below) of Class A, Class B, Class C, Class R and Institutional Class shares to 2.25%, 2.90%, 2.90%, 2.40% and 1.90% of average daily net assets, respectively, through October 31, 2005. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses to exceed the limits stated above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items (these are expenses that are not anticipated to arise from the Fund's day-to-day operations), or items designated as such by the Fund's Board of Trustees; (v) expenses related to a merger or reorganization, as approved by the Fund's Board of Trustees; and (vi) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Currently, in addition to the expense reimbursement arrangement with AMVESCAP PLC ("AMVESCAP") described more fully below, the only expense offset arrangements from which the Fund may benefit are in the form of credits that the Fund receives from banks where the Fund or its transfer agent has deposit accounts in which it holds uninvested cash. Those credits are used to pay certain expenses incurred by the Fund. To the extent that the annualized expense ratio does not exceed the expense limitation, AIM will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
For the six months ended April 30, 2005, AIM waived fees of $82,354.
For the six months ended April 30, 2005, at the request of the Trustees of the Trust, AMVESCAP agreed to reimburse $46 of expenses incurred by the Fund in connection with market timing matters in the AIM Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement, are included in the Statement of Operations.
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. Pursuant to such agreement, for the six months ended April 30, 2005, AIM was paid $24,795.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay AIM Investment Services, Inc. ("AISI") a fee for providing transfer agency and shareholder services to the Fund and reimburse AISI for certain expenses incurred by AISI in the course of providing such services. AISI may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. For the six months ended April 30, 2005, the Fund paid AISI $23,591 for Class A, Class B, Class C and Class R share classes and $0 for Institutional Class shares.
The Trust has entered into master distribution agreements with A I M Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class B, Class C, Class R and 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, Class B, Class C and Class R shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays ADI 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, up to 0.25% of the average daily net assets of the Class A, Class B, Class C or Class R shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. NASD Rules 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 Plans, for the six months ended April 30, 2005, the Class A, Class B, Class C and Class R shares paid $22,490, $26,204, $24,592 and $48, respectively.
Front-end sales commissions and contingent deferred sales charges ("CDSC") (collectively the "sales charges") are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended April 30, 2005, ADI advised the Fund that it
FS-107
retained $10,641 in front-end sales commissions from the sale of Class A shares and $111, $4,547, $2,082 and $0 from Class A, Class B, Class C and Class R shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of AIM, AISI and/or ADI.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions and (ii) custodian credits which result from periodic overnight cash balances at the custodian. For the six months ended April 30, 2005, the Fund received credits from these arrangements which resulted in the reduction of the Fund's total expenses of $331.
NOTE 4--TRUSTEES' AND OFFICER'S FEES AND BENEFITS
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to pay remuneration to each Trustee of the Fund who is not an "interested person" of the AIM Funds. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
In addition to the above, "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to pay remuneration to the Senior Officer of the AIM Funds.
During the six months ended April 30, 2005, the Fund paid legal fees of $1,874 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 5--BORROWINGS
Pursuant to an exemptive order from the SEC, the Fund may participate in an interfund lending facility that AIM has established for temporary borrowings by the AIM Funds. An interfund loan will be made under this facility only if the loan rate (an average of the rate available on bank loans and the rate available on investments in overnight repurchase agreements) is favorable to both the lending fund and the borrowing fund. A loan will be secured by collateral if the Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total assets. To the extent that the loan is required to be secured by collateral, the collateral is marked to market daily to ensure that the market value is at least 102% of the outstanding principal value of the loan.
The Fund is a participant in an uncommitted unsecured revolving credit facility with State Street Bank and Trust Company ("SSB"). The Fund may borrow up to the lesser of (i) $125,000,000, or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the credit facility can borrow on a first come, first served basis. Principal on each loan outstanding shall bear interest at the bid rate quoted by SSB at the time of the request for the loan.
During the six months ended April 30, 2005, the Fund did not borrow or lend under the interfund lending facility or borrow under the uncommitted unsecured revolving credit facility.
Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds in the account so the custodian can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank. In either case, the custodian bank will be compensated at an amount equal to the Federal Funds rate plus 100 basis points.
NOTE 6--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund's fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of October 31, 2004 which expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
-----------------------------------------------------------------------------
October 31, 2012 $154,130
_____________________________________________________________________________
=============================================================================
|
* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code.
FS-108
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities and money market funds) purchased and sold by the Fund during the six months ended April 30, 2005 was $13,399,421 and $4,814,115, respectively. For interim reporting periods, the cost of investments for tax purposes includes reversals of certain tax items, such as, wash sales that have occurred since the prior fiscal year-end.
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS ------------------------------------------------------------------------------ Aggregate unrealized appreciation of investment securities $1,503,857 ------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (826,925) ============================================================================== Net unrealized appreciation of investment securities $ 676,932 ______________________________________________________________________________ ============================================================================== Cost of investments for tax purposes is $27,482,371. |
NOTE 8--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A shares, Class B shares, Class C shares, Class R shares and Institutional Class shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with CDSC. Class R shares and Institutional Class shares are sold at net asset value. Under certain circumstances, Class A shares and Class R shares are subject to CDSC. Generally, Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase.
CHANGES IN SHARES OUTSTANDING
-----------------------------------------------------------------------------------------------------------------
NOVEMBER 4, 2003
(DATE OPERATIONS
SIX MONTHS ENDED COMMENCED) TO
APRIL 30, 2005 OCTOBER 31, 2004
----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------------
Sold:
Class A 611,549 $ 6,855,378 1,037,741 $10,842,516
-----------------------------------------------------------------------------------------------------------------
Class B 164,987 1,835,141 441,749 4,598,409
-----------------------------------------------------------------------------------------------------------------
Class C 188,875 2,104,869 404,000 4,219,660
-----------------------------------------------------------------------------------------------------------------
Class R(a) 1,537 17,055 952 10,000
-----------------------------------------------------------------------------------------------------------------
Institutional Class(a) -- -- 951 10,000
=================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 6,785 76,304 5,961 62,836
-----------------------------------------------------------------------------------------------------------------
Class B (6,842) (76,304) (5,984) (62,836)
=================================================================================================================
Reacquired:(b)
Class A (122,704) (1,375,118) (103,752) (1,062,574)
-----------------------------------------------------------------------------------------------------------------
Class B (42,849) (473,319) (13,198) (135,970)
-----------------------------------------------------------------------------------------------------------------
Class C (45,669) (512,711) (12,303) (125,085)
-----------------------------------------------------------------------------------------------------------------
Class R(a) (296) (3,285) -- --
=================================================================================================================
755,373 $ 8,448,010 1,756,117 $18,356,956
_________________________________________________________________________________________________________________
=================================================================================================================
|
(a) Class R shares and Institutional Class shares commenced sales on April
30, 2004.
(b) Amount is net of redemption fees of $674, $262, $258, $0, and $0 for
Class A, Class B, Class C, Class R and Institutional Class shares,
respectively, for the six months ended April 30, 2005 and $193, $64,
$59, $0 and $0 for Class A, Class B, Class C, Class R and Institutional
Class shares, respectively, for the period November 4, 2003 (date
operations commenced) through October 31, 2004.
FS-109
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
------------------------------------
NOVEMBER 4, 2003
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
--------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.38 $10.00
--------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.05)(a)
--------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.64 0.43
==================================================================================================
Total from investment operations 0.60 0.38
==================================================================================================
Redemptions fees added to shares of beneficial interest 0.00 0.00
==================================================================================================
Net asset value, end of period $ 10.98 $10.38
__________________________________________________________________________________________________
==================================================================================================
Total return(b) 5.78% 3.80%
__________________________________________________________________________________________________
==================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $15,761 $9,757
__________________________________________________________________________________________________
==================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.25%(c) 2.25%(d)
--------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.97%(c) 3.84%(d)
==================================================================================================
Ratio of net investment income (loss) to average net assets (0.68)%(c) (0.53)%(d)
__________________________________________________________________________________________________
==================================================================================================
Portfolio turnover rate(e) 22% 38%
__________________________________________________________________________________________________
==================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and the returns for
shareholder transactions. 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
$12,958,172.
(d) Annualized.
(e) Not annualized for periods less than one year.
FS-110
NOTE 9--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS B
------------------------------------
NOVEMBER 4, 2003
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
--------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.31 $10.00
--------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a) (0.12)(a)
--------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.63 0.43
==================================================================================================
Total from investment operations 0.56 0.31
==================================================================================================
Redemptions fees added to shares of beneficial interest 0.00 0.00
==================================================================================================
Net asset value, end of period $10.87 $10.31
__________________________________________________________________________________________________
==================================================================================================
Total return(b) 5.43% 3.10%
__________________________________________________________________________________________________
==================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $5,848 $4,358
__________________________________________________________________________________________________
==================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.90%(c) 2.90%(d)
--------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.62%(c) 4.49%(d)
==================================================================================================
Ratio of net investment income (loss) to average net assets (1.33)%(c) (1.18)%(d)
__________________________________________________________________________________________________
==================================================================================================
Portfolio turnover rate(e) 22% 38%
__________________________________________________________________________________________________
==================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and the returns for
shareholder transactions. 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
$5,284,166.
(d) Annualized.
(e) Not annualized for periods less than one year.
FS-111
NOTE 9--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS C
------------------------------------
NOVEMBER 4, 2003
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
--------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.31 $10.00
--------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a) (0.12)(a)
--------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.63 0.43
==================================================================================================
Total from investment operations 0.56 0.31
==================================================================================================
Redemptions fees added to shares of beneficial interest 0.00 0.00
==================================================================================================
Net asset value, end of period $10.87 $10.31
__________________________________________________________________________________________________
==================================================================================================
Total return(b) 5.43% 3.10%
__________________________________________________________________________________________________
==================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $5,816 $4,040
__________________________________________________________________________________________________
==================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.90%(c) 2.90%(d)
--------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.62%(c) 4.49%(d)
==================================================================================================
Ratio of net investment income (loss) to average net assets (1.33)%(c) (1.18)%(d)
__________________________________________________________________________________________________
==================================================================================================
Portfolio turnover rate(e) 22% 38%
__________________________________________________________________________________________________
==================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and the returns for
shareholder transactions. 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
$4,959,075.
(d) Annualized.
(e) Not annualized for periods less than one year.
FS-112
NOTE 9--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS R
----------------------------------
APRIL 30, 2004
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.37 $10.51
------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.04)(a)
------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.65 (0.10)
================================================================================================
Total from investment operations 0.60 (0.14)
================================================================================================
Redemptions fees added to shares of beneficial interest 0.00 0.00
================================================================================================
Net asset value, end of period $10.97 $10.37
________________________________________________________________________________________________
================================================================================================
Total return(b) 5.79% (1.33)%
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 24 $ 10
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.40%(c) 2.40%(d)
------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.12%(c) 3.99%(d)
================================================================================================
Ratio of net investment income (loss) to average net assets (0.83)%(c) (0.68)%(d)
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate(e) 22% 38%
________________________________________________________________________________________________
================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and the returns for
shareholder transactions. Not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $19,512.
(d) Annualized.
(e) Not annualized for periods less than one year.
FS-113
NOTE 9--FINANCIAL HIGHLIGHTS--(CONTINUED)
INSTITUTIONAL CLASS
----------------------------------
APRIL 30, 2004
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.40 $10.51
------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a) (0.01)(a)
------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.64 (0.10)
================================================================================================
Total from investment operations 0.62 (0.11)
================================================================================================
Net asset value, end of period $11.02 $10.40
________________________________________________________________________________________________
================================================================================================
Total return(b) 5.96% (1.05)%
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 10 $ 10
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.90%(c) 1.90%(d)
------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.41%(c) 3.42%(d)
================================================================================================
Ratio of net investment income (loss) to average net assets (0.33)%(c) (0.18)%(d)
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate(e) 22% 38%
________________________________________________________________________________________________
================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and the returns for
shareholder transactions. Not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $10,684.
(d) Annualized.
(e) Not annualized for periods less than one year.
NOTE 10--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note.
SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING
On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment advisor to certain AIM Funds), A I M Advisors, Inc. ("AIM") (the Fund's investment advisor) and A I M Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached final settlements with certain regulators, including, among others, the Securities and Exchange Commission ("SEC"), the New York Attorney General ("NYAG") and the Colorado Attorney General ("COAG"), to resolve civil enforcement actions and/or investigations related to market timing activity and related issues in the AIM Funds, including those formerly advised by IFG.
As part of the settlements, IFG agreed to pay a total of $325 million (including $110 million in civil penalties). Additionally, AIM and ADI agreed to pay a total of $50 million (including $30 million in civil penalties). These settlement funds will be made available for distribution to the shareholders of the applicable AIM Funds that were harmed by market timing activity, and may (or may not) increase as a result of contributions from third parties who reach final settlements with the SEC or other regulators to resolve allegations of market timing and/or late trading. The settlement funds will be distributed in accordance with a methodology to be determined by AIM's independent distribution consultant, in consultation with AIM and the independent trustees of the AIM Funds and acceptable to the staff of the SEC. As the methodology is unknown at the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the distribution of these settlement funds may have on the Fund or whether such distribution will have an impact on the Fund's financial statements in the future.
At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"), the parent company of IFG and AIM, has agreed to reimburse expenses incurred by the AIM Funds related to market timing matters.
REGULATORY INQUIRIES AND PENDING LITIGATION
IFG, AIM, ADI and/or related entities and individuals have received inquiries from numerous regulators in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, some of which concern one or more AIM Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost securityholders. IFG, AIM and ADI are providing full cooperation with respect to these
FS-114
NOTE 10--LEGAL PROCEEDINGS--(CONTINUED)
inquiries. As described more fully below, the AIM Funds, IFG, AIM, ADI and/or related entities and individuals are defendants in numerous civil lawsuits related to one or more of these issues. Regulatory actions and/or additional civil lawsuits related to these or other issues may be filed against the AIM Funds, IFG, AIM and/or related entities and individuals in the future.
On April 12, 2005, the Attorney General of the State of West Virginia ("WVAG") filed civil proceedings against AIM, IFG and ADI, as well as numerous unrelated mutual fund complexes and financial institutions. None of the AIM Funds has been named as a defendant in these proceedings. The WVAG complaint, filed in the Circuit Court of Marshall County, West Virginia [Civil Action No. 05-C-81], alleges, in substance, that AIM, IFG and ADI engaged in unfair competition and/or unfair or deceptive trade practices by failing to disclose in the prospectuses for the AIM Funds, including those formerly advised by IFG, that they had entered into certain arrangements permitting market timing of such Funds. As a result of the foregoing, the WVAG alleges violations of W. Va. Code sec. 46A-1-101, et seq. (the West Virginia Consumer Credit and Protection Act). The WVAG complaint is seeking, among other things, injunctive relief, civil monetary penalties and a writ of quo warranto against the defendants. If AIM is unsuccessful in its defense of the WVAG proceedings, it could be barred from serving as an investment advisor for any investment company registered under the Investment Company Act of 1940, as amended (a "registered investment company"). Such results could affect the ability of AIM or any other investment advisor directly or indirectly owned by AMVESCAP, from serving as an investment advisor to any registered investment company, including the Fund. The Fund has been informed by AIM that, if these results occur, AIM will seek exemptive relief from the SEC to permit it to continue to serve as the Fund's investment advisor. There is no assurance that such exemptive relief will be granted.
Civil lawsuits, including purported class action and shareholder derivative suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or related entities and individuals, depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related issues in the AIM Funds;
- that certain AIM Funds inadequately employed fair value pricing;
- that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale and that the defendants adopted unlawful distribution plans;
- that the defendants breached their fiduciary duties by charging distribution fees while funds and/or specific share classes were closed generally to new investors and/or while other share classes of the same fund were not charged the same distribution fees;
- that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively promote the sale of the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions; and
- that the defendants breached their fiduciary duties by failing to ensure that the AIM Funds participated in class action settlements in which the AIM Funds were eligible to participate.
These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and ERISA, negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid, an accounting of all fund-related fees, commissions and soft dollar payments, restitution of all commissions and fees paid, and prospective relief in the form of reduced fees.
At the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the outcome of the Regulatory Inquiries and Pending Litigation described above may have on AIM, ADI or the Fund.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
As a result of the matters discussed above, investors in the AIM Funds might react by redeeming their investments. This might require the AIM Funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AIM Funds.
FS-115
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2005
(Unaudited)
MARKET
SHARES VALUE
-------------------------------------------------------------------------
DOMESTIC COMMON STOCKS-67.10%
ADVERTISING-2.07%
Harte-Hanks, Inc. 89,600 $ 2,553,600
=========================================================================
AGRICULTURAL PRODUCTS-2.91%
Delta & Pine Land Co. 142,300 3,585,960
=========================================================================
AIR FREIGHT & LOGISTICS-5.10%
Dynamex Inc.(a) 172,198 3,087,510
-------------------------------------------------------------------------
Pacer International, Inc.(a) 153,800 3,188,274
=========================================================================
6,275,784
=========================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-2.81%
Hampshire Group, Ltd.(a) 86,400 3,457,728
=========================================================================
CASINOS & GAMING-0.78%
Argosy Gaming Co.(a) 20,900 960,146
=========================================================================
COMMUNICATIONS EQUIPMENT-3.59%
SpectraLink Corp. 397,300 4,414,003
=========================================================================
DATA PROCESSING & OUTSOURCED SERVICES-3.58%
Sabre Holdings Corp.-Class A 225,300 4,406,868
=========================================================================
DIVERSIFIED COMMERCIAL SERVICES-4.98%
FTI Consulting, Inc.(a) 193,900 4,281,312
-------------------------------------------------------------------------
Learning Tree International, Inc.(a) 144,300 1,841,268
=========================================================================
6,122,580
=========================================================================
HEALTH CARE EQUIPMENT-5.15%
Bio-Rad Laboratories, Inc.-Class A(a) 50,300 2,431,502
-------------------------------------------------------------------------
Illumina, Inc.(a) 397,700 3,905,414
=========================================================================
6,336,916
=========================================================================
HEALTH CARE FACILITIES-3.09%
Alderwoods Group, Inc.(a) 291,700 3,806,685
=========================================================================
HEALTH CARE SUPPLIES-6.23%
Cooper Cos., Inc. (The) 36,824 2,487,461
-------------------------------------------------------------------------
DENTSPLY International Inc. 35,400 1,934,964
-------------------------------------------------------------------------
|
MARKET
SHARES VALUE
-------------------------------------------------------------------------
HEALTH CARE SUPPLIES-(CONTINUED)
Inverness Medical Innovations, Inc.(a) 60,000 $ 1,413,600
-------------------------------------------------------------------------
Sybron Dental Specialties, Inc.(a) 49,000 1,825,250
=========================================================================
7,661,275
=========================================================================
LEISURE PRODUCTS-4.73%
Oakley, Inc. 188,600 2,517,810
-------------------------------------------------------------------------
Polaris Industries Inc. 57,300 3,298,188
=========================================================================
5,815,998
=========================================================================
OFFICE SERVICES & SUPPLIES-2.26%
HNI Corp. 54,800 2,776,168
=========================================================================
PHARMACEUTICALS-5.19%
Endo Pharmaceuticals Holdings Inc.(a) 321,500 6,381,775
=========================================================================
PUBLISHING-2.95%
ADVO, Inc. 125,800 3,624,298
=========================================================================
REGIONAL BANKS-2.05%
Alabama National BanCorp. 44,200 2,527,356
=========================================================================
RESTAURANTS-1.77%
IHOP Corp. 53,200 2,175,880
=========================================================================
SPECIALTY CHEMICALS-2.00%
MacDermid, Inc. 81,000 2,458,350
=========================================================================
SPECIALTY STORES-3.30%
Lithia Motors, Inc.-Class A 164,500 4,056,570
=========================================================================
THRIFTS & MORTGAGE FINANCE-2.56%
Northwest Bancorp, Inc. 153,400 3,155,438
=========================================================================
Total Domestic Common Stocks (Cost
$80,608,487) 82,553,378
=========================================================================
FOREIGN STOCKS-14.73%
CANADA-14.73%
Cymat Corp. (Aluminum)(a) 1,533,100 950,307
-------------------------------------------------------------------------
FirstService Corp. (Diversified Commercial
Services)(a) 200,400 3,858,777
-------------------------------------------------------------------------
Husky Injection Molding Systems Ltd.
(Industrial Machinery)(a) 645,900 2,083,962
-------------------------------------------------------------------------
|
FS-116
MARKET
SHARES VALUE
-------------------------------------------------------------------------
CANADA-(CONTINUED)
Mega Bloks Inc. (Leisure Products)(a) 286,100 $ 4,081,134
-------------------------------------------------------------------------
Sleeman Breweries Ltd. (Brewers)(a) 338,600 3,691,812
-------------------------------------------------------------------------
Vincor International Inc. (Distillers &
Vintners)(a) 159,100 3,454,216
=========================================================================
Total Foreign Stocks (Cost $17,917,751) 18,120,208
=========================================================================
|
-------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
U.S. GOVERNMENT AGENCY SECURITIES-19.38%
FEDERAL HOME LOAN BANK (FHLB)-19.38%
Unsec. Disc. Notes,
2.80%, 05/02/05 (Cost $23,840,291)(b) $23,844,000 $ 23,840,291
=========================================================================
TOTAL INVESTMENTS-101.21% (Cost $122,366,529) 124,513,877
=========================================================================
OTHER ASSETS LESS LIABILITIES-(1.21%) (1,489,513)
=========================================================================
NET ASSETS-100.00% $123,024,364
_________________________________________________________________________
=========================================================================
|
Investment Abbreviations:
Disc. - Discounted Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security is traded on a discount basis. The interest rate shown represents
the discount rate at the time of purchase by the Fund.
See accompanying notes which are an integral part of the financial statements.
FS-117
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005
(Unaudited)
ASSETS:
Investments, at market value (cost
$122,366,529) $124,513,877
-----------------------------------------------------------
Cash 310,892
-----------------------------------------------------------
Receivables for:
Fund shares sold 1,215,938
-----------------------------------------------------------
Dividends 56,263
-----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 3,666
-----------------------------------------------------------
Other assets 44,946
===========================================================
Total assets 126,145,582
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 2,659,203
-----------------------------------------------------------
Fund shares reacquired 343,630
-----------------------------------------------------------
Trustee deferred compensation and
retirement plans 3,830
-----------------------------------------------------------
Accrued distribution fees 42,105
-----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 1,293
-----------------------------------------------------------
Accrued transfer agent fees 15,382
-----------------------------------------------------------
Accrued operating expenses 55,775
===========================================================
Total liabilities 3,121,218
===========================================================
Net assets applicable to shares outstanding $123,024,364
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $120,100,027
-----------------------------------------------------------
Undistributed net investment income (loss) (345,936)
-----------------------------------------------------------
Undistributed net realized gain from
investment securities and foreign
currencies 1,122,692
-----------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 2,147,581
===========================================================
$123,024,364
___________________________________________________________
===========================================================
NET ASSETS:
Class A $ 83,930,320
___________________________________________________________
===========================================================
Class B $ 13,344,286
___________________________________________________________
===========================================================
Class C $ 12,547,025
___________________________________________________________
===========================================================
Class R $ 242,745
___________________________________________________________
===========================================================
Institutional Class $ 12,959,988
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 6,687,860
___________________________________________________________
===========================================================
Class B 1,072,607
___________________________________________________________
===========================================================
Class C 1,009,079
___________________________________________________________
===========================================================
Class R 19,378
___________________________________________________________
===========================================================
Institutional Class 1,028,245
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 12.55
-----------------------------------------------------------
Offering price per share:
(Net asset value of $12.55 divided by
94.50%) $ 13.28
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 12.44
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 12.43
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per
share $ 12.53
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per
share $ 12.60
___________________________________________________________
===========================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-118
STATEMENT OF OPERATIONS
For the six months ended April 30, 2005
(Unaudited)
INVESTMENT INCOME:
Dividends $ 198,804
------------------------------------------------------------------------
Interest 176,261
========================================================================
Total investment income 375,065
========================================================================
EXPENSES:
Advisory fees 333,771
------------------------------------------------------------------------
Administrative services fees 24,795
------------------------------------------------------------------------
Custodian fees 18,764
------------------------------------------------------------------------
Distribution fees:
Class A 88,880
------------------------------------------------------------------------
Class B 51,075
------------------------------------------------------------------------
Class C 41,359
------------------------------------------------------------------------
Class R 380
------------------------------------------------------------------------
Transfer agent fees -- Class A, B, C and R 58,642
------------------------------------------------------------------------
Transfer agent fees -- Institutional Class 682
------------------------------------------------------------------------
Trustees' and officer's fees and benefits 7,779
------------------------------------------------------------------------
Registration and filing fees 62,556
------------------------------------------------------------------------
Other 64,110
========================================================================
Total expenses 752,793
========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (33,714)
========================================================================
Net expenses 719,079
========================================================================
Net investment income (loss) (344,014)
========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities 1,142,399
------------------------------------------------------------------------
Foreign currencies (18,416)
========================================================================
1,123,983
========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (672,864)
------------------------------------------------------------------------
Foreign currencies 2,282
========================================================================
(670,582)
========================================================================
Net gain from investment securities and foreign currencies 453,401
========================================================================
Net increase in net assets resulting from operations $ 109,387
________________________________________________________________________
========================================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-119
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2005 and the year ended October 31, 2004
(Unaudited)
APRIL 30, OCTOBER 31,
2005 2004
-----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (344,014) $ (149,909)
-----------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currencies 1,123,983 458,107
-----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (670,582) 2,818,163
=========================================================================================
Net increase in net assets resulting from operations 109,387 3,126,361
=========================================================================================
Distributions to shareholders from net realized gains:
Class A (196,595) --
-----------------------------------------------------------------------------------------
Class B (50,849) --
-----------------------------------------------------------------------------------------
Class C (38,970) --
-----------------------------------------------------------------------------------------
Class R (275) --
-----------------------------------------------------------------------------------------
Institutional Class (41,277) --
=========================================================================================
Decrease in net assets resulting from distributions (327,966) --
=========================================================================================
Share transactions-net:
Class A 62,669,582 20,158,818
-----------------------------------------------------------------------------------------
Class B 6,609,099 5,987,958
-----------------------------------------------------------------------------------------
Class C 7,928,470 4,134,003
-----------------------------------------------------------------------------------------
Class R 208,830 30,917
-----------------------------------------------------------------------------------------
Institutional Class 7,729,409 4,659,496
=========================================================================================
Net increase in net assets resulting from share
transactions 85,145,390 34,971,192
=========================================================================================
Net increase in net assets 84,926,811 38,097,553
=========================================================================================
NET ASSETS:
Beginning of period 38,097,553 --
=========================================================================================
End of period (including undistributed net investment
income (loss) of $(345,936) and $(1,922), respectively). $123,024,364 $38,097,553
_________________________________________________________________________________________
=========================================================================================
|
See accompanying notes which are an integral part of the financial statements.
FS-120
NOTES TO FINANCIAL STATEMENTS
April 30, 2005
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Trimark Small Companies Fund (the "Fund") is a separate series of AIM Investment Funds (the "Trust"). The Trust is organized as 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 consisting of six separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The Fund currently offers multiple classes of shares. 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. Each company listed in the Schedule of Investments is organized in the United States of America unless otherwise noted.
Under the Trust's organizational documents, each Trustee, officer, employee or other agent of the Trust (including the Trust's investment manager) is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts.
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 on the basis of prices furnished by independent pricing services, which may be considered fair valued, or market makers. Each security reported on the NASDAQ National Market System is valued at the NASDAQ Official Closing Price ("NOCP") as of the close of the customary trading session on the valuation date or absent a NOCP, at the closing bid price.
Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. 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").
Investments in open-end registered investment companies and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in closed-end registered investment companies that trade on an exchange are valued at the last sales price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes 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 specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations having 60 days or less to maturity and commercial paper are valued at amortized cost which approximates market value.
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.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable 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 ordinarily be reflected in the computation of the Fund's net asset value. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current market value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current market value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs and domestic and foreign index futures.
FS-121
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities.' Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
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 Subchapter M 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 -- Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.
F. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. 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 (net of foreign taxes withheld on disposition) 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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from, (i) sales of foreign currencies, (ii) currency gains or losses realized between the trade and settlement dates on securities transactions, and (iii) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.
G. 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.
FS-122
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO 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 paid an advisory fee based on the annual rate of the Fund's average daily net assets as follows:
AVERAGE NET ASSETS RATE --------------------------------------------------------------------- First $1 billion 0.85% --------------------------------------------------------------------- Over $1 billion 0.80% _____________________________________________________________________ ===================================================================== |
Effective January 1, 2005 through June 30, 2006, AIM has contractually agreed to waive advisory fees to the extent necessary so that the advisory fees payable by the Fund (based on the Fund's average daily net assets) do not exceed the annual rate of:
AVERAGE NET ASSETS RATE ---------------------------------------------------------------------- First $250 million 0.745% ---------------------------------------------------------------------- Next $250 million 0.73% ---------------------------------------------------------------------- Next $500 million 0.715% ---------------------------------------------------------------------- Next $1.5 billion 0.70% ---------------------------------------------------------------------- Next $2.5 billion 0.685% ---------------------------------------------------------------------- Next $2.5 billion 0.67% ---------------------------------------------------------------------- Next $2.5 billion 0.655% ---------------------------------------------------------------------- Over $10 billion 0.64% ______________________________________________________________________ ====================================================================== |
Under the terms of a master sub-advisory agreement between AIM and AIM Funds Management Inc. ("AIM Funds Management"), AIM pays AIM Funds Management 40% of the amount of AIM's compensation on the sub-advised assets.
AIM has contractually agreed to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual operating expenses (excluding certain items discussed below) of Class A, Class B. Class C, Class R and Institutional Class shares to 2.00%, 2.65%, 2.65%, 2.15% and 1.65% of average daily net assets, respectively, through October 31, 2005. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses to exceed the limits stated above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items (these are expenses that are not anticipated to arise from the Fund's day-to-day operations), or items designated as such by the Fund's Board of Trustees; (v) expenses related to a merger or reorganization, as approved by the Fund's Board of Trustees; and (vi) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Currently, in addition to the expense reimbursement arrangement with AMVESCAP PLC ("AMVESCAP") described more fully below, the only expense offset arrangements from which the Fund may benefit are in the form of credits that the Fund receives from banks where the Fund or its transfer agent has deposit accounts in which it holds uninvested cash. Those credits are used to pay certain expenses incurred by the Fund. AIM did not waive fees and/or reimburse expenses during the period under this expense limitation. To the extent that the annualized expense ratio does not exceed the expense limitation, AIM will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
For the six months ended April 30, 2005, AIM waived fees of $32,184.
For the six months ended April 30, 2005, at the request of the Trustees of the Trust, AMVESCAP agreed to reimburse $136 of expenses incurred by the Fund in connection with market timing matters in the AIM Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement, are included in the Statement of Operations.
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. Pursuant to such agreement, for the six months ended April 30, 2005, AIM was paid $24,795.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay AIM Investment Services, Inc. ("AISI") a fee for providing transfer agency and shareholder services to the Fund and reimburse AISI for certain expenses incurred by AISI in the course of providing such services. AISI may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. For the six months ended April 30, 2005, the Fund paid AISI $58,642 for Class A, Class B, Class C and Class R share classes and $682 for Institutional Class shares.
The Trust has entered into master distribution agreements with A I M Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class B, Class C, Class R and 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, Class B, Class C and Class R shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays ADI 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, up to 0.25% of the average daily net assets of the Class A, Class B, Class C or Class R shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. NASD Rules 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 Plans, for the six months ended April 30, 2005, the Class A, Class B, Class C and Class R shares paid $88,880, $51,075, $41,359 and $380, respectively.
Front-end sales commissions and contingent deferred sales charges ("CDSC") (collectively the "sales charges") are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are
FS-123
deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended April 30, 2005, ADI advised the Fund that it retained $50,346 in front-end sales commissions from the sale of Class A shares and $26, $3,143, $1,406 and $0 from Class A, Class B, Class C and Class R shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of AIM, AISI and/or ADI.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions and (ii) custodian credits which result from periodic overnight cash balances at the custodian. For the six months ended April 30, 2005, the Fund received credits from these arrangements which resulted in the reduction of the Fund's total expenses of $1,394.
NOTE 4--TRUSTEES' AND OFFICER'S FEES AND BENEFITS
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to pay remuneration to each Trustee of the Fund who is not an "interested person" of the AIM Funds. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
In addition to the above, "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to pay remuneration to the Senior Officer of the AIM Funds.
During the six months ended April 30, 2005, the Fund paid legal fees of $1,917 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 5--BORROWINGS
Pursuant to an exemptive order from the SEC, the Fund may participate in an interfund lending facility that AIM has established for temporary borrowings by the AIM Funds. An interfund loan will be made under this facility only if the loan rate (an average of the rate available on bank loans and the rate available on investments in overnight repurchase agreements) is favorable to both the lending fund and the borrowing fund. A loan will be secured by collateral if the Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total assets. To the extent that the loan is required to be secured by collateral, the collateral is marked to market daily to ensure that the market value is at least 102% of the outstanding principal value of the loan.
The Fund is a participant in an uncommitted unsecured revolving credit facility with State Street Bank and Trust Company ("SSB"). The Fund may borrow up to the lesser of (i) $125,000,000, or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the credit facility can borrow on a first come, first served basis. Principal on each loan outstanding shall bear interest at the bid rate quoted by SSB at the time of the request for the loan.
During the six months ended April 30, 2005, the Fund did not borrow or lend under the interfund lending facility or borrow under the uncommitted unsecured revolving credit facility.
Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds in the account so the custodian can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank. In either case, the custodian bank will be compensated at an amount equal to the Federal Funds rate plus 100 basis points.
NOTE 6--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund's fiscal year-end.
The Fund did not have capital loss carryforward as of October 31, 2004.
FS-124
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities and money market funds) purchased and sold by the Fund during the six months ended April 30, 2005 was $73,603,100 and $5,660,307, respectively. For interim reporting periods, the cost of investments for tax purposes includes reversals of certain tax items, such as, wash sales that have occurred since the prior fiscal year-end.
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS ------------------------------------------------------------------------------- Aggregate unrealized appreciation of investment securities $ 6,110,120 ------------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (3,962,772) =============================================================================== Net unrealized appreciation of investment securities $ 2,147,348 _______________________________________________________________________________ =============================================================================== Cost of investments is the same for tax and financial statement purposes. |
NOTE 8--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A shares, Class B shares, Class C shares, Class R shares and Institutional Class shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with CDSC. Class R shares and Institutional Class shares are sold at net asset value. Under certain circumstances, Class A shares and Class R shares are subject to CDSC. Generally, Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase.
CHANGES IN SHARES OUTSTANDING(a)
--------------------------------------------------------------------------------------------------------------------
NOVEMBER 4, 2003
(DATE OPERATIONS
SIX MONTHS ENDED COMMENCED) TO
APRIL 30, 2005 OCTOBER 31, 2004
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------
Sold:
Class A 5,280,620 $68,210,048 2,059,644 $22,545,293
--------------------------------------------------------------------------------------------------------------------
Class B 632,905 8,068,078 593,305 6,419,319
--------------------------------------------------------------------------------------------------------------------
Class C 700,506 8,901,486 420,237 4,528,577
--------------------------------------------------------------------------------------------------------------------
Class R(b) 17,893 226,827 2,956 32,022
--------------------------------------------------------------------------------------------------------------------
Institutional Class(b) 601,134 7,731,863 431,390 4,705,451
====================================================================================================================
Issued as reinvestment of dividends:
Class A 15,350 191,411 -- --
--------------------------------------------------------------------------------------------------------------------
Class B 3,944 48,870 -- --
--------------------------------------------------------------------------------------------------------------------
Class C 2,967 36,729 -- --
--------------------------------------------------------------------------------------------------------------------
Class R(b) 22 275 -- --
--------------------------------------------------------------------------------------------------------------------
Institutional Class(b) 3,302 41,278 -- --
====================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 17,881 229,700 8,450 94,770
--------------------------------------------------------------------------------------------------------------------
Class B (18,006) (229,700) (8,485) (94,770)
====================================================================================================================
Reacquired:
Class A (462,958) (5,961,577) (231,127) (2,481,245)
--------------------------------------------------------------------------------------------------------------------
Class B (100,322) (1,278,149) (30,734) (336,591)
--------------------------------------------------------------------------------------------------------------------
Class C (78,999) (1,009,745) (35,632) (394,574)
--------------------------------------------------------------------------------------------------------------------
Class R(b) (1,397) (18,272) (96) (1,105)
--------------------------------------------------------------------------------------------------------------------
Institutional Class(b) (3,391) (43,732) (4,190) (45,955)
====================================================================================================================
6,611,451 $85,145,390 3,205,718 $34,971,192
____________________________________________________________________________________________________________________
====================================================================================================================
|
(a) There is one entity that is record owner of more than 5% of the
outstanding shares of the Fund and owns 15% of the outstanding shares of
the Fund. AIM Distributors has an agreement with this entity to sell
Fund shares. The Fund, AIM and/or AIM affiliates may make payments to
this entity, which is considered to be related to the Fund, for
providing services to the Fund, AIM and/or AIM affiliates including but
not limited to services such as, securities brokerage, distribution,
third party record keeping and account servicing. The Trust has no
knowledge as to whether all or any portion of the shares owned of record
by this shareholder is also owned beneficially. 10% of the outstanding
shares of the Fund are owned by affiliated mutual funds. Affiliated
mutual funds are mutual funds advised by AIM.
(b) Class R shares and Institutional Class shares commenced sales on April
30, 2004.
FS-125
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
---------------------------------
NOVEMBER 4, 2003
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
-----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.90 $ 10.00
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.04)
-----------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.77 1.94
===============================================================================================
Total from investment operations 0.72 1.90
===============================================================================================
Less distributions from net realized gains (0.07) --
===============================================================================================
Net asset value, end of period $ 12.55 $ 11.90
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 6.08% 19.00%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $83,930 $21,862
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.74%(c) 2.01%(d)
-----------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.82%(c) 3.26%(d)
===============================================================================================
Ratio of net investment income (loss) to average net assets (0.78)%(c) (1.17)%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 9% 29%
_______________________________________________________________________________________________
===============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$51,209,542.
(d) Annualized.
(e) Not annualized for periods less than one year.
FS-126
NOTE 9--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS B
---------------------------------
NOVEMBER 4, 2003
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
-----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.84 $10.00
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)(a) (0.08)
-----------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.76 1.92
===============================================================================================
Total from investment operations 0.67 1.84
===============================================================================================
Less distributions from net realized gains (0.07) --
===============================================================================================
Net asset value, end of period $ 12.44 $11.84
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 5.69% 18.40%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $13,344 $6,558
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.39%(c) 2.66%(d)
-----------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.47%(c) 3.91%(d)
===============================================================================================
Ratio of net investment income (loss) to average net assets (1.43)%(c) (1.82)%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 9% 29%
_______________________________________________________________________________________________
===============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. 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
$10,299,671.
(d) Annualized.
(e) Not annualized for periods less than one year.
FS-127
NOTE 9--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS C
---------------------------------
NOVEMBER 4, 2003
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
-----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.83 $10.00
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)(a) (0.07)
-----------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.76 1.90
===============================================================================================
Total from investment operations 0.67 1.83
===============================================================================================
Less distributions from net realized gains (0.07) --
===============================================================================================
Net asset value, end of period $ 12.43 $11.83
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 5.69% 18.30%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,547 $4,550
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.39%(c) 2.66%(d)
-----------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.47%(c) 3.91%(d)
===============================================================================================
Ratio of net investment income (loss) to average net assets (1.43)%(c) (1.82)%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 9% 29%
_______________________________________________________________________________________________
===============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$8,340,240.
(d) Annualized.
(e) Not annualized for periods less than one year.
FS-128
NOTE 9--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS R
-------------------------------
APRIL 30, 2004
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
---------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.89 $10.56
---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) (0.04)
---------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.77 1.37
=============================================================================================
Total from investment operations 0.71 1.33
=============================================================================================
Less distributions from net realized gains (0.07) --
=============================================================================================
Net asset value, end of period $12.53 $11.89
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 6.00% 12.59%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 243 $ 34
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.89%(c) 2.16%(d)
---------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.97%(c) 3.41%(d)
=============================================================================================
Ratio of net investment income (loss) to average net assets (0.93)%(c) (1.32)%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate(e) 9% 29%
_____________________________________________________________________________________________
=============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $153,248.
(d) Annualized.
(e) Not annualized for periods less than one year.
FS-129
NOTE 9--FINANCIAL HIGHLIGHTS--(CONTINUED)
INSTITUTIONAL CLASS
-------------------------------
APRIL 30, 2004
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2005 2004
---------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.92 $10.56
---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a) (0.02)
---------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.77 1.38
=============================================================================================
Total from investment operations 0.75 1.36
=============================================================================================
Less distributions from net realized gains (0.07) --
=============================================================================================
Net asset value, end of period $ 12.60 $11.92
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 6.32% 12.88%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,960 $5,094
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.24%(c) 1.60%(d)
---------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.32%(c) 2.86%(d)
=============================================================================================
Ratio of net investment income (loss) to average net assets (0.28)%(c) (0.77)%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate(e) 9% 29%
_____________________________________________________________________________________________
=============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$9,182,442.
(d) Annualized.
(e) Not annualized for periods less than one year.
NOTE 10--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note.
SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING
On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment advisor to certain AIM Funds), A I M Advisors, Inc. ("AIM") (the Fund's investment advisor) and A I M Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached final settlements with certain regulators, including, among others, the Securities and Exchange Commission ("SEC"), the New York Attorney General ("NYAG") and the Colorado Attorney General ("COAG"), to resolve civil enforcement actions and/or investigations related to market timing activity and related issues in the AIM Funds, including those formerly advised by IFG.
As part of the settlements, IFG agreed to pay a total of $325 million (including $110 million in civil penalties). Additionally, AIM and ADI agreed to pay a total of $50 million (including $30 million in civil penalties). These settlement funds will be made available for distribution to the shareholders of the applicable AIM Funds that were harmed by market timing activity, and may (or may not) increase as a result of contributions from third parties who reach final settlements with the SEC or other regulators to resolve allegations of market timing and/or late trading. The settlement funds will be distributed in accordance with a methodology to be determined by AIM's independent distribution consultant, in consultation with AIM and the independent trustees of the AIM Funds and acceptable to the staff of the SEC. As the methodology is unknown at the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the distribution of these settlement funds may have on the Fund or whether such distribution will have an impact on the Fund's financial statements in the future.
At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"), the parent company of IFG and AIM, has agreed to reimburse expenses incurred by the AIM Funds related to market timing matters.
REGULATORY INQUIRIES AND PENDING LITIGATION
IFG, AIM, ADI and/or related entities and individuals have received inquiries from numerous regulators in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, some of which concern one or more AIM Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to
FS-130
NOTE 10--LEGAL PROCEEDINGS--(CONTINUED)
Section 529 college savings plans and procedures for locating lost securityholders. IFG, AIM and ADI are providing full cooperation with respect to these inquiries. As described more fully below, the AIM Funds, IFG, AIM, ADI and/or related entities and individuals are defendants in numerous civil lawsuits related to one or more of these issues. Regulatory actions and/or additional civil lawsuits related to these or other issues may be filed against the AIM Funds, IFG, AIM and/or related entities and individuals in the future.
On April 12, 2005, the Attorney General of the State of West Virginia ("WVAG") filed civil proceedings against AIM, IFG and ADI, as well as numerous unrelated mutual fund complexes and financial institutions. None of the AIM Funds has been named as a defendant in these proceedings. The WVAG complaint, filed in the Circuit Court of Marshall County, West Virginia [Civil Action No. 05-C-81], alleges, in substance, that AIM, IFG and ADI engaged in unfair competition and/or unfair or deceptive trade practices by failing to disclose in the prospectuses for the AIM Funds, including those formerly advised by IFG, that they had entered into certain arrangements permitting market timing of such Funds. As a result of the foregoing, the WVAG alleges violations of W. Va. Code sec. 46A-1-101, et seq. (the West Virginia Consumer Credit and Protection Act). The WVAG complaint is seeking, among other things, injunctive relief, civil monetary penalties and a writ of quo warranto against the defendants. If AIM is unsuccessful in its defense of the WVAG proceedings, it could be barred from serving as an investment advisor for any investment company registered under the Investment Company Act of 1940, as amended (a "registered investment company"). Such results could affect the ability of AIM or any other investment advisor directly or indirectly owned by AMVESCAP, from serving as an investment advisor to any registered investment company, including the Fund. The Fund has been informed by AIM that, if these results occur, AIM will seek exemptive relief from the SEC to permit it to continue to serve as the Fund's investment advisor. There is no assurance that such exemptive relief will be granted.
Civil lawsuits, including purported class action and shareholder derivative suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or related entities and individuals, depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related issues in the AIM Funds;
- that certain AIM Funds inadequately employed fair value pricing;
- that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale and that the defendants adopted unlawful distribution plans;
- that the defendants breached their fiduciary duties by charging distribution fees while funds and/or specific share classes were closed generally to new investors and/or while other share classes of the same fund were not charged the same distribution fees;
- that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively promote the sale of the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions; and
- that the defendants breached their fiduciary duties by failing to ensure that the AIM Funds participated in class action settlements in which the AIM Funds were eligible to participate.
These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and ERISA, negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid, an accounting of all fund-related fees, commissions and soft dollar payments, restitution of all commissions and fees paid, and prospective relief in the form of reduced fees.
At the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the outcome of the Regulatory Inquiries and Pending Litigation described above may have on AIM, ADI or the Fund.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
As a result of the matters discussed above, investors in the AIM Funds might react by redeeming their investments. This might require the AIM Funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AIM Funds.
FS-131
PART C
OTHER INFORMATION
Item 23. Exhibits
a (1) - (a) Amended and Restated Agreement and Declaration of
Trust of Registrant, dated May 15, 2002.(8)
- (b) Amendment No. 1, dated May 15, 2002,(effective as
of July 1, 2002), to Amended and Restated Agreement
and Declaration of Trust of Registrant.(8)
- (c) Amendment No. 2, dated August 8, 2002, to Amended
and Restated Agreement and Declaration of Trust of
Registrant.(8)
- (d) Amendment No. 3, dated September 23, 2002, to
Amended and Restated Agreement and Declaration of
Trust of Registrant.(9)
- (e) Amendment No. 4, dated February 6, 2003
(effective as of February 28, 2002), to Amended and
Restated Agreement and Declaration of Trust of
Registrant.(9)
- (f) Amendment No. 5, dated June 11, 2003, to Amended
and Restated Agreement and Declaration of Trust of
Registrant.(10)
- (g) Amendment No. 6, dated June 23, 2003, to Amended
and Restated Agreement and Declaration of Trust of
Registrant.(10)
- (h) Amendment No. 7, dated June 11, 2003, to Amended
and Restated Agreement and Declaration of Trust of
Registrant.(10)
- (i) Amendment No. 8, dated September 16, 2003, to
Amended and Restated Agreement and Declaration of
Trust of Registrant.(11)
- (j) Amendment No. 9, dated December 10, 2003, to
Amended and Restated Agreement and Declaration of
Trust of Registrant.(12)
- (k) Amendment No. 10, dated December 2, 2004, to
Amended and Restated Agreement and Declaration of
Trust of Registrant.(14)
- (l) Amendment No. 11, dated February 25, 2005, to
Amended and Restated Agreement and Declaration of
Trust of Registrant.(16)
|
- (m) Amendment No. 12, dated July 18, 2005, to Amended and Restated Agreement and Declaration of Trust of Registrant.(18)
b (1) - (a) Amended and Restated By-Laws of Registrant,
adopted effective May 15, 2002.(8)
- (b) First Amendment, adopted November 6, 2003, to
Amended and Restated By-Laws of Registrant.(14)
|
- (c) Second Amendment, adopted effective September 15, 2004, to Amended and Restated By-Laws of Registrant.(14)
- (d) Third Amendment, adopted effective June 30, 2005, to Amended and Restated By-Laws of Registrant.(18)
c - Articles II, VI, VII, VIII and IX of the Amended and
Restated Agreement and Declaration of Trust, as
amended, and Articles IV, V and VI, of the Amended
and Restated By-Laws, as previously filed, define
rights of holders of shares.
d (1) - (a) Master Investment Advisory Agreement, dated
September 11, 2000, between Registrant and A I M
Advisors, Inc.(5)
- (b) Amendment No. 1, dated September 1, 2001, to the
Master Investment Advisory Agreement, dated September
11, 2000, between Registrant and A I M Advisors,
Inc.(6)
- (c) Amendment No. 2, dated December 28, 2001, to the
Master Investment Advisory Agreement, dated September
11, 2000, between Registrant and A I M Advisors,
Inc.(7)
- (d) Amendment No. 3, dated July 1, 2002, to the
Master Investment Advisory Agreement, dated September
11, 2000, between Registrant and A I M Advisors,
Inc.(8)
- (e) Amendment No. 4, dated September 23, 2002, to the
Master Investment Advisory Agreement, dated September
11, 2000, between Registrant and A I M Advisors,
Inc.(9)
- (f) Amendment No. 5, dated November 1, 2002, to the
Master Investment Advisory Agreement, dated September
11, 2000, between Registrant and A I M Advisors,
Inc.(9)
- (g) Amendment No. 6, dated February 28, 2003, to the
Master Investment Advisory Agreement, dated September
11, 2000, between Registrant and A I M Advisors,
Inc.(9)
- (h) Amendment No. 7, dated June 23, 2003, to the
Master Investment Advisory Agreement, dated September
11, 2000, between Registrant and A I M Advisors,
Inc.(10)
- (i) Amendment No. 8, dated November 3, 2003, to the
Master Investment Advisory Agreement, dated September
11, 2000, between Registrant and A I M Advisors,
Inc.(12)
- (j) Amendment No. 9, dated November 24, 2003, to the
Master Investment Advisory Agreement, dated September
11, 2000, between Registrant and A I M Advisors,
Inc.(13)
|
- (k) Amendment No. 10, dated July 18, 2005, to the Master Investment Advisory Agreement, dated September 11, 2000, between Registrant and A I M Advisors, Inc.(18)
(2) - Master Intergroup Sub-Advisory Contract for Mutual
Funds, dated November 4, 2003, between A I M
Advisors, Inc. and AIM Funds Management Inc.(12)
|
e (1) - (a) Amended and Restated Master Distribution
Agreement (all classes of shares except Class B
shares), dated August 18, 2003, between Registrant
and A I M Distributors, Inc.(11)
- (b) Amendment No. 1, dated October 29, 2003, to the
Amended and Restated Master Distribution Agreement
(all classes of shares except Class B shares), dated
August 18, 2003, between Registrant and A I M
Distributors, Inc.(12)
- (c) Amendment No. 2, dated November 4, 2003, to the
Amended and Restated Master Distribution Agreement
(all classes of shares except Class B shares), dated
August 18, 2003, between Registrant and A I M
Distributors, Inc.(12)
- (d) Amendment No. 3, dated November 20, 2003, to the
Amended and Restated Master Distribution Agreement
(all classes of shares except Class B shares), dated
August 18, 2003, between Registrant and A I M
Distributors, Inc.(12)
- (e) Amendment No. 4, dated November 24, 2003, to the
Amended and Restated Master Distribution Agreement
(all classes of shares except Class B shares), dated
August 18, 2003, between Registrant and A I M
Distributors, Inc.(12)
- (f) Amendment No. 5, dated November 25, 2003, to the
Amended and Restated Master Distribution Agreement
(all classes of shares except Class B shares), dated
August 18, 2003, between Registrant and A I M
Distributors, Inc.(12)
- (g) Amendment No. 6, dated January 6, 2004, to the
Amended and Restated Master Distribution Agreement
(all classes of shares except Class B shares), dated
August 18, 2003, between Registrant and A I M
Distributors, Inc.(13)
- (h) Amendment No. 7, dated March 31, 2004, to the
Amended and Restated Master Distribution Agreement
(all classes of shares except Class B shares), dated
August 18, 2003, between Registrant and A I M
Distributors, Inc.(13)
- (i) Amendment No. 8, dated April 30, 2004, to the
Amended and Restated Master Distribution Agreement
(all classes of shares except Class B shares), dated
August 18, 2003, between Registrant and A I M
Distributors, Inc.(13)
- (j) Amendment No. 9, dated September 14, 2004, to the
Amended and Restated Master Distribution Agreement
(all classes of shares except Class B shares), dated
August 18, 2003, between Registrant and A I M
Distributors, Inc.(14)
- (k) Amendment No. 10, dated September 15, 2004, to
the Amended and Restated Master Distribution
Agreement (all classes of shares except Class B
shares), dated August 18, 2003, between Registrant
and A I M Distributors, Inc.(14)
- (l) Amendment No. 11, dated October 15, 2004, to the
Amended and Restated Master Distribution Agreement
(all classes of shares except Class B shares), dated
August 18, 2003, between Registrant and A I M
Distributors, Inc.(14)
- (m) Amendment No. 12, dated November 30, 2004, to the
Amended and Restated Master Distribution Agreement
(all classes of shares except Class B shares), dated
August 18, 2003, between Registrant and A I M
Distributors, Inc.(14)
|
- (n) Amendment No. 13, dated December 30, 2004, to the Amended and Restated Master Distribution Agreement (all classes of shares except Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(15)
- (o) Amendment No. 14, dated February 23, 2005, to the Amended and Restated Master Distribution Agreement (all classes of shares except Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(16)
- (p) Amendment No. 15, dated March 15, 2005, to the Amended and Restated Master Distribution Agreement (all classes of shares except Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(16)
- (q) Amendment No. 16, dated April 29, 2005, to the Amended and Restated Master Distribution Agreement (all classes of shares except Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(18)
- (r) Amendment No. 17, dated July 13, 2005, to the Amended and Restated Master Distribution Agreement (all classes of shares except Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(18)
- (s) Amendment No. 18, dated July 18, 2005, to the Amended and Restated Master Distribution Agreement (all classes of shares except Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(18)
- (t) Form of Amendment No. 19, dated October 22, 2005, to the Amended and Restated Master Distribution Agreement (all Classes of Shares except Class B shares) dated August 18, 20003, between Registrant and A I M Distributors, Inc. (18)
- (u) Form of Amendment No. 20, dated October 25, 2005, to the Amended and Restated Master Distribution Agreement (all Classes of Shares except Class B shares) dated August 18, 2003, between Registrant and A I M Distributors, Inc. (18)
(2) - (a) Amended and Restated Master Distribution
Agreement (Class B shares) dated August 18, 2003,
between Registrant and A I M Distributors, Inc.(11)
- (b) Amendment No. 1, dated October 1, 2003, to the
Amended and Restated Master Distribution Agreement
(Class B shares), dated August 18, 2003, between
Registrant and A I M Distributors, Inc.(12)
- (c) Amendment No. 2, dated October 29, 2003, to the
Amended and Restated Master Distribution Agreement
(Class B shares), dated August 18, 2003, between
Registrant and A I M Distributors, Inc.(12)
- (d) Amendment No. 3, dated November 3, 2003, to the
Amended and Restated Master Distribution Agreement
(Class B shares), dated August 18, 2003, between
Registrant and A I M Distributors, Inc.(12)
- (e) Amendment No. 4, dated November 4, 2003, to the
Amended and Restated Master Distribution Agreement
(Class B shares), dated August 18, 2003, between
Registrant and A I M Distributors, Inc.(12)
|
- (f) Amendment No. 5, dated November 20, 2003, to the Amended and Restated Master Distribution Agreement (Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(12)
- (g) Amendment No. 6, dated November 24, 2003, to the Amended and Restated Master Distribution Agreement (Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(12)
- (h) Amendment No. 7, dated November 25, 2003, to the Amended and Restated Master Distribution Agreement (Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(12)
- (i) Amendment No. 8, dated March 31, 2004, to the Amended and Restated Master Distribution Agreement (Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(13)
- (j) Amendment No. 9, dated April 30, 2004, to the Amended and Restated Master Distribution Agreement (Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(13)
- (k) Amendment No. 10, dated September 15, 2004, to the Amended and Restated Master Distribution Agreement (Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(14)
- (l) Amendment No. 11, dated October 15, 2004, to the Amended and Restated Master Distribution Agreement (Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(14)
- (m) Amendment No. 12, dated December 30, 2004, to the Amended and Restated Master Distribution Agreement (Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(15)
- (n) Amendment No. 13, dated March 15, 2005, to the Amended and Restated Master Distribution Agreement (Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(18)
- (o) Amendment No. 14, dated April 29, 2005, to the Amended and Restated Master Distribution Agreement (Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(18)
- (p) Amendment No. 15, dated July 18, 2005, to the Amended and Restated Master - Distribution Agreement (Class B shares), dated August 18, 2003, between Registrant and A I M Distributors, Inc.(18)
(3) - Form of Selected Dealer Agreement between A I M
Distributors, Inc. and selected dealers.(5)
(4) - Form of Bank Selling Group Agreement between A I M
Distributors, Inc. and banks.(3)
f (1) - AIM Funds Retirement Plan for Eligible
Directors/Trustees, as restated October 1, 2001.(7)
|
(2) - Form of AIM Funds Director Deferred Compensation
Agreement, as amended, March 7, 2000, September 28,
2001 and September 26, 2002.(9)
g (1) - (a) Master Custodian Contract, dated May 1, 2000,
between Registrant and State Street Bank and Trust
Company.(5)
- (b) Amendment, dated May 1, 2000, to the Master
Custodian Contract, dated May 1, 2000, between
Registrant and State Street Bank and Trust
Company.(5)
- (c) Amendment, dated June 29, 2001, to the Master
Custodian Contract, dated May 1, 2000, between
Registrant and State Street Bank and Trust
Company.(7)
- (d) Amendment, dated April 2, 2002, to the Master
Custodian Contract, dated May 1, 2000, between
Registrant and State Street Bank and Trust
Company.(8)
- (e) Amendment, dated September 8, 2004, to the Master
Custodian Contract, dated May 1, 2000, between
Registrant and State Street Bank and Trust
Company.(15)
(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. (now known as AIM
Investment Services, Inc.)(6)
- (b) Amendment No. 1, dated October 2, 1998, to the
Subcustodian Agreement, dated September 9, 1994,
between Registrant, Chase Bank of Texas, N.A.
(formerly Texas Commerce Bank National Association),
State Street Bank and Trust Company and A I M Fund
Services, Inc. (now known as AIM Investment Services,
Inc.)(6)
- (c) Amendment No. 2, dated March 15, 2002, to the
Subcustodian Agreement, dated September 9, 1994,
between Registrant, JPMorgan Chase Bank (formerly
Chase Bank of Texas, N.A., State Street Bank and
Trust Company and A I M Fund Services, Inc. (now
known as AIM Investment Services, Inc.)(8)
(3) - Subcustodian Agreement, dated January 20, 1993,
between State Street Bank and Trust Company and The
Bank of New York.(7)
h (1) - Transfer Agency and Service Agreement, dated July 1,
2004, between Registrant and AIM Investment Services,
Inc.(13)
(2) - (a) Amended and Restated Master Administrative
Services Agreement, dated July 1, 2004, between
Registrant and A I M Advisors, Inc.(13)
- (b) Amendment No. 1, dated December 2, 2004, to the
Amended and Restated Master Administrative Services
Agreement.(14)
|
- (c) Amendment No. 2, dated July 18, 2005, to the Amended and Restated Master Administrative Services Agreement.(18)
(3) - Memorandum of Agreement, regarding securities
lending, dated October 29, 2003, between Registrant
(on behalf of all Funds) and A I M Advisors, Inc.(15)
|
(4) - Memorandum of Agreement, regarding expense
limitations, dated January 1, 2005, between
Registrant (on behalf of AIM Developing Markets Fund,
AIM Trimark Endeavor, AIM Trimark Fund and AIM
Trimark Small Company Fund) and A I M Advisors,
Inc.(15)
(5) - Memorandum of Agreement, regarding expense
limitations, dated January 1, 2005, between
Registrant (on behalf of each Fund's Institutional
Class) and AIM Investment Services, Inc. (15)
(6) - Memorandum of Agreement dated January 1, 2005,
between Registrant (on behalf of all Funds) and A I M
Advisors, Inc.(15)
(7) - (a) Interfund Loan Agreement, dated September 18,
2001, between Registrant and A I M Advisors, Inc.(6)
- (b) Second Amended and Restated Interfund Loan
Agreement dated April 30, 2004 between Registrant and
A I M Advisors, Inc.(15)
(8) - Expense Reimbursement Agreement, dated June 30, 2003,
between Registrant and A I M Fund Services, Inc. (now
known as AIM Investment Services, Inc.).(13)
i - Opinion and Consent of Ballard, Spahr, Andrews &
Ingersoll, LLP. (18)
j (1) - Opinion of Ballard Spahr Andrews & Ingersoll, LLP
concerning federal income tax consequences of the
reorganization of AIM Health Sciences Fund.(18)
|
(2) - Consent of PricewaterhouseCoopers LLP.(18)
k - Omitted Financial Statements - None.
l - Agreement Concerning Initial Capitalization of
Registrant's AIM Trimark Endeavor Fund, AIM Trimark
Fund and AIM Trimark Small Companies Fund dated
November 3, 2003.(12)
|
m (1) - (a) Amended and Restated Master Distribution Plan
(Class A Shares), effective as of August 18,
2003.(11)
- (b) Amendment No. 1, dated October 29, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares).(12)
- (c) Amendment No. 2, dated November 4, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares).(12)
- (d) Amendment No. 3, dated November 20, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares).(12)
- (e) Amendment No. 4, dated November 24, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares).(12)
- (f) Amendment No. 5, dated November 25, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares).(12)
|
- (g) Amendment No. 6, dated March 31, 2004, to the Registrant's Amended and Restated Master Distribution Plan (Class A Shares).(13)
- (h) Amendment No. 7, dated April 30, 2004, to the Registrant's Amended and Restated Master Distribution Plan (Class A Shares).(13)
- (i) Amendment No. 8, dated September 15, 2004, to the Registrant's Amended and Restated Master Distribution Plan (Class A Shares).(14)
- (j) Amendment No. 9, dated October 15, 2004, to the Registrant's Amended and Restated Master Distribution Plan (Class A Shares).(14)
- (k) Amendment No. 10, dated December 30, 2004, to the Registrant's Amended and Restated Master Distribution Plan (Class A Shares).(15)
- (l) Amendment No. 11, dated January 1, 2005, to the Registrant's Amended and Restated Master Distribution Plan (Class A Shares).(15)
- (m) Amendment No. 12, dated March 15, 2005, to the Registrant's Amended and Restated Master Distribution Plan (Class A Shares).(18)
- (n) Amendment No. 13, dated April 29, 2005, to the Registrant's Amended and Restated Master Distribution Plan (Class A Shares).(18)
- (o) Amendment No. 14, dated July 1, 2005 to the Registrant's Amended and Restated Master Distribution Plan (Class A Shares).(18)
- (p) Amendment No. 15, dated July 18, 2005, to the Registrant's Amended and Restated Master Distribution Plan (Class A Shares).(18)
- (q) Master Related Agreement to Amended and Restated Master Distribution Plan (Class A Shares).(18)
(2) - (a) Amended and Restated Master Distribution Plan
(Class B Shares) (Securitization Feature), effective
as of August 18, 2003.(11)
- (b) Amendment No. 1, dated October 29, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature).(12)
- (c) Amendment No. 2, dated November 4, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature).(12)
- (d) Amendment No. 3, dated November 20, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature).(12)
- (e) Amendment No. 4, dated November 24, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature).(12)
- (f) Amendment No. 5, dated November 25, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature).(12)
|
- (g) Amendment No. 6, dated March 31, 2004, to the Registrant's Amended and Restated Master Distribution Plan (Class B Shares) (Securitization Feature).(13)
- (h) Amendment No. 7, dated April 30, 2004, to the Registrant's Amended and Restated Master Distribution Plan (Class B Shares) (Securitization Feature).(13)
- (i) Amendment No. 8, dated September 15, 2004, to the Registrant's Amended and Restated Master Distribution Plan (Class B Shares) (Securitization Feature).(14)
- (j) Amendment No. 9, dated October 15, 2004, to the Registrant's Amended and Restated Master Distribution Plan (Class B Shares) (Securitization Feature).(14)
- (k) Amendment No. 10, dated December 30, 2004, to the Registrant's Amended and Restated Master Distribution Plan (Class B Shares) (Securitization Feature).(15) -
(l) Amendment No. 11, dated March 15, 2005, to the Registrant's Amended and Restated Master Distribution Plan (Class B Shares) (Securitization Feature).(18)
- (m) Amendment No. 12, dated April 29, 2005, to the Registrant's Amended and Restated Master Distribution Plan (Class B Shares) (Securitization Feature).(18)
- (n) Amendment No. 13, dated July 18, 2005, to the Registrant's Amended and Restated Master Distribution Plan (Class B Shares) (Securitization Feature).(18)
(3) - (a) Amended and Restated Master Distribution Plan
(Class C Shares), effective as of August 18,
2003.(11)
- (b) Amendment No. 1, dated October 29, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares).(12)
- (c) Amendment No. 2, dated November 4, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares).(12)
- (d) Amendment No. 3, dated November 20, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares).(12)
- (e) Amendment No. 4, dated November 24, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares).(12)
- (f) Amendment No. 5, dated November 25, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares).(12)
- (g) Amendment No. 6, dated March 31, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares).(13)
- (h) Amendment No. 7, dated April 30, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares).(13)
- (i) Amendment No. 8, dated September 15, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares).(14)
|
- (j) Amendment No. 9, dated October 15, 2004, to the Registrant's Amended and Restated Master Distribution Plan (Class C Shares).(14)
- (k) Amendment No. 10, dated December 30, 2004, to the Registrant's Amended and Restated Master Distribution Plan (Class C Shares).(15)
- (l) Amendment No. 11, dated March 15, 2005, to the Registrant's Amended and Restated Master Distribution Plan (Class C Shares).(18)
- (m) Amendment No. 12, dated April 29, 2005, to the Registrant's Amended and Restated Master Distribution Plan (Class C Shares).(18)
- (n) Amendment No. 13 dated July 18, 2005 to the Registrant's Amended and Restated Master Distribution Plan (Class C Shares).(18)
(4) - (a) Amended and Restated Master Distribution Plan
(Class R shares), effective as of August 18,
2003.(11)
- (b) Amendment No. 1, dated November 4, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class R Shares).(12)
- (c) Amendment No. 2, dated November 24, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class R Shares).(12)
- (d) Amendment No. 3, dated November 25, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class R Shares).(12)
- (e) Amendment No. 4, dated April 30, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class R Shares).(13)
- (f) Amendment No. 5, dated September 14, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class R Shares).(14)
- (g) Amendment No. 6, dated October 15, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class R Shares).(14)
|
- (h) Amendment No. 7, dated April 29, 2005, to the Registrant's Amended and Restated Master Distribution Plan (Class R Shares).(18)
- (i) Amendment No. 8, dated July 18, 2005 to the Registrant's Amended and Restated Master Distribution Plan (Class R Shares).(18)
- (j) Form of Amendment No. 9, dated October 25, 2005, to the Registrant's Amended and Restated Master Distribution Plan (Class R Shares). (18)
(5) - (a) Amended and Restated Master Distribution Plan
(Compensation) between Registrant (Investor Class
Plans) and A I M Distributors, Inc. effective July 1,
2004.(16)
- (b) Amendment No. 1, dated October 15, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Compensation) between Registrant (Investor
Class Plans) and A I M Distributors, Inc.(16)
|
- (c) Amendment No. 2, dated November 30, 2004, to the Registrant's Amended and Restated Master Distribution Plan (Compensation) between Registrant (Investor Class Plans) and A I M Distributors, Inc.(16)
- (d) Amendment No. 3, dated April 29, 2005, to the Registrant's Amended and Restated Master Distribution Plan (Compensation) between Registrant (Investor Class Plans) and A I M Distributors, Inc.(16)
(6) - Form of Master Related Agreement to Amended and
Restated Master Distribution Plan (Class A
Shares).(10)
(7) - Form of Master Related Agreement to Amended and
Restated Master Distribution Plan (Class C
Shares).(10)
(8) - Form of Master Related Agreement to Amended and
Restated Master Distribution Plan (Class R
Shares).(10)
(9) - Form of Master Related Agreement to Amended and
Restated Master Distribution Plan (Compensation)
(Investor Class Shares).(16)
n (1) - Seventh Amended and Restated Multiple Class Plan of
The AIM Family of Funds--Registered Trademark--
effective December 12, 2001, as amended and restated
effective June 30, 2005, (18)
(2) - Eighth Amended and Restated Multiple Class Plan of
The AIM Family of Funds--Registered Trademark--
effective December 12, 2001, as amended and restated
effective August 4, 2005, (18)
|
o - Reserved.
p (1) - A I M Management Group Inc. Code of Ethics, adopted
May 1, 1981, as last amended January 1, 2005,
relating to A I M Management Group Inc. and A I M
Advisors, Inc. and its wholly owned and indirect
subsidiaries.(15)
|
(2) - Code of Ethics of Registrant, effective September 28, 2000.(5)
(3) - AIM Funds Management Inc. Code of Ethics, effective January 1, 2005.(17)
q - Powers of Attorney for Baker, Bayley, Bunch,
Crockett, Dowden, Dunn, Fields, Frischling, Graham,
Lewis, Mathai-Davis, Pennock, Quigley, Soll and
Williamson.(14)
|
(1) Incorporated herein by reference to PEA No. 55, filed on August
26, 1998.
(2) Incorporated herein by reference to PEA No. 56, filed on December
30, 1998.
(3) Incorporated herein by reference to PEA No. 57, filed on February
22, 1999.
(4) Incorporated herein by reference to PEA No. 58, filed on February
24, 2000.
(5) Incorporated herein by reference to PEA No. 59, filed on February
28, 2001.
(6) Incorporated herein by reference to PEA No. 60, filed on October
12, 2001.
(7) Incorporated herein by reference to PEA No. 61, filed on January
30, 2002.
(8) Incorporated herein by reference to PEA No. 62, filed on August
14, 2002.
(9) Incorporated herein by reference to PEA No. 63, filed on February
20, 2003.
(10) Incorporated herein by reference to PEA No. 64, filed on August
20, 2003.
(11) Incorporated herein by reference to PEA No. 65, filed on October
10, 2003.
(12) Incorporated herein by reference to PEA No. 66, filed on February
25, 2004.
(13) Incorporated herein by reference to PEA No. 67, filed August 31,
2004.
(14) Incorporated herein by reference to PEA No. 70, filed on December
23, 2004.
(15) Incorporated herein by reference to PEA No. 71, filed on February
23, 2005.
(16) Incorporated herein by reference to PEA No. 72, filed on March 1,
2005.
(17) Incorporated herein by reference to PEA No. 73, filed on March
30, 2005.
|
(18) Filed herewith electronically.
Item 24. Persons Controlled by or Under Common Control With the Fund
None.
Item 25. Indemnification
Indemnification provisions for officers, directors, and employees
of the Registrant are set forth in Article VIII of the
Registrant's Agreement and Declaration of Trust and Article VIII
of its Bylaws, and are hereby incorporated by reference. See Item
23(a) and (b) above. Under the Agreement and Declaration of Trust
dated July 29, 2003, (i) Trustees or officers, when acting in
such capacity, shall not be personally liable for any act,
omission or obligation of the Registrant or any Trustee or
officer except by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office with the Trust; (ii) every Trustee,
officer, employee or agent of the Registrant shall be indemnified
to the fullest extent permitted under the Delaware Statutory
Trust act, the Registrant's Bylaws and other applicable law;
(iii) in case any shareholder or former shareholder of the
Registrant shall be held to be personally liable solely by reason
of his being or having been a shareholder of the Registrant or
any portfolio or class and not because of his acts or omissions
or for some other reason, the shareholder or former shareholder
(or his heirs, executors, administrators or other legal
representatives, or, in the case of a corporation or other
entity, its corporate or general successor) shall be entitled,
out of the assets belonging to the applicable portfolio (or
allocable to the applicable class), to be held harmless from and
indemnified against all loss and expense arising from such
liability in accordance with the Bylaws and applicable law. The
Registrant, on behalf of the affected portfolio (or class), shall
upon request by the shareholder, assume the defense of any such
claim made against the shareholder for any act or obligation of
that portfolio (or class). The Registrant, A I M Advisors, Inc.
("AIM") and other investment companies managed by AIM, their
respective officers, trustees, directors and employees are
insured under a joint Mutual Fund and Investment Advisory
Professional and Directors and Officers Liability Policy also
maintains liability insurance policies covering its directors and
officers.
A I M Advisors, Inc. ("AIM"), the Registrant and other investment companies managed by AIM, their respective officers, trustees, directors and employees (the "Insured Parties") are insured under a joint Mutual Fund and Investment Advisory Professional and Directors and Officers Liability Policy, issued by ICI Mutual Insurance Company, with a $55,000,000 limit of liability (an additional $10,000,000 coverage applies to independent directors/trustees only).
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 7 of the Master Intergroup Sub-Advisory Contract for Mutual Funds (the "Sub-Advisory Contract") between AIM and AIM Funds Management Inc. provides that the Sub-advisor 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 Contract relates except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Sub-advisor in the performance by the Sub-advisor of its duties or from reckless disregard by the Sub-advisor of its obligations and duties under the Sub-Advisory Contract.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in connection with the successful defense of any action suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the shares being registered, such indemnification by it is against public policy, as expressed in the Act and be governed by final adjudication of such issue.
Item 26. Business and Other Connections of Investment Advisor
The only employment of a substantial nature of AIM's directors and officers is with AIM and its affiliated companies. For information as to the business, profession, vocation or employment of a substantial nature of each of the officers and directors of AIM Funds Management Inc., reference is made to Form ADV filed under the Investment Advisers Act of 1940 by AIM Funds Management Inc., herein incorporated by reference. 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 26(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 Counselor Series Trust
AIM Equity Funds
AIM Floating Rate Fund
AIM Funds Group
AIM Growth Series
AIM International Mutual Funds
AIM Investment Securities Funds
AIM Sector Funds
AIM Special Opportunities Funds
AIM Stock Funds
AIM Summit Fund
AIM Tax-Exempt Funds
AIM Treasurer's Series Trust (with respect to its Investor Class
Shares)
AIM Variable Insurance Funds
|
(b) The following table sets forth information with respect to each director, officer or partner of A I M Distributors, Inc.
Name and Principal Position and Officers with Positions and Offices
Business Address* Underwriter with Registrant
------------------ -------------------------- ---------------------
Gene L. Needles Chairman, Director, President and None
Chief Executive Officer
Mark H. Williamson Director Trustee and Executive Vice President
John S. Cooper Executive Vice President None
James L. Salners Executive Vice President None
James E. Stueve Executive Vice President None
Kevin M. Carome Senior Vice President Senior Vice President, Secretary and
Chief Legal Officer
Glenda A. Dayton Senior Vice President None
Lawrence E. Manierre Senior Vice President None
Ivy B. McLemore Senior Vice President None
David J. Nardecchia Senior Vice President None
Margaret A. Vinson Senior Vice President None
William J. Wendel Senior Vice President None
|
Name and Principal Position and Officers with Positions and Offices
Business Address* Underwriter with Registrant
------------------ -------------------------- ---------------------
Gary K. Wendler Senior Vice President None
Scott B. Widder Senior Vice President None
Dawn M. Hawley Vice President & Treasurer None
Ofelia M. Mayo Vice President, General Counsel & Assistant Secretary
Assistant Secretary
Rebecca Starling-Klatt Chief Compliance Officer and None
Assistant Vice President
Kathleen J. Pflueger Secretary Assistant Secretary
Lance A. Rejsek Anti-Money Laundering Compliance Anti-Money Laundering Compliance
Officer Officer
|
* 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, AIM
Investment Services, Inc., P.O. Box 4739, Houston, Texas
77210-4739.
Item 29. Management Services
None.
Item 30. Undertakings
Not applicable.
|
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Houston, Texas on the 24th day of August, 2005.
REGISTRANT: AIM INVESTMENT FUNDS
By: /s/ Robert H. Graham
--------------------------------
Robert H. Graham, President
|
Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
SIGNATURES TITLE DATE
----------------------------------- ----------------------------- --------
/s/ Robert H. Graham Trustee & President 08-24-05
----------------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ Bob R. Baker* Trustee 08-24-05
-----------------------------------
(Bob R. Baker)
/s/ Frank S. Bayley* Trustee 08-24-05
-----------------------------------
(Frank S. Bayley)
/s/ James T. Bunch* Trustee 08-24-05
-----------------------------------
(James T. Bunch)
/s/ Bruce L. Crockett* Chair & Trustee 08-24-05
-----------------------------------
(Bruce L. Crockett)
/s/ Albert R. Dowden* Trustee 08-24-05
-----------------------------------
(Albert R. Dowden)
/s/ Edward K. Dunn, Jr.* Trustee 08-24-05
-----------------------------------
(Edward K. Dunn, Jr.)
/s/ Jack M. Fields* Trustee 08-24-05
-----------------------------------
(Jack M. Fields)
/s/ Carl Frischling* Trustee 08-24-05
-----------------------------------
(Carl Frischling)
/s/ Gerald J. Lewis* Trustee 08-24-05
-----------------------------------
(Gerald J. Lewis)
/s/ Prema Mathai-Davis* Trustee 08-24-05
-----------------------------------
(Prema Mathai-Davis)
/s/ Lewis F. Pennock* Trustee 08-24-05
-----------------------------------
(Lewis F. Pennock)
/s/ Ruth H. Quigley* Trustee 08-24-05
-----------------------------------
(Ruth H. Quigley)
|
/s/ Larry Soll* Trustee 08-24-05
-----------------------------------
(Larry Soll)
/s/ Mark H. Williamson* Trustee & 08-24-05
----------------------------------- Executive Vice President
(Mark H. Williamson)
/s/ Sidney M. Dilgren Vice President & Treasurer 08-24-05
----------------------------------- (Principal Financial and
(Sidney M. Dilgren) Accounting Officer)
*By /s/ Robert H. Graham
-----------------------------
Robert H. Graham
Attorney-in-Fact
|
Robert H. Graham, pursuant to powers of attorney dated November 16, 2004.
INDEX
Exhibit
Number Description
------- -----------
a(1)(m) Amendment No. 12, dated July 18, 2005, to Amended and Restated
Agreement and Declaration of Trust of Registrant.
b(1)(d) Third Amendment, adopted effective June 30, 2005 to Amended
and Restated By-Laws of Registrant.
d(1)(k) Amendment No. 10, dated July 18, 2005, to the Master
Investment Advisory Agreement, dated September 11, 2000,
between Registrant and A I M Advisors, Inc.
e(1)(q) Amendment No. 16, dated April 29, 2005, to the Amended and
Restated Master Distribution Agreement (all classes of shares
except Class B shares), dated August 18, 2003, between
Registrant and A I M Distributors, Inc.
e(1)(r) Amendment No. 17, dated July 13, 2005, to the Amended and
Restated Master Distribution Agreement (all classes of shares
except Class B shares), dated August 18, 2003, between
Registrant and A I M Distributors, Inc.
e(1)(s) Amendment No. 18, dated July 18, 2005, to the Amended and
Restated Master Distribution Agreement (all classes of shares
except Class B shares), dated August 18, 2003, between
Registrant and A I M Distributors, Inc.
e(1)(t) Form of Amendment No. 19, dated October 22, 2005, to the
Amended and Restated Master Distribution Agreement (all
classes of shares except Class B shares), dated August 18,
2003, between Registrant and A I M Distributors, Inc.
e(1)(u) Form of Amendment No. 20, dated October 25, 2005, to the
Amended and Restated Master Distribution Agreement (all
classes of shares except Class B shares), dated August 18,
2003, between Registrant and A I M Distributors, Inc.
e(2)(n) Amendment No. 13, dated March 15, 2005, to the Amended and
Restated Master Distribution Agreement (Class B shares), dated
August 18, 2003, between Registrant and A I M Distributors,
Inc.
e(2)(o) Amendment No. 14, dated April 29, 2005, to the Amended and
Restated Master Distribution Agreement (Class B shares), dated
August 18, 2003, between Registrant and A I M Distributors,
Inc.
e(2)(p) Amendment No. 15, dated July 18, 2005, to the Amended and
Restated Master Distribution Agreement (Class B shares), dated
August 18, 2003, between Registrant and A I M Distributors,
Inc.
h(2)(c) Amendment No. 2, dated July 18, 2005, to the Amended and
Restated Master Administrative Services Agreement.
i Opinion and Consent of Ballard Spahr Andrews & Ingersoll, LLP.
j(1) Opinion of Ballard Spahr Andrews & Ingersoll, LLP concerning
federal income tax consequences of the reorganization of AIM
Health Sciences Fund.
|
INDEX
Exhibit
Number Description
------- -----------
j(2) Consent of PricewaterhouseCoopers LLP.
m(1)(m) Amendment No. 12, dated March 15, 2005, to the Registrant's
Amended and Restated Master Distribution Plan (Class A
Shares).
m(1)(n) Amendment No. 13, dated April 29, 2005, to the Registrant's
Amended and Restated Master Distribution Plan (Class A
Shares).
m(1)(o) Amendment No. 14, dated July 1, 2005 to the Registrant's
Amended and Restated Master Distribution Plan (Class A
Shares).
m(1)(p) Amendment No. 15, dated July 18, 2005, to the Registrant's
Amended and Restated Master Distribution Plan (Class A
Shares).
m(1)(q) Master Related Agreement to Amended and Restated Master
Distribution Plan (Class A Shares).
m(2)(l) Amendment No. 11, dated March 15, 2005, to the Registrant's
Amended and Restated Master Distribution Plan (Class B Shares)
(Securitization Feature).
m(2)(m) Amendment No. 12, dated April 29, 2005, to the Registrant's
Amended and Restated Master Distribution Plan (Class B Shares)
(Securitization Feature).
m(2)(n) Amendment No. 13, dated July 18, 2005, to the Registrant's
Amended and Restated Master Distribution Plan (Class B Shares)
(Securitization Feature).
m(3)(l) Amendment No. 11, dated March 15, 2005, to the Registrant's
Amended and Restated Master Distribution Plan (Class C
Shares).
m(3)(m) Amendment No. 12, dated April 29, 2005, to the Registrant's
Amended and Restated Master Distribution Plan (Class C
Shares).
m(3)(n) Amendment No. 13 dated July 18, 2005, to the Registrant's
Amended and Restated Master Distribution Plan (Class C
Shares).
m(4)(h) Amendment No. 7, dated April 29, 2005, to the Registrant's
Amended and Restated Master Distribution Plan (Class R
Shares).
m(4)(i) Amendment No. 8, dated July 18, 2005, to the Registrant's
Amended and Restated Master Distribution Plan (Class R
Shares).
m(4)(j) Form of Amendment No. 9, dated October 25, 2005, to the
Registrant's Amended and Restated Master Distribution Plan
(Class R Shares).
n(1) Seventh Amended and Restated Multiple Class Plan of The AIM
Family of Funds--Registered Trademark-- effective December 12,
2001, as amended and restated effective June 30, 2005.
n(2) Eighth Amended and Restated Multiple Class Plan of The AIM
Family of Funds--Registered Trademark-- effective December 12,
2001, as amended and restated effective August 4, 2005.
|
AMENDMENT NO. 12
TO AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST OF
AIM INVESTMENT FUNDS
This Amendment No. 12 to the Amended and Restated Agreement and Declaration of Trust of AIM Investment Funds (this "Amendment") amends, effective as of July 18, 2005, the Amended and Restated Agreement and Declaration of Trust of AIM Investment Funds (the "Trust") dated as of May 15, 2002, as amended (the "Agreement").
Under Section 9.7 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
WHEREAS, the Trust desires to amend the Agreement to reflect the merger of AIM Libra Fund;
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.
3. Except as specifically amended by this Amendment, the Agreement 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 July 18, 2005.
By: /s/ Robert H. Graham
---------------------------------------
Name: Robert H. Graham
Title: President
|
AMENDMENT NO. 12
TO
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF AIM INVESTMENT FUNDS
"SCHEDULE A
AIM INVESTMENT FUNDS
PORTFOLIOS AND CLASSES THEREOF
PORTFOLIO CLASSES OF EACH PORTFOLIO
-------------------------------- -----------------------------
AIM Developing Markets Fund Class A Shares
Class B Shares
Class C Shares
Institutional Class Shares
AIM Global Health Care Fund Class A Shares
Class B Shares
Class C Shares
Investor Class Shares
Institutional Class Shares
AIM Trimark Endeavor Fund Class A Shares
Class B Shares
Class C Shares
Class R Shares
Institutional Class Shares
AIM Trimark Fund Class A Shares
Class B Shares
Class C Shares
Class R Shares
Institutional Class Shares
AIM Trimark Small Companies Fund Class A Shares
Class B Shares
Class C Shares
Class R Shares
Institutional Class Shares"
|
THIRD AMENDMENT TO
AMENDED AND RESTATED BYLAWS
OF AIM INVESTMENT FUNDS
Adopted effective June 30, 2005
The Amended and Restated Bylaws of AIM Investment Funds (the "Trust"), adopted effective May 15, 2002, (the "Bylaws"), are hereby amended as follows:
1. Article VIII is hereby amended and restated to read in its entirety as follows:
"ARTICLE VIII
INDEMNIFICATION AND ADVANCEMENT
Section 1. Indemnification. (a) To the maximum extent permitted by law, the Trust (or applicable Portfolio) shall indemnify any person who was or is a party or is threatened to be made a party to, or is involved as a witness in, any proceeding (other than a proceeding by or in the right of the Trust or a Portfolio) by reason of the fact that such person is or was a Covered Person, against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such proceeding.
(b) To the maximum extent permitted by law, the Trust (or applicable Portfolio) shall indemnify any person who was or is a party or is threatened to be made a party to, or is involved as a witness in, any proceeding by or in the right of the Trust (or such Portfolio) to procure a judgment in its favor by reason of the fact that such person is or was a Covered Person, against expenses actually and reasonably incurred by that person in connection with the defense or settlement of such proceeding.
(c) Notwithstanding any provision to the contrary contained herein, no Covered Person shall be indemnified for any expenses, judgments, fines, amounts paid in settlement, or other liability or loss arising by reason of disabling conduct. The termination of any proceeding by conviction, or a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, creates a rebuttable presumption that the person engaged in disabling conduct.
Section 2. Advance Payment of Indemnification Expenses. To the maximum extent permitted by law, the Trust or applicable Portfolio shall advance to any person who was or is a party or is threatened to be made a party to, or is involved as a witness in, any proceeding by reason of the fact that such person is or was a Trustee or officer of the Trust the expenses actually and reasonably incurred by such person in connection with the defense of such proceeding in advance of its final disposition. To the maximum extent permitted by law, the Trust or applicable Portfolio may advance to any person who was or is a party or is threatened to be made a party to any proceeding by reason of the fact that such person is or was a Covered Person (other than a Trustee or officer of the Trust) the expenses actually and reasonably incurred by such person in connection with the defense of such proceeding in advance of its final disposition. Notwithstanding
any provision to the contrary contained herein, the Trust shall not advance expenses to any Covered Person (including a Trustee or officer of the Trust) unless:
(a) the Trust or applicable Portfolio has received an undertaking by or on behalf of such Covered Person that the amount of all expenses so advanced will be paid over by such person to the Trust or applicable Portfolio unless it is ultimately determined that such person is entitled to indemnification for such expenses; and
(b) (i) such Covered Person shall have provided appropriate security for such undertaking, or (ii) such Covered Person shall have insured the Trust or applicable Portfolio against losses arising out of any such advance payments, or (iii) either (1) the Trustees, by the vote of a majority of a quorum of qualifying Trustees, or (2) independent legal counsel in a written opinion, shall have determined, based upon a review of readily available facts (as opposed to a full trial-type inquiry) that there is reason to believe that such Covered Person ultimately will be found entitled to indemnification.
Section 3. Determination of Entitlement to Indemnification. Any indemnification required or permitted under this Article VIII (unless ordered by a court) shall be made by the Trust or applicable Portfolio only as authorized in the specific case upon a reasonable determination, based upon a review of the facts, that the Covered Person is entitled to indemnification because (i) he or she is not liable by reason of disabling conduct, or (ii) in cases where there is no liability, he or she has not engaged in disabling conduct. Such determination shall be made by (i) the vote of a majority of a quorum of qualifying Trustees; or (ii) if there are no such Trustees, or if such Trustees so direct, by independent legal counsel in a written opinion. Notwithstanding anything to the contrary in Section 2 of this Article VIII, if a determination that a Covered Person engaged in disabling conduct is made in accordance with this Section 3, no further advances of expenses shall be made, and all prior advances, and insurance premiums paid for by the Trust, if applicable, must be repaid.
Section 4. Contract Rights. With respect to any person who was
or is a party or is threatened to be made a party to, or is involved as
a witness in, any proceeding by reason of the fact that such person is
or was a Covered Person, the rights to indemnification conferred in
Section 1 of this Article VIII, and with respect to any person who was
or is a party or is threatened to be made a party to, or is involved as
a witness in, any proceeding by reason of the fact that such person is
or was a Trustee or officer of the Trust, the advancement of expenses
conferred in Section 2 of this Article VIII shall be contract rights.
Any amendment, repeal, or modification of, or adoption of any provision
inconsistent with, this Article VIII (or any provision hereof) shall
not adversely affect any right to indemnification or advancement of
expenses granted to any such person pursuant hereto with respect to any
act or omission of such person occurring prior to the time of such
amendment, repeal, modification, or adoption (regardless of whether the
proceeding relating to such acts or omissions is commenced before or
after the time of such amendment, repeal, modification, or adoption).
Any amendment or modification of, or adoption of any provision
inconsistent with, this Article VIII (or any provision hereof), that
has the effect of positively affecting any right to indemnification or
advancement of expenses granted to any such person pursuant hereto,
shall not apply retroactively to any person who was not serving as a
Trustee, officer, employee or agent of the Trust at the time of such
amendment, modification or adoption.
Section 5. Claims. (a) If (X) a claim under Section 1 of this Article VIII with respect to any right to indemnification is not paid in full by the Trust or applicable Portfolio within sixty days after a written demand has been received by the Trust or applicable Portfolio or (Y) a claim under Section 2 of this Article VIII with respect to any right to the advancement of expenses is not paid in full by the Trust or applicable Portfolio within thirty days after a written demand has been received by the Trust or applicable Portfolio, then the Covered Person seeking to enforce a right to indemnification or to an advancement of expenses, as the case may be, may at any time thereafter bring suit against the Trust or applicable Portfolio to recover the unpaid amount of the claim.
(b) If successful in whole or in part in any suit brought pursuant to Section 5(a) of this Article VIII, or in a suit brought by the Trust or applicable Portfolio to recover an advancement of expenses (whether pursuant to the terms of an undertaking or otherwise), the Covered Person seeking to enforce a right to indemnification or an advancement of expenses hereunder or the Covered Person from whom the Trust or applicable Portfolio sought to recover an advancement of expenses, as the case may be, shall be entitled to be paid by the Trust or applicable Portfolio the reasonable expenses (including attorneys' fees) of prosecuting or defending such suit.
Section 6. Definitions. For purposes of this Article VIII: (a) references to "Trust" include any domestic or foreign predecessor entity of this Trust in a merger, consolidation, or other transaction in which the predecessor's existence ceased upon consummation of the transaction; (b) the term "disabling conduct" means willful misfeasance, bad faith, gross negligence, or the reckless disregard of the duties involved in the conduct of the Covered Person's office with the Trust or applicable Portfolio; (c) the term "expenses" includes, without limitations, attorneys' fees; (d) the term "proceeding" means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative; and (e) the term "qualifying Trustee" means any Trustee who is not an interested person (as defined in the 1940 Act) of the Trust and is not a party to the proceeding."
2. Capitalized terms not specifically defined herein shall have the meanings ascribed to them in the Trust's Amended and Restated Agreement and Declaration of Trust, as amended.
AMENDMENT NO. 10
TO
MASTER INVESTMENT ADVISORY AGREEMENT
This Amendment dated as of July 18, 2005, amends the Master Investment Advisory Agreement (the "Agreement"), dated September 11, 2000, between AIM Investment Funds, a Delaware statutory trust, and A I M Advisors, Inc., a Delaware corporation.
WITNESSETH:
WHEREAS, the parties desire to amend the Agreement to delete AIM Libra Fund from the Agreement; and
WHEREAS, the parties desire to amend the Agreement to permanently reduce the advisory fee payable by AIM Global Health Care Fund effective July 18, 2005;
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 Developing Markets Fund September 1, 2001 AIM Global Health Care Fund September 1, 2001 AIM Trimark Endeavor Fund November 3, 2003 AIM Trimark Fund November 3, 2003 AIM Trimark Small Companies Fund November 3, 2003" |
"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 DEVELOPING MARKETS FUND
NET ASSETS ANNUAL RATE --------------------------------------------------------- ----------- First $500 million....................................... 0.975% Next $500 million........................................ 0.95% Next $500 million........................................ 0.925% On amounts thereafter.................................... 0.90% |
AIM GLOBAL HEALTH CARE FUND
NET ASSETS ANNUAL RATE --------------------------------------------------------- ----------- First $350 million....................................... 0.75% Next $350 million........................................ 0.65% Next $1.3 billion........................................ 0.55% Next $2 billion.......................................... 0.45% Next $2 billion.......................................... 0.40% Next $2 billion.......................................... 0.375% Over $8 billion.......................................... 0.35% |
AIM TRIMARK ENDEAVOR FUND
NET ASSETS ANNUAL RATE --------------------------------------------------------- ----------- First $1 billion......................................... 0.80% On amounts thereafter.................................... 0.75% |
AIM TRIMARK FUND
AIM TRIMARK SMALL COMPANIES FUND
NET ASSETS ANNUAL RATE --------------------------------------------------------- ----------- First $1 billion......................................... 0.85% On amounts thereafter.................................... 0.80%" |
2. In all other respects, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers on the date first written above.
AIM INVESTMENT FUNDS
Attest: /s/ John H. Lively By: /s/ Robert H. Graham
------------------------------- -----------------------
Assistant Secretary Robert H. Graham
President
|
(SEAL)
A I M ADVISORS, INC.
Attest: /s/ John H. Lively By: /s/ Mark H. Williamson
------------------------------- -----------------------
Assistant Secretary Mark H. Williamson
President
|
(SEAL)
AMENDMENT NO. 16 TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(ALL CLASSES OF SHARES EXCEPT CLASS B SHARES)
The Amended and Restated Master Distribution Agreement (all Classes of shares except Class B Shares) (the "Agreement") made as of the 18th day of August, 2003, by and between each registered investment company set forth on Schedule A to the Agreement (each individually referred to as "Fund", or collectively, "Funds"), severally, on behalf of each of its series of common stock or beneficial interest, as the case may be, set forth on Schedule A to the Agreement, (each, a "Portfolio"), with respect to each class of shares except Class B Shares (the "Shares") of each Portfolio, and A I M DISTRIBUTORS, INC., a Delaware corporation (the "Distributor") is hereby amended as follows:
WHEREAS, the parties desire to amend the Agreement to add AIM Global Real Estate Fund, AIM Moderate Growth Allocation Fund, AIM Moderately Conservative Allocation Fund, Institutional Class Shares of AIM Intermediate Government Fund and AIM Small Cap Equity Fund; and Investor Class Shares of AIM Basic Balanced Fund, AIM Diversified Dividend Fund and AIM Global Health Care Fund; and
WHEREAS, the parties desire to amend the Agreement to change the name of AIM Aggressive Allocation Fund to AIM Growth Allocation;
NOW, THEREFORE, agree as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(ALL CLASSES OF SHARES EXCEPT CLASS B SHARES)
AIM COMBINATION STOCK & BOND FUNDS
AIM Core Stock Fund - Class A
Class C
Class K
Investor Class
AIM Total Return Fund - Class A
Class C
Class K
Institutional Class
Investor Class
AIM COUNSELOR SERIES TRUST
AIM Advantage Health Sciences Fund - Class A
Class C
|
AIM Multi-Sector Fund - Class A
Class C
Institutional Class
AIM EQUITY FUNDS
AIM Aggressive Growth Fund - Class A
Class C
Class R
Institutional Class
AIM Blue Chip Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Capital Development Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Charter Fund - Class A
Class C
Class R
Institutional Class
AIM Constellation Fund - Class A
Class C
Class R
Institutional Class
AIM Dent Demographic Trends Fund - Class A
Class C
AIM Diversified Dividend Fund - Class A
Class C
Investor Class
AIM Emerging Growth Fund - Class A
Class C
AIM Large Cap Basic Value Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Large Cap Growth Fund - Class A
Class C
Class R
Institutional Class
Investor Class
|
AIM Mid Cap Growth Fund - Class A
Class C
Class R
Institutional Class
AIM Select Basic Value Fund - Class A
Class C
AIM Weingarten Fund - Class A
Class C
Class R
Institutional Class
AIM FUNDS GROUP
AIM Balanced Fund - Class A
Class C
Class R
Institutional Class
AIM Basic Balanced Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM European Small Company Fund - Class A
Class C
AIM Global Value Fund - Class A
Class C
AIM International Small Company Fund - Class A
Class C
AIM Mid Cap Basic Value Fund - Class A
Class C
Class R
Institutional Class
AIM Premier Equity Fund - Class A
Class C
Class R
Institutional Class
AIM Select Equity Fund - Class A
Class C
AIM Small Cap Equity Fund - Class A
Class C
Class R
Institutional Class
|
AIM GROWTH SERIES
AIM Basic Value Fund - Class A
Class C
Class R
Institutional Class
AIM Conservative Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Global Equity Fund - Class A
Class C
Institutional Class
AIM Growth Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Mid Cap Core Equity Fund - Class A
Class C
Class R
Institutional Class
AIM Moderate Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Moderate Growth Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Moderately Conservative Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Small Cap Growth Fund - Class A
Class C
Class R
Institutional Class
AIM INTERNATIONAL MUTUAL FUNDS
AIM Asia Pacific Growth Fund - Class A
Class C
AIM European Growth Fund - Class A
Class C
Class R
Investor Class
|
AIM Global Aggressive Growth Fund - Class A
Class C
AIM Global Growth Fund - Class A
Class C
AIM International Core Equity Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM International Growth Fund - Class A
Class C
Class R
Institutional Class
AIM INVESTMENT FUNDS
AIM Developing Markets Fund - Class A
Class C
AIM Global Health Care Fund - Class A
Class C
Investor Class
AIM Libra Fund - Class A
Class C
AIM Trimark Endeavor Fund - Class A
Class C
Class R
Institutional Class
AIM Trimark Fund - Class A
Class C
Class R
Institutional Class
AIM Trimark Small Companies Fund - Class A
Class C
Class R
Institutional Class
AIM INVESTMENT SECURITIES FUNDS
AIM Global Real Estate Fund - Class A
Class C
Class R
Institutional Class
AIM High Yield Fund - Class A
Class C
Institutional Class
Investor Class
|
AIM Income Fund - Class A
Class C
Class R
Investor Class
AIM Intermediate Government Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Limited Maturity Treasury Fund - Class A
Class A3
Institutional Class
AIM Money Market Fund - AIM Cash Reserve Shares
Class C
Class R
Institutional Class
Investor Class
AIM Municipal Bond Fund - Class A
Class C
Investor Class
AIM Real Estate Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Short Term Bond Fund - Class A
Class C
Class R
Institutional Class
AIM Total Return Bond Fund - Class A
Class C
Class R
Institutional Class
AIM SECTOR FUNDS
AIM Energy Fund - Class A
Class C
Class K
Investor Class
AIM Financial Services Fund - Class A
Class C
Class K
Investor Class
|
AIM Gold & Precious Metals Fund - Class A
Class C
Investor Class
AIM Health Sciences Fund - Class A
Class C
Class K
Investor Class
AIM Leisure Fund - Class A
Class C
Class K
Investor Class
AIM Technology Fund - Class A
Class C
Class K
Institutional Class
Investor Class
AIM Utilities Fund - Class A
Class C
Investor Class
AIM SPECIAL OPPORTUNITIES FUNDS
AIM Opportunities I Fund - Class A
Class C
AIM Opportunities II Fund - Class A
Class C
AIM Opportunities III Fund - Class A
Class C
AIM STOCK FUNDS
AIM Dynamics Fund - Class A
Class C
Class K
Institutional Class
Investor Class
AIM Mid Cap Stock Fund - Class A
Class C
Class K
Institutional Class
Investor Class
AIM Small Company Growth Fund - Class A
Class C
Class K
Investor Class
AIM S&P 500 Index Fund - Institutional Class
Investor Class
|
AIM TAX-EXEMPT FUNDS
AIM High Income Municipal Fund - Class A
Class C
AIM Tax-Exempt Cash Fund - Class A
Investor Class
AIM Tax-Free Intermediate Fund - Class A
Class A3
Institutional Class
AIM TREASURER'S SERIES TRUST
Premier Portfolio Investor Class
Premier Tax-Exempt Portfolio Investor Class
Premier U.S. Government Money Portfolio Investor Class"
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: April 29, 2005
EACH FUND (LISTED ON SCHEDULE A)
ON BEHALF OF THE SHARES OF EACH
PORTFOLIO LISTED ON SCHEDULE A
By: /s/ ROBERT H. GRAHAM
--------------------
Robert H. Graham
President
|
A I M DISTRIBUTORS, INC.
By: /s/ GENE L. NEEDLES
-------------------
Gene L. Needles
President
|
AMENDMENT NO. 17 TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(ALL CLASSES OF SHARES EXCEPT CLASS B SHARES)
The Amended and Restated Master Distribution Agreement (all Classes of shares except Class B Shares) (the "Agreement") made as of the 18th day of August, 2003, by and between each registered investment company set forth on Schedule A to the Agreement (each individually referred to as "Fund", or collectively, "Funds"), severally, on behalf of each of its series of common stock or beneficial interest, as the case may be, set forth on Schedule A to the Agreement, (each, a "Portfolio"), with respect to each class of shares except Class B Shares (the "Shares") of each Portfolio, and A I M DISTRIBUTORS, INC., a Delaware corporation (the "Distributor") is hereby amended to reflect the addition of Institutional Class of AIM Small Company Growth Fund.
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(ALL CLASSES OF SHARES EXCEPT CLASS B SHARES)
AIM COMBINATION STOCK & BOND FUNDS
AIM Core Stock Fund - Class A
Class C
Class K
Investor Class
AIM Total Return Fund - Class A
Class C
Class K
Institutional Class
Investor Class
AIM COUNSELOR SERIES TRUST
AIM Advantage Health Sciences Fund - Class A
Class C
AIM Multi-Sector Fund - Class A
Class C
Institutional Class
AIM EQUITY FUNDS
AIM Aggressive Growth Fund - Class A
Class C
Class R
Institutional Class
|
AIM Blue Chip Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Capital Development Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Charter Fund - Class A
Class C
Class R
Institutional Class
AIM Constellation Fund - Class A
Class C
Class R
Institutional Class
AIM Dent Demographic Trends Fund - Class A
Class C
AIM Diversified Dividend Fund - Class A
Class C
Investor Class
AIM Emerging Growth Fund - Class A
Class C
AIM Large Cap Basic Value Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Large Cap Growth Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Mid Cap Growth Fund - Class A
Class C
Class R
Institutional Class
AIM Select Basic Value Fund - Class A
Class C
|
AIM Weingarten Fund - Class A
Class C
Class R
Institutional Class
AIM FUNDS GROUP
AIM Balanced Fund - Class A
Class C
Class R
Institutional Class
AIM Basic Balanced Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM European Small Company Fund - Class A
Class C
AIM Global Value Fund - Class A
Class C
AIM International Small Company Fund - Class A
Class C
AIM Mid Cap Basic Value Fund - Class A
Class C
Class R
Institutional Class
AIM Premier Equity Fund - Class A
Class C
Class R
Institutional Class
AIM Select Equity Fund - Class A
Class C
AIM Small Cap Equity Fund - Class A
Class C
Class R
Institutional Class
|
AIM GROWTH SERIES
AIM Basic Value Fund - Class A
Class C
Class R
Institutional Class
AIM Conservative Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Global Equity Fund - Class A
Class C
Institutional Class
AIM Growth Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Mid Cap Core Equity Fund - Class A
Class C
Class R
Institutional Class
AIM Moderate Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Moderate Growth Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Moderately Conservative Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Small Cap Growth Fund - Class A
Class C
Class R
Institutional Class
AIM INTERNATIONAL MUTUAL FUNDS
AIM Asia Pacific Growth Fund - Class A
Class C
AIM European Growth Fund - Class A
Class C
Class R
Investor Class
4
|
AIM Global Aggressive Growth Fund - Class A
Class C
AIM Global Growth Fund - Class A
Class C
AIM International Core Equity Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM International Growth Fund - Class A
Class C
Class R
Institutional Class
|
AIM INVESTMENT FUNDS
AIM Developing Markets Fund - Class A
Class C
AIM Global Health Care Fund - Class A
Class C
Investor Class
AIM Libra Fund - Class A
Class C
AIM Trimark Endeavor Fund - Class A
Class C
Class R
Institutional Class
AIM Trimark Fund - Class A
Class C
Class R
Institutional Class
AIM Trimark Small Companies Fund - Class A
Class C
Class R
Institutional Class
AIM INVESTMENT SECURITIES FUNDS
AIM Global Real Estate Fund - Class A
Class C
Class R
Institutional Class
AIM High Yield Fund - Class A
Class C
Institutional Class
Investor Class
5
|
AIM Income Fund - Class A
Class C
Class R
Investor Class
AIM Intermediate Government Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Limited Maturity Treasury Fund - Class A
Class A3
Institutional Class
AIM Money Market Fund - AIM Cash Reserve Shares
Class C
Class R
Institutional Class
Investor Class
AIM Municipal Bond Fund - Class A
Class C
Investor Class
AIM Real Estate Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Short Term Bond Fund - Class A
Class C
Class R
Institutional Class
AIM Total Return Bond Fund - Class A
Class C
Class R
Institutional Class
AIM SECTOR FUNDS
AIM Energy Fund - Class A
Class C
Class K
Investor Class
AIM Financial Services Fund - Class A
Class C
Class K
Investor Class
|
AIM Gold & Precious Metals Fund - Class A
Class C
Investor Class
AIM Health Sciences Fund - Class A
Class C
Class K
Investor Class
AIM Leisure Fund - Class A
Class C
Class K
Investor Class
AIM Technology Fund - Class A
Class C
Class K
Institutional Class
Investor Class
AIM Utilities Fund - Class A
Class C
Investor Class
AIM SPECIAL OPPORTUNITIES FUNDS
AIM Opportunities I Fund - Class A
Class C
AIM Opportunities II Fund - Class A
Class C
AIM Opportunities III Fund - Class A
Class C
AIM STOCK FUNDS
AIM Dynamics Fund - Class A
Class C
Class K
Institutional Class
Investor Class
AIM Mid Cap Stock Fund - Class A
Class C
Class K
Institutional Class
Investor Class
AIM Small Company Growth Fund - Class A
Class C
Class K
Institutional Class
Investor Class
AIM S&P 500 Index Fund - Institutional Class
Investor Class
|
AIM TAX-EXEMPT FUNDS
AIM High Income Municipal Fund - Class A
Class C
AIM Tax-Exempt Cash Fund - Class A
Investor Class
AIM Tax-Free Intermediate Fund - Class A
Class A3
Institutional Class
AIM TREASURER'S SERIES TRUST
Premier U.S. Government Money Portfolio Investor Class"
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: July 13, 2005
EACH FUND (LISTED ON SCHEDULE A) ON
BEHALF OF THE SHARES OF EACH
PORTFOLIO LISTED ON SCHEDULE A
By: /s/ ROBERT H. GRAHAM
--------------------
Robert H. Graham
President
|
A I M DISTRIBUTORS, INC.
By: /s/ GENE L. NEEDLES
-------------------
Gene L. Needles
President
|
AMENDMENT NO. 18 TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(ALL CLASSES OF SHARES EXCEPT CLASS B SHARES)
The Amended and Restated Master Distribution Agreement (all Classes of shares except Class B Shares) (the "Agreement") made as of the 18th day of August, 2003, by and between each registered investment company set forth on Schedule A to the Agreement (each individually referred to as "Fund", or collectively, "Funds"), severally, on behalf of each of its series of common stock or beneficial interest, as the case may be, set forth on Schedule A to the Agreement, (each, a "Portfolio"), with respect to each class of shares except Class B Shares (the "Shares") of each Portfolio, and A I M DISTRIBUTORS, INC., a Delaware corporation (the "Distributor") is hereby amended to reflect the merger of AIM Balanced Fund, AIM Core Stock Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM Health Sciences Fund, AIM Libra Fund, AIM Mid Cap Stock Fund and AIM Total Return Fund.
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(ALL CLASSES OF SHARES EXCEPT CLASS B SHARES)
AIM COUNSELOR SERIES TRUST
AIM Advantage Health Sciences Fund - Class A
Class C
AIM Multi-Sector Fund - Class A
Class C
Institutional Class
AIM EQUITY FUNDS
AIM Aggressive Growth Fund - Class A
Class C
Class R
Institutional Class
AIM Blue Chip Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Capital Development Fund - Class A
Class C
Class R
Institutional Class
Investor Class
|
AIM Charter Fund - Class A
Class C
Class R
Institutional Class
AIM Constellation Fund - Class A
Class C
Class R
Institutional Class
AIM Diversified Dividend Fund - Class A
Class C
Investor Class
AIM Large Cap Basic Value Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Large Cap Growth Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Mid Cap Growth Fund - Class A
Class C
Class R
Institutional Class
AIM Select Basic Value Fund - Class A
Class C
AIM Weingarten Fund - Class A
Class C
Class R
Institutional Class
AIM FUNDS GROUP
AIM Basic Balanced Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM European Small Company Fund - Class A
Class C
AIM Global Value Fund - Class A
Class C
AIM International Small Company Fund - Class A
Class C
2
|
AIM Mid Cap Basic Value Fund - Class A
Class C
Class R
Institutional Class
AIM Premier Equity Fund - Class A
Class C
Class R
Institutional Class
AIM Select Equity Fund - Class A
Class C
AIM Small Cap Equity Fund - Class A
Class C
Class R
Institutional Class
AIM GROWTH SERIES
AIM Basic Value Fund - Class A
Class C
Class R
Institutional Class
AIM Conservative Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Global Equity Fund - Class A
Class C
Institutional Class
AIM Growth Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Mid Cap Core Equity Fund - Class A
Class C
Class R
Institutional Class
AIM Moderate Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Moderate Growth Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Moderately Conservative Allocation Fund - Class A
Class C
3
|
Class R
Institutional Class
AIM Small Cap Growth Fund - Class A
Class C
Class R
Institutional Class
AIM INTERNATIONAL MUTUAL FUNDS
AIM Asia Pacific Growth Fund - Class A
Class C
AIM European Growth Fund - Class A
Class C
Class R
Investor Class
AIM Global Aggressive Growth Fund - Class A
Class C
AIM Global Growth Fund - Class A
Class C
AIM International Core Equity Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM International Growth Fund - Class A
Class C
Class R
Institutional Class
AIM INVESTMENT FUNDS
AIM Developing Markets Fund - Class A
Class C
AIM Global Health Care Fund - Class A
Class C
Investor Class
AIM Trimark Endeavor Fund - Class A
Class C
Class R
Institutional Class
AIM Trimark Fund - Class A
Class C
Class R
Institutional Class
AIM Trimark Small Companies Fund - Class A
Class C
4
|
Class R
Institutional Class
AIM INVESTMENT SECURITIES FUNDS
AIM Global Real Estate Fund - Class A
Class C
Class R
Institutional Class
AIM High Yield Fund - Class A
Class C
Institutional Class
Investor Class
AIM Income Fund - Class A
Class C
Class R
Investor Class
AIM Intermediate Government Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Limited Maturity Treasury Fund - Class A
Class A3
Institutional Class
AIM Money Market Fund - AIM Cash Reserve Shares
Class C
Class R
Institutional Class
Investor Class
AIM Municipal Bond Fund - Class A
Class C
Investor Class
AIM Real Estate Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Short Term Bond Fund - Class A
Class C
Class R
Institutional Class
AIM Total Return Bond Fund - Class A
Class C
Class R
Institutional Class
|
AIM SECTOR FUNDS
AIM Energy Fund - Class A
Class C
Class K
Investor Class
AIM Financial Services Fund - Class A
Class C
Class K
Investor Class
AIM Gold & Precious Metals Fund - Class A
Class C
Investor Class
AIM Leisure Fund - Class A
Class C
Class K
Investor Class
AIM Technology Fund - Class A
Class C
Class K
Institutional Class
Investor Class
AIM Utilities Fund - Class A
Class C
Investor Class
AIM SPECIAL OPPORTUNITIES FUNDS
AIM Opportunities I Fund - Class A
Class C
AIM Opportunities II Fund - Class A
Class C
AIM Opportunities III Fund - Class A
Class C
AIM STOCK FUNDS
AIM Dynamics Fund - Class A
Class C
Class K
Institutional Class
Investor Class
AIM Small Company Growth Fund - Class A
Class C
Class K
Institutional Class
Investor Class
AIM S&P 500 Index Fund - Institutional Class
Investor Class
|
AIM TAX-EXEMPT FUNDS
AIM High Income Municipal Fund - Class A
Class C
AIM Tax-Exempt Cash Fund - Class A
Investor Class
AIM Tax-Free Intermediate Fund - Class A
Class A3
Institutional Class
AIM TREASURER'S SERIES TRUST
Premier U.S. Government Money Portfolio Investor Class"
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: July 18, 2005
EACH FUND (LISTED ON SCHEDULE A) ON
BEHALF OF THE SHARES OF EACH
PORTFOLIO LISTED ON SCHEDULE A
By: /s/ ROBERT H. GRAHAM
--------------------
Robert H. Graham
President
|
A I M DISTRIBUTORS, INC.
By: /s/ GENE L. NEEDLES
-------------------
Gene L. Needles
President
|
AMENDMENT NO. 19 TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(ALL CLASSES OF SHARES EXCEPT CLASS B SHARES)
The Amended and Restated Master Distribution Agreement (all Classes of shares except Class B Shares) (the "Agreement") made as of the 18th day of August, 2003, by and between each registered investment company set forth on Schedule A to the Agreement (each individually referred to as "Fund", or collectively, "Funds"), severally, on behalf of each of its series of common stock or beneficial interest, as the case may be, set forth on Schedule A to the Agreement, (each, a "Portfolio"), with respect to each class of shares except Class B Shares (the "Shares") of each Portfolio, and A I M DISTRIBUTORS, INC., a Delaware corporation (the "Distributor") is hereby amended to reflect the removal of Class K Shares of AIM Dynamics Fund, AIM Energy Fund, AIM Financial Services Fund, AIM Leisure Fund, AIM Small Company Growth Fund and AIM Technology Fund.
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(ALL CLASSES OF SHARES EXCEPT CLASS B SHARES)
AIM COUNSELOR SERIES TRUST
AIM Advantage Health Sciences Fund - Class A
Class C
AIM Multi-Sector Fund - Class A
Class C
Institutional Class
AIM EQUITY FUNDS
AIM Aggressive Growth Fund - Class A
Class C
Class R
Institutional Class
AIM Blue Chip Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Capital Development Fund - Class A
Class C
Class R
Institutional Class
Investor Class
|
AIM Charter Fund - Class A
Class C
Class R
Institutional Class
AIM Constellation Fund - Class A
Class C
Class R
Institutional Class
AIM Diversified Dividend Fund - Class A
Class C
Investor Class
AIM Large Cap Basic Value Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Large Cap Growth Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Mid Cap Growth Fund - Class A
Class C
Class R
Institutional Class
AIM Select Basic Value Fund - Class A
Class C
AIM Weingarten Fund - Class A
Class C
Class R
Institutional Class
AIM FUNDS GROUP
AIM Basic Balanced Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM European Small Company Fund - Class A
Class C
AIM Global Value Fund - Class A
Class C
|
AIM International Small Company Fund - Class A Class C
AIM Mid Cap Basic Value Fund - Class A
Class C
Class R
Institutional Class
AIM Premier Equity Fund - Class A
Class C
Class R
Institutional Class
AIM Select Equity Fund - Class A
Class C
AIM Small Cap Equity Fund - Class A
Class C
Class R
Institutional Class
AIM GROWTH SERIES
AIM Basic Value Fund - Class A
Class C
Class R
Institutional Class
AIM Conservative Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Global Equity Fund - Class A
Class C
Institutional Class
AIM Growth Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Mid Cap Core Equity Fund - Class A
Class C
Class R
Institutional Class
AIM Moderate Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Moderate Growth Allocation Fund - Class A
Class C
Class R
Institutional Class
|
AIM Moderately Conservative Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Small Cap Growth Fund - Class A
Class C
Class R
Institutional Class
AIM INTERNATIONAL MUTUAL FUNDS
AIM Asia Pacific Growth Fund - Class A
Class C
AIM European Growth Fund - Class A
Class C
Class R
Investor Class
AIM Global Aggressive Growth Fund - Class A
Class C
AIM Global Growth Fund - Class A
Class C
AIM International Core Equity Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM International Growth Fund - Class A
Class C
Class R
Institutional Class
AIM INVESTMENT FUNDS
AIM Developing Markets Fund - Class A
Class C
AIM Global Health Care Fund - Class A
Class C
Investor Class
AIM Trimark Endeavor Fund - Class A
Class C
Class R
Institutional Class
AIM Trimark Fund - Class A
Class C
Class R
Institutional Class
4
|
AIM Trimark Small Companies Fund - Class A
Class C
Class R
|
Institutional Class
AIM INVESTMENT SECURITIES FUNDS
AIM Global Real Estate Fund - Class A
Class C
Class R
Institutional Class
AIM High Yield Fund - Class A
Class C
Institutional Class
Investor Class
AIM Income Fund - Class A
Class C
Class R
Investor Class
AIM Intermediate Government Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Limited Maturity Treasury Fund - Class A
Class A3
Institutional Class
AIM Money Market Fund - AIM Cash Reserve Shares
Class C
Class R
Institutional Class
Investor Class
AIM Municipal Bond Fund - Class A
Class C
Investor Class
AIM Real Estate Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Short Term Bond Fund - Class A
Class C
Class R
Institutional Class
5
|
AIM Total Return Bond Fund - Class A
Class C
Class R
Institutional Class
AIM SECTOR FUNDS
AIM Energy Fund - Class A
Class C
Investor Class
AIM Financial Services Fund - Class A
Class C
Investor Class
AIM Gold & Precious Metals Fund - Class A
Class C
Investor Class
AIM Leisure Fund - Class A
Class C
Investor Class
AIM Technology Fund -
Class A
Class C
Institutional Class
Investor Class
AIM Utilities Fund - Class A
Class C
Investor Class
AIM SPECIAL OPPORTUNITIES FUNDS
AIM Opportunities I Fund - Class A
Class C
AIM Opportunities II Fund - Class A
Class C
AIM Opportunities III Fund - Class A
Class C
AIM STOCK FUNDS
AIM Dynamics Fund - Class A
Class C
Institutional Class
Investor Class
AIM Small Company Growth Fund - Class A
Class C
Institutional Class
Investor Class
AIM S&P 500 Index Fund - Institutional Class
Investor Class
6
|
AIM TAX-EXEMPT FUNDS
AIM High Income Municipal Fund - Class A
Class C
AIM Tax-Exempt Cash Fund - Class A
Investor Class
AIM Tax-Free Intermediate Fund - Class A
Class A3
Institutional Class
AIM TREASURER'S SERIES TRUST
Premier U.S. Government Money Portfolio Investor Class"
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: October 22, 2005
EACH FUND (LISTED ON SCHEDULE A) ON BEHALF OF
THE SHARES OF EACH PORTFOLIO LISTED ON
SCHEDULE A
By:__________________________________________
Robert H. Graham
President
A I M DISTRIBUTORS, INC.
By:__________________________________________
Gene L. Needles
President
AMENDMENT NO. 20 TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(ALL CLASSES OF SHARES EXCEPT CLASS B SHARES)
The Amended and Restated Master Distribution Agreement (all Classes of shares except Class B Shares) (the "Agreement") made as of the 18th day of August, 2003, by and between each registered investment company set forth on Schedule A to the Agreement (each individually referred to as "Fund", or collectively, "Funds"), severally, on behalf of each of its series of common stock or beneficial interest, as the case may be, set forth on Schedule A to the Agreement, (each, a "Portfolio"), with respect to each class of shares except Class B Shares (the "Shares") of each Portfolio, and A I M DISTRIBUTORS, INC., a Delaware corporation (the "Distributor") is hereby amended to reflect the addition of Institutional Class Shares to AIM Developing Markets Fund, AIM Diversified Dividend Fund, AIM Global Value Fund, AIM Income Fund, AIM International Small Company Fund and AIM Utilities Fund and Class R Shares to AIM Diversified Dividend Fund, AIM Dynamics Fund, AIM Leisure Fund and AIM Small Company Growth Fund.
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(ALL CLASSES OF SHARES EXCEPT CLASS B SHARES)
AIM COUNSELOR SERIES TRUST
AIM Advantage Health Sciences Fund - Class A
Class C
AIM Multi-Sector Fund - Class A
Class C
Institutional Class
AIM EQUITY FUNDS
AIM Aggressive Growth Fund - Class A
Class C
Class R
Institutional Class
AIM Blue Chip Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Capital Development Fund - Class A
Class C
Class R
Institutional Class
Investor Class
|
AIM Charter Fund - Class A
Class C
Class R
Institutional Class
AIM Constellation Fund - Class A
Class C
Class R
Institutional Class
AIM Diversified Dividend Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Large Cap Basic Value Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Large Cap Growth Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Mid Cap Growth Fund - Class A
Class C
Class R
Institutional Class
AIM Select Basic Value Fund - Class A
Class C
AIM Weingarten Fund - Class A
Class C
Class R
Institutional Class
AIM FUNDS GROUP
AIM Basic Balanced Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM European Small Company Fund - Class A
Class C
AIM Global Value Fund - Class A
Class C
Institutional Class
2
|
AIM International Small Company Fund - Class A
Class C
Institutional Class
AIM Mid Cap Basic Value Fund - Class A
Class C
Class R
Institutional Class
AIM Premier Equity Fund - Class A
Class C
Class R
Institutional Class
AIM Select Equity Fund - Class A
Class C
AIM Small Cap Equity Fund - Class A
Class C
Class R
Institutional Class
AIM GROWTH SERIES
AIM Basic Value Fund - Class A
Class C
Class R
Institutional Class
AIM Conservative Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Global Equity Fund - Class A
Class C
Institutional Class
AIM Growth Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Mid Cap Core Equity Fund - Class A
Class C
Class R
Institutional Class
AIM Moderate Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Moderate Growth Allocation Fund - Class A
3
|
Class C
Class R
Institutional Class
AIM Moderately Conservative Allocation Fund - Class A
Class C
Class R
Institutional Class
AIM Small Cap Growth Fund - Class A
Class C
Class R
Institutional Class
AIM INTERNATIONAL MUTUAL FUNDS
AIM Asia Pacific Growth Fund - Class A
Class C
AIM European Growth Fund - Class A
Class C
Class R
Investor Class
AIM Global Aggressive Growth Fund - Class A
Class C
AIM Global Growth Fund - Class A
Class C
AIM International Core Equity Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM International Growth Fund - Class A
Class C
Class R
Institutional Class
AIM INVESTMENT FUNDS
AIM Developing Markets Fund - Class A
Class C
Institutional Class
AIM Global Health Care Fund - Class A
Class C
Investor Class
AIM Trimark Endeavor Fund - Class A
Class C
Class R
Institutional Class
4
|
AIM Trimark Fund - Class A
Class C
Class R
Institutional Class
AIM Trimark Small Companies Fund - Class A
Class C
Class R
Institutional Class
AIM INVESTMENT SECURITIES FUNDS
AIM Global Real Estate Fund - Class A
Class C
Class R
Institutional Class
AIM High Yield Fund - Class A
Class C
Institutional Class
Investor Class
AIM Income Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Intermediate Government Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM Limited Maturity Treasury Fund - Class A
Class A3
Institutional Class
AIM Money Market Fund - AIM Cash Reserve Shares
Class C
Class R
Institutional Class
Investor Class
AIM Municipal Bond Fund - Class A
Class C
Investor Class
AIM Real Estate Fund - Class A
Class C
Class R
Institutional Class
Investor Class
5
|
AIM Short Term Bond Fund - Class A
Class C
Class R
Institutional Class
AIM Total Return Bond Fund - Class A
Class C
Class R
Institutional Class
AIM SECTOR FUNDS
AIM Energy Fund - Class A
Class C
Investor Class
AIM Financial Services Fund - Class A
Class C
Investor Class
AIM Gold & Precious Metals Fund - Class A
Class C
Investor Class
AIM Leisure Fund - Class A
Class C
Class R
Investor Class
AIM Technology Fund - Class A
Class C
Institutional Class
Investor Class
AIM Utilities Fund - Class A
Class C
Institutional Class
Investor Class
AIM SPECIAL OPPORTUNITIES FUNDS
AIM Opportunities I Fund - Class A
Class C
AIM Opportunities II Fund - Class A
Class C
AIM Opportunities III Fund - Class A
Class C
AIM STOCK FUNDS
AIM Dynamics Fund - Class A
Class C
Class R
Institutional Class
Investor Class
6
|
AIM Small Company Growth Fund - Class A
Class C
Class R
Institutional Class
Investor Class
AIM S&P 500 Index Fund - Institutional Class
Investor Class
AIM TAX-EXEMPT FUNDS
AIM High Income Municipal Fund - Class A
Class C
AIM Tax-Exempt Cash Fund - Class A
Investor Class
AIM Tax-Free Intermediate Fund - Class A
Class A3
Institutional Class
AIM TREASURER'S SERIES TRUST
Premier U.S. Government Money Portfolio Investor Class"
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: October 25, 2005
EACH FUND (LISTED ON SCHEDULE A) ON
BEHALF OF THE SHARES OF EACH PORTFOLIO
LISTED ON SCHEDULE A
By: __________________________________
Robert H. Graham
President
A I M DISTRIBUTORS, INC.
By: __________________________________
Gene L. Needles
President
AMENDMENT NO. 13
TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(CLASS B SHARES)
The Amended and Restated Master Distribution Agreement (Class B Shares) (the "Agreement") made as of the 18th day of August, 2003, by and between each registered investment company set forth on Schedule A-1 and Schedule A-2 to the Agreement (each individually referred to as the "Fund", or collectively, the "Funds"), severally, on behalf of each of its series of common stock or beneficial interest, as the case may be, set forth on Schedule A-1 and Schedule A-2 to the Agreement (each, a "Portfolio"), with respect to the Class B Shares (the "Shares") of each Portfolio, and A I M DISTRIBUTORS, INC., a Delaware corporation (the "Distributor"), is hereby amended as follows:
WHEREAS, the parties desire to amend the Agreement to delete two portfolios, AIM Core Strategies Fund and AIM U.S. Growth Fund;
1. Schedule A-1 and Schedule A-2 to the Agreement are hereby deleted in their entirety and replaced with Schedule A-1 and Schedule A-2 attached to this amendment.
All other terms and provisions of the Agreement not amended hereby shall remain in full force and effect.
Dated: March 15, 2005
EACH FUND LISTED ON SCHEDULE A-1 ON
BEHALF OF THE SHARES OF EACH PORTFOLIO
LISTED ON SCHEDULE A-1
By: /s/ Robert H. Graham
-------------------------------
Name: Robert H. Graham
Title: President
|
EACH FUND LISTED ON SCHEDULE A-2 ON
BEHALF OF THE SHARES OF EACH PORTFOLIO
LISTED ON SCHEDULE A-2
By: /s/ Robert H. Graham
-------------------------------
Name: Robert H. Graham
Title: President
|
A I M DISTRIBUTORS, INC.
By: /s/ Gene L. Needles
-------------------------------
Name: Gene L. Needles
Title: President
|
SCHEDULE A-1
TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(CLASS B SHARES)
AIM EQUITY FUNDS
PORTFOLIOS
AIM Aggressive Growth Fund
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund
AIM Constellation Fund
AIM Dent Demographic Trends Fund
AIM Diversified Dividend Fund
AIM Emerging Growth Fund
AIM Large Cap Basic Value Fund
AIM Large Cap Growth Fund
AIM Mid Cap Growth Fund
AIM Select Basic Value
AIM Weingarten Fund
AIM FUNDS GROUP
PORTFOLIOS
AIM Balanced Fund
AIM Basic Balanced Fund
AIM European Small Company Fund
AIM Global Value Fund
AIM International Small Company Fund
AIM Mid Cap Basic Value Fund
AIM Premier Equity Fund
AIM Select Equity Fund
AIM Small Cap Equity Fund
AIM GROWTH SERIES
PORTFOLIOS
AIM Aggressive Allocation Fund
AIM Basic Value Fund
AIM Conservative Allocation Fund
AIM Mid Cap Core Equity Fund
AIM Moderate Allocation Fund
AIM Small Cap Growth Fund
AIM Global Equity Fund
AIM INTERNATIONAL MUTUAL FUNDS
PORTFOLIOS
AIM Asia Pacific Growth Fund
AIM European Growth Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM International Core Equity Fund
AIM International Growth Fund
AIM INVESTMENT FUNDS
PORTFOLIOS
AIM Developing Markets Fund
AIM Global Health Care Fund
AIM Libra Fund
AIM Trimark Fund
AIM Trimark Endeavor Fund
AIM Trimark Small Companies Fund
AIM INVESTMENT SECURITIES FUNDS
PORTFOLIOS
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Total Return Bond Fund
AIM Real Estate Fund
AIM SPECIAL OPPORTUNITIES FUNDS
PORTFOLIOS
AIM Opportunities I Fund
AIM Opportunities II Fund
AIM Opportunities III Fund
AIM TAX-EXEMPT FUNDS
PORTFOLIO
AIM High Income Municipal Fund
SCHEDULE A-2
TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(CLASS B SHARES)
AIM COMBINATION STOCK & BOND FUNDS
PORTFOLIOS
AIM Core Stock Fund
AIM Total Return Fund
AIM COUNSELOR SERIES TRUST
PORTFOLIOS
AIM Advantage Health Sciences Fund
AIM Multi-Sector Fund
AIM SECTOR FUNDS
PORTFOLIOS
AIM Energy Fund
AIM Financial Services Fund
AIM Gold & Precious Metals Fund
AIM Health Sciences Fund
AIM Leisure Fund
AIM Technology Fund
AIM Utilities Fund
AIM STOCK FUNDS
AIM Dynamics Fund
AIM Mid Cap Stock Fund
AIM Small Company Growth Fund
AMENDMENT NO. 14
TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(CLASS B SHARES)
The Amended and Restated Master Distribution Agreement (Class B Shares) (the "Agreement") made as of the 18th day of August, 2003, by and between each registered investment company set forth on Schedule A-1 and Schedule A-2 to the Agreement (each individually referred to as the "Fund", or collectively, the "Funds"), severally, on behalf of each of its series of common stock or beneficial interest, as the case may be, set forth on Schedule A-1 and Schedule A-2 to the Agreement (each, a "Portfolio"), with respect to the Class B Shares (the "Shares") of each Portfolio, and A I M DISTRIBUTORS, INC., a Delaware corporation (the "Distributor"), is hereby amended as follows:
WHEREAS, the parties desire to amend the Agreement to reflect the addition of AIM Global Real Estate Fund, AIM Moderate Growth Allocation Fund and AIM Moderately Conservative Allocation Fund and to change the name of AIM Aggressive Allocation Fund to AIM Growth Allocation Fund;
NOW, THEREFORE, Schedule A-1 and Schedule A-2 to the Agreement are hereby deleted in their entirety and replaced with Schedule A-1 and Schedule A-2 attached to this amendment.
All other terms and provisions of the Agreement not amended hereby shall remain in full force and effect.
Dated: April 29, 2005
EACH FUND LISTED ON SCHEDULE A-1 ON
BEHALF OF THE SHARES OF EACH PORTFOLIO
LISTED ON SCHEDULE A-1
By: /s/ ROBERT H. GRAHAM
--------------------
Name: Robert H. Graham
Title: President
|
EACH FUND LISTED ON SCHEDULE A-2 ON
BEHALF OF THE SHARES OF EACH PORTFOLIO
LISTED ON SCHEDULE A-2
By: /s/ ROBERT H. GRAHAM
--------------------
Name: Robert H. Graham
Title: President
|
A I M DISTRIBUTORS, INC.
By: /s/ GENE L. NEEDLES
-------------------
Name: Gene Needles
Title: President
|
SCHEDULE A-1
TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(CLASS B SHARES)
AIM EQUITY FUNDS
PORTFOLIOS
AIM Aggressive Growth Fund
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund
AIM Constellation Fund
AIM Dent Demographic Trends Fund
AIM Diversified Dividend Fund
AIM Emerging Growth Fund
AIM Large Cap Basic Value Fund
AIM Large Cap Growth Fund
AIM Mid Cap Growth Fund
AIM Select Basic Value Fund
AIM Weingarten Fund
AIM FUNDS GROUP
PORTFOLIOS
AIM Balanced Fund
AIM Basic Balanced Fund
AIM European Small Company Fund
AIM Global Value Fund
AIM International Small Company Fund
AIM Mid Cap Basic Value Fund
AIM Premier Equity Fund
AIM Select Equity Fund
AIM Small Cap Equity Fund
AIM GROWTH SERIES
PORTFOLIOS
AIM Basic Value Fund
AIM Conservative Allocation Fund
AIM Global Equity Fund
AIM Growth Allocation Fund
AIM Mid Cap Core Equity Fund
AIM Moderate Allocation Fund
AIM Moderate Growth Allocation Fund
AIM Moderately Conservative Allocation Fund
AIM Small Cap Growth Fund
AIM INTERNATIONAL MUTUAL FUNDS
PORTFOLIOS
AIM Asia Pacific Growth Fund
AIM European Growth Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM International Core Equity Fund
AIM International Growth Fund
AIM INVESTMENT FUNDS
PORTFOLIOS
AIM Developing Markets Fund
AIM Global Health Care Fund
AIM Libra Fund
AIM Trimark Fund
AIM Trimark Endeavor Fund
AIM Trimark Small Companies Fund
AIM INVESTMENT SECURITIES FUNDS
PORTFOLIOS
AIM Global Real Estate Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Total Return Bond Fund
AIM Real Estate Fund
AIM SPECIAL OPPORTUNITIES FUNDS
PORTFOLIOS
AIM Opportunities I Fund
AIM Opportunities II Fund
AIM Opportunities III Fund
AIM TAX-EXEMPT FUNDS
PORTFOLIO
AIM High Income Municipal Fund
SCHEDULE A-2
TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(CLASS B SHARES)
AIM COMBINATION STOCK & BOND FUNDS
PORTFOLIOS
AIM Core Stock Fund
AIM Total Return Fund
AIM COUNSELOR SERIES TRUST
PORTFOLIOS
AIM Advantage Health Sciences Fund
AIM Multi-Sector Fund
AIM SECTOR FUNDS
PORTFOLIOS
AIM Energy Fund
AIM Financial Services Fund
AIM Gold & Precious Metals Fund
AIM Health Sciences Fund
AIM Leisure Fund
AIM Technology Fund
AIM Utilities Fund
AIM STOCK FUNDS
AIM Dynamics Fund
AIM Mid Cap Stock Fund
AIM Small Company Growth Fund
AMENDMENT NO. 15
TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(CLASS B SHARES)
The Amended and Restated Master Distribution Agreement (Class B Shares) (the "Agreement") made as of the 18th day of August, 2003, by and between each registered investment company set forth on Schedule A-1 and Schedule A-2 to the Agreement (each individually referred to as the "Fund", or collectively, the "Funds"), severally, on behalf of each of its series of common stock or beneficial interest, as the case may be, set forth on Schedule A-1 and Schedule A-2 to the Agreement (each, a "Portfolio"), with respect to the Class B Shares (the "Shares") of each Portfolio, and A I M DISTRIBUTORS, INC., a Delaware corporation (the "Distributor"), is hereby amended as follows:
WHEREAS, the parties desire to amend the Agreement to reflect the merger of AIM Balanced Fund, AIM Core Stock Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM Health Sciences Fund, AIM Libra Fund, AIM Mid Cap Stock Fund and AIM Total Return Fund;
NOW, THEREFORE, Schedule A-1 and Schedule A-2 to the Agreement are hereby deleted in their entirety and replaced with Schedule A-1 and Schedule A-2 attached to this amendment.
All other terms and provisions of the Agreement not amended hereby shall remain in full force and effect.
Dated: July 18, 2005
EACH FUND LISTED ON SCHEDULE A-1 ON
BEHALF OF THE SHARES OF EACH PORTFOLIO
LISTED ON SCHEDULE A-1
By: /s/ ROBERT H. GRAHAM
-------------------
Name: Robert H. Graham
Title: President
|
EACH FUND LISTED ON SCHEDULE A-2 ON
BEHALF OF THE SHARES OF EACH PORTFOLIO
LISTED ON SCHEDULE A-2
By: /s/ ROBERT H. GRAHAM
--------------------
Name: Robert H. Graham
Title: President
|
A I M DISTRIBUTORS, INC.
By: /s/ GENE L. NEEDLES
-------------------
Name: Gene Needles
Title: President
|
SCHEDULE A-1
TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(CLASS B SHARES)
AIM EQUITY FUNDS
PORTFOLIOS
AIM Aggressive Growth Fund
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund
AIM Constellation Fund
AIM Diversified Dividend Fund
AIM Large Cap Basic Value Fund
AIM Large Cap Growth Fund
AIM Mid Cap Growth Fund
AIM Select Basic Value Fund
AIM Weingarten Fund
AIM FUNDS GROUP
PORTFOLIOS
AIM Basic Balanced Fund
AIM European Small Company Fund
AIM Global Value Fund
AIM International Small Company Fund
AIM Mid Cap Basic Value Fund
AIM Premier Equity Fund
AIM Select Equity Fund
AIM Small Cap Equity Fund
AIM GROWTH SERIES
PORTFOLIOS
AIM Basic Value Fund
AIM Conservative Allocation Fund
AIM Global Equity Fund
AIM Growth Allocation Fund
AIM Mid Cap Core Equity Fund
AIM Moderate Allocation Fund
AIM Moderate Growth Allocation Fund
AIM Moderately Conservative Allocation Fund
AIM Small Cap Growth Fund
AIM INTERNATIONAL MUTUAL FUNDS
PORTFOLIOS
AIM Asia Pacific Growth Fund
AIM European Growth Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM International Core Equity Fund
AIM International Growth Fund
AIM INVESTMENT FUNDS
PORTFOLIOS
AIM Developing Markets Fund
AIM Global Health Care Fund
AIM Trimark Fund
AIM Trimark Endeavor Fund
AIM Trimark Small Companies Fund
AIM INVESTMENT SECURITIES FUNDS
PORTFOLIOS
AIM Global Real Estate Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Total Return Bond Fund
AIM Real Estate Fund
AIM SPECIAL OPPORTUNITIES FUNDS
PORTFOLIOS
AIM Opportunities I Fund
AIM Opportunities II Fund
AIM Opportunities III Fund
AIM TAX-EXEMPT FUNDS
PORTFOLIO
AIM High Income Municipal Fund
SCHEDULE A-2
TO
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
(CLASS B SHARES)
AIM COUNSELOR SERIES TRUST
PORTFOLIOS
AIM Advantage Health Sciences Fund
AIM Multi-Sector Fund
AIM SECTOR FUNDS
PORTFOLIOS
AIM Energy Fund
AIM Financial Services Fund
AIM Gold & Precious Metals Fund
AIM Leisure Fund
AIM Technology Fund
AIM Utilities Fund
AIM STOCK FUNDS
AIM Dynamics Fund
AIM Small Company Growth Fund
AMENDMENT NO. 2
AMENDED AND RESTATED MASTER ADMINISTRATIVE SERVICES AGREEMENT
The Amended and Restated Master Administrative Services Agreement (the "Agreement"), dated July 1, 2004, by and between A I M Advisors, Inc., a Delaware corporation, and AIM Investment Funds, a Delaware statutory trust, is hereby amended as follows:
W I T N E S S E T H:
WHEREAS, the parties desire to amend the Agreement to delete AIM Libra Fund from the Agreement;
NOW, THEREFORE, the parties agree as follows;
Appendix A of the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
FEE SCHEDULE TO
AMENDED AND RESTATED MASTER ADMINISTRATIVE SERVICES AGREEMENT
OF
AIM INVESTMENT FUNDS
PORTFOLIOS EFFECTIVE DATE OF AGREEMENT -------------------------------- --------------------------- AIM Developing Markets Fund July 1, 2004 AIM Global Health Care Fund July 1, 2004 AIM Trimark Endeavor Fund July 1, 2004 AIM Trimark Fund July 1, 2004 AIM Trimark Small Companies Fund July 1, 2004 |
The Administrator may receive from each Portfolio reimbursement for costs or reasonable compensation for such services as follows:
Rate* Net Assets ------ ------------------ 0.023% First $1.5 billion 0.013% Next $1.5 billion 0.003% Over $3 billion |
*Annual minimum fee is $50,000. An additional $10,000 per class of shares is charged for each class other than the initial class. The $10,000 class fee is waived for any of the above Portfolios with insufficient assets to result in the payment of more than the minimum fee of $50,000."
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: July 18, 2005
A I M ADVISORS, INC.
Attest: /s/ John H. Lively By: /s/ Mark H. Williamson
----------------------------- ---------------------------
Assistant Secretary Mark H. Williamson
President
PRESIDENT
|
(SEAL)
AIM INVESTMENT FUNDS
Attest: /s/ John H. Lively By: /s/ Robert H. Graham
----------------------------- ---------------------------
Assistant Secretary Robert H. Graham
President
|
(SEAL)
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL, LLP]
August 19, 2005
AIM Investment Funds
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Re: AIM Investment Funds Registration Statement on Form N-1A
Ladies and Gentlemen:
We have acted as counsel to AIM Investment Funds, a statutory trust organized under the laws of the State of Delaware (the "Trust") and registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end, series management investment company.
This opinion is given in connection with the filing by the Trust of Post-Effective Amendment No. 74 to the Registration Statement on Form N-1A under the Securities Act of 1933, as amended, and Amendment No. 75 to such Registration Statement under the 1940 Act (collectively, the "Registration Statement") relating to the registration of an indefinite number of Institutional Class shares of beneficial interest, par value $0.01 per share (the "Shares"), of AIM Developing Markets Fund (the "Fund").
In connection with giving this opinion, we have examined copies of the Trust's Amended and Restated Certificate of Trust, Amended and Restated Agreement and Declaration of Trust, as amended (the "Trust Agreement"), and resolutions of the Board of Trustees adopted December 10, 2003 and March 22, 2005, and originals or copies, certified or otherwise identified to our satisfaction, of such other documents, records and other instruments as we have deemed necessary or advisable for purposes of this opinion. We have also examined the prospectus for the Fund, which is included in the Registration Statement, substantially in the form in which it is to be filed (the "Prospectus"). As to various questions of fact material to our opinion, we have relied upon information provided by officers of the Trust.
AIM Investment Funds
August 19, 2005
The Prospectus provides for issuance of the Shares from time to time at the net asset value thereof. In connection with our giving this opinion, we assume that upon sale of the Shares the Trust will receive the net asset value thereof.
Based on the foregoing, we are of the opinion that the Shares to be offered for sale pursuant to the Prospectus are duly authorized and, when sold, issued and paid for as described in the Prospectus, will be validly issued, fully paid and nonassessable.
We express no opinion concerning the laws of any jurisdiction other than the federal law of the United States of America and the Delaware Statutory Trust Act.
Both the Delaware Statutory Trust Act and the Trust Agreement provide that shareholders of the Trust shall be entitled to the same limitation on personal liability as is extended under the Delaware General Corporation Law to stockholders of private corporations for profit. There is a remote possibility, however, that, under certain circumstances, shareholders of a Delaware statutory trust may be held personally liable for that trust's obligations to the extent that 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 also provides for indemnification out of property of the Fund for all loss and expense of any shareholder held personally liable for the obligations of the Fund. Therefore, the risk of any shareholder incurring financial loss beyond his investment due to shareholder liability is limited to circumstances in which the Fund is unable to meet its obligations and the express limitation of shareholder liabilities is determined not to be effective.
We consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name and to the reference to our firm under the caption "Investment Advisory and Other Services - Other Service Providers - Counsel to the Trust" in the Statement of Additional Information for the Fund, which is included in the Registration Statement.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll, LLP |
LAW OFFICES
BALLARD SPAHR ANDREWS & INGERSOLL, LLP BALTIMORE, MD
1735 MARKET STREET, 51ST FLOOR DENVER, CO
PHILADELPHIA, PENNSYLVANIA 19103-7599 SALT LAKE CITY, UT
215-665-8500 VOORHEES, NJ
FAX: 215-864-8999 WASHINGTON, DC
www.ballardspahr.com WILMINGTON, DE
July 18, 2005
AIM Sector Funds
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
AIM Investment Funds
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Re: Federal Income Tax Consequences of the Reorganization of AIM Health Sciences Fund
Ladies and Gentlemen:
You have requested our opinion regarding certain United States federal income tax consequences in connection with the transfer of the property and assets of AIM Health Sciences Fund ("Selling Fund"), an investment portfolio of AIM Sector Funds ("Seller"), a Delaware statutory trust, to AIM Global Health Care Fund ("Buying Fund"), an investment portfolio of AIM Investment Funds ("Buyer"), a Delaware statutory trust, in exchange for shares of beneficial interest of Buying Fund ("Buying Fund Shares") issued by Buyer directly to Selling Fund Shareholders, and Buying Fund's assumption of Selling Fund's liabilities, and the termination of Selling Fund as a designated series of shares of Seller, all pursuant to the Agreement and Plan of Reorganization that was adopted by the Boards of Trustees of Seller and Buyer as of March 22, 2005 (the "Plan") (the transaction in its entirety being hereinafter referred to as the "Reorganization"). Capitalized terms used in this letter without definition shall have the meanings given them in the Plan.
For purposes of this opinion, we have examined and relied upon the accuracy and completeness of the facts, information, covenants, statements and representations contained in originals or copies of the Plan, the exhibits attached thereto, the Registration Statement on Form N-14 filed by Buyer on April 1, 2005 with the Securities and Exchange Commission, and such other documents and instruments as we have deemed necessary or appropriate. In our examination of the foregoing materials, we have assumed the genuineness of all signatures, legal capacity of natural persons, the authenticity of all documents submitted to us as originals and the conformity to the original documents of all documents submitted to us as copies. We have
assumed that such documents reflect all the material facts relating to the Reorganization. In addition, we have assumed that the Reorganization will be consummated in accordance with the terms of such documents and that none of the material terms and conditions contained therein will have been waived or modified prior to the consummation of the Reorganization.
In rendering this opinion, we are relying upon the representations, warranties and covenants made by Seller and Buyer in the Plan as well as on letters of representation of even date that we have received from officers of Seller and Buyer, copies of which are attached as Exhibits A and B hereto. We have not been asked to, nor have we undertaken to, verify the accuracy of these and other representations made to us. In this regard, we have assumed that any representation made "to the best of the knowledge," "to the knowledge" or similarly qualified is correct without such qualification. As to all matters in which a person making a representation has represented that such person either is not a party to, does not have, or is not aware of, any plan or intention, understanding or agreement, we have likewise assumed that there is in fact no such plan, intention, understanding or agreement.
Based upon and subject to the foregoing, it is our opinion that, for federal income tax purposes:
1. The transfer of the assets of Selling Fund to Buying Fund in exchange for Buying Fund Shares distributed directly to Selling Fund Shareholders, as provided in the Plan, will constitute a "reorganization" within the meaning of Section 368(a) of the Code, and Selling Fund and Buying Fund each will be "a party to a reorganization" within the meaning of Section 368(b) of the Code.
2. In accordance with Sections 357(a), 361(a) and 361(c)(1) of the Code, no gain or loss will be recognized by Selling Fund on the transfer of its assets to Buying Fund in exchange for Buying Fund Shares and the assumption of Selling Fund's liabilities, or on the distribution of Buying Fund Shares to Selling Fund Shareholders.
3. In accordance with Section 1032 of the Code, no gain or loss will be recognized by Buying Fund upon the receipt of assets of Selling Fund in exchange for Buying Fund Shares issued directly to Selling Fund Shareholders.
4. In accordance with Section 354(a)(1) of the Code, no gain or loss will be recognized by Selling Fund Shareholders on the receipt of Buying Fund Shares in exchange for their shares of Selling Fund.
5. In accordance with Section 362(b) of the Code, the basis to Buying Fund of the assets of Selling Fund will be the same as the basis of such assets in the hands of Selling Fund immediately prior to the Reorganization.
6. In accordance with Section 358(a) of the Code, a Selling Fund Shareholder's basis for Buying Fund Shares received by the Selling Fund Shareholder will be the same as his basis for the shares of Selling Fund exchanged therefor.
7. In accordance with Section 1223(1) of the Code, a Selling Fund Shareholder's holding period for Buying Fund Shares will be determined by including such Selling Fund
Shareholder's holding period for the shares of Selling Fund exchanged therefor, provided that the Selling Fund Shareholder held such shares of Selling Fund as a capital asset as of the Closing Date.
8. In accordance with Section 1223(2) of the Code, the holding period with respect to the assets of Selling Fund transferred to Buying Fund in the Reorganization will include the holding period for such assets in the hands of Selling Fund immediately prior to the Reorganization.
9. In accordance with Sections 381(a) and (b) of the Code and Sections 1.381(a)-1 and 1.381(b)-1 of the Income Tax Regulations, the tax year of Selling Fund will end on the date the Reorganization is consummated and Buying Fund will succeed to and take into account the items of Selling Fund described in Section 381(c) of the Code, subject to the provisions and limitations specified in Sections 381, 382, 383 and 384 of the Code, and the regulations thereunder.
We express no opinion as to the tax consequences of the Reorganization except as expressly set forth above, or as to any transaction except the Reorganization. We also note that certain Selling Fund Shareholders may be subject to special rules because of their particular federal income tax status and that the tax consequences of the Reorganization to such Selling Fund Shareholders may accordingly differ from the ones of general application that are described above. This opinion is intended to satisfy the mutual condition precedent to the Reorganization set forth in Section 6.2(f) of the Plan, is being furnished to you solely for that purpose, and may not be relied upon by any other person without our express written consent. We expressly authorize Buyer to file this opinion with the Securities and Exchange Commission as a post-effective amendment to the Registration Statement as required by the Plan.
Our opinion is based upon the Code, Treasury regulations (proposed, temporary and final) promulgated thereunder, judicial decisions, interpretative rulings of the Internal Revenue Service and such other authorities as we have considered relevant, all as in effect on the date hereof. All such legal authorities are subject to change, either prospectively or retroactively. We are not undertaking hereby any obligation to advise you of any changes in the applicable law subsequent to the date hereof, even if such changes materially affect the tax consequences of the Reorganization that are set forth above.
If any of the facts, assumptions or representations on which our opinion is based are incorrect, we expect you to advise us so that we may consider the effect, if any, on our opinion.
Our opinion has no binding effect on the Internal Revenue Service or the courts of any jurisdiction. No assurance can accordingly be given that, if the matter were contested, a court would agree with the legal conclusions set forth above.
Sincerely,
/s/ Ballard Spahr Andrews & Ingersoll, LLP |
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form N-1A of each of our four reports each dated December 20, 2004, relating to the financial statements and financial highlights of AIM Developing Markets Fund, AIM Trimark Endeavor Fund, AIM Trimark Fund and AIM Trimark Small Company Fund (four of the portfolios constituting AIM Investment Funds), which appear in such Registration Statement. We also consent to the references to us under the headings "Financial Highlights", "Other Service Providers" and "Examples of persons to whom AIM provides non-public portfolio holdings on an ongoing basis" in such Registration Statement.
Houston, Texas
August 24, 2005
AMENDMENT NO. 12
TO THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS A SHARES)
The Amended and Restated Master Distribution Plan (the "Plan"), dated as of August 18, 2003, pursuant to Rule 12b-1, is hereby amended, effective March 15, 2005, as follows:
WHEREAS, the parties desire to amend the Plan to delete two portfolios, AIM Core Strategies Fund and AIM U.S. Growth Fund;
NOW THEREFORE, Schedule A to the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS A SHARES)
(DISTRIBUTION AND SERVICE FEES)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for the Class A Shares of each Portfolio designated below, a Distribution Fee* and a Service Fee determined by applying the annual rate set forth below as to the Class A Shares of each Portfolio to the average daily net assets of the Class A Shares of the Portfolio for the plan year. Average daily net assets shall be computed in a manner used for the determination of the offering price of the Class A Shares of the Portfolio.
MINIMUM
ASSET
AIM COMBINATION STOCK & BOND FUNDS BASED MAXIMUM MAXIMUM
---------------------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------- ------- ---------
AIM Core Stock Fund 0.10% 0.25% 0.35%
AIM Total Return Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM COUNSELOR SERIES TRUST BASED MAXIMUM MAXIMUM
-------------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------- ------- ---------
AIM Advantage Health Sciences Fund 0.10% 0.25% 0.35%
AIM Multi-Sector Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM EQUITY FUNDS BASED MAXIMUM MAXIMUM
---------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------- ------- ---------
AIM Aggressive Growth Fund 0.00% 0.25% 0.25%
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 Dent Demographic Trends Fund 0.10% 0.25% 0.35%
AIM Diversified Dividend 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 Growth Fund 0.10% 0.25% 0.35%
AIM Mid Cap Growth Fund 0.10% 0.25% 0.35%
AIM Select Basic Value Fund 0.10% 0.25% 0.35%
AIM Weingarten Fund 0.05% 0.25% 0.30%
|
MINIMUM
ASSET
AIM FUNDS GROUP BASED MAXIMUM MAXIMUM
--------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------- ------- ---------
AIM Balanced Fund 0.00% 0.25% 0.25%
AIM Basic Balanced Fund 0.10% 0.25% 0.35%
AIM European Small Company Fund 0.10% 0.25% 0.35%
AIM Global Value Fund 0.10% 0.25% 0.35%
AIM International Small Company Fund 0.10% 0.25% 0.35%
AIM Mid Cap Basic Value Fund 0.10% 0.25% 0.35%
AIM Premier Equity Fund 0.00% 0.25% 0.25%
AIM Select Equity Fund 0.00% 0.25% 0.25%
AIM Small Cap Equity Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM GROWTH SERIES BASED MAXIMUM MAXIMUM
----------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------- ------- ---------
AIM Aggressive Allocation Fund 0.10% 0.25% 0.35%
AIM Basic Value Fund 0.10% 0.25% 0.35%
AIM Conservative Allocation Fund 0.10% 0.25% 0.35%
AIM Global Equity Fund 0.10% 0.25% 0.35%
AIM Mid Cap Core Equity Fund 0.10% 0.25% 0.35%
AIM Moderate Allocation Fund 0.10% 0.25% 0.35%
AIM Small Cap Growth Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM INTERNATIONAL MUTUAL FUNDS BASED MAXIMUM MAXIMUM
------------------------------ SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------- ------- ---------
AIM Asia Pacific Growth Fund 0.10% 0.25% 0.35%
AIM European Growth Fund 0.10% 0.25% 0.35%
AIM Global Aggressive Growth Fund 0.10% 0.25% 0.35%
AIM Global Growth Fund 0.10% 0.25% 0.35%
AIM International Core Equity Fund 0.10% 0.25% 0.35%
AIM International Growth Fund 0.05% 0.25% 0.30%
|
MINIMUM
ASSET
AIM INVESTMENT FUNDS BASED MAXIMUM MAXIMUM
-------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------- ------- ---------
AIM Developing Markets Fund 0.10% 0.25% 0.35%
AIM Global Health Care Fund 0.10% 0.25% 0.35%
AIM Libra Fund 0.10% 0.25% 0.35%
AIM Trimark Endeavor Fund 0.10% 0.25% 0.35%
AIM Trimark Fund 0.10% 0.25% 0.35%
AIM Trimark Small Companies Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM INVESTMENT SECURITIES FUNDS BASED MAXIMUM MAXIMUM
------------------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------- ------- ---------
AIM High Yield Fund 0.00% 0.25% 0.25%
AIM Income Fund 0.00% 0.25% 0.25%
AIM Intermediate Government Fund 0.00% 0.25% 0.25%
AIM Limited Maturity Treasury Fund 0.00% 0.15% 0.15%
AIM Municipal Bond Fund 0.00% 0.25% 0.25%
AIM Real Estate Fund 0.10% 0.25% 0.35%
AIM Short Term Bond Fund 0.10% 0.25% 0.35%
AIM Total Return Bond Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM SECTOR FUNDS BASED MAXIMUM MAXIMUM
---------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------- ------- ---------
AIM Energy Fund 0.10% 0.25% 0.35%
AIM Financial Services Fund 0.10% 0.25% 0.35%
AIM Gold & Precious Metals Fund 0.10% 0.25% 0.35%
AIM Health Sciences Fund 0.10% 0.25% 0.35%
AIM Leisure Fund 0.10% 0.25% 0.35%
AIM Technology Fund 0.10% 0.25% 0.35%
AIM Utilities Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM SPECIAL OPPORTUNITIES FUNDS BASED MAXIMUM MAXIMUM
------------------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------- ------- ---------
AIM Opportunities I Fund 0.10% 0.25% 0.35%
AIM Opportunities II Fund 0.10% 0.25% 0.35%
AIM Opportunities III Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM STOCK FUNDS BASED MAXIMUM MAXIMUM
--------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------- ------- ---------
AIM Dynamics Fund 0.10% 0.25% 0.35%
AIM Mid Cap Stock Fund 0.10% 0.25% 0.35%
AIM Small Company Growth Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM TAX-EXEMPT FUNDS BASED MAXIMUM MAXIMUM
-------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------- ------- ---------
AIM High Income Municipal Fund 0.00% 0.25% 0.25%
AIM Tax-Exempt Cash Fund 0.00% 0.25% 0.25%
|
* The Distribution Fee is payable apart from the sales charge, if any, as stated in the current prospectus for the applicable Portfolio (or Class thereof)."
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: March 15, 2005
AMENDMENT NO. 13
TO THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS A SHARES)
The Amended and Restated Master Distribution Plan (the "Plan"), dated as of August 18, 2003, pursuant to Rule 12b-1, is hereby amended, effective April 29, 2005, as follows:
WHEREAS, the parties desire to amend the Plan to reflect the addition of AIM Global Real Estate Fund, AIM Moderate Growth Allocation Fund and AIM Moderately Conservative Allocation Fund; and to change the name of AIM Aggressive Allocation Fund to AIM Growth Allocation Fund;
NOW THEREFORE, Schedule A to the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS A SHARES)
(DISTRIBUTION AND SERVICE FEES)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for the Class A Shares of each Portfolio designated below, a Distribution Fee* and a Service Fee determined by applying the annual rate set forth below as to the Class A Shares of each Portfolio to the average daily net assets of the Class A Shares of the Portfolio for the plan year. Average daily net assets shall be computed in a manner used for the determination of the offering price of the Class A Shares of the Portfolio.
MINIMUM
ASSET
AIM COMBINATION STOCK & BOND FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Core Stock Fund 0.10% 0.25% 0.35%
AIM Total Return Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM COUNSELOR SERIES TRUST BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Advantage Health Sciences Fund 0.10% 0.25% 0.35%
AIM Multi-Sector Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM EQUITY FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Aggressive Growth Fund 0.00% 0.25% 0.25%
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% |
MINIMUM
ASSET
AIM EQUITY FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Dent Demographic Trends Fund 0.10% 0.25% 0.35%
AIM Diversified Dividend 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 Growth Fund 0.10% 0.25% 0.35%
AIM Mid Cap Growth Fund 0.10% 0.25% 0.35%
AIM Select Basic Value Fund 0.10% 0.25% 0.35%
AIM Weingarten Fund 0.05% 0.25% 0.30%
|
MINIMUM
ASSET
AIM FUNDS GROUP BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Balanced Fund 0.00% 0.25% 0.25%
AIM Basic Balanced Fund 0.10% 0.25% 0.35%
AIM European Small Company Fund 0.10% 0.25% 0.35%
AIM Global Value Fund 0.10% 0.25% 0.35%
AIM International Small Company Fund 0.10% 0.25% 0.35%
AIM Mid Cap Basic Value Fund 0.10% 0.25% 0.35%
AIM Premier Equity Fund 0.00% 0.25% 0.25%
AIM Select Equity Fund 0.00% 0.25% 0.25%
AIM Small Cap Equity Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM GROWTH SERIES BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Basic Value Fund 0.10% 0.25% 0.35%
AIM Conservative Allocation Fund 0.10% 0.25% 0.35%
AIM Global Equity Fund 0.10% 0.25% 0.35%
AIM Growth Allocation Fund 0.10% 0.25% 0.35%
AIM Mid Cap Core Equity Fund 0.10% 0.25% 0.35%
AIM Moderate Allocation Fund 0.10% 0.25% 0.35%
AIM Moderate Growth Allocation Fund 0.10% 0.25% 0.35%
AIM Moderately Conservative Allocation Fund 0.10% 0.25% 0.35%
AIM Small Cap Growth Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM INTERNATIONAL MUTUAL FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Asia Pacific Growth Fund 0.10% 0.25% 0.35%
AIM European Growth Fund 0.10% 0.25% 0.35%
AIM Global Aggressive Growth Fund 0.10% 0.25% 0.35%
AIM Global Growth Fund 0.10% 0.25% 0.35%
AIM International Core Equity Fund 0.10% 0.25% 0.35%
AIM International Growth Fund 0.05% 0.25% 0.30%
|
MINIMUM
ASSET
AIM INVESTMENT FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Developing Markets Fund 0.10% 0.25% 0.35%
AIM Global Health Care Fund 0.10% 0.25% 0.35%
AIM Libra Fund 0.10% 0.25% 0.35%
AIM Trimark Endeavor Fund 0.10% 0.25% 0.35%
AIM Trimark Fund 0.10% 0.25% 0.35%
AIM Trimark Small Companies Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM INVESTMENT SECURITIES FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Global Real Estate Fund 0.10% 0.25% 0.35%
AIM High Yield Fund 0.00% 0.25% 0.25%
AIM Income Fund 0.00% 0.25% 0.25%
AIM Intermediate Government Fund 0.00% 0.25% 0.25%
AIM Limited Maturity Treasury Fund 0.00% 0.15% 0.15%
AIM Municipal Bond Fund 0.00% 0.25% 0.25%
AIM Real Estate Fund 0.10% 0.25% 0.35%
AIM Short Term Bond Fund 0.10% 0.25% 0.35%
AIM Total Return Bond Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM SECTOR FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Energy Fund 0.10% 0.25% 0.35%
AIM Financial Services Fund 0.10% 0.25% 0.35%
AIM Gold & Precious Metals Fund 0.10% 0.25% 0.35%
AIM Health Sciences Fund 0.10% 0.25% 0.35%
AIM Leisure Fund 0.10% 0.25% 0.35%
AIM Technology Fund 0.10% 0.25% 0.35%
AIM Utilities Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM SPECIAL OPPORTUNITIES FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Opportunities I Fund 0.10% 0.25% 0.35%
AIM Opportunities II Fund 0.10% 0.25% 0.35%
AIM Opportunities III Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM STOCK FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Dynamics Fund 0.10% 0.25% 0.35%
AIM Mid Cap Stock Fund 0.10% 0.25% 0.35%
AIM Small Company Growth Fund 0.10% 0.25% 0.35%
|
MINIMUM
ASSET
AIM TAX-EXEMPT FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM High Income Municipal Fund 0.00% 0.25% 0.25%
AIM Tax-Exempt Cash Fund 0.00% 0.25% 0.25%
|
* The Distribution Fee is payable apart from the sales charge, if any, as stated in the current prospectus for the applicable Portfolio (or Class thereof)."
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: April 29, 2005
AMENDMENT NO. 14
TO THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS A SHARES)
The Amended and Restated Master Distribution Plan (the "Plan"), dated as of August 18, 2003, pursuant to Rule 12b-1, is hereby amended, effective July 1, 2005, as follows:
WHEREAS, the parties desire to amend the Plan to (i) reduce the Rule
12b-1 fee for each of AIM Core Stock Fund, AIM Total Return Fund, AIM Advantage
Health Sciences Fund, AIM Multi-Sector Fund, AIM Blue Chip Fund, AIM Capital
Development Fund, AIM Dent Demographic Trends Fund, AIM Diversified Dividend
Fund, AIM Emerging Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap
Growth Fund, AIM Mid Cap Growth Fund, AIM Select Basic Value Fund, AIM Basic
Balanced Fund, AIM European Small Company Fund, AIM Global Value Fund, AIM
International Small Company Fund, AIM Mid Cap Basic Value Fund, AIM Small Cap
Equity Fund, AIM Basic Value Fund, AIM Conservative Allocation Fund, AIM Global
Equity Fund, AIM Growth Allocation Fund, AIM Mid Cap Core Equity Fund, AIM
Moderate Allocation Fund, AIM Moderate Growth Allocation Fund, AIM Moderately
Conservative Allocation Fund, AIM Small Cap Growth Fund, AIM Asia Pacific Growth
Fund, AIM European Growth Fund, AIM Global Aggressive Growth Fund, AIM Global
Growth Fund, AIM International Core Equity Fund, AIM Developing Markets Fund,
AIM Global Health Care Fund, AIM Libra Fund, AIM Trimark Endeavor Fund, AIM
Trimark Fund, AIM Trimark Small Companies Fund, AIM Global Real Estate Fund, AIM
Real Estate Fund, AIM Short Term Bond Fund, AIM Total Return Bond Fund, AIM
Energy Fund, AIM Financial Services Fund, AIM Gold & Precious Metals Fund, AIM
Health Sciences Fund, AIM Leisure Fund, AIM Technology Fund, AIM Opportunities I
Fund, AIM Opportunities II Fund, AIM Opportunities III Fund, AIM Dynamics Fund,
AIM Mid Cap Stock Fund and AIM Small Company Growth Fund from 0.35% to 0.25%;
(ii) reduce the minimum asset-based sales charge for such portfolios from 0.10%
to 0.00%; (iii) reduce the Rule 12b-1 fee for each of AIM Charter Fund, AIM
Constellation Fund, AIM Weingarten Fund and AIM International Growth Fund from
0.30% to 0.25%; and (iv) reduce the minimum asset-based sales charge for such
portfolios from 0.05% to 0.00%.
NOW THEREFORE, Schedule A to the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS A SHARES)
(DISTRIBUTION AND SERVICE FEES)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for the Class A Shares of each Portfolio designated below, a Distribution Fee* and a Service Fee determined by applying the annual rate set forth below as to the Class A Shares of each Portfolio to the average daily net assets of the Class A Shares of the Portfolio for the plan year. Average daily net assets shall be computed in a manner used for the determination of the offering price of the Class A Shares of the Portfolio.
MINIMUM
ASSET
AIM COMBINATION STOCK & BOND FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Core Stock Fund 0.00% 0.25% 0.25%
AIM Total Return Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM COUNSELOR SERIES TRUST BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Advantage Health Sciences Fund 0.00% 0.25% 0.25%
AIM Multi-Sector Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM EQUITY FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Aggressive Growth Fund 0.00% 0.25% 0.25%
AIM Blue Chip Fund 0.00% 0.25% 0.25%
AIM Capital Development Fund 0.00% 0.25% 0.25%
AIM Charter Fund 0.00% 0.25% 0.25%
AIM Constellation Fund 0.00% 0.25% 0.25%
AIM Dent Demographic Trends Fund 0.00% 0.25% 0.25%
AIM Diversified Dividend Fund 0.00% 0.25% 0.25%
AIM Emerging Growth Fund 0.00% 0.25% 0.25%
AIM Large Cap Basic Value Fund 0.00% 0.25% 0.25%
AIM Large Cap Growth Fund 0.00% 0.25% 0.25%
AIM Mid Cap Growth Fund 0.00% 0.25% 0.25%
AIM Select Basic Value Fund 0.00% 0.25% 0.25%
AIM Weingarten Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM FUNDS GROUP BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Balanced Fund 0.00% 0.25% 0.25%
AIM Basic Balanced Fund 0.00% 0.25% 0.25%
AIM European Small Company Fund 0.00% 0.25% 0.25%
AIM Global Value Fund 0.00% 0.25% 0.25%
AIM International Small Company Fund 0.00% 0.25% 0.25%
AIM Mid Cap Basic Value Fund 0.00% 0.25% 0.25%
AIM Premier Equity Fund 0.00% 0.25% 0.25%
AIM Select Equity Fund 0.00% 0.25% 0.25%
AIM Small Cap Equity Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM GROWTH SERIES BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Basic Value Fund 0.00% 0.25% 0.25%
AIM Conservative Allocation Fund 0.00% 0.25% 0.25%
AIM Global Equity Fund 0.00% 0.25% 0.25%
AIM Growth Allocation Fund 0.00% 0.25% 0.25%
AIM Mid Cap Core Equity Fund 0.00% 0.25% 0.25%
AIM Moderate Allocation Fund 0.00% 0.25% 0.25%
AIM Moderate Growth Allocation Fund 0.00% 0.25% 0.25%
AIM Moderately Conservative Allocation Fund 0.00% 0.25% 0.25%
AIM Small Cap Growth Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM INTERNATIONAL MUTUAL FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Asia Pacific Growth Fund 0.00% 0.25% 0.25%
AIM European Growth Fund 0.00% 0.25% 0.25%
AIM Global Aggressive Growth Fund 0.00% 0.25% 0.25%
AIM Global Growth Fund 0.00% 0.25% 0.25%
AIM International Core Equity Fund 0.00% 0.25% 0.25%
AIM International Growth Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM INVESTMENT FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Developing Markets Fund 0.00% 0.25% 0.25%
AIM Global Health Care Fund 0.00% 0.25% 0.25%
AIM Libra Fund 0.00% 0.25% 0.25%
AIM Trimark Endeavor Fund 0.00% 0.25% 0.25%
AIM Trimark Fund 0.00% 0.25% 0.25%
AIM Trimark Small Companies Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM INVESTMENT SECURITIES FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Global Real Estate Fund 0.00% 0.25% 0.25%
AIM High Yield Fund 0.00% 0.25% 0.25%
AIM Income Fund 0.00% 0.25% 0.25%
AIM Intermediate Government Fund 0.00% 0.25% 0.25%
AIM Limited Maturity Treasury Fund 0.00% 0.15% 0.15%
AIM Municipal Bond Fund 0.00% 0.25% 0.25%
AIM Real Estate Fund 0.00% 0.25% 0.25%
AIM Short Term Bond Fund 0.00% 0.25% 0.25%
AIM Total Return Bond Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM SECTOR FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Energy Fund 0.00% 0.25% 0.25%
AIM Financial Services Fund 0.00% 0.25% 0.25%
AIM Gold & Precious Metals Fund 0.00% 0.25% 0.25%
AIM Health Sciences Fund 0.00% 0.25% 0.25%
AIM Leisure Fund 0.00% 0.25% 0.25%
AIM Technology Fund 0.00% 0.25% 0.25%
AIM Utilities Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM SPECIAL OPPORTUNITIES FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Opportunities I Fund 0.00% 0.25% 0.25%
AIM Opportunities II Fund 0.00% 0.25% 0.25%
AIM Opportunities III Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM STOCK FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Dynamics Fund 0.00% 0.25% 0.25%
AIM Mid Cap Stock Fund 0.00% 0.25% 0.25%
AIM Small Company Growth Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM TAX-EXEMPT FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM High Income Municipal Fund 0.00% 0.25% 0.25%
AIM Tax-Exempt Cash Fund 0.00% 0.25% 0.25%
|
* The Distribution Fee is payable apart from the sales charge, if any, as stated in the current prospectus for the applicable Portfolio (or Class thereof)."
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: July 1, 2005
AMENDMENT NO. 15
TO THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS A SHARES)
The Amended and Restated Master Distribution Plan (the "Plan"), dated as of August 18, 2003, pursuant to Rule 12b-1, is hereby amended, effective July 18, 2005, as follows:
WHEREAS, the parties desire to amend the Plan to reflect the merger of AIM Balanced Fund, AIM Core Stock Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM Health Sciences Fund, AIM Libra Fund, AIM Mid Cap Stock Fund and AIM Total Return Fund.
NOW THEREFORE, Schedule A to the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS A SHARES)
(DISTRIBUTION AND SERVICE FEES)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for the Class A Shares of each Portfolio designated below, a Distribution Fee* and a Service Fee determined by applying the annual rate set forth below as to the Class A Shares of each Portfolio to the average daily net assets of the Class A Shares of the Portfolio for the plan year. Average daily net assets shall be computed in a manner used for the determination of the offering price of the Class A Shares of the Portfolio.
MINIMUM
ASSET
AIM COUNSELOR SERIES TRUST BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Advantage Health Sciences Fund 0.00% 0.25% 0.25%
AIM Multi-Sector Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM EQUITY FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Aggressive Growth Fund 0.00% 0.25% 0.25%
AIM Blue Chip Fund 0.00% 0.25% 0.25%
AIM Capital Development Fund 0.00% 0.25% 0.25%
AIM Charter Fund 0.00% 0.25% 0.25%
AIM Constellation Fund 0.00% 0.25% 0.25%
AIM Diversified Dividend Fund 0.00% 0.25% 0.25%
AIM Large Cap Basic Value Fund 0.00% 0.25% 0.25%
AIM Large Cap Growth Fund 0.00% 0.25% 0.25%
AIM Mid Cap Growth Fund 0.00% 0.25% 0.25%
AIM Select Basic Value Fund 0.00% 0.25% 0.25%
AIM Weingarten Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM FUNDS GROUP BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Basic Balanced Fund 0.00% 0.25% 0.25%
AIM European Small Company Fund 0.00% 0.25% 0.25%
AIM Global Value Fund 0.00% 0.25% 0.25%
AIM International Small Company Fund 0.00% 0.25% 0.25%
AIM Mid Cap Basic Value Fund 0.00% 0.25% 0.25%
AIM Premier Equity Fund 0.00% 0.25% 0.25%
AIM Select Equity Fund 0.00% 0.25% 0.25%
AIM Small Cap Equity Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM GROWTH SERIES BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Basic Value Fund 0.00% 0.25% 0.25%
AIM Conservative Allocation Fund 0.00% 0.25% 0.25%
AIM Global Equity Fund 0.00% 0.25% 0.25%
AIM Growth Allocation Fund 0.00% 0.25% 0.25%
AIM Mid Cap Core Equity Fund 0.00% 0.25% 0.25%
AIM Moderate Allocation Fund 0.00% 0.25% 0.25%
AIM Moderate Growth Allocation Fund 0.00% 0.25% 0.25%
AIM Moderately Conservative Allocation Fund 0.00% 0.25% 0.25%
AIM Small Cap Growth Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM INTERNATIONAL MUTUAL FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Asia Pacific Growth Fund 0.00% 0.25% 0.25%
AIM European Growth Fund 0.00% 0.25% 0.25%
AIM Global Aggressive Growth Fund 0.00% 0.25% 0.25%
AIM Global Growth Fund 0.00% 0.25% 0.25%
AIM International Core Equity Fund 0.00% 0.25% 0.25%
AIM International Growth Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM INVESTMENT FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Developing Markets Fund 0.00% 0.25% 0.25%
AIM Global Health Care Fund 0.00% 0.25% 0.25%
AIM Trimark Endeavor Fund 0.00% 0.25% 0.25%
AIM Trimark Fund 0.00% 0.25% 0.25%
AIM Trimark Small Companies Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM INVESTMENT SECURITIES FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Global Real Estate Fund 0.00% 0.25% 0.25%
AIM High Yield Fund 0.00% 0.25% 0.25%
AIM Income Fund 0.00% 0.25% 0.25%
AIM Intermediate Government Fund 0.00% 0.25% 0.25%
AIM Limited Maturity Treasury Fund 0.00% 0.15% 0.15%
AIM Municipal Bond Fund 0.00% 0.25% 0.25%
AIM Real Estate Fund 0.00% 0.25% 0.25%
AIM Short Term Bond Fund 0.00% 0.25% 0.25%
AIM Total Return Bond Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM SECTOR FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Energy Fund 0.00% 0.25% 0.25%
AIM Financial Services Fund 0.00% 0.25% 0.25%
AIM Gold & Precious Metals Fund 0.00% 0.25% 0.25%
AIM Leisure Fund 0.00% 0.25% 0.25%
AIM Technology Fund 0.00% 0.25% 0.25%
AIM Utilities Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM SPECIAL OPPORTUNITIES FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Opportunities I Fund 0.00% 0.25% 0.25%
AIM Opportunities II Fund 0.00% 0.25% 0.25%
AIM Opportunities III Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM STOCK FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM Dynamics Fund 0.00% 0.25% 0.25%
AIM Small Company Growth Fund 0.00% 0.25% 0.25%
|
MINIMUM
ASSET
AIM TAX-EXEMPT FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS A SHARES CHARGE FEE FEE
------ --- ---
AIM High Income Municipal Fund 0.00% 0.25% 0.25%
AIM Tax-Exempt Cash Fund 0.00% 0.25% 0.25%
|
* The Distribution Fee is payable apart from the sales charge, if any, as stated in the current prospectus for the applicable Portfolio (or Class thereof)."
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: July 18, 2005
[AIM INVESTMENTS LOGO] MASTER RELATED AGREEMENT TO
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS A SHARES)
This Master Related Agreement (the "Agreement") is entered into in accordance with Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act") by each registered investment company, listed in Schedule A to this Agreement (each individually referred to as a "Fund", or collectively, "Funds"), severally, on behalf of each of the series of common stock or beneficial interest, as the case may be, set forth in Schedule A to this Agreement (each, a "Portfolio" ), with respect to the Class A Shares of each such Portfolio listed on Schedule A. This Agreement, being made between A I M Distributors, Inc. ("Distributors") and each Fund, on behalf of each applicable Portfolio, defines the services to be provided by Distributors, or its designees, for which it is to receive payments pursuant to the Amended and Restated Master Distribution Plan (Class A Shares) (the "Plan") adopted by each of the Funds. The Plan has been approved by a majority of the directors/trustees ("Trustees") of each of the Funds, including a majority of the Trustees who have no direct or indirect financial interest in the operation of the Plan or this Agreement (the "Dis-Interested Trustees"), by votes cast in person at a meeting called for the purpose of voting on the Plan.
1. a. Distributors may use payments received pursuant to Paragraph 2 of this Agreement to provide continuing personal shareholder services to customers who may, from time to time, directly or beneficially own shares of the Funds. Continuing personal shareholder services may include but are not limited to, distributing sales literature to customers, answering routine customer inquiries regarding the Funds, assisting customers in changing dividend options, account designations and addresses, and in enrolling in any of several special investment plans offered in connection with the purchase of the Funds' shares, assisting customers in the establishment and maintenance of customer accounts and records and in the placement of purchase and redemption transactions, assisting customers in investing dividends and capital gains distributions automatically in shares, and providing such other services as the Funds or the customer may reasonably request and Distributors agrees to provide. Distributors will not be obligated to provide services which are provided by a transfer agent for a Fund with respect to a Portfolio.
b. Distributors may also use the payments received pursuant to Paragraph 2 of this Agreement for distribution-related services. As used in this Agreement, "distribution-related services" shall mean any activity which is primarily intended to result in the sale of the Shares, including, but not limited to, organizing and conducting sales seminars, implementing advertising programs, engaging finders and paying finders fees, printing prospectuses and statements of additional information (and supplements thereto) and annual and semi-annual reports for other than existing shareholders, preparing and distributing advertising material and sales literature, making supplemental payments to dealers and other institutions as asset-based sales charges, and administering the Plan.
c. Distributors may provide the services described in paragraphs a. and b. above either directly or through third parties (its "designees").
2. For the services provided by Distributors or its designees pursuant to this Agreement, each Fund shall pay Distributors a fee, calculated at the end of each month at the annual rate set forth in Schedule A, or such lesser rate as shall be agreed to by Distributors, as applied to the average net asset value of the shares of such Fund purchased or acquired through exchange on or after the Plan Calculation Date shown for such Fund on Schedule A.
3. The total of the fees calculated for all of the Funds listed on Schedule A for any period with respect to which calculations are made shall be paid to Distributors within 10 days after the close of each month.
4. Distributors shall furnish the Funds with such information as shall reasonably be requested by the Trustees of the Funds with respect to the fees paid to Distributors pursuant to this Agreement.
5. Distributors shall furnish the Trustees of the Funds, for their review on a quarterly basis, a written report of the amounts expended under the Plan and the purposes for which such expenditures were made.
6. Distributors may enter into other similar Master Related Agreements with any other investment company without a Fund's consent.
7. This Agreement shall become effective immediately upon its approval by a majority of the Trustees of each of the Funds, including a majority of the Dis-Interested Trustees, by votes cast in person at a meeting called for the purpose of voting on the Plan and this Agreement.
8. This Agreement shall continue in full force and effect as long as the continuance of the Plan and this Agreement are approved at least annually by a vote of the Trustees, including a majority of the Dis-Interested Trustees, cast in person at a meeting called for the purpose of voting thereon.
9. This Agreement may be terminated with respect to any Fund at any time without payment of any penalty by the vote of a majority of the Trustees of such Fund who are Dis-interested Trustees or by a vote of a majority of the Fund's outstanding shares, on sixty (60) days' written notice. It will be terminated by any act which terminates the Fund's Plan, and in any event, it shall terminate automatically in the event of its assignment as that term is defined in the 1940 Act.
10. This Agreement may be amended by mutual written agreement of the parties.
11. All communications should be sent to the address of each signor as shown at the bottom of this Agreement.
12. This Agreement shall be construed in accordance with the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
By: /s/ Gene L. Needles
------------------------------------------
Name: Gene L. Needles
Title: President
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Attn: President
EFFECTIVE AUGUST 18, 2003. FUND (LISTED IN SCHEDULE A)
on behalf of the Class A Shares of each
Portfolio listed on Schedule A
By: /s/ Robert H. Graham
------------------------------------------
Name: Robert H. Graham
Title: President
|
SCHEDULE "A" TO
MASTER RELATED AGREEMENT
Maximum Aggregate
Fund Fee Rate* Plan Calculation Date
---- --------- ---------------------
AIM EQUITY FUNDS
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Blue Chip Fund A Shares 0.25(1) June 3, 1996
AIM Capital Development Fund A Shares 0.25(1) June 17, 1996
AIM Charter Fund A Shares 0.25(2) November 18, 1986
AIM Constellation Fund A Shares 0.25(2) September 9, 1986
AIM Diversified Dividend Fund A Shares 0.25(1) December 31, 2001
AIM Large Cap Basic Value Fund A Shares 0.25(1) July 15, 1999
AIM Large Cap Growth Fund A Shares 0.25(1) March 1, 1999
AIM Mid Cap Growth Fund A Shares 0.25(1) November 1, 1999
AIM Weingarten Fund A Shares 0.25(2) September 9, 1986
AIM FUNDS GROUP
AIM Basic Balanced Fund A Shares 0.25(1) September 28, 2001
AIM European Small Company Fund A Shares(4) 0.25(1) August 31, 2000
AIM Global Value Fund A Shares 0.25(1) December 29, 2000
AIM International Small Company Fund A Shares(4) 0.25(1) August 31, 2000
AIM Mid Cap Basic Value Fund A Shares 0.25(1) December 31, 2001
AIM Premier Equity Fund A Shares 0.25 July 1, 1992
AIM Select Equity Fund A Shares 0.25 July 1, 1992
AIM Small Cap Equity Fund A Shares 0.25(1) August 31, 2000
AIM GROWTH SERIES
AIM Basic Value Fund A Shares 0.25(1) May 29, 1998
AIM Conservative Allocation Fund A Shares 0.25(1) April 30, 2004
AIM Global Equity Fund A Shares 0.25(1,3) May 29, 1998
AIM Growth Allocation Fund A Shares 0.25(1) April 30, 2004
AIM Mid Cap Core Equity Fund A Shares(4) 0.25(1) May 29, 1998
AIM Moderate Allocation Fund A Shares 0.25(1) April 30, 2004
AIM Moderate Growth Allocation Fund A Shares 0.25(1) April 29, 2005
AIM Moderately Conservative Allocation Fund A Shares 0.25(1) April 29, 2005
AIM Small Cap Growth Fund A Shares(4) 0.25(1) May 29, 1998
|
(2) Effective July 1, 2005, this fee rate was reduced from 0.30% to 0.25%.
(3) Effective January 1, 2005, this fee rate was reduced from 0.50% to 0.35%.
(4) AIM European Small Company Fund, AIM International Small Company Fund, AIM Mid Cap Core Equity Fund, AIM Small Cap Growth Fund and AIM Real Estate Fund are closed to new investors.
Maximum Aggregate
Fund Fee Rate* Plan Calculation Date
---- --------- ---------------------
AIM INTERNATIONAL MUTUAL FUNDS
AIM Asia Pacific Growth Fund A Shares 0.25(1) November 1, 1997
AIM European Growth Fund A Shares 0.25(1) November 1, 1997
AIM Global Aggressive Growth Fund A Shares 0.25(1,3) September 15, 1994
AIM Global Growth Fund A Shares 0.25(1,3) September 15, 1994
AIM International Core Equity Fund A Shares 0.25(1) March 29, 2002
AIM International Growth Fund A Shares 0.25(2) May 21, 1992
AIM INVESTMENT FUNDS
AIM Developing Markets Fund A Shares 0.25(1,3) May 29, 1998
AIM Global Health Care Fund A Shares 0.25(1,3) May 29, 1998
AIM Trimark Endeavor Fund A Shares 0.25(1) November 4, 2003
AIM Trimark Fund A Shares 0.25(1) November 4, 2003
AIM Trimark Small Companies Fund A Shares 0.25(1) November 4, 2003
AIM INVESTMENT SECURITIES FUNDS
AIM Global Real Estate Fund A Shares 0.25(1) April 29, 2005
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Limited Maturity Treasury Fund A Shares 0.15 December 2, 1987
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Real Estate Fund A Shares(4) 0.25(1) August 4, 1997
AIM Short Term Bond Fund 0.25(1) April 30, 2004
AIM Total Return Bond Fund A Shares 0.25(1) December 31, 2001
AIM SPECIAL OPPORTUNITIES FUNDS
AIM Opportunities I Fund A Shares 0.25(1) June 29, 1998
AIM Opportunities II Fund A Shares 0.25(1) December 30, 1998
AIM Opportunities III Fund A Shares 0.25(1) December 30, 1999
AIM TAX-EXEMPT FUNDS
AIM High Income Municipal Fund A Shares 0.25 December 22, 1997
AIM Tax-Exempt Cash Fund A Shares 0.25 July 1, 1992
|
(1) Effective July 1, 2005, this fee rate was reduced from 0.35% to 0.25%.
(2) Effective July 1, 2005, this fee rate was reduced from 0.30% to 0.25%.
(3) Effective January 1, 2005, this fee rate was reduced from 0.50% to 0.35%.
(4) AIM European Small Company Fund, AIM International Small Company Fund, AIM Mid Cap Core Equity Fund, AIM Small Cap Growth Fund and AIM Real Estate Fund are closed to new investors.
SCHEDULE "A" TO
RELATED AGREEMENT
Maximum Aggregate
Fund Fee Rate* Plan Calculation Date
---- --------- ---------------------
AIM COUNSELOR SERIES TRUST
AIM Advantage Health Sciences Fund A Shares 0.25(1) May 15, 2001
AIM Multi-Sector Fund A Shares 0.25(1) August 30, 2002
AIM SECTOR FUNDS
AIM Energy Fund A Shares 0.25(1) March 29, 2002
AIM Financial Services Fund A Shares 0.25(1) March 29, 2002
AIM Gold & Precious Metals Fund A Shares 0.25(1) March 29, 2002
AIM Leisure Fund A Shares 0.25(1) March 29, 2002
AIM Technology Fund A Shares 0.25(1) March 29, 2002
AIM Utilities Fund A Shares 0.25(5) March 29, 2002
AIM STOCK FUNDS
AIM Dynamics Fund A Shares 0.25(1) March 29, 2002
AIM Small Company Growth Fund A Shares 0.25(1) March 29, 2002
|
* Of this amount, 0.25% is paid as a shareholder servicing fee and the remainder is paid as an asset based sales charge, as these terms are defined under the rules of the NASD, Inc.
(5) Effective July 10, 2003, this fee rate was reduced from 0.35% to 0.25%.
AMENDMENT NO. 11
TO
AMENDED AND RESTATED MASTER DISTRIBUTION PLAN
(CLASS B SHARES)
(SECURITIZATION FEATURE)
The Amended and Restated Master Distribution Plan (the "Plan"), dated as of August 18, 2003, pursuant to Rule 12b-1, is hereby amended, effective March 15, 2005, as follows:
WHEREAS, on February 25, 2005, the Board of Trustees of AIM Equity Funds approved the liquidation of AIM Core Strategies Fund and AIM U.S. Growth Fund;
NOW THEREFORE, Schedule A to the Plan is hereby deleted and replaced in its entirety with Schedule A attached hereto.
All other terms and provisions of the Plan not amended hereby shall remain in full force and effect.
"SCHEDULE A
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS B SHARES)
DISTRIBUTION AND SERVICE FEES
The Fund shall pay the Distributor or the Assignee as full compensation for all services rendered and all facilities furnished under the Distribution Plan for the Class B Shares of each Portfolio designated below, a Distribution Fee and a Service Fee determined by applying the annual rate set forth below to the average daily net assets of the Class B Shares of the Portfolio. Average daily net assets shall be computed in a manner used for the determination of the offering price of Class B Shares of the Portfolio.
MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
AIM EQUITY FUNDS CHARGE FEE FEE
-------------------------------- ------- ------- ---------
PORTFOLIOS
AIM Aggressive Growth 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 Dent Demographic Trends Fund 0.75% 0.25% 1.00%
AIM Diversified Dividend 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 Growth Fund 0.75% 0.25% 1.00%
AIM Mid Cap Growth Fund 0.75% 0.25% 1.00%
AIM Select Basic Value Fund 0.75% 0.25% 1.00%
AIM Weingarten Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
AIM FUNDS GROUP CHARGE FEE FEE
------------------------------------ ------- ------- ---------
PORTFOLIOS
AIM Balanced Fund 0.75% 0.25% 1.00%
AIM Basic Balanced Fund 0.75% 0.25% 1.00%
AIM European Small Company Fund 0.75% 0.25% 1.00%
AIM Global Value Fund 0.75% 0.25% 1.00%
AIM International Small Company Fund 0.75% 0.25% 1.00%
AIM Mid Cap Basic Value Fund 0.75% 0.25% 1.00%
AIM Premier Equity Fund 0.75% 0.25% 1.00%
AIM Select Equity Fund 0.75% 0.25% 1.00%
AIM Small Cap Equity Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
AIM GROWTH SERIES CHARGE FEE FEE
-------------------------------- ------- ------- ----------
PORTFOLIOS
AIM Aggressive Allocation Fund 0.75% 0.25% 1.00%
AIM Basic Value Fund 0.75% 0.25% 1.00%
AIM Conservative Allocation Fund 0.75% 0.25% 1.00%
AIM Mid Cap Core Equity Fund 0.75% 0.25% 1.00%
AIM Moderate Allocation Fund 0.75% 0.25% 1.00%
AIM Small Cap Growth Fund 0.75% 0.25% 1.00%
AIM Global Equity Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
AIM INTERNATIONAL MUTUAL FUNDS CHARGE FEE FEE
---------------------------------- ------- ------- ---------
PORTFOLIOS
AIM Asia Pacific Growth Fund 0.75% 0.25% 1.00%
AIM European Growth Fund 0.75% 0.25% 1.00%
AIM Global Aggressive Growth Fund 0.75% 0.25% 1.00%
AIM Global Growth Fund 0.75% 0.25% 1.00%
AIM International Core Equity Fund 0.75% 0.25% 1.00%
AIM International Growth Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
AIM INVESTMENT FUNDS CHARGE FEE FEE
-------------------------------- ------- ------- ---------
PORTFOLIOS
AIM Developing Markets Fund 0.75% 0.25% 1.00%
AIM Global Health Care Fund 0.75% 0.25% 1.00%
AIM Libra Fund 0.75% 0.25% 1.00%
AIM Trimark Fund 0.75% 0.25% 1.00%
AIM Trimark Endeavor Fund 0.75% 0.25% 1.00%
AIM Trimark Small Companies Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
AIM INVESTMENT SECURITIES FUNDS CHARGE FEE FEE
-------------------------------- ------- ------- ---------
PORTFOLIOS
AIM High Yield Fund 0.75% 0.25% 1.00%
AIM Income Fund 0.75% 0.25% 1.00%
AIM Intermediate Government Fund 0.75% 0.25% 1.00%
AIM Money Market Fund 0.75% 0.25% 1.00%
AIM Municipal Bond Fund 0.75% 0.25% 1.00%
AIM Total Return Bond Fund 0.75% 0.25% 1.00%
AIM Real Estate Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
AIM SPECIAL OPPORTUNITIES FUNDS CHARGE FEE FEE
-------------------------------- ------- ------- ---------
PORTFOLIOS
AIM Opportunities I Fund 0.75% 0.25% 1.00%
AIM Opportunities II Fund 0.75% 0.25% 1.00%
AIM Opportunities III Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
AIM TAX-EXEMPT FUNDS CHARGE FEE FEE
------------------------------- ------- ------- ---------
PORTFOLIO
AIM High Income Municipal Fund 0.75% 0.25% 1.00%
|
MAXIMUM
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
AIM COMBINATION STOCK & BOND FUNDS CHARGE FEE FEE
---------------------------------- ------- ------- ---------
PORTFOLIO
AIM Core Stock Fund 0.75% 0.25% 1.00%
AIM Total Return Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
AIM COUNSELOR SERIES TRUST CHARGE FEE FEE
------------------------------- ------- ------- ---------
PORTFOLIO
AIM Advantage Health
Sciences Fund 0.75% 0.25% 1.00%
AIM Multi-Sector Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
AIM SECTOR FUNDS CHARGE FEE FEE
------------------------------- ------- ------- ---------
PORTFOLIO
AIM Energy Fund 0.75% 0.25% 1.00%
AIM Financial Services Fund 0.75% 0.25% 1.00%
AIM Gold & Precious Metals Fund 0.75% 0.25% 1.00%
AIM Health Sciences Fund 0.75% 0.25% 1.00%
AIM Leisure Fund 0.75% 0.25% 1.00%
AIM Technology Fund 0.75% 0.25% 1.00%
AIM Utilities Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
AIM STOCK FUNDS CHARGE FEE FEE
------------------------------- ------- ------- ---------
PORTFOLIO
AIM Dynamics Fund 0.75% 0.25% 1.00%
AIM Mid Cap Stock Fund 0.75% 0.25% 1.00%
AIM Small Company Growth Fund 0.75% 0.25% 1.00%".
|
AMENDMENT NO. 12
TO
AMENDED AND RESTATED MASTER DISTRIBUTION PLAN
(CLASS B SHARES)
(SECURITIZATION FEATURE)
The Amended and Restated Master Distribution Plan (the "Plan"), dated as of August 18, 2003, pursuant to Rule 12b-1, is hereby amended, effective April 29, 2005, as follows:
WHEREAS, the parties desire to amend the Plan to reflect the addition of AIM Global Real Estate Fund, AIM Moderate Growth Allocation Fund and AIM Moderately Conservative Allocation Fund and to change the name of AIM Aggressive Allocation Fund to AIM Growth Allocation Fund;
NOW THEREFORE, Schedule A to the Plan is hereby deleted and replaced in its entirety with Schedule A attached hereto.
All other terms and provisions of the Plan not amended hereby shall remain in full force and effect.
"SCHEDULE A
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS B SHARES)
DISTRIBUTION AND SERVICE FEES
The Fund shall pay the Distributor or the Assignee as full compensation for all services rendered and all facilities furnished under the Distribution Plan for the Class B Shares of each Portfolio designated below, a Distribution Fee and a Service Fee determined by applying the annual rate set forth below to the average daily net assets of the Class B Shares of the Portfolio. Average daily net assets shall be computed in a manner used for the determination of the offering price of Class B Shares of the Portfolio.
MAXIMUM
ASSET
AIM EQUITY FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIOS CHARGE FEE FEE
---------- ------ --- ---
AIM Aggressive Growth 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 Dent Demographic Trends Fund 0.75% 0.25% 1.00%
AIM Diversified Dividend 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 Growth Fund 0.75% 0.25% 1.00%
AIM Mid Cap Growth Fund 0.75% 0.25% 1.00%
AIM Select Basic Value Fund 0.75% 0.25% 1.00%
AIM Weingarten Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM FUNDS GROUP BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIOS CHARGE FEE FEE
---------- ------ --- ---
AIM Balanced Fund 0.75% 0.25% 1.00%
AIM Basic Balanced Fund 0.75% 0.25% 1.00%
AIM European Small Company Fund 0.75% 0.25% 1.00%
AIM Global Value Fund 0.75% 0.25% 1.00%
AIM International Small Company Fund 0.75% 0.25% 1.00%
AIM Mid Cap Basic Value Fund 0.75% 0.25% 1.00%
AIM Premier Equity Fund 0.75% 0.25% 1.00%
AIM Select Equity Fund 0.75% 0.25% 1.00%
AIM Small Cap Equity Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM GROWTH SERIES BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIOS CHARGE FEE FEE
---------- ------ --- ---
AIM Basic Value Fund 0.75% 0.25% 1.00%
AIM Conservative Allocation Fund 0.75% 0.25% 1.00%
AIM Global Equity Fund 0.75% 0.25% 1.00%
AIM Growth Allocation Fund 0.75% 0.25% 1.00%
AIM Mid Cap Core Equity Fund 0.75% 0.25% 1.00%
AIM Moderate Allocation Fund 0.75% 0.25% 1.00%
AIM Moderate Growth Allocation Fund 0.75% 0.25% 1.00%
AIM Moderately Conservative Allocation Fund 0.75% 0.25% 1.00%
AIM Small Cap Growth Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM INTERNATIONAL MUTUAL FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIOS CHARGE FEE FEE
---------- ------ --- ---
AIM Asia Pacific Growth Fund 0.75% 0.25% 1.00%
AIM European Growth Fund 0.75% 0.25% 1.00%
AIM Global Aggressive Growth Fund 0.75% 0.25% 1.00%
AIM Global Growth Fund 0.75% 0.25% 1.00%
AIM International Core Equity Fund 0.75% 0.25% 1.00%
AIM International Growth Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM INVESTMENT FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIOS CHARGE FEE FEE
---------- ------ --- ---
AIM Developing Markets Fund 0.75% 0.25% 1.00%
AIM Global Health Care Fund 0.75% 0.25% 1.00%
AIM Libra Fund 0.75% 0.25% 1.00%
AIM Trimark Fund 0.75% 0.25% 1.00%
AIM Trimark Endeavor Fund 0.75% 0.25% 1.00%
AIM Trimark Small Companies Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM INVESTMENT SECURITIES FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIOS CHARGE FEE FEE
---------- ------ --- ---
AIM Global Real Estate Fund 0.75% 0.25% 1.00%
AIM High Yield Fund 0.75% 0.25% 1.00%
AIM Income Fund 0.75% 0.25% 1.00%
AIM Intermediate Government Fund 0.75% 0.25% 1.00%
AIM Money Market Fund 0.75% 0.25% 1.00%
AIM Municipal Bond Fund 0.75% 0.25% 1.00%
AIM Total Return Bond Fund 0.75% 0.25% 1.00%
AIM Real Estate Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM SPECIAL OPPORTUNITIES FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIOS CHARGE FEE FEE
---------- ------ --- ---
AIM Opportunities I Fund 0.75% 0.25% 1.00%
AIM Opportunities II Fund 0.75% 0.25% 1.00%
AIM Opportunities III Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM TAX-EXEMPT FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO CHARGE FEE FEE
--------- ------ --- ---
AIM High Income Municipal Fund 0.75% 0.25% 1.00%
|
AIM COMBINATION STOCK & MAXIMUM
BOND FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO CHARGE FEE FEE
--------- ------ --- ---
AIM Core Stock Fund 0.75% 0.25% 1.00%
AIM Total Return Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM COUNSELOR SERIES TRUST BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO CHARGE FEE FEE
--------- ------ --- ---
AIM Advantage Health
Sciences Fund 0.75% 0.25% 1.00%
AIM Multi-Sector Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM SECTOR FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO CHARGE FEE FEE
--------- ------ --- ---
AIM Energy Fund 0.75% 0.25% 1.00%
AIM Financial Services Fund 0.75% 0.25% 1.00%
AIM Gold & Precious Metals Fund 0.75% 0.25% 1.00%
AIM Health Sciences Fund 0.75% 0.25% 1.00%
AIM Leisure Fund 0.75% 0.25% 1.00%
AIM Technology Fund 0.75% 0.25% 1.00%
AIM Utilities Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM STOCK FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO CHARGE FEE FEE
--------- ------ --- ---
AIM Dynamics Fund 0.75% 0.25% 1.00%
AIM Mid Cap Stock Fund 0.75% 0.25% 1.00%
AIM Small Company Growth Fund 0.75% 0.25% 1.00%"
|
AMENDMENT NO. 13
TO
AMENDED AND RESTATED MASTER DISTRIBUTION PLAN
(CLASS B SHARES)
(SECURITIZATION FEATURE)
The Amended and Restated Master Distribution Plan (the "Plan"), dated as of August 18, 2003, pursuant to Rule 12b-1, is hereby amended, effective July 18, 2005, as follows:
WHEREAS, the parties desire to amend the Plan to reflect the merger of AIM Balanced Fund, AIM Core Stock Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM Health Sciences Fund, AIM Libra Fund, AIM Mid Cap Stock Fund and AIM Total Return Fund;
NOW THEREFORE, Schedule A to the Plan is hereby deleted and replaced in its entirety with Schedule A attached hereto.
All other terms and provisions of the Plan not amended hereby shall remain in full force and effect.
"SCHEDULE A
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS B SHARES)
DISTRIBUTION AND SERVICE FEES
The Fund shall pay the Distributor or the Assignee as full compensation for all services rendered and all facilities furnished under the Distribution Plan for the Class B Shares of each Portfolio designated below, a Distribution Fee and a Service Fee determined by applying the annual rate set forth below to the average daily net assets of the Class B Shares of the Portfolio. Average daily net assets shall be computed in a manner used for the determination of the offering price of Class B Shares of the Portfolio.
MAXIMUM
ASSET
AIM EQUITY FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIOS CHARGE FEE FEE
------ --- ---
AIM Aggressive Growth 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 Diversified Dividend Fund 0.75% 0.25% 1.00%
AIM Large Cap Basic Value 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 Select Basic Value Fund 0.75% 0.25% 1.00%
AIM Weingarten Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM FUNDS GROUP BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIOS CHARGE FEE FEE
------ --- ---
AIM Basic Balanced Fund 0.75% 0.25% 1.00%
AIM European Small Company Fund 0.75% 0.25% 1.00%
AIM Global Value Fund 0.75% 0.25% 1.00%
AIM International Small Company Fund 0.75% 0.25% 1.00%
AIM Mid Cap Basic Value Fund 0.75% 0.25% 1.00%
AIM Premier Equity Fund 0.75% 0.25% 1.00%
AIM Select Equity Fund 0.75% 0.25% 1.00%
AIM Small Cap Equity Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM GROWTH SERIES BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIOS CHARGE FEE FEE
------ --- ---
AIM Basic Value Fund 0.75% 0.25% 1.00%
AIM Conservative Allocation Fund 0.75% 0.25% 1.00%
AIM Global Equity Fund 0.75% 0.25% 1.00%
AIM Growth Allocation Fund 0.75% 0.25% 1.00%
AIM Mid Cap Core Equity Fund 0.75% 0.25% 1.00%
AIM Moderate Allocation Fund 0.75% 0.25% 1.00%
AIM Moderate Growth Allocation Fund 0.75% 0.25% 1.00%
AIM Moderately Conservative Allocation Fund 0.75% 0.25% 1.00%
AIM Small Cap Growth Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM INTERNATIONAL MUTUAL FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIOS CHARGE FEE FEE
------ --- ---
AIM Asia Pacific Growth Fund 0.75% 0.25% 1.00%
AIM European Growth Fund 0.75% 0.25% 1.00%
AIM Global Aggressive Growth Fund 0.75% 0.25% 1.00%
AIM Global Growth Fund 0.75% 0.25% 1.00%
AIM International Core Equity Fund 0.75% 0.25% 1.00%
AIM International Growth Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM INVESTMENT FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIOS CHARGE FEE FEE
------ --- ---
AIM Developing Markets Fund 0.75% 0.25% 1.00%
AIM Global Health Care Fund 0.75% 0.25% 1.00%
AIM Trimark Fund 0.75% 0.25% 1.00%
AIM Trimark Endeavor Fund 0.75% 0.25% 1.00%
AIM Trimark Small Companies Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM INVESTMENT SECURITIES FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIOS CHARGE FEE FEE
------ --- ---
AIM Global Real Estate Fund 0.75% 0.25% 1.00%
AIM High Yield Fund 0.75% 0.25% 1.00%
AIM Income Fund 0.75% 0.25% 1.00%
AIM Intermediate Government Fund 0.75% 0.25% 1.00%
AIM Money Market Fund 0.75% 0.25% 1.00%
AIM Municipal Bond Fund 0.75% 0.25% 1.00%
AIM Total Return Bond Fund 0.75% 0.25% 1.00%
AIM Real Estate Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM SPECIAL OPPORTUNITIES FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIOS CHARGE FEE FEE
------ --- ---
AIM Opportunities I Fund 0.75% 0.25% 1.00%
AIM Opportunities II Fund 0.75% 0.25% 1.00%
AIM Opportunities III Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM TAX-EXEMPT FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO CHARGE FEE FEE
------ --- ---
AIM High Income Municipal Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM COUNSELOR SERIES TRUST BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO CHARGE FEE FEE
------ --- ---
AIM Advantage Health
Sciences Fund 0.75% 0.25% 1.00%
AIM Multi-Sector Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM SECTOR FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO CHARGE FEE FEE
------ --- ---
AIM Energy Fund 0.75% 0.25% 1.00%
AIM Financial Services Fund 0.75% 0.25% 1.00%
AIM Gold & Precious Metals Fund 0.75% 0.25% 1.00%
AIM Leisure Fund 0.75% 0.25% 1.00%
AIM Technology Fund 0.75% 0.25% 1.00%
AIM Utilities Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM STOCK FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO CHARGE FEE FEE
------ --- ---
AIM Dynamics Fund 0.75% 0.25% 1.00%
AIM Small Company Growth Fund 0.75% 0.25% 1.00%"
|
AMENDMENT NO. 11
TO THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS C SHARES)
The Amended and Restated Master Distribution Plan (the "Plan"), dated as of August 18, 2003, pursuant to Rule 12b-1, is hereby amended, effective March 15, 2005, as follows:
WHEREAS, on February 25, 2005, the Board of Trustees of AIM Equity Funds approved the liquidation of AIM Core Strategies Fund and AIM U.S. Growth Fund;
NOW THEREFORE, Schedule A to the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS C SHARES)
(DISTRIBUTION AND SERVICE FEES)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for the Class C Shares of each Portfolio designated below, a Distribution Fee* and a Service Fee determined by applying the annual rate set forth below as to the Class C Shares of each Portfolio to the average daily net assets of the Class C Shares of the Portfolio for the plan year. Average daily net assets shall be computed in a manner used for the determination of the offering price of the Class C Shares of the Portfolio.
MAXIMUM
ASSET
AIM COMBINATION STOCK & BOND FUNDS BASED MAXIMUM MAXIMUM
---------------------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Core Stock Fund 0.75% 0.25% 1.00%
AIM Total Return Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM COUNSELOR SERIES TRUST BASED MAXIMUM MAXIMUM
-------------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Advantage Health Sciences Fund 0.75% 0.25% 1.00%
AIM Multi-Sector Fund .75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM EQUITY FUNDS BASED MAXIMUM MAXIMUM
---------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Aggressive Growth 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%
|
MAXIMUM
ASSET
AIM EQUITY FUNDS BASED MAXIMUM MAXIMUM
---------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Charter Fund 0.75% 0.25% 1.00%
AIM Constellation Fund 0.75% 0.25% 1.00%
AIM Dent Demographic Trends Fund 0.75% 0.25% 1.00%
AIM Diversified Dividend 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 Growth Fund 0.75% 0.25% 1.00%
AIM Mid Cap Growth Fund 0.75% 0.25% 1.00%
AIM Select Basic Value Fund 0.75% 0.25% 1.00%
AIM Weingarten Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM FUNDS GROUP BASED MAXIMUM MAXIMUM
--------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Balanced Fund 0.75% 0.25% 1.00%
AIM Basic Balanced Fund 0.75% 0.25% 1.00%
AIM European Small Company Fund 0.75% 0.25% 1.00%
AIM Global Value Fund 0.75% 0.25% 1.00%
AIM International Small Company Fund 0.75% 0.25% 1.00%
AIM Mid Cap Basic Value Fund 0.75% 0.25% 1.00%
AIM Premier Equity Fund 0.75% 0.25% 1.00%
AIM Select Equity Fund 0.75% 0.25% 1.00%
AIM Small Cap Equity Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM GROWTH SERIES BASED MAXIMUM MAXIMUM
----------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Aggressive Allocation Fund 0.75% 0.25% 1.00%
AIM Basic Value Fund 0.75% 0.25% 1.00%
AIM Conservative Allocation Fund 0.75% 0.25% 1.00%
AIM Global Equity Fund 0.75% 0.25% 1.00%
AIM Mid Cap Core Equity Fund 0.75% 0.25% 1.00%
AIM Moderate Allocation Fund 0.75% 0.25% 1.00%
AIM Small Cap Growth Fund 0.75% 0.25% 1.00%
|
MINIMUM
ASSET
AIM INTERNATIONAL MUTUAL FUNDS BASED MAXIMUM MAXIMUM
------------------------------ SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Asia Pacific Growth Fund 0.75% 0.25% 1.00%
AIM European Growth Fund 0.75% 0.25% 1.00%
AIM Global Aggressive Growth Fund 0.75% 0.25% 1.00%
AIM Global Growth Fund 0.75% 0.25% 1.00%
AIM International Core Equity Fund .75% 0.25% 1.00%
AIM International Growth Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM INVESTMENT FUNDS BASED MAXIMUM MAXIMUM
-------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Developing Markets Fund 0.75% 0.25% 1.00%
AIM Global Health Care Fund 0.75% 0.25% 1.00%
AIM Libra Fund 0.75% 0.25% 1.00%
AIM Trimark Endeavor Fund 0.75% 0.25% 1.00%
AIM Trimark Fund 0.75% 0.25% 1.00%
AIM Trimark Small Companies Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM INVESTMENT SECURITIES FUNDS BASED MAXIMUM MAXIMUM
------------------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM High Yield Fund 0.75% 0.25% 1.00%
AIM Income Fund 0.75% 0.25% 1.00%
AIM Intermediate Government Fund 0.75% 0.25% 1.00%
AIM Money Market Fund 0.75% 0.25% 1.00%
AIM Municipal Bond Fund 0.75% 0.25% 1.00%
AIM Real Estate Fund 0.75% 0.25% 1.00%
AIM Short Term Bond Fund 0.75% 0.25% 1.00%
AIM Total Return Bond Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM SECTOR FUNDS BASED MAXIMUM MAXIMUM
---------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Energy Fund 0.75% 0.25% 1.00%
AIM Financial Services Fund 0.75% 0.25% 1.00%
AIM Gold & Precious Metals Fund 0.75% 0.25% 1.00%
AIM Health Sciences Fund 0.75% 0.25% 1.00%
AIM Leisure Fund 0.75% 0.25% 1.00%
AIM Technology Fund 0.75% 0.25% 1.00%
AIM Utilities Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM SPECIAL OPPORTUNITIES FUNDS BASED MAXIMUM MAXIMUM
------------------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Opportunities I Fund 0.75% 0.25% 1.00%
AIM Opportunities II Fund 0.75% 0.25% 1.00%
AIM Opportunities III Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM STOCK FUNDS BASED MAXIMUM MAXIMUM
--------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Dynamics Fund 0.75% 0.25% 1.00%
AIM Mid Cap Stock Fund 0.75% 0.25% 1.00%
AIM Small Company Growth Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM TAX-EXEMPT FUNDS BASED MAXIMUM MAXIMUM
-------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM High Income Municipal Fund 0.75% 0.25% 1.00%
|
* The Distribution Fee is payable apart from the sales charge, if any, as stated in the current prospectus for the applicable Portfolio (or Class thereof)."
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: March 15, 2005
AMENDMENT NO. 12
TO THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS C SHARES)
The Amended and Restated Master Distribution Plan (the "Plan"), dated as of August 18, 2003, pursuant to Rule 12b-1, is hereby amended, effective April 29, 2005, as follows:
WHEREAS, the parties desire to amend the Plan to reflect the addition of AIM Global Real Estate Fund, AIM Moderate Growth Allocation Fund and AIM Moderately Conservative Allocation Fund and to change the name of AIM Aggressive Allocation Fund to AIM Growth Allocation Fund;
NOW THEREFORE, Schedule A to the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS C SHARES)
(DISTRIBUTION AND SERVICE FEES)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for the Class C Shares of each Portfolio designated below, a Distribution Fee* and a Service Fee determined by applying the annual rate set forth below as to the Class C Shares of each Portfolio to the average daily net assets of the Class C Shares of the Portfolio for the plan year. Average daily net assets shall be computed in a manner used for the determination of the offering price of the Class C Shares of the Portfolio.
MAXIMUM
ASSET
AIM COMBINATION STOCK & BOND FUNDS BASED MAXIMUM MAXIMUM
---------------------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Core Stock Fund 0.75% 0.25% 1.00%
AIM Total Return Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM COUNSELOR SERIES TRUST BASED MAXIMUM MAXIMUM
-------------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Advantage Health Sciences Fund 0.75% 0.25% 1.00%
AIM Multi-Sector Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM EQUITY FUNDS BASED MAXIMUM MAXIMUM
---------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Aggressive Growth 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 Dent Demographic Trends Fund 0.75% 0.25% 1.00% AIM Diversified Dividend 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 Growth Fund 0.75% 0.25% 1.00% AIM Mid Cap Growth Fund 0.75% 0.25% 1.00% AIM Select Basic Value Fund 0.75% 0.25% 1.00% AIM Weingarten Fund 0.75% 0.25% 1.00% |
MAXIMUM
ASSET
AIM FUNDS GROUP BASED MAXIMUM MAXIMUM
--------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Balanced Fund 0.75% 0.25% 1.00%
AIM Basic Balanced Fund 0.75% 0.25% 1.00%
AIM European Small Company Fund 0.75% 0.25% 1.00%
AIM Global Value Fund 0.75% 0.25% 1.00%
AIM International Small Company Fund 0.75% 0.25% 1.00%
AIM Mid Cap Basic Value Fund 0.75% 0.25% 1.00%
AIM Premier Equity Fund 0.75% 0.25% 1.00%
AIM Select Equity Fund 0.75% 0.25% 1.00%
AIM Small Cap Equity Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM GROWTH SERIES BASED MAXIMUM MAXIMUM
----------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Basic Value Fund 0.75% 0.25% 1.00%
AIM Conservative Allocation Fund 0.75% 0.25% 1.00%
AIM Global Equity Fund 0.75% 0.25% 1.00%
AIM Growth Allocation Fund 0.75% 0.25% 1.00%
AIM Mid Cap Core Equity Fund 0.75% 0.25% 1.00%
AIM Moderate Allocation Fund 0.75% 0.25% 1.00%
AIM Moderate Growth Allocation Fund 0.75% 0.25% 1.00%
AIM Moderately Conservative Allocation Fund 0.75% 0.25% 1.00%
AIM Small Cap Growth Fund 0.75% 0.25% 1.00%
|
MINIMUM
ASSET
AIM INTERNATIONAL MUTUAL FUNDS BASED MAXIMUM MAXIMUM
------------------------------ SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Asia Pacific Growth Fund 0.75% 0.25% 1.00%
AIM European Growth Fund 0.75% 0.25% 1.00%
AIM Global Aggressive Growth Fund 0.75% 0.25% 1.00%
AIM Global Growth Fund 0.75% 0.25% 1.00%
AIM International Core Equity Fund 0.75% 0.25% 1.00%
|
AIM International Growth Fund 0.75% 0.25% 1.00% |
MAXIMUM
ASSET
AIM INVESTMENT FUNDS BASED MAXIMUM MAXIMUM
-------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Developing Markets Fund 0.75% 0.25% 1.00%
AIM Global Health Care Fund 0.75% 0.25% 1.00%
AIM Libra Fund 0.75% 0.25% 1.00%
AIM Trimark Endeavor Fund 0.75% 0.25% 1.00%
AIM Trimark Fund 0.75% 0.25% 1.00%
AIM Trimark Small Companies Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM INVESTMENT SECURITIES FUNDS BASED MAXIMUM MAXIMUM
------------------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Global Real Estate Fund 0.75% 0.25% 1.00%
AIM High Yield Fund 0.75% 0.25% 1.00%
AIM Income Fund 0.75% 0.25% 1.00%
AIM Intermediate Government Fund 0.75% 0.25% 1.00%
AIM Money Market Fund 0.75% 0.25% 1.00%
AIM Municipal Bond Fund 0.75% 0.25% 1.00%
AIM Real Estate Fund 0.75% 0.25% 1.00%
AIM Short Term Bond Fund 0.75% 0.25% 1.00%
AIM Total Return Bond Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM SECTOR FUNDS BASED MAXIMUM MAXIMUM
---------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Energy Fund 0.75% 0.25% 1.00%
AIM Financial Services Fund 0.75% 0.25% 1.00%
AIM Gold & Precious Metals Fund 0.75% 0.25% 1.00%
AIM Health Sciences Fund 0.75% 0.25% 1.00%
AIM Leisure Fund 0.75% 0.25% 1.00%
AIM Technology Fund 0.75% 0.25% 1.00%
AIM Utilities Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM SPECIAL OPPORTUNITIES FUNDS BASED MAXIMUM MAXIMUM
------------------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Opportunities I Fund 0.75% 0.25% 1.00%
AIM Opportunities II Fund 0.75% 0.25% 1.00%
AIM Opportunities III Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM STOCK FUNDS BASED MAXIMUM MAXIMUM
--------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM Dynamics Fund 0.75% 0.25% 1.00%
AIM Mid Cap Stock Fund 0.75% 0.25% 1.00%
AIM Small Company Growth Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM TAX-EXEMPT FUNDS BASED MAXIMUM MAXIMUM
-------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------- ------- ---------
AIM High Income Municipal Fund 0.75% 0.25% 1.00%
|
* The Distribution Fee is payable apart from the sales charge, if any, as stated in the current prospectus for the applicable Portfolio (or Class thereof)."
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: April 29, 2005
AMENDMENT NO. 13
TO THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS C SHARES)
The Amended and Restated Master Distribution Plan (the "Plan"), dated as of August 18, 2003, pursuant to Rule 12b-1, is hereby amended, effective July 18, 2005, as follows:
WHEREAS, the parties desire to amend the Plan to reflect the merger of AIM Balanced Fund, AIM Core Stock Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM Health Sciences Fund, AIM Libra Fund, AIM Mid Cap Stock Fund and AIM Total Return Fund;
NOW THEREFORE, Schedule A to the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS C SHARES)
(DISTRIBUTION AND SERVICE FEES)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for the Class C Shares of each Portfolio designated below, a Distribution Fee* and a Service Fee determined by applying the annual rate set forth below as to the Class C Shares of each Portfolio to the average daily net assets of the Class C Shares of the Portfolio for the plan year. Average daily net assets shall be computed in a manner used for the determination of the offering price of the Class C Shares of the Portfolio.
MAXIMUM
ASSET
AIM COUNSELOR SERIES TRUST BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------ --- ---
AIM Advantage Health Sciences Fund 0.75% 0.25% 1.00%
AIM Multi-Sector Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM EQUITY FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------ --- ---
AIM Aggressive Growth 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 Diversified Dividend Fund 0.75% 0.25% 1.00%
AIM Large Cap Basic Value 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 Select Basic Value Fund 0.75% 0.25% 1.00%
AIM Weingarten Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM FUNDS GROUP BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------ --- ---
AIM Basic Balanced Fund 0.75% 0.25% 1.00%
AIM European Small Company Fund 0.75% 0.25% 1.00%
AIM Global Value Fund 0.75% 0.25% 1.00%
AIM International Small Company Fund 0.75% 0.25% 1.00%
AIM Mid Cap Basic Value Fund 0.75% 0.25% 1.00%
AIM Premier Equity Fund 0.75% 0.25% 1.00%
AIM Select Equity Fund 0.75% 0.25% 1.00%
AIM Small Cap Equity Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM GROWTH SERIES BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------ --- ---
AIM Basic Value Fund 0.75% 0.25% 1.00%
AIM Conservative Allocation Fund 0.75% 0.25% 1.00%
AIM Global Equity Fund 0.75% 0.25% 1.00%
AIM Growth Allocation Fund 0.75% 0.25% 1.00%
AIM Mid Cap Core Equity Fund 0.75% 0.25% 1.00%
AIM Moderate Allocation Fund 0.75% 0.25% 1.00%
AIM Moderate Growth Allocation Fund 0.75% 0.25% 1.00%
AIM Moderately Conservative Allocation Fund 0.75% 0.25% 1.00%
AIM Small Cap Growth Fund 0.75% 0.25% 1.00%
|
MINIMUM
ASSET
AIM INTERNATIONAL MUTUAL FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------ --- ---
AIM Asia Pacific Growth Fund 0.75% 0.25% 1.00%
AIM European Growth Fund 0.75% 0.25% 1.00%
AIM Global Aggressive Growth Fund 0.75% 0.25% 1.00%
AIM Global Growth Fund 0.75% 0.25% 1.00%
AIM International Core Equity Fund 0.75% 0.25% 1.00%
AIM International Growth Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM INVESTMENT FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------ --- ---
AIM Developing Markets Fund 0.75% 0.25% 1.00%
AIM Global Health Care Fund 0.75% 0.25% 1.00%
AIM Trimark Endeavor Fund 0.75% 0.25% 1.00%
AIM Trimark Fund 0.75% 0.25% 1.00%
AIM Trimark Small Companies Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM INVESTMENT SECURITIES FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------ --- ---
AIM Global Real Estate Fund 0.75% 0.25% 1.00%
AIM High Yield Fund 0.75% 0.25% 1.00%
AIM Income Fund 0.75% 0.25% 1.00%
AIM Intermediate Government Fund 0.75% 0.25% 1.00%
AIM Money Market Fund 0.75% 0.25% 1.00%
AIM Municipal Bond Fund 0.75% 0.25% 1.00%
AIM Real Estate Fund 0.75% 0.25% 1.00%
AIM Short Term Bond Fund 0.75% 0.25% 1.00%
AIM Total Return Bond Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM SECTOR FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------ --- ---
AIM Energy Fund 0.75% 0.25% 1.00%
AIM Financial Services Fund 0.75% 0.25% 1.00%
AIM Gold & Precious Metals Fund 0.75% 0.25% 1.00%
AIM Leisure Fund 0.75% 0.25% 1.00%
AIM Technology Fund 0.75% 0.25% 1.00%
AIM Utilities Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM SPECIAL OPPORTUNITIES FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------ --- ---
AIM Opportunities I Fund 0.75% 0.25% 1.00%
AIM Opportunities II Fund 0.75% 0.25% 1.00%
AIM Opportunities III Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM STOCK FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------ --- ---
AIM Dynamics Fund 0.75% 0.25% 1.00%
AIM Small Company Growth Fund 0.75% 0.25% 1.00%
|
MAXIMUM
ASSET
AIM TAX-EXEMPT FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS C SHARES CHARGE FEE FEE
------ --- ---
AIM High Income Municipal Fund 0.75% 0.25% 1.00%
|
* The Distribution Fee is payable apart from the sales charge, if any, as stated in the current prospectus for the applicable Portfolio (or Class thereof)."
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: July 18, 2005
AMENDMENT NO. 7
TO THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS R SHARES)
The Amended and Restated Master Distribution Plan (the "Plan"), dated as of August 18, 2003, pursuant to Rule 12b-1, is hereby amended, effective April 29, 2005, as follows:
WHEREAS, the parties desire to amend the Plan to reflect the addition of AIM Global Real Estate Fund, AIM Moderate Growth Allocation Fund and AIM Moderately Conservative Allocation Fund and to change the name of AIM Aggressive Allocation Fund to AIM Growth Allocation Fund;
NOW THEREFORE, Schedule A to the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS R SHARES)
(DISTRIBUTION AND SERVICE FEES)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for the Class R Shares of each Portfolio designated below, a Distribution Fee and a Service Fee determined by applying the annual rate set forth below as to the Class R Shares of each Portfolio to the average daily net assets of the Class R Shares of the Portfolio for the plan year. Average daily net assets shall be computed in a manner used for the determination of the offering price of the Class R Shares of the Portfolio.
MINIMUM
ASSET
AIM EQUITY FUNDS BASED MAXIMUM MAXIMUM
---------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES 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%
|
MINIMUM
ASSET
AIM FUNDS GROUP BASED MAXIMUM MAXIMUM
--------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
------- ------- ---------
AIM Balanced Fund 0.25% 0.25% 0.50%
AIM Basic Balanced Fund 0.25% 0.25% 0.50%
AIM Mid Cap Basic Value Fund 0.25% 0.25% 0.50%
AIM Premier Equity Fund 0.25% 0.25% 0.50%
AIM Small Cap Equity Fund 0.25% 0.25% 0.50%
|
MINIMUM
ASSET
AIM GROWTH SERIES BASED MAXIMUM MAXIMUM
----------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
------- ------- ---------
AIM Basic Value Fund 0.25% 0.25% 0.50%
AIM Conservative Allocation Fund 0.25% 0.25% 0.50%
AIM Growth Allocation Fund 0.25% 0.25% 0.50%
AIM Mid Cap Core Equity Fund 0.25% 0.25% 0.50%
AIM Moderate Allocation Fund 0.25% 0.25% 0.50%
AIM Moderate Growth Allocation Fund 0.25% 0.25% 0.50%
AIM Moderately Conservative Allocation Fund 0.25% 0.25% 0.50%
AIM Small Cap Growth Fund 0.25% 0.25% 0.50%
|
MINIMUM
ASSET
AIM INTERNATIONAL MUTUAL FUNDS BASED MAXIMUM MAXIMUM
------------------------------ SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
------- ------- ---------
AIM European Growth Fund 0.25% 0.25% 0.50%
AIM International Core Equity Fund 0.25% 0.25% 0.50%
AIM International Growth Fund 0.25% 0.25% 0.50%
|
MINIMUM
ASSET
AIM INVESTMENT FUNDS BASED MAXIMUM MAXIMUM
-------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
------- ------- ---------
AIM Trimark Endeavor Fund 0.25% 0.25% 0.50%
AIM Trimark Fund 0.25% 0.25% 0.50%
AIM Trimark Small Companies Fund 0.25% 0.25% 0.50%
|
MINIMUM
ASSET
AIM INVESTMENT SECURITIES FUNDS BASED MAXIMUM MAXIMUM
------------------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
------- ------- --------
AIM Global Real Estate Fund 0.25% 0.25% 0.50%
AIM Income Fund 0.25% 0.25% 0.50%
AIM Intermediate Government Fund 0.25% 0.25% 0.50%
AIM Money Market Fund 0.25% 0.25% 0.50%
AIM Real Estate Fund 0.25% 0.25% 0.50%
AIM Short Term Bond Fund 0.25% 0.25% 0.50%
AIM Total Return Bond Fund 0.25% 0.25% 0.50%"
|
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: April 29, 2005
AMENDMENT NO. 8
TO THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS R SHARES)
The Amended and Restated Master Distribution Plan (the "Plan"), dated as of August 18, 2003, pursuant to Rule 12b-1, is hereby amended, effective July 18, 2005, as follows:
WHEREAS, the parties desire to amend the Plan to reflect the merger of AIM Balanced Fund;
NOW THEREFORE, Schedule A to the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS R SHARES)
(DISTRIBUTION AND SERVICE FEES)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for the Class R Shares of each Portfolio designated below, a Distribution Fee and a Service Fee determined by applying the annual rate set forth below as to the Class R Shares of each Portfolio to the average daily net assets of the Class R Shares of the Portfolio for the plan year. Average daily net assets shall be computed in a manner used for the determination of the offering price of the Class R Shares of the Portfolio.
MINIMUM
ASSET
AIM EQUITY FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES 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%
|
MINIMUM
ASSET
AIM FUNDS GROUP BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
-------------------------- ------ --- ---
AIM Basic Balanced Fund 0.25% 0.25% 0.50%
AIM Mid Cap Basic Value Fund 0.25% 0.25% 0.50%
AIM Premier Equity Fund 0.25% 0.25% 0.50%
AIM Small Cap Equity Fund 0.25% 0.25% 0.50%
|
MINIMUM
ASSET
AIM GROWTH SERIES BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
-------------------------- ------ --- ---
AIM Basic Value Fund 0.25% 0.25% 0.50%
AIM Conservative Allocation Fund 0.25% 0.25% 0.50%
AIM Growth Allocation Fund 0.25% 0.25% 0.50%
AIM Mid Cap Core Equity Fund 0.25% 0.25% 0.50%
AIM Moderate Allocation Fund 0.25% 0.25% 0.50%
AIM Moderate Growth Allocation Fund 0.25% 0.25% 0.50%
AIM Moderately Conservative Allocation Fund 0.25% 0.25% 0.50%
AIM Small Cap Growth Fund 0.25% 0.25% 0.50%
|
MINIMUM
ASSET
AIM INTERNATIONAL MUTUAL FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
-------------------------- ------ --- ---
AIM European Growth Fund 0.25% 0.25% 0.50%
AIM International Core Equity Fund 0.25% 0.25% 0.50%
AIM International Growth Fund 0.25% 0.25% 0.50%
|
MINIMUM
ASSET
AIM INVESTMENT FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
-------------------------- ------ --- ---
AIM Trimark Endeavor Fund 0.25% 0.25% 0.50%
AIM Trimark Fund 0.25% 0.25% 0.50%
AIM Trimark Small Companies Fund 0.25% 0.25% 0.50%
|
MINIMUM
ASSET
AIM INVESTMENT SECURITIES FUNDS BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
-------------------------- ------ --- ---
AIM Global Real Estate Fund 0.25% 0.25% 0.50%
AIM Income Fund 0.25% 0.25% 0.50%
AIM Intermediate Government Fund 0.25% 0.25% 0.50%
AIM Money Market Fund 0.25% 0.25% 0.50%
AIM Real Estate Fund 0.25% 0.25% 0.50%
AIM Short Term Bond Fund 0.25% 0.25% 0.50%
AIM Total Return Bond Fund 0.25% 0.25% 0.50%"
|
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: July 18, 2005
AMENDMENT NO. 9
TO THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS R SHARES)
The Amended and Restated Master Distribution Plan (the "Plan"), dated as of August 18, 2003, pursuant to Rule 12b-1, is hereby amended, effective October 25, 2005, as follows:
WHEREAS, the parties desire to amend the Plan to reflect the addition of AIM Diversified Dividend Fund, AIM Dynamics Fund, AIM Leisure Fund and AIM Small Company Growth Fund;
NOW THEREFORE, Schedule A to the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
THE AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS R SHARES)
(DISTRIBUTION AND SERVICE FEES)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for the Class R Shares of each Portfolio designated below, a Distribution Fee and a Service Fee determined by applying the annual rate set forth below as to the Class R Shares of each Portfolio to the average daily net assets of the Class R Shares of the Portfolio for the plan year. Average daily net assets shall be computed in a manner used for the determination of the offering price of the Class R Shares of the Portfolio.
MINIMUM
ASSET
AIM EQUITY FUNDS BASED MAXIMUM MAXIMUM
---------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES 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 Diversified Dividend 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%
|
MINIMUM
ASSET
AIM FUNDS GROUP BASED MAXIMUM MAXIMUM
--------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
------- ------- ---------
AIM Basic Balanced Fund 0.25% 0.25% 0.50%
AIM Mid Cap Basic Value Fund 0.25% 0.25% 0.50%
AIM Premier Equity Fund 0.25% 0.25% 0.50%
AIM Small Cap Equity Fund 0.25% 0.25% 0.50%
|
MINIMUM
ASSET
AIM GROWTH SERIES BASED MAXIMUM MAXIMUM
----------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
------- ------- ---------
AIM Basic Value Fund 0.25% 0.25% 0.50%
AIM Conservative Allocation Fund 0.25% 0.25% 0.50%
AIM Growth Allocation Fund 0.25% 0.25% 0.50%
AIM Mid Cap Core Equity Fund 0.25% 0.25% 0.50%
AIM Moderate Allocation Fund 0.25% 0.25% 0.50%
AIM Moderate Growth Allocation Fund 0.25% 0.25% 0.50%
AIM Moderately Conservative Allocation Fund 0.25% 0.25% 0.50%
AIM Small Cap Growth Fund 0.25% 0.25% 0.50%
|
MINIMUM
ASSET
AIM INTERNATIONAL MUTUAL FUNDS BASED MAXIMUM MAXIMUM
------------------------------ SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
------- ------- ---------
AIM European Growth Fund 0.25% 0.25% 0.50%
AIM International Core Equity Fund 0.25% 0.25% 0.50%
AIM International Growth Fund 0.25% 0.25% 0.50%
|
MINIMUM
ASSET
AIM INVESTMENT FUNDS BASED MAXIMUM MAXIMUM
-------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
------- ------- ---------
AIM Trimark Endeavor Fund 0.25% 0.25% 0.50%
AIM Trimark Fund 0.25% 0.25% 0.50%
AIM Trimark Small Companies Fund 0.25% 0.25% 0.50%
|
MINIMUM
ASSET
AIM INVESTMENT SECURITIES FUNDS BASED MAXIMUM MAXIMUM
------------------------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
------- ------- ---------
AIM Global Real Estate Fund 0.25% 0.25% 0.50%
AIM Income Fund 0.25% 0.25% 0.50%
AIM Intermediate Government Fund 0.25% 0.25% 0.50%
AIM Money Market Fund 0.25% 0.25% 0.50%
AIM Real Estate Fund 0.25% 0.25% 0.50%
AIM Short Term Bond Fund 0.25% 0.25% 0.50%
AIM Total Return Bond Fund 0.25% 0.25% 0.50%"
|
MINIMUM
ASSET
AIM SECTOR FUNDS BASED MAXIMUM MAXIMUM
---------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
------- ------- ---------
AIM Leisure Fund 0.25% 0.25% 0.50%
|
MINIMUM
ASSET
AIM STOCK FUNDS BASED MAXIMUM MAXIMUM
--------------- SALES SERVICE AGGREGATE
PORTFOLIO - CLASS R SHARES CHARGE FEE FEE
------- ------- ---------
AIM Dynamics Fund 0.25% 0.25% 0.50%
AIM Small Company Growth Fund 0.25% 0.25% 0.50%
|
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: October 25, 2005
SEVENTH 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 K Shares -- shall mean those Shares designated as Class K Shares in the Fund's organizing documents.
(k) Class P Shares -- shall mean those Shares designated as Class P Shares in the Fund's organizing documents.
(l) Class R Shares -- shall mean those Shares designated as Class R Shares in the Fund's organizing documents.
(m) Distribution Expenses -- expenses incurred in activities which are primarily intended to result in the distribution and sale of Shares as authorized in a Plan of Distribution and/or agreements relating thereto.
(n) Distribution Fee -- a fee paid to the Distributor and/or financial intermediaries for Distribution Expenses.
(o) Distributor -- A I M Distributors, Inc. or Fund Management Company, as applicable.
(p) Fund -- those investment companies advised by A I M Advisors, Inc. which have adopted this Plan.
(q) Institutional Class Shares -- shall mean those Shares designated as Institutional Class Shares in the Fund's organizing documents and representing an interest in a Portfolio distributed by A I M Distributors, Inc. that are offered for sale to institutional customers as may be approved by the Trustees from time to time and as set forth in the Prospectus.
(r) Institutional Money Market Fund Shares -- shall mean those Shares designated as Cash Management Class Shares, Corporate Class Shares, Institutional Class Shares, Personal Investment Class Shares, Private Investment Class Shares, Reserve Class Shares, Resource Class Shares and Sweep Class Shares in the Fund's organizing documents and representing an interest in a Portfolio distributed by Fund Management Company that are offered for sale to institutional customers as may be approved by the Trustees from time to time and as set forth in the Prospectus.
(s) Investor Class Shares -- shall mean those Shares designated as Investor Class Shares in the Fund's organizing documents.
(t) 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.
(u) Portfolio -- a series of the Shares of a Fund constituting a separate investment portfolio of the Fund.
(v) Prospectus -- the then currently effective prospectus and statement of additional information of a Portfolio.
(w) Service Fee -- a fee paid to the Distributor and/or financial intermediaries for the ongoing provision of personal services to Fund shareholders and/or the maintenance of shareholder accounts.
(x) Share -- a share of common stock or beneficial interest in a Fund, as applicable.
(y) Trustees -- the directors or trustees of a Fund.
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 -- Class P Shares -- The Class P Shares shall bear directly the transfer agency fees and expenses and other shareholder recordkeeping fees and expenses incurred with respect to such Class.
(c) Transfer Agency and Shareholder Recordkeeping Fees -- Institutional Class Shares -- The Institutional Class Shares shall bear directly the transfer agency fees and expenses and other shareholder recordkeeping fees and expenses incurred with respect to such Class.
(d) Transfer Agency and Shareholder Recordkeeping Fees -- All Shares except Class P Shares and Institutional Class Shares -- Each Class of Shares, except Class P Shares and Institutional Class Shares, shall bear proportionately the transfer agency fees and expenses and other shareholder recordkeeping fees and expenses incurred with respect to such Classes, based on the relative net assets attributable to each such Class.
(e) 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.
(f) 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.
(g) Waiver of Fees and Reimbursement of Expenses -- A Portfolio's adviser, underwriter or any other provider of services to the Portfolio may waive fees payable by, or reimburse expenses of, a Class, to the extent that such fees and expenses are payable, or have been paid, to such provider, and have been allocated solely to that Class as a Class expense. Such provider may also waive fees payable, or reimburse expenses paid, by all Classes in a Portfolio to the extent such fees and expenses have been allocated to such Classes in accordance with relative net assets.
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 Prospectus describing the distribution and servicing arrangements are incorporated herein by this reference.
(a) 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 Trustees and set forth in the Prospectus.
(b) 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 Trustees and set forth in the 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 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 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 Trustees and set forth in the Prospectus.
(c) 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 Trustees and set forth in the Prospectus.
(d) 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(c), (iii) subject to ongoing Service Fees and/or
Distribution Fees approved from time to time by the Trustees and set
forth in the 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 Prospectus.
Class B Shares of AIM Global Trends Fund 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 Prospectus.
Class B Shares of AIM Money Market Fund will convert to AIM Cash Reserve Shares of AIM Money Market Fund.
(e) 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(d), and (iii) subject to ongoing Service Fees and/or
Distribution Fees approved from time to time by the Trustees and set
forth in the Prospectus.
(f) Class K Shares. Class K Shares shall be (i) offered at net asset
value, (ii) subject to a CDSC for the CDSC Period set forth in
Section 5(e), and (iii) subject to on-going Service Fees and/or
Distribution Fees approved from time to time by the Trustees and set
forth in the Prospectus.
(g) Class P Shares. Class P Shares shall be (i) offered at net asset value, and (ii) subject to on-going Service Fees and/or Distribution Fees approved from time to time by the Trustees and set forth in the Prospectus.
(h) 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(f), and (iii) subject to on-going Service Fees and/or
Distribution Fees approved from time to time by the Trustees and set
forth in the Prospectus.
(i) Institutional Class Shares. Institutional Class Shares shall be (i) offered at net asset value and (ii) offered only to certain categories of institutional customers as approved from time to time by the Trustees and as set forth in the Prospectus.
(j) Institutional Money Market Fund Shares. Institutional Money Market Fund 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 Trustees and as set forth in the Prospectus, and (iii) may be subject to ongoing Service Fees and/or Distribution Fees as approved from time to time by the Trustees and set forth in the Prospectus.
(k) Investor Class Shares. Investor Class Shares shall be (i) offered at net asset value, (ii) offered only to certain categories of customers as approved from time to time by the Trustees and as set forth in the Prospectus, and (iii) may be subject to ongoing Service Fees and/or Distribution Fees as approved from time to time by the Trustees and set forth in the Prospectus.
5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that do not incur a front-end sales charge, and of certain AIM Cash Reserve Shares, Class B Shares, Class C Shares and Class R Shares as follows:
(a) AIM Cash Reserve Shares. 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 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 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 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 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 Prospectus, the relevant portions of which are incorporated herein by reference.
(e) Class K Shares. The CDSC Period for the Class K Shares that are subject to a CDSC shall be the period set forth in the Prospectus. The CDSC rate for the Class K Shares that are subject to a CDSC shall be as set forth in the Prospectus, the relevant portions of which are incorporated herein by reference.
(f) 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 Prospectus. The CDSC rate for the Class R Shares that are subject to a CDSC shall be as set forth in the Prospectus, the relevant portions of which are incorporated herein by reference.
(g) 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.
(h) Waiver. The Distributor may in its discretion waive a CDSC otherwise due upon the redemption of Shares on terms disclosed in the Prospectus and, for the Class A Shares and AIM Cash Reserve Shares, as allowed under Rule 6c-10 under the Act.
(i) 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 Prospectus.
6. Exchange Privileges. Exchanges of Shares, except for Institutional Money Market Fund Shares, shall be permitted between Funds as follows:
(a) Shares of a Portfolio generally may be exchanged for Shares of the same Class of another Portfolio or where so provided for in the Prospectus, another registered investment company distributed by A I M Distributors, Inc. subject to such exceptions and such terms and limitations as are disclosed in the Prospectus.
(b) Shares of a Portfolio generally may not be exchanged for Shares of a different Class of that Portfolio or another Portfolio or another registered investment company distributed by A I M Distributors, Inc. subject to such exceptions and such terms and limitations as are disclosed in the 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 Prospectus.
7. Service Fees and Distribution Fees. The Service Fee and Distribution Fee applicable to any Class shall be those set forth in the 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 and/or agreements relating thereto 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 Trustees 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 Trustees of a Fund, including a majority of the Trustees 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, as further amended and restated October 31, 2002, as further amended and restated effective July 21, 2003, as further amended and restated effective August 18, 2003, as further amended and restated May 12, 2004, as further amended and restated February 25, 2005, and as further amended and restated June 30, 2005.
EIGHTH 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 K Shares -- shall mean those Shares designated as Class K Shares in the Fund's organizing documents.
(k) Class P Shares -- shall mean those Shares designated as Class P Shares in the Fund's organizing documents.
(l) Class R Shares -- shall mean those Shares designated as Class R Shares in the Fund's organizing documents.
(m) Distribution Expenses -- expenses incurred in activities which are primarily intended to result in the distribution and sale of Shares as authorized in a Plan of Distribution and/or agreements relating thereto.
(n) Distribution Fee -- a fee paid to the Distributor and/or financial intermediaries for Distribution Expenses.
(o) Distributor -- A I M Distributors, Inc. or Fund Management Company, as applicable.
(p) Fund -- those investment companies advised by A I M Advisors, Inc. which have adopted this Plan.
(q) Institutional Class Shares -- shall mean those Shares designated as Institutional Class Shares in the Fund's organizing documents and representing an interest in a Portfolio distributed by A I M Distributors, Inc. that are offered for sale to institutional customers as may be approved by the Trustees from time to time and as set forth in the Prospectus.
(r) Institutional Money Market Fund Shares -- shall mean those Shares designated as Cash Management Class Shares, Corporate Class Shares, Institutional Class Shares, Personal Investment Class Shares, Private Investment Class Shares, Reserve Class Shares, Resource Class Shares and Sweep Class Shares in the Fund's organizing documents and representing an interest in a Portfolio distributed by Fund Management Company that are offered for sale to institutional customers as may be approved by the Trustees from time to time and as set forth in the Prospectus.
(s) Investor Class Shares -- shall mean those Shares designated as Investor Class Shares in the Fund's organizing documents.
(t) 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.
(u) Portfolio -- a series of the Shares of a Fund constituting a separate investment portfolio of the Fund.
(v) Prospectus -- the then currently effective prospectus and statement of additional information of a Portfolio.
(w) Service Fee -- a fee paid to the Distributor and/or financial intermediaries for the ongoing provision of personal services to Fund shareholders and/or the maintenance of shareholder accounts.
(x) Share -- a share of common stock or beneficial interest in a Fund, as applicable.
(y) Trustees -- the directors or trustees of a Fund.
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 -- Class P Shares -- The Class P Shares shall bear directly the transfer agency fees and expenses and other shareholder recordkeeping fees and expenses incurred with respect to such Class.
(c) Transfer Agency and Shareholder Recordkeeping Fees -- Institutional Class Shares -- The Institutional Class Shares shall bear directly the transfer agency fees and expenses and other shareholder recordkeeping fees and expenses incurred with respect to such Class.
(d) Transfer Agency and Shareholder Recordkeeping Fees -- All Shares except Class P Shares and Institutional Class Shares -- Each Class of Shares, except Class P Shares and Institutional Class Shares, shall bear proportionately the transfer agency fees and expenses and other shareholder recordkeeping fees and expenses incurred with respect to such Classes, based on the relative net assets attributable to each such Class.
(e) 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.
(f) 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.
(g) Waiver of Fees and Reimbursement of Expenses -- A Portfolio's adviser, underwriter or any other provider of services to the Portfolio may waive fees payable by, or reimburse expenses of, a Class, to the extent that such fees and expenses are payable, or have been paid, to such provider, and have been allocated solely to that Class as a Class expense. Such provider may also waive fees payable, or reimburse expenses paid, by all Classes in a Portfolio to the extent such fees and expenses have been allocated to such Classes in accordance with relative net assets.
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 Prospectus describing the distribution and servicing arrangements are incorporated herein by this reference.
(a) 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 Trustees and set forth in the Prospectus.
(b) 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 Trustees and set forth in the 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 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 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 Trustees and set forth in the Prospectus.
(c) 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 Trustees and set forth in the Prospectus.
(d) 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(c), (iii) subject to ongoing Service Fees and/or
Distribution Fees approved from time to time by the Trustees and set
forth in the 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 Prospectus.
Class B Shares of AIM Global Equity Fund (formerly AIM Global Trends Fund) acquired prior to June 1, 1998 which are continuously held in AIM Global Equity 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 Prospectus.
Class B Shares of AIM Money Market Fund will convert to AIM Cash Reserve Shares of AIM Money Market Fund.
(e) 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(d) if so provided in the Prospectus, and (iii) subject to
ongoing Service Fees and/or Distribution Fees approved from time to
time by the Trustees and set forth in the Prospectus.
(f) Class K Shares. Class K Shares shall be (i) offered at net asset
value, (ii) subject to a CDSC for the CDSC Period set forth in
Section 5(e), (iii) subject to on-going Service Fees and/or
Distribution Fees approved from time to time by the Trustees and set
forth in the Prospectus, and (iv) converted (the "Class K
Conversion") to Class A Shares on October 21 2005 at 5:00 p.m.
Eastern time, or such later date and time as the officers of the
Trust shall determine (the "Effective Time").
(g) Class P Shares. Class P Shares shall be (i) offered at net asset value, and (ii) subject to on-going Service Fees and/or Distribution Fees approved from time to time by the Trustees and set forth in the Prospectus.
(h) 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(f), and (iii) subject to on-going Service Fees and/or
Distribution Fees approved from time to time by the Trustees and set
forth in the Prospectus.
(i) Institutional Class Shares. Institutional Class Shares shall be (i) offered at net asset value and (ii) offered only to certain categories of institutional customers as approved from time to time by the Trustees and as set forth in the Prospectus.
(j) Institutional Money Market Fund Shares. Institutional Money Market Fund 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 Trustees and as set forth in the Prospectus, and (iii) may be subject to ongoing Service Fees and/or Distribution Fees as approved from time to time by the Trustees and set forth in the Prospectus.
(k) Investor Class Shares. Investor Class Shares shall be (i) offered at net asset value, (ii) offered only to certain categories of customers as approved from time to time by the Trustees and as set forth in the Prospectus, and (iii) may be subject to ongoing Service Fees and/or Distribution Fees as approved from time to time by the Trustees and set forth in the Prospectus.
5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that do not incur a front-end sales charge, and of certain AIM Cash Reserve Shares, Class B Shares, Class C Shares, Class K and Class R Shares as follows:
(a) AIM Cash Reserve Shares. 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 Prospectus.
(b) Class A Shares. The CDSC Period for Class A Shares that are subject to a CDSC shall be the period set forth in the Fund's Prospectus. The CDSC rate shall be as set forth in the 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 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 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 Prospectus, the relevant portions of which are incorporated herein by reference.
(e) Class K Shares. The CDSC Period for the Class K Shares that are subject to a CDSC shall be the period set forth in the Prospectus. The CDSC rate for the Class K Shares that are subject to a CDSC shall be as set forth in the Prospectus, the relevant portions of which are incorporated herein by reference.
(f) 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 Prospectus. The CDSC rate for the Class R Shares that are subject to a CDSC shall be as set forth in the Prospectus, the relevant portions of which are incorporated herein by reference.
(g) 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.
(h) Waiver. The Distributor may in its discretion waive a CDSC otherwise due upon the redemption of Shares on terms disclosed in the Prospectus and, for the Class A Shares and AIM Cash Reserve Shares, as allowed under Rule 6c-10 under the Act.
(i) CDSC Computation. The CDSC payable upon redemption of AIM Cash Reserve Shares, Class A Shares, Class B Shares, Class C Shares, Class K and Class R Shares subject to a CDSC shall be computed in the manner described in the Prospectus.
6. Exchange Privileges. Exchanges of Shares, except for Institutional Money Market Fund Shares, shall be permitted between Funds as follows:
(a) Shares of a Portfolio generally may be exchanged for Shares of the same Class of another Portfolio or where so provided for in the Prospectus, another registered investment company distributed by A I M Distributors, Inc. subject to such exceptions and such terms and limitations as are disclosed in the Prospectus.
(b) Shares of a Portfolio generally may not be exchanged for Shares of a different Class of that Portfolio or another Portfolio or another registered investment company distributed by A I M Distributors, Inc. subject to such exceptions and such terms and limitations as are disclosed in the 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 Prospectus.
7. Service Fees and Distribution Fees. The Service Fee and Distribution Fee applicable to any Class shall be those set forth in the 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 and/or agreements relating thereto 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 Trustees 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. Conversion of Class K Shares.
(a) Conversions on Basis of Relative Net Asset Value -- The Class K Conversion 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.
(b) Amendments to Plan of Distribution for Class A Shares -- If, prior to the Effective Time, 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 K Shares shall convert into Class A Shares of that Fund until the holders of Class K Shares of that Fund have also approved the proposed amendment. If the holders of such Class K Shares do not approve the proposed amendment, the Trustees 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.
10. Effective Date. This Plan shall not take effect until a majority of the Trustees of a Fund, including a majority of the Trustees 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.
11. 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 10 above.
12. 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, as further amended and restated October 31, 2002, as further amended and restated effective July 21, 2003, as further amended and restated effective August 18, 2003, as further amended and restated May 12, 2004, as further amended and restated February 25, 2005, as further amended and restated June 30, 2005 and as further amended and restated August 4, 2005.