As filed on August 22, 2005 1933 Act File No. 002-85905
1940 Act File No. 811-3826
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.___
Post-Effective Amendment No. 45 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 45 [X]
AIM SECTOR FUNDS
(Exact Name of Registrant as Specified in Charter)
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11 Greenway Plaza, Suite 100, Houston, TX 77046
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (713) 626-1919
Copies to:
Teresa A. Oxford, Esq. Martha J. Hays, Esq.
A I M Advisors, Inc. Ballard Spahr Andrews &
11 Greenway Plaza, Suite 100 Ingersoll, LLP
Houston, TX 77046 1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
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Approximate Date of Proposed Public Offering: As soon as practicable after this
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post-effective amendment becomes effective. It is proposed that this filing will
become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[X] on October 25, 2005, pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
PROSPECTUS | July 29, 2005
AIM ENERGY FUND -- INVESTOR CLASS, CLASS A, B, AND C AIM FINANCIAL SERVICES FUND -- INVESTOR CLASS, CLASS A, B, AND C
AIM GOLD & PRECIOUS METALS FUND -- INVESTOR CLASS, CLASS A, B, AND C
AIM LEISURE FUND -- INVESTOR CLASS, CLASS A, B, C, AND R AIM TECHNOLOGY FUND -- INVESTOR CLASS, CLASS A, B, AND C
AIM UTILITIES FUND -- INVESTOR CLASS, CLASS A, B, AND C
Six mutual funds designed for investors seeking capital growth through targeted investment opportunities.
Investor Class shares offered by this Prospectus are offered only to grandfathered investors. Please see the section of the Prospectus entitled "How To Buy Shares."
Class A, B, and C shares are sold primarily through financial intermediaries. Class R shares are sold to qualified retirement plans, retirement savings programs, educational savings programs, and wrap programs primarily through financial intermediaries.
TABLE OF CONTENTS
Investment Goals, Strategies, And Risks...........................2 Fund Performance..................................................4 Fee Table And Expense Example.....................................9 Disclosure of Portfolio Holdings.................................17 Investment Risks.................................................17 Principal Risks Associated With The Funds........................17 Temporary Defensive Positions....................................19 Fund Management..................................................20 Portfolio Managers...............................................21 Other Information................................................21 Dividends And Capital Gain Distributions.........................23 Financial Highlights.............................................24 Shareholder Information.........................................A-1 Choosing a Share Class........................................A-1 Excessive Short-Term Trading Activity Disclosures............A-5 Purchasing Shares.............................................A-7 Redeeming Shares..............................................A-9 Exchanging Shares............................................A-11 Pricing of Shares............................................A-14 Taxes........................................................A-16 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.
The Securities and Exchange Commission has not approved or disapproved the shares of these funds. Likewise, the Commission has not determined if this Prospectus is truthful or complete. Anyone who tells you otherwise is committing a federal crime.
AIM SECTOR FUNDS
[LOGO]
Your goals. Our solutions.(R) AIM INVESTMENTS(R)
A I M Advisors, Inc. (AIM or the advisor) is the investment advisor for AIM Energy Fund, AIM Financial Services Fund, AIM Gold & Precious Metal Fund, AIM Leisure Fund, AIM Technology Fund and AIM Utilities Fund (each, a fund and collectively the funds).
This Prospectus contains important information about the funds' Investor Class, Class A, B, C, and, if applicable, R shares. Class A, B, and C shares are sold primarily through financial intermediaries. Class R shares are sold to qualified retirement plans, retirement savings programs, educational savings programs, and wrap programs primarily through financial intermediaries. If you invest through a financial intermediary, please contact your financial intermediary or, with respect to Class R shares, your plan or program sponsor, for detailed information on suitability and transactional issues (i.e., how to purchase or sell shares, minimum investment amounts, and fees and expenses). AIM Technology Fund and AIM Utilities Fund also offers an additional class of shares through a separate Prospectus. Each of the fund's classes has varying expenses, with resulting effects on their performance. You can choose the class of shares that is best for you, based on how much you plan to invest and other relevant factors discussed in "How To Buy Shares." To obtain additional information about the other class of AIM Technology Fund's and AIM Utilities Fund's shares, contact A I M Distributors, Inc. (ADI) at 1-800-347-4246.
THIS PROSPECTUS WILL TELL YOU MORE ABOUT:
INVESTMENT GOALS & STRATEGIES [GRAPHIC]
[LOGO]POTENTIAL INVESTMENT RISKS
[GRAPHIC]
PAST PERFORMANCE
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[GRAPHIC]
[LOGO]
INVESTMENT GOALS, STRATEGIES, AND RISKS
FACTORS COMMON TO ALL THE FUNDS
FOR MORE DETAILS ABOUT The funds seek capital growth; the AIM Utilities EACH FUND'S CURRENT Fund also attempts to earn income for you. The INVESTMENTS AND MARKET funds are actively managed. They invest primarily |
OUTLOOK, PLEASE SEE THE in equity securities that the advisor believes MOST RECENT ANNUAL OR will rise in price faster than other securities, SEMIANNUAL REPORT. as well as in options and other investments whose values are based upon the values of equity securities.
Each fund normally invests at least 80% of its net assets in the equity securities and equity-related instru-ments of companies doing business in the economic sector described by its name. At any given time, 20% of each fund's assets is not required to be invested in the sector. To determine whether a potential investment is truly doing business in a particular sector, a company must meet at least one of the follow-ing tests:
. At least 50% of its gross income or its net sales must come from
activities in the sector;
. At least 50% of its assets must be devoted to producing revenues from
the sector; or
. Based on other available information, we determine that its primary
business is within the sector.
AIM Energy Fund, AIM Financial Services Fund, AIM Leisure Fund, AIM Technology Fund and AIM Utilities Fund may invest up to 25% of their respective assets in securities of non-U.S. issuers. Securities of Canadian issuers and American Depositary Receipts are not subject to this 25% limitation. Foreign securities risks are potentially greater for the AIM Gold & Precious Metals Fund, since that fund has the ability to invest more than 25% of its assets in the securities of non-U.S. issuers.
The advisor uses a research oriented "bottom-up" investment approach to create each fund's investment portfolio, focusing on company fundamentals and growth prospects when selecting securities. In general, the funds emphasize companies that the advisor believes are strongly managed and will generate above-average long-term capital appreciation.
Growth investing may be more volatile than other investment styles because growth stocks are more sensitive to investor perceptions of an issuing company's growth potential. Growth-oriented funds typically will underperform value-oriented funds when investor sentiment favors the value investing style. Value investing seeks securities, particularly stocks, that are currently undervalued by the market -- companies that are performing well, or have solid management and products, but whose stock prices do not reflect that value. Through our value process, we seek to provide reasonably consistent returns over a variety of market cycles. Value-oriented funds typically will underperform growth-oriented funds when investor sentiment favors the growth investing style.
As sector funds, each fund is concentrated in a comparatively narrow segment of the economy. This means a fund's investment concentration in a sector is higher than most mutual funds and the broad securities markets. Consequently, the funds tend to be more volatile than other mutual funds, and the value of their portfolio investments and consequently the value of an investment in a fund tend to go up and down more rapidly.
The funds are subject to other principal risks, as applicable, such as market, foreign securities, liquidity, derivatives, counterparty, lack of timely information, and portfolio turnover risks. These risks are described and discussed later in the Prospectus under the headings "Investment Risks" and "Principal Risks Associated With The Funds." An investment in a fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. As with any mutual fund, there is always a risk that you may lose money on your investment in a fund.
The funds are concentrated in these sectors:
[GRAPHIC]
AIM ENERGY FUND -- INVESTOR CLASS, CLASS A, B, AND C
The fund normally invests at least 80% of its net assets in the equity securities and equity-related instruments of companies within the energy sector. These companies include, but are not limited to, oil companies, oil and gas exploration companies, natural gas pipeline companies, refinery companies, energy conservation companies, coal, alternative energy companies, and innovative energy technology companies.
Generally, we prefer to keep the fund's investments divided among the four main energy subsectors: major oil companies, energy services, oil and gas exploration/production companies, and natural gas pipeline companies. We adjust portfolio weightings depending on current economic conditions. Although individual security selection drives the performance of the fund, short-term fluctuations in commodity prices may influence fund returns and increase price fluctuations in the fund's shares. The businesses in which we invest may be adversely affected by foreign government, federal, or state regulations on energy production, distribution, and sale.
[GRAPHIC]
AIM FINANCIAL SERVICES FUND -- INVESTOR CLASS, CLASS A, B, AND C
The fund normally invests at least 80% of its net assets in the equity securities and equity-related instruments of companies involved in the financial services sector. These companies include, but are not limited to, banks (regional and money-centers), insurance companies (life, property and casualty, and multiline), investment and miscellaneous industries (asset managers, brokerage firms, and government-sponsored agencies), and suppliers to financial services companies.
We place a greater emphasis on companies that are increasing their revenue streams along with their earnings. We seek companies that we believe can grow their revenues and earnings in a variety of interest rate environments -- although securities prices of financial services companies generally are interest rate sensitive. We seek companies with successful sales and marketing cultures and that leverage technologies in their operations and distribution. We adjust portfolio weightings depending on current economic conditions and relative valuations of securities.
This sector generally is subject to extensive governmental regulation, which may change frequently. In addition, the profitability of businesses in these industries depends heavily upon the availability and cost of money, and may fluctuate significantly in response to changes in interest rates, as well as changes in general economic conditions. From time to time, severe competition may also affect the profitability of these industries.
[GRAPHIC]
AIM GOLD & PRECIOUS METALS FUND -- INVESTOR CLASS, CLASS A, B, AND C
The fund normally invests at least 80% of its net assets in the equity securities and equity-related instruments of companies involved in exploring for, mining, processing, or dealing and investing in gold, gold bullion, and other precious metals, such as silver, platinum, and palladium, as well as diamonds. The securities of these companies are highly dependent on the price of precious metals at any given time.
Fluctuations in the price of gold directly -- and often dramatically -- affect the profitability and market value of companies in this sector. Changes in political or economic climate for the two largest gold producers -- South Africa and the former Soviet Union -- may have a direct impact on the price of gold worldwide. Up to 10% of the fund's assets at the time of purchase may be invested in gold bullion. The fund's investments directly in gold bullion will earn no income return; appreciation in the market price of gold is the sole manner in which the fund can realize gains on bullion investments. The fund may have higher storage and custody costs in connection with its ownership of bullion than those associated with the purchase, holding and sale of more traditional types of investments.
The fund primarily focuses on those gold companies that have the ability to increase production capacity at low costs, while having the potential to make major gold discoveries around the world. Additionally, we try to identify companies that leverage increasing gold prices; that is, companies that do not hedge gold prices on the market. While the fund may take positions in mid- to small-sized exploration companies that may be more volatile than investments in large, more established companies, it will primarily focus on major gold stocks that are leaders in their fields. Up to 100% of the fund's assets may be invested in foreign companies.
[GRAPHIC]
AIM LEISURE FUND -- INVESTOR CLASS, CLASS A, B, C, AND R
The fund normally invests at least 80% of its net assets in the equity securities and equity-related instruments of companies engaged in the design, production, and distribution of products related to the leisure activities. These industries include, but are not limited to, hotels/gaming, publishing, advertising, beverages, audio/video, broadcasting-radio/TV, cable & satellite operators, cable & satellite programmers, motion pictures & TV, recreation services/entertainment, retail, and toys.
We seek firms that can grow their businesses regardless of the economic environment. The advisor attempts to keep the portfolio well diversified across the leisure sector, adjusting portfolio weightings depending on prevailing economic conditions and relative valuations of securities. This sector depends on consumer discretionary spending, which generally falls during economic downturns. Securities of gambling casinos often are subject to high price volatility and are considered speculative. Video and electronic games are subject to risks of rapid obsolescence.
[GRAPHIC]
AIM TECHNOLOGY FUND -- INVESTOR CLASS, CLASS A, B, AND C
The fund normally invests at least 80% of its net assets in the equity securities and equity-related instruments of companies engaged in technology-related industries. These include, but are not limited to, various applied technologies, hardware, software, semiconductors, telecommunications equipment and services, and service-related companies in information technology. Many of these products and services are subject to rapid obsolescence, which may lower the market value of the securities of the companies in this sector.
A core portion of the fund's portfolio is invested in market-leading technology companies among various subsectors in the technology universe that we believe will maintain or improve their market share regardless of overall economic conditions. These companies are leaders in their field and are believed to have a strategic advantage over many of their competitors. The remainder of the fund's portfolio consists of faster-growing, more volatile technology companies that the advisor believes to be emerging leaders in their fields. The market prices of these companies tend to rise and fall more rapidly than those of larger, more established companies.
[GRAPHIC]
AIM UTILITIES FUND -- INVESTOR CLASS, CLASS A, B, AND C
The fund normally invests at least 80% of its net assets in the equity securities and equity-related instruments of companies engaged in utilities-related industries. These include, but are not limited to, companies that produce, generate, transmit, or distribute natural gas or electricity, as well as companies that provide telecommunications services, including local, long distance and wireless.
Governmental regulation, difficulties in obtaining adequate financing and investment return, environmental issues, prices of fuel for generation of electricity, availability of natural gas, risks associated with power marketing and trading, and risks associated with nuclear power facilities may adversely affect the market value of the fund's holdings. The recent trend towards deregulation in the utility industries presents special risks. Some companies may be faced with increased competition and may become less profitable.
Normally, the advisor seeks to keep the portfolio divided among the electric utilities, natural gas, and telecommunications industries. Weightings within the various industry segments are continually monitored, and we adjust the portfolio weightings depending on the prevailing economic conditions.
[GRAPHIC]
FUND PERFORMANCE
Performance information in the bar charts below is that of the funds' Investor Class shares, which have the longest operating history of the funds' classes. Information included in the table is that of Investor Class, Class A, B and C shares, and, if applicable, Class R shares. Investor Class and Class A, B, C, and R share returns would be similar because all classes of shares invest in the same portfolio of securities. The returns of the classes would differ, however, to the extent of differing levels of expenses or
sales loads. In this regard, the returns reflected in the bar charts reflect only the applicable total expenses of the Investor Class shares. If the effect of the other classes' total expenses were reflected, the returns would be lower than those shown because the other classes have higher total expenses.
The bar charts below show the funds' Investor Class shares actual yearly performance (commonly known as their "total return") for the years ended December 31 over the past decade or since inception. The returns in the bar charts do not reflect a 12b-1 fee in excess of 0.25% or sales loads; if they did, the total returns shown would be lower. The table below shows the pre-tax and after-tax average annual total returns of Investor Class shares and pre-tax average annual total returns for Class A, B and C shares for various periods ended December 31, 2004. The after-tax returns are shown only for the Investor Class shares. After-tax returns for other classes of shares offered in this Prospectus will vary.
After-tax returns are provided on a pre-redemption and post-redemption basis. Pre-redemption returns assume you continue to hold your shares and pay taxes on fund distributions (i.e., dividends and capital gains) but do not reflect taxes that may be incurred upon selling or exchanging shares. Post-redemption returns assume payment of taxes on fund distributions and also that you close your account and pay remaining federal taxes. After-tax returns are calculated using the highest individual federal marginal income tax rates in effect at the time the distribution is paid. State and local taxes are not considered. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. For investors holding their shares in tax-deferred arrangements such as 401(k) plans or individual retirement accounts, the after-tax returns shown are not relevant.
The information in the bar charts illustrates the variability of each fund's total return by showing changes in the funds' performance year to year. The information in the tables illustrates the variability of each fund's Investor Class, Class A, Class B, Class C, and Class R shares, as applicable, total return compared to a broad-based securities market index, a style specific index and/or a peer group index. The indices may not reflect payment of fees, expenses or taxes. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. Remember, past performance (before and after taxes) does not indicate how a fund will perform in the future.
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 ------ ------ ------ -------- ------ ------ -------- ------- -------- -------- 19.80% 38.84% 19.09% (27.83%) 41.88% 58.17% (16.81%) (4.32%) 22.56% 36.62% |
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 ------ ------ ------ -------- ------ ------ -------- ------- ------- ------- 39.81% 30.29% 44.79% 13.45% 0.73% 26.69% (10.17%) (15.56%) 29.50% 8.54% |
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 ------ ------ ------ -------- ------ -------- -------- ------- ------ ------ 12.72% 40.64% (55.50%) (22.54%) (8.99%) (12.98%) 17.12% 59.65% 47.38% (4.89%) |
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 ------ ------ ------ ------ ------ ----- ------ ------- -------- -------- 15.79% 9.08% 26.46% 29.78% 65.59% (7.97%) 4.10% (15.41%) 30.31% 13.60% |
Best Calendar Qtr. 12/31/99 25.59%
Worst Calendar Qtr. 9/30/01 (24.06%)
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 --- --- --- --- --- --- --- --- --- --- 45.80% 21.75% 8.84% 30.12% 144.94% (22.77%) (45.51%) (47.22%) 43.61% 3.37% |
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 ----- ------ ------ ------ ------ ------ ------ ----- ------ ------- 25.26% 12.75% 24.38% 24.30% 19.88% 4.14% (33.98%) (22.29%) 17.64% 25.33% |
/1/ Returns before taxes for Investor Class shares of AIM Energy Fund, AIM Financial Services Fund, AIM Gold & Precious Metals Fund, AIM Leisure Fund, AIM Technology Fund and AIM Utilities Fund year-to-date as of the calendar quarter ended September 30, 2005 were %, %, %, %, % and %, respectively.
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AVERAGE ANNUAL TOTAL RETURN/1,2/
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(for the periods 10 YEARS
ended December 31, 2004) 1 YEAR 5 YEARS OR SINCE INCEPTION
AIM ENERGY FUND
Investor Class
Return Before Taxes 36.62% 16.09% 15.64%
Return After Taxes on Distributions 36.62% 15.71% 14.14%
Return After Taxes on Distributions and Sale of Fund
Shares 23.80% 14.00% 13.04%
Class A
Return Before Taxes 28.93% N/A 12.04%/21/
Class B
Return Before Taxes 30.58% N/A 12.68%/21/
Class C
Return Before Taxes 34.58% N/A 15.72%/3/
S&P 500 Index/4,5/ 10.87% (2.30%) 12.07%
Dow Jones U.S. Energy Index/6/ 32.43% 10.00% 14.13%
Lipper Natural Resources Fund Index/7/ 35.25% 12.34% 12.91%
AIM FINANCIAL SERVICES FUND
Investor Class
Return After Taxes 8.54% 6.20% 15.07%
Return After Taxes on Distributions 7.12% 5.35% 12.96%
Return After Taxes on Distributions and Sale of Fund
Shares 7.39% 5.08% 12.37%
Class A
Return Before Taxes 2.46% N/A 2.94%/21/
Class B
Return Before Taxes 2.80% N/A 3.55%/21/
Class C
Return Before Taxes 6.66% N/A 8.09%/3/
S&P 500 Index/4,8/ 10.87% (2.30%) 12.07%
S&P 500 Financials Index/9/ 10.89% 7.26% 17.65%
Lipper Financial Services Fund Index/10/ 13.96% 9.35% 15.87%
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AVERAGE ANNUAL TOTAL RETURN/1,2/
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(for the periods 10 YEARS
ended December 31, 2004) 1 YEAR 5 YEARS OR SINCE INCEPTION
AIM GOLD & PRECIOUS METALS FUND
Investor Class
Return Before Taxes (4.89%) 17.93% 1.27%
Return Before Taxes on Distributions (5.21%) 17.34% (0.22%)
Return After Taxes on Distributions and Sale of Fund
Shares (3.13%) 15.48% 0.28%
Class A
Return Before Taxes (10.14%) N/A 17.70%/21/
Class B
Return Before Taxes (10.51%) N/A 19.07%/21/
Class C
Return Before Taxes (6.67%) N/A 18.89%/3/
S&P 500 Index/4,11/ 10.87% (2.30%) 12.07%
Philadelphia Gold & Silver Index/12/ (8.72%) 7.89% (0.95%)
Lipper Gold Fund Index/13/ (6.16%) 18.47% 1.82%
AIM LEISURE FUND
Investor Class
Return Before Taxes 13.60% 3.71% 15.20%
Return After Taxes on Distributions 13.43% 2.78% 13.38%
Return After Taxes on Distributions and Sale of Fund
Shares 8.97% 2.72% 12.55%
Class A
Return Before Taxes 7.24% N/A 5.00%/21/
Class B
Return Before Taxes 7.81% N/A 5.46%/21/
Class C
Return Before Taxes 11.70% N/A 3.89%/3/
Class R/15/
Return Before Taxes N/A N/A N/A
S&P 500 Index/4/ 10.87% (2.30%) 12.07%
AIM TECHNOLOGY FUND
Investor Class
Return Before Taxes 3.37% (19.95%) 7.31%
Return After Taxes on Distributions 3.37% (20.15%) 5.08%
Return After Taxes on Distributions and Sale of Fund
Shares 2.19% (15.56%) 5.24%
Class A
Return Before Taxes (2.24%) N/A (7.83%)/21/
Class B
Return Before Taxes (2.18%) N/A (7.70%)/21/
Class C
Return Before Taxes 1.82% N/A (23.68%)/3/
S&P 500 Index/4,16/ 10.87% (2.30%) 12.07%
Goldman Sachs Technology Composite Index/17/ 2.57% (16.10%) N/A
Lipper Science & Technology Fund Index/18/ 4.11% (15.92%) 8.72%
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AVERAGE ANNUAL TOTAL RETURN/1,2/
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(for the periods 10 YEARS
ended December 31, 2004) 1 YEAR 5 YEARS OR SINCE INCEPTION
AIM UTILITIES FUND
Investor Class
Return Before Taxes 25.33% (4.66%) 7.51%
Return After Taxes on Distributions 24.81% (5.40%) 6.03%
Return After Taxes on Distributions and Sale of Fund
Shares 17.03% (4.19%) 5.80%
Class A
Return Before Taxes 18.34% N/A 5.26%/21/
Class B
Return Before Taxes 19.42% N/A 5.72%/21/
Class C
Return Before Taxes 23.43% N/A (7.60%)/3/
S&P 500/4,19/ 10.87% (2.30%) 12.07%
Lipper Utility Fund Index/20/ 23.90% (0.11%) 8.95%
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/1/ Total return figures include reinvested dividends and capital gain
distributions and the effect of each class' expenses.
/2/ The total returns are for those classes of shares with a full calendar year
of performance. The effect of each classes' total expenses, including 12b-1
fees, front-end sales charge for Class A, and CDSC for Class B are
reflected.
/3/ Since inception of Class C shares on February 14, 2000.
/4/ The Standard & Poor's 500 Index measures the performance of the 500 most
widely held common stocks and is considered one of the best indicators of
U.S. stock market performance.
/5/ The fund has also included the Dow Jones U.S. Energy Index, which the fund
believes more closely reflects the performance of the securities in which
the fund invests. In addition, the Lipper Natural Resources Fund Index
(which may or may not include the fund) is included for comparison to a
peer group.
/6/ The Dow Jones U.S. Energy Index measures the performance of energy
companies within the United States. The index maintains an approximate
weightings of 95% in U.S. coal, oil and drilling and pipeline companies.
/7/ The Lipper Natural Resources Fund Index is an equally weighted
representation of the 10 largest funds within the Lipper Natural Resources
category. These funds invest at least 65% of their equity commitment in
natural resource stocks.
/8/ The fund has also included the S&P 500 Financials Index, which the fund
believes more closely reflects the performance of the securities in which
the fund invests. In addition, the Lipper Financial Services Fund Index
(which may or may not include the fund) is included for comparison to a
peer group.
/9/ The S&P 500 Financials Index is a market capitalization weighted index of
companies involved in activities such as banking, consumer finance,
investment banking and brokerage, asset management, insurance and
investment, and real estate, including REITs.
/10/The Lipper Financial Services Fund Index is an equally weighted
representation of the 30 largest funds within the Lipper Financial Services
category. These funds invest at least 65% of their portfolios in equity
securities of companies engaged in providing financial services.
/11/The fund has also included the Philadelphia Gold & Silver Index, which the
fund believes more closely reflects the performance of the securities in
which the fund invests. In addition, the Lipper Gold Fund Index (which may
or may not include the fund) is included for comparison to a peer group.
/12/The Philadelphia Gold & Silver Index is a capitalization weighted index on
the Philadelphia Stock Exchange that includes the leading companies involved
in the mining of gold and silver. Index return is price only and does not
reflect the reinvestment of dividends.
/13/The Lipper Gold Fund Index is an equally weighted representation of the 10
largest funds in the Lipper Gold Category. These funds invest primarily in
shares of gold mines, gold-oriented mining finance houses, gold coins or
Bullion.
/14/Since inception of Class K shares on December 14, 2001.
/15/The inception date of the funds Class R shares is October 25, 2005.
/16/The fund has also included the Goldman Sachs Technology Composite Index,
which the fund believes more closely reflects the performance of the
securities in which the fund invests. In addition, the Lipper Science &
Technology Fund Index (which may or may not include the fund) is included
for comparison to a peer group.
/17/The Goldman Sachs Technology Composite Index is a modified capitalization
weighted index currently composed of 178 companies involved in the
technology industry. The index is rebalanced semiannually and becomes
effective after the close of business on expiration Friday, or the third
Friday of January and July.
/18/The Lipper Science & Technology Fund Index is an equally weighted
representation of the 30 largest funds that make up the Lipper Science &
Technology category. These funds invest more than 65% of their portfolios in
science and technology stocks.
/19/The fund has also included the Lipper Utility Fund Index (which may or may
not include the fund) for comparison to a peer group.
/20/The Lipper Utility Fund Index is an equally weighted representation of the
10 largest funds in the Lipper Utility category. These funds invest at least
65% of their equity portfolios in utility shares.
/21/Since inception of Class A or Class B shares on March 28, 2002.
FEE TABLE AND EXPENSE EXAMPLE
This table describes the fees and expenses that you may pay if you buy and hold Investor Class, Class A, Class B, Class C, or, if applicable, Class R shares of the funds. If you invest in the funds through a financial intermediary, you may be charged a commission or transaction fee by the financial intermediary for purchases and sales of fund shares.
SHAREHOLDER FEES PAID DIRECTLY FROM YOUR ACCOUNT
Investor
Class Class A Class B Class C Class R
Maximum Front-End Sales Charge on purchases as a
percentage of offering price None 5.50% None None None
Maximum Contingent Deferred Sales Charge (CDSC)
as a percentage of the total original cost or current
market value of the shares None None/1/ 5.00%/2/ 1.00%/2/ None/1/
Maximum Sales Charge on reinvested dividends/
distributions None None None None None
ANNUAL FUND OPERATING EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS/3/
Investor
AIM ENERGY FUND Class Class A Class B Class C
Management Fees 0.73% 0.73% 0.73% 0.73%
Distribution and Service (12b-1) Fees/4,5/ 0.25% 0.25% 1.00% 1.00%
Other Expenses 0.40% 0.40% 0.40% 0.40%
----- ------- -------- --------
Total Annual Fund Operating Expenses/6,7/ 1.38% 1.38% 2.13% 2.13%
===== ======= ======== ========
Investor
AIM FINANCIAL SERVICES FUND Class Class A Class B Class C
Management Fees 0.66% 0.66% 0.66% 0.66%
Distribution and Service (12b-1) Fees/4,5/ 0.25% 0.25% 1.00% 1.00%
Other Expenses 0.38% 0.38% 0.38% 0.38%
----- ------- -------- --------
Total Annual Fund Operating Expenses/6,8/ 1.29% 1.29% 2.04% 2.04%
===== ======= ======== ========
Investor
AIM GOLD & PRECIOUS METALS FUND Class Class A Class B Class C
Management Fees 0.75% 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees/4,5/ 0.25% 0.25% 1.00% 1.00%
Other Expenses 0.61% 0.61% 0.61% 0.61%
----- ------- -------- --------
Total Annual Fund Operating Expenses/6,9/ 1.61% 1.61% 2.36% 2.36%
===== ======= ======== ========
Investor
AIM LEISURE FUND Class Class A Class B Class C Class R
Management Fees 0.67% 0.67% 0.67% 0.67% 0.67%
Distribution and Service (12b-1) Fees/4,5/ 0.25% 0.25% 1.00% 1.00% 0.50%
Other Expenses 0.41% 0.41% 0.41% 0.41% 0.41%
----- ------- -------- -------- -------
Total Annual Fund Operating Expenses/6,10/ 1.33% 1.33% 2.08% 2.08% 1.58%
===== ======= ======== ======== =======
Investor
AIM TECHNOLOGY FUND Class Class A Class B Class C
Management Fees 0.61% 0.61% 0.61% 0.61%
Distribution and Service (12b-1) Fees/4,5/ 0.25% 0.25% 1.00% 1.00%
Other Expenses 0.72% 0.72% 0.72% 0.72%
----- ------- -------- --------
Total Annual Fund Operating Expenses/11/ 1.58% 1.58% 2.33% 2.33%
----- ------- -------- --------
Fee Waiver/6/ 0.01% 0.01% 0.01% 0.01%
Net Annual Fund Operating Expenses 1.57% 1.57% 2.32% 2.32%
===== ======= ======== ========
|
Investor
AIM UTILITIES FUND Class Class A Class B Class C
Management Fees 0.75% 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees/4/ 0.25% 0.25% 1.00% 1.00%
Other Expenses 0.46% 0.46% 0.46% 0.46%
----- ----- ----- -----
Total Annual Fund Operating Expenses/6,12,13/ 1.46% 1.46% 2.21% 2.21%
===== ===== ===== =====
|
/1/ If you buy $1,000,000 or more of Class A shares and redeem those shares within eighteen months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption. For qualified plans investing in Class R shares, you may pay a CDSC of 0.75% on your Class R shares if the distributor paid a concession to the dealer of record and if the plan is redeemed within twelve months from initial deposit in the plan's account.
/2/ A 5% and 1% CDSC may be charged on Class B and Class C shares,
respectively. Please see the section entitled "How To Buy Shares."
/3/ There is no guarantee that actual expenses will be the same as those shown
in the table.
/4/ Because each class pays a 12b-1 distribution and service fee which is
based upon each class's assets, if you own shares of a fund for a certain
period of time, you may pay more than the economic equivalent of the
maximum front-end sales charge permitted for mutual funds by the National
Association of Securities Dealers, Inc.
/5/ The Board of Trustees has approved a permanent reduction of the Rule 12b-1
fees applicable to Class A shares to 0.25% effective July 1, 2005.
Distribution and/or Service (12b-1) Fees reflect this agreement.
/6/ The fund's advisor 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) for AIM Energy Fund,
AIM Financial Services Fund, AIM Gold & Precious Metals Fund, AIM Leisure
Fund and AIM Utilities Fund to 1.90%, 1.90%, 2.65%, 2.65% and 2.15% of
average daily net assets on Investor Class, Class A, Class B, Class C and
Class R shares, respectively and for AIM Technology Fund to 1.55%, 1.55%,
2.30% and 2.30% of average daily net assets on Investor Class, Class A,
Class B and Class C shares, respectively. 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
Operating Expense to exceed the caps stated above: (i) interest; (ii)
taxes; (iii) dividend expenses 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 (as defined herein) described more fully below,
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 March 31, 2006 for AIM
Energy Fund, AIM Financial Services Fund, AIM Gold & Precious Metals Fund,
AIM Leisure Fund and AIM Utilities Fund and June 30, 2006 for AIM
Technology Fund.
/7/ At the request of the Board of Trustees, AMVESCAP (as defined herein) has
agreed to reimburse the fund for expenses related to market timing
matters. Total Annual Fund Operating Expenses restated for the item in
Note 5 above and net of this arrangement were 1.37%, 1.37%, 2.12% and
2.12% for Investor Class, Class A, Class B and Class C shares,
respectively, for the year ended March 31, 2005.
/8/ At the request of the Board of Trustees, AMVESCAP (as defined herein) has
agreed to reimburse the fund for expenses related to market timing
matters. Total Annual Fund Operating Expenses restated for the item in
Note 5 above and net of this arrangement were 1.28%, 1.28%, 2.03% and
2.03% for Investor Class, Class A, Class B and Class C shares,
respectively, for the year ended March 31, 2005.
/9/ At the request of the Board of Trustees, AMVESCAP (as defined herein) has agreed to reimburse the fund for expenses related to market timing matters. Total Annual Fund Operating Expenses restated for the item in Note 5 above and net of this arrangement were 1.59%, 1.59%, 2.34% and 2.34% for Investor Class, Class A, Class B and Class C shares, respectively, for the year ended March 31, 2005.
/10/At the request of the Board of Trustees, AMVESCAP (as defined herein) has
agreed to reimburse the fund for expenses related to market timing
matters. Total Annual Fund Operating Expenses restated for the item in
Note 5 above and net of this arrangement were 1.32%, 1.32%, 2.07% and
2.07% for Investor Class, Class A, Class B and Class C shares,
respectively, for the year ended March 31, 2005.
/11/At the request of the Board of Trustees, AMVESCAP (as defined herein) has
agreed to reimburse the fund for expenses related to market timing
matters. Total Annual Fund Operating Expenses restated for the items in
Note 5 and Note 6 above and net of this arrangement were 1.55%, 1.55%,
2.30% and 2.30% for Investor Class, Class A, Class B and Class C shares,
respectively, for the year ended March 31, 2005.
/12/The fund's advisory has voluntarily agreed to waive advisory fees and/or
reimburse expenses to the extent necessary to limit Total Annual Fund
Operating Expenses (excluding certain items discussed above) for AIM
Utilities Fund's Investor Class, Class A, Class B and Class C shares to
1.30%, 1.30%, 2.05% and 2.05%, respectively. The expense limitation
agreement may be modified or discontinued upon consultation with the Board
of Trustees without further notice to investors.
/13/At the request of the Board of Trustees, AMVESCAP (as defined herein) has
agreed to reimburse the fund for expenses related to market timing
matters. Total Annual Fund Operating Expenses restated for the item in
Note 12 and net of this arrangement were 1.30%, 1.30%, 2.05% and 2.05% for
Investor Class, Class A, Class B and Class C shares, respectively, for the
year ended March 31, 2005.
If a financial institution is managing your account, you may also be charged a transaction or other fee by such financial institution.
As a result of 12b-1 fees long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
The Example is intended to help you compare the cost of investing in the Investor Class, Class A, Class B, Class C, and, if applicable, Class R shares of the funds to the cost of investing in other mutual funds.
The Example assumes that you invested $10,000 in Investor Class, Class A, Class B, Class C, or Class R shares of a fund for the time periods indicated. Within each Example, there is an assumption that you redeem all of your shares at the end of those periods. The Example also assumes that your investment had a hypothetical 5% return each year, that a fund's Investor Class, Class A, Class B, Class C, and Class R shares' operating expenses remain the same and includes the effect of any contractual fee and/or expense reimbursement, if any. To the extent fees are waived and/or expenses are reimbursed voluntarily, your expenses will be lower. Although the actual costs and performance of a fund's Investor Class, Class A, Class B, Class C, and Class R shares may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
AIM ENERGY FUND
Investor Class shares $141 $437 $755 $1,657
Class A shares/1/ $683 $963 $1,264 $2,116
Class B shares:
Assuming complete redemption at end of period/1/ $716 $967 $1,344 $2,271/2/
Assuming no redemption $216 $667 $1,144 $2,271/2/
Class C shares:
Assuming complete redemption at end of period/1/ $316 $667 $1,144 $2,462
Assuming no redemption $216 $667 $1,144 $2,462
AIM FINANCIAL SERVICES FUND
Investor Class shares $131 $409 $708 $1,556
Class A shares/1/ $674 $936 $1,219 $2,021
Class B shares:
Assuming complete redemption at end of period/1/ $707 $940 $1,298 $2,176/2/
Assuming no redemption $207 $640 $1,098 $2,176/2/
Class C shares:
Assuming complete redemption at end of period/1/ $307 $640 $1,098 $2,369
Assuming no redemption $207 $640 $1,098 $2,369
AIM GOLD & PRECIOUS METALS FUND
Investor Class shares $164 $508 $876 $1,911
Class A shares/1/ $705 $1,030 $1,378 $2,356
Class B shares:
Assuming complete redemption at end of period/1/ $739 $1,036 $1,460 $2,510/2/
Assuming no redemption $239 $736 $1,260 $2,510/2/
Class C shares:
Assuming complete redemption at end of period/1/ $339 $736 $1,260 $2,696
Assuming no redemption $239 $736 $1,260 $2,696
AIM LEISURE FUND
Investor Class shares $135 $421 $729 $1,601
Class A shares/1/ $678 $948 $1,239 $2,063
Class B shares:
Assuming complete redemption at end of period/1/ $711 $952 $1,319 $2,219/2/
Assuming no redemption $211 $652 $1,119 $2,219/2/
Class C shares:
Assuming complete redemption at end of period/1/ $311 $652 $1,119 $2,410
Assuming no redemption $211 $652 $1,119 $2,410
Class R shares $161 $499 $860 $1,878
|
1 YEAR 3 YEARS 5 YEARS 10 YEARS
AIM TECHNOLOGY FUND
Investor Class shares $160 $498 $859 $1,877
Class A shares/1/ $701 $1,020 $1,362 $2,324
Class B shares:
Assuming complete redemption at end of period/1/ $735 $1,026 $1,444 $2,478/2/
Assuming no redemption $235 $726 $1,244 $2,478/2/
Class C shares:
Assuming complete redemption at end of period/1/ $335 $726 $1,244 $2,665
Assuming no redemption $235 $726 $1,244 $2,665
AIM UTILITIES FUND
Investor Class shares $149 $462 $797 $1,746
Class A shares/1/ $690 $986 $1,304 $2,200
Class B shares:
Assuming complete redemption at end of period/1/ $724 $991 $1,385 $2,355/2/
Assuming no redemption $224 $691 $1,185 $2,355/2/
Class C shares:
Assuming complete redemption at end of period/1/ $324 $691 $1,185 $2,544
Assuming no redemption $224 $691 $1,185 $2,544
|
/1/ Based on initial sales charge for Class A shares at the beginning of each
period shown and CDSC charges for Class B and C shares based on redemption
at the end of each period shown. Please see "Choosing a Share Class."
/2/ Assumes conversion of Class B to Class A at the end of the eighth year.
Please see "Choosing a Share Class."
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 the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. Because the 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 the fund's fees and expenses on your investment. Assuming a hypothetical investment of $10,000 in each class 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, 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 ENERGY FUND INVESTOR CLASS -- ANNUAL EXPENSE RATIO 1.38% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 3.62% 7.37% 11.26% 15.29% 19.46% 23.78% 28.26% 32.91% 37.72% 42.70% End of Year Balance $10,362.00 $10,737.10 $11,125.79 $11,528.54 $11,945.87 $12,378.31 $12,826.41 $13,290.73 $13,771.85 $14,270.39 Estimated Annual Expenses $140.50 $145.58 $150.85 $156.31 $161.97 $167.84 $173.91 $180.21 $186.73 $193.49 --------------------------------------------------------------------------------------------------------------------------------- |
CLASS A -- ANNUAL EXPENSE RATIO 1.38% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 3.62% 7.37% 11.26% 15.29% 19.46% 23.78% 28.26% 32.91% 37.72% 42.70% End of Year Balance $10,362.00 $10,737.10 $11,125.79 $11,528.54 $11,945.87 $12,378.31 $12,826.41 $13,290.73 $13,771.85 $14,270.39 Estimated Annual Expenses $140.50 $145.58 $150.85 $156.31 $161.97 $167.84 $173.91 $180.21 $186.73 $193.49 --------------------------------------------------------------------------------------------------------------------------------- CLASS B -- ANNUAL EXPENSE RATIO 2.13% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 2.87% 5.82% 8.86% 11.98% 15.20% 18.50% 21.90% 25.40% 29.94% 34.65% End of Year Balance $10,278.00 $10,582.24 $10,885.95 $11,198.37 $11,519.77 $11,850.38 $12,190.49 $12,540.36 $12,994.32 $13,464.71 Estimated Annual Expenses $216.06 $222.26 $228.64 $235.20 $241.95 $248.89 $256.04 $263.38 $176.19 $182.57 --------------------------------------------------------------------------------------------------------------------------------- CLASS C -- ANNUAL EXPENSE RATIO 2.13% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 2.87% 5.82% 8.86% 11.98% 15.20% 18.50% 21.90% 25.40% 29.00% 32.71% End of Year Balance $10,287.00 $10,582.24 $10,885.95 $11,198.37 $11,519.77 $11,850.38 $12,190.49 $12,540.36 $12,900.27 $13,270.50 Estimated Annual Expenses $216.06 $222.26 $228.64 $235.20 $241.95 $248.89 $256.04 $263.38 $270.94 $278.72 --------------------------------------------------------------------------------------------------------------------------------- FINANCIAL SERVICES FUND INVESTOR CLASS -- ANNUAL EXPENSE RATIO 1.29% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 3.71% 7.56% 11.55% 15.69% 19.98% 24.43% 29.05% 33.83% 38.80% 43.95% End of Year Balance $10,371.00 $10,755.76 $11,154.80 $11,568.65 $11,997.84 $12,442.96 $12,904.60 $13,383.36 $13,879.88 $14,394.82 Estimated Annual Expenses $131.39 $136.27 $141.32 $146.57 $152.00 $157.64 $163.49 $169.56 $175.85 $182.37 --------------------------------------------------------------------------------------------------------------------------------- CLASS A -- ANNUAL EXPENSE RATIO 1.29% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 3.71% 7.56% 11.55% 15.69% 19.98% 24.43% 29.05% 33.83% 38.80% 43.95% End of Year Balance $10,371.00 $10,755.76 $11,154.80 $11,568.65 $11,997.84 $12,442.96 $12,904.60 $13,383.36 $13,879.88 $14,394.82 Estimated Annual Expenses $131.39 $136.27 $141.32 $146.57 $152.00 $157.64 $163.49 $169.56 $175.85 $182.37 --------------------------------------------------------------------------------------------------------------------------------- CLASS B -- ANNUAL EXPENSE RATIO 2.04% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 2.96% 6.01% 9.15% 12.38% 15.70% 19.13% 22.65% 26.28% 30.97% 35.83% End of Year Balance $10,296.00 $10,600.76 $10,914.54 $11,237.61 $11,570.25 $11,912.73 $12,265.34 $12,628.40 $13,096.91 $13,582.81 Estimated Annual Expenses $207.02 $213.15 $219.46 $225.95 $232.64 $239.53 $246.62 $253.92 $165.93 $172.08 --------------------------------------------------------------------------------------------------------------------------------- |
CLASS C -- ANNUAL EXPENSE RATIO 2.04% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 2.96% 6.01% 9.15% 12.38% 15.70% 19.13% 22.65% 26.28% 30.02% 33.87% End of Year Balance $10,296.00 $10,600.76 $10,914.54 $11,237.61 $11,570.25 $11,912.73 $12,265.34 $12,628.40 $13,002.20 $13,387.06 Estimated Annual Expenses $207.02 $213.15 $219.46 $225.95 $232.64 $239.53 $246.62 $253.92 $261.43 $269.17 --------------------------------------------------------------------------------------------------------------------------------- GOLD & PRECIOUS METALS FUND INVESTOR CLASS -- EXPENSE RATIO 1.61% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 3.39% 6.89% 10.52% 14.27% 18.14% 22.14% 26.28% 30.57% 34.99% 39.57% End of Year Balance $10,339.00 $10,689.49 $11,051.87 $11,426.52 $11,813.88 $12,214.37 $12,628.44 $13,056.55 $13,499.16 $13,956.78 Estimated Annual Expenses $163.73 $169.28 $175.02 $180.95 $187.09 $193.43 $199.98 $206.76 $213.77 $221.02 --------------------------------------------------------------------------------------------------------------------------------- CLASS A -- EXPENSE RATIO 1.61% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 3.39% 6.89% 10.52% 14.27% 18.14% 22.14% 26.28% 30.57% 34.99% 39.57% End of Year Balance $10,339.00 $10,689.49 $11,051.87 $11,426.52 $11,813.88 $12,214.37 $12,628.44 $13,056.55 $13,499.16 $13,956.78 Estimated Annual Expenses $163.73 $169.28 $175.02 $180.95 $187.09 $193.43 $199.98 $206.76 $213.77 $221.02 --------------------------------------------------------------------------------------------------------------------------------- CLASS B -- EXPENSE RATIO 2.36% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 2.64% 5.35% 8.13% 10.99% 13.92% 16.92% 20.01% 23.18% 27.35% 31.67% End of Year Balance $10,264.00 $10,534.97 $10,813.09 $11,098.56 $11,391.56 $11,692.30 $12,000.97 $12,317.80 $12,735.37 $13,167.10 Estimated Annual Expenses $239.12 $245.43 $251.91 $258.56 $265.38 $272.39 $279.58 $286.96 $201.68 $208.51 --------------------------------------------------------------------------------------------------------------------------------- CLASS C -- EXPENSE RATIO 2.36% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 2.64% 5.35% 8.13% 10.99% 13.92% 16.92% 20.01% 23.18% 26.43% 29.77% End of Year Balance $10,264.00 $10,534.97 $10,813.09 $11,098.56 $11,391.56 $11,692.30 $12,000.97 $12,317.80 $12,642.99 $12,976.76 Estimated Annual Expenses $239.12 $245.43 $251.91 $258.56 $265.38 $272.39 $279.58 $286.96 $294.54 $302.31 --------------------------------------------------------------------------------------------------------------------------------- AIM LEISURE FUND INVESTOR CLASS -- EXPENSE RATIO 1.33% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 3.67% 7.47% 11.42% 15.51% 19.75% 24.14% 28.70% 33.42% 38.32% 43.39% End of Year Balance $10,367.00 $10,747.47 $11,141.90 $11,550.81 $11,974.72 $12,414.20 $12,869.80 $13,342.12 $13,831.77 $14,339.40 Estimated Annual Expenses $135.44 $140.41 $145.56 $150.91 $156.44 $162.19 $168.14 $174.31 $180.71 $187.34 --------------------------------------------------------------------------------------------------------------------------------- |
CLASS A -- EXPENSE RATIO 1.33% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 3.67% 7.47% 11.42% 15.51% 19.75% 24.14% 28.70% 33.42% 38.32% 43.39% End of Year Balance $10,367.00 $10,747.47 $11,141.90 $11,550.81 $11,974.72 $12,414.20 $12,869.80 $13,342.12 $13,831.77 $14,339.40 Estimated Annual Expenses $135.44 $140.41 $145.56 $150.91 $156.44 $162.19 $168.14 $174.31 $180.71 $187.34 --------------------------------------------------------------------------------------------------------------------------------- CLASS B -- EXPENSE RATIO 2.08% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 2.92% 5.93% 9.02% 12.20% 15.48% 18.85% 22.32% 25.89% 30.51% 35.30% End of Year Balance $10,292.00 $10,592.53 $10,901.83 $11,220.16 $11,547.79 $11,884.99 $12,232.09 $12,589.20 $13,051.23 $13,530.21 Estimated Annual Expenses $211.04 $217.20 $223.54 $230.07 $236.79 $243.70 $250.82 $258.14 $170.51 $176.77 --------------------------------------------------------------------------------------------------------------------------------- CLASS C -- EXPENSE RATIO 2.08% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 2.92% 5.93% 9.02% 12.20% 15.48% 18.85% 22.32% 25.89% 29.57% 33.35% End of Year Balance $10,292.00 $10,592.53 $10,901.83 $11,220.16 $11,547.79 $11,884.99 $12,232.09 $12,589.20 $12,956.81 $13,335.15 Estimated Annual Expenses $211.04 $217.20 $223.54 $230.07 $236.79 $243.70 $250.82 $258.14 $265.68 $273.44 --------------------------------------------------------------------------------------------------------------------------------- CLASS R -- ANNUAL EXPENSE RATIO 1.58% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 3.42% 6.96% 10.61% 14.40% 18.31% 22.36% 26.54% 30.87% 35.34% 39.97% End of Year Balance $10,342.00 $10,695.70 $11,061.49 $11,439.79 $11,831.03 $12,235.65 $12,654.11 $13,086.88 $13,534.46 $13,997.33 Estimated Annual Expenses $160.70 $166.20 $171.88 $177.76 $183.84 $190.13 $196.63 $203.35 $210.31 $217.50 --------------------------------------------------------------------------------------------------------------------------------- AIM TECHNOLOGY FUND INVESTOR CLASS -- EXPENSE RATIO 1.57% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 3.43% 6.98% 10.65% 14.44% 18.37% 22.43% 26.63% 30.97% 35.46% 40.11% End of Year Balance $10,343.00 $10,697.76 $11,064.70 $11,444.22 $11,836.75 $12,242.75 $12,662.68 $13,097.01 $13,546.24 $14,010.87 Estimated Annual Expenses $159.69 $165.17 $170.84 $176.69 $182.76 $189.02 $195.51 $202.21 $209.15 $216.32 --------------------------------------------------------------------------------------------------------------------------------- CLASS A -- EXPENSE RATIO 1.57% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 3.43% 6.98% 10.65% 14.44% 18.37% 22.43% 26.63% 30.97% 35.46% 40.11% End of Year Balance $10,343.00 $10,697.76 $11,064.70 $11,444.22 $11,836.75 $12,242.75 $12,662.68 $13,097.01 $13,546.24 $14,010.87 Estimated Annual Expenses $159.69 $165.17 $170.84 $176.69 $182.76 $189.02 $195.51 $202.21 $209.15 $216.32 --------------------------------------------------------------------------------------------------------------------------------- |
CLASS B -- EXPENSE RATIO 2.32% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 2.68% 5.43% 8.26% 11.16% 14.14% 17.20% 20.34% 23.56% 27.80% 32.18% End of Year Balance $10,268.00 $10,543.18 $10,825.74 $11,115.87 $11,413.77 $11,719.66 $12,033.75 $12,356.26 $12,780.08 $13,218.43 Estimated Annual Expenses $235.11 $241.41 $247.88 $254.52 $261.34 $268.35 $275.54 $282.92 $197.32 $204.09 --------------------------------------------------------------------------------------------------------------------------------- CLASS C -- EXPENSE RATIO 2.32% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 2.68% 5.43% 8.26% 11.16% 14.14% 17.20% 20.34% 23.56% 26.87% 30.27% End of Year Balance $10,268.00 $10,543.18 $10,825.74 $11,115.87 $11,413.77 $11,719.66 $12,033.75 $12,356.26 $12,687.40 $13,027.43 Estimated Annual Expenses $235.11 $241.41 $247.88 $254.52 $261.34 $268.35 $275.54 $282.92 $290.51 $298.29 --------------------------------------------------------------------------------------------------------------------------------- AIM UTILITIES FUND INVESTOR CLASS -- EXPENSE RATIO 1.46% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 3.54% 7.21% 11.00% 14.93% 19.00% 23.21% 27.57% 32.09% 36.76% 41.61% End of Year Balance $10,354.00 $10,720.53 $11,100.04 $11,492.98 $11,899.83 $12,321.09 $12,757.25 $13,208.86 $13,676.45 $14,160.60 Estimated Annual Expenses $148.58 $153.84 $159.29 $164.93 $170.77 $176.81 $183.07 $189.55 $196.26 $203.21 --------------------------------------------------------------------------------------------------------------------------------- CLASS A -- EXPENSE RATIO 1.46% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 3.54% 7.21% 11.00% 14.93% 19.00% 23.21% 27.57% 32.09% 36.76% 41.61% End of Year Balance $10,354.00 $10,720.53 $11,100.04 $11,492.98 $11,899.83 $12,321.09 $12,757.25 $13,208.86 $13,676.45 $14,160.60 Estimated Annual Expenses $148.58 $153.84 $159.29 $164.93 $170.77 $176.81 $183.07 $189.55 $196.26 $203.21 --------------------------------------------------------------------------------------------------------------------------------- CLASS B -- EXPENSE RATIO 2.21% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 2.79% 5.66% 8.61% 11.64% 14.75% 17.95% 21.24% 24.63% 29.04% 33.61% End of Year Balance $10,279.00 $10,565.78 $10,860.57 $11,163.58 $11,475.04 $11,795.20 $12,124.28 $12,462.55 $12,903.72 $13,360.52 Estimated Annual Expenses $224.08 $230.33 $236.76 $243.37 $250.16 $257.14 $264.31 $271.68 $185.17 $191.73 --------------------------------------------------------------------------------------------------------------------------------- CLASS C -- EXPENSE RATIO 2.21% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 --------------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cumulative Return After Expenses 2.79% 5.66% 8.61% 11.64% 14.75% 17.95% 21.24% 24.63% 28.10% 31.68% End of Year Balance $10,279.00 $10,565.78 $10,860.57 $11,163.58 $11,475.04 $11,795.20 $12,124.28 $12,462.55 $12,810.26 $13,167.66 Estimated Annual Expenses $224.08 $230.33 $236.76 $243.37 $250.16 $257.14 $264.31 $271.68 $279.26 $287.06 --------------------------------------------------------------------------------------------------------------------------------- |
DISCLOSURE OF PORTFOLIO HOLDINGS
The 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 the fund's first and third fiscal quarter-ends. In addition, portfolio holdings information for the fund is available at (http://www.aiminvestments.com). To reach this information, access the fund's overview page on the website. Links to the following fund information are located in the upper right side of this website page:
INFORMATION APPROXIMATE DATE OF INFORMATION REMAINS POSTED ON
WEBSITE POSTING WEBSITE
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Top ten holdings as of month end 15 days after month end Until posting of the following
month's top ten holdings
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Complete portfolio holdings as of calendar 30 days after calendar quarter end For one year
quarter end
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A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information, which is available at (http://www.aiminvestments.com).
[LOGO]INVESTMENT RISKS
BEFORE INVESTING IN A You should determine the level of risk with which
FUND, YOU SHOULD DE- you are comfortable before you invest. The
TERMINE THE LEVEL OF RISK principal risks of investing in any mutual fund,
WITH WHICH YOU ARE COM- including these funds, are:
FORTABLE. TAKE INTO
ACCOUNT FACTORS LIKE NOT INSURED. Mutual funds are not insured by the
YOUR AGE, CAREER, INCOME FDIC or any other government agency, unlike bank
LEVEL, AND TIME HORIZON. deposits such as CDs or savings accounts.
NO GUARANTEE. No mutual fund can guarantee that it will meet its investment objectives.
POSSIBLE LOSS OF INVESTMENT. A mutual fund cannot guarantee its performance, nor assure you that the market value of your investment will increase. You may lose the money you invest, and the funds will not reimburse you for any of these losses.
VOLATILITY. The price of your mutual fund shares will increase or decrease with changes in the value of a fund's underlying investments and changes in the equity markets as a whole.
NOT A COMPLETE INVESTMENT PLAN. An investment in any mutual fund does not constitute a complete investment plan. The funds are designed to be only a part of your personal investment plan.
[LOGO]PRINCIPAL RISKS ASSOCIATED WITH THE FUNDS
You should consider the special risk factors discussed below associated with the funds' policies in determining the appropriateness of investing in a fund. See the Statement of Additional Information for a discussion of additional risk factors.
MARKET RISK
Equity stock prices vary and may fall, thus reducing the value of a fund's investments. Certain stocks selected for any fund's portfolio may decline in value more than the overall stock market. In general, the securities of small companies are more volatile than those of mid-size companies or large companies.
FOREIGN SECURITIES RISKS
Investments in foreign and emerging markets carry special risks, including currency, political, regulatory, and diplomatic risks.
CURRENCY RISK. A change in the exchange rate between U.S. dollars and a foreign currency may reduce the value of a fund's investment in a security valued in the foreign currency, or based on that currency value.
POLITICAL RISK. Political actions, events, or instability may result in unfavorable changes in the value of a security.
REGULATORY RISK. Government regulations may affect the value of a security. In foreign countries, securities markets that are less regulated than those in the U.S. may permit trading practices that are not allowed in the U.S.
DIPLOMATIC RISK. A change in diplomatic relations between the U.S. and a foreign country could affect the value or liquidity of investments.
LIQUIDITY RISK
A fund's portfolio is liquid if the fund is able to sell the securities it owns at a fair price within a reasonable time. Liquidity is generally related to the market trading volume for a particular security. Investments in smaller companies or in foreign companies or companies in emerging markets are subject to a variety of risks, including potential lack of liquidity.
DERIVATIVES RISK
A derivative is a financial instrument whose value is "derived," in some manner, from the price of another security, index, asset, or rate. Derivatives include options and futures contracts, among a wide range of other instruments. The principal risk of investments in derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. Some derivatives are more sensitive to interest rate changes and market price fluctuations than others. Also, derivatives are subject to counterparty risk, described below.
Options and futures are common types of derivatives that a fund may occasionally use to hedge its investments. An option is the right to buy and sell a security or other instrument, index, or commodity at a specific price on or before a specific date. A future is an agreement to buy or sell a security or other instrument, index, or commodity at a specific price on a specific date. The use of options and futures may increase the performance of the fund, but also may increase market risk. Other types of derivatives include futures, swaps, caps, floors, and collars.
COUNTERPARTY RISK
This is a risk associated primarily with repurchase agreements and some derivatives transactions. It is the risk that the other party in the transaction will not fulfill its contractual obligation to complete the transaction with a fund.
LACK OF TIMELY INFORMATION RISK
Timely information about a security or its issuer may be unavailable, incomplete, or inaccurate. This risk is more common to securities issued by foreign companies and companies in emerging markets than it is to the securities of U.S.-based companies.
PORTFOLIO TURNOVER RISK
A fund's investments may be bought and sold relatively frequently. A high turnover rate may affect a fund's performance because it results in higher brokerage commissions and may result in taxable gain distributions to a fund's shareholders.
Although each fund generally invests in equity securities of companies in the economic sector described by its name, the funds also may invest in other types of securities and other financial instruments, indicated in the chart below. Although these investments typically are not part of any fund's principal investment strategy, they may constitute a significant portion of a fund's portfolio, thereby possibly exposing a fund and its investors to the following additional risks.
INVESTMENT RISKS APPLIES TO THESE FUNDS ----------------------------------------------------------------------------------------------------------------------- AMERICAN DEPOSITARY RECEIPTS (ADRS) These are securities issued by U.S. banks that represent Market, Information, Political, All Funds shares of foreign corporations held by those banks. Although Regulatory, Diplomatic, traded in U.S. securities markets and valued in U.S. dollars, Liquidity, and Currency Risks ADRs carry most of the risks of investing directly in foreign securities. ----------------------------------------------------------------------------------------------------------------------- FUTURES A futures contract is an agreement to buy or sell a specific Market, Liquidity, and Derivatives AIM Technology Fund amount of a financial instrument (such as an index option) at Risks a stated price on a stated date. A fund may use futures contracts to provide liquidity and to hedge portfolio value. ----------------------------------------------------------------------------------------------------------------------- OPTIONS The obligation or right to deliver or receive a security or Information, Liquidity, and AIM Technology Fund other instrument, index, or commodity, or cash payment Derivatives Risks depending on the price of the underlying security or the performance of an index or other benchmark. Includes options on specific securities and stock indices, and options on stock index futures. May be used in a fund's portfolio to provide liquidity and hedge portfolio value. ----------------------------------------------------------------------------------------------------------------------- |
INVESTMENT RISKS APPLIES TO THESE FUNDS ----------------------------------------------------------------------------------------------------------------------- OTHER FINANCIAL INSTRUMENTS These may include forward contracts, swaps, caps, floors, Counterparty, Currency, Liquidity, AIM Technology Fund and collars. They may be used to try to manage a fund's Market, and Regulatory Risks foreign currency exposure and other investment risks, which can cause its net asset value to rise or fall. A fund may use these financial instruments, commonly known as "derivatives," to increase or decrease its exposure to changing securities prices, interest rates, currency exchange rates, or other factors. ----------------------------------------------------------------------------------------------------------------------- REPURCHASE AGREEMENTS A contract under which the seller of a security agrees to buy Counterparty Risk All Funds it back at an agreed-upon price and time in the future. ----------------------------------------------------------------------------------------------------------------------- |
[LOGO]TEMPORARY DEFENSIVE POSITIONS
When securities markets or economic conditions are unfavorable or unsettled, we might try to protect the assets of a fund by investing in securities that are highly liquid, such as high-quality money market instruments like short-term U.S. government obligations, commercial paper, or repurchase agreements, even though that is not the normal investment strategy of any fund. We have the right to invest up to 100% of a fund's assets in these securities, although we are unlikely to do so. Even though the securities purchased for defensive purposes often are considered the equivalent of cash, they also have their own risks. Investments that are highly liquid or comparatively safe tend to offer lower returns. Therefore, a fund's performance could be comparatively lower if it concentrates in defensive holdings.
FUND MANAGEMENT
AIM AND ADI ARE SUBSIDIARIES INVESTMENT ADVISOR
OF AMVESCAP PLC, AN INTERNA- AIM is the investment advisor for the funds and
TIONAL INVESTMENT MANAGE- is responsible for its day-to-day management. AIM
MENT COMPANY THAT MANAGES is located at 11 Greenway Plaza, Suite 100,
MORE THAN $373 BILLION IN Houston, Texas 77046-1173. AIM supervises all
ASSETS WORLDWIDE AS OF aspects of the funds' operations and provides
JUNE 30, 2005. AMVESCAP IS investment advisor services to the funds,
BASED IN LONDON, WITH MONEY including obtaining and evaluating economic,
MANAGERS LOCATED IN EUROPE, statistical and financial information to
NORTH AND SOUTH AMERICA, formulate and implement invest-ment programs for
AND THE FAR EAST. the funds. AIM has acted as an investment advisor
since its organization in 1976. Today, AIM,
together with its subsidiaries, advises or
manages over 200 investment portfolios,
en-compassing a broad range of investment
objectives.
ADI is the funds' distributor and is responsible
for the sale of the funds' shares.
AIM and ADI are subsidiaries of AMVESCAP PLC
(AMVESCAP) and are also affiliates.
The following table shows the fees the funds paid
to AIM for its advisory services in the fiscal
year ended March 31, 2005.
|
--------------------------------------------------------------------------
ADVISORY FEE AS A PERCENTAGE OF
FUND AVERAGE ANNUAL NET ASSETS UNDER MANAGEMENT
--------------------------------------------------------------------------
AIM Energy Fund 0.73%
AIM Financial Services Fund 0.66%
AIM Gold & Precious Metals Fund 0.75%
AIM Leisure Fund 0.67%
AIM Technology Fund 0.56%
AIM Utilities Fund 0.66%
|
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.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of their respective fund's or funds' portfolio:
FUND PORTFOLIO MANAGER
AIM Energy Fund John S. Segner
AIM Financial Services Fund
Michael J. Simon
Meggan M. Walsh
AIM Gold & Precious Metals Fund
John S. Segner
AIM Leisure Fund
Mark D. Greenberg
AIM Technology Fund
Michelle E. Fenton
William R. Keithler
AIM Utilities Fund
John S. Segner
|
MICHELLE E. FENTON, Portfolio Manager of AIM Technology Fund, who has been responsible for the fund since 2003 and has been associated with AIM and/or its affiliates since 1998.
MARK D. GREENBERG, Senior Portfolio Manager of AIM Leisure Fund, who has been responsible for the fund since 1996 and has been associated with AIM and/or its affiliates since 1996.
WILLIAM R. KEITHLER, Senior Portfolio Manager of AIM Technology Fund, who has been responsible for the fund since 1999 and has been associated with AIM and/or its affiliates since 1998.
JOHN S. SEGNER, Senior Portfolio Manager of AIM Energy Fund, AIM Gold & Precious Metals Fund and AIM Utilities Fund, who has been responsible for the funds since 1997, 1999 and 2003, respectively. Mr. Segner has been associated with AIM and/or its affiliates since 1997.
MICHAEL J. SIMON, Senior Portfolio Manager and lead manager of AIM Financial Services Fund, who has been responsible for the fund since 2004 and has been associated with AIM and/or its affiliates since 2001. From 1996 to 2001, he was equity analyst and portfolio manager with Luther King Capital Management. Mr. Simon generally has final authority over all aspects of AIM Financial Services Fund 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 Mr. Simon may perform these functions, and the nature of these functions, may change from time to time.
MEGGAN M. WALSH, Senior Portfolio Manager of AIM Financial Services Fund, who has been responsible for the fund since 2004 and has been associated with AIM and/or its affiliates since 1991.
The AIM Financial Services Fund portfolio managers are assisted by the Basic Value and Diversified Dividend Teams. The AIM Leisure Fund portfolio manager is assisted by the Leisure Team. The AIM Technology Fund portfolio managers are assisted by the Technology Team. The AIM Energy Fund, AIM Gold & Precious Metals Fund and AIM Utilities Fund portfolio manager is assisted by the Energy/Gold/Utilities Team. Each of these teams 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.
The funds' Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
OTHER INFORMATION
SUITABILITY FOR INVESTORS
Only you can determine if an investment in a fund is right for you based
upon your own economic situation, the risk level with which you are
comfortable and other factors. In general, the funds are most suitable for
investors who:
. are willing to grow their capital over the long-term (at least five
years).
. can accept the additional risks and volatility associated with sector
investing.
. understand that shares of a fund can, and likely will, have daily price
fluctuations.
. are investing through tax-deferred retirement accounts, such as
traditional and Roth Individual Retirement Accounts (IRAs), as well as
employer-sponsored qualified retirement plans, including 401(k)s and
403(b)s, all of which have longer investment horizons.
You probably do not want to invest in the funds if you are:
. primarily seeking current dividend income (although AIM Utilities Fund
does seek to provide income in addition to capital growth).
. unwilling to accept potentially significant changes in the price of fund
shares.
. speculating on short-term fluctuations in the stock markets.
SALES CHARGES
Purchases of Class A shares of AIM Energy Fund, AIM Financial Services Fund, AIM Gold & Precious Metal Fund, AIM Leisure Fund, AIM Technology Fund and AIM Utilities Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "Category I Initial Sales Charges" in the "Shareholder Information -- Choosing a Share Class" section of this prospectus. Certain purchases of Class A and Class R shares at net asset value may be subject to the contingent deferred sales charge listed in that section. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
[GRAPHIC]
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The funds earn ordinary or investment income primarily from dividends and interest on their investments. AIM Energy Fund, AIM Financial Services Fund, AIM Gold & Precious Metals Fund, AIM Leisure Fund and AIM Technology Fund expect to distribute their respective investment income, less fund expenses, to shareholders annually. AIM Utilities Fund expects to make such distributions quarterly. All funds can make distributions at other times, if they choose to do so. Please note that classes with higher expenses are expected to have lower dividends.
NET INVESTMENT INCOME AND NET Each fund also realizes capital gains or losses
REALIZED CAPITAL GAINS, IF ANY, ARE when it sells securities in its portfolio for
DISTRIBUTED TO SHAREHOLDERS AT more or less than it had paid for them. If total
LEAST ANNUALLY. DISTRIBUTIONS ARE gains on sales exceed total losses (including
TAXABLE WHETHER REINVESTED IN losses carried forward from previous years), a
ADDITIONAL SHARES OR PAID TO YOU fund has a net realized capital gain. Net
IN CASH (EXCEPT FOR TAX-EXEMPT OR realized capital gain, if any, is distributed to
TAX-DEFERRED ACCOUNTS). shareholders at least annually, usually in
December. Dividends and capital gain
distributions are paid to you if you hold shares
on the record date of the dis-tribution
regardless of how long you have held your shares.
Under present federal income tax laws, capital
gains may be taxable at different rates,
depend-ing on how long a fund has held the
underlying investment. Short-term capital gains,
which are derived from the sale of assets held
one year or less, are taxed as ordinary income.
Long-term capital gains, which are derived from
the sale of assets held for more than one year,
are taxed at up to the maximum capital gains
rate, currently 15% for individuals.
|
A fund's daily NAV reflects all ordinary income and realized capital gains that have not yet been distributed to shareholders. Therefore, a fund's NAV will drop by the amount of a distribution, net of market fluctuations, on the day the distribution is declared. If you buy shares of a fund just before a distribution is declared, you may wind up "buying a distribution." This means that if the fund declares a dividend or capital gain distribution shortly after you buy, you will receive some of your investment back as a taxable distribution. Although purchasing your shares at the resulting higher NAV may mean a smaller capital gain or greater loss upon sale of the shares, most shareholders want to avoid the purchase of shares immediately before the distribution record date. However, keep in mind that your basis in the fund will be increased to the extent such distributions are reinvested in the fund. If you sell your shares of a fund at a loss for tax purposes and then replace those shares with a substantially identical investment either thirty days before or after that sale, the transaction is usually considered a "wash sale" and you will not be able to claim a tax loss at the time of sale. Instead, the loss will be deferred to a later date.
Dividends and capital gain distributions paid by each fund are automatically reinvested in additional fund shares at the NAV on the ex-distribution date, unless you choose to have them automatically reinvested in another AIM fund or paid to you by check or electronic funds transfer. Dividends and other distributions, whether received in cash or reinvested in additional fund shares, are generally subject to federal income tax.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial performance of the various classes of each fund for the past five years (or, if shorter, the period of the class's operations). Certain information reflects financial results for a single fund share. The total returns in the table represent the annual percentages that an investor would have earned (or lost) on an investment in a fund (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, independent Registered Public Accounting Firm, whose report, along with the financial statements, is included in each fund's 2005 Annual Report to Shareholders, which is incorporated by reference into the Statement of Additional Information.
AIM Leisure's Class R shares commenced operations on October 25, 2005 and therefore, financial information for such shares is not available.
YEAR ENDED MARCH 31
-----------------------------------------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
AIM ENERGY FUND -- INVESTOR CLASS
Net Asset Value -- Beginning of Period $22.19 $16.81 $19.26 $19.73 $17.40
-----------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.06)/(a)/ (0.07)/(a)/ (0.10)/(a)(b)/ (0.07)/(a)(b)/ (0.08)/(a)(b)/
Net Gains (Losses) on Securities (Both
Realized and Unrealized) 10.65 5.45 (2.35) (0.40) 3.84
-----------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 10.59 5.38 (2.45) (0.47) 3.76
-----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM NET REALIZED
GAINS -- -- -- -- (1.43)
-----------------------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $32.78 $22.19 $16.81 $19.26 $19.73
============================================================================================================================
TOTAL RETURN/(C)/ 47.72% 32.00% (12.72)% (2.38)% 23.09%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s
Omitted) $378,915 $230,148 $231,023 $358,439 $445,845
Ratio of Expenses to Average Net Assets 1.37%/(d)(e)/ 1.76% 1.69% 1.53% 1.41%
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.22)%/(d)/ (0.35)% (0.57)% (0.34)% (0.35)%
Portfolio Turnover Rate 45% 123% 144% 144% 166%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current method,
which is before reclassification of net operating losses, net investment
income (loss) per share would have been $(0.10), $(0.07) and $(0.08) for the
years ended March 31, 2003, 2002 and 2001, respectively.
(c)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.
(d)Ratios are based on average daily net assets of $283,673,891.
(e)After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 1.38%.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED MARCH 31
-------------------------------------------------------------------------------------------------------------
2005 2004 2003
AIM ENERGY FUND -- CLASS A
Net Asset Value -- Beginning of Period $22.27 $16.85 $19.26
-------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.09)/(a)/ (0.05)/(a)/ (0.05)/(a)(b)/
Net Gains (Losses) on Securities (Both Realized and Unrealized) 10.68 5.47 (2.36)
-------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 10.59 5.42 (2.41)
-------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $32.86 $22.27 $16.85
=============================================================================================================
TOTAL RETURN/(C)/ 47.55% 32.17% (12.51)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $161,529 $40,847 $9,131
RATIO OF EXPENSES TO AVERAGE NET ASSETS
With Fee Waivers and/or Expense Reimbursements 1.47%/(d)/ 1.66% 1.46%
Without Fee Waivers and/or Expense Reimbursements 1.48%/(d)/ 1.74% 1.46%
Ratio of Net Investment Income (Loss) to Average Net Assets (0.32)%/(d)/ (0.25)% (0.33)%
Portfolio Turnover Rate 45% 123% 144%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current method,
which is before reclassification of net operating losses, net investment
income (loss) per share would have been $(0.05) for the year ended March 31,
2003.
(c)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.
(d)Ratios are based on average daily net assets of $74,963,183.
YEAR ENDED MARCH 31
-------------------------------------------------------------------------------------------------------------
2005 2004 2003
AIM ENERGY FUND -- CLASS B
Net Asset Value -- Beginning of Period $21.94 $16.71 $19.26
-------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.25)/(a)/ (0.18)/(a)/ (0.17)/(a)(b)/
Net Gains (Losses) on Securities (Both Realized and Unrealized) 10.48 5.41 (2.38)
-------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 10.23 5.23 (2.55)
-------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $32.17 $21.94 $16.71
=============================================================================================================
TOTAL RETURN/(C)/ 46.63% 31.30% (13.24)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $55,559 $20,164 $1,502
RATIO OF EXPENSES TO AVERAGE NET ASSETS
With Fee Waivers and/or Expense Reimbursements 2.12%/(d)/ 2.31% 2.33%
Without Fee Waivers and/or Expense Reimbursements 2.13%/(d)/ 2.59% 2.41%
Ratio of Net Investment Income (Loss) to Average Net Assets (0.97)%/(d)/ (0.90)% (1.16)%
Portfolio Turnover Rate 45% 123% 144%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current method,
which is before reclassification of net operating losses, net investment
income (loss) per share would have been $(0.17) for the year ended March 31,
2003.
(c)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.
(d)Ratios are based on average daily net assets of $31,796,265.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED MARCH 31
-----------------------------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
AIM ENERGY FUND -- CLASS C
Net Asset Value -- Beginning of Period $21.60 $16.45 $18.98 $19.58 $17.39
-----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.25)/(a)/ (0.17)/(a)/ (0.11)/(a)(b)/ (0.07)/(b)/ (0.05)/(b)/
Net Gains (Losses) on Securities (Both
Realized and Unrealized) 10.33 5.32 (2.42) (0.53) 3.67
-----------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 10.08 5.15 (2.53) (0.60) 3.62
-----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM NET REALIZED
GAINS -- -- -- -- (1.43)
-----------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $31.68 $21.60 $16.45 $18.98 $19.58
================================================================================================================
TOTAL RETURN/(C)/ 46.67% 31.31% (13.33)% (3.06)% 22.35%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s
Omitted) $58,626 $16,383 $9,566 $12,324 $8,704
RATIO OF EXPENSES TO AVERAGE NET
ASSETS (INCLUDING INTEREST EXPENSE)
With Fee Waivers and/or Expense
Reimbursements 2.12%/(d)/ 2.31% 2.33% 2.27% 2.05%
Without Fee Waivers and/or Expense
Reimbursements 2.13%/(d)/ 2.59% 2.53% 2.27% 2.05%
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.97)%/(d)/ (0.90)% (1.22)% (1.08)% (1.10)%
Portfolio Turnover Rate 45% 123% 144% 144% 166%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current method,
which is before reclassification of net operating losses, net investment
income (loss) per share would have been $(0.11), $(0.16) and $(0.10) for the
years ended March 31, 2003, 2002 and 2001, respectively.
(c)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.
(d)Ratios based on average daily net assets of $28,642,181.
YEAR ENDED MARCH 31
---------------------------------------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
AIM FINANCIAL SERVICES FUND -- INVESTOR CLASS
Net Asset Value -- Beginning of Period $30.96 $21.77 $28.22 $28.88 $27.13
---------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.27/(a)/ 0.15/(a)/ 0.10 0.07 0.10
Net Gains (Losses) on Securities (Both Realized and Unrealized) (1.19) 9.14 (6.42) 0.94 2.97
---------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (0.92) 9.29 (6.32) 1.01 3.07
---------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.23) (0.10) (0.10) (0.07) (0.10)
Distributions from Net Realized Gains (2.51) -- (0.03) (1.60) (1.22)
---------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (2.74) (0.10) (0.13) (1.67) (1.32)
---------------------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $27.30 $30.96 $21.77 $28.22 $28.88
===========================================================================================================================
TOTAL RETURN/(B)/ (3.44)% 42.73% (22.39)% 3.82% 11.25%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $632,450 $846,933 $734,440 $1,234,230 $1,368,583
Ratio of Expenses to Average Net Assets 1.28%/(c)(d)/ 1.42% 1.40% 1.27% 1.25%
Ratio of Net Investment Income to Average Net Assets 0.89%/(c)/ 0.54% 0.38% 0.24% 0.36%
Portfolio Turnover Rate 53% 57% 60% 81% 99%
|
(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.
(c)Ratios are based on average daily net assets of $736,109,176.
(d)After fee waivers and/or expense reimbursements. Ratio of expense to average
net assets prior to fee waivers and/or expense reimbursements was 1.29%.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED MARCH 31
----------------------------------------------------------------------------------------------
2005 2004 2003
AIM FINANCIAL SERVICES FUND -- CLASS A
Net Asset Value -- Beginning of Period $30.83 $21.68 $28.22
----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.23/(a)/ 0.16/(a)/ 0.06
Net Gains (Losses) on Securities (Both Realized and Unrealized) (1.19) 9.10 (6.37)
----------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (0.96) 9.26 (6.31)
----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.20) (0.11) (0.20)
Distributions from Net Realized Gains (2.51) -- (0.03)
----------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (2.71) (0.11) (0.23)
----------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $27.16 $30.83 $21.68
==============================================================================================
TOTAL RETURN/(B)/ (3.57)% 42.78% (22.36)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $81,761 $111,766 $5,311
RATIO OF EXPENSES TO AVERAGE NET ASSETS
With Fee Waivers and/or Expense Reimbursements 1.38%/(c)/ 1.41% 1.38%
Without Fee Waivers and/or Expense Reimbursements 1.39%/(c)/ 1.66% 1.51%
Ratio of Net Investment Income to Average Net Assets 0.79%/(c)/ 0.55% 0.49%
Portfolio Turnover Rate 53% 57% 60%
|
(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 $96,453,575.
YEAR ENDED MARCH 31
-------------------------------------------------------------------------------------------------
2005 2004 2003
AIM FINANCIAL SERVICES FUND -- CLASS B
Net Asset Value -- Beginning of Period $30.82 $21.74 $28.22
-------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.04/(a)/ (0.03)/(a)/ (0.03)
Net Gains (Losses) on Securities (Both Realized and Unrealized) (1.19) 9.11 (6.30)
-------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (1.15) 9.08 (6.33)
-------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.06) (0.00) (0.11)
Distributions from Net Realized Gains (2.51) -- (0.04)
-------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (2.57) (0.00) (0.15)
-------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $27.10 $30.82 $21.74
=================================================================================================
TOTAL RETURN/(B)/ (4.19)% 41.78% (22.48)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $65,390 $92,137 $990
RATIO OF EXPENSES TO AVERAGE NET ASSETS
With Fee Waivers and/or Expense Reimbursements 2.03%/(c)/ 2.06% 2.09%
Without Fee Waivers and/or Expense Reimbursements 2.04%/(c)/ 2.34% 2.40%
Ratio of Net Investment Income (Loss) to Average Net Assets 0.14%/(c)/ (0.10)% (0.20)%
Portfolio Turnover Rate 53% 57% 60%
|
(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 $78,723,304.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED MARCH 31
-----------------------------------------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
AIM FINANCIAL SERVICES FUND -- CLASS C
Net Asset Value -- Beginning of Period $30.20 $21.38 $27.89 $28.72 $27.06
-----------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.04/(a)/ (0.12)/(a)/ (0.25) (0.10) (0.09)/(a)/
Net Gains (Losses) on Securities (Both Realized and Unrealized) (1.16) 8.94 (6.22) 0.87 3.05
-----------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (1.12) 8.82 (6.47) 0.77 2.96
-----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.06) (0.00) -- -- (0.08)
Distributions from Net Realized Gains (2.51) -- (0.04) (1.60) (1.22)
-----------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (2.57) (0.00) (0.04) (1.60) (1.30)
-----------------------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $26.51 $30.20 $21.38 $27.89 $28.72
=============================================================================================================================
TOTAL RETURN/(B)/ (4.18)% 41.27% (23.22)% 2.98% 10.87%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $23,932 $38,696 $10,026 $16,880 $12,221
Ratio of Expenses to Average Net Assets 2.03%/(c)(d)/ 2.38% 2.45% 2.07% 1.85%
Ratio of Net Investment Income (Loss) to Average Net Assets 0.14%/(c)/ (0.42)% (0.68)% (0.57)% (0.31)%
Portfolio Turnover Rate 53% 57% 60% 81% 99%
|
(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 $30,611,411.
(d)After fee waivers and/or expense reimbursements. Ratio of expense to average
net assets prior to fee waivers and/or expense reimbursements was 2.04%.
YEAR ENDED MARCH 31
---------------------------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
AIM GOLD & PRECIOUS METALS
FUND -- INVESTOR CLASS
Net Asset Value -- Beginning of
Period $3.84 $2.40 $2.29 $1.43 $1.60
---------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.02)/(a)/ (0.05) (0.02)/(a)(b)/ (0.01)/(b)/ (0.01)/(a)(b)/
Net Gains (Losses) on Securities
(Both Realized and Unrealized) (0.21) 1.63 0.13 0.87 (0.12)
---------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (0.23) 1.58 0.11 0.86 (0.13)
---------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS FROM NET INVESTMENT
INCOME (0.04) (0.14) -- -- (0.04)
---------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $3.57 $3.84 $2.40 $2.29 $1.43
==============================================================================================================
TOTAL RETURN/(C)/ (6.00)% 65.92% 4.80% 60.14% (8.38)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s
Omitted) $100,838 $125,053 $98,388 $104,831 $64,429
Ratio of Expenses to Average Net
Assets 1.59%/(d)(e)/ 1.93% 1.88% 2.10% 2.34%
Ratio of Net Investment Income
(Loss) to Average Net Assets (0.68)%/(d)/ (1.09)% (0.79)% (0.80)% (0.99)%
Portfolio Turnover Rate 51% 48% 84% 46% 90%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current method,
which is before reclassification of net operating losses, net investment
income (loss) per share would have been $(0.02), $(0.01) and $(0.01) for the
years ended March 31, 2003, 2002 and 2001.
(c)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.
(d)Ratios are based on average daily net assets of $105,865,709.
(e)After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.61%.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED MARCH 31
--------------------------------------------------------------------------------------------------------
2005 2004 2003
AIM GOLD & PRECIOUS METALS FUND -- CLASS A
Net Asset Value -- Beginning of Period $3.81 $2.39 $2.29
--------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.03)/(a)/ (0.01) (0.02)/(a)(b)/
Net Gains (Losses) on Securities (Both Realized and Unrealized) (0.20) 1.56 0.12
--------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (0.23) 1.55 0.10
--------------------------------------------------------------------------------------------------------
LESS DIVIDENDS FROM NET INVESTMENT INCOME (0.03) (0.13) --
--------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $3.55 $3.81 $2.39
========================================================================================================
TOTAL RETURN/(C)/ (5.89)% 65.02% 4.37%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $10,609 $8,844 $1,514
RATIO OF EXPENSES TO AVERAGE NET ASSETS
With Fee Waivers and/or Expense Reimbursements 1.69%/(d)/ 2.13% 2.09%
Without Fee Waivers and/or Expense Reimbursements 1.71%/(d)/ 2.13% 2.11%
Ratio of Net Investment Income (Loss) to Average Net Assets (0.78)%/(d)/ (1.29)% (1.09)%
Portfolio Turnover Rate 51% 48% 84%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current method,
which is before reclassification of net operating losses, net investment
income (loss) per share would have been $(0.02) for the year ended March 31,
2003.
(c)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.
(d)Ratios are based on average daily net assets of $8,475,956.
YEAR ENDED MARCH 31
--------------------------------------------------------------------------------------------------------
2005 2004 2003
AIM GOLD & PRECIOUS METALS FUND -- CLASS B
Net Asset Value -- Beginning of Period $3.82 $2.39 $2.29
--------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.05)/(a)/ (0.01) (0.02)/(a)(b)/
Net Gains (Losses) on Securities (Both Realized and Unrealized) (0.20) 1.57 0.12
--------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (0.25) 1.56 0.10
--------------------------------------------------------------------------------------------------------
LESS DIVIDENDS FROM NET INVESTMENT INCOME (0.03) (0.13) --
--------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $3.54 $3.82 $2.39
========================================================================================================
TOTAL RETURN/(C)/ (6.48)% 65.26% 4.37%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $8,593 $7,042 $2,315
Ratio of Expenses to Average Net Assets 2.34%/(d)(e)/ 2.28% 2.18%
Ratio of Net Investment Income (Loss) to Average Net Assets (1.43)%/(d)/ (1.44)% (1.12)%
Portfolio Turnover Rate 51% 48% 84%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current method,
which is before reclassification of net operating losses, net investment
income (loss) per share would have been $(0.02) for the year ended March 31,
2003.
(c)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.
(d)Ratios are based on average daily net assets of $7,467,379.
(e)After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.36%.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED MARCH 31
---------------------------------------------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
AIM GOLD & PRECIOUS METALS FUND -- CLASS C
Net Asset Value -- Beginning of Period $4.04 $2.52 $2.42 $1.53 $1.60
---------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.05)/(a)/ (0.04) (0.00)/(b)/ (0.07)/(b)/ (0.01)/(a)(b)/
Net Gains (losses) on Securities (both Realized and Unrealized) (0.22) 1.67 0.10 0.96 (0.02)
---------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (0.27) 1.63 0.10 0.89 (0.03)
---------------------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS FROM NET INVESTMENT INCOME (0.02) (0.11) -- -- (0.04)
---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $3.75 $4.04 $2.52 $2.42 $1.53
=================================================================================================================================
TOTAL RETURN/(C)/ (6.58)% 64.70% 4.13% 58.17% (1.95)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $6,993 $5,208 $2,459 $515 $57
Ratio of Expenses to Average Net Assets 2.34%/(d)(e)/ 2.69% 2.65% 3.33% 3.38%
Ratio of Net Investment Income (Loss) to Average Net Assets (1.43)%/(d)/ (1.85)% (1.60)% (1.67)% (1.41)%
Portfolio Turnover Rate 51% 48% 84% 46% 90%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current method,
which is before reclassification of net operating losses, net investment
income (loss) per share would have been $(0.04), $(0.07) and $(0.01) for the
years ended March 31, 2003, 2002 and 2001.
(c)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.
(d)Ratios are based on average daily net assets of $5,725,666.
(e)After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 2.36%.
YEAR ENDED MARCH 31
-------------------------------------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
AIM LEISURE FUND -- INVESTOR CLASS
Net Asset Value -- Beginning of Period $42.75 $30.83 $38.95 $37.13 $47.12
-------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.00)/(a)/ (0.14)/(a)/ (0.23)/(b)/ (0.03)/(b)/ (0.00)/(b)/
Net Gains (Losses) on Securities (Both
Realized and Unrealized) 3.14 12.06 (7.89) 2.21 (3.05)
-------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 3.14 11.92 (8.12) 2.18 (3.05)
-------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.35) -- -- -- --
Distributions from Net Realized Gains -- -- -- (0.36) (6.94)
-------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.35) -- -- (0.36) (6.94)
-------------------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $45.54 $42.75 $30.83 $38.95 $37.13
========================================================================================================================
TOTAL RETURN/(C)/ 7.35% 38.66% (20.87)% 6.01% (5.50)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $659,978 $702,969 $536,108 $799,465 $607,428
Ratio of Expenses to Average Net Assets 1.32%/(d)(e)/ 1.49% 1.50% 1.40% 1.36%
Ratio of Net Investment Income (Loss) to
Average Net Assets (0.01)%/(d)/ (0.38)% (0.69)% (0.64)% (0.51)%
Portfolio Turnover Rate 8% 20% 20% 27% 28%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current method,
which is before reclassification of net operating losses, net investment
income (loss) per share would have been $(0.23) $(0.22) and $(0.18) for the
years ended March 31, 2003, 2002 and 2001, respectively.
(c)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.
(d)Ratios are based on average daily net assets of $664,128,930.
(e)After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 1.33%.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED MARCH 31
--------------------------------------------------------------------------------------------------------------
2005 2004 2003
AIM LEISURE FUND -- CLASS A
Net Asset Value -- Beginning of Period $42.83 $30.88 $38.96
--------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.05)/(a)/ (0.14)/(a)/ (0.17)/(a)(b)/
Net Gains (Losses) on Securities (Both Realized and Unrealized) 3.15 12.09 (7.91)
--------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 3.10 11.95 (8.08)
--------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS FROM NET INVESTMENT INCOME (0.32) -- --
--------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $45.61 $42.83 $30.88
==============================================================================================================
TOTAL RETURN/(C)/ 7.23% 38.70% (20.74)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $87,068 $66,510 $27,175
Ratio of Expenses to Average Net Assets 1.42%/(d)(e)/ 1.48% 1.42%
Ratio of Net Investment Income (Loss) to Average Net Assets (0.11)%/(d)/ (0.37)% (0.56)%
Portfolio Turnover Rate 8% 20% 20%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating which were reclassified from
accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current method,
which is before reclassification of net operating losses, net investment
income (loss) per share would have been $(0.17) for the year ended March 31,
2003.
(c)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.
(d)Ratios are based on average daily net assets of $71,979,376.
(e)After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 1.43%.
YEAR ENDED MARCH 31
-------------------------------------------------------------------------------------------------------------
2005 2004 2003
AIM LEISURE FUND -- CLASS B
Net Asset Value -- Beginning of Period $42.22 $30.65 $38.96
-------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.32)/(a)/ (0.40)/(a)/ (0.38)/(a)(b)/
Net Gains (Losses) on Securities (Both Realized and Unrealized) 3.08 11.97 (7.93)
-------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 2.76 11.57 (8.31)
-------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS FROM NET INVESTMENT INCOME (0.12) -- --
-------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $44.86 $42.22 $30.65
=============================================================================================================
TOTAL RETURN/(C)/ 6.54% 37.75% (21.33)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $28,776 $18,814 $8,268
RATIO OF EXPENSES TO AVERAGE NET ASSETS
With Fee Waivers and/or Expense Reimbursements 2.07%/(d)/ 2.15% 2.14%
Without Fee Waivers and/or Expense Reimbursements 2.08%/(d)/ 2.26% 2.23%
Ratio of Net Investment Income (Loss) to Average Net Assets (0.76)%/(d)/ (1.04)% (1.29)%
Portfolio Turnover Rate 8% 20% 20%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating which were reclassified from
accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current method,
which is before reclassification of net operating losses, net investment
income (loss) per share would have been $(0.38) for the year ended March 31,
2003.
(c)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.
(d)Ratios are based on average daily net assets of $22,107,318.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED MARCH 31
---------------------------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
AIM LEISURE FUND -- CLASS C
Net Asset Value -- Beginning of Period $41.24 $30.00 $38.29 $36.80 $47.09
---------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.31)/(a)/ (0.46)/(a)/ (0.18)/(b)/ (0.17)/(b)/ (0.13)/(b)/
Net Gains (Losses) on Securities (Both
Realized and Unrealized) 3.01 11.70 (8.11) 2.02 (3.22)
---------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 2.70 11.24 (8.29) 1.85 (3.35)
---------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.12) -- -- -- --
Distributions from Net Realized Gains -- -- -- (0.36) (6.94)
---------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.12) -- -- (0.36) (6.94)
---------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $43.82 $41.24 $30.00 $38.29 $36.80
==============================================================================================================
TOTAL RETURN/(C)/ 6.55% 37.47% (21.65)% 5.10% (6.18)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s
Omitted) $29,706 $28,383 $17,768 $16,307 $5,388
Ratio of Expenses to Average Net Assets 2.07%/(d)(e)/ 2.36% 2.44% 2.26% 2.08%
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.76)%/(d)/ (1.25)% (1.62)% (1.48)% (1.08)%
Portfolio Turnover Rate 8% 20% 20% 27% 28%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current method,
which is before reclassification of net operating losses, net investment
income (loss) per share would have been $(0.18), $(0.34) and $(0.16) for the
years ended March 31, 2003, 2002 and 2001, respectively.
(c)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.
(d)Ratios are based on average daily net assets of $27,951,451.
(e)After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 2.08%.
YEAR ENDED MARCH 31
--------------------------------------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
AIM TECHNOLOGY FUND -- INVESTOR CLASS
Net Asset Value -- Beginning of Period $24.49 $16.90 $30.41 $35.60 $101.92
--------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.20)/(a)/ (0.35)/(a)/ (0.14)/(b)/ (0.08)/(b)/ (0.10)/(b)/
Net Gains (Losses) on Securities (Both
Realized and Unrealized) (0.92) 7.94 (13.37) (5.11) (63.58)
--------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (1.12) 7.59 (13.51) (5.19) (63.68)
--------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM NET REALIZED
GAINS -- -- -- -- (2.64)
--------------------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $23.37 $24.49 $16.90 $30.41 $35.60
=========================================================================================================================
TOTAL RETURN/(C)/ (4.57)% 44.91% (44.43)% (14.58)% (63.54)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s
Omitted) $892,630 $1,347,335 $853,530 $1,865,251 $2,181,879
Ratio of Expenses to Average Net Assets 1.56%/(d)(e)/ 1.72%/(e)/ 1.77% 1.37% 0.98%
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.86)%/(d)/ (1.53)% (1.46)% (1.08)% (0.47)%
Portfolio Turnover Rate 92% 141% 107% 79% 85%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current method,
which is before reclassification of net operating losses, net investment
income (loss) per share would have been $(0.29), $(0.37) and $(0.33) for the
years ended March 31, 2003, 2002 and 2001.
(c)Includes adjustments in accordance with accounting principles generally
accepted in the United States of America as such, the net asset value for
financial reporting purposes and the returns based upon those net asset
value may differ from the net asset value and returns for shareholder
transactions.
(d)Ratios are based on average daily net assets of $1,099,128,961.
(e)After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.58 and 1.75% for the years ended March 31, 2005 and March 31, 2004,
respectively.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED MARCH 31
--------------------------------------------------------------------------------------------------------------
2005 2004 2003
AIM TECHNOLOGY FUND -- CLASS A
Net Asset Value -- Beginning of Period $24.71 $16.98 $30.41
--------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.19)/(a)/ (0.33)/(a)/ (0.20)/(a)(b)/
Net Gains (Losses) on Securities (Both Realized and Unrealized) (0.93) 8.06 (13.23)
--------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (1.12) 7.73 (13.43)
--------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $23.59 $24.71 $16.98
==============================================================================================================
TOTAL RETURN/(C)/ (4.53)% 45.52% (44.16)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $314,755 $410,407 $4,460
RATIO OF EXPENSES TO AVERAGE NET ASSETS
With Fee Waivers and/or Expense Reimbursements 1.50%/(d)/ 1.50% 1.47%
Without Fee Waivers and/or Expense Reimbursements 1.68%/(d)/ 1.93% 1.51%
Ratio of Net Investment Income (Loss) to Average Net Assets (0.80)%/(d)/ (1.31)% (1.12)%
Portfolio Turnover Rate 92% 141% 107%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) been calculated using the current method, which is
before reclassification of net operating losses, net investment income
(loss) per share would have been $(0.20) for the year ended March 31, 2003.
(c)Includes adjustments in accordance with accounting principles generally
accepted in the United States of America as such, the net asset value for
financial reporting purposes and the returns based upon those net asset
value may differ from the net asset value and returns for shareholder
transactions. Does not include sales charges.
(d)Ratios are based on average daily net assets of $351,891,329.
YEAR ENDED MARCH 31
--------------------------------------------------------------------------------------------------------------
2005 2004 2003
AIM TECHNOLOGY FUND -- CLASS B
Net Asset Value -- Beginning of Period $24.29 $16.84 $30.41
--------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.34)/(a)/ (0.48)/(a)/ (0.27)/(a)(b)/
Net Gains (Losses) on Securities (Both Realized and Unrealized) (0.91) 7.93 (13.30)
--------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (1.25) 7.45 (13.57)
--------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $23.04 $24.29 $16.84
==============================================================================================================
TOTAL RETURN/(C)/ (5.15)% 44.24% (44.62)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $88,240 $125,597 $532
RATIO OF EXPENSES TO AVERAGE NET ASSETS
With Fee Waivers and/or Expense Reimbursements 2.15%/(d)/ 2.15% 2.15%
Without Fee Waivers and/or Expense Reimbursements 2.33%/(d)/ 3.16% 2.74%
Ratio of Net Investment Income (Loss) to Average Net Assets (1.45)%/(d)/ (1.96)% (1.71)%
Portfolio Turnover Rate 92% 141% 107%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) been calculated using the current method, which is
before reclassification of net operating losses, net investment income
(loss) per share would have been $(0.27) for the year ended March 31, 2003.
(c)Includes adjustments in accordance with accounting principles generally
accepted in the United States of America as such, the net asset value for
financial reporting purposes and the returns based upon those net asset
value may differ from the net asset value and returns for shareholder
transactions. Does not include sales charges.
(d)Ratios are based on average daily net assets of $103,811,919.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED MARCH 31
---------------------------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
AIM TECHNOLOGY FUND -- CLASS C
Net Asset Value -- Beginning of Period $23.64 $16.39 $29.73 $35.22 $101.85
---------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.33)/(a)/ (0.45)/(a)/ (0.62)/(b)/ (0.22)/(b)/ (0.18)/(b)/
Net Gains (Losses) on Securities (Both
Realized and Unrealized) (0.88) 7.70 (12.72) (5.27) (63.81)
---------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (1.21) 7.25 (13.34) (5.49) (63.99)
---------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM NET REALIZED
GAINS -- -- -- -- (2.64)
---------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $22.43 $23.64 $16.39 $29.73 $35.22
==============================================================================================================
TOTAL RETURN/(C)/ (5.12)% 44.23% (44.87)% (15.59)% (63.89)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s
Omitted) $27,016 $37,191 $5,759 $18,910 $15,919
RATIO OF EXPENSES TO AVERAGE NET ASSETS
With Fee Waivers and/or Expense
Reimbursements 2.15%/(d)/ 2.15% 2.69% 2.54% 1.86%
Without Fee Waivers and/or Expense
Reimbursements 2.33%/(d)/ 3.20% 3.95% 2.54% 1.86%
Ratio of Net Investment Income (loss)
to Average Net Assets (1.45)%/(d)/ (1.96)% (2.39)% (2.26)% (1.30)%
Portfolio Turnover Rate 92% 141% 107% 79% 85%
|
(a)Calculated using average shares outstanding.
(b)The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current method,
which is before reclassification of net operating losses, net investment
income (loss) per share would have been $(0.84),$(0.54) and $(0.36) for the
years ended March 31, 2003, 2002 and 2001, respectively.
(c)Includes adjustments in accordance with accounting principles generally
accepted in the United States of America as such, the net asset value for
financial reporting purposes and the returns based upon those net asset
value may differ from the net asset value and returns for shareholder
transactions. Does not include sales charges.
(d)Ratios are based on average daily net assets of $31,495,472.
YEAR ENDED MARCH 31
--------------------------------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
AIM UTILITIES FUND -- INVESTOR CLASS
Net Asset Value -- Beginning of Period $10.18 $8.19 $10.66 $16.20 $20.42
--------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.31/(a)/ 0.22/(a)/ 0.23 0.15 0.13
Net Gains (Losses) on Securities (Both Realized And Unrealized) 2.21 2.01 (2.46) (5.54) (3.22)
--------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 2.52 2.23 (2.23) (5.39) (3.09)
--------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.32) (0.24) (0.24) (0.15) (0.13)
Distributions from Net Realized Gains -- -- -- -- (1.00)
--------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.32) (0.24) (0.24) (0.15) (1.13)
--------------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $12.38 $10.18 $8.19 $10.66 $16.20
====================================================================================================================
TOTAL RETURN/(B)/ 25.08% 27.50% (20.99)% (33.34)% (15.18)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $79,536 $69,065 $72,749 $124,578 $232,877
RATIO OF EXPENSES TO AVERAGE NET ASSETS
With Fee Waivers and/or Expense Reimbursements 1.30%/(c)/ 1.30% 1.30% 1.30% 1.30%
Without Fee Waivers and/or Expense Reimbursements 1.46%/(c)/ 2.01% 1.90% 1.57% 1.40%
Ratio of Net Investment Income to Average Net Assets 2.86%/(c)/ 2.37% 2.63% 1.09% 0.74%
Portfolio Turnover Rate 33% 101% 64% 56% 49%
|
(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.
(c)Ratios are based on average daily net assets of $72,041,996.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED MARCH 31
-------------------------------------------------------------------------------------------------
2005 2004 2003
AIM UTILITIES FUND -- CLASS A
Net Asset Value -- Beginning of Period $10.10 $8.13 $10.66
-------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.30/(a)/ 0.22/(a)/ 0.16
Net Gains (Losses) on Securities (Both Realized and Unrealized) 2.18 1.98 (2.40)
-------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 2.48 2.20 (2.24)
-------------------------------------------------------------------------------------------------
LESS DIVIDENDS FROM NET INVESTMENT INCOME (0.30) (0.23) (0.29)
-------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $12.28 $10.10 $8.13
=================================================================================================
TOTAL RETURN/(B)/ 24.95% 27.33% (21.05)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $113,325 $101,899 $450
RATIO OF EXPENSES TO AVERAGE NET ASSETS
With Fee Waivers and/or Expense Reimbursements 1.40%/(c)/ 1.40% 1.41%
Without Fee Waivers and/or Expense Reimbursements 1.46%/(c)/ 1.77% 1.74%
Ratio of Net Investment Income to Average Net Assets 2.76%/(c)/ 2.27% 2.79%
Portfolio Turnover Rate 33% 101% 64%
|
(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.
(c)Ratios are based on average daily net assets of $105,250,221.
YEAR ENDED MARCH 31
---------------------------------------------------------------------------------------------
2005 2004 2003
AIM UTILITIES FUND -- CLASS B
Net Asset Value -- Beginning of Period $10.13 $8.15 $10.66
---------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.23/(a)/ 0.16/(a)/ 0.13
Net Gains (Losses) on Securities (Both Realized and Unrealized) 2.19 1.98 (2.43)
---------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 2.42 2.14 (2.30)
---------------------------------------------------------------------------------------------
LESS DIVIDENDS FROM NET INVESTMENT INCOME (0.23) (0.16) (0.21)
---------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $12.32 $10.13 $8.15
=============================================================================================
TOTAL RETURN/(B)/ 24.17% 26.47% (21.67)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $35,303 $34,606 $193
RATIO OF EXPENSES TO AVERAGE NET ASSETS
With Fee Waivers and/or Expense Reimbursements 2.05%/(c)/ 2.05% 2.14%
Without Fee Waivers and/or Expense Reimbursements 2.21%/(c)/ 2.79% 2.69%
Ratio of Net Investment Income to Average Net Assets 2.11%/(c)/ 1.62% 1.84%
Portfolio Turnover Rate 33% 101% 64%
|
(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.
(c)Ratios are based on average daily net assets of $32,972,575.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED MARCH 31
-------------------------------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
AIM UTILITIES FUND -- CLASS C
Net Asset Value -- Beginning of Period $10.21 $8.22 $10.63 $16.08 $20.40
-------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.23/(a)/ 0.16/(a)/ 0.15 0.03 (0.00)/(a)/
Net Gains (Losses) on Securities (Both Realized and Unrealized) 2.20 1.98 (2.47) (5.48) (3.22)
-------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 2.43 2.14 (2.32) (5.45) (3.22)
-------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.23) (0.15) (0.09) (0.00) (0.10)
Distributions from Net Realized Gains -- -- -- -- (1.00)
-------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.23) (0.15) (0.09) (0.00) (1.10)
-------------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $12.41 $10.21 $8.22 $10.63 $16.08
===================================================================================================================
TOTAL RETURN/(B)/ 24.08% 26.17% (21.85)% (33.87)% (15.83)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $6,900 $6,437 $667 $1,799 $3,579
RATIO OF EXPENSES TO AVERAGE NET ASSETS
With Fee Waivers and/or Expense Reimbursements 2.05%/(c)/ 2.05% 2.05% 2.04% 2.07%
Without Fee Waivers and/or Expense Reimbursements 2.21%/(c)/ 3.14% 3.70% 2.45% 2.11%
Ratio of Net Investment Income (Loss) to Average Net Assets 2.11%/(c)/ 1.62% 1.75% 0.32% (0.02)%
Portfolio Turnover Rate 33% 101% 64% 56% 49%
|
(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.
(c)Ratios are based on average daily net assets of $6,289,328.
THE AIM FUNDS
In addition to the fund, AIM serves as investment advisor to many other mutual funds (the funds). The following information is about all the funds.
CHOOSING A SHARE CLASS
Most of the funds have multiple classes of shares, each class representing an
interest in the same portfolio of investments. Certain classes have higher
expenses than other classes which may lower the return on your investment
relative to a less expensive class. In deciding which class of shares to
purchase, you should consider, among other things, (i) the length of time you
expect to hold your shares, (ii) the provisions of the distribution plan, if
any, applicable to the class (iii) the eligibility requirements that apply to
purchases of a particular class, and (iv) any services you may receive in
making your investment determination. In addition, you should consider the
other factors described below. Please contact your financial advisor to assist
you in making your decision.
CLASS A/1/ CLASS A3 CLASS B/4/ CLASS C CLASS R INVESTOR CLASS
------------------------------------------------------------------------------------------------------------
. Initial sales . No initial . No initial . No initial . No initial . No initial
charge sales charge sales charge sales charge sales charge sales charge
. Reduced or . No contingent . Contingent . Contingent . Generally, no . No contingent
waived initial deferred sales deferred sales deferred sales contingent deferred sales
sales charge charge on charge on deferred sales charge
charge for redemptions redemptions charge/2/
certain within six within one
purchases/2/ years year/7/
. Generally, . 12b-1 fee of . 12b-1 fee of . 12b-1 fee of . 12b-1 fee of . 12b-1 fee of
lower 0.35% 1.00% 1.00% 0.50% 0.25%/3/
distribution
and service
(12b-1) fee
than Class B,
Class C, Class
K or Class R
shares (See
"Fee Table and
Expense
Example")/3/
. Does not . Converts to . Does not . Does not . Does not
convert to Class A shares convert to convert to convert to
Class A shares at the end of Class A shares Class A shares Class A shares
the month
which is eight
years after
the date on
which shares
were purchased
along with a
pro rata
portion of its
reinvested
dividends and
distributions/5/
. Generally more . Available only . Purchase . Generally more . Generally, . Closed to new
appropriate for a limited orders limited appropriate only available investors,
for long-term number of funds to amount less for short-term to employee except as
investors than $ investors benefit described in
100,000/6/ . Purchase plans/9/ the
orders limited "Purchasing
to amount less Shares --
than Grandfathered
$1,000,000/8/ Investors"
section of
your prospectus
------------------------------------------------------------------------------------------------------------
|
Certain funds also offer Institutional Class shares to certain eligible institutional investors; consult the fund's Statement of Additional Information for the Institutional Class shares for details.
/1/ As of the close of business on October 30, 2002, Class A shares of AIM
Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund were
closed to new investors.
/2/ A contingent deferred sales charge may apply in some cases.
/3/ Class A shares of AIM Tax-Free Intermediate Fund and Investor Class shares
of AIM Money Market Fund, AIM Tax-Exempt Cash Fund, Premier Portfolio,
Premier Tax-Exempt Portfolio and Premier U.S. Government Money Portfolio do
not have a 12b-1 fee.
/4/ Class B shares are not available as an investment for retirement plans
maintained pursuant to Section 401 of the Internal Revenue Code. These
plans include 401(k) plans (including AIM Solo 401(k) plans), money
purchase pension plans and profit sharing plans. Plans that have existing
accounts invested in Class B shares will continue to be allowed to make
additional purchases.
/5/ AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares.
AIM Global Equity Fund: If you held Class B shares on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of that
fund at the end of the month which is seven years after the date on which
shares were purchased. If you exchange those shares for Class B shares of
another fund, the shares into which you exchanged will not convert to Class A
shares until the end of the month which is eight years after the date on
which you purchased your original shares.
MCF--10/05 A-1 |
THE AIM FUNDS
/6/ Any purchase order for Class B shares in an amount equal to or in excess of
$100,000 will be rejected. Although our ability to monitor or enforce this
limitation for underlying shareholders of omnibus accounts is severely
limited, we have advised the administrators of omnibus accounts maintained
by brokers, retirement plans and approved fee-based programs of this
limitation.
/7/ A contingent deferred sales charge (CDSC) does not apply to redemption of
Class C shares of AIM Short Term Bond Fund unless you exchange Class C
shares of another fund that are subject to a CDSC into AIM Short Term Bond
Fund.
/8/ Any purchase order for Class C shares in an amount equal to or in excess of
$1,000,000 will be rejected. Although our ability to monitor or enforce
this limitation for underlying shareholders of omnibus accounts is severely
limited, we have advised the administrators of omnibus accounts maintained
by brokers, retirement plans and approved fee-based programs of this
limitation.
/9/ Generally, Class R shares are only available to employee benefit plans.
These may include, for example, retirement and deferred compensation plans
maintained pursuant to Sections 401, 403, 457 of the Internal Revenue Code;
nonqualified deferred compensation plans; health savings accounts
maintained pursuant to Section 223 of the Internal Revenue Code,
respectively; and voluntary employees' beneficiary arrangements maintained
pursuant to Section 501(c)(9) of the Internal Revenue Code. Retirement
plans maintained pursuant to Section 401 generally include 401(k) plans,
profit sharing plans, money purchase pension plans, and defined benefit
plans. Retirement plans maintained pursuant to Section 403 must be
established and maintained by non-profit organizations operating pursuant
to Section 501(c)(3) of the Internal Revenue Code in order to purchase
Class R shares. Class R shares are generally not available for individual
retirement accounts such as traditional, Roth, SEP, SAR-SEP and SIMPLE IRAs.
DISTRIBUTION AND SERVICE (12B-1) FEES
Each fund (except AIM Tax-Free Intermediate Fund with respect to its Class A
shares and AIM Money Market Fund, AIM Tax-Exempt Cash Fund, Premier Portfolio,
Premier Tax-Exempt Portfolio and Premier U.S. Government Money Portfolio with
respect to their Investor Class shares) has adopted 12b-1 plans that allow the
fund to pay distribution fees to A I M Distributors, Inc. (ADI) for the sale
and distribution of its shares and fees for services provided to shareholders,
all or a substantial portion of which are paid to the dealer of record. Because
the fund pays these fees out of its assets on an ongoing basis, over time these
fees will increase the cost of your investment and may cost you more than
paying other types of sales charges.
SALES CHARGES
Sales charges on the funds and classes of those funds are detailed below. As
used below, the term "offering price" with respect to all categories of Class A
shares includes the initial sales charge.
Certain categories of persons are permitted to purchase Class A shares of the
funds without paying an initial sales charge because their transactions involve
little expense, such as persons who have a relationship with the funds or with
AIM and certain programs for purchase. For more detailed information regarding
eligibility to purchase or redeem shares at reduced or without sales charges,
please consult the fund's website at www.aiminvestments.com and click on the
links "My Account", Service Center, or consult the fund's Statement of
Additional Information, which is available upon request free of charge.
INITIAL SALES CHARGES
The funds (except AIM Short Term Bond Fund) are grouped into three categories
with respect to initial sales charges. The "Other Information" section of your
prospectus will tell you in what category your particular fund is classified.
INVESTOR'S
SALES CHARGE
-------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-----------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-----------------------------------------------------------
|
INVESTOR'S
SALES CHARGE
-------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-----------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-----------------------------------------------------------
|
INVESTOR'S
SALES CHARGE
-------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-----------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-----------------------------------------------------------
|
INVESTOR'S
SALES CHARGE
-------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-----------------------------------------------------------
Less than $ 100,000 2.50% 2.56%
$100,000 but less than $ 250,000 2.00 2.04
$250,000 but less than $ 500,000 1.50 1.52
$500,000 but less than $1,000,000 1.25 1.27
-----------------------------------------------------------
|
A-2 MCF--10/05 |
THE AIM FUNDS
SHARES SOLD WITHOUT A SALES CHARGE
You will not pay an initial sales charge on purchases of Class A shares of AIM
Tax-Exempt Cash Fund or AIM Cash Reserve Shares of AIM Money Market Fund.
You will not pay an initial sales charge or a contingent deferred sales
charge (CDSC) on Class A3 shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund.
You will not pay an initial sales charge or a CDSC on Investor Class shares
of any fund.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES AND AIM CASH RESERVE
SHARES OF AIM MONEY MARKET FUND
You can purchase $1,000,000 or more (a Large Purchase) of Class A shares of
Category I and II funds and AIM Short Term Bond Fund at net asset value.
However, if you redeem these shares prior to 18 months after the date of
purchase, they will be subject to a CDSC of 1%.
If you currently own Class A shares of a Category I or II fund or AIM Short
Term Bond Fund and make additional purchases at net asset value that result in
account balances of $1,000,000 or more, the additional shares purchased will be
subject to an 18-month,
1% CDSC.
Some retirement plans can purchase Class A shares at their net asset value
per share. If ADI paid a concession to the dealer of record in connection with
a Large Purchase of Class A shares by a retirement plan, the Class A shares may
be subject to a 1% CDSC at the time of redemption if all retirement plan assets
are redeemed within one year from the date of the plan's initial purchase.
You may be charged a CDSC when you redeem AIM Cash Reserve Shares of AIM
Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund if you acquired
those shares through an exchange, and the shares originally purchased were
subject to a CDSC.
ADI may pay a dealer concession and/or a service fee for Large Purchases and
purchases by certain retirement plans.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
YEAR SINCE PURCHASE MADE CLASS B CLASS C ------------------------------------- First 5% 1% Second 4 None Third 3 None Fourth 3 None Fifth 2 None Sixth 1 None Seventh and following None None ------------------------------------- |
You can purchase Class C shares of AIM Short Term Bond Fund at their net asset value and not subject to a CDSC. However, you may be charged a CDSC when you redeem Class C shares of AIM Short Term Bond Fund if you acquired those shares through an exchange, and the shares originally purchased were subject to a CDSC.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS R SHARES
You can purchase Class R shares at their net asset value per share. If ADI pays
a concession to the dealer of record, however, the Class R shares are subject
to a 0.75% CDSC at the time of redemption if all retirement plan assets are
redeemed within 12 months from the date of the retirement plan's initial
purchase.
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends
and capital gains distributions. In determining whether to charge a CDSC, we
will assume that you are redeeming shares on which there is no CDSC first and,
then, shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To
qualify for these reductions or exceptions, you or your financial advisor must
notify the transfer agent at the time of purchase that your purchase qualifies
for such treatment. Certain individuals and employer-sponsored retirement plans
may link accounts for the purpose of qualifying for lower initial sales
charges. You or your financial consultant must provide other account numbers to
be considered for Rights of Accumulation, or mark the Letter of Intent section
on the account application, or provide other relevant documentation, so that
the transfer agent can verify your eligibility for the reduction or exception.
Consult the fund's Statement of Additional Information for details.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, Class A3 shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, AIM Cash
Reserve Shares of AIM Money Market Fund and Class B and Class C shares of AIM
Floating Rate Fund and Investor Class shares of any fund will not be taken into
account in determining whether a purchase qualifies for a reduction in initial
sales charges pursuant to Rights of Accumulation or Letters of Intent.
RIGHTS OF ACCUMULATION
You may combine your new purchases of Class A shares of a fund with fund shares
currently owned (Class A, B, C, or R) and investments in the AIM College
Savings Plan/SM/ for the purpose of qualifying for the lower initial sales
charge rates that apply to larger purchases. The applicable initial sales
charge for the new purchase is based on the total of your current purchase and
the public offering price of all other shares you own. The transfer agent may
automatically link certain accounts registered in the same name, with the same
taxpayer identification number, for the purpose of qualifying you for lower
initial sales charge rates.
MCF--10/05 A-3 |
THE AIM FUNDS
LETTERS OF INTENT
Under a Letter of Intent (LOI), you commit to purchase a specified dollar
amount of Class A shares of the funds during a 13-month period. The amount you
agree to purchase determines the initial sales charge you pay. If the full face
amount of the LOI is not invested by the end of the 13-month period, your
account will be adjusted to the higher initial sales charge level for the
amount actually invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
. on shares purchased by reinvesting dividends and distributions;
. when exchanging shares among certain funds; and
. when a merger, consolidation, or acquisition of assets of a fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
. if you redeem Class B shares you held for more than six years;
. if you redeem Class C shares you held for more than one year;
. if you redeem Class C shares of a fund other than AIM Short Term Bond Fund and you received such Class C shares by exchanging Class C shares of AIM Short Term Bond Fund;
. if you redeem Class C shares of AIM Short Term Bond Fund unless you received such Class C shares by exchanging Class C shares of another fund and the original purchase was subject to a CDSC;
. if you are a participant in a retirement plan and your plan redeems, at any time, less than all of the Class A, C, or Class R shares held through such plan that would otherwise be subject to a CDSC;
. if you are a participant in a retirement plan and your plan redeems, after having held them for more than one year from the date of the plan's initial purchase, all of the Class A, C, or Class R shares held through such plan that would otherwise be subject to a CDSC;
. if you are a participant in a qualified retirement plan and redeem Class A, Class C, or Class R shares in order to fund a distribution;
. if you participate in the Systematic Redemption Plan and withdraw up to 12% of the value of your shares that are subject to a CDSC in any twelve-month period;
. if you redeem shares to pay account fees;
. for redemptions following the death or post-purchase disability of a shareholder or beneficial owner;
. if you redeem shares acquired through reinvestment of dividends and distributions; and
. on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
ADDITIONAL PAYMENTS TO FINANCIAL ADVISORS
The financial advisor through which you purchase your shares may receive all or
a portion of the sales charges and Rule 12b-1 distribution fees discussed
above. In addition to those payments, 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 from their own resources, from ADI's retention of underwriting
concessions and from payments to ADI under Rule 12b-1 plans. 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 they make 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 sales of shares of
the funds (Sales-Based Payments), in which case the total amount of such
payments shall not exceed 0.25% of the public offering price of all shares sold
by the financial advisor during the particular period. Such payments also 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 0.25% per
annum of those assets during a defined period. Sales-Based Payments primarily
create incentives to make new sales of shares of the funds and Asset-Based
Payments primarily create incentives to retain previously sold shares of the
funds in investor accounts. ADI Affiliates may pay a financial advisor either
or both Sales-Based Payments and Asset-Based Payments.
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
A-4 MCF--10/05 |
THE AIM FUNDS
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 the 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 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.
MCF--10/05 A-5 |
THE AIM FUNDS
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".
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.
A-6 MCF--10/05 |
THE AIM FUNDS
PURCHASING SHARES
If you hold your shares through a broker/dealer or other financial institution,
your eligibility to purchase those shares, the conditions for purchase and
sale, and the minimum and maximum amounts allowed may differ depending on that
institution's policies.
MINIMUM INVESTMENTS PER FUND ACCOUNT
There are no minimum investments with respect to Class R shares for fund
accounts. The minimum investments with respect to Class A, A3, B and C shares
and Investor Class shares for fund accounts are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
---------------------------------------------------------------------------------------------------------------------------------
Employer-Sponsored Retirement Plans (includes section 401, 403 and 0 ($25 per fund investment for salary $25
457 plans, and SEP, SARSEP and SIMPLE IRA plans) deferrals from Employer-Sponsored
Retirement Plans)
Systematic Purchase Plan 50 50
IRA, Roth IRA or Coverdell ESA 250 25
All other accounts 1,000 50
ADI has the discretion to accept orders for lesser amounts.
---------------------------------------------------------------------------------------------------------------------------------
|
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 Same
advisor.
By Mail Mail completed account Mail your check and the
application and check to the remittance slip from your
transfer agent, AIM confirmation statement to the
Investment Services, Inc., transfer agent.
P.O. Box 4739, Houston, TX
77210-4739.
By Wire Mail completed account Call the transfer agent to
application to the transfer receive a reference number.
agent. Call the transfer Then, use the wire
agent at (800) 959-4246 to instructions at left.
receive a reference number.
Then, use the following wire
instructions:
Beneficiary Bank ABA/Routing
#: 113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: AIM
Investment Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By Telephone Open your account using one Select the AIM Bank
of the methods described Connection/SM/ option on your
above. completed account application
or complete an AIM Bank
Connection form. Mail the
application or form to the
transfer agent. Once the
transfer agent has received
the form, call the transfer
agent to place your purchase
order.
Call the AIM 24-hour
Automated Investor Line at
1-800-246-5463. You may place
your order after you have
provided the bank
instructions that will be
requested.
By Internet Open your account using one Access your account at
of the methods described www.aiminvestments.com. The
above. proper bank instructions must
have been provided on your
account. You may not purchase
shares in retirement accounts
on the internet.
--------------------------------------------------------------------------------------------
|
MCF--10/05 A-7 |
THE AIM FUNDS
GRANDFATHERED INVESTORS
Investor Class shares of a fund may be purchased only by: (1) persons or
entities who had established an account, prior to April 1, 2002, in Investor
Class shares of any of the funds currently distributed by ADI (the
Grandfathered Funds) and have continuously maintained such account in Investor
Class shares since April 1, 2002; (2) any person or entity listed in the
account registration for any Grandfathered Funds, which account was established
prior to April 1, 2002 and continuously maintained since April 1, 2002, such as
joint owners, trustees, custodians and designated beneficiaries; (3) customers
of certain financial institutions, wrap accounts or other fee-based advisory
programs, or insurance company separate accounts, which have had relationships
with ADI and/or any of the Grandfathered Funds prior to April 1, 2002 and
continuously maintained such relationships since April 1, 2002; (4) defined
benefit, defined contribution and deferred compensation plans; and (5) fund
trustees, employees of AMVESCAP PLC and its subsidiaries, AMVESCAP directors,
and their immediate families.
SPECIAL PLANS
SYSTEMATIC PURCHASE PLAN
You can arrange for periodic investments in any of the funds by authorizing the
transfer agent to withdraw the amount of your investment from your bank account
on a day or dates you specify and in an amount of at least $50. You may stop
the Systematic Purchase Plan at any time by giving the transfer agent notice
ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one fund account to one or more other fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this
option. Exchanges will occur on (or about) the day of the month you specify, in
the amount you specify. Dollar Cost Averaging cannot be set up for the 29th
through the 31st of the month. The minimum amount you can exchange to another
fund is $50. You may participate in a dollar cost averaging program hosted by
your dealer of record, your financial advisor or another financial
intermediary. If such program is the same or similar to AIM's Dollar Cost
Averaging program and is non-discretionary, both as determined by an AIM
Affiliate, exchanges made pursuant to such program generally will not be
counted toward the trading guideline limitation of four exchanges out of a fund
per calendar year.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same fund. You may invest
your dividends and distributions per the rules listed in the "Permitted
Exchanges" section.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another fund:
(1) Your account balance (a) in the fund paying the dividend must be at least $5,000; and (b) in the fund receiving the dividend must be at least $500; and
(2) Both accounts must have identical registration information.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your fund holdings should be rebalanced, on a percentage basis,
between two and ten of your funds on a quarterly, semiannual or annual basis.
Your portfolio will be rebalanced through the exchange of shares in one or more
of your funds for shares of the same class of one or more other funds in your
portfolio. Rebalancing will NOT occur if your portfolio is within 2% of your
stated allocation. If you wish to participate in the Program, make changes or
cancel the Program, the transfer agent must receive your request to
participate, changes, or cancellation in good order at least five business days
prior to the next rebalancing date, which is normally the 28th day of the last
month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days prior written notice. You may participate in a portfolio rebalancing
program hosted by your dealer of record, your financial advisor or another
financial intermediary. If such program is the same or similar to AIM's
Portfolio Rebalancing Program and is non-discretionary, both as determined by
an AIM Affiliate, exchanges made pursuant to such program generally will not be
counted toward the trading guideline limitation of four exchanges out of a fund
per calendar year.
RETIREMENT PLANS
Shares of most of the funds can be purchased through tax-sheltered retirement
plans made available to corporations, individuals and employees of non-profit
organizations and public schools. A plan document must be adopted to establish
a retirement plan. You may use AIM sponsored retirement plans, which include
IRAs, Roth IRAs, SIMPLE IRA plans, SEP/SARSEP plans, 403(b) plans, Solo 401(k)
plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement
plan. AIM Investment Services, Inc. assesses certain fees associated with the
maintenance of certain types of retirement plan accounts and the provision of
specialized recordkeeping services for those plan accounts. ADI assesses
certain fees associated with the maintenance of retirement plan documents for
which it acts as the prototype sponsor. Contact your financial advisor for
details.
A-8 MCF--10/05 |
THE AIM FUNDS
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 International Growth
AIM European Small Company Fund
Fund
AIM Global Aggressive AIM International Small
Growth Fund Company Fund
AIM Global Equity Fund AIM S&P 500 Index Fund
AIM Global Growth Fund AIM Trimark 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.
REDEMPTION OF CLASS A SHARES AND AIM CASH RESERVE SHARES ACQUIRED BY EXCHANGE If you purchase $1,000,000 or more of Class A shares of any fund, or if you make additional purchases of Class A shares on and after
MCF--10/05 A-9 |
THE AIM FUNDS
October 31, 2002 at net asset value, your shares may be subject to a CDSC upon redemption as described below.
SHARES
INITIALLY SHARES HELD CDSC APPLICABLE UPON
PURCHASED AFTER AN EXCHANGE REDEMPTION OF SHARES
--------- ----------------- -----------------------------
.Class A shares .Class A shares of Category .1% if shares are redeemed
of Category I I or II Fund or AIM Short within 18 months of initial
or II Fund or Term Bond Fund purchase of Category I or
AIM Short .Class A shares of Category II Fund or AIM Short Term
Term Bond III Fund/2/ Bond Fund shares
Fund .AIM Cash Reserve Shares
of AIM Money Market Fund
.Class A shares .Class A shares of Category .1% if shares are redeemed
of Category III I or II Fund or AIM Short within 18 months of initial
Fund/1/ Term Bond Fund purchase of Category III
Fund shares
.Class A shares .Class A shares of Category .No CDSC
of Category III III Fund/2/
Fund/1/ .Class A shares of AIM Tax-
Exempt Cash Fund
.AIM Cash Reserve Shares
of AIM Money Market
|
/1 /As of the close of business on October 30, 2002, only existing shareholders of Class A shares of a Category III Fund may purchase such shares. /2 /Beginning on February 17, 2003, Class A shares of a Category I, II or III Fund or AIM Short Term Bond Fund may not be exchanged for Class A shares of Category III Fund.
REDEMPTION OF CLASS B SHARES ACQUIRED BY EXCHANGE FROM AIM FLOATING RATE FUND If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
HOW TO REDEEM SHARES
----------------------------------------------------------------------------------------
Through a Financial Advisor Contact your financial advisor, including your retirement
plan or program sponsor.
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners
/trustees; (2) the name of the fund and your account
number; (3) if the transfer agent does not hold your
shares, endorsed share certificates or share certificates
accompanied by an executed stock power; and (4) signature
guarantees, if necessary (see below). The transfer agent
may require that you provide additional information, such
as corporate resolutions or powers of attorney, if
applicable. If you are redeeming from an IRA account, you
must include a statement of whether or not you are at least
59 1/2 years old and whether you wish to have federal
income tax withheld from your proceeds. The transfer agent
may require certain other information before you can redeem
from an employer-sponsored retirement plan. Contact your
employer for details.
By Telephone Call the transfer agent at 1-800-959-4246 or our AIM
24-hour Automated Investor Line at 1-800-246-5463. You will
be allowed to redeem by telephone if (1) the proceeds are
to be mailed to the address on record (if there has been no
change communicated to us within the last 30 days) or
transferred electronically to a pre-authorized checking
account; (2) you do not hold physical share certificates;
(3) you can provide proper identification information;
(4) the proceeds of the redemption do not exceed $250,000;
and (5) you have not previously declined the telephone
redemption privilege. Certain retirement accounts and
403(b) plans, may not be redeemed by telephone. For funds
other than Premier Portfolio, Premier Tax-Exempt Portfolio
and Premier U.S. Government Money Portfolio, the transfer
agent must receive your call during the hours of the
customary trading session of the New York Stock Exchange
(NYSE) in order to effect the redemption at that day's
closing price. For Premier Portfolio, Premier Tax-Exempt
Portfolio and Premier U.S. Government Money Portfolio, the
transfer agent must receive your call before the last net
asset value determination on a business day in order to
effect the redemption at that day's closing price. You may,
with limited exceptions, redeem from an IRA account by
telephone. Redemptions from other types of retirement
accounts may be requested in writing.
By Internet Place your redemption request at www.aiminvestments.com.
You will be allowed to redeem by internet if (1) you do not
hold physical share certificates; (2) you can provide
proper identification information; (3) the proceeds of the
redemption do not exceed $ 250,000; and (4) you have
already provided proper bank information. AIM prototype
retirement accounts may not be redeemed on the internet.
For funds other than Premier Portfolio, Premier Tax-Exempt
Portfolio and Premier U.S. Government Money Portfolio, the
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price. For
Premier Portfolio, Premier Tax-Exempt Portfolio and Premier
U.S. Government Money Portfolio, the transfer agent must
confirm your transaction before the last net asset value
determination on a business day in order to effect the
redemption at that day's closing price.
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|
A-10 MCF--10/05 |
THE AIM FUNDS
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared. Payment may be
postponed in cases where the SEC declares an emergency or normal trading is
halted.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you
a check in the amount of the redemption proceeds to the address on record with
us. If your request is not in good order, you may have to provide us with
additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit
them electronically to your pre-authorized bank account. We use reasonable
procedures to confirm that instructions communicated by telephone are genuine,
but we are not liable for telephone instructions that are reasonably believed
to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable
procedures to confirm that instructions communicated by internet are genuine,
but we are not liable for internet instructions that are reasonably believed to
be genuine.
PAYMENT FOR SYSTEMATIC REDEMPTIONS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A
shares. We will redeem enough shares from your account to cover the amount
withdrawn. You must have an account balance of at least $5,000 to establish a
Systematic Redemption Plan. You can stop this plan at any time by giving ten
days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND ONLY)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on
the next business day.
REDEMPTIONS BY CHECK
(CLASS A SHARES OF AIM TAX-EXEMPT CASH FUND, AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND AND INVESTOR CLASS SHARES OF AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH FUND, PREMIER PORTFOLIO, PREMIER TAX-EXEMPT PORTFOLIO AND PREMIER U.S. GOVERNMENT MONEY PORTFOLIO ONLY) You may redeem shares of these funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $250,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
REDEMPTIONS 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).
REDEMPTIONS BY THE FUNDS
If your account (Class A, Class A3, Class B, Class C and Investor Class shares
only) has been open at least one year, you have not made an additional purchase
in the account during the past six calendar months, and the value of your
account falls below $500 ($250 for Investor Class shares) for three consecutive
months due to redemptions or exchanges (excluding retirement accounts), the
funds have the right to redeem the account after giving you 60 days' prior
written notice. You may avoid having your account redeemed during the notice
period by bringing the account value up to $500 ($250 for Investor Class
shares) or by utilizing the Automatic Investment Plan.
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 certain circumstances, exchange shares in one fund for those 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. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
You may be charged a redemption fee on certain redemptions, including
exchanges. See "Redeeming Shares -- Redemption Fee."
MCF--10/05 A-11 |
THE AIM FUNDS
PERMITTED EXCHANGES
Except as otherwise stated under "Exchanges Not Permitted," you generally may
exchange your shares for shares of the same class of another fund.
-----------------------------------------------------------------------------------------------------------------------------
EXCHANGE FROM EXCHANGE TO
-----------------------------------------------------------------------------------------------------------------------------
Class A Class A, A3, Investor Class, or AIM Cash Reserve Shares. Exceptions are:
.Class A Shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund are
currently closed to new investors.
.Class A Shares of AIM Limited Maturity Treasury Fund, AIM Tax-Exempt Cash Fund and AIM Tax-
Free Intermediate Fund cannot be exchanged for Class A3 Shares of those funds.
.Investor Class Shares of all funds are currently offered to new investors only on a limited basis.
-----------------------------------------------------------------------------------------------------------------------------
Class A Class B, C, P, R or Institutional Class Shares.
-----------------------------------------------------------------------------------------------------------------------------
Class A3 Class A, A3, Investor Class, or AIM Cash Reserve Shares. Exceptions are:
.Class A3 Shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund
cannot be exchanged for Class A Shares of those funds.
.Investor Class Shares of all funds are currently offered to new investors only on a limited basis.
-----------------------------------------------------------------------------------------------------------------------------
Class A3 Class B, C, P, R or Institutional Class Shares.
-----------------------------------------------------------------------------------------------------------------------------
Class B Class B. Exceptions are:
.Class B Shares of other funds cannot be exchanged for Class B Shares of AIM Floating Rate
Fund.
-----------------------------------------------------------------------------------------------------------------------------
Class B Class A, A3, C, P, R, AIM Cash Reserve Shares, Institutional or Investor Class Shares.
-----------------------------------------------------------------------------------------------------------------------------
Class C Class C. Exceptions are:
.Class C shares of other funds cannot be exchanged for Class C shares of AIM Floating Rate Fund.
-----------------------------------------------------------------------------------------------------------------------------
Class C Class A, A3, B, P, R, AIM Cash Reserve Shares, Institutional or Investor Class shares.
-----------------------------------------------------------------------------------------------------------------------------
Class R Class R
-----------------------------------------------------------------------------------------------------------------------------
Class R Class A, A3, B, C, P, AIM Cash Reserve Shares, Institutional or Investor Class shares.
-----------------------------------------------------------------------------------------------------------------------------
AIM Cash Reserve Shares Class A, A3, B, C, R, or Investor Class shares. Exceptions are:
.Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund are
currently closed to new investors.
.Shares to be exchanged for Class B, C or R shares must not have been acquired by exchange
from Class A shares of any fund.
.Investor Class Shares of all funds are currently offered to new investors only on a limited basis.
-----------------------------------------------------------------------------------------------------------------------------
AIM Cash Reserve Shares Class P or Institutional Class shares.
-----------------------------------------------------------------------------------------------------------------------------
Institutional Class Institutional Class
-----------------------------------------------------------------------------------------------------------------------------
Institutional Class Class A, A3, B, C, P, R, AIM Cash Reserve Shares or Investor Class shares.
-----------------------------------------------------------------------------------------------------------------------------
Investor Class A, A3, or Investor Class. Exceptions are:
.Investor Class shares cannot be exchanged for Class A shares of any fund which offers Investor
Class shares.
.Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund are
currently closed to new investors.
-----------------------------------------------------------------------------------------------------------------------------
Investor Class Class B, C, P, R, AIM Cash Reserve Shares or Institutional Class shares.
-----------------------------------------------------------------------------------------------------------------------------
Class P Class A, A3, or AIM Cash Reserve Shares. Exceptions are:
.Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund are
currently closed to new investors.
-----------------------------------------------------------------------------------------------------------------------------
Class P Class B, C, R, Institutional or Investor Class shares.
-----------------------------------------------------------------------------------------------------------------------------
|
-----------------------------------------------------------------------------------------------------------------------
EXCHANGE TO ALLOWED PROHIBITED
-----------------------------------------------------------------------------------------------------------------------
Class A, A3, Investor Class, or AIM Cash Reserve Shares. Exceptions are: X
.Class A Shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund are
currently closed to new investors.
.Class A Shares of AIM Limited Maturity Treasury Fund, AIM Tax-Exempt Cash Fund and AIM Tax-
Free Intermediate Fund cannot be exchanged for Class A3 Shares of those funds.
.Investor Class Shares of all funds are currently offered to new investors only on a limited basis.
-----------------------------------------------------------------------------------------------------------------------
Class B, C, P, R or Institutional Class Shares. X
-----------------------------------------------------------------------------------------------------------------------
Class A, A3, Investor Class, or AIM Cash Reserve Shares. Exceptions are: X
.Class A3 Shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund
cannot be exchanged for Class A Shares of those funds.
.Investor Class Shares of all funds are currently offered to new investors only on a limited basis.
-----------------------------------------------------------------------------------------------------------------------
Class B, C, P, R or Institutional Class Shares. X
-----------------------------------------------------------------------------------------------------------------------
Class B. Exceptions are: X
.Class B Shares of other funds cannot be exchanged for Class B Shares of AIM Floating Rate
Fund.
-----------------------------------------------------------------------------------------------------------------------
Class A, A3, C, P, R, AIM Cash Reserve Shares, Institutional or Investor Class Shares. X
-----------------------------------------------------------------------------------------------------------------------
Class C. Exceptions are: X
.Class C shares of other funds cannot be exchanged for Class C shares of AIM Floating Rate Fund.
-----------------------------------------------------------------------------------------------------------------------
Class A, A3, B, P, R, AIM Cash Reserve Shares, Institutional or Investor Class shares. X
-----------------------------------------------------------------------------------------------------------------------
Class R X
-----------------------------------------------------------------------------------------------------------------------
Class A, A3, B, C, P, AIM Cash Reserve Shares, Institutional or Investor Class shares. X
-----------------------------------------------------------------------------------------------------------------------
Class A, A3, B, C, R, or Investor Class shares. Exceptions are: X
.Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund are
currently closed to new investors.
.Shares to be exchanged for Class B, C or R shares must not have been acquired by exchange
from Class A shares of any fund.
.Investor Class Shares of all funds are currently offered to new investors only on a limited basis.
-----------------------------------------------------------------------------------------------------------------------
Class P or Institutional Class shares. X
-----------------------------------------------------------------------------------------------------------------------
Institutional Class X
-----------------------------------------------------------------------------------------------------------------------
Class A, A3, B, C, P, R, AIM Cash Reserve Shares or Investor Class shares. X
-----------------------------------------------------------------------------------------------------------------------
A, A3, or Investor Class. Exceptions are: X
.Investor Class shares cannot be exchanged for Class A shares of any fund which offers Investor
Class shares.
.Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund are
currently closed to new investors.
-----------------------------------------------------------------------------------------------------------------------
Class B, C, P, R, AIM Cash Reserve Shares or Institutional Class shares. X
-----------------------------------------------------------------------------------------------------------------------
Class A, A3, or AIM Cash Reserve Shares. Exceptions are: X
.Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund are
currently closed to new investors.
-----------------------------------------------------------------------------------------------------------------------
Class B, C, R, Institutional or Investor Class shares. X
-----------------------------------------------------------------------------------------------------------------------
|
A-12 MCF--10/05 |
THE AIM FUNDS
You may be required to pay an initial sales charge when exchanging from a fund with a lower initial sales charge than the one into which you are exchanging. If you exchange into shares that are subject to a CDSC, we will begin the holding period for purposes of calculating the CDSC on the date you made your initial purchase.
EXCHANGES NOT SUBJECT TO A SALES CHARGE
You will not pay an initial sales charge when exchanging:
(1) Class A shares with an initial sales charge (excluding Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
(a) Class A shares of another fund;
(b) AIM Cash Reserve Shares of AIM Money Market Fund; or
(c) Class A3 shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free
Intermediate Fund.
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund with an initial sales charge for
(a) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(b) Class A shares of another Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an
exchange from shares with higher initial sales charges; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) Class A shares of a fund subject to an initial sales charge (excluding
Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an
initial sales charge (excluding Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(4) Class A3 shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free
Intermediate Fund for
(a) AIM Cash Reserve Shares of AIM Money Market Fund; or
(b) Class A shares of AIM Tax-Exempt Cash Fund; or
(5) Investor Class shares for Class A or Class A3 shares of any fund which does not offer Investor Class shares.
You will not pay a CDSC or other sales charge when exchanging:
(1) Class A shares for other Class A shares;
(2) Class B shares for other Class B shares;
(3) Class C shares for other Class C shares;
(4) Class R shares for other Class R shares.
EXCHANGES NOT PERMITTED
For shares purchased prior to November 15, 2001, you may not exchange:
(1) Class A shares of Category I or II funds (i) subject to an initial sales charge or (ii) purchased at net asset value and subject to a contingent deferred sales charge (CDSC) for Class A shares of AIM Tax-Exempt Cash Fund;
(2) Class A shares of Category III funds purchased at net asset value for Class A shares of a Category I or II fund, Class A shares of AIM Short Term Bond Fund;
(3) on or after January 15, 2002, AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category III AIM Funds that are subject to a CDSC.
For shares purchased on or after November 15, 2001, you may not exchange:
(1) Class A shares of Category I or II fund, Class A shares of AIM Short Term Bond Fund (i) subject to an initial sales charge or (ii) purchased at net asset value and subject to a CDSC for Class A shares of AIM Tax-Exempt Cash Fund;
(2) Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of any other fund (i) subject to an initial sales charge or (ii) purchased at net asset value and subject to a CDSC or for AIM Cash Reserve Shares of AIM Money Market Fund; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any fund or for Class A shares of any fund that are subject to a CDSC, however, if you originally purchased Class A shares of a Category I or II fund or AIM Short Term Bond Fund, and exchanged those shares for AIM Cash Reserve Shares of AIM Money Market Fund, you may further exchange the AIM Cash Reserve Shares for Class A shares of a Category I or II fund or AIM Short Term Bond Fund.
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.
MCF--10/05 A-13 |
THE AIM FUNDS
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 MAIL
If you wish to make an exchange by mail, you must include original signatures
of each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the funds from which and into which the exchange is
to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if you do not hold physical share
certificates and you provide the proper identification information.
EXCHANGING CLASS B, CLASS C AND CLASS R SHARES
If you make an exchange involving Class B or Class C shares or Class R shares
subject to a CDSC, the amount of time you held the original shares will be
credited to the holding period of the Class B, Class C or Class R shares,
respectively, into which you exchanged for the purpose of calculating
contingent deferred sales charges (CDSC) if you later redeem the exchanged
shares. If you redeem Class B or Class C shares acquired by exchange via a
tender offer by AIM Floating Rate Fund, you will be credited with the time
period you held the Class B or Class C shares of AIM Floating Rate Fund for the
purpose of computing the early withdrawal charge applicable to those shares.
Each fund and its agents reserve the right at any time to:
. reject or cancel all or any part of any purchase or exchange order;
. modify any terms or conditions of purchase of shares of any fund;
. reject or cancel any request to establish the Systematic Purchase Plan and
Systematic Redemption Plan options on the same account; or
. suspend, change or withdraw all or any part of the offering made by this
prospectus.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each 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 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.
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
A-14 MCF--10/05 |
THE AIM FUNDS
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 (a business day), 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 business
day. Premier Portfolio, Premier Tax-Exempt Portfolio and Premier U.S.
Government Money Portfolio determine the net asset value of their shares every
fifteen minutes on each business day, beginning at 8:00 a.m. Eastern Time. The
last net asset value determination on any business day for Premier Portfolio
and Premier U.S. Government Money Portfolio will generally occur at 5:30 p.m.
Eastern Time, and the last net asset value determination on any business day
for Premier Tax-Exempt Portfolio will generally occur at 4:30 p.m. Eastern
Time. Premier Portfolio, Premier Tax-Exempt Portfolio and Premier U.S.
Government Money Portfolio are authorized not to open for trading on a day that
is otherwise a business day if the Bond Market Association recommends that
government securities dealers not open for trading and any such day will not be
considered a business day. Premier Portfolio, Premier Tax-Exempt Portfolio and
Premier U.S. Government Money Portfolio also may close early on a business day
if the Bond Market Association recommends that government securities dealers
close early. If Premier Portfolio, Premier Tax-Exempt Portfolio or Premier U.S.
Government Money Portfolio uses its discretion to close early on a business
day, the last net asset value calculation will occur as of the time of such
closing.
TIMING OF ORDERS
For funds other than Premier Portfolio, Premier Tax-Exempt Portfolio and
Premier U.S. Government Money Portfolio, you can purchase or redeem shares on
each business day prior to the close of the customary trading session or any
earlier NYSE closing time that day. For funds other than Premier Portfolio,
Premier Tax-Exempt Portfolio and Premier U.S. Government Money Portfolio,
purchase orders that are received and accepted before the close of the
customary trading session or any earlier NYSE closing time on a business day
generally are processed that day and settled on the next business day.
For Premier Portfolio, Premier Tax-Exempt Portfolio and Premier U.S.
Government Money Portfolio, you can purchase or redeem shares on each business
day, prior to the last net asset value determination on such business day;
however, if your order is received and accepted after the close of the
customary trading session or any earlier NYSE closing time that day, your order
generally will be processed on the next business day and settled on the second
business day following the receipt and acceptance of your order.
For all funds, you can exchange shares on each business day, prior to the
close of the customary trading session or any earlier NYSE closing time that
day. Shareholders of Premier Portfolio, Premier Tax-Exempt Portfolio and
Premier U.S. Government Money Portfolio therefore cannot exchange their shares
after the close of the customary trading session or any earlier NYSE closing
time on a particular day, even though these funds remain open after such
closing time.
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 unusual circumstances, as
allowed by the Securities and Exchange Commission, such as when the NYSE
restricts or suspends trading.
MCF--10/05 A-15 |
THE AIM FUNDS
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.
A-16 MCF--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 each fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about each fund's investments. Each fund's annual report also discusses the market conditions and investment strategies that significantly affected each fund's performance during its last fiscal year. Each 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(R) or your account, or wish to obtain free copies of a fund's current SAI or annual or semiannual reports, please contact us by mail at AIM Investment Services, Inc. P. O. Box 4739 Houston, TX 77210-4739 or
BY TELEPHONE: (800) 959-4246
ON THE INTERNET: You can send us a request
by e-mail or download
prospectuses, SAI, annual or
semiannual reports via our
website:
HTTP://WWW.AIMINVESTMENTS.COM
|
You also can review and obtain copies of a SAI, financial reports, the fund's Forms N-Q and other information at the SEC's Public Reference Room in Washington, D.C.; 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, D.C. 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 Energy Fund
AIM Financial Services Fund
AIM Gold & Precious Metals Fund
AIM Leisure Fund
AIM Technology Fund
AIM Utilities Fund
SEC 1940 Act file number: 811-3826
The fund's most recent portfolio holdings, as filed on Form N-Q, are also
available at www.aiminvestments.com.
AIMinvestments.com [LOGO]
I-SEC-PRO-1 Your goals. Our solutions.(R) AIM INVESTMENTS(R)
|
PROSPECTUS | October 25, 2005
AIM UTILITIES FUND -- INSTITUTIONAL CLASS
A no-load class of shares of a mutual fund designed for investors seeking capital growth and income from the utilities sector.
TABLE OF CONTENTS Investment Goals, Strategies, And Risks.....................................2 Fund Performance............................3 Fee Table And Expense Example...............4 Disclosure of Portfolio Holdings............5 Investment Risks............................5 Principal Risks Associated With The Fund......................................5 Temporary Defensive Positions...............6 Fund Management.............................6 Portfolio Managers..........................7 Dividends And Capital Gain Distributions.............................7 Financial Highlights........................9 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-6 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.
The Securities and Exchange Commission has not approved or disapproved the
shares of the fund. Likewise, the
Commission has not determined if this Prospectus is truthful or complete.
Anyone who tells you otherwise is committing a federal crime.
AIM SECTOR FUNDS
[LOGO]
Your goals. Our solutions.(R) AIM INVESTMENTS(R)
A I M Advisors, Inc. (AIM or the advisor) is the investment advisor for the AIM Utilities Fund (the fund).
This Prospectus contains important information about the fund's Institutional Class shares, which are offered only to institutional investors and qualified retirement plans. The fund also offers one or more additional classes of shares through a separate prospectus. Each of the fund's classes has varying expenses, with resulting effects on their performance. You can choose the class of shares that is best for you based on how much you plan to invest and other relevant factors discussed in "How To Buy Shares." To obtain additional information about other classes of shares, contact A I M Distributors, Inc. (ADI) at 1-800-347-4246.
THIS PROSPECTUS WILL TELL YOU MORE ABOUT:
INVESTMENT GOALS & STRATEGIES [GRAPHIC]
POTENTIAL INVESTMENT RISKS [GRAPHIC]
[GRAPHIC]
PAST PERFORMANCE
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[GRAPHIC]
[GRAPHIC]
INVESTMENT GOALS, STRATEGIES, AND RISKS
FOR MORE DETAILS ABOUT The fund seeks capital growth and income. It is THE FUND'S CURRENT IN- actively managed. The fund invests primarily in VESTMENTS AND MARKET equity securities that the advisor believes will |
OUTLOOK, PLEASE SEE THE rise in price faster than other securities, as MOST RECENT ANNUAL OR well as options and other investments whose SEMIANNUAL REPORT. values are based upon the values of equity securities.
The fund normally invests at least 80% of its net assets in the equity securities and equity-related instru-ments of companies engaged in utilities-related industries. These include, but are not limited to, compa-nies that produce, generate, transmit, or distribute natural gas or electricity, as well as companies that provide telecommunications services, including local, long distance and wireless. At any given time, 20%
of the fund's assets are not required to be invested in the sector. To
determine whether a potential investment is truly doing business in the
utilities sector, a company must meet at least one of the following tests:
. At least 50% of its gross income or its net sales must come from
activities in the utilities sector;
. At least 50% of its assets must be devoted to producing revenues from
the utilities sector; or
. Based on other available information, we determine that its primary
business is within the utilities sector.
The fund may invest up to 25% of its assets in securities of non-U.S. issuers. Securities of Canadian issuers and American Depository Receipts are not subject to this 25% limitation.
The advisor uses a research-oriented "bottom-up" investment approach to create the fund's investment portfolio, focusing on company fundamentals and growth prospects when selecting securities. In general, the fund emphasizes strongly managed companies that the advisor believes will generate above-average long-term capital appreciation.
Governmental regulation, difficulties in obtaining adequate financing and investment return, environmental issues, prices of fuel for generation of electricity, availability of natural gas, risks associated with power marketing and trading, and risks associated with nuclear power facilities may adversely affect the market value of the fund's holdings. The recent trend towards deregulation in the utility industries presents special risks. Some companies may be faced with increased competition and may become less profitable.
Normally, the advisor seeks to keep the portfolio divided among the electric utilities, natural gas, and telecommunications industries. Weightings within the various industry segments are continually monitored, and we adjust the portfolio weightings depending on the prevailing economic conditions.
Growth investing may be more volatile than other investment styles because growth stocks are more sensitive to investor perceptions of an issuing company's growth potential. Growth-oriented funds typically will underperform value-oriented funds when investor sentiment favors the value investing style.
As a sector fund, the portfolio is concentrated in a comparatively narrow segment of the economy. This means the fund's investment concentration in a sector is higher than most mutual funds and the broad securities markets. Consequently, the fund tends to be more volatile than other mutual funds and the value of the portfolio investments and consequently an investment in the fund tend to go up and down more rapidly.
Other principal risks involved in investing in the fund are market, foreign securities, liquidity, derivatives, counterparty, and lack of timely information risks. These risks are described and discussed later in the Prospectus under the headings "Investment Risks" and "Principal Risks Associated With The Fund." An investment in the fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. As with any other mutual fund, there is always a risk that you may lose money on your investment in the fund.
FUND PERFORMANCE [GRAPHIC]
Performance information in the bar chart below is that of the fund's Investor Class shares which has the longest operating history of the Fund's classes. Information included in the table is that of Investor Class shares. The returns reflected in the bar chart reflect only the applicable total expenses of the Investor Class. 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 bar chart below shows the fund's Investor Class shares' actual yearly performance (commonly known as its "total return") for the years ended December 31 over the previous ten year period. The table below shows pre-tax and after-tax average annual total returns for various periods ended December 31, 2004 compared to the S&P 500 Index and Lipper Utility Fund Index.
After-tax returns are provided on a pre-redemption and post-redemption basis. Pre-redemption returns assume you continue to hold your shares and pay taxes on fund distributions (i.e., dividends and capital gains) but do not reflect taxes that may be incurred upon selling or exchanging shares. Post-redemption returns assume payment of taxes on fund distributions and also that you close your account and pay remaining federal taxes. After-tax returns are calculated using the highest individual federal marginal income tax rates in effect at the time the distribution is paid. State and local taxes are not considered. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. For investors holding their shares in tax-deferred arrangements such as 401(k) plans or individual retirement accounts, the after-tax returns shown are not relevant.
The information in the bar chart illustrates the variability of the fund's Investor Class shares' total return by showing changes in the fund's performance year to year. The information in the table illustrates the variability of the fund's Investor Class shares' total return compared to a broad-based securities market index and a peer group index. The indices may not reflect payment of fees, expenses or taxes. The fund is not managed to track the performance of any particular index, including the indices shown below, and consequently, the performance of the fund may deviate significantly from the performance of the indices shown below. Remember, past performance (before and after taxes) does not indicate how a fund will perform in the future.
[CHART]
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 ----- ------ ------ ------ ------ ------ ------ ------ ------ ------ 25.26% 12.75% 24.38% 24.30% 19.88% 4.14% (33.98%) (22.29%) 17.64% 25.33% |
/1/ Returns before taxes for Investor Class shares of AIM Utilities Fund
year-to-date as of the calendar quarter ended September 30, 2005 was
[ %].
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AVERAGE ANNUAL TOTAL RETURN/1,2/
--------------------------------------------------------------------------------------
(for the periods 10 YEARS
ended December 31, 2004) 1 YEAR 5 YEARS OR SINCE INCEPTION
AIM UTILITIES FUND
Investor Class
Return Before Taxes 25.33% (4.66%) 7.51%
Return After Taxes on Distributions 24.81% (5.40%) 6.03%
Return After Taxes on Distributions and Sale of
Fund Shares 17.03% (4.19%) 5.80%
S&P 500/3,4/ 10.87% (2.30%) 12.07%
Lipper Utility Fund Index/5/ 23.90% (0.11%) 8.95%
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/1/ Total return figures include reinvested dividends and capital gain
distributions and the effect of the Investor Class expenses.
/2/ The fund (Investor Class shares) commenced investment operations on June 2,
1986. The inception date of the fund's Institutional Class shares is
October 25, 2005.
/3/ The Standard & Poor's 500 Index measures the performance of the 500 most
widely held common stocks and is considered one of the best indicators of
U.S. stock market performance.
/4/ The fund has also included the Lipper Utility Fund Index (which may or may
not include the fund) for comparison to a peer group.
/5/ The Lipper Utility Fund Index is an equally weighted representation of the
10 largest funds in the Lipper Utility category. These funds invest at
least 65% of their equity portfolios in utility shares.
FEE TABLE AND EXPENSE EXAMPLE
This table describes the fees and expenses that you may pay if you buy and hold Institutional Class shares of the fund.
SHAREHOLDER FEES PAID DIRECTLY FROM YOUR ACCOUNT
You pay no fees to purchase Institutional Class shares of the fund, to exchange to another AIM Fund, or to sell your shares. Accordingly, no fees are paid directly from your shareholder account.
ANNUAL FUND OPERATING EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS/1/
AIM UTILITIES FUND -- INSTITUTIONAL CLASS
Management Fees 0.75%
Distribution and Service (12b-1) Fees None
Other Expenses/2/ 0.19%
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Total Annual Fund Operating Expenses/3/ 0.94%
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/1/ There is no guarantee that actual expenses will be the same as those shown in the table.
/2/ Other expenses are based on estimated amounts for the current fiscal year.
/3/ The 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) to 2.15% on
Institutional Class shares. 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. This
expense limitation agreement is in effect through March 31, 2006.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeemed 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 $96 $300 $520 $1,155 |
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 the fund's expenses, including investment advisory fees and other fund costs, on the fund's return over a 10-year period. Because the 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 the fund's fees and expenses on your investment. Assuming a hypothetical investment of $10,000 in the Institutional Class shares of the 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 the Institutional Class, 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 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.
ANNUAL EXPENSE RATIO 0.94% YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 -------------------------------------------------------------------------------------------------------------------------- Cumulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% Cumulative Return After Expenses 4.06% 8.28% 12.68% 17.26% 22.02% 26.97% 32.13% 37.49% End of Year Balance $10,406.00 $10,828.48 $11,268.12 $11,725.61 $12,201.67 $12,697.05 $13,212.55 $13,748.98 Estimated Annual Expenses $ 95.91 $ 99.80 $ 103.85 $ 108.07 $ 112.46 $ 117.02 $ 121.78 $ 126.72 -------------------------------------------------------------------------------------------------------------------------- |
ANNUAL EXPENSE RATIO 0.94% YEAR 9 YEAR 10 ------------------------------------------------- Cumulative Return Before Expenses 55.13% 62.89% Cumulative Return After Expenses 43.07% 48.88% End of Year Balance $14,307.19 $14,888.06 Estimated Annual Expenses $ 131.86 $ 137.22 ------------------------------------------------- |
DISCLOSURE OF PORTFOLIO HOLDINGS
The 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 the fund's first and third fiscal quarter-ends. In addition, portfolio holdings information for the fund is available at (http://www.aiminvestments.com). To reach this information, access the fund's overview page on the website. Links to the following fund information are located in the upper right side of this website page:
INFORMATION APPROXIMATE DATE OF INFORMATION REMAINS POSTED ON
WEBSITE POSTING 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 calendar 30 days after calendar quarter end For one year
quarter end
------------------------------------------------------------------------------------------------------------
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A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information, which is available at (http://www.aiminvestments.com).
INVESTMENT RISKS [GRAPHIC]
BEFORE INVESTING IN THE You should determine the level of risk with which
FUND, YOU SHOULD DE- you are comfortable before you invest. The
TERMINE THE LEVEL OF principal risks of investing in any mutual fund,
RISK WITH WHICH YOU ARE including the fund, are:
COMFORTABLE. TAKE INTO
ACCOUNT FACTORS LIKE NOT INSURED. Mutual funds are not insured by the
YOUR AGE, CAREER, IN- FDIC or any other agency, unlike bank deposits
COME AND TIME HORIZON. such as CDs or savings accounts.
NO GUARANTEE. No mutual fund can guarantee that it will meet its investment objectives.
POSSIBLE LOSS OF INVESTMENT. A mutual fund cannot guarantee its performance, nor assure you that the market value of your investment will increase. You may lose the money you invest, and the fund will not reimburse you for any of these losses.
VOLATILITY. The price of your mutual fund shares will increase or decrease with changes in the value of the fund's underlying investments and changes in the equity markets as a whole.
NOT A COMPLETE INVESTMENT PLAN. An investment in any mutual fund does not constitute a complete investment plan. The fund is designed to be only part of your personal investment plan.
[GRAPHIC]
PRINCIPAL RISKS ASSOCIATED WITH THE FUND
You should consider the special risk factors discussed below associated with the fund's policies in determining the appropriateness of investing in the fund. See the Statement of Additional Information for a discussion of additional risk factors.
MARKET RISK
Equity stock prices vary and may fall, thus reducing the value of the fund's investments. Certain stocks selected for the fund's portfolio may decline in value more than the overall stock market. In general, the securities of small companies are more volatile than those of mid-size companies or large companies.
FOREIGN SECURITIES RISKS
Investments in foreign and emerging markets carry special risks, including currency, political, regulatory, and diplomatic risks.
CURRENCY RISK. A change in the exchange rate between U.S. dollars and a foreign currency may reduce the value of the fund's investment in a security valued in the foreign currency, or based on that currency value.
POLITICAL RISK. Political actions, events, or instability may result in unfavorable changes in the value of a security.
REGULATORY RISK. Government regulations may affect the value of a security. In foreign countries, securities markets that are less regulated than those in the U.S. may permit trading practices that are not allowed in the U.S.
DIPLOMATIC RISK. A change in diplomatic relations between the U.S. and a foreign country could affect the value or liquidity of investments.
LIQUIDITY RISK
The fund's portfolio is liquid if the fund is able to sell the securities it owns at a fair price within a reasonable time. Liquidity is generally related to the market trading volume for a particular security. Investments in smaller companies or in foreign companies or companies in emerging markets are subject to a variety of risks, including potential lack of liquidity.
COUNTERPARTY RISK
This is a risk associated primarily with repurchase agreements and some derivatives transactions. It is the risk that the other party in the transaction will not fulfill its contractual obligation to complete the transaction with the fund.
LACK OF TIMELY INFORMATION RISK
Timely information about a security or its issuer may be unavailable, incomplete, or inaccurate. This risk is more common to securities issued by foreign companies and companies in emerging markets than it is to the securities of U.S.-based companies.
PORTFOLIO TURNOVER RISK
A fund's investments may be bought and sold relatively frequently. A high turnover rate may affect a fund's performance because it results in higher brokerage commissions and may result in taxable gain distributions to a fund's shareholders.
Although the fund generally invests in equity securities of companies in the utilities sector, the fund also may invest in other types of securities and other financial instruments, indicated in the chart below. Although these investments typically are not part of the fund's principal investment strategy, they may constitute a significant portion of the fund's portfolio, thereby possibly exposing the fund and its investors to the following additional risks.
INVESTMENT RISKS -------------------------------------------------------------------------------------------------------------------------- AMERICAN DEPOSITARY RECEIPTS (ADRS) These are securities issued by U.S. banks that represent shares of foreign corporations Market, Information, Political, held by those banks. Although traded in U.S. securities markets and valued in U.S. Regulatory, Diplomatic, Liquidity, dollars, ADRs carry most of the risks of investing directly in foreign securities. and Currency Risks -------------------------------------------------------------------------------------------------------------------------- REPURCHASE AGREEMENTS A contract under which the seller of a security agrees to buy it back at an agreed-upon Counterparty Risk price and time in the future. -------------------------------------------------------------------------------------------------------------------------- |
TEMPORARY DEFENSIVE POSITIONS [GRAPHIC]
When securities markets or economic conditions are unfavorable or unsettled, we might try to protect the assets of the fund by investing in securities that are highly liquid, such as high-quality money market instruments like short-term U.S. government obligations, commercial paper or repurchase agreements, even though that is not the normal investment strategy of the fund. We have the right to invest up to 100% of the fund's assets in these securities, although we are unlikely to do so. Even though the securities purchased for defensive purposes often are considered the equivalent of cash, they also have their own risks. Investments that are highly liquid or comparatively safe tend to offer lower returns. Therefore, the fund's performance could be comparatively lower if it concentrates in defensive holdings.
FUND MANAGEMENT
INVESTMENT ADVISOR
AIM AND ADI ARE SUBSIDIARIES AIM is the investment advisor for the fund and is OF AMVESCAP PLC, AN INTERNA- responsible for its day-to-day management. AIM is
TIONAL INVESTMENT MANAGE- located at 11 Greenway Plaza, Suite 100, Houston,
MENT COMPANY THAT MANAGES Texas 77046-1173. AIM supervises all aspects of
MORE THAN $373 BILLION IN the fund's operations and provides investment
ASSETS WORLDWIDE AS OF advisory services to the fund, including
JUNE 30, 2005. AMVESCAP IS obtaining and evaluating economic, statistical
BASED IN LONDON, WITH MONEY and financial information to formulate and
MANAGERS LOCATED IN EUROPE, implement invest-ment programs for the fund. AIM
NORTH AND SOUTH AMERICA, has acted as an investment advisor since its
AND THE FAR EAST. organization in 1976. Today, AIM, together with
its subsidiaries, advises or manages over 200
investment portfolios, en-compassing a broad
range of investment objectives.
ADI is the fund's distributor and is responsible
for the sale of the fund's shares.
AIM and ADI are subsidiaries of AMVESCAP PLC and
are also affiliates.
The following table shows the fees the fund paid
to AIM for its advisory services in the fiscal
year ended March 31, 2005.
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ADVISORY FEE AS A PERCENTAGE OF
FUND AVERAGE ANNUAL NET ASSETS UNDER MANAGEMENT
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AIM Utilities Fund 0.66%
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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.
PORTFOLIO MANAGERS
The following individuals are jointly and primarily responsible for the day-to-day management of the fund's portfolio:
JOHN S. SEGNER, Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with AIM and/or its affiliates since 1997.
Mr. Segner is assisted by the Utilities Team 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 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.
The fund's Statement of Additional Information provides additional information about the portfolio manager investments in the fund, a description of his compensation structure, and information regarding other accounts he manages.
DIVIDENDS AND CAPITAL GAIN DIST[RGIRBAUPTHIIOCN]S
The fund earns ordinary or investment income primarily from dividends and interest on its investments. The fund expects to distribute substantially all of this investment income, less fund expenses, to shareholders quarterly. The fund can make distributions at other times, if it chooses to do so.
The fund also realizes capital gains or losses when it sells securities in its portfolio for more or less than it had paid for them. If total gains on sales exceed total losses (including losses carried forward from previous years), the fund has a net realized capital gain. Net realized capital gain, if any, is distributed to shareholders at least annually, usually in December. Dividends and capital gain distributions are paid to you if you hold shares on the record date of the distribution regardless of how long you have held your shares.
NET INVESTMENT INCOME AND NET Under present federal income tax laws, capital
REALIZED CAPITAL GAINS IF ANY ARE gains may be taxable at different rates,
DISTRIBUTED TO SHAREHOLDERS AT depend-ing on how long the fund has held the
LEAST ANNUALLY. DISTRIBUTIONS ARE underlying investment. Short-term capital gains
TAXABLE WHETHER REINVESTED IN which are derived from the sale of assets held
ADDITIONAL SHARES OR PAID TO YOU one year or less are taxed as ordinary income.
IN CASH (EXCEPT FOR TAX-EXEMPT Long-term capital gains which are derived from
ACCOUNTS). the sale of assets held for more than one year
are taxed at up to the maximum capital gains
rate, currently 15% for individuals.
The fund's daily NAV reflects all ordinary income
and realized capital gains that have not yet been
distributed to shareholders. Therefore, the
fund's NAV will drop by the amount of a
dis-tribution, net of market fluctuations, on the
day the distribution is declared. If you buy
shares of the fund just before a distribution is
declared, you may wind up "buying a distribution."
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This means that if the fund declares a dividend or capital gain distribution shortly after you buy, you will receive some of your investment back as a taxable distribution. Although purchasing your shares at the resulting higher NAV may mean a smaller capital gain or greater loss upon sale of the shares, most shareholders want to avoid the purchase of shares immediately before the distribution record date. However, keep in mind that your basis in the fund will be increased to the extent such distributions are reinvested in the fund. If you sell your shares at a loss for tax purposes and then replace those shares with a substantially identical investment either thirty days before or after that sale, the transaction is usually considered a "wash sale" and you will not be able to claim a tax loss at the time of sale. Instead, the loss will be deferred to a later date.
Dividends and capital gain distributions paid by the fund are automatically reinvested in additional fund shares at the NAV on the ex-distribution date, unless you choose to have them automatically reinvested in the same share class of another AIM fund or paid to you by check or electronic funds transfer. If you choose to be paid by check, the minimum amount of the check must be at least $10; amounts less than that will be automatically reinvested.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial performance of the fund's Investor Class shares. Certain information reflects financial results for a single fund share. The total returns in the table represent the annual percentage that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, independent Registered Public Accounting Firm, whose report, along with the financial statements, is included in the fund's 2005 Annual Report to Shareholders. AIM Utilities Institutional Class shares commenced operations on October 25, 2005 and therefore, financial information for such shares is not available.
----------------------------------------------------
YEAR ENDED MARCH 31
--------------------------------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
AIM UTILITIES FUND -- INVESTOR CLASS
Net Asset Value -- Beginning of Period $10.18 $8.19 $10.66 $16.20 $20.42
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INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.31/(a)/ 0.22/(a)/ 0.23 0.15 0.13
Net Gains (Losses) on Securities (Both Realized and Unrealized) 2.21 2.01 (2.46) (5.54) (3.22)
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TOTAL FROM INVESTMENT OPERATIONS 2.52 2.23 (2.23) (5.39) (3.09)
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LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.32) (0.24) (0.24) (0.15) (0.13)
Distributions from Net Realized Gains -- -- -- -- (1.00)
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TOTAL DISTRIBUTIONS (0.32) (0.24) (0.24) (0.15) (1.13)
--------------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $12.38 $10.18 $8.19 $10.66 $16.20
====================================================================================================================
TOTAL RETURN/(B)/ 25.08% 27.50% (20.99)% (33.34)% (15.18)%
RATIOS/SUPPLEMENTAL DATA
Net Assets -- End of Period (000s Omitted) $79,536 $69,065 $72,749 $124,578 $232,877
RATIO OF EXPENSES TO AVERAGE NET ASSETS
With Fee Waivers and/or Expense Reimbursements 1.30%/(c)/ 1.30% 1.30% 1.30% 1.30%
Without Fee Waivers and/or Expense Reimbursements 1.46%/(c)/ 2.01% 1.90% 1.57% 1.40%
Ratio of Net Investment Income to Average Net Assets 2.86%/(c)/ 2.37% 2.63% 1.09% 0.74%
Portfolio Turnover Rate 33% 101% 64% 56% 49%
|
(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.
(c)Ratios are based on average daily net assets of $72,041,996.
THE AIM FUNDS
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
TYPE OF ACCOUNT INVESTMENTS
--------------------------------------------------------------------------------------------------------------------------------
Defined Benefit Plans or Platform Sponsors for Defined Contribution Plans $ 0
--------------------------------------------------------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------------------------------------------------------
Defined Contribution Plans (Corporate, Non-profit or Governmental) 10 million
--------------------------------------------------------------------------------------------------------------------------------
|
ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS
-------------------------------------------------------------------------------------------------------------------------------
Defined Benefit Plans or Platform Sponsors for Defined Contribution Plans 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 no minimum
-------------------------------------------------------------------------------------------------------------------------------
Defined Contribution Plans (Corporate, Non-profit or Governmental) 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 Same
advisor.
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 Call the transfer agent at
described above. (800) 659-1005 and wire
payment for your purchase
order in accordance with the
wire instructions noted above.
--------------------------------------------------------------------------------------------
|
INSTCL--10/05 A-1 |
THE AIM FUNDS
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 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.
A-2 INSTCL--10/05 |
THE AIM 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 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.
INSTCL--10/05 A-3 |
THE AIM FUNDS
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".
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 AIM International Growth
Company Fund Fund
AIM Global Aggressive AIM International Small
Growth Fund Company Fund
AIM Global Equity Fund AIM S&P 500 Index Fund
AIM Global Growth Fund AIM Trimark 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.
A-4 INSTCL--10/05 |
THE AIM FUNDS
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.
HOW TO REDEEM SHARES
----------------------------------------------------------
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.
INSTCL--10/05 A-5 |
THE AIM FUNDS
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
Each fund and its agents reserve the right at any time to:
. reject or cancel all or any part of any purchase or exchange order;
. modify any terms or conditions of purchase of shares of any fund; or
. suspend, change or withdraw all or any part of the offering made by this
prospectus.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each 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.
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,
A-6 INSTCL--10/05 |
THE AIM FUNDS
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
unusual circumstances,
as allowed by the Securities and Exchange Commission, such as when the NYSE
restricts or suspends trading.
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 A-7 |
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. 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 this fund, another fund in The AIM Family of Funds(R) 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 SAI annual or
semiannual reports via our
website:
HTTP://WWW.AIMINVESTMENTS.COM
|
You also can 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, D.C.; 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, D.C. 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 Utilities Fund
SEC 1940 Act file number: 811-3826
The fund's most recent portfolio holdings, as filed on Form N-Q, are also available at www.aiminvestments.com.
AIMinvestments.com [LOGO]
I-UTI-PRO-1 Your goals. Our solutions.(R) AIM INVESTMENTS(R)
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STATEMENT OF
ADDITIONAL INFORMATION
AIM SECTOR FUNDS
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
This Statement of Additional Information relates to the Investor Class, Class A, Class B, Class C, Class R and Institutional Class shares, as applicable, of each portfolio (each a "Fund," collectively the "Funds") of AIM Sector Funds listed below. This Statement of Additional Information is not a Prospectus, and it should be read in conjunction with the Prospectuses for the Investor Class, Class A, Class B, Class C, Class R and Institutional Class shares, as applicable, of the Funds listed below. You may obtain a copy of any Prospectus for any Fund listed below from an authorized dealer or by writing to:
AIM Investment Services, Inc. P. O. Box 4739 Houston, Texas 77210-4739 or by calling (800) 959-4246
This Statement of Additional Information dated October 25, 2005, relates to the Investor Class, Class A, Class B, Class C, Class R and Institutional Class shares, as applicable, of the following Prospectuses:
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FUND Dated
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AIM Energy Fund October 25, 2005
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AIM Financial Services Fund October 25, 2005
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AIM Gold & Precious Metals Fund October 25, 2005
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AIM Leisure Fund October 25, 2005
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AIM Technology Fund July 29, 2005
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AIM Utilities Fund October 25, 2005
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Table of Contents
General Information About the Trust...........................................3 Investments, Policies and Risks...............................................4 Investment Restrictions......................................................21 Management of the Funds......................................................25 Trustees and Officers of the Trust...........................................31 Code of Ethics...............................................................52 Proxy Voting Policies and Procedures.........................................52 Control Persons and Principal Holders of Securities..........................52 Distribution of Securities...................................................52 Purchase, Redemption and Pricing of Shares...................................58 Other Service Providers......................................................80 Brokerage Allocation and Other Practices.....................................81 Tax Consequences of Owning Shares of a Fund..................................87 Performance..................................................................90 Pending Litigation...........................................................97 APPENDICES: Ratings of Debt Securities..................................................A-1 Examples of Persons to Whom AIM Provides Non-Public Portfolio Holdings on an Ongoing Basis................................................B-1 Portfolio Managers..........................................................C-1 Trustees and Officers.......................................................D-1 Trustee Compensation Table..................................................E-1 Proxy Voting Policies and Procedures........................................F-1 Control Persons and Principal Holders of Securities.........................G-1 Pending Litigation..........................................................H-1 Financial Statements.........................................................FS |
GENERAL INFORMATION ABOUT THE TRUST
AIM Sector Funds (the "Trust") was organized as a Delaware statutory trust on July 24, 2003. Pursuant to shareholder approval obtained at a shareholder meeting held on October 21, 2003, each series portfolio of INVESCO Sector Funds, Inc. was redomesticated as a new series of the Trust on November 20, 2003. INVESCO Sector Funds, Inc. (the "Company") was incorporated under the laws of Maryland as INVESCO Strategic Portfolios, Inc. on August 10, 1983. On October 29, 1998, the name of the Company was changed to INVESCO Sector Funds, Inc. On October 31, 1999, the Company changed its fiscal year end to March 31. On October 1, 2003, the name of the Company was changed to AIM Sector Funds, Inc. On October 15, 2004, INVESCO Energy Fund, INVESCO Financial Services Fund, INVESCO Gold & Precious Metals Fund, INVESCO Leisure Fund, INVESCO Technology Fund and INVESCO Utilities Fund changed their names to AIM Energy Fund, AIM Financial Services Fund, AIM Gold & Precious Metals Fund, AIM Leisure Fund, AIM Technology Fund and AIM Utilities Fund, respectively.
The Trust is an open-end, diversified, management investment company currently consisting of six Funds: AIM Energy Fund, AIM Financial Services Fund, AIM Gold & Precious Metals Fund, AIM Leisure Fund, AIM Technology Fund and AIM Utilities Fund(each a "Fund" and collectively, the "Funds"). Additional funds and classes may be offered in the future.
"Open-end" means that each Fund may issue an indefinite number of shares which are continuously offered and which may be redeemed at net asset value ("NAV"). A "management" investment company actively buys and sells securities for each Fund at the direction of a professional manager. Open-end management investment companies (or one or more series of such companies, such as the Funds) are commonly referred to as mutual funds.
SHARES OF BENEFICIAL INTEREST
The Trust is authorized to issue an unlimited number of shares of beneficial interest of each class of shares of each Fund.
Shares of beneficial interest of the Trust are redeemable at their net asset value (subject, in certain circumstances, to a contingent deferred sales charge or redemption fee) at the option of the shareholder or at the option of the Trust in certain circumstances.
Each Fund offers separate classes of shares as follows:
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INVESTOR INSTITUTIONAL
FUND CLASS CLASS A CLASS B CLASS C CLASS R CLASS
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AIM Energy Fund* X X X X
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AIM Financial Services X X X X
Fund*
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AIM Gold & Precious X X X X
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Metals Fund
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AIM Leisure Fund* X X X X X
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AIM Technology Fund* X X X X X
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AIM Utilities Fund X X X X X
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* The Fund previously offered Class K shares. Class K shares were converted to Class A shares at the close of business October 21, 2005.
The Institutional Class shares of the AIM Technology Fund and AIM Utilities Fund are intended for use by certain eligible institutional investors, including the following:
. banks and trust companies acting in a fiduciary or similar capacity;
. bank and trust company common and collective trust funds;
. banks and trust companies investing for their own account;
. entities acting for the account of a public entity (e.g. Taft-Hartley funds, states, cities or government agencies);
. retirement plans;
. platform sponsors with which A I M Distributors, Inc. ("AIM Distributors") has entered into an agreement; and
. proprietary asset allocation funds.
A share of each class of a Fund represents an identical interest in that Fund's investment portfolio and has the same rights, privileges, and preferences. However, each class may differ with respect to sales charges, if any, distribution and/or service fees, if any, other expenses allocable exclusively to each class, voting rights on matters exclusively affecting that class, conversion features, if any, and its exchange privilege, if any. The different sales charges and other expenses applicable to the different classes of shares of the Funds will affect the performance of those classes. Each share of a Fund is entitled to participate equally in dividends for that class, other distributions and the proceeds of any liquidation of a class of that Fund. However, due to the differing expenses of the classes, dividends and liquidation proceeds on each class of shares will differ. All shares of a fund will be voted together, except that only the shareholders of a particular class of a Fund may vote on matters exclusively affecting that class, such as the terms of a Rule 12b-1 Plan as it relates to the class. All shares issued and outstanding are, and all shares offered hereby when issued will be, fully paid and nonassessable. The Board of Trustees of the Trust (the "Board") has the authority to designate additional classes of beneficial interest without seeking the approval of shareholders.
Because Class B shares automatically convert to Class A shares at month-end eight years after the date of purchase, the Funds' distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act requires that Class B shareholders must also approve any material increase in distribution fees submitted to Class A shareholders of that Fund. A pro rata portion of shares from reinvested dividends and distributions convert along with the Class B shares.
Shares have no preemptive rights and are freely transferable on the books of each Fund.
All shares of the Trust have equal voting rights based on one vote for each share owned. The Trust is not generally required and does not expect to hold regular annual meetings of shareholders. However, when requested to do so in writing by the holders of 10% or more of the outstanding shares of the Trust or as may be required by applicable law or the Trust's Agreement and Declaration of Trust, the Board will call special meetings of shareholders.
Trustees may be removed by action of the holders of a majority of the outstanding shares of the Trust. The Funds will assist shareholders in communicating with other shareholders as required by the Investment Company Act of 1940 as amended (the "1940 Act").
Fund shares have noncumulative voting rights, which means that the holders of a majority of the shares of the Trust voting for the election of trustees of the Trust can elect 100% of the trustees if they choose to do so. If that occurs, the holders of the remaining shares voting for the election of trustees will not be able to elect any person or persons to the Board.
SHARE CERTIFICATES. Shareholders of the Fund do not have the right to demand or require the Trust to issue share certificates.
INVESTMENTS, POLICIES AND RISKS
The principal investments and policies of the Funds are discussed in the Prospectuses of the Funds. The Funds also may invest in the following securities and engage in the following practices.
ADRS AND EDRS -- American Depositary Receipts, or ADRs, are receipts typically issued by U.S. banks. ADRs are receipts for the shares of foreign corporations that are held by the bank issuing the receipt. An ADR entitles its holder to all dividends and capital gains on the underlying foreign securities, less any fees paid to the bank. Purchasing ADRs gives a Fund the ability to purchase the functional equivalent of foreign securities without going to the foreign securities markets to do so. ADRs are bought and sold in U.S. dollars, not foreign currencies. An ADR that is "sponsored" means that the foreign corporation whose shares are represented by the ADR is actively involved in the issuance of the ADR, and generally provides material information about the corporation to the U.S. market. An "unsponsored" ADR program means that the foreign corporation whose shares are held by the bank is not obligated to disclose material information in the United States, and, therefore, the market value of the ADR may not reflect important facts known only to the foreign company. Since they mirror their underlying foreign securities, ADRs generally have the same risks as investing directly in the underlying foreign securities. European Depositary Receipts, or EDRs, are similar to ADRs, except that they are typically issued by European banks or trust companies.
CERTIFICATES OF DEPOSIT IN FOREIGN BANKS AND U.S. BRANCHES OF FOREIGN BANKS -- The Funds may maintain time deposits in and invest in U.S. dollar denominated certificates of deposit ("CDs") issued by foreign banks and U.S. branches of foreign banks. The Funds limit investments in foreign bank obligations to U.S. dollar denominated obligations of foreign banks which have more than $10 billion in assets, have branches or agencies in the U.S., and meet other criteria established by the Board. Investments in foreign securities involve special considerations. There is generally less publicly available information about foreign issuers since many foreign countries do not have the same disclosure and reporting requirements as are imposed by the U.S. securities laws. Moreover, foreign issuers are generally not bound by uniform accounting and auditing and financial reporting requirements and standards of practice comparable to those applicable to domestic issuers. Such investments may also entail the risks of possible imposition of dividend withholding or confiscatory taxes, possible currency blockage or transfer restrictions, expropriation, nationalization or other adverse political or economic developments, and the difficulty of enforcing obligations in other countries.
The Funds may also invest in bankers' acceptances, time deposits, and certificates of deposit of U.S. branches of foreign banks and foreign branches of U.S. banks. Investments in instruments of U.S. branches of foreign banks will be made only with branches that are subject to the same regulations as U.S. banks. Investments in instruments issued by a foreign branch of a U.S. bank will be made only if the investment risk associated with such investment is the same as that involving an investment in instruments issued by the U.S. parent, with the U.S. parent unconditionally liable in the event that the foreign branch fails to pay on the investment for any reason.
COMMERCIAL PAPER -- Commercial paper is the term for short-term promissory notes issued by domestic corporations to meet current working capital needs. Commercial paper may be unsecured by the corporation's assets but may be backed by a letter of credit from a bank or other financial institution. The letter of credit enhances the commercial paper's creditworthiness. The issuer is directly responsible for payment but the bank "guarantees" that if the note is not paid at maturity by the issuer, the bank will pay the principal and interest to the buyer. AIM will consider the creditworthiness of the institution issuing the letter of credit, as well as the creditworthiness of the issuer of the commercial paper, when purchasing paper enhanced by a letter of credit. Commercial paper is sold either in an interest-bearing form or on a discounted basis, with maturities not exceeding 270 days.
DEBT SECURITIES -- Debt securities include bonds, notes, and other securities that give the holder the right to receive fixed amounts of principal, interest, or both on a date in the future or on demand. Debt securities also are often referred to as fixed-income securities, even if the rate of interest varies over the life of the security.
Debt securities are generally subject to credit risk and market risk. Credit risk is the risk that the issuer of the security may be unable to meet interest or principal payments or both as they come due. Market risk is the risk that the market value of the security may decline for a variety of reasons, including changes in interest rates. An increase in interest rates tends to reduce the market values of debt securities in which a Fund has invested. A decline in interest rates tends to increase the market values of debt securities in which a Fund has invested.
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's ("S&P") ratings provide a useful guide to the credit risk of many debt securities. The lower the rating of a debt security, the greater the credit risk the rating service assigns to the security. To compensate investors for accepting that greater risk, lower-rated debt securities tend to offer higher interest rates. Lower-rated debt securities are often referred to as "junk bonds." Increasing the amount of Fund assets invested in unrated or lower-grade straight debt securities may increase the yield produced by a Fund's debt securities but will also increase the credit risk of those securities. A debt security is considered lower-grade if it is rated Ba or less by Moody's or
BB or less by S&P at the time of purchase. Lower-rated and non-rated debt securities of comparable quality are subject to wider fluctuations in yields and market values than higher-rated debt securities and may be considered speculative. Although a Fund may invest in debt securities assigned lower grade ratings by S&P or Moody's at the time of purchase, the Funds' investments have generally been limited to debt securities rated B or higher by either S&P or Moody's at the time of purchase. Debt securities rated lower than B by either S&P or Moody's are usually considered to be speculative. At the time of purchase, AIM will limit Fund investments to debt securities which AIM believes are not highly speculative and which are rated at least CCC by S&P or Caa by Moody's.
A significant economic downturn or increase in interest rates may cause issuers of debt securities to experience increased financial problems which could adversely affect their ability to pay principal and interest obligations, to meet projected business goals, and to obtain additional financing. These conditions more severely impact issuers of lower-rated debt securities. The market for lower-rated straight debt securities may not be as liquid as the market for higher-rated straight debt securities. Therefore, AIM attempts to limit purchases of lower-rated securities to securities having an established secondary market.
Debt securities rated Caa by Moody's may be in default or may present risks of non-payment of principal or interest. Lower-rated securities by S&P (categories BB, B, or CCC) include those which are predominantly speculative because of the issuer's perceived capacity to pay interest and repay principal in accordance with their terms; BB indicates the lowest degree of speculation and CCC a high degree of speculation. While such bonds will likely have some quality and protective characteristics, these are usually outweighed by large uncertainties or major risk exposures to adverse conditions.
The Funds expect that most emerging country debt securities in which they invest will not be rated by U.S. rating services. Although bonds in the lowest investment grade debt category (those rated BBB by S&P, Baa by Moody's or the equivalent) are regarded as having adequate capability to pay principal and interest, they have speculative characteristics. Adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to make principal and interest payments than is the case for higher-rated bonds. Lower-rated bonds by Moody's (categories Ba, B, or Caa) are of poorer quality and also have speculative characteristics. Bonds rated Caa may be in default or there may be present elements of danger with respect to principal or interest. Lower-rated bonds by S&P (categories BB, B, or CCC) include those that are regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with their terms; BB indicates the lowest degree of speculation and CCC a high degree of speculation. While such bonds likely will have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. Bonds having equivalent ratings from other rating services will have characteristics similar to those of the corresponding S&P and Moody's ratings. For a specific description of S&P and Moody's corporate bond rating categories, please refer to Appendix A.
The Funds may invest in zero coupon bonds, step-up bonds, mortgage-backed securities, and asset-backed securities. Zero coupon bonds do not make regular interest payments. Zero coupon bonds are sold at a discount from face value. Principal and accrued discount (representing interest earned but not paid) are paid at maturity in the amount of the face value. Step-up bonds initially make no (or low) cash interest payments but begin paying interest (or a higher rate of interest) at a fixed time after issuance of the bond. The market values of zero coupon and step-up bonds generally fluctuate more in response to changes in interest rates than interest-paying securities of comparable term and quality. A Fund may be required to distribute income recognized on these bonds, even though no cash may be paid to the Fund until the maturity or call date of a bond, in order for the Fund to maintain its qualification as a regulated investment company. These required distributions could reduce the amount of cash available for investment by a Fund.
DOMESTIC BANK OBLIGATIONS -- U.S. banks (including their foreign branches) issue CDs and bankers' acceptances which may be purchased by the Funds if an issuing bank has total assets in excess of $5 billion and the bank otherwise meets the Funds' credit rating requirements. CDs are issued against deposits in a commercial bank for a specified period and rate and are normally negotiable. Eurodollar CDs are certificates issued by a foreign branch (usually London) of a U.S. domestic bank, and, as such, the credit is deemed to be that of the domestic bank. Bankers' acceptances are short-term credit instruments evidencing the promise of the bank (by virtue of the bank's "acceptance") to pay at maturity a draft which has been drawn on it by a customer (the "drawer"). Bankers' acceptances are used to finance the import, export, transfer, or storage of goods and reflect the obligation of both the bank and the drawer to pay the face amount. Both types of securities are subject to the ability of the issuing bank to meet its obligations, and are subject to risks common to all debt securities. In addition, Eurodollar CDs and banker's acceptances may be subject to foreign currency risk and certain other risks of investment in foreign securities.
EQUITY SECURITIES -- The Funds may invest in common, preferred, and convertible preferred stocks, and securities whose values are tied to the price of stocks, such as rights, warrants, and convertible debt securities. Common stocks and preferred stocks represent equity ownership in a corporation. Owners of stock, such as the Funds, share in a corporation's earnings through dividends which may be declared by the corporation, although the receipt of dividends is not the principal benefit that the Funds seek when they invest in stocks and similar instruments.
Instead, the Funds seek to invest in stocks that will increase in market value and may be sold for more than a Fund paid to buy them. Market value is based upon constantly changing investor perceptions of what the company is worth compared to other companies. Although dividends are a factor in the changing market value of stocks, many companies do not pay dividends, or pay comparatively small dividends. The principal risk of investing in equity securities is that their market values fluctuate constantly, often due to factors entirely outside the control of the Funds or the company issuing the stock. At any given time, the market value of an equity security may be significantly higher or lower than the amount paid by a Fund to acquire it.
Owners of preferred stocks are entitled to dividends payable from the corporation's earnings, which in some cases may be "cumulative" if prior dividends on the preferred stock have not been paid. Dividends payable on preferred stock have priority over distributions to holders of common stock, and preferred stocks generally have a priority on the distribution of assets in the event of the corporation's liquidation. Preferred stocks may be "participating," which means that they may be entitled to dividends in excess of the stated dividend in certain cases. The holders of a company's debt securities generally are entitled to be paid by the company before it pays anything to its stockholders.
Rights and warrants are securities which entitle the holder to purchase the securities of a company (usually, its common stock) at a specified price during a specified time period. The value of a right or warrant is affected by many of the same factors that determine the prices of common stocks. Rights and warrants may be purchased directly or acquired in connection with a corporate reorganization or exchange offer.
The Funds also may purchase convertible securities including convertible debt obligations and convertible preferred stock. A convertible security entitles the holder to exchange it for a fixed number of shares of common stock (or other equity security), usually at a fixed price within a specified period of time. Until conversion, the owner of convertible securities usually receives the interest paid on a convertible bond or the dividend preference of a preferred stock.
A convertible security has an "investment value" which is a theoretical value determined by the yield it provides in comparison with similar securities without the conversion feature. Investment value changes are based upon prevailing interest rates and other factors. It also has a "conversion value," which is the market value the convertible security would have if it were exchanged for the underlying equity security. Convertible securities may be purchased at varying price levels above or below their investment values or conversion values.
Conversion value is a simple mathematical calculation that fluctuates directly with the price of the underlying security. However, if the conversion value is substantially below the investment value, the market value of the convertible security is governed principally by its investment value. If the conversion value is near or above the investment value, the market value of the convertible security generally will rise above the investment value. In such cases, the market value of the convertible security may be higher than its conversion value, due to the combination of the convertible security's right to interest (or dividend preference) and the possibility of capital appreciation from the conversion feature. However, there is no assurance that any premium above investment value or conversion value will be recovered because prices change and, as a result, the ability to achieve capital appreciation through conversion may be eliminated.
EUROBONDS AND YANKEE BONDS -- Bonds issued by foreign branches of U.S. banks ("Eurobonds") and bonds issued by a U.S. branch of a foreign bank and sold in the United States ("Yankee bonds"). These bonds are bought and sold in U.S. dollars, but generally carry with them the same risks as investing in foreign securities.
FOREIGN SECURITIES -- Investments in the securities of foreign companies, or companies that have their principal business activities outside the United States, involve certain risks not associated with investments in U.S. companies. Non-U.S. companies generally are not subject to the same uniform accounting, auditing, and financial reporting standards that apply to U.S. companies. Therefore, financial information about foreign companies may be incomplete, or may not be comparable to the information available on U.S. companies. There may also be less publicly available information about a foreign company.
Although the volume of trading in foreign securities markets is growing, securities of many non-U.S. companies may be less liquid and have greater swings in price than securities of comparable U.S. companies. The costs of buying and selling securities on foreign securities exchanges are generally significantly higher than similar costs in the United States. There is generally less government supervision and regulation of exchanges, brokers, and issuers in foreign countries than there is in the United States. Investments in non-U.S. securities may also be subject to other risks different from those affecting U.S. investments, including local political or economic developments, expropriation or nationalization of assets, confiscatory taxation, and imposition of withholding taxes on dividends or interest payments. If it becomes necessary, it may be more difficult for a Fund to obtain or to enforce a judgment against a foreign issuer than against a domestic issuer.
Securities traded on foreign markets are usually bought and sold in local currencies, not in U.S. dollars. Therefore, the market value of foreign securities acquired by a Fund can be affected -- favorably or unfavorably -- by changes in currency rates and exchange control regulations. Costs are incurred in converting money from one currency to another. Foreign currency exchange rates are determined by supply and demand on the foreign exchange markets. Foreign exchange markets are affected by the international balance of payments and other economic and financial conditions, government intervention, speculation and other factors, all of which are outside the control of each Fund. Generally, the Funds' foreign currency exchange transactions will be conducted on a cash or "spot" basis at the spot rate for purchasing or selling currency in the foreign currency exchange markets.
FUTURES, OPTIONS, AND OTHER FINANCIAL INSTRUMENTS
General. AIM may use various types of financial instruments, some of which are derivatives, to attempt to manage the risk of a Fund's investments or, in certain circumstances, for investment (e.g., as a substitute for investing in securities). These financial instruments include options, futures contracts (sometimes referred to as "futures"), forward contracts, swaps, caps, floors, and collars (collectively, "Financial Instruments"). The policies in this section do not apply to other types of instruments sometimes referred to as derivatives, such as indexed securities, mortgage-backed and other asset-backed securities, and stripped interest and principal of debt.
Hedging strategies can be broadly categorized as "short" hedges and "long" or "anticipatory" hedges. A short hedge involves the use of a Financial Instrument in order to partially or fully offset potential variations in the value of one or more investments held in a Fund's portfolio. A long or anticipatory hedge involves the use of a Financial Instrument in order to partially or fully offset potential increases in the acquisition cost of one or more investments that the Fund intends to acquire. In an anticipatory hedge transaction, the Fund does not already own a corresponding security. Rather, the hedge relates to a security or type of security that the Fund intends to acquire. If the Fund does not eliminate the hedge by purchasing the security as anticipated, the effect on the Fund's portfolio is the same as if a long position were entered into. Financial Instruments may also be used, in certain circumstances, for investment (e.g., as a substitute for investing in securities).
Financial Instruments on individual securities generally are used to attempt to hedge against price movements in one or more particular securities positions that a Fund already owns or intends to acquire. Financial Instruments on indexes, in contrast, generally are used to attempt to hedge all or a portion of a portfolio against price movements of the securities within a market sector in which the Fund has invested or expects to invest.
The use of Financial Instruments is subject to applicable regulations of the Securities and Exchange Commission ("SEC"), the several exchanges upon which they are traded, and the Commodity Futures Trading Commission ("CFTC"). In addition, the Funds' ability to use Financial Instruments will be limited by tax considerations. See "Tax Consequences of Owning Shares of a Fund."
In addition to the instruments and strategies described below, AIM may use other similar or related techniques to the extent that they are consistent with a Fund's investment objective and permitted by its investment limitations and applicable regulatory authorities. The Funds' Prospectuses or SAI will be supplemented to the extent that new products or techniques become employed involving materially different risks than those described below or in the Prospectuses.
Special Risks. Financial Instruments and their use involve special considerations and risks, certain of which are described below.
(1) Financial Instruments may increase the volatility of a Fund. If AIM employs a Financial Instrument that correlates imperfectly with a Fund's investments, a loss could result, regardless of whether or not the intent was to manage risk. In
addition, these techniques could result in a loss if there is not a liquid market to close out a position that a Fund has entered.
(2) There might be imperfect correlation between price movements of a Financial Instrument and price movement of the investment(s) being hedged. For example, if the value of a Financial Instrument used in a short hedge increased by less than the decline in value of the hedged investment(s), the hedge would not be fully successful. This might be caused by certain kinds of trading activity that distorts the normal price relationship between the security being hedged and the Financial Instrument. Similarly, the effectiveness of hedges using Financial Instruments on indexes will depend on the degree of correlation between price movements in the index and price movements in the securities being hedged.
The Funds are authorized to use options and futures contracts related to securities with issuers, maturities or other characteristics different from the securities in which it typically invests. This involves a risk that the options or futures position will not track the performance of a Fund's portfolio investments.
The direction of options and futures price movements can also diverge from the direction of the movements of the prices of their underlying instruments, even if the underlying instruments match a Fund's investments well. Options and futures prices are affected by such factors as current and anticipated short-term interest rates, changes in volatility of the underlying instrument, and the time remaining until expiration of the contract, which may not affect security prices the same way. Imperfect correlation may also result from differing levels of demand in the options and futures markets and the securities markets, from structural differences in how options and futures and securities are traded, or from imposition of daily price fluctuation limits or trading halts. A Fund may take positions in options and futures contracts with a greater or lesser face value than the securities it wishes to hedge or intends to purchase in order to attempt to compensate for differences in volatility between the contract and the securities, although this may not be successful in all cases.
(3) If successful, the above-discussed hedging strategies can reduce risk of loss by wholly or partially offsetting the negative effect of unfavorable price movements of portfolio securities. However, such strategies can also reduce opportunity for gain by offsetting the positive effect of favorable price movements. For example, if a Fund entered into a short hedge because AIM projected a decline in the price of a security in the Fund's portfolio, and the price of that security increased instead, the gain from that increase would likely be wholly or partially offset by a decline in the value of the short position in the Financial Instrument. Moreover, if the price of the Financial Instrument declined by more than the increase in the price of the security, the Fund could suffer a loss.
(4) A Fund's ability to close out a position in a Financial Instrument prior to expiration or maturity depends on the degree of liquidity of the market or, in the absence of such a market, the ability and willingness of the other party to the transaction (the "counterparty") to enter into a transaction closing out the position. Therefore, there is no assurance that any position can be closed out at a time and price that is favorable to a Fund.
(5) As described below, the Funds are required to maintain assets as "cover," maintain segregated accounts or make margin payments when they take positions in Financial Instruments involving obligations to third parties (i.e., Financial Instruments other than purchased options). If a Fund is unable to close out its positions in such Financial Instruments, it might be required to continue to maintain such assets or segregated accounts or make such payments until the position expired. These 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.
Cover. Positions in Financial Instruments, other than purchased options, expose the Funds to an obligation to another party. A Fund will not enter into any such transaction unless it owns (1) an offsetting ("covered") position in securities, currencies or other options, futures contracts or forward contracts, or (2) cash and liquid assets with a value, marked-to-market daily, sufficient to cover its obligations to the extent not covered as provided in (1) above. The Funds will comply with SEC guidelines regarding cover for these instruments and will, if the guidelines so require, designate cash or liquid assets as segregated in the prescribed amount as determined daily.
Assets used as cover or held as segregated cannot be sold while the position in the corresponding Financial Instrument is open unless they are replaced with other appropriate assets. As a result, the commitment of a large portion of a Fund's assets to cover or to hold as segregated could impede portfolio management or the Fund's ability to meet redemption requests or other current obligations.
Options. Each Fund may engage in certain strategies involving options to attempt to manage the risk of its investments or, in certain circumstances, for investment (e.g., as a substitute for investing in securities). A call option gives the purchaser
the right to buy, and obligates the writer to sell the underlying investment at the agreed-upon exercise price during the option period. A put option gives the purchaser the right to sell, and obligates the writer to buy the underlying investment at the agreed-upon exercise price during the option period. Purchasers of options pay an amount, known as a premium, to the option writer in exchange for the right under the option contract. See "Options on Indexes" below with regard to cash settlement of option contracts on index values.
The purchase of call options can serve as a hedge against a price rise of the underlying security and the purchase of put options can serve as a hedge against a price decline of the underlying security. Writing call options can serve as a limited short hedge because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security or currency appreciates to a price higher than the exercise price of the call option, it can be expected that the option will be exercised and a Fund will be obligated to sell the security or currency at less than its market value.
Writing put options can serve as a limited long or anticipatory hedge because increases in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security or currency depreciates to a price lower than the exercise price of the put option, it can be expected that the put option will be exercised and a Fund will be obligated to purchase the security or currency at more than its market value.
The value of an option position will reflect, among other things, the current market value of the underlying investment, the time remaining until expiration, the relationship of the exercise price to the market price of the underlying investment, the price volatility of the underlying investment and general market and interest rate conditions. Options that expire unexercised have no value.
A Fund may effectively terminate its right or obligation under an option by entering into a closing transaction. For example, the Fund may terminate its obligation under a call or put option that it had written by purchasing an identical call or put option, which is known as a closing purchase transaction. Conversely, the Fund may terminate a position in a put or call option it had purchased by writing an identical put or call option, which is known as a closing sale transaction. Closing transactions permit a Fund to realize profits or limit losses on an option position prior to its exercise or expiration.
Risks of Options on Securities. Options embody the possibility of large amounts of exposure, which will result in a Fund's net asset value being more sensitive to changes in the value of the related investment. A Fund may purchase or write both exchange-traded and OTC options. Exchange-traded options in the United States are issued by a clearing organization affiliated with the exchange on which the option is listed that, in effect, guarantees completion of every exchange-traded option transaction. In contrast, OTC options are contracts between a Fund and its counterparty (usually a securities dealer or a bank) with no clearing organization guarantee. Thus, when a Fund purchases an OTC option, it relies on the counterparty from whom it purchased the option to make or take delivery of the underlying investment upon exercise of the option. Failure by the counterparty to do so would result in the loss of any premium paid by a Fund as well as the loss of any expected benefit from the transaction.
The Funds' ability to establish and close out positions in options depends on the existence of a liquid market. However, there can be no assurance that such a market will exist at any particular time. Closing transactions can be made for OTC options only by negotiating directly with the counterparty, or by a transaction in the secondary market if any such market exists. There can be no assurance that a 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 counterparty, a Fund might be unable to close out an OTC option position at any time prior to the option's expiration. If a Fund is not able to enter into an offsetting closing transaction on an option it has written, it will be required to maintain the securities subject to the call or the liquid assets underlying the put until a closing purchase transaction can be entered into or the option expires. However, there can be no assurance that such a market will exist at any particular time.
If a Fund were unable to effect a closing transaction for an option it had purchased, it would have to exercise the option to realize any profit. The inability to enter into a closing purchase transaction for a covered call option written by a Fund could cause material losses because the Fund would be unable to sell the investment used as cover for the written option until the option expires or is exercised.
Options on Indexes. Puts and calls on indexes are similar to puts and calls on securities or futures contracts except that all settlements are in cash and changes in value depend on changes in the index in question. When a Fund writes a call on an index, it receives a premium and agrees that, prior to the expiration date, upon exercise of the call, the purchaser will receive from the Fund an amount of cash equal to the positive difference between the closing price of the index and
the exercise price of the call times a specified multiple ("multiplier"), which determines the total dollar value for each point of such difference. When a Fund buys a call on an index, it pays a premium and has the same rights as to such call as are indicated above. When a Fund buys a put on an index, it pays a premium and has the right, prior to the expiration date, to require the seller of the put to deliver to the Fund an amount of cash equal to the positive difference between the exercise price of the put and the closing price of the index times the multiplier. When a Fund writes a put on an index, it receives a premium and the purchaser of the put has the right, prior to the expiration date, to require the Fund to deliver to it an amount of cash equal to the positive difference between the exercise price of the put and the closing level of the index times the multiplier.
The risks of purchasing and selling options on indexes 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 fulfill its potential settlement obligations by delivering the underlying securities. A Fund can offset some of the risk of writing a call index option by holding a diversified portfolio of securities similar to those on which the underlying index is based. However, a 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 vary from the value of the index.
Even if a Fund could assemble a portfolio that exactly reproduced the composition of the underlying index, it still would not be fully covered from a risk standpoint because of the "timing risk" inherent in writing index options. When an index option is exercised, the amount of cash that the holder is entitled to receive is determined by the difference between the exercise price and the closing index level. As with other kinds of options, a Fund as the call writer will not learn what it has been assigned until the next business day. The time lag between exercise and notice of assignment poses no risk for the writer of a covered call on a specific underlying security, such as common stock, because in that case the writer's obligation is to deliver the underlying security, not to pay its value as of a moment in the past. In contrast, the writer of an index call will be required to pay cash in an amount based on the difference between the closing index value on the exercise date and the exercise price. By the time a Fund learns what it has been assigned, the index may have declined. This "timing risk" is an inherent limitation on the ability of index call writers to cover their risk exposure.
If a Fund has purchased an index option and exercises it before the closing index value for that day is available, it runs the risk that the level of the underlying index may subsequently change. If such a change causes the exercised option to fall out-of-the-money, the Fund nevertheless will be required to pay the difference between the closing index value and the exercise price of the option (times the applicable multiplier) to the assigned writer.
OTC Options. Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size, and strike price, the terms of OTC options (options not traded on exchanges) generally are established through negotiation with the other party to the option contract. While this type of arrangement allows a Fund great flexibility to tailor the option to its needs, OTC options generally involve greater risk than exchange-traded options, which are guaranteed by the clearing organization of the exchange where they are traded.
Generally, OTC foreign currency options used by a Fund are European-style options. This means that the option is only exercisable immediately prior to its expiration. This is in contrast to American-style options, which are exercisable at any time prior to the expiration date of the option.
Futures Contracts and Options on Futures Contracts. When a Fund purchases or sells a futures contract, it incurs an obligation respectively to take or make delivery of a specified amount of the obligation underlying the contract at a specified time and price. When a Fund writes an option on a futures contract, it becomes obligated to assume a position in the futures contract at a specified exercise price at any time during the term of the option. If a Fund writes a call, on exercise it assumes a short futures position. If it writes a put, on exercise it assumes a long futures position.
The purchase of futures or call options on futures can serve as a long or an anticipatory hedge, and the sale of futures or the purchase of put options on futures can serve as a short hedge. Writing call options on futures contracts can serve as a limited short hedge, using a strategy similar to that used for writing call options on securities or indexes. Similarly, writing put options on futures contracts can serve as a limited long or anticipatory hedge.
In addition, futures strategies can be used to manage the "duration" (a measure of anticipated sensitivity to changes in interest rates, which is sometimes related to the weighted average maturity of a portfolio) and associated interest rate risk of a Fund's fixed-income portfolio. If AIM wishes to shorten the duration of a Fund's fixed-income portfolio (i.e., reduce anticipated sensitivity), the Fund may sell an appropriate debt futures contract or a call option thereon, or purchase a put option on that futures contract. If AIM wishes to lengthen the duration of a Fund's fixed-income portfolio (i.e., increase
anticipated sensitivity), the Fund may buy an appropriate debt futures contract or a call option thereon, or sell a put option thereon.
At the inception of a futures contract, a Fund is required to deposit "initial margin" in an amount generally equal to 10% or less of the contract value. Initial margin must also be deposited when writing a call or put option on a futures contract, in accordance with applicable exchange rules. Subsequent "variation margin" payments are made to and received from the futures broker daily as the value of the futures or written option position varies, a process known as "marking-to-market." Unlike margin in securities transactions, initial margin on futures contracts and written options on futures contracts does not represent a borrowing on margin, but rather is in the nature of a performance bond or good-faith deposit that is returned to the Fund at the termination of the transaction if all contractual obligations have been satisfied. Under certain circumstances, such as periods of high volatility, a Fund may be required to increase the level of initial margin deposits. If the Fund has insufficient cash to meet daily variation margin requirements, it might need to sell securities in order to do so at a time when such sales are disadvantageous.
Purchasers and sellers of futures contracts and options on futures can enter into offsetting closing transactions, similar to closing transactions on options, by selling or purchasing, respectively, an instrument identical to the instrument purchased or sold. However, there can be no assurance that a liquid market will exist for a particular contract at a particular time. In such event, it may not be possible to close a futures contract or options position.
Under certain circumstances, futures exchanges may establish daily limits on the amount that the price of a futures contract or an option on a futures contract can vary from the previous day's settlement price; once that limit is reached, no trades may be made that day at a price beyond the limit. Daily price limits do not limit potential losses because prices could move to the daily limit for several consecutive days with little or no trading, thereby preventing liquidation of unfavorable positions.
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 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 continue to maintain the position being hedged by the futures contract or option or to continue to maintain cash or securities in a segregated account.
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 that is not for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums required to establish these positions (excluding the amount by which options are "in-the-money" at the time of purchase) may not exceed 5% of the liquidation value of the Fund's portfolio, after taking into account unrealized profits and unrealized losses on any contracts the Fund has entered into. This policy does not limit to 5% the percentage of the Fund's assets that are at risk in futures contracts, options on futures contracts and currency options.
Risks of Futures Contracts and Options Thereon. The ordinary spreads at a given time between prices in the cash and futures markets (including the options on futures markets), due to differences in the natures of those markets, are subject to the following factors. First, all participants in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions, which could distort the normal relationship between the cash and futures markets. Second, the liquidity of the futures market depends on participants entering into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity in the futures market could be reduced, thus producing distortion. Due to the possibility of distortion, a hedge may not be successful. Although stock index futures contracts do not require physical delivery, under extraordinary market conditions, liquidity of such futures contracts also could be reduced. Additionally, AIM may be incorrect in its expectations as to the extent of various interest rates, currency exchange rates or stock market movements or the time span within which the movements take place.
Index Futures. The risk of imperfect correlation between movements in the price of index futures and movements in the price of the securities that are the subject of a hedge increases as the composition of a Fund's portfolio diverges from the index. The price of the index futures may move proportionately more than or less than the price of the securities being hedged. If the price of the index futures moves proportionately less than the price of the securities that are the subject of the hedge, the hedge will not be fully effective. Assuming the price of the securities being hedged has moved in an unfavorable direction, as anticipated when the hedge was put into place, the Fund would be in a better position than if it
had not hedged at all, but not as good as if the price of the index futures moved in full proportion to that of the hedged securities. However, if the price of the securities being hedged has moved in a favorable direction, this advantage will be partially offset by movement of the price of the futures contract. If the price of the futures contract moves more than the price of the securities, the Fund will experience either a loss or a gain on the futures contract that will not be completely offset by movements in the price of the securities that are the subject of the hedge.
Where index futures are purchased in an anticipatory hedge, it is possible that the market may decline instead. If a Fund then decides not to invest in the securities at that time because of concern as to possible further market decline or for other reasons, it will realize a loss on the futures contract that is not offset by a reduction in the price of the securities it had anticipated purchasing.
Foreign Currency Hedging Strategies--Special Considerations. A Fund may use options and futures contracts on foreign currencies, as mentioned previously, and forward currency contracts, as described below, to attempt to hedge against movements in the values of the foreign currencies in which the Fund's securities are denominated or, in certain circumstances, for investment (e.g., as a substitute for investing in securities denominated in foreign currency). Currency hedges can protect against price movements in a security that a Fund owns or intends to acquire that are attributable to changes in the value of the currency in which it is denominated.
A Fund might seek to hedge against changes in the value of a particular currency when no Financial Instruments on that currency are available or such Financial Instruments are more expensive than certain other Financial Instruments. In such cases, a Fund may seek to hedge against price movements in that currency by entering into transactions using Financial Instruments on another currency or a basket of currencies, the value of which AIM believes will have a high degree of positive correlation to the value of the currency being hedged. The risk that movements in the price of the Financial Instrument will not correlate perfectly with movements in the price of the currency subject to the hedging transaction may be increased when this strategy is used.
The value of Financial Instruments on foreign currencies depends on the value of the underlying currency relative to the U.S. dollar. Because foreign currency transactions occurring in the interbank market might involve substantially larger amounts than those involved in the use of such Financial Instruments, a Fund could be disadvantaged by having to deal in the odd-lot market (generally consisting of transactions of less than $1 million) for the underlying foreign currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign currencies or any regulatory requirement that quotations available through dealers or other market sources be firm or revised on a timely basis. Quotation information generally is representative of very large transactions in the interbank market and thus might not reflect odd-lot transactions where rates might be less favorable. The interbank market in foreign currencies is a global, round-the-clock market. To the extent the U.S. options or futures markets are closed while the markets for the underlying currencies remain open, significant price and rate movements might take place in the underlying markets that cannot be reflected in the markets for the Financial Instruments until they reopen.
Settlement of hedging transactions involving foreign currencies might be required to take place within the country issuing the underlying currency. Thus, a Fund might be required to accept or make delivery of the underlying foreign currency in accordance with any U.S. or foreign regulations regarding the maintenance of foreign banking arrangements by U.S. residents and might be required to pay any fees, taxes, and charges associated with such delivery assessed in the issuing country.
Forward Currency Contracts and Foreign Currency Deposits. The Funds may enter into forward currency contracts to purchase or sell foreign currencies for a fixed amount of U.S. dollars or another foreign currency. A forward currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days (term) from the date of the forward currency contract agreed upon by the parties, at a price set at the time the forward currency contract is entered. Forward currency contracts are negotiated directly between currency traders (usually large commercial banks) and their customers.
Such transactions may serve as long or anticipatory hedges. For example, a Fund may purchase a forward currency contract to lock in the U.S. dollar price of a security denominated in a foreign currency that the Fund intends to acquire. Forward currency contracts may also serve as short hedges. For example, a Fund may sell a forward currency contract to lock in the U.S. dollar equivalent of the proceeds from the anticipated sale of a security or a dividend or interest payment denominated in a foreign currency.
The Funds may also use forward currency contracts to hedge against a decline in the value of existing investments denominated in foreign currency. Such a hedge would tend to offset both positive and negative currency fluctuations, but would not offset changes in security values caused by other factors. A Fund could also hedge the position by entering into a forward currency contract to sell another currency expected to perform similarly to the currency in which the Fund's existing investments are denominated. This type of hedge could offer advantages in terms of cost, yield or efficiency, but may not hedge currency exposure as effectively as a simple hedge against U.S. dollars. This type of hedge may result in losses if the currency used to hedge does not perform similarly to the currency in which the hedged securities are denominated.
The Funds may also use forward currency contracts in one currency or a basket of currencies to attempt to hedge against fluctuations in the value of securities denominated in a different currency if AIM anticipates that there will be a positive correlation between the two currencies.
The cost to a Fund of engaging in forward currency contracts varies with factors such as the currency 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. When a Fund enters into a forward currency contract, it relies on the counterparty to make or take delivery of the underlying currency at the maturity of the contract. Failure by the counterparty to do so would result in the loss of some or all of any expected benefit of the transaction.
As is the case with futures contracts, purchasers, and sellers of forward currency contracts can enter into offsetting closing transactions, similar to closing transactions on futures contracts, by selling or purchasing, respectively, an instrument identical to the instrument purchased or sold. Secondary markets generally do not exist for forward currency contracts, with the result that closing transactions generally can be made for forward currency contracts only by negotiating directly with the counterparty. Thus, there can be no assurance that a Fund will in fact be able to close out a forward currency contract at a favorable price prior to maturity. In addition, in the event of insolvency of the counterparty, the Fund might be unable to close out a forward currency contract. In either event, the Fund would continue to be subject to market risk with respect to the position, and would continue to be required to maintain a position in securities denominated in the foreign currency or to segregate cash or liquid assets.
The precise matching of forward currency contract amounts and the value of the securities, dividends, or interest payments involved generally will not be possible because the value of such securities, dividends, or interest payments, measured in the foreign currency, will change after the forward currency contract has been established. Thus, a Fund might need to purchase or sell foreign currencies in the spot (cash) market to the extent such foreign currencies are not covered by forward currency contracts. The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain.
Forward currency contracts may substantially change a Fund's investment exposure to changes in currency exchange rates and could result in losses to the Fund if currencies do not perform as AIM anticipates. There is no assurance that AIM's use of forward currency contracts will be advantageous to a Fund or that it will hedge at an appropriate time.
The Funds may also purchase and sell foreign currency and invest in foreign currency deposits. Currency conversion involves dealer spreads and other costs, although commissions usually are not charged.
Combined Positions. A Fund may purchase and write options or futures in combination with each other, or in combination with futures or forward currency contracts, to manage the risk and return characteristics of its overall position. For example, a Fund may purchase a put option and write a call option on the same underlying instrument, in order to construct a combined position whose risk and return characteristics are similar to selling a futures contract. Another possible combined position would involve writing a call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs.
Turnover. The Funds' options and futures activities may affect their turnover rates and brokerage commission payments. The exercise of calls or puts written by a Fund, and the sale or purchase of futures contracts, may cause it to sell or purchase related investments, thus increasing its turnover rate. Once a Fund has received an exercise notice on an option it has written, it cannot effect a closing transaction in order to terminate its obligation under the option and must deliver or receive the underlying securities at the exercise price. The exercise of puts purchased by a Fund may also cause the sale of related investments, increasing turnover. Although such exercise is within the Fund's control, holding a protective put might cause it to sell the related investments for reasons that would not exist in the absence of the put. A
Fund will pay a brokerage commission each time it buys or sells a put or call or purchases or sells a futures contract. Such commissions may be higher than those that would apply to direct purchases or sales.
Swaps, Caps, Floors, and Collars. The Funds are authorized to enter into swaps, caps, floors, and collars. Swaps involve the exchange by one party with another party of their respective commitments to pay or receive cash flows, e.g., an exchange of floating rate payments for fixed rate payments. The purchase of a cap or a floor entitles the purchaser, to the extent that a specified index exceeds in the case of a cap, or falls below in the case of a floor, a predetermined value, to receive payments on a notional principal amount from the party selling such instrument. A collar combines elements of buying a cap and selling a floor.
GOLD BULLION -- AIM Gold & Precious Metals Fund may invest up to 10% at the time of purchase of its total assets directly in gold bullion. The two largest national producers of gold bullion are the Republic of South Africa and the former states of the Soviet Union. Changes in political and economic conditions affecting either country may have a direct impact on its sales of gold bullion. AIM Gold & Precious Metals Fund will purchase gold bullion from, and sell gold bullion to, banks (both U.S. and foreign) and dealers who are members of, or affiliated with members of, a regulated U.S. commodities exchange, in accordance with applicable investment laws. Values of gold bullion held by the Gold & Precious Metals Fund are based upon daily quotes provided by banks or brokers dealing in such commodities.
HOLDRS -- Holding Company Depositary Receipts, or HOLDRs, are trust-issued receipts that represent a Fund's beneficial ownership of a specific group of stocks. HOLDRs involve risks similar to the risks of investing in common stock. For example, a Fund's investment will decline in value if the underlying stocks decline in value. Because HOLDRs are not subject to concentration limits, the relative weight of an individual stock may increase substantially, causing the HOLDRs to be less diverse and creating more risk.
ILLIQUID SECURITIES -- Securities which do not trade on stock exchanges or in the over-the-counter market, or have restrictions on when and how they may be sold, are generally considered to be "illiquid." An illiquid security is one that a Fund may have difficulty -- or may even be legally precluded from -- selling at any particular time. A Fund may invest in illiquid securities, including restricted securities and other investments which are not readily marketable. A Fund will not purchase any such security if the purchase would cause the Fund to invest more than 15% of its net assets, measured at the time of purchase, in illiquid securities. Repurchase agreements maturing in more than seven days are considered illiquid for purposes of this restriction.
The principal risk of investing in illiquid securities is that a Fund may be unable to dispose of them at the time desired or at a reasonable price. In addition, in order to resell a restricted security, a Fund might have to bear the expense and incur the delays associated with registering the security with the SEC, and otherwise obtaining listing on a securities exchange or in the over-the-counter market.
INITIAL PUBLIC OFFERINGS ("IPOS") -- The Funds may invest a portion of their assets in securities of companies offering shares in IPOs. IPOs may have a magnified performance impact on a Fund for as long as it has a small asset base. The impact of IPOs on a Fund's performance likely will decrease as the Fund's asset size increases, which could reduce the Fund's total returns. IPOs may not be consistently available to a Fund for investment, particularly as the Fund's asset base grows. Because IPO shares frequently are volatile in price, a Fund may hold IPO shares for a very short period of time. This may increase the turnover of a Fund's portfolio and may lead to increased expenses for the Fund, such as commissions and transaction costs. By selling shares, the Funds may realize taxable gains they will subsequently distribute to shareholders. In addition, the market for IPO shares can be speculative and/or inactive for extended periods of time. The limited number of shares available for trading in some IPOs may make it more difficult for a Fund to buy or sell significant amounts of shares without an unfavorable impact on prevailing prices. Shareholders in IPO shares can be affected by substantial dilution in the value of their shares, by sales of additional shares and by concentration of control in existing management and principal shareholders.
A Fund's investment in IPO shares may include the securities of unseasoned companies (companies with less than three years of continuous operations), which present risks considerably greater than common stocks of more established companies. These companies may have limited operating histories and their prospects for profitability may be uncertain. These companies may be involved in new and evolving businesses and may be vulnerable to competition and changes in technology, markets and economic conditions. They may be more dependent on key managers and third parties and may have limited product lines.
INTERFUND BORROWING AND LENDING PROGRAM -- Pursuant to an exemptive order issued by the SEC dated December 21, 1999, a Fund may lend money to, and borrow money for temporary purposes from other funds advised by AIM (the "AIM Funds"). A Fund will borrow through the program only when the costs are equal to or lower than the cost of bank loans. Interfund borrowings normally extend overnight, but can have a maximum duration of seven days. Loans may be called on one day's notice. A Fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed.
INVESTMENT COMPANY SECURITIES -- To manage their daily cash positions, the Funds may invest in securities issued by other investment companies, including investment companies advised by AIM and its affiliates (pursuant to an exemptive order dated June 9, 1999) that invest in short-term debt securities and seek to maintain a net asset value of $1.00 per share ("money market funds"). The Funds also may invest in Exchange-Traded Funds ("ETFs"). ETFs are investment companies that are registered under the 1940 Act as open-end funds or Unit Investment Trusts ("UITs"). ETFs are based on specific domestic and foreign indices. ETF shares are sold and redeemed at net asset value only in large blocks. In addition, national securities exchanges list ETF shares for trading, which allows investors to purchase and sell individual ETF shares among themselves at market prices throughout the day. The 1940 Act limits investments in securities of other investment companies. These limitations include, among others, that, subject to certain exceptions: (i) A Fund may not invest more than 10% of its total assets in securities issued by other investment companies; (ii) A Fund may not invest more than 5% of its total assets in securities issued by another investment company; and (iii) and A Fund may not purchase more than 3% of the total outstanding voting stock of another investment company.
MORTGAGE-BACKED SECURITIES -- Mortgage-backed securities are interests in pools of mortgage loans that various governmental, government-related and private organizations assemble as securities for sale to investors. Unlike most debt securities, which pay interest periodically and repay principal at maturity or on specified call dates, mortgage-backed securities make monthly payments that consist of both interest and principal payments. In effect, these payments are a "pass-through" of the monthly payments made by the individual borrowers on their mortgage loans, net of any fees paid to the issuer or guarantor of such securities. Since homeowners usually have the option of paying either part or all of the loan balance before maturity, the effective maturity of a mortgage-backed security is often shorter than is stated.
Governmental entities, private insurers, and the mortgage poolers may insure or guarantee the timely payment of interest and principal of these pools through various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance and letters of credit. AIM will consider such insurance and guarantees and the creditworthiness of the issuers thereof in determining whether a mortgage-related security meets its investment quality standards. It is possible that the private insurers or guarantors will not meet their obligations under the insurance policies or guarantee arrangements.
Although the market for such securities is becoming increasingly liquid, securities issued by certain private organizations may not be readily marketable.
Government National Mortgage Association (GNMA). GNMA is the principal governmental guarantor of mortgage-related securities. GNMA is a wholly-owned corporation of the U.S. government and it falls within the Department of Housing and Urban Development. Securities issued by GNMA are considered the equivalent of treasury securities and are backed by the full faith and credit of the U.S. government. GNMA guarantees the timely payment of principal and interest on securities issued by institutions approved by GNMA and backed by pools of FHA-insured or VA-guaranteed mortgages. GNMA does not guarantee the market value or yield of mortgage-backed securities or the value of the Fund's shares. To buy GNMA securities, a Fund may have to pay a premium over the maturity value of the underlying mortgages, which the Fund may lose if prepayment occurs.
Federal National Mortgage Association (FNMA). FNMA is a government-sponsored corporation owned entirely by private stockholders. FNMA is regulated by the Secretary of Housing and Urban Development. FNMA purchases conventional mortgages from a list of approved sellers and service providers, including state and federally-chartered savings and loan associations, mutual savings banks, commercial banks and credit unions, and mortgage bankers. Securities issued by FNMA are agency securities, which means FNMA, but not the U.S. government, guarantees their timely payment of principal and interest.
Federal Home Loan Mortgage Corporation (FHLMC). FHLMC is a stockholder owned corporation chartered by Congress in 1970 to increase the supply of funds that mortgage lenders, such as commercial banks, mortgage bankers, savings institutions and credit unions, can make available to homebuyers and multifamily investors. FHLMC issues Participation
Certificates (PCs) which represent interests in conventional mortgages. FHLMC guarantees the timely payment of interest and ultimate collection of principal, but PCs are not backed by the full faith and credit of the U.S. government.
Commercial Banks, Savings And Loan Institutions, Private Mortgage Insurance Companies, Mortgage Bankers, and Other Secondary Market Issuers. Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers, and other secondary market issuers also create pass-through pools of conventional mortgage loans. In addition to guaranteeing the mortgage-related security, such issuers may service and/or have originated the underlying mortgage loans. Pools created by these issuers generally offer a higher rate of interest than pools created by GNMA, FNMA & FHLMC because they are not guaranteed by a government agency.
Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities are derivative multiple-class mortgage-backed securities. Stripped mortgage-backed securities usually have two classes that receive different proportions of interest and principal distributions on a pool of mortgage assets. Typically, one class will receive some of the interest and most of the principal, while the other class will receive most of the interest and the remaining principal. In extreme cases, one class will receive all of the interest ("interest only" or "IO" class) while the other class will receive the entire principal ("principal only" or "PO class"). The cash flow and yields on IOs and POs are extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage loans or mortgage-backed securities. A rapid rate of principal payments may adversely affect the yield to maturity of IOs. Slower than anticipated prepayments of principal may adversely affect the yield to maturity of a PO. The yields and market risk of interest only and principal only stripped mortgage-backed securities, respectively, may be more volatile than those of other fixed income securities, including traditional mortgage-backed securities.
Collateralized Mortgage Obligations (CMOs). CMOs are hybrids between mortgage-backed bonds and mortgage pass-through securities. Similar to a bond, CMOs usually pay interest monthly and have a more focused range of principal payment dates than pass-through securities. While whole mortgage loans may collateralize CMOs, mortgage-backed securities guaranteed by GNMA, FHLMC, or FNMA and their income streams more typically collateralize them.
A Real Estate Mortgage Investment Conduit ("REMIC") is a CMO that qualifies for special tax treatment under the Internal Revenue Code of 1986, as amended and is an investment in certain mortgages primarily secured by interests in real property and other permitted investments.
CMOs are structured into multiple classes, each bearing a different stated maturity. Each class of CMO or REMIC certificate, often referred to as a "tranche," is issued at a specific interest rate and must be fully retired by its final distribution date. Generally, all classes of CMOs or REMIC certificates pay or accrue interest monthly. Investing in the lowest tranche of CMOs and REMIC certificates involves risks similar to those associated with investing in equity securities.
Risks of Mortgage-Backed Securities. Yield characteristics of mortgage-backed securities differ from those of traditional debt securities in a variety of ways. For example, payments of interest and principal are more frequent (usually monthly) and their interest rates are sometimes adjustable. In addition, a variety of economic, geographic, social, and other factors, such as the sale of the underlying property, refinancing, or foreclosure, can cause investors to repay the loans underlying a mortgage-backed security sooner than expected. If the prepayment rates increase, a Fund may have to reinvest its principal at a rate of interest that is lower than the rate on existing mortgage-backed securities.
ASSET-BACKED SECURITIES. These securities are interests in pools of a broad range of assets other than mortgages, such as automobile loans, computer leases, and credit card receivables. Like mortgage-backed securities, these securities are pass-through. In general, the collateral supporting these securities is of shorter maturity than mortgage loans and is less likely to experience substantial prepayments with interest rate fluctuations.
Asset-backed securities present certain risks that are not presented by mortgage-backed securities. Primarily, these securities may not have the benefit of any security interest in the related assets, which raises the possibility that recoveries on repossessed collateral may not be available to support payments on these securities. For example, credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of which allow debtors to reduce their balances by offsetting certain amounts owed on the credit cards. Most issuers of asset-backed securities backed by automobile receivables permit the servicers of such receivables to retain possession of the underlying obligations. If the servicer were to sell these obligations to another party, there is a risk that the purchaser would acquire an interest superior to that of the holders of the related asset-backed securities. Due to the quantity of vehicles involved and requirements under state laws, asset-backed securities
backed by automobile receivables may not have a proper security interest in all of the obligations backing such receivables.
To lessen the effect of failures by obligors on underlying assets to make payments, the entity administering the pool of assets may agree to ensure the receipt of payments on the underlying pool in a timely fashion ("liquidity protection"). In addition, asset-backed securities may include insurance, such as guarantees, policies, or letters of credit obtained by the issuer or sponsor from third parties, for some or all of the assets in the pool ("credit support"). Delinquency or loss more than that anticipated or failure of the credit support could adversely affect the return on an investment in such a security.
The Funds may also invest in residual interests in asset-backed securities, which is the excess cash flow remaining after making required payments on the securities and paying related administrative expenses. The amount of residual cash flow resulting from a particular issue of asset-backed securities depends in part on the characteristics of the underlying assets, the coupon rates on the securities, prevailing interest rates, the amount of administrative expenses and the actual prepayment experience on the underlying assets.
REAL ESTATE INVESTMENT TRUSTS - To the extent consistent with their investment objectives and policies, the Funds may invest in securities issued by real estate investment trusts ("REITs").
REITs are trusts which 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 that the Funds have the ability to invest in REITs, a Fund could conceivably own real estate directly as a result of a default on the securities it owns. The Funds, 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, REITs may be affected by any changes in the value of the underlying property in their portfolios. 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. REITs 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 a Fund, but also, indirectly, similar expenses of the REITs.
REPURCHASE AGREEMENTS -- A Fund may enter into repurchase agreements ("REPOs") on debt securities that the Fund is allowed to hold in its portfolio. This is a way to invest money for short periods. A REPO is an agreement under which the Fund acquires a debt security and then resells it to the seller at an agreed-upon price and date (normally, the next business day). The repurchase price represents an interest rate effective for the short period the debt security is held by the Fund, and is unrelated to the interest rate on the underlying debt security. A repurchase agreement is often considered as a loan collateralized by securities. The collateral securities acquired by a Fund (including accrued interest earned thereon) must have a total value in excess of the value of the repurchase agreement. The collateral securities are held by a Fund's custodian bank until the repurchase agreement is completed.
The Funds may enter into repurchase agreements with financial institutions that are creditworthy under standards established by AIM. AIM must use these standards to review the creditworthiness of any financial institution that is a party to a REPO. REPOs maturing in more than seven days are considered illiquid securities. A Fund will not enter into repurchase agreements maturing in more than seven days if as a result more than 15% of the Fund's net assets would be invested in these repurchase agreements and other illiquid securities.
As noted above, the Funds use REPOs as a means of investing cash for short periods of time. Although REPOs are considered to be highly liquid and comparatively low-risk, the use of REPOs does involve some risks. For example, if the other party to the agreement defaults on its obligation to repurchase the underlying security at a time when the value of the security has declined, the Fund may incur a loss on the sale of the collateral security. If the other party to the agreement becomes insolvent and subject to liquidation or reorganization under the Bankruptcy Code or other laws, a
court may determine that the underlying security is collateral for a loan by the Fund not within the control of the Fund and therefore the realization by the Fund on such collateral may automatically be stayed. Finally, it is possible that the Fund may not be able to substantiate its interest in the underlying security and may be deemed an unsecured creditor of the other party to the agreement.
RULE 144A SECURITIES -- A Fund also may invest in securities that can be resold to institutional investors pursuant to Rule 144A under the Securities Act of 1933, as amended (the "1933 Act"). In recent years, a large institutional market has developed for many Rule 144A Securities. Institutional investors generally cannot sell these securities to the general public but instead will often depend on an efficient institutional market in which Rule 144A Securities can readily be resold to other institutional investors, or on an issuer's ability to honor a demand for repayment. Therefore, the fact that there are contractual or legal restrictions on resale to the general public or certain institutions does not necessarily mean that a Rule 144A Security is illiquid. Institutional markets for Rule 144A Securities may provide both reliable market values for Rule 144A Securities and enable a Fund to sell a Rule 144A investment when appropriate. For this reason, the Board has concluded that if a sufficient institutional trading market exists for a given Rule 144A Security, it may be considered "liquid," and not subject to a Fund's limitations on investment in restricted securities. The Board has given AIM the day-to-day authority to determine the liquidity of Rule 144A Securities, according to guidelines approved by the Board. The principal risk of investing in Rule 144A Securities is that there may be an insufficient number of qualified institutional buyers interested in purchasing a Rule 144A Security held by a Fund, and the Fund might be unable to dispose of such security promptly or at reasonable prices.
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 cost 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.
SOVEREIGN DEBT -- In certain emerging countries, the central government and its
agencies are the largest debtors to local and foreign banks and others.
Sovereign debt involves the risk that the government, as a result of political
considerations or cash flow difficulties, may fail to make scheduled payments of
interest or principal and may require holders to participate in rescheduling of
payments or even to make additional loans. If an emerging country government
defaults on its sovereign debt, there is likely to be no legal proceeding under
which the debt may be ordered repaid, in whole or in part. The ability or
willingness of a foreign sovereign debtor to make payments of principal and
interest in a timely manner may be influenced by, among other factors, its cash
flow, the magnitude of its foreign reserves, the availability of foreign
exchanges on the payment date, the debt service burden to the economy as a
whole, the debtor's then-current relationship with the International Monetary
Fund, and its then-current political constraints. Some of the emerging countries
issuing such instruments have experienced high rates of inflation in recent
years and have extensive internal debt. Among other effects, high inflation and
internal debt service requirements may adversely affect the cost and
availability of future domestic sovereign borrowing to finance government
programs, and may have other adverse social, political, and economic
consequences, including effects on the willingness of such countries to service
their sovereign debt. An emerging country government's willingness and ability
to make timely payments on its sovereign debt also are likely to be heavily
affected by the country's balance of trade and its access to trade and other
international credits. If a country's exports are concentrated in a few
commodities, such country would be more significantly exposed to a decline in
the international prices of one or more of such commodities. A rise in
protectionism on the part of its trading partners, or unwillingness by such
partners to make payment for goods in hard currency, could also adversely affect
the country's
ability to export its products and repay its debts. Sovereign debtors may also be dependent on expected receipts from such agencies and others abroad to reduce principal and interest arrearages on their debt. However, failure by the sovereign debtor or other entity to implement economic reforms negotiated with multilateral agencies or others, to achieve specified levels of economic performance, or to make other debt payments when due, may cause third parties to terminate their commitments to provide funds to the sovereign debtor, which may further impair such debtor's willingness or ability to service its debts.
The Funds may invest in debt securities issued under the "Brady Plan" in connection with restructurings in emerging country debt markets or earlier loans. These securities, often referred to as "Brady Bonds," are, in some cases, denominated in U.S. dollars and collateralized as to principal by U.S. Treasury zero coupon bonds having the same maturity. At least one year's interest payments, on a rolling basis, are collateralized by cash or other investments. Brady Bonds are actively traded on an over-the-counter basis in the secondary market for emerging country debt securities. Brady Bonds are lower-rated bonds and highly volatile.
UNSEASONED ISSUERS -- The Funds may purchase securities in unseasoned issuers. Securities in such issuers may provide opportunities for long term capital growth. Greater risks are associated with investments in securities of unseasoned issuers than 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.
U.S. GOVERNMENT SECURITIES -- Each Fund may, from time to time, purchase debt securities issued by the U.S. government. These securities include Treasury bills, notes, and bonds. Treasury bills have a maturity of one year or less, Treasury notes generally have a maturity of one to ten years, and Treasury bonds generally have maturities of more than ten years.
U.S. government debt securities also include securities issued or guaranteed by agencies or instrumentalities of the U.S. government. Some obligations of U.S. government agencies, which are established under the authority of an act of Congress, such as GNMA Participation Certificates, are supported by the full faith and credit of the U.S. Treasury. GNMA Certificates are mortgagebacked securities representing part ownership of a pool of mortgage loans. These loans issued by lenders such as mortgage bankers, commercial banks, and savings and loan associations are either insured by the Federal Housing Administration or guaranteed by the Veterans Administration. A "pool" or group of such mortgages is assembled and, after being approved by GNMA, is offered to investors through securities dealers. Once approved by GNMA, the timely payment of interest and principal on each mortgage is guaranteed by GNMA and backed by the full faith and credit of the U.S. government. The market value of GNMA Certificates is not guaranteed. GNMA Certificates are different from bonds because principal is paid back monthly by the borrower over the term of the loan rather than returned in a lump sum at maturity, as is the case with a bond. GNMA Certificates are called "pass-through" securities because both interest and principal payments (including prepayments) are passed through to the holder of the GNMA Certificate.
Other United States government debt securities, such as securities of the Federal Home Loan Banks, are supported by the right of the issuer to borrow from the Treasury. Others, such as bonds issued by Fannie Mae, a federally chartered private corporation, are supported only by the credit of the corporation. In the case of securities not backed by the full faith and credit of the United States, a Fund must look principally to the agency issuing or guaranteeing the obligation in the event the agency or instrumentality does not meet its commitments. 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. A Fund will invest in securities of such instrumentalities only when AIM is satisfied that the credit risk with respect to any such instrumentality is comparatively minimal.
WHEN-ISSUED/DELAYED DELIVERY -- The Funds normally buy and sell securities on an ordinary settlement basis. That means that the buy or sell order is sent, and a Fund actually takes delivery or gives up physical possession of the security on the "settlement date," which is three business days later. However, the Funds also may purchase and sell securities on a when-issued or delayed delivery basis.
When-issued or delayed delivery transactions occur when securities are purchased or sold by a Fund and payment and delivery take place at an agreed-upon time in the future. The Funds may engage in this practice in an effort to secure an advantageous price and yield. However, the yield on a comparable security available when delivery actually takes place may vary from the yield on the security at the time the when-issued or delayed delivery transaction was entered into. When a Fund engages in when-issued and delayed delivery transactions, it relies on the seller or buyer to consummate
the sale at the future date. If the seller or buyer fails to act as promised, that failure may result in the Fund missing the opportunity of obtaining a price or yield considered to be advantageous. No payment or delivery is made by a Fund until it receives delivery or payment from the other party to the transaction. However, fluctuation in the value of the security from the time of commitment until delivery could adversely affect a Fund.
INVESTMENTS IN ENTITIES WITH RELATIONSHIPS WITH THE FUNDS/ADVISOR -- The Funds
may invest in securities issued, sponsored or guaranteed by the following types
of entities or their affiliates: (i) entities that sell shares of the AIM Funds;
(ii) entities that rate or rank the AIM Funds; (iii) exchanges on which the AIM
Funds buy or sell securities; and (iv) entities that provide services to the AIM
Funds (e.g., custodian banks). The Funds will decide whether to invest in or
sell securities issued by these entities based on the merits of the specific
investment opportunity.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below have been adopted by each respective Fund and, unless identified as non-fundamental policies, may not be changed without the affirmative vote of a majority of the outstanding voting securities of that Fund. As provided in the 1940 Act, a "vote of a majority of the outstanding voting securities of the Fund" means the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the Fund or (2) 67% or more of the shares present at a meeting, if more than 50% of the outstanding shares are represented at the meeting in person or by proxy. Except with respect to borrowing, changes in values of a particular Fund's assets will not cause a violation of the following investment restrictions so long as percentage restrictions are observed by such Fund at the time it purchases any security. Each Fund may not:
1. with respect to 75% of the Fund's 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, or securities of other investment companies) 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;
2. underwrite securities of other issuers, except insofar as it may be deemed to be an underwriter under the 1933 Act in connection with the disposition of the Fund's portfolio securities;
3. borrow money, except that the Fund may borrow money in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings);
4. issue senior securities, except as permitted under the 1940 Act;
5. lend any security or make any loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties, but this limitation does not apply to the purchase of debt securities or to repurchase agreements;
6. purchase or sell physical commodities; however, this policy shall not prevent the Fund from purchasing and selling foreign currency, futures contracts, options, forward contracts, swaps, caps, floors, collars, and other financial instruments. This restriction shall not prevent AIM Gold & Precious Metals Fund from investing in gold bullion;
7. purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business);
8. purchase any securities of an issuer in a particular industry if
as a result 25% or more of its total assets (taken at market
value at the time of purchase) would be invested in securities
of issuers whose principal business activities are in the same
industry; provided however, that (i) AIM Energy Fund will invest
25% or more of its assets in one or more energy-related
industries; (ii) AIM Financial Services Fund will invest 25% or
more of its assets in one or more financial services-related
industries; (iii) AIM Gold & Precious Metals Fund will invest
25% or more of its assets in one or more gold and precious
metals-related industries; (iv) AIM Leisure Fund will invest 25%
or more of its assets in one or more leisure-related industries;
(v) AIM Technology Fund will invest 25% or more of its assets in
one or more technology-related industries; and (vi) AIM
Utilities Fund will invest 25% or more of its assets in one or
more utilities-related industries; or
9. each 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 managed by AIM or an affiliate or a successor thereof, with substantially the same fundamental investment objective, policies, and limitations as the Fund.
In addition, each Fund has the following non-fundamental policies, which may be changed without shareholder approval:
A. The Fund may not sell securities short (unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short) or purchase securities on margin, except that (i) this policy does not prevent the Fund from entering into short positions in foreign currency, futures contracts, options, forward contracts, swaps, caps, floors, collars, and other financial instruments, (ii) the Fund may obtain such short-term credits as are necessary for the clearance of transactions, and (iii) the Fund may make margin payments in connection with futures contracts, options, forward contracts, swaps, caps, floors, collars, and other financial instruments.
B. The Fund may borrow money only from a bank or from an open-end management investment company managed by AIM or an affiliate or a successor thereof for temporary or emergency purposes (not for leveraging or investing) or by engaging in reverse repurchase agreements with any party (reverse repurchase agreements will be treated as borrowings for purposes of fundamental limitation (3)).
C. The Fund does not currently intend to purchase any security if, as a result, more than 15% of its net assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued.
D. The Fund may invest in securities issued by other investment companies to the extent that such investments are consistent with the Fund's investment objective and policies and permissible under the 1940 Act.
E. AIM Gold & Precious Metals Fund may invest up to 10% at the time of purchase of its total assets in gold bullion.
F. With respect to fundamental restriction (8) above, (i)
energy-related industries include, but are not limited to, oil
companies, oil and gas exploration companies, natural gas
pipeline companies, refinery companies, energy conservation
companies, coal companies, alternative energy companies, and
innovative energy technology companies; (ii) financial
services-related industries include, but are not limited to,
banks (regional and money-centers), insurance companies (life,
property and casualty, and multiline), investment and
miscellaneous industries (asset managers, brokerage firms, and
government-sponsored agencies), and suppliers to financial
services companies; (iii) gold and precious metals-related
industries include, but are not limited to, those involved in
exploring for, mining, processing, or dealing and investing in
gold, gold bullion, silver, platinum, palladium, and diamonds;
(iv) leisure-related industries include, but are not limited to,
hotels/gaming, publishing, advertising, beverages, audio/video,
broadcasting-radio/TV, cable & satellite operators, cable &
satellite programmers, motion pictures & TV, recreation
services/entertainment, retail, and toys; (v) real
estate-related industries include, but are not limited to, real
estate brokers, home builders or real estate developers,
companies with substantial real estate holdings, and companies
with significant involvement in the real estate industry; (vi)
technology-related industries include, but are not limited to,
various applied technologies, hardware, software,
semiconductors, telecommunications equipment and services, and
service-related companies in information technology; and (vii)
utilities-related industries include, but are not limited to,
companies that produce, generate, transmit, or distribute
natural gas or electricity, as well as companies that provide
telecommunications services, including local, long distance and
wireless.
G. 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.
In addition, with respect to a Fund that may invest in municipal securities, the following non-fundamental policy applies, which may be changed without shareholder approval:
Each state (including the District of Columbia and Puerto Rico), territory and possession of the United States, each political subdivision, agency, instrumentality, and authority thereof, and each multi-state agency of which a state is a member is a separate "issuer." When the assets and revenues of an agency, authority, instrumentality, or other political subdivision are separate from the government creating the subdivision and the security is backed
only by assets and revenues of the subdivision, such subdivision would be deemed to be the sole issuer. Similarly, in the case of an Industrial Development Bond or Private Activity bond, if that bond is backed only by the assets and revenues of the non-governmental user, then that non-governmental user would be deemed to be the sole issuer. However, if the creating government or another entity guarantees a security, then to the extent that the value of all securities issued or guaranteed by that government or entity and owned by a Fund exceeds 10% of the Fund's total assets, the guarantee would be considered a separate security and would be treated as issued by that government or entity. With respect to a Fund that is not a money market fund, securities issued or guaranteed by a bank or subject to financial guaranty insurance are not subject to the limitations set forth in the preceding sentence.
PORTFOLIO TURNOVER -- AIM Energy Fund's portfolio turnover rate decreased from 123% in 2004 to 45% in 2005. AIM Technology Fund's portfolio turnover rate decreased from 141% in 2004 to 92% in 2005. AIM Utilities Fund's portfolio turnover rate decreased from 101% in 2004 to 33% in 2005. Each of the Funds was involved in mergers on November 24, 2003, that resulted in the acquisition of the assets of one or more funds. The sale of the acquired securities and the resulting purchases of new portfolio securities contributed to the high portfolio turnover during the fiscal year ended 2004. For the fiscal year ended March 31, 2005, purchases and sale of portfolio securities were not affected by such circumstances; and therefore the portfolio turnover for each Fund decreased significantly.
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/:
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APPROXIMATE DATE OF INFORMATION REMAINS
INFORMATION WEBSITE POSTING POSTED ON WEBSITE
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Top ten holdings as 15 days after month end Until replaced with
of month end the following month's
top ten holdings
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Select holdings 29 days after calendar Until replaced with the
included in theFund's quarter end following quarter's
Quarterly Performance Quarterly Performance
Update Update
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Complete portfolio 30 days after calendar For one year
holdings as of calendar quarter end
quarter end
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Complete portfolio holdings 60-70 days after fiscal For one year
as of fiscal quarter end quarter 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:
. Attorneys and accountants;
. Securities lending agents;
. Lenders to the AIM Funds;
. Rating and rankings agencies;
. Persons assisting in the voting of proxies;
. AIM Funds' custodians;
. The AIM Funds' transfer agent(s) (in the event of a redemption
in kind);
. 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);
. Financial printers;
. Brokers identified by the AIM Funds' portfolio management team
who provide execution and research services to the team; and
. 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 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 FUNDS
THE INVESTMENT ADVISOR
AIM is the investment advisor for each Fund. Prior to November 25, 2003, INVESCO Funds Group, Inc. ("IFG") served as the investment advisor.
AIM, located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, 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 and AIM Management are each an indirect wholly owned subsidiary of AMVESCAP PLC, a publicly traded holding company. Through its subsidiaries, AMVESCAP PLC engages in the business of investment management on an
international basis. AMVESCAP PLC is one of the largest independent investment management businesses in the world, with approximately $373 billion in assets under management as of June 30, 2005.
INVESTMENT ADVISORY AGREEMENT
As investment advisor, AIM supervises all aspects of the Funds' operations and provides investment advisory services to the Fund. AIM obtains and evaluates economic, statistical and financial information to formulate and implement investment programs for the Funds. The Master Investment Advisory Agreement provides that, in fulfilling its responsibilities, AIM may engage the services of other investment managers with respect to the Funds. The investment advisory services of AIM are not exclusive and AIM is 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 the Funds' accounts and records, and the preparation of all requisite corporate documents such as tax returns and reports to the SEC and shareholders.
The Master Investment Advisory Agreement provides that the Funds will pay or cause to be paid all expenses of the Funds 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 trustees and shareholder meetings, the cost of preparing and distributing reports and notices to shareholders, the fees and other expenses incurred by the Trust on behalf of each Fund in connection with membership in investment company organizations, and the cost of printing copies of prospectuses and statements of additional information distributed to the Funds' shareholders.
AIM, at its own expense, furnishes to the Trust office space and facilities. AIM furnishes to the Trust all personnel for managing the affairs of the Trust and each of its series of shares.
Pursuant to its investment 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 the Fund during the year:
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Maximum Advisory
Fee Rates
Annual Rate/Net Asset Per Maximum Advisory Fee Rate Committed Until
Fund Name Advisory Agreement After January 1, 2005 Date
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AIM Energy Fund 0.75% of the first $350M 0.75% of the first $250M June 30, 2006
0.65% of the next $350M 0.74% of the next $250M
0.55% of the next $1.3B 0.73% of the next $500M
0.45% of the next $2B 0.72% of the next $1.5B
0.40% of the next $2B 0.71% of the next $2.5B
0.375% of the next $2B 0.70% of the next $2.5B
0.35% of the excess over $8B 0.69% of the next $2.5B
0.68% of the excess over $10B
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AIM Financial Services Fund, 0.75% of first $350 M 0.75% of the first $250M June 30, 2006
AIM Gold & Precious Metals Fund, 0.65% of next $350 M 0.74% of the next $250M
AIM Leisure Fund, 0.55% of the next $1.3B 0.73% of the next $500M
AIM Technology Fund and 0.45% of next $2 B 0.72% of the next $1.5B
AIM Utilities Fund 0.40% of next $2 B 0.71% of the next $2.5B
0.375% of next $2 B 0.70% of the next $2.5B
0.35% of amount over $8 B 0.69% of the next $2.5B
0.68% of the excess over $10B
--------------------------------------------------------------------------------------------------------------
|
The management fees payable by each Fund, the amounts waived by AIM and/or IFG, as applicable, and the net fees paid by each Fund for the fiscal years ended March 31, 2004 and 2005 are as follows:
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FUND NAME MARCH 31, 2005 MARCH 31, 2004
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MANAGEMENT MANAGEMENT NET MANAGEMENT MANAGEMENT NET
FEE FEE MANAGEMENT FEE FEE MANAGEMENT
PAYABLE WAIVERS FEE PAID PAYABLE WAIVERS FEE PAID
-------------------------------------------------------------------------------------------------------------------------------
AIM Energy Fund $ 3,081,975 $ 7,020 $ 3,074,955 $ 1,961,154 $ 1,139 $ 1,960,015
-------------------------------------------------------------------------------------------------------------------------------
AIM Financial Services Fund $ 6,238,104 $ 15,532 $ 6,222,572 $ 6,269,673 $ 1,618 $ 6,268,055
-------------------------------------------------------------------------------------------------------------------------------
AIM Gold & Precious Metals Fund $ 956,510 $ 3,699 $ 952,811 $ 977,792 $ 313 $ 977,479
-------------------------------------------------------------------------------------------------------------------------------
AIM Leisure Fund $ 5,986,641 $ 11,083 $ 5,975,558 $ 5,662,406 $ 3,101 $ 5,659,305
-------------------------------------------------------------------------------------------------------------------------------
AIM Technology Fund $ 10,500,091 $ 22,884 $ 10,477,207 $ 15,105,891 $ 0 $ 15,105,891
-------------------------------------------------------------------------------------------------------------------------------
AIM Utilities Fund $ 1,624,156 $ 88,199 $ 1,535,957 $ 952,940 $ 139 $ 952,801
-------------------------------------------------------------------------------------------------------------------------------
|
Prior to November 25, 2003, IFG served as investment advisor to the Funds. During the period ended March 31, 2003, each Fund paid IFG advisory fees in the dollar amounts shown. If applicable, the advisory fees were offset by credits in the amounts shown below, so that a Fund's fees were not in excess of the expense limitations shown, which were voluntarily agreed to by the Company and IFG. The fee is allocated daily to each class based on the relative proportion of net assets represented by such class.
ADVISORY TOTAL EXPENSE TOTAL EXPENSE FEE DOLLARS REIMBURSEMENTS LIMITATIONS ----------- -------------- ------------- |
INVESTOR CLASS
AIM ENERGY FUND
Year Ended March 31, 2003 2,050,307 N/A N/A AIM FINANCIAL SERVICES FUND Year Ended March 31, 2003 6,122,659 N/A N/A AIM GOLD & PRECIOUS METALS FUND Year Ended March 31, 2003 835,712 N/A N/A AIM LEISURE FUND Year Ended March 31, 2003 4,325,688 N/A N/A AIM TECHNOLOGY FUND Year Ended March 31, 2003 6,450,728 N/A N/A AIM UTILITIES FUND Year Ended March 31, 2003 655,934 526,139 1.30% |
INSTITUTIONAL CLASS
AIM TECHNOLOGY FUND
Year Ended March 31, 2003 5,032,432 0 1.15%/1/
ADVISORY TOTAL EXPENSE TOTAL EXPENSE FEE DOLLARS REIMBURSEMENTS LIMITATIONS ----------- -------------- ------------- |
CLASS A
AIM ENERGY FUND
Year Ended March 31, 2003 47,926 0 1.65%/2/ AIM FINANCIAL SERVICES FUND Year Ended March 31, 2003 20,833 3,917 1.40%/3/ AIM GOLD & PRECIOUS METALS FUND Year Ended March 31, 2003 11,649 431 2.10%/4/ AIM LEISURE FUND Year Ended March 31, 2003 119,744 0 1.50%/5/ AIM TECHNOLOGY FUND Year Ended March 31, 2003 12,982 818 1.50%/5/ AIM UTILITIES FUND Year Ended March 31, 2003 2,533 1,095 1.40%/6/ |
CLASS B
AIM ENERGY FUND
Year Ended March 31, 2003 5,555 582 2.30%/7/ AIM FINANCIAL SERVICES FUND Year Ended March 31, 2003 4,450 2,056 2.05%/8/ AIM GOLD & PRECIOUS METALS FUND Year Ended March 31, 2003 6,563 0 2.75%/9/ AIM LEISURE FUND Year Ended March 31, 2003 36,036 4,408 2.15%/11/ AIM TECHNOLOGY FUND Year Ended March 31, 2003 1,084 1,027 2.15%/12/ AIM UTILITIES FUND Year Ended March 31, 2003 1,296 943 2.05%/10/ |
CLASS C
AIM ENERGY FUND
Year Ended March 31, 2003 75,869 20,103 2.30%/13/
ADVISORY TOTAL EXPENSE TOTAL EXPENSE
FEE DOLLARS REIMBURSEMENTS LIMITATIONS
----------- -------------- -------------
AIM FINANCIAL SERVICES FUND
Year Ended March 31, 2003 85,164 0 2.75%/13/
AIM GOLD & PRECIOUS METALS FUND
Year Ended March 31, 2003 18,502 0 2.75%/13/
AIM LEISURE FUND
Year Ended March 31, 2003 123,328 0 2.75%/13/
AIM TECHNOLOGY FUND
Year Ended March 31, 2003 47,458 100,306 2.15%/13/
AIM UTILITIES FUND
Year Ended March 31, 2003 7,076 15,628 2.05%
|
CLASS K
AIM ENERGY FUND
Year Ended March 31, 2003 1,034 4,502 1.75%/13/ AIM FINANCIAL SERVICES FUND Year Ended March 31, 2003 7,688 3,997 1.50%/13/ AIM LEISURE FUND Year Ended March 31, 2003 428,717 209,552 2.20%/13/ AIM TECHNOLOGY FUND Year Ended March 31, 2003 128,789 130,850 2.20%/13/ ---------- |
/1/ 1.15% as of August 1, 2002. 0.95% prior to August 1, 2002. /2/ 1.65% as of August 1, 2002. 2.00% prior to August 1, 2002. /3/ 1.40% as of August 1, 2002. 2.00% prior to August 1, 2002. /4/ 2.10% as of August 1, 2002. 2.65% prior to August 1, 2002. /5/ 1.50% as of August 1, 2002. 2.25% prior to August 1, 2002. /6/ 1.40% as of August 1, 2002. 1.70% prior to August 1, 2002. /7/ 2.30% as of August 1, 2002. 2.60% prior to August 1, 2002. /8/ 2.05% as of August 1, 2002. 2.40% prior to August 1, 2002. /9/ 2.75% as of August 1, 2002. 3.00% prior to August 1, 2002. /10/ 2.05% as of August 1, 2002. 2.50% prior to August 1, 2002. /11/ 2.15% as of August 1, 2002. 3.00% prior to August 1, 2002. /12/ 2.15% as of August 1, 2002. 2.70% prior to August 1, 2002. /13/ Effective August 1, 2002.
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 Fund's detriment during the period stated in the agreement between AIM and a Fund.
AIM has voluntarily agreed to waive a portion of advisory fees payable by the Funds. The amount of the waiver will equal 25% of the advisory fee AIM receives from the Affiliated Money Market Funds as a result of a Fund's investment of uninvested cash in an Affiliated Money Market Fund. Termination of this agreement requires approval by the Board. See "INVESTMENTS, POLICIES AND RISKS - Other Investment Company Securities."
AIM has contractually agreed each to waive advisory fees or reimburse expenses to the extent necessary to limit (i) the Funds' (excluding AIM Technology Fund) Total Annual Fund Operating Expenses (excluding certain items each discussed below) to 1.90%, 1.90%, 2.65%, 2.65%, 2.15% and 2.15% on Investor Class, Class A, Class B, Class C, Class R shares and Institutional Class shares, as applicable, respectively; (ii) AIM Technology Fund's Total Annual Fund Operating Expenses (excluding certain items each discussed below) to 1.55%, 1.55%, 2.30%, 2.30%, and 1.30% on Investor Class, Class A, Class B, Class C, and Institutional Class shares, respectively. 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 Funds' day-to-day operations), as defined in the Financial Accounting Standard's Board's Generally Accepted Accounting Principles or as approved by the Funds' Board of Trustees; (v) expenses related to a merger or reorganization, as approved by the Funds' Board of Trustees; (vi) expenses that the Funds' have incurred but did not actually pay because of an expense offset arrangement; and (vii) Rule 12b-1 fees. Currently, the only expense offset arrangements from which the Funds benefits are in the form of credits that each 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 each Fund. Such contractual fee waivers or reductions are set forth in the Fee Table to the Funds' Prospectus and may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Funds.
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.
PORTFOLIO MANAGERS
Appendix C contains the following information regarding the portfolio managers identified in each Fund's prospectus:
. The dollar range of the manager's investments in each Fund.
. A description of the manager's compensation structure.
. Information regarding other accounts managed by the manager and potential conflicts of interest that might arise from the management of multiple accounts.
ADMINISTRATIVE SERVICES AGREEMENT
AIM and the Trust have entered into a Master Administrative Services Agreement pursuant to which AIM may perform or arrange for the provision of certain accounting and other administrative services to the Fund which are not required to be performed by AIM under the advisory agreement. The Master Administrative Services Agreement provides that it will remain in effect and continue from year to year only if such continuance is specifically approved at least annually by the
Trust's Board, including the independent trustees, by votes cast in person at a meeting called for such purpose. Under the Master Administrative Services Agreement, AIM is entitled to receive from the Fund 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
The Funds paid AIM and/or IFG, as applicable, the following amounts for administrative services for the last three fiscal years ended March 31.
-------------------------------------------------------------------------------- FUND NAME 2005 2004 2003 -------------------------------------------------------------------------------- AIM Energy Fund $ 147,061 $ 127,669 $ 141,109 -------------------------------------------------------------------------------- AIM Financial Services Fund 305,430 437,064 $ 434,701 -------------------------------------------------------------------------------- AIM Gold & Precious Metals Fund 53,577 68,668 $ 62,346 -------------------------------------------------------------------------------- AIM Leisure Fund 289,567 387,379 $ 337,249 -------------------------------------------------------------------------------- AIM Technology Fund 560,226 1,215,589 $ 892,715 -------------------------------------------------------------------------------- AIM Utilities Fund 85,884 67,176 $ 50,010 -------------------------------------------------------------------------------- |
IFG served as administrator of the Funds prior to August 12, 2003.
TRUSTEES AND OFFICERS 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, their principal occupations during the last five years and certain other information concerning them are set forth in Appendix D.
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 current 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 auditor's qualifications, independence and performance; (ii) appoint independent auditors 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 auditors; (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 auditors 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 March 31, 2005, the Audit Committee held seven 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 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 the AIM, the Chief Compliance Officer, the Senior
Officer and/or the Compliance Consultant. During the fiscal year ended March 31,
2005, the Compliance Committee held four 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 March 31, 2005, 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, 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 Fund 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 March 31, 2005, the Investments Committee held nine meetings.
The Investments Committee has established three Sub-Committees. The
Sub-Committees are responsible for: (i) reviewing the performance, fees and
expenses of the Funds that have been assigned to a particular Sub-Committee (for
each Sub-Committee, the "Designated Funds"), unless the Investments Committee
takes such action directly; (ii) reviewing with the applicable portfolio
managers from time to time the investment objective(s), policies, strategies and
limitations of the Designated Funds; (iii) evaluating the investment advisory,
sub-advisory and distribution arrangements in effect or proposed for the
Designated Funds, unless the Investments Committee takes such action directly;
(iv) being familiar with the registration statements and periodic shareholder
reports applicable to their Designated Funds; and (v) such other
investment-related matters as the Investments Committee may delegate to the
Sub-Committee from time to time.
The members of the Valuation Committee are Messrs. Bunch, Pennock (Vice Chair),
Soll 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 March 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 Fund's 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 D.
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 ENERGY FUND
. 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.
. 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.
. 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 one and five year periods was at or above the median performance of such comparable funds and below such median performance for the three year period. The Board also noted that AIM began serving as investment
advisor to the Fund in November 2003. 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.
. The performance of the Fund relative to indices. The Board reviewed the performance of the Fund during the past one, three and five calendar year against the performance of the Lipper Natural Resources 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 above such Index for the five year period. The Board also noted that AIM began serving as investment advisor to the Fund in November 2003. 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.
. 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.
. 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.
. Fees relative to those of clients of AIM with comparable investment strategies. The Board reviewed the advisory fee rate for the Fund under the Advisory Agreement. The Board noted that this rate was lower than the advisory fee rate for an offshore fund for which an AIM affiliate serves as investment advisor with investment strategies comparable to those of the Fund. 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.
. 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 above 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.
. 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 through June 30, 2006. The Board noted that AIM has contractually agreed to waive fees and/or limit expenses of the Fund through March 31, 2006 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 also noted that AIM has voluntarily agreed to waive fees and/or limit expenses of the Fund 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 that is lower than the contractual agreement. The Board considered the contractual and voluntary nature of these fee waivers/expense limitations and noted that the contractual agreement remains in effect through March 31, 2006 and the voluntary agreement can be terminated at any time by AIM without further notice to investors. 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.
. Breakpoints and economies of scale. The Board reviewed the structure of the Fund's advisory fee under the Advisory Agreement, noting that it includes six 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.
. 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.
. 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.
. 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.
. 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.
. 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.
. 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.
. 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 FINANCIAL SERVICES FUND
. 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.
. 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.
. 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 in such periods was below the median performance of such comparable funds. The Board also noted that AIM began serving as investment advisor to the Fund in November 2003. The Board noted that AIM has recently made changes to the Fund's portfolio management team, which appear to be producing encouraging early results but need more time to be evaluated before a conclusion can be made that the changes have addressed the Fund's under-performance. 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.
. 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 Financial Services Fund Index. The Board noted that the Fund's performance in such periods was below the performance of such Index. The Board also noted that AIM began serving as investment advisor to the Fund in November 2003. The Board noted that AIM has recently made changes to the Fund's portfolio management team, which appear to be producing encouraging early results but need more time to be evaluated before a conclusion can be made that the changes have addressed the Fund's under-performance. 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.
. 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.
. 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.
. Fees relative to those of clients of AIM with comparable investment strategies. The Board reviewed the advisory fee rate for the Fund under the Advisory Agreement. The Board noted that this rate (i) was the same as the initial advisory fee rate for a variable insurance fund advised by AIM and offered to insurance company separate accounts with investment strategies comparable to those of the Fund, although there were no breakpoints in the advisory fee schedule applicable to the variable insurance fund; and (ii) was higher than the sub-advisory fee rates for an unaffiliated mutual fund for which an AIM affiliate serves as sub-advisor, although the total management fees paid by such unaffiliated mutual fund were higher than the advisory fee rate for the Fund. 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.
. 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.
. 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 through June 30, 2006. The Board noted that AIM has contractually agreed to waive fees and/or limit expenses of the Fund through March 31, 2006 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 also noted that AIM has voluntarily agreed to waive fees and/or limit expenses of the Fund 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 that is lower than the contractual agreement. The Board considered the contractual and voluntary nature of these fee waivers/expense limitations and noted that the contractual agreement remains in effect through March 31, 2006 and the voluntary agreement can be terminated at any time by AIM without further notice to investors. 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.
. Breakpoints and economies of scale. The Board reviewed the structure of the Fund's advisory fee under the Advisory Agreement, noting that it includes six 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, have decreased as net assets increased 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 fully 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 reflect economies of scale and that it was not necessary to change the advisory fee breakpoints in the Fund's advisory fee schedule.
. 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.
. 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. The Board noted that AIM has recently made changes to the Fund's portfolio management team, which appear to be producing encouraging early results but need more time to be evaluated before a conclusion can be made that the changes have addressed the Fund's under-performance. The Board also considered the Senior Officer's recommendation that the Board consider an additional advisory fee waiver for the Fund due to the Fund's under-performance. The Board concluded that such a fee waiver was not appropriate for the Fund at this time and that, rather than requesting such a fee waiver from AIM, the Board should closely monitor the Fund's performance under the new portfolio management team.
. 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.
. 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.
. 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.
. 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.
. 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 GOLD & PRECIOUS METALS FUND
. 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.
. 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.
. 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. The Board also noted AIM began serving as investment advisor to the Fund in November 2003. 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.
. 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 Gold Fund Index. The Board noted that the Fund's performance for the three and five year periods was comparable to the performance of such Index and above such Index for the one year period. The Board also noted that AIM began serving as investment advisor to the Fund in November 2003. 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.
. 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.
. 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.
. Fees relative to those of clients of AIM with comparable investment strategies. The Board reviewed the advisory fee rate for the Fund under the Advisory Agreement. The Board noted that this rate was lower than the advisory fee rate for an offshore fund for which an AIM affiliate serves as advisor with investment strategies comparable to those of the Fund. 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.
. 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.
. 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 through June 30, 2006. The Board noted that AIM has contractually agreed to waive fees and/or limit expenses of the Fund through March 31, 2006 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 through March 31, 2006. 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.
. Breakpoints and economies of scale. The Board reviewed the structure of the Fund's advisory fee under the Advisory Agreement, noting that it includes six 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.
. 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.
. 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.
. 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.
. 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.
. 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.
. 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.
. 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 LEISURE FUND
. 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.
. 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.
. 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 one and three year periods was below the median performance of such comparable funds and above such median performance for the five year period. The Board also noted that AIM began serving as investment advisor to the Fund in November 2003. 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.
. 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 S&P 500 Index. The Board noted that the Fund's performance in such periods was above the performance of such Index. The Board also noted that the performance of such Index does not reflect fees, while the performance of the Fund does reflect fees. The Board also noted that AIM began serving as investment advisor to the Fund in November 2003. 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.
. 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.
. 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.
. Fees relative to those of clients of AIM with comparable investment strategies. The Board reviewed the advisory fee rate for the Fund under the Advisory Agreement. The Board noted that this rate (i) was the same as the initial advisory fee rate for a variable insurance fund advised by AIM and offered to insurance company separate accounts with investment strategies comparable to those of the Fund, although there were no breakpoints in the advisory fee schedule applicable to the variable insurance fund; and (ii) was lower than the advisory fee rates for two offshore funds for which an AIM affiliate serves as advisor with investment strategies comparable to those of the Fund. 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.
. 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.
. 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 through June 30, 2006. The Board noted that AIM has contractually agreed to waive fees and/or limit expenses of the Fund through March 31, 2006 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 also noted that AIM has voluntarily agreed to waive fees and/or limit expenses of the Fund 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 that is lower than the contractual agreement. The Board considered the contractual and voluntary nature of these fee waivers/expense limitations and noted that the contractual agreement remains in effect through March 31, 2006 and the voluntary agreement can be terminated at any time by AIM without further notice to investors. 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.
. Breakpoints and economies of scale. The Board reviewed the structure of the Fund's advisory fee under the Advisory Agreement, noting that it includes six 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, have decreased as net assets increased 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 fully 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 reflect economies of scale and that it was not necessary to change the advisory fee breakpoints in the Fund's advisory fee schedule.
. 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.
. 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.
. 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.
. 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.
. 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.
. 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.
. 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 TECHNOLOGY FUND
. 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.
. 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.
. 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. The Board also noted that AIM began serving as investment advisor to the Fund in November 2003. Based on this review and after taking account of all of the other factors that the Board considered in determining whether to continue the Advisory Agreement for the Fund, 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. However, due to the Fund's under-performance, the Board also concluded that it would be appropriate for management and the Board to continue to closely monitor the performance of the Fund.
. 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 Science & Technology Fund Index.
The Board noted that the Fund's performance in such periods was below the performance of such Index. The Board also noted that AIM began serving as investment advisor to the Fund in November 2003. Based on this review and after taking account of all of the other factors that the Board considered in determining whether to continue the Advisory Agreement for the Fund, 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. However, due to the Fund's under-performance, the Board also concluded that it would be appropriate for management and the Board to continue to closely monitor the performance of the Fund.
. 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.
. 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.
. Fees relative to those of clients of AIM with comparable investment strategies. The Board reviewed the advisory fee rate for the Fund under the Advisory Agreement. The Board noted that this rate (i) was the same as the initial advisory fee rate for a variable insurance fund advised by AIM and offered to insurance company separate accounts with investment strategies comparable to those of the Fund, although there were no breakpoints in the advisory fee schedule applicable to the variable insurance fund; (ii) was lower than the advisory fee rate for four offshore funds for which an AIM affiliate serves as advisor with investment strategies comparable to those of the Fund; and (iii) was higher than the sub-advisory fee rates for two unaffiliated mutual funds for which an AIM affiliate serves as sub-advisor, although the total management fees paid by such unaffiliated mutual funds were higher than the advisory fee rate for the Fund. 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.
. 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.
. 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 through June 30, 2006. The Board noted that AIM has contractually agreed to waive fees and/or limit expenses of the Fund through June 30, 2006 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 through June 30, 2006. 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.
. Breakpoints and economies of scale. The Board reviewed the structure of the Fund's advisory fee under the Advisory Agreement, noting that it includes six 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, have decreased as net assets increased 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 fully 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 reflect economies of scale and that it was not necessary to change the advisory fee breakpoints in the Fund's advisory fee schedule.
. 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.
. 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.
. 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.
. 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.
. 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.
. 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.
. 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 UTILITIES FUND
. 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.
. 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.
. 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. The Board also noted that AIM began serving as investment advisor to the Fund in November 2003. Based on this review and after taking account of all of the other factors that the Board considered in determining whether to continue the Advisory Agreement for the Fund, 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. However, due to the Fund's under-performance, the Board also concluded that it would be appropriate for management and the Board to continue to closely monitor the performance of the Fund.
. 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 Science & Technology Fund Index. The Board noted that the Fund's performance in such periods was below the performance of such Index. The Board also noted that AIM began serving as investment advisor to the Fund in November 2003. Based on this review and after taking account of all of the other factors that the Board considered in determining whether to continue the Advisory Agreement for the Fund, 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. However, due to the Fund's under-performance, the Board also concluded that it would be appropriate for management and the Board to continue to closely monitor the performance of the Fund.
. 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.
. 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.
. Fees relative to those of clients of AIM with comparable investment strategies. The Board reviewed the advisory fee rate for the Fund under the Advisory Agreement. The Board noted that this rate (i) was the same as the initial advisory fee rate for a variable insurance fund advised by AIM and offered to insurance company separate accounts with investment strategies comparable to those of the Fund, although there were no breakpoints in the advisory fee schedule applicable to the variable insurance fund; (ii) was lower than the advisory fee rate for four offshore funds for which an AIM affiliate serves as advisor with investment strategies comparable to those of the Fund; and (iii) was higher than the sub-advisory fee rates for two unaffiliated mutual funds for which an AIM affiliate serves as sub-advisor, although the total management fees paid by such unaffiliated mutual funds were higher than the advisory fee rate for the Fund. 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.
. 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.
. 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 through June 30, 2006. The Board noted that AIM has contractually agreed to waive fees and/or limit expenses of the Fund through June 30, 2006 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 through June 30, 2006. 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.
. Breakpoints and economies of scale. The Board reviewed the structure of the Fund's advisory fee under the Advisory Agreement, noting that it includes six 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, have decreased as net assets increased 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 fully 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 reflect economies of scale and that it was not necessary to change the advisory fee breakpoints in the Fund's advisory fee schedule.
. 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.
. 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.
. 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.
. 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.
. 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.
. 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.
. 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.
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 trustee of other AIM Funds. Each such trustee receives a fee, allocated among the AIM Funds for which he or she serves as a 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 E.
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 (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, Sklar and Soll and Dr. Mathai-Davis (for purposes of this paragraph only, the "Deferring Trustees") have each executed a Deferred Compensation Agreement (collectively, the "Compensation Agreements"). Pursuant to the Compensation Agreements, the Deferring Trustees have the option to elect to defer receipt of up to 100% of their compensation payable by the Trust, and such amounts are placed into a deferral account and deemed to be invested in one or more AIM Funds selected by the Deferring Trustees. Distributions from the Deferring Trustees' deferral accounts will be paid in cash, generally in equal quarterly installments over a period of up to ten (10) years (depending on the Compensation Agreement) beginning on the date selected under the Compensation Agreement. The Trust's Board, in its sole discretion, may accelerate or extend the distribution of such deferral accounts after the Deferring Trustee's retirement benefits commence under the Plan. The Board, in its sole discretion, also may accelerate or extend the distribution of such deferral accounts after the Deferring Trustee's termination of service as a trustee of the Trust. If a Deferring Trustee dies prior to the distribution of amounts in his or her deferral account, the balance of the deferral account will be distributed to his or her designated beneficiary. The Compensation Agreements are not funded and, with respect to the payments of amounts held in the deferral accounts, the Deferring Trustees have the status of unsecured creditors of the Trust and of each other AIM Fund from which they are deferring compensation.
Purchases of Class A Shares of the Funds at Net Asset Value
The trustees and other affiliated persons of the Trust may purchase Class A shares of the AIM Funds without paying an initial sales charge. A I M Distributors, Inc. ("AIM Distributors") permits such purchases because there is a reduced sales effort involving in sales to such purchasers, thereby resulting in relatively low expenses of distribution. For a complete description of the persons who will not pay an initial sales charge on purchases of Class A shares of the Funds, see
"Purchase, Redemption and Pricing of Shares - Purchase and Redemption of Shares
- Purchases of Class A Shares, Class A3 Shares of Limited Maturity Treasury Fund
and AIM Tax-Free Intermediate Fund and AIM Cash Reserve Shares of AIM Money
Market Fund - Purchases of Class A Shares at Net Asset Value."
CODE OF ETHICS
AIM, the Trust, with respect to the Funds, and AIM Distributors have each adopted a Code of Ethics governing, as applicable, personal trading activities of all 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 the Fund 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(R) ("affiliated funds"). Personal trading, including personal trading involving securities that may be purchased or held by the 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 AND PROCEDURES
The Board, with respect to the Funds, has delegated responsibility for decisions regarding proxy voting for securities held by the Fund to AIM. AIM 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 F.
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 the Fund's proxy voting record.
Information regarding how the Funds voted proxies related to its 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 the Funds' shares by beneficial or record owners of the Funds and by trustees and officers as a group is found in Appendix G. A shareholder who owns beneficially 25% or more of the outstanding shares of a Fund is presumed to "control" that Fund.
DISTRIBUTION OF SECURITIES
DISTRIBUTOR
The Trust has entered into master distribution agreements, as amended, relating to the Funds (the "Distribution Agreements") with A I M Distributors, Inc. ("AIM Distributors"), a registered broker-dealer and a wholly owned subsidiary of AIM, pursuant to which AIM Distributors acts as the distributor of the shares of the Funds. AIM Distributors became the distributor of the Funds effective July 1, 2003. The address of AIM Distributors is P.O. Box 4739, Houston, Texas 77210-4739. Certain trustees and offices of the Trust are affiliated with AIM Distributors.
AIM Distributors bears all expenses, including the cost of printing and distributing prospectuses, incident to marketing of the Funds' shares, except for such distribution expenses as are paid out of Fund assets under the Trust's Plans of Distribution (each individually a "Plan" and collectively, the "Plans"), which have been adopted by each Fund pursuant to Rule 12b-1 under the 1940 Act. Prior to July 1, 2003, INVESCO Distributors, Inc. ("IDI") was the distributor of the Funds.
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 class of the Funds.
The following chart reflects the total sales charges paid in connection with the sale of Class A shares of each Fund and the amount retained by AIM Distributors and/or IDI, as applicable, for the last two fiscal years ended March 31, 2005:
2005 2004
------------------------- ------------------------
SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED
------------ ---------- ----------- -----------
AIM Energy Fund $ 1,448,942 $ 206,184 $ 191,782 $ 32,693
AIM Financial Services 115,948 21,120 75,965 11,971
Fund
AIM Gold & Precious Metals 109,583 19,236 65,612 10,924
Fund
AIM Leisure Fund 316,145 46,679 325,447 49,155
AIM Technology Fund 265,177 48,237 223,961 39,222
AIM Utilities Fund 121,651 18,371 38,894 6,437
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The following chart reflects the contingent deferred sales charges paid by Class A, Class B, Class C, and Class K shareholders and retained by AIM Distributors for the last two fiscal years ended March 31.
2005 2004
---------- -----------
AIM Energy Fund $ 64,607 $ 23,336
AIM Financial Services Fund 14,880 7,594
AIM Gold & Precious Metals Fund 38,335 12,042
AIM Leisure Fund 18,349 12,477
AIM Technology Fund 45,500 6,718
AIM Utilities Fund 14,840 567
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INVESTOR CLASS. The Trust has adopted a reimbursement-type Amended and Restated Master Distribution Plan - Investor Class pursuant to Rule 12b-1 under the 1940 Act relating to the Investor Class shares of AIM Technology Fund (the "Reimbursement Investor Class Plan"). Under the Reimbursement Investor Class Plan, Investor Class shares of this Fund pay AIM Distributors an amount necessary to reimburse AIM Distributors for its actual allocated share of expenses incurred pursuant to the Reimbursement Investor Class Plan for the period, up to a maximum annual rate of 0.25% per annum of the average daily net assets attributable to Investor Class shares. These payments permit AIM Distributors, at its discretion, to engage in certain activities and provide services in connection with the distribution of AIM Technology Fund's Investor Class shares to investors. Payments by AIM Technology Fund under the Reimbursement Investor Class Plan, for any month, may be made to reimburse AIM Distributors for permissible activities engaged in and services provided.
The Trust has adopted a compensation-type Amended and Restated Master Distribution Plan - Investor Class pursuant to Rule 12b-1 under the 1940 Act relating to the Investor Class shares of each Fund other than AIM Technology Fund (the "Compensation Investor Class Plan"). Under the Compensation Investor Class Plan, Investor Class shares of the Funds will make monthly payments to AIM Distributors computed at an annual rate no greater than 0.25% of average net assets attributable to Investor Class shares. These payments permit AIM Distributors, at its discretion, to engage in certain activities and provide services in connection with the distribution of the Funds' Investor Class shares to investors.
Payments by a Fund under the Compensation Investor Class Plan, for any month, may be made to compensate AIM Distributors for permissible activities engaged in and services provided.
CLASS A. The Trust has adopted an Amended and Restated Master Distribution Plan
- Class A pursuant to Rule 12b-1 under the 1940 Act relating to the Class A
shares of the Funds (the "Class A Plan").
The Class A Plan is designed to compensate AIM Distributors, on a monthly basis, for certain promotional and other sales-related costs, and to implement a dealer incentive program which provides for periodic payments to financial intermediaries who furnish continuing personal shareholder services to their customers who purchase and own Class A shares of the Funds. Payment can also be directed by AIM Distributors to financial intermediaries that have entered into service agreements with respect to Class A shares of the Funds and that provide continuing personal services to their customers who own Class A shares of the Funds. The service fees payable to financial intermediaries are calculated at the annual rate of 0.25% of the average daily net asset value of those Fund shares that are held in such financial intermediaries' customers' accounts.
Of the aggregate amount payable under the Class A Plan, payments to financial intermediaries that provide continuing personal shareholder services to their customers who purchase and own Class A shares of the Funds, in amounts up to 0.25% of the average daily net assets of the Class A shares of each Fund attributable to the customers of such financial intermediaries, are characterized as service fees. Payments to financial intermediaries in excess of such amount and payments to AIM Distributors would be characterized as an asset-based sales charge pursuant to the Class A Plan. The Class A Plan also imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Trust with respect to the Class A shares of a Fund.
Under the Class A Plan, Class A shares of the Funds pay compensation to AIM Distributors at an annual rate of 0.25% per annum of the average daily net assets attributable to Class A shares for the purpose of financing any activity which is primarily intended to result in the sale of Class A shares.
CLASS B. The Trust has adopted an Amended and Restated Master Distribution Plan
- Class B pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares
of the Funds (the "Class B Plan"). Under the Class B Plan, Class B shares of the
Funds pay compensation monthly to AIM Distributors at an annual rate of 1.00%
per annum of the average daily net assets attributable to Class B shares for the
purpose of financing any activity which is primarily intended to result in the
sale of Class B shares. Of such amount, each Fund pays a service fee of 0.25% of
the average daily net assets attributable to Class B shares to selected
financial intermediaries that have entered into service agreements with respect
to Class B shares of the Funds and that provide continuing personal shareholder
services to their customers who purchase and own Class B shares. Any amount not
paid as a service fee would constitute an asset-based sales charge pursuant to
the Class B Plan. The portion of the payments to AIM Distributors under the
Class B plan which constitutes an asset-based sales charge (0.75%) is intended
in part to permit AIM Distributors to recoup a portion of such sales commissions
plus financing costs. The Class B Plan also imposes a cap on the total amount of
sales charges, including asset-based sales charges, that may be paid by the
Trust with respect to the Class B shares of a Fund.
The Class B Plan may obligate the Class B shares to continue to make payments to AIM Distributors following termination of the Class B Plan with respect to Class B shares sold by or attributable to the distribution efforts of AIM Distributors or its predecessor unless there has been a complete termination of the Class B Plan (as defined in such Plan). Additionally, the Class B Plan expressly authorizes AIM Distributors to assign, transfer, or pledge its rights to payments pursuant to the Class B Plan. The contingent deferred sales charge (CDSC) on Class B shares will continue to be applicable even in the event of a complete termination of the Class B Plan (as defined in such Plan).
CLASS C. The Trust has adopted an Amended and Restated Master Distribution Plan
- Class C pursuant to Rule 12b-1 under the 1940 Act relating to the Class C
shares of the Funds (the "Class C Plan"). Under the Class C Plan, Class C shares
of the Funds pay compensation monthly to AIM Distributors at an annual rate of
1.00% per annum of the average daily net assets attributable to Class C shares
for the purpose of financing any activity which is primarily intended to result
in the sale of Class C shares. The Class C Plan is designed to compensate AIM
Distributors for certain promotional and other sales-related costs, and to
implement a financial intermediary incentive program which provides for periodic
payments to selected financial intermediaries that have entered onto service
agreements and furnish continuing personal shareholder services to their
customers who purchase and own Class C shares of a Fund.
Of the aggregate amount payable under the Class C Plan, payments to financial intermediaries that provide continuing personal shareholder services to their customers who purchase and own Class C shares of a Fund, in amounts of up to
0.25% of the average daily net assets of the Class C shares of the Fund attributable to the customers of such financial intermediaries, are characterized as a service fee. Payments to financial intermediaries in excess of such amount and payments to AIM Distributors would be characterized as an asset-based sales charge pursuant to the Class C Plan. The Class C Plan also imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Trust with respect to the Class C shares.
AIM Distributors may pay sales commissions to financial intermediaries that sell Class C shares of the Funds at the time of such sales. Payments with respect to Class C shares will equal 1.00% of the purchase price of the Class C shares sold or serviced by the financial intermediary, and will consist of an asset-based sales charge of 0.75% of the purchase price of Class C shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. AIM Distributors will retain all payments received by it relating to Class C shares for the first thirteen months after they are purchased. The portion of the payments to AIM Distributors under the Class C Plan which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of on-going sales commissions to financial intermediaries plus financing costs, if any. After the first thirteen months, AIM Distributors will make such payments quarterly to financial intermediaries based on the average net asset value of Class C shares which are attributable to shareholders for whom the financial intermediaries are designated as dealers of record. These commissions are not paid on sales to investors who may not be subject to payment of the CDSC and in circumstances where AIM Distributors grants an exemption on particular transactions. Should the financial intermediary elect to waive the asset-based sales charge, the 12b-1 fees will begin to be paid by AIM Distributors to the financial intermediary immediately.
CLASS K. The Trust has adopted an Amended and Restated Master Distribution Plan
- Class K pursuant to Rule 12b-1 under the 1940 Act relating to Class K shares
(the "Class K Plan"). Under the Class K Plan, Class K shares of the Funds pay
compensation monthly to AIM Distributors at an annual rate of 0.45% of average
net assets attributable to Class K shares for the purpose of financing any
activity which is primarily intended to result in the sale of Class K shares.
The Class K Plan is designed to compensate AIM Distributors for certain
promotional and other sales-related costs, and to implement a financial
intermediary incentive program which provides for periodic payments to selected
financial intermediaries that have entered into service agreements and furnish
continuing personal shareholder services to their customers who purchase and own
Class K shares of a Fund.
Of the aggregate amount payable under the Class K Plan, payments to financial intermediaries that provide continuing personal shareholder services to their customers who purchase and own Class K shares of a Fund may be characterized as a service fee. The Board has terminated the Class K Plan effective close of business October 21, 2005.
CLASS R. The Trust has adopted an Amended and Restated Master Distribution Plan
- Class R pursuant to Rule 12b-1 under the 1940 Act relating to Class R shares
(the "Class R Plan"). Under the Class R Plan, Class R shares of the Fund pay
compensation monthly to AIM Distributors at an annual rate of 0.50% of average
net assets attributable to Class R shares for the purpose of financing any
activity which is primarily intended to result in the sale of Class R shares.
The Class R Plan is designed to compensate AIM Distributors for certain
promotional and other sales-related costs, and to implement a financial
intermediary incentive program which provides for periodic payments to selected
financial intermediaries that have entered into service agreements and furnish
continuing personal shareholder services to their customers who purchase and own
Class R shares of the Fund.
Of the aggregate amount payable under the Class R Plan, payments to financial intermediaries that provide continuing personal shareholder services to their customers who purchase and own Class R shares of the Fund may be characterized as a service fee.
ALL PLANS. Activities appropriate for financing under the Plans include, but are not limited to, the following: printing of prospectuses and statements of additional information and reports for other than existing shareholders; preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; and supplemental payments to financial intermediaries such as asset-based sales charges or as payments of service fees under shareholder service arrangements.
A significant expenditure under the Plans is compensation paid to financial intermediaries, which may include AIM-affiliated companies in order to obtain various distribution-related and/or administrative services for the Funds. Each Fund is authorized by a Plan to use its assets to finance the payments made to obtain those services from selected financial
intermediaries which may enter into agreements with AIM Distributors. Payments will be made by AIM Distributors to financial intermediaries who sell shares of a Fund and may be made to banks, savings and loan associations, and other depository institutions ("Banks"). Although the Glass-Steagall Act limits the ability of certain Banks to act as underwriters of mutual fund shares, AIM does not believe that these limitations would affect the ability of such Banks to enter into arrangements with AIM Distributors, but can give no assurance in this regard. However, to the extent it is determined otherwise in the future, arrangements with Banks might have to be modified or terminated, and, in that case, the size of the Funds possibly could decrease to the extent that the Banks would no longer invest customer assets in the Funds. Neither the Trust nor its investment advisor will give any preference to Banks which enter into such arrangements when selecting investments to be made by a Fund.
The Funds made payments to AIM Distributors under the Investor Class, Class A, Class B, Class C and, if applicable, Class K Plans during the fiscal year ended March 31, 2005 in the following amounts:
CLASS A CLASS B CLASS C CLASS K INVESTOR
FUND SHARES SHARES SHARES SHARES CLASS
AIM Energy Fund $ 262,371 $ 317,963 $ 286,422 $ 5,527 $ 709,185
AIM Financial Services Fund 337,588 787,233 306,114 6,274 1,840,273
AIM Gold & Precious Metals Fund 29,666 74,674 57,257 N/A 264,664
AIM Leisure Fund 251,928 221,073 279,515 501,318 1,660,322
AIM Technology Fund 1,231,620 1,038,119 314,955 71,142 2,747,822
AIM Utilities Fund 263,126 329,726 62,893 N/A 180,105
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An estimate by category of the allocation of actual fees paid by Class A shares of the Funds during the fiscal year ended March 31, 2005 follows:
PRINTING & UNDERWRITERS DEALER SALES PERSONNEL
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION COMPENSATION TRAVEL
----------- ----------- ----------- ------------ ------------ --------------- -----------
AIM Energy Fund $ 10,223 $ 822 $ 3,093 $ 0 $ 207,732 $ 38,439 $ 2,062
AIM Financial Services Fund 13,401 1,240 4,306 0 264,366 52,533 1,722
AIM Gold & Precious Metals 1,041 66 184 0 23,585 4,606 184
Fund
AIM Leisure Fund 9,304 787 2,691 0 200,130 37,671 1,345
AIM Technology Fund 47,180 4,022 14,895 0 961,650 195,495 8,378
AIM Utilities Fund 0 0 0 0 263,126 0 0
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An estimate by category of the allocation of actual fees paid by Class B shares of the Funds during the fiscal year ended March 31, 2005 follows:
PRINTING & UNDERWRITERS DEALER SALES PERSONNEL
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION COMPENSATION TRAVEL
----------- ----------- ----------- ------------ ------------ --------------- -----------
AIM Energy Fund $ 2,984 $ 232 $ 1,072 $ 238,472 $ 62,555 $ 12,219 429
AIM Financial Services Fund 1,176 116 387 590,425 189,965 4,906 258
AIM Gold & Precious Metals 308 0 0 56,005 15,285 3,076 0
Fund
AIM Leisure Fund 1,419 0 710 165,805 44,270 8,514 355
AIM Technology Fund 3,044 282 783 778,589 243,292 11,738 391
AIM Utilities Fund 554 0 185 247,294 78,182 3,326 185
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An estimate by category of the allocation of actual fees paid by Class C shares of the Funds during the fiscal year ended March 31, 2005 follows:
PRINTING & UNDERWRITERS DEALER SALES PERSONNEL
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION COMPENSATION TRAVEL
----------- ----------- ----------- ------------ ------------ --------------- -----------
AIM Energy Fund $ 4,284 $ 306 $ 1,360 $ 86,699 $ 177,112 $ 15,810 $ 850
AIM Financial Services Fund 834 0 208 18,124 283,407 3,541 0
AIM Gold & Precious Metals 620 0 0 15,803 37,425 3,409 0
Fund
AIM Leisure Fund 2,501 181 670 51,286 214,821 9,721 335
AIM Technology Fund 1,059 0 794 29,388 277,889 5,825 0
AIM Utilities Fund 0 0 0 5,489 55,879 1,525 0
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An estimate by category of the allocation of actual fees paid by Class K shares of the Funds during the fiscal year ended March 31, 2005 follows:
PRINTING & UNDERWRITERS DEALER SALES PERSONNEL
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION COMPENSATION TRAVEL
----------- ----------- ----------- ------------ ------------ --------------- -----------
AIM Energy Fund $ 15 $ 0 $ 15 $ 166 $ 5,199 $ 117 $ 15
AIM Financial Services Fund 0 0 0 4 6,263 7 0
AIM Gold & Precious Metals N/A N/A N/A N/A N/A N/A N/A
Fund/1/
AIM Leisure Fund 301 25 93 1,866 497,634 1,352 47
AIM Technology Fund 11 0 7 93 70,957 70 4
AIM Utilities Fund/1/ N/A N/A N/A N/A N/A N/A N/A
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An estimate by category of the allocation of actual fees paid by Investor Class shares of the Funds during the fiscal year ended March 31, 2005 follows:
PRINTING & UNDERWRITERS DEALER SALES PERSONNEL
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION COMPENSATION TRAVEL
----------- ----------- ----------- ------------ ------------ --------------- -----------
AIM Energy Fund $ 0 $ 0 $ 0 $ 0 $ 709,185 $ 0 $ 0
AIM Financial Services Fund 0 0 0 0 1,840,273 0 0
AIM Gold & Precious Metals 0 0 0 0 264,664 0 0
Fund
AIM Leisure Fund 0 0 0 0 1,660,322 0 0
AIM Technology Fund 0 0 0 0 2,747,822 0 0
AIM Utilities Fund 0 0 0 0 180,105 0 0
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/1/ Class K shares are not offered.
The services which are provided by financial intermediaries may vary by financial intermediary but include, among other things, processing new shareholder account applications, preparing and transmitting to the Trust's Transfer Agent computer-processable tapes of all Fund transactions by customers, serving as the primary source of information to customers in answering questions concerning the Funds, and assisting in other customer transactions with the Funds.
The Plans provide that they shall continue in effect with respect to each Fund as long as such continuance is approved at least annually by the vote of the Board cast in person at a meeting called for the purpose of voting on such continuance, including the vote of a majority of the Independent Trustees. A Plan can be terminated at any time by a Fund, without penalty, if a majority of the Independent Trustees, or shareholders of the relevant class of shares of the Fund, vote to terminate a Plan. Unless a complete termination of the Class B Plan (as defined in such Plan) occurs, Class B shares will continue to make payments to AIM Distributors with respect to Class B Shares sold by or attributable to the distribution efforts of AIM Distributors or its predecessor. The Trust may, in its absolute discretion, suspend, discontinue, or limit the offering of its shares at any time. In determining whether any such action should be taken, the Board intends to consider all relevant factors including, without limitation, the size of a Fund, the investment climate for a Fund, general market conditions, and the volume of sales and redemptions of a Fund's shares. The Plans may continue in effect and payments may be made under a Plan following any temporary suspension or limitation of the offering of Fund shares; however, the Trust is not contractually obligated to continue a Plan for any particular period of time. Suspension of the offering of a Fund's shares would not, of course, affect a shareholder's ability to redeem his or her shares.
So long as the Plans are in effect, the selection and nomination of persons to serve as Independent Trustees of the Trust shall be committed to the Independent Trustees then in office at the time of such selection or nomination. The Plans may not be amended to increase the amount of a Fund's payments under a Plan without approval of the shareholders of that Fund's respective class of shares, and all material amendments to a Plan must be approved by the Board, including a majority of the Independent Trustees. Under the agreement implementing the Plans, AIM Distributors or a Fund, the latter by vote of a majority of the Independent Trustees, or a majority of the holders of the relevant class of a Fund's outstanding voting securities, may terminate such agreement without penalty upon thirty days' written notice to the other party. No further payments will be made by the Fund under a Plan in the event of its termination.
To the extent that a Plan constitutes a plan of distribution adopted pursuant to Rule 12b-1 under the 1940 Act, it shall remain in effect as such, so as to authorize the use of Fund assets in the amounts and for the purposes set forth therein, notwithstanding the occurrence of an assignment, as defined by the 1940 Act, and rules thereunder. To the extent it constitutes an agreement pursuant to a plan, a Fund's obligation to make payments to AIM Distributors shall terminate automatically, in the event of such "assignment." In this event, a Fund may continue to make payments pursuant to a Plan only upon the approval of new arrangements regarding the use of the amounts authorized to be paid by a Fund under a Plan. Such new arrangements must be approved by the trustees, including a majority of the Independent Trustees, by a vote cast in person at a meeting called for such purpose. These new arrangements might or might not be with AIM Distributors. On a quarterly basis, the trustees review information about the distribution services that have been provided to each Fund and the 12b-1 fees paid for such services. On an annual basis, the trustees consider whether a Plan should be continued and, if so, whether any amendment to the Plan, including changes in the amount of 12b-1 fees paid by each class of a Fund, should be made.
The only trustees and interested persons, as that term is defined in Section 2(a)(19) of the 1940 Act, who have a direct or indirect financial interest in the operation of the Plans are the officers and trustees of the Trust who are also officers either of AIM Distributors or other companies affiliated with AIM Distributors. The benefits which the Trust believes will be reasonably likely to flow to a Fund and its shareholders under the Plans include the following:
. Enhanced marketing efforts, if successful, should result in an increase in net assets through the sale of additional shares and afford greater resources with which to pursue the investment objectives of the Funds;
. The sale of additional shares reduces the likelihood that redemption of shares will require the liquidation of securities of the Funds in amounts and at times that are disadvantageous for investment purposes; and
. Increased Fund assets may result in reducing each investor's share of certain expenses through economies of scale (e.g. exceeding established breakpoints in an advisory fee schedule and allocating fixed expenses over a larger asset base), thereby partially offsetting the costs of a Plan.
The positive effect which increased Fund assets will have on AIM's revenues could allow AIM and its affiliated companies:
. To have greater resources to make the financial commitments necessary to improve the quality and level of the Funds' shareholder services (in both systems and personnel);
. To increase the number and type of mutual funds available to investors from AIM and its affiliated companies (and support them in their infancy), and thereby expand the investment choices available to all shareholders; and
. To acquire and retain talented employees who desire to be associated with a growing organization.
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; (iii) system inability to provide Letter of Intent privileges; and (iv) different annual amounts (less than 12%) subject to withdrawal under a Systematic Redemption Plan without being subject to a contingent deferred sales charge. 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
Purchases of Class A Shares, Class A3 Shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund and AIM Cash Reserve Shares of AIM Money Market Fund
INITIAL SALES CHARGES. Each AIM Fund (other than AIM Tax-Exempt Cash Fund) is grouped into one of three categories to determine the applicable initial sales charge for its Class A Shares. Additionally, Class A shares of AIM Short Term Bond Fund are subject to an initial sales charge of 2.50%. The sales charge is used to compensate AIM Distributors and participating dealers for their expenses incurred in connection with the distribution of the Funds' shares. You may also be charged a transaction or other fee by the financial institution managing your account.
Class A Shares of AIM Tax-Exempt Cash Fund, Class A3 Shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund and AIM Cash Reserve Shares of AIM Money Market Fund are sold without an initial sales charge.
CATEGORY I FUNDS
AIM Advantage Health Sciences Fund AIM Leisure Fund
AIM Aggressive Growth Fund AIM Mid Cap Basic Value Fund
AIM Asia Pacific Growth Fund AIM Mid Cap Core Equity Fund
AIM Basic Value Fund AIM Mid Cap Growth Fund
AIM Blue Chip Fund AIM Moderate Allocation Fund
AIM Capital Development Fund AIM Moderate Growth Allocation Fund
AIM Charter Fund AIM Moderately Conservative Allocation
AIM Conservative Allocation Fund Fund
AIM Constellation Fund AIM Multi-Sector Fund
AIM Diversified Dividend Fund AIM Opportunities I Fund
AIM Dynamics Fund AIM Opportunities II Fund
AIM Energy Fund AIM Opportunities III Fund
AIM European Growth Fund AIM Premier Equity Fund
AIM European Small Company Fund AIM Select Equity Fund
AIM Financial Services Fund AIM Small Cap Equity Fund
AIM Global Real Estate Fund AIM Small Cap Growth Fund
AIM Global Value Fund AIM Small Company Growth Fund
AIM Gold & Precious Metals Fund AIM Technology Fund
AIM Growth Allocation Fund AIM Trimark Endeavor Fund
AIM International Core Equity Fund AIM Trimark Fund
AIM International Growth Fund AIM Trimark Small Companies Fund
AIM International Small Company Fund AIM Utilities Fund
AIM Large Cap Basic Value Fund AIM Weingarten Fund
AIM Large Cap Growth Fund
59
|
Dealer
Investor's Sales Charge Concession
------------------------- -------------
As a As a As a
Percentage Percentage Percentage
of the Public of the Net of the Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
----------------------- ------------- ---------- -------------
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
|
CATEGORY II FUNDS
AIM Basic Balanced Fund AIM High Yield Fund
AIM Developing Markets Fund AIM Income Fund
AIM Global Aggressive Growth Fund AIM Intermediate Government Fund
AIM Global Equity Fund AIM Municipal Bond Fund
AIM Global Growth Fund AIM Real Estate Fund
AIM Global Health Care Fund AIM Total Return Bond Fund
AIM High Income Municipal Fund
Dealer
Investor's Sales Charge Concession
------------------------- -------------
As a As a As a
Percentage Percentage Percentage
of the Public of the Net of the Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
----------------------- ------------- ---------- -------------
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
|
CATEGORY III FUNDS
AIM Limited Maturity Treasury Fund
AIM Tax-Free Intermediate Fund
Dealer
Investor's Sales Charge Concession
------------------------- -------------
As a As a As a
Percentage Percentage Percentage
of the Public of the Net of the Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
----------------------- ------------- ---------- -------------
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
AIM SHORT TERM BOND FUND
Dealer
Investor's Sales Charge Concession
------------------------- -------------
As a As a As a
Percentage Percentage Percentage
of the Public of the Net of the Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
----------------------- ------------- ---------- -------------
Less than $ 100,000 2.50 2.56 2.00
$100,000 but less than $ 250,000 2.00 2.04 1.50
$250,000 but less than $ 500,000 1.50 1.52 1.25
$500,000 but less than $1,000,000 1.25 1.27 1.00
|
Beginning on October 31, 2003 Class A Shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund was closed to new investors. Current investors must maintain a share balance in order to continue to make incremental purchases.
LARGE PURCHASES OF CLASS A SHARES. Investors who purchase $1,000,000 or more of Class A Shares of Category I, II or III Funds and Class A shares of AIM Short Term Bond Fund do not pay an initial sales charge. In addition, investors who currently own Class A shares of Category I, II, or III Funds and Class A shares of AIM Short Term Bond Fund and make additional purchases that result in account balances of $1,000,000 or more do not pay an initial sales charge on the additional purchases. The additional purchases, as well as initial purchases of $1,000,000 or more, are referred to as Large Purchases. If an investor makes a Large Purchase of Class A shares of a Category I or II Fund and Class A shares of AIM Short Term Bond Fund, however, each share issued will generally be subject to a 1.00% contingent deferred sales charge ("CDSC") if the investor redeems those shares within 18 months after purchase. Large Purchases of Class A shares by investors who were Class K shareholders of record on October 21, 2005 are not subject to a CDSC.
AIM Distributors may pay a dealer concession and/or advance a service fee on Large Purchases, as set forth below. Exchanges between the AIM Funds may affect total compensation paid.
AIM Distributors may make the following payments to dealers of record for Large Purchases of Class A shares of Category I or II Funds or AIM Short Term Bond Fund, by investors other than: (i) retirement plans that are maintained pursuant to Sections 401 and 457 of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) retirement plans that are maintained pursuant to Section 403 of the Code if the employer or plan sponsor is a tax-exempt organization operated pursuant to Section 501(c)(3) of the Code.
PERCENT OF PURCHASE
1% of the first $2 million
plus 0.80% of the next $1 million
plus 0.50% of the next $17 million
plus 0.25% of amounts in excess of $20 million
If (i) the amount of any single purchase order plus (ii) the net asset value of all other shares owned by the same customer submitting the purchase order on the day on which the purchase order is received equals or exceeds $1,000,000, the purchase will be considered a "jumbo accumulation purchase." With regard to any individual jumbo accumulation purchase, AIM Distributors may make payment to the dealer of record based on the cumulative total of jumbo accumulation purchases made by the same customer over the life of his or her account(s).
If an investor made a Large Purchase of Class A shares of a Category III Fund or AIM Short Term Bond Fund on and after November 15, 2001 and through October 30, 2002 and exchanges those shares for Class A shares of a Category I or II Fund or AIM Short Term Bond Fund, AIM Distributors will pay an additional dealer concession of 0.75% upon exchange.
If an investor makes a Large Purchase of Class A shares of a Category I or II Fund or AIM Short Term Bond Fund on and after November 15, 2001 and exchanges those shares for Class A shares of a Category III Fund, AIM Distributors will not pay any additional dealer compensation upon the exchange. Beginning February 17, 2003, Class A shares of a Category I or II Fund or AIM Short Term Bond Fund may not be exchanged for Class A shares of a Category III Fund.
If an investor makes a Large Purchase of Class A3 shares of a Category III Fund on and after October 31, 2002 and exchanges those shares for Class A shares of a Category I or II Fund or AIM Short Term Bond Fund, AIM Distributors will pay 1.00% of such purchase as dealer compensation upon the exchange. The Class A shares of the Category I or II Fund or AIM Short Term Bond Fund received in exchange generally will be subject to a 1.00% CDSC if the investor redeems such shares within 18 months from the date of exchange.
If an investor makes a Large Purchase of Class A shares of a Category III Fund and exchanges those shares for Class A shares of another Category III Fund, AIM Distributors will not pay any additional dealer concession upon the exchange. Beginning February 17, 2003, Class A shares of a Category III Fund may not be exchanged for Class A shares of another Category III Fund.
PURCHASES OF CLASS A SHARES BY CERTAIN RETIREMENT PLANS AT NAV. For purchases of Class A shares of Category I and II Funds or AIM Short Term Bond Fund, AIM Distributors may make the following payments to investment dealers or other financial service firms for sales of such shares at net asset value ("NAV") to certain retirement plans provided that the applicable dealer of record is able to establish that the retirement plan's purchase of Class A shares is a new investment (as defined below):
PERCENT OF PURCHASE
0.50% of the first $20 million
plus 0.25% of amounts in excess of $20 million
This payment schedule will be applicable to purchases of Class A shares at NAV by the following types of retirement plans: (i) all plans maintained pursuant to Sections 401 and 457 of the Code, and (ii) plans maintained pursuant to Section 403 of the Code if the employer or plan sponsor is a tax-exempt organization operated pursuant to Section 501(c)(3) of the Code.
A "new investment" means a purchase paid for with money that does not represent
(i) the proceeds of one or more redemptions of AIM Fund shares, (ii) an exchange
of AIM Fund shares, or (iii) the repayment of one or more retirement plan loans
that were funded through the redemption of AIM Fund shares. If AIM Distributors
pays a dealer concession in connection with a plan's purchase of Class A shares
at NAV, such shares may be subject to a CDSC of 1.00% of net assets for 12
months, commencing on the date the plan first invests in Class A shares of an
AIM Fund. The trail commission will be paid out beginning in the 13th month. If
no additional fee is paid to financial intermediaries, the trail commission will
begin to accrue immediately. If the applicable dealer of record is unable to
establish that a plan's purchase of Class A shares at NAV is a new investment,
AIM Distributors will not pay a dealer concession in connection with such
purchase and such shares will not be subject to a CDSC.
With regard to any individual jumbo accumulation purchase, AIM Distributors may make payment to the dealer of record based on the cumulative total of jumbo accumulation purchases made by the same plan over the life of the plan's account(s).
PURCHASERS QUALIFYING FOR REDUCTIONS IN INITIAL SALES CHARGES. As shown in the tables above, purchases of certain amounts of AIM Fund shares may reduce the initial sales charges. These reductions are available to purchasers that meet the qualifications listed below. We will refer to purchasers that meet these qualifications as "Qualified Purchasers."
DEFINITIONS
As used herein, the terms below shall be defined as follows:
. "Individual" refers to a person, as well as his or her Spouse or Domestic Partner and his or her Children;
. "Spouse" is the person to whom one is legally married under state law;
. "Domestic Partner" is an adult with whom one shares a primary residence for at least six-months, is in a relationship as a couple where one or each of them provides personal or financial welfare of the other without a fee, is not related by blood and is not married;
. "Child" or "Children" include a biological, adopted or foster son or daughter, a Step-child, a legal ward or a Child of a person standing in loco parentis;
. "Parent" is a person's biological or adoptive mother or father;
. "Step-child" is the child of one's Spouse by a previous marriage or relationship;
. "Step-parent" is the Spouse of a Child's Parent; and
. "Immediate Family" includes an Individual (including, as defined above, a person, his or her Spouse or Domestic Partner and his or her Children) as well as his or her Parents, Step-parents and the Parents of Spouse or Domestic Partner.
INDIVIDUALS
. an Individual (including his or her spouse or domestic partner, and children);
. a retirement plan established exclusively for the benefit of an Individual, specifically including, but not limited to, a Traditional IRA, Roth IRA, SEP IRA, SIMPLE IRA, Solo 401(k), Keogh plan, or a tax-sheltered 403(b)(7) custodial account; and
. a qualified tuition plan account, maintained pursuant to Section 529 of the Code, or a Coverdell Education Savings Account, maintained pursuant to Section 530 of the Code (in either case, the account must be established by an individual or have an individual named as the beneficiary thereof).
EMPLOYER-SPONSORED RETIREMENT PLANS
. a retirement plan maintained pursuant to Sections 401, 403 (only if the employer or plan sponsor is a tax-exempt organization operated pursuant to Section 501(c)(3) of the Code), 408 (includes SEP, SARSEP and SIMPLE IRA plans) or 457 of the Code, if:
a. the employer or plan sponsor submits all contributions for all participating employees in a single contribution transmittal (the AIM Funds will not accept separate contributions submitted with respect to individual participants);
b. each transmittal is accompanied by a single check or wire transfer; and
c. if the AIM Funds are expected to carry separate accounts in the names of each of the plan participants, (i) the employer or plan sponsor notifies AIM Distributors in writing that the separate accounts of all plan participants should be linked, and (ii) all new participant accounts are established by submitting an appropriate Account Application on behalf of each new participant with the contribution transmittal.
HOW TO QUALIFY FOR REDUCTIONS IN INITIAL SALES CHARGES. The following sections discuss different ways that a Qualified Purchaser can qualify for a reduction in the initial sales charges for purchases of Class A shares of the AIM Funds.
LETTERS OF INTENT
A Qualified Purchaser may pay reduced initial sales charges by (i) indicating on the Account Application that he, she or it intends to provide a Letter of Intent ("LOI"), and (ii) subsequently fulfilling the conditions of that LOI. Employer-sponsored retirement plans, with the exception of Solo 401(k) plans and SEP plans, are not eligible for a LOI.
The LOI confirms the total investment in shares of the AIM Funds that the Qualified Purchaser intends to make within the next 13 months. By marking the LOI section on the account application and by signing the account application, the Qualified Purchaser indicates that he, she or it understands and agrees to the terms of the LOI and is bound by the provisions described below:
Calculating the Initial Sales Charge
. Each purchase of fund shares normally subject to an initial sales charge made during the 13-month period will be made at the public offering price applicable to a single transaction of the total dollar amount indicated by the LOI (to determine what the applicable public offering price is, look at the sales charge table in the section on "Initial Sales Charges" above).
. It is the purchaser's responsibility at the time of purchase to specify the account numbers that should be considered in determining the appropriate sales charge.
. The offering price may be further reduced as described below under "Rights of Accumulation" if the Transfer Agent is advised of all other accounts at the time of the investment.
. Shares acquired through reinvestment of dividends and capital gains distributions will not be applied to the LOI.
Calculating the Number of Shares to be Purchased
. Purchases made within 90 days before signing an LOI will be applied toward completion of the LOI. The LOI effective date will be the date of the first purchase within the 90-day period.
. Purchases made more than 90 days before signing an LOI will be applied toward the completion of the LOI based on the value of the shares purchased that is calculated at the public offering price on the effective date of the LOI.
. If a purchaser meets the original obligation at any time during the 13-month period, he or she may revise the intended investment amount upward by submitting a written and signed request. This revision will not change the original expiration date.
. The Transfer Agent will process necessary adjustments upon the expiration or completion date of the LOI.
Fulfilling the Intended Investment
. By signing an LOI, a purchaser is not making a binding commitment to purchase additional shares, but if purchases made within the 13-month period do not total the amount specified, the purchaser will have to pay the increased amount of sales charge.
. To assure compliance with the provisions of the 1940 Act, the Transfer Agent will escrow in the form of shares an appropriate dollar amount (computed to the nearest full share) out of the initial purchase (or subsequent purchases if necessary). All dividends and any capital gain distributions on the escrowed shares will be credited to the purchaser. All shares purchased, including those escrowed, will be registered in the purchaser's name. If the total investment specified under this LOI is completed within the 13-month period, the escrowed shares will be promptly released.
. If the intended investment is not completed, the purchaser will pay the Transfer Agent the difference between the sales charge on the specified amount and the sales charge on the amount actually purchased. If the purchaser does not pay such difference within 20 days of the expiration date, he or she irrevocably constitutes and appoints the Transfer Agent as his attorney to surrender for redemption any or all shares, to make up such difference within 60 days of the expiration date.
Canceling the LOI
. If at any time before completing the LOI Program, the purchaser wishes to cancel the agreement, he or she must give written notice to AIM Distributors.
. If at any time before completing the LOI Program the purchaser requests the Transfer Agent to liquidate or transfer beneficial ownership of his total shares, the LOI will be automatically canceled. If the total amount purchased is less than the amount specified in the LOI, the Transfer Agent will redeem an appropriate number of escrowed shares equal to the difference between the sales charge actually paid and the sales charge that would have been paid if the total purchases had been made at a single time.
Other Persons Eligible for the LOI Privilege
. The LOI privilege is also available to holders of the Connecticut General Guaranteed Account, established for tax qualified group annuities, for contracts purchased on or before June 30, 1992.
LOIs and Contingent Deferred Sales Charges
All LOIs to purchase $1,000,000 or more of Class A shares of Category I and II Funds and AIM Short Term Bond Fund are subject to an 18-month, 1% CDSC.
RIGHTS OF ACCUMULATION
A Qualified Purchaser may also qualify for reduced initial sales charges based upon his, her or its existing investment in shares of any of the AIM Funds at the time of the proposed purchase. To determine whether or not a reduced initial sales charge applies to a proposed purchase, AIM Distributors takes into account not only the money which is invested upon such proposed purchase, but also the value of all shares of the AIM Funds owned by such purchaser, calculated at their then current public offering price.
If a purchaser qualifies for a reduced sales charge, the reduced sales charge applies to the total amount of money being invested, even if only a portion of that amount exceeds the breakpoint for the reduced sales charge. For example, if a purchaser already owns qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest an additional $20,000 in a fund with a maximum initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will apply to the full $20,000 purchase and not just to the $15,000 in excess of the $25,000 breakpoint.
To qualify for obtaining the discount applicable to a particular purchase, the purchaser or his dealer must furnish the Transfer Agent with a list of the account numbers and the names in which such accounts of the purchaser are registered at the time the purchase is made.
Rights of Accumulation are also available to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
If an investor's new purchase of Class A shares of a Category I or II Fund or AIM Short Term Bond Fund is at net asset value, the newly purchased shares will be subject to a CDSC if the investor redeems them prior to the end of the 18 month holding period. For new purchases of Class A shares of Category III Funds at net asset value made on and after November 15, 2001 and through October 30, 2002, the newly purchased shares will be subject to a CDSC if the investor redeems them prior to the end of the 12 month holding period.
OTHER REQUIREMENTS FOR REDUCTIONS IN INITIAL SALES CHARGES. As discussed above, investors or dealers seeking to qualify orders for a reduced initial sales charge must identify such orders and, if necessary, support their qualification for the reduced charge. AIM Distributors reserves the right to determine whether any purchaser is entitled to the reduced sales charge based on the definition of a Qualified Purchaser listed above. No person or entity may distribute shares of the AIM Funds without payment of the applicable sales charge other than to Qualified Purchasers.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, Class A3 Shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, AIM Cash Reserve Shares of AIM Money Market Fund, and Class B and Class C shares of AIM Floating Rate Fund and Investor Class shares of any fund will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges.
PURCHASES OF CLASS A SHARES AT NET ASSET VALUE. AIM Distributors permits certain categories of persons to purchase Class A shares of the AIM Funds without paying an initial sales charge. These are typically categories of persons whose transactions involve little expense, such as persons who have a relationship with the funds or with AIM and certain programs for purchase.
AIM Distributors believes that it is appropriate and in the Funds' best interests that such persons, and certain other persons whose purchases result in relatively low expenses of distribution, be permitted to purchase shares through AIM Distributors without payment of a sales charge.
Accordingly, the following purchasers will not pay initial sales charges on purchases of Class A shares because there is a reduced sales effort involved in sales to these purchasers:
. AIM Management and its affiliates, or their clients;
. Any current or retired officer, director or employee (and members of their immediate family) of AIM Management, its affiliates or The AIM Family of Funds(R); any foundation, trust or employee benefit plan established exclusively for the benefit of, or by, such persons; and any deferred compensation plan for trustees of investment companies sponsoring A I M Management or its affiliates;
. Any current or retired officer, director, or employee (and members of their immediate family) of DST Systems, Inc. or Personix, a division of FISERV Solutions, Inc.;
. Sales representatives and employees (and members of their immediate family) of selling group members of financial institutions that have arrangements with such selling group members;
. Purchases through approved fee-based programs;
. Employer-sponsored retirement plans that are Qualified Purchasers, as defined above, provided that:
a. a plan's initial investment is at least $1 million;
b. there are at least 100 employees eligible to participate in the plan;
c. all plan transactions are executed through a single omnibus account per AIM Fund and the financial institution or service organization has entered into the appropriate agreement with the distributor; further provided that
d. retirement plans maintained pursuant to Section 403(b) of the Code are not eligible to purchase shares at NAV based on the aggregate investment made by the plan or the number of eligible employees unless the employer or plan sponsor is a tax-exempt organization operated pursuant to Section 501(c)(3) of the Code; and
e. purchases of AIM Opportunities I Fund by all retirement plans are subject to initial sales charges;
. Shareholders of record of Advisor Class shares of AIM International Growth Fund or AIM Worldwide Growth Fund on February 12, 1999 who have continuously owned shares of the AIM Funds;
. Shareholders of record or discretionary advised clients of any investment advisor holding shares of AIM Weingarten Fund or AIM Constellation Fund on September 8, 1986, or of AIM Charter Fund on November 17, 1986, who have continuously owned shares having a market value of at least $500 and who purchase additional shares of the same Fund;
. Unitholders of G/SET series unit investment trusts investing proceeds from such trusts in shares of AIM Weingarten Fund or AIM Constellation Fund; provided, however, prior to the termination date of the trusts, a unitholder may invest proceeds from the redemption or repurchase of his
units only when the investment in shares of AIM Weingarten Fund and AIM Constellation Fund is effected within 30 days of the redemption or repurchase;
. A shareholder of a fund that merges or consolidates with an AIM Fund or that sells its assets to an AIM Fund in exchange for shares of an AIM Fund;
. Shareholders of the GT Global funds as of October 31, 1987 who since that date continually have owned shares of one or more of these funds;
. Certain former AMA Investment Advisers' shareholders who became shareholders of AIM Global Health Care Fund in October 1989, and who have continuously held shares in the GT Global funds since that time;
. Shareholders of record of Advisor Class shares of an AIM Fund on February 11, 2000 who have continuously owned shares of that AIM Fund, and who purchase additional shares of that AIM Fund;
. Shareholders of Investor Class shares of an AIM Fund;
. Qualified Tuition Programs created and maintained in accordance with Section 529 of the Code; and
. Insurance company separate accounts;
. Additional purchases of Class A shares by shareholders of record of Class K shares on October 21, 2005 whose Class K shares were converted to Class A shares.
. Retirement plan established exclusively for the benefit of an individual (specifically including, but not limited to, a Traditional IRA, Roth IRA, SEP IRA, SIMPLE IRA, Solo 401(k), Keogh plan, or a tax-sheltered 403(b)(7) custodial account) if:
a. such plan is funded by a rollover of assets from an Employer-Sponsored Retirement Plan;
b. the account being funded by such rollover is to be maintained by the same trustee, custodian or administrator that maintained the plan from which the rollover distribution funding such rollover originated, or an affiliate thereof; and
c. the dealer of record with respect to the account being funded by such rollover is the same as the dealer of record with respect to the plan from which the rollover distribution funding such rollover originated, or an affiliate thereof.
. Transfers to IRAs that are attributable to AIM Fund investments held in 403(b)(7)s, SIMPLEs, SEPs, SARSEPs, Traditional or Roth IRAs; and
. Rollovers from AIM-held 403(b)(7)s, 401(K)s, SEPs, SIMPLEs, SARSEPs, Money Purchase Plans, and Profit Sharing Plans if the assets are transferred to an AIM IRA.
In addition, an investor may acquire shares of any of the AIM Funds at net asset value in connection with:
. the reinvestment of dividends and distributions from a Fund;
. exchanges of shares of certain Funds, as more fully described in the Prospectus;or
. a merger, consolidation or acquisition of assets of a Fund.
PAYMENTS TO DEALERS. AIM Distributors may elect to re-allow the entire initial sales charge to dealers for all sales with respect to which orders are placed with AIM Distributors during a particular period. Dealers to whom substantially the entire sales charge is re-allowed may be deemed to be "underwriters" as that term is defined under the 1933 Act.
The financial advisor through which you purchase your shares may receive all or a portion of the sales charges and Rule 12b-1 distribution fees discussed above. In addition to those payments, 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 and from payments to AIM Distributors under Rule 12b-1 plans. 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 ADI Affiliates.
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. In addition, payments typically apply only to retail sales, and may not apply to other types of sales or assets (such as sales to retirement plans, qualified tuition programs, or fee based advisor programs - some of which may be generate certain other payments described below.)
The revenue sharing payments ADI Affiliates make may be calculated on sales of shares of AIM funds ("Sales-Based Payments"), in which case the total amount of such payments shall not exceed 0.25% of the public offering price of all shares sold by the financial advisor during the particular period. Such payments also 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 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make new sales of shares of AIM funds and Asset-Based Payments primarily create incentives to retain previously sold shares of AIM funds in investor accounts. ADI Affiliates may pay a financial advisor either or both Sales-Based Payments and Asset-Based Payments.
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 0.25% of average annual assets or $19 per annum per shareholder account. ADI Affiliates also may make payments to certain financial advisors that sell AIM Fund shares in connection with client account maintenance support, statement preparation and transaction processing. The types of payments that ADI Affiliates may make under this category include, among others, payment of ticket charges per purchase or exchange order placed by a financial advisor, payment of networking fees of up to $12 per shareholder account maintained on certain mutual fund trading systems, or one-time payments for ancillary services
such as setting up funds on a financial advisor's mutual fund trading systems.
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. ("NASD"). ADI Affiliates make payments for entertainment events it deems 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 this 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.
Purchases of Class B Shares
Class B shares are sold at net asset value, and are not subject to an initial sales charge. Instead, investors may pay a CDSC if they redeem their shares within six years after purchase. See the Prospectus for additional information regarding contingent deferred sales charges. AIM Distributors may pay sales commissions to dealers and institutions who sell Class B shares of the AIM Funds at the time of such sales. Payments will equal 4.00% of the purchase price and will consist of a sales commission equal to 3.75% plus an advance of the first year service fee of 0.25%.
Purchases of Class C Shares
Class C shares are sold at net asset value, and are not subject to an initial sales charge. Instead, investors may pay a CDSC if they redeem their shares within the first year after purchase (no CDSC applies to Class C shares of AIM Short Term Bond Fund unless you exchange shares of another AIM Fund that are subject to a CDSC into AIM Short Term Bond Fund). See the Prospectus for additional information regarding this CDSC. AIM Distributors may pay sales commissions to dealers and institutions who sell Class C shares of the AIM Funds (except for Class C shares of AIM Short Term Bond Fund) at the time of such sales. Payments will equal 1.00% of the purchase price and will consist of a sales commission of 0.75% plus an advance of the first year service fee of 0.25%. These commissions are not paid on sales to investors exempt from the CDSC, including shareholders of record of AIM Advisor Funds, Inc. on October 31, 1995, who purchase additional shares in any of the Funds on or after May 1, 1995, and in circumstances where AIM Distributors grants an exemption on particular transactions.
AIM Distributors may pay dealers and institutions who sell Class C shares of AIM Short Term Bond Fund, an annual fee of 0.50% of average daily net assets. These payments will consist of an asset-based fee of 0.25% and a service fee of 0.25% and will commence immediately.
Purchases of Class K Shares
Class K shares are sold at net asset value, and are not subject to an initial
sales charge. If AIM Distributors pays a concession to the dealer of record,
however, the Class K shares are subject to a 0.70% CDSC at the time of
redemption if all retirement plan assets are redeemed within one year from the
date of the retirement plan's initial purchase. Class K shares are scheduled to
convert to Class A shares at the close of business on October 21, 2005. The CDSC
[described above] will continue to apply if all retirement plan assets are
redeemed within 12 months from the date of the retirement plan's initial
purchase.
For purchases of Class K shares, AIM Distributors may make the following payments to dealers of record:
PERCENT OF CUMULATIVE PURCHASE
0.70% of the first $5 million
plus 0.45% of amounts in excess of $5 million
If the dealer of record receives the above payments, the trail commission will be paid out beginning in the 13th month. If no additional fee is paid to financial intermediaries, the trail commission will begin to accrue immediately.
Payments upon conversion of Class K Shares
After the conversion of Class K shares to Class A shares on October 21, 2005, AIM Distributors will continue to pay financial advisors 0.45% on Class K shares that are converted into Class A shares: 0.25% from the Class A shares' Rule 12b-1 plan fees and 0.20% from AIM Distributors' own resources, if the total annual payments attributable to the 0.20% fee equals or exceeds $2,000.
Purchases of Class R Shares
Class R shares are sold at net asset value, and are not subject to an initial sales charge. If AIM Distributors pays a concession to the dealer of record, however, the Class R shares are subject to a 0.75% CDSC at the time of redemption if all retirement plan assets are redeemed within one year from the date of the retirement plan's initial purchase. For purchases of Class R shares of Category I or II Funds, AIM Distributors may make the following payments to dealers of record provided that the applicable dealer of record is able to establish that the purchase of Class R shares is a new investment or a rollover from a retirement plan in which an AIM Fund was offered as an investment option:
PERCENT OF CUMULATIVE PURCHASES
0.75% of the first $5 million
plus 0.50% of amounts in excess of $5 million
With regard to any individual purchase of Class R shares, AIM Distributors may make payment to the dealer of record based on the cumulative total of purchases made by the same plan over the life of the plan's account(s). If the dealer of record receives the above payments, the trail commission will be paid out beginning in the 13th month. If no additional fee is paid to financial intermediaries, the trail commission will begin to accrue immediately.
Purchases of Investor Class Shares
Investor Class shares are sold at net asset value, and are not subject to an initial sales charge or to a CDSC. AIM Distributors may pay dealers and institutions an annual fee of 0.25% of average daily net assets and such payments will commence immediately.
Purchases of Institutional Class Shares
Institutional Class shares are sold at net asset value, and are not subject to an initial sales charge or to a CDSC.
Exchanges
TERMS AND CONDITIONS OF EXCHANGES. Normally, shares of an AIM Fund to be acquired by exchange are purchased at their net asset value or applicable offering price, as the case may be, determined on the date that such request is received, but under unusual market conditions such purchases may be delayed for up to five business days if it is determined that a fund would be materially disadvantaged by an immediate transfer of the proceeds of the exchange. If a shareholder is exchanging into a fund paying daily dividends, and the release of the exchange proceeds is delayed for the foregoing five-day period, such shareholder will not begin to accrue dividends until the sixth business day after the exchange.
EXCHANGES BY TELEPHONE. AIM Distributors has made arrangements with certain dealers and investment advisory firms to accept telephone instructions to exchange shares between any of the AIM Funds. AIM Distributors reserves the right to impose conditions on dealers or investment advisors who make telephone exchanges of shares of the funds, including the condition that any such dealer or investment advisor enter into an agreement (which contains additional conditions with respect to exchanges of shares) with AIM Distributors. To exchange shares by telephone, a shareholder, dealer or investment advisor who has satisfied the foregoing conditions must call AIS at (800) 959-4246. If a shareholder is unable to reach AIS by telephone, he may also request exchanges by fax, telegraph or use overnight courier services to expedite exchanges by mail, which will be effective on the business day received by AIS as long as such request is received prior to the close of the customary trading session of the New York Stock Exchange ("NYSE"). AIS and AIM Distributors may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction.
Redemptions
GENERAL. Shares of the AIM Funds may be redeemed directly through AIM Distributors or through any dealer who has entered into an agreement with AIM Distributors. In addition to the Funds' obligation to redeem shares, AIM Distributors may also repurchase shares as an accommodation to shareholders. To effect a repurchase, those dealers who have executed Selected Dealer Agreements with AIM Distributors must phone orders to the order desk of the Funds at (800) 959-4246 and guarantee delivery of all required documents in good order. A repurchase is effected at the net asset value per share of the applicable Fund next determined after the repurchase order is received. Such an arrangement is subject to timely receipt by AIS, the Funds' transfer agent, of all required documents in good order. If such documents are not received within a reasonable time after the order is placed, the order is subject to cancellation. While there is no charge imposed by a Fund or by AIM Distributors (other than any applicable contingent deferred sales charge) when shares are redeemed or repurchased, dealers may charge a fair service fee for handling the transaction.
SUSPENSION OF REDEMPTIONS. The right of redemption may be suspended or the date of payment postponed when (a) trading on the NYSE is restricted, as determined by applicable rules and regulations of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension, or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of a Fund not reasonably practicable.
REDEMPTIONS BY TELEPHONE. By signing an account application form, an investor appoints AIS as his true and lawful attorney-in-fact to surrender for redemption any and all unissued shares held by AIS in the designated account(s), present or future, with full power of substitution in the premises. AIS and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption. An investor acknowledges by signing the form that he understands and agrees that AIS and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone redemption requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transactions. AIS reserves the right to cease to act as attorney-in-fact subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone redemption privilege at any time without notice. An investor may elect not to have this privilege by marking the appropriate box on the application. Then any redemptions must be effected in writing by the investor.
SYSTEMATIC REDEMPTION PLAN. A Systematic Redemption Plan permits a shareholder of an AIM Fund to withdraw on a regular basis at least $50 per withdrawal. Under a Systematic Redemption Plan, all shares are to be held by AIS and all dividends and distributions are reinvested in shares of the applicable AIM Fund by AIS. To provide funds for payments made under the Systematic Redemption Plan, AIS redeems sufficient full and fractional shares at their net asset value in effect at the time of each such redemption.
Payments under a Systematic Redemption Plan constitute taxable events. Since such payments are funded by the redemption of shares, they may result in a return of capital and in capital gains or losses, rather than in ordinary income. Because sales charges are imposed on additional purchases of Class A shares, it is disadvantageous to effect such purchases while a Systematic Redemption Plan is in effect.
Each AIM Fund bears its share of the cost of operating the Systematic Redemption Plan.
Contingent Deferred Sales Charges Imposed upon Redemption of Shares
A CDSC may be imposed upon the redemption of Large Purchases of Class A shares of Category I and II Funds and AIM Short Term Bond Fund, upon the redemption of Class B shares or Class C shares (no CDSC applies to Class C shares of AIM Short Term Bond Fund unless you exchange shares of another AIM Fund that are subject to a CDSC into AIM Short Term Bond Fund) and, in certain circumstances, upon the redemption of Class K or Class R shares.
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS FOR LARGE PURCHASES OF CLASS A
SHARES. An investor who has made a Large Purchase of Class A shares of a
Category I, II, III Fund or AIM Short Term Bond Fund will not be subject to a
CDSC upon the redemption of those shares in the following situations:
Redemptions of shares of Category I or II Funds or AIM Short Term Bond Fund held
more than 18 months;
Redemptions of shares of Category III Funds purchased prior to November 15, 2001 or after October 30, 2002;
. Redemptions of shares of Category III Funds purchased on or after November 15, 2001 and through October 30, 2002 and held for more than 12 months;
. Redemptions of shares held by retirement plans in cases where
(i) the plan has remained invested in Class A shares of an AIM
Fund for at least 12 months, or (ii) the redemption is not a
complete redemption of shares held by the plan;
. Redemptions from private foundations or endowment funds;
. Redemptions of shares by the investor where the investor's dealer waives the amounts otherwise payable to it by the distributor and notifies the distributor prior to the time of investment;
. Redemptions of shares of Category I, II or III Funds, AIM Cash Reserve Shares of AIM Money Market Fund or AIM Short Term Bond Fund acquired by exchange from Class A shares of a Category I or II Fund or AIM Short Term Bond Fund, unless the shares acquired by exchange (on or after November 15, 2001 and through October 30, 2002 with respect to Category III Funds) are redeemed within 18 months of the original purchase or the exchange of Category I or II Fund or AIM Short Term Bond Fund shares;
. Redemptions of shares of Category III Funds, shares of AIM Tax-Exempt Cash Fund or AIM Cash Reserve Shares of AIM Money Market Fund acquired by exchange from Class A shares of a Category III Fund purchased prior to November 15, 2001;
. Redemptions of shares of Category I or II Funds or AIM Short Term Bond Fund acquired by exchange from Class A shares of a Category III Fund purchased on and after November 15, 2001 and through October 30, 2002, unless the shares acquired by exchange are redeemed within 18 months of the original purchase of the exchanged Category III Fund shares;
. Redemption of shares of Category III Funds, shares of AIM Tax-Exempt Cash Fund or AIM Cash Reserve Shares of AIM Money Market Fund acquired by exchange from Class A shares of a Category III Fund purchased on and after November 15, 2001, and through October 30, 2002 unless the shares acquired by exchange are redeemed within 12 months of the original purchase of the exchanged Category III Fund shares;
. Redemptions of shares of Category I or II Funds or AIM Short Term Bond Fund acquired by exchange on and after November 15, 2001 from AIM Cash Reserve Shares of AIM Money Market Fund if the AIM Cash Reserve Shares were acquired by exchange from a Category I or II Fund or AIM Short Term Bond Fund, unless the Category I or II Fund or AIM Short Term Bond Fund shares acquired by exchange are redeemed within 18 months of the original purchase of the exchanged Category I or II Funds or AIM Short Term Bond Fund shares;
. Redemptions of Category I or II Funds or AIM Short Term Bond Fund by retirement plan participants resulting from a total redemption of the plan assets that occurs more than one year from the date of the plan's initial purchase; and
. Redemptions of shares of Category I or II Funds or AIM Short Term Bond Fund held by an Investor Class shareholder.
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS FOR CLASS B AND C SHARES. Investors who purchased former GT Global funds Class B shares before June 1, 1998 are subject to the following waivers from the CDSC otherwise due upon redemption:
. Total or partial redemptions resulting from a distribution following retirement in the case of a tax-qualified employer-sponsored retirement;
. Minimum required distributions made in connection with an IRA, Keogh Plan or custodial account under Section 403(b) of the Code or other retirement plan following attainment of age 70 1/2;
. Redemptions pursuant to distributions from a tax-qualified employer-sponsored retirement plan, which is invested in the former GT Global funds, which are permitted to be made without penalty pursuant to the Code, other than tax-free rollovers or transfers of assets, and the proceeds of which are reinvested in the former GT Global funds;
. Redemptions made in connection with participant-directed exchanges between options in an employer-sponsored benefit plan;
. Redemptions made for the purpose of providing cash to fund a loan to a participant in a tax-qualified retirement plan;
. Redemptions made in connection with a distribution from any retirement plan or account that is permitted in accordance with the provisions of Section 72(t)(2) of the Code, and the regulations promulgated thereunder;
. Redemptions made in connection with a distribution from a
qualified profit-sharing or stock bonus plan described in
Section 401(k) of the Code to a participant or beneficiary under
Section 401(k)(2)(B)(IV) of the Code upon hardship of the
covered employee (determined pursuant to Treasury Regulation
Section 1.401(k)-1(d)(2)); and
. Redemptions made by or for the benefit of certain states, counties or cities, or any instrumentalities, departments or authorities thereof where such entities are prohibited or limited by applicable law from paying a sales charge or commission.
CDSCs will not apply to the following redemptions of Class B or Class C shares, as applicable:
. Additional purchases of Class C shares of AIM International Core Equity Fund and AIM Real Estate Fund by shareholders of record on April 30, 1995, of these Funds, except that shareholders whose broker-dealers maintain a single omnibus account with AIS on behalf of these shareholders, perform sub-accounting functions with respect to those shareholders, and are unable to segregate shareholders of record prior to April 30, 1995, from shareholders whose accounts were opened after that date will be subject to a CDSC on all purchases made after March 1, 1996;
. Redemptions following the death or post-purchase disability of
(1) any registered shareholders on an account or (2) a settlor
of a living trust, of shares held in the account at the time of
death or initial determination of post-purchase disability;
. Certain distributions from individual retirement accounts,
Section 403(b) retirement plans, Section 457 deferred
compensation plans and Section 401 qualified plans, where
redemptions result from (i) required minimum distributions to
plan participants or beneficiaries who are age 70 1/2 or older,
and only with respect to that portion of such distributions that
does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund; (ii) in
kind transfers of assets where the participant or beneficiary
notifies the distributor of the transfer no later than the time
the transfer occurs; (iii) tax-free rollovers or transfers of
assets to another plan of the type described above invested in
Class B or Class C shares of one or more of the AIM Funds; (iv)
tax-free returns of excess contributions or returns of excess
deferral amounts; and (v) distributions on the death or
disability (as defined in the Code) of the participant or
beneficiary;
. Amounts from a Systematic Redemption Plan of up to an annual amount of 12% of the account value on a per fund basis, at the time the withdrawal plan is established, provided the investor reinvests his dividends;
. Liquidation by the AIM Fund when the account value falls below the minimum required account size of $500; and
. Investment account(s) of AIM and its affiliates.
CDSCs will not apply to the following redemptions of Class C shares:
. A total or partial redemption of shares where the investor's dealer of record notifies the distributor prior to the time of investment that the dealer waives the upfront payment otherwise payable to him;
. A total or partial redemption which is necessary to fund a distribution requested by a participant in a retirement plan maintained pursuant to Section 401, 403, or 457 of the Code;
. Redemptions of Class C shares of an AIM Fund other than AIM Short Term Bond Fund if you received such Class C shares by exchanging Class C shares of AIM Short Term Bond Fund; and
. Redemptions of Class C shares of AIM Short Term Bond Fund unless you received such Class C shares by exchanging Class C shares of another AIM Fund and the original purchase was subject to a CDSC.
CDSCs will not apply to the following redemptions of Class R shares:
. A total or partial redemption of shares where the retirement plan's dealer of record notifies the distributor prior to the time of investment that the dealer waives the upfront payment otherwise payable to him; and
. Redemptions of shares held by retirement plans in cases where
(i) the plan has remained invested in Class R shares of an AIM
Fund for at least 12 months, or (ii) the redemption is not a
complete redemption of all Class R shares held by the plan.
CDSCs will not apply to the following redemptions of Class K shares:
. Class K shares where the retirement plan's dealer of record notifies the distributor prior to the time of investment that the dealer waives the upfront payment otherwise payable to him.
General Information Regarding Purchases, Exchanges and Redemptions
GOOD ORDER. Purchase, exchange and redemption orders must be received in good order. To be in good order, an investor must supply AIS with all required information and documentation, including signature guarantees when required. In addition, if a purchase of shares is made by check, the check must be received in good order. This means that the check must be properly completed and signed, and legible to AIS in its sole discretion.
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.
TIMING OF PURCHASE ORDERS. It is the responsibility of the dealer or other financial intermediary to ensure that all orders are transmitted on a timely basis to AIS. Any loss resulting from the failure of the dealer or financial intermediary to submit an order within the prescribed time frame will be borne by that dealer or financial intermediary. If a check used to purchase shares does not clear, or if any investment order must be canceled due to nonpayment, the investor will be responsible for any resulting loss to an AIM Fund or to AIM Distributors.
SIGNATURE GUARANTEES. In addition to those circumstances listed in the "Shareholder Information" section of each Fund's prospectus, signature guarantees are required in the following situations: (1) requests to transfer the registration of shares to another owner; (2) telephone exchange and telephone redemption authorization forms; (3) changes in previously designated wiring or electronic funds transfer instructions; and (4) written redemptions or exchanges of shares previously reported as lost, whether or not the redemption amount is under $250,000 or the proceeds are to be sent to the address of record. AIM Funds may waive or modify any signature guarantee requirements at any time.
Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that such institution or organization qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the SEC, and further provided that such guarantor institution is listed in one of the reference guides contained in AIS' current Signature Guarantee Standards and Procedures, such as certain domestic banks, credit unions, securities dealers, or securities exchanges. AIS will also accept signatures with either: (1) a signature guaranteed with a medallion stamp of the STAMP Program, or (2) a signature guaranteed with a medallion stamp of the NYSE Medallion Signature Program, provided that in either event, the amount of the transaction involved does not exceed the surety coverage amount indicated on the medallion. For information regarding whether a particular institution or organization qualifies as an "eligible guarantor institution," an investor should contact the Client Services Department of AIS.
TRANSACTIONS BY TELEPHONE. By signing an account application form, an investor appoints AIS as his true and lawful attorney-in-fact to surrender for redemption any and all unissued shares held by AIS in the designated account(s), or in any other account with any of the AIM Funds, present or future, which has the identical registration as the designated account(s), with full power of substitution in the premises. AIS and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption proceeds to be applied to purchase shares in any one or more of the AIM Funds, provided that such fund is available for sale and provided that the registration and mailing address of the shares to be purchased are identical to the registration of the shares being redeemed. An investor acknowledges by signing the form that he understands and agrees that AIS and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone exchange requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transactions. AIS reserves the right to modify or terminate the telephone exchange privilege at any time without notice. An investor may elect not to have this privilege by marking the appropriate box on the application. Then any exchanges must be effected in writing by the investor.
INTERNET TRANSACTIONS. An investor may effect transactions in his account through the internet by establishing a Personal Identification Number (PIN). By establishing a PIN, the investor acknowledges and agrees that neither AIS nor AIM Distributors will be liable for any loss, expense or cost arising out of any internet transaction effected by them in accordance with any instructions submitted by a user who transmits the PIN as authentication of his or her identity. Procedures for verification of internet transactions include requests for confirmation of the shareholder's personal identification number and mailing of confirmations promptly after the transactions. The investor also acknowledges that the ability to effect internet transactions may be terminated at any time by the AIM Funds.
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
The following formula may be used to determine the public offering price per Class A share of an investor's investment:
Net Asset Value / (1 - Sales Charge as % of Offering Price ) = Offering Price.
For example, at the close of business on March 31, 2005, AIM Energy Fund - Class A shares had a net asset value per share of $32.86. The offering price, assuming an initial sales charge of 5.50%, therefore was $34.77.
Shares of the Institutional Class 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, the Fund will generally use futures and options contract closing prices which are available fifteen (15) minutes after the close of the customary trading session of the NYSE. The Funds determine net asset value per share by dividing the value of a Fund's securities, cash and other assets (including interest accrued but not collected) attributable to a particular class, less all its liabilities (including accrued expenses and dividends payable) attributable to that class, by the total number of shares outstanding of that class. Determination of a Fund's net asset value per share is made in accordance with generally accepted accounting principles. The net asset value for shareholder transactions may be different than the net asset value reported in the Fund's financial statements due to adjustments required by generally accepted accounting principles made to the net asset value 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 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 vendors or market makers. Each equity 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; option contracts are valued at the mean between the closing bid and asked prices on the exchange where the contracts are principally traded; futures contracts are valued at final settlement price quotations from the primary exchange on which they are traded. Debt securities (including convertible bonds) are fair valued using an evaluated quote on the basis of prices 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 asked prices. Securities for which market quotations are not 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.
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 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. 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 the Fund, is obligated to redeem for cash all shares presented to such Fund for redemption by any one shareholder in an amount up to the lesser of $250,000 or 1% of that Fund's net assets in any 90-day period. 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.
OTHER SERVICE PROVIDERS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Funds' independent registered public accounting firm is responsible for auditing the financial statements of the Funds. The Audit Committee of the Board appointed PricewaterhouseCoopers LLP, 1201 Louisiana Street, Suite 2900, Houston, Texas 77002, as the independent registered public accounting firm to audit the financial statements of the Funds. Such appointment was ratified and approved by the Board.
CUSTODIAN
State Street Bank and Trust Company (the "custodian"), 225 Franklin Street, Boston, Massachusetts 02110, is the custodian of all securities and cash of the Funds. J. P. Morgan 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.
TRANSFER AGENT
AIM Investment Services, Inc. ("AIS"), 11 Greenway Plaza, Suite 100, Houston, TX 77046, is the Trust's transfer agent, registrar, and dividend disbursing agent.
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 Class A, A3, B, C, K, R, AIM Cash Reserve and Investor Class Shares, the TA Agreement provides that the Trust on behalf of the Funds will pay AIS at a rate of $17.08 per open shareholder account plus certain out of pocket expenses, whether such account is serviced directly by AIS or by a third party pursuant to a sub-transfer agency, omnibus account service, sub-accounting, or networking agreement. This fee is paid monthly at the rate of 1/12 of the annual fee and is based upon the number of open shareholder accounts during each month.
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.
LEGAL COUNSEL
Legal matters of the Trust have been passed upon by Ballard Spahr Andrews & Ingersoll, LLP 1735 Market Street, Philadelphia, PA 19103-7599.
BROKERAGE ALLOCATION AND OTHER PRACTICES
BROKERAGE TRANSACTIONS
AIM 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 of 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 "Broker 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.
COMMISSIONS
During the last three fiscal years ended March 31, none of the Funds paid brokerage commissions to Brokers affiliated with the Funds, AIM, AIM Distributors, or any affiliates of such entities.
The Funds may engage in certain principal and agency transactions with banks and their affiliates that own 5% or more of the outstanding voting securities of an AIM Fund, provided the conditions of an exemptive order received by the AIM Funds from the SEC are met. In addition, a Fund may purchase or sell a security from or to certain other AIM Funds or other accounts (and may invest in the 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.
BROKER 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, a 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 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, Inc. ("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:
. proprietary research created by the Broker executing the trade,
and
. 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:
. 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).
. 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.
. Economic Data/Forecasting Tools - various macro economic forecasting tools, such as economic data or currency and political forecasts for various countries or regions.
. Quantitative/Technical Analysis - software tools that assist in quantitative and technical analysis of investment data.
. Fundamental/Industry Analysis - industry specific fundamental investment research.
. 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.
. 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 are 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)
During the last fiscal year ended March 31, 2005, each Fund allocated the following amount of transactions to broker-dealers that provided AIM with certain research, statistics and other information:
RELATED
BROKERAGE
FUND TRANSACTIONS COMMISSIONS
---- --------------- -----------
AIM Energy Fund $ 451,725,002 $ 614,977
AIM Financial Services Fund 897,225,427 966,186
AIM Gold & Precious Metals Fund 91,906,572 224,911
AIM Leisure Fund 170,593,098 407,153
AIM Technology Fund 2,698,062,815 7,126,753
AIM Utilities Fund 135,271,961 264,793
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REGULAR BROKERS
During the last fiscal year ended March 31, 2005, AIM Financial Services Fund held securities issued by the following companies, which are "regular" brokers or dealers of AIM Financial Services Fund:
ISSUER SECURITY MARKET VALUE
------ -------- ------------
Bank of America Corp. Common Stock $ 40,740,109
Goldman Sachs Group, Inc. (The) Common Stock 4,971,548
JPMorgan Chase & Co. Common Stock 48,871,531
Lehman Brothers Holding Inc. Common Stock 10,517,672
Merrill Lynch & Co., Inc. Common Stock 37,672,960
Morgan Stanley Common Stock 28,705,150
UBS A.G. Common Stock 10,043,600
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Neither AIM nor any affiliate of AIM receives any brokerage commissions on portfolio transactions effected on behalf of the Funds, and there is no affiliation between AIM or any person affiliated with AIM or the Funds and any broker or dealer that executes transactions for the Funds.
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 one of 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(s) and one or more other accounts, and is considered at or about the same time, AIM will allocate transactions in such securities among the Fund(s) 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. AIM shall combine indications of interest for equity IPOs for all AIM Funds and accounts participating in purchase transactions for that IPO. When the full amount of all IPO orders for such AIM Funds and accounts cannot be filled completely, 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 of the investment with the AIM Fund's or account's investment objective, policies, strategies and current holdings. AIM will allocate equity securities issued in IPOs to eligible AIM Funds and accounts on a pro rata basis based on order size.
BROKERAGE COMMISSIONS AND UNDERWRITING DISCOUNTS
The aggregate dollar amount of brokerage commissions paid by each Fund for the periods outlined in the table below were:
ENERGY FUND/1/
Year Ended March 31, 2005 $ 658,184 Year Ended March 31, 2004 1,056,462 Year Ended March 31, 2003 1,874,405 FINANCIAL SERVICES FUND Year Ended March 31, 2005 $ 1,236,728 Year Ended March 31, 2004 1,561,233 Year Ended March 31, 2003 2,680,782 GOLD & PRECIOUS METALS FUND Year Ended March 31, 2005 $ 347,166 Year Ended March 31, 2004 434,500 Year Ended March 31, 2003 642,351 LEISURE FUND Year Ended March 31, 2005 $ 338,613 Year Ended March 31, 2004 586,281 Year Ended March 31, 2003 1,189,376 |
TECHNOLOGY FUND/2/
Year Ended March 31, 2005 $ 8,180,633 Year Ended March 31, 2004 14,722,021 Year Ended March 31, 2003 11,471,075 UTILITIES FUND Year Ended March 31, 2005 $ 322,041 Year Ended March 31, 2004 352,717 Year Ended March 31, 2003 455,873 |
/1/ The variation in brokerage commissions paid by AIM Energy Fund for the
fiscal years ended March 31, 2003 and 2004, as compared to the fiscal year ended
March 31, 2005, was due to an increase in portfolio turnover as a result of fund
mergers the Fund was involved in on November 24, 2003.
/2/ The variation in brokerage commission paid by AIM Technology Fund for the
fiscal years ended March 31, 2003 and 2004, as compared to the fiscal year ended
March 31, 2005, was due to an increase in portfolio turnover during the fiscal
years ended March 31, 2004 as a result of fund mergers the Fund was involved in
on November 24, 2003.
TAX CONSEQUENCES OF OWNING SHARES OF A FUND
Each Fund has elected to be taxed under Subchapter M of the Code as a regulated investment company and intends to maintain its qualifications as such in each of its taxable years. As a regulated investment company, each Fund is not subject to federal income tax on the portion of its net investment income (i.e., taxable interest, dividends and other taxable ordinary income, net of expenses) and capital gain net income (i.e., the excess of capital gains over capital losses) that it distributes to shareholders, provided that it distributes (i) at least 90% of its investment company taxable income (i.e., net investment income, net foreign currency ordinary gain or loss and the excess of net short-term capital gain over net long-term capital loss) and (ii) at least 90% of the excess of its tax-exempt interest income under Code Section 103(a) over its deductions disallowed under Code Sections 265 and 171(a)(2) for the taxable year (the "Distribution Requirement"), and satisfies certain other requirements of the Code that are described below. Distributions by a Fund made during the taxable year or, under specified circumstances, within twelve months after the close of the taxable year, will be considered distributions of income and gain of the taxable year and can therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated investment company must derive at least 90% of its gross income from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock or securities, other income (including, but not limited to, gains from options, futures or forward contracts) derived from its business of investing in such stock or securities and 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 the Income Requirement.
In addition to satisfying the Distribution and Income Requirements described above, each Fund must satisfy an asset diversification test in order to qualify as a regulated investment company. 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 collectively, in securities of certain publicly traded partnerships.
If for any taxable year a Fund does not qualify as a regulated investment company, all of its taxable income (including its net capital gain) will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions will be taxable as ordinary dividends to
the extent of such Fund's current and accumulated earnings and profits. Such distributions generally will be eligible for the dividends received deduction in the case of corporate shareholders.
Dividends paid by a Fund from net investment income as well as distributions of net realized short-term capital gain and net realized gain from certain foreign currency transactions are taxable for federal income tax purposes as ordinary income to shareholders. All dividends and other distributions, to the extent of a Fund's earnings and profits, are taxable, whether such dividends and distributions are reinvested in additional shares or paid in cash. Dividends eligible for the dividends-received deduction will be limited to the aggregate amount of qualifying dividends that a Fund derives from its portfolio investments.
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 a 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 a Fund's gross income (exclusive of net capital gain) in any taxable year, all of the ordinary income dividends paid by a Fund will be qualifying dividend income.
A Fund realizes a capital gain or loss when it sells a portfolio security for more or less than it paid for that security. Capital gain and loss are divided into short-term and long-term, depending on how long the Fund held the security which gave rise to the gain or loss. If the security was held one year or less the gain or loss is considered short-term, while holding a security for more than one year will generate a long-term gain or loss. Short-term capital gain is included with income from dividends and interest as ordinary income and is paid to shareholders as dividends, as discussed above. If total long-term gains on sales exceed total short-term losses, including any losses carried forward from previous years, a Fund will have a net capital gain. .
A Fund may either retain or distribute to shareholders its net capital gain 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. Such distributions are not eligible for the dividends-received deduction. 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.
After the end of each fiscal year, each Fund sends information to shareholders regarding the amount and character of dividends paid during the year.
If the net asset value of a Fund's shares should be reduced below a shareholder's cost as a result of a distribution, such distribution would be taxable to the shareholder although a portion would be a return of invested capital. Accordingly, if shares of a Fund are purchased shortly before a distribution, a portion of the purchase price for the shares may then be returned to the shareholder as a taxable dividend or capital gain.
If it invests in foreign securities, a Fund may be subject to the withholding of foreign taxes on dividends or interest it receives on foreign securities. Foreign taxes withheld will be treated as an expense of the Fund
unless the Fund meets the qualifications and makes the election to enable it to pass these taxes through to shareholders for use by them as a foreign tax credit or deduction. Tax conventions between certain countries and the United States may reduce or eliminate such taxes.
A Fund may invest in the stock of "passive foreign investment companies" ("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the following tests: (1) at least 75% of its gross income is passive or (2) an average value of at least 50% of its assets produce, or are held for the production of, passive income. Each Fund intends to "mark-to-market" its stock in any PFIC. In this context, "marking-to-market" means including in ordinary income for each taxable year the excess, if any, of the fair market value of the PFIC stock over the Fund's adjusted basis in the PFIC stock as of the end of the year. In certain circumstances, a Fund will also be allowed to deduct from ordinary income the excess, if any, of its adjusted basis in PFIC stock over the fair market value of the PFIC stock as of the end of the year. The deduction will only be allowed to the extent of any PFIC mark-to-market gains recognized as ordinary income in prior years. A Fund's adjusted tax basis in each PFIC stock for which it makes this election will be adjusted to reflect the amount of income included or deduction taken under the election.
Gains or losses (1) from the disposition of foreign currencies, (2) from the disposition of debt securities denominated in foreign currencies that are attributable to fluctuations in the value of the foreign currency between the date of acquisition of each security and the date of disposition, and (3) that are attributable to fluctuations in exchange rates that occur between the time a Fund accrues interest, dividends or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time the Fund actually collects the receivables or pays the liabilities, generally will be treated as ordinary income or loss. These gains or losses may increase or decrease the amount of a Fund's investment company taxable income to be distributed to its shareholders.
The transfer agent may provide Fund shareholders with information concerning the average cost basis of their shares in order to help them prepare their tax returns. This information is intended as a convenience to shareholders and will not be reported to the Internal Revenue Service (the "IRS"). The IRS permits the use of several methods to determine the cost basis of mutual fund shares. The cost basis information provided by the transfer agent will be computed using the single-category average cost method, although neither the transfer agent nor the Funds recommend any particular method of determining cost basis. Other methods may result in different tax consequences. Even if you have reported gains or losses for a Fund in past years using another basis method, you may be able to use the average cost method for determining gains or losses in the current year. However, once you have elected to use the average cost method, you must continue to use it unless you apply to the IRS for permission to change methods. Likewise, changing to any basis method other than the average cost method requires IRS approval.
If you sell Fund shares at a loss after holding them for six months or less, your loss will be treated as long-term (instead of short-term) capital loss to the extent of any capital gain distributions that you may have received on those shares. If you pay a sales charge to acquire shares, that sales charge is generally treated as part of your cost basis for determining gain or loss upon disposition of those shares. However, if you exchange your shares within ninety days of acquisition and the sales charge was paid on the original shares, then the sales charge is not treated as part of your cost basis on the original shares, but instead, carries over to be included as part of your cost basis in the new or replacement shares.
Each Fund will be subject to a nondeductible 4% excise tax to the extent it fails to distribute by the end of any calendar year substantially all of its ordinary income for that year and its capital gain net income for the one-year period ending on October 31 of that year, plus certain other amounts.
You should consult your own tax adviser regarding specific questions as to federal, state, and local taxes. Dividends and capital gain distributions will generally be subject to applicable state and local taxes. Qualification as a regulated investment company under the Internal Revenue Code of 1986, as amended, for income tax purposes does not entail government supervision of management or investment policies. 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 May 15, 2005.
On April 30, 2004, 51,524,128 Institutional Class shares valued at $1,223,182,804 were redeemed by an institutional investor which exceeded 25% of the voting securities of the AIM Technology Fund. The redemption was satisfied through a transfer of securities held by the AIM Technology Fund valued at $1,168,804,445 and cash of $54,378,359. Total net assets of the AIM Technology Fund prior to the redemption were $3,005,136,178. Under the Investment Company Act of 1940, any person who owns beneficially more than 25% of the voting securities of a mutual fund is presumed to control such mutual fund.
From a federal income tax perspective, the redemption triggers limitations under the Internal Revenue Code and related regulations regarding the amount of the capital loss carry forward available for future utilization by the AIM Technology Fund. After the redemption, the capital loss carry forward is expected to be subject to an annual accumulating limitation of approximately $77,000,000 per year (approximately $530,000,000 in total). The AIM Technology Fund may also be able to utilize an additional $285,000,000 of capital loss carry forward to the extent that unrealized gains existing on the redemption date are realized within a five-year period. The actual amount of capital loss carry forward reduction may fluctuate based on future transactions of the Fund. The capital loss carry forward at March 31, 2004 was approximately $4,550,000,000.
PERFORMANCE
To keep shareholders and potential investors informed, AIM will occasionally advertise the Funds' total return for one-, five-, and ten-year periods (or since inception). Most advertisements of the Funds will disclose the maximum front-end sales charge imposed on purchases of a Fund's Class A shares and/or the applicable CDSC imposed on redemptions of a Fund's Class B, Class C, and Class R shares. If any advertised performance data does not reflect the maximum front-end sales charge (if any), or the applicable CDSC, such advertisement will disclose that the sales charge or CDSC has not been deducted in computing the performance data, and that, if reflected, such charges would reduce the performance quoted.
Each Fund's total return is calculated in accordance with a standardized formula for computation of annualized total return. Standardized total return for Class A shares reflects the deduction of the maximum front-end sales charge at the time of purchase. Standardized total return for Class B and Class C shares reflects the deduction of the maximum applicable CDSC on a redemption of shares held for the period. A 1.00% - 5.00% CDSC may be charged on redemptions of Class B shares held six years or less, other than shares acquired through reinvestment of dividends and other distributions. A 1.00% CDSC may be charged on redemptions of Class C shares held twelve months or less, other than shares acquired through reinvestment of dividends and other distributions. Please see the section entitled "Distributor" for additional information on CDSCs. A 0.75% CDSC may be charged on redemptions of Class R shares, if you are a qualified plan, elect to receive a dealer concession, and redeem the plan within twelve months from initial deposit in the plan's AIM account. 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. Average annual returns are calculated by determining the growth or decline in value of a hypothetical investment in a Fund over a stated period, 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 returns tend to even out variations in a Fund's returns, investors should realize that the Fund's performance is not constant over time, but changes from year to year, and that average annual returns do not represent the actual year-to-year performance of the Fund.
In addition to average annual returns, each Fund may quote unaveraged or cumulative total returns reflecting the simple change in value of an investment over a stated period. Cumulative total return shows the actual rate of return on an investment for the period cited; average annual total return represents the average annual percentage change in the value of an investment. Both cumulative and average annual total returns tend to "smooth out" fluctuations in a Fund's investment results, because they do not show the interim variations in performance over the periods cited. Total returns may be quoted with or without taking a Fund's maximum applicable Class A front-end sales charge or Class B, Class C, or Class R
CDSC into account. Excluding sales charges from a total return calculation produces a higher total return figure.
We may also advertise the Utilities Fund's "30-day SEC yield." "30-day SEC yield" is based on historical earnings and is not intended to indicate future performance. The "30-day SEC yield" of a Fund refers to the income generated by an investment in the Fund over a 30-day period (which period will be stated in the advertisement). This income is then "annualized." That is, the amount of income generated by the investment during that period is assumed to be generated each 30-day period over a 52-week period and is shown as a percentage of the investment.
The "30-day SEC yield" for the Utilities Fund (with expense reimbursements) for the 30 days ended March 31, 2005 was:
Investor Institutional
Fund Class Class A Class B Class C Class
---- -------- ------- ------- ------- -------------
Utilities 1.95% 1.78% 1.22% 1.22% N/A/1/
|
/1/ Institutional Class shares commenced operations on October 25, 2005.
More information about the Funds' recent and historical performance is contained in a Fund's Annual Report to Shareholders. You can get a free copy by calling or writing to AIS using the telephone number or address on the back cover of the Funds' Prospectuses.
When we quote mutual fund rankings published by Lipper Inc., we may compare a Fund to others in its appropriate Lipper category, as well as the broad-based Lipper general fund groupings. These rankings allow you to compare a Fund to its peers. Other independent financial media also produce performance- or service-related comparisons, which you may see in our promotional materials.
Performance figures are based on historical earnings and are not intended to suggest future performance.
Average annual total return performance for the one-, five-, and ten- (or since inception) periods ended March 31, 2005 was:
10 YEAR OR
FUND AND CLASS 1 YEAR 5 YEAR SINCE INCEPTION
-------------- ------ ------ ---------------
INVESTOR CLASS
Energy Fund
Return Before Taxes 47.72% 15.38% 17.22%
Return After Taxes on Distributions 47.72% 15.01% 15.71%
Return After Taxes on Distributions
and Sale of Fund Shares 31.02% 13.34% 14.49%
Financial Services Fund
Return Before Taxes -3.44% 4.32% 13.46%
Return After Taxes on Distributions -4.70% 3.49% 11.37%
Return After Taxes on Distributions
and Sale of Fund Shares -0.42% 3.49% 10.92%
Gold & Precious Metals Fund
Return Before Taxes -6.00% 19.12% 1.13%
Return After Taxes on Distributions -6.32% 18.52% -0.36%
Return After Taxes on Distributions
and Sale of Fund Shares -3.85% 16.56% 0.17%
|
10 YEAR OR
FUND AND CLASS 1 YEAR 5 YEAR SINCE INCEPTION
-------------- ------ ------ ---------------
Leisure Fund
Return Before Taxes 7.35% 3.37% 14.14%
Return After Taxes on Distributions 7.19% 2.44% 12.33%
Return After Taxes on Distributions
and Sale of Fund Shares 4.91% 2.43% 11.57%
Technology Fund
Return Before Taxes -4.57% -24.87% 5.45%
Return After Taxes on Distributions -4.57% -25.06% 3.26%
Return After Taxes on Distributions
and Sale of Fund Shares -2.97% -18.77% 3.66%
Utilities Fund
Return Before Taxes 25.08% -6.56% 7.48%
Return After Taxes on Distributions 24.42% -7.30% 6.03%
Return After Taxes on Distributions
and Sale of Fund Shares 16.76% -5.75% 5.79%
INSTITUTIONAL CLASS
Technology Fund
Return Before Taxes -3.59% -24.29% -3.51/1/%
Return After Taxes on Distributions -3.59% -24.48% -3.91/1/%
Return After Taxes on Distributions
and Sale of Fund Shares -2.33% -18.41% -2.86/1/%
Utilities Fund N/A N/A N/A/2/
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CLASS A - (INCLUDING FRONT-END SALES CHARGE)
Energy Fund
Return Before Taxes 39.42% N/A 17.21/2/%
Return After Taxes on Distributions 39.42% N/A 17.21/2/%
Return After Taxes on Distributions
and Sale of Fund Shares 25.62% N/A 14.95/2/%
Financial Services Fund
Return Before Taxes -8.86% N/A 0.34/2/%
Return After Taxes on Distributions -10.04% N/A 0.17/2/%
Return After Taxes on Distributions
Gold & Precious Metals Fund
Return Before Taxes -11.03% N/A 15.28/2/%
Return After Taxes on Distributions -11.30% N/A 14.72/2/%
Return After Taxes on Distributions
and Sale of Fund Shares -7.13% N/A 12.94/2/%
Leisure Fund
Return Before Taxes 1.35% N/A 3.65/2/%
Return After Taxes on Distributions 1.21% N/A 3.61/2/%
Return After Taxes on Distributions
and Sale of Fund Shares 0.99% N/A 3.11/2/%
|
10 YEAR OR
FUND AND CLASS 1 YEAR 5 YEAR SINCE INCEPTION
-------------- ------ ------ ---------------
Technology Fund
Return Before Taxes -9.79% N/A -9.81/2/%
Return After Taxes on Distributions -9.79% N/A -9.81/2/%
Return After Taxes on Distributions
and Sale of Fund Shares -6.36% N/A -8.20/2/%
Utilities Fund
Return Before Taxes 18.05% N/A 5.87/2/%
Return After Taxes on Distributions 17.45% N/A 5.14/2/%
Return After Taxes on Distributions
and Sale of Fund Shares 12.16% N/A 4.64/2/%
CLASS B - (INCLUDING CDSC)
Energy Fund
Return Before Taxes 41.63% N/A 17.88/2/%
Return After Taxes on Distributions 41.63% N/A 17.88/2/%
Return After Taxes on Distributions
and Sale of Fund Shares 27.06% N/A 15.54/2/%
Financial Services Fund
Return Before Taxes -8.59% N/A 0.81/2/%
Return After Taxes on Distributions -9.77% N/A 0.35/2/%
Return After Taxes on Distributions
and Sale of Fund Shares -3.88% N/A 0.73/2/%
Gold & Precious Metals Fund
Return Before Taxes -11.11% N/A 16.50/2/%
Return After Taxes on Distributions -11.37% N/A 15.95/2/%
Return After Taxes on Distributions
and Sale of Fund Shares -7.18% N/A 14.02/2/%
Leisure Fund
Return Before Taxes 1.54% N/A 3.98/2/%
Return After Taxes on Distributions 1.48% N/A 3.96/2/%
Return After Taxes on Distributions
and Sale of Fund Shares 1.05% N/A 3.40/2/%
Technology Fund
Return Before Taxes -9.89% N/A -9.73/2/%
Return After Taxes on Distributions -9.89% N/A -9.73/2/%
Return After Taxes on Distributions
and Sale of Fund Shares -6.43% N/A 8.14/2/%
Utilities Fund
Return Before Taxes 19.17% N/A 6.25/2/%
Return After Taxes on Distributions 18.70% N/A 5.71/2/%
Return After Taxes on Distributions
and Sale of Fund Shares 12.81% N/A 5.08/2/%
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10 YEAR OR
FUND AND CLASS 1 YEAR 5 YEAR SINCE INCEPTION
-------------- ------ ------ ---------------
CLASS C - (INCLUDING CDSC)
Energy Fund
Return Before Taxes 45.67% 14.63 18.60/3/%
Return After Taxes on Distributions 45.67% 14.26 18.22/3/%
Return After Taxes on Distributions
and Sale of Fund Shares 29.68% 12.66 16.28/3/%
Financial Services Fund
Return Before Taxes -5.05% 3.48 6.20/3/%
Return After Taxes on Distributions -6.26% 2.72 5.41/3/%
Return After Taxes on Distributions
and Sale of Fund Shares -1.54% 2.81 5.15/3/%
Gold & Precious Metals Fund
Return Before Taxes -7.51% 19.97 17.36/3/%
Return After Taxes on Distributions -7.69% 19.49 16.89/3/%
Return After Taxes on Distributions
and Sale of Fund Shares -4.85% 12.39 15.05/3/%
Leisure Fund
Return Before Taxes 5.55% 2.50 3.13/4/%
Return After Taxes on Distributions 5.50% 1.60 2.24/4/%
Return After Taxes on Distributions
and Sale of Fund Shares 3.66% 1.71 2.25/4/%
Technology Fund
Return Before Taxes -6.07% -25.47 -23.98/4/%
Return After Taxes on Distributions -6.07% -25.66 -24.17/4/%
Return After Taxes on Distributions
and Sale of Fund Shares -3.94% -19.14 -18.13/4/%
Utilities Fund
Return Before Taxes 23.08% -7.40 -6.76/4/%
Return After Taxes on Distributions 22.61% -7.88 -7.24/4/%
Return After Taxes on Distributions
and Sale of Fund Shares 15.35% -6.28 -5.76/4/%
CLASS K
Energy Fund
Return Before Taxes 32.03% N/A 6.28/5/%
Return After Taxes on Distributions 32.03% N/A 6.28/5/%
Return After Taxes on Distributions
and Sale of Fund Shares 20.82% N/A 5.39/5/%
Financial Services Fund
Return Before Taxes 42.61% N/A 3.42/5/%
Return After Taxes on Distributions 42.54% N/A 2.83/5/%
Return After Taxes on Distributions
and Sale of Fund Shares 27.78% N/A 2.66/5/%
|
10 YEAR OR
FUND AND CLASS 1 YEAR 5 YEAR SINCE INCEPTION
-------------- ------ ------ ---------------
Health Sciences Fund
Return Before Taxes 28.46% N/A -4.09/5/%
Return After Taxes on Distributions 28.46% N/A -4.09/5/%
Return After Taxes on Distributions
and Sale of Fund Shares 18.50% N/A -3.45/5/%
Leisure Fund
Return Before Taxes 37.80% N/A 7.21/6/%
Return After Taxes on Distributions 37.80% N/A 7.21/6/%
Return After Taxes on Distributions
and Sale of Fund Shares 24.57% N/A 6.17/6/%
Technology Fund
Return Before Taxes 44.28% N/A -23.85/5/%
Return After Taxes on Distributions 44.28% N/A -23.85/5/%
Return After Taxes on Distributions
and Sale of Fund Shares 28.78% N/A -19.13/5/%
CLASS R
Leisure Fund N/A N/A N/A/7/
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/1/ Institutional Class shares commenced investment operations on December 21, 1998.
/2/ Institutional Class shares commenced operations on October 25, 2005. /3/ Class A and Class B shares commenced operations on March 28, 2002. /4/ Class C shares commenced operations on February 14, 2000. /5/ Class K shares commenced operations on November 30, 2000. /6/ Class K shares commenced operations on December 14, 2001. /7/ Class R shares commenced operations on October 25, 2005.
Average annual total return performance for each of the periods indicated was computed by finding the average annual compounded rates of return that would equate the initial amount invested to the ending redeemable value, according to the following formula:
P(1 + T)/n/ = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
|
Average annual total return after taxes on distributions and after taxes on distributions and sale of Fund shares is computed by finding the average annual compounded rates of return that would equate the initial amount invested to the ending value, according to the following formula:
After taxes on distributions:
P(1 + T)/n/ =ATV//D//
where: P = a hypothetical initial payment of $1,000
T = average annual total return (after taxes on distributions)
n = number of years
ATV//D// = ending value of a hypothetical $1,000 payment made at
the beginning of the 1-, 5-, or 10-year periods at the end of
the 1-, 5-, or 10-year periods (or fractional portion) after
taxes on fund distributions but not after taxes on
redemptions.
|
After taxes on distributions and redemption:
P(1 + T)/n/ =ATV//DR//
where: P = a hypothetical initial payment of $1,000
T = average annual total return (after taxes on distributions and
redemption) n = number of years
ATV//DR// = ending value of a hypothetical $1,000 payment made at
the beginning of the 1-, 5-, or 10-year periods at the end of
the 1-, 5-, or 10-year periods (or fractional portion) after
taxes on fund distributions and redemptions.
|
The average annual total return performance figures shown above were determined by solving the above formula for "T" for each time period indicated.
The "30-day SEC yield" is computed by dividing the net investment income per share earned during the period by the maximum offering price per share on the last day of the period, according to the following formula:
Yield = 2[(a-b/cd + 1)/6/ - 1]
where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
|
In conjunction with performance reports, comparative data between a Fund's performance for a given period and other types of investment vehicles, including certificates of deposit, may be provided to prospective investors and shareholders.
In conjunction with performance reports and/or analyses of shareholder services for a Fund, comparative data between that Fund's performance for a given period and recognized indices of investment results for the same period, and/or assessments of the quality of shareholder service, may be provided to shareholders. Such indices include indices provided by Dow Jones & Company, S&P, Lipper Inc., Lehman Brothers, National Association of Securities Dealers Automated Quotations, Frank Russell Company, Value Line Investment Survey, the American Stock Exchange, Morgan Stanley Capital International, Wilshire Associates, the Financial Times Stock Exchange, the NYSE, the Nikkei Stock Average, and Deutcher Aktienindex, all of which are unmanaged market indicators. In addition, rankings, ratings, and comparisons of investment performance and/or assessments of the quality of shareholder service made by independent sources may be used in advertisements, sales literature or shareholder
reports, including reprints of, or selections from, editorials or articles about the Fund. These sources utilize information compiled (i) internally; (ii) by Lipper Inc.; or (iii) by other recognized analytical services. The Lipper Inc. mutual fund rankings and comparisons which may be used by the Funds in performance reports will be drawn from the following mutual fund groupings, in addition to the broad-based Lipper general fund groupings.
Lipper Mutual
Fund Fund Category
---- -------------
Energy Natural Resources
Financial Services Financial Services
Gold & Precious Metals Gold Oriented
Leisure Specialty/Miscellaneous
Technology Science and Technology
Utilities Utility
|
Sources for Fund performance information and articles about the Funds include, but are not limited to, the following:
Advertising Age Financial Services Mutual Fund Forecaster Barron's Week Nation's Business Best's Review Financial World New York Times Bloomberg Forbes Pension World Broker World Fortune Pensions & Investments Business Week Hartford Courant Personal Investor Changing Times Inc. Philadelphia Inquirer Christian Science Institutional Investor The Bond Buyer Monitor Insurance Forum USA Today Consumer Reports Insurance Week U.S. News & World Report Economist Investor's Business Daily Wall Street Journal FACS of the Week Journal of the American Washington Post Financial Planning Society of CLU & ChFC CNN Financial Product Kiplinger Letter CNBC News Money PBS |
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 Date Systems Strategic Insight Lipper, Inc. Thompson Financial |
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 not 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 June 20, 2005 is set forth in Appendix H-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. 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 H-1. Plaintiffs in two of the underlying lawsuits transferred to the MDL Court continue to seek remand of their action to state court. These lawsuits are identified in Appendix H-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 June 20, 2005 is set forth in Appendix H-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 June 20, 2005 is set forth in Appendix H-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 June 20, 2005 is set forth in Appendix H-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 H-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 served on AIM and AIM Capital on June 20, 2005, is set forth in Appendix H-6.
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 areas 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)
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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)
Coastal Securities, LP Broker (for certain AIM Funds)
B-1
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SERVICE PROVIDER DISCLOSURE CATEGORY
---------------- -------------------
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)
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APPENDIX C
PORTFOLIO MANAGERS
As of March 31, 2005
INVESTMENTS IN EACH FUND
Michael J. Simon $100,001 - $500,000
Meggan M. Walsh $10,001 - $50,000
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AIM GOLD & PRECIOUS METALS FUND
John S. Segner $50,001 - $100,000
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AIM LEISURE FUND
Mark D. Greenberg $100,001 - $500,000
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AIM TECHNOLOGY FUND
Michelle E. Fenton $100,001 - $500,000
William R. Keithler $100,001 - $500,000
----------------------------------------------------------------------------
AIM UTILITIES FUND
John S. Segner $1 - $10,000
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DESCRIPTION OF COMPENSATION STRUCTURE
AIM ADVISORS, INC.
AIM seeks to maintain a compensation program that is competitively positioned to attract and retain high-caliber investment professionals. Portfolio managers receive a base salary, an incentive bonus opportunity, an equity compensation opportunity, and a benefits package. Portfolio manager compensation is reviewed and may be modified each year as appropriate to reflect changes in the market, as well as to adjust the factors used to determine bonuses to promote good sustained fund performance. AIM evaluates competitive market compensation by reviewing compensation survey results conducted by an independent third party of investment industry compensation. Each portfolio manager's compensation consists of the following five elements:
. BASE SALARY. Each portfolio manager is paid a base salary. In setting the base salary, AIM'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 non-quantitative components. Generally, 70% of the bonus is quantitatively determined, based typically on a four-year rolling average of pre-tax performance of all registered investment company accounts for which a portfolio manager has day-to-day management responsibilities versus the performance of a pre-determined peer group. In instances where a portfolio manager has responsibility for management of more than one fund, an asset weighted four-year rolling average is used.
High fund performance (against applicable peer group) would deliver compensation generally associated with top pay in the industry (determined by reference to the third-party provided compensation survey information) and poor fund performance (versus applicable peer group) could result in no bonus. The amount of fund assets under management typically have an impact on the bonus potential (for example, managing more assets increases the bonus potential); however, this factor typically carries less weight than relative performance. The remaining 30% portion of the bonus is discretionary as determined by AIM and takes into account other subjective factors.
. EQUITY-BASED COMPENSATION. Portfolio managers may be awarded options to purchase common shares and/or granted restricted shares of AMVESCAP stock from pools determined from time to time 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 variable universal life insurance policy, under which they may make additional contributions to purchase additional insurance coverage or for investment purposes.
. PARTICIPATION IN DEFERRED COMPENSATION PLAN. Portfolio managers are eligible to participate in a non-qualified deferred compensation plan, which affords participating employees the tax benefits of deferring the receipt of a portion of their cash compensation.
Portfolio managers also participate in benefit plans and programs available generally to all employees.
OTHER MANAGED ACCOUNTS
As of March 31, 2005
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.
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NAME OF PORTFOLIO NUMBER OF ACCOUNTS MANAGED BY EACH PORTFOLIO MANAGER
MANAGER AND TOTAL ASSETS BY CATEGORY
--------------------------------------------------------------------------------
AIM ENERGY FUND
--------------------------------------------------------------------------------
John S. Segner 4 Registered Mutual Funds with $668,041,958 in total
assets under management
2 Unregistered Pooled Investment Vehicles with
$121,669,999 in total assets under management
1 Other Account with $14,247,234 in total assets under
management/3/
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AIM FINANCIAL SERVICES FUND
--------------------------------------------------------------------------------
Michael J. Simon 12 Registered Mutual Funds with $10,949,213,885 in total
assets under management
1 Unregistered Pooled Investment Vehicle with $11,875,771
in total assets under management
3,614 Other Accounts with $1,062,537,104 in total assets
under management/2/
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Meggan M. Walsh 3 Registered Mutual Funds with $463,730,727 in total
assets under management
--------------------------------------------------------------------------------
AIM GOLD & PRECIOUS METALS FUND
--------------------------------------------------------------------------------
John S. Segner 4 Registered Mutual fund with $1,200,343,296 in total
assets under management
2 Unregistered Pooled Investment Vehicles with
$121,669,999 in total assets under management
1 Other Account with $14,247,234 in total assets under
management/2/
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/3/ These are accounts of individual investors for which AIM's affiliate, AIM Private Asset Management, Inc. ("APAM") provides investment advice. APAM offers separately managed accounts that are managed according to the investment models developed by AIM"s portfolio managers and used in connection with the management of certain AIM funds. APAM accounts may be invested in accordance with one or more of those investment models and investments held in those accounts are traded in accordance with the applicable models.
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NAME OF PORTFOLIO NUMBER OF ACCOUNTS MANAGED BY EACH PORTFOLIO MANAGER
MANAGER AND TOTAL ASSETS BY CATEGORY
--------------------------------------------------------------------------------
AIM LEISURE FUND
--------------------------------------------------------------------------------
Mark D. Greenberg 2 Registered Mutual Funds with $167,670,165 in total
assets under management
2 Unregistered Pooled Investment Vehicles with
$116,134,596 in total assets under management
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AIM TECHNOLOGY FUND
--------------------------------------------------------------------------------
Michelle E. Fenton 2 Registered Mutual Fund with $245,444,136 in total assets
under management
4 Unregistered Pooled Investment Vehicles with
$446,648,452 in total assets under management
--------------------------------------------------------------------------------
William R. Keithler 3 Registered Mutual Funds with $362,912,722 in total
assets under management
5 Unregistered Pooled Investment Vehicles with
$576,175,595 in total assets under management
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AIM UTILITIES FUND
--------------------------------------------------------------------------------
John S. Segner 4 Registered Mutual Funds with $1,091,872,012 in total
assets under management
2 Unregistered Pooled Investment Vehicles with
$121,669,999 in total assets under management
1 Other Account with $14,247,234 in total assets under
management/2/
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POTENTIAL CONFLICTS OF INTEREST
Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one Fund or other account. More specifically, portfolio managers who manage multiple Funds and /or other accounts may be presented with one or more of 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.
. With respect to securities transactions for the Funds, AIM determines which broker to use to execute each order, consistent with its duty to seek best execution of the transaction. However, with respect to certain other accounts (such as 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), AIM may be limited by the client with respect to the selection of brokers or may be instructed to direct trades through a particular broker. In these cases, trades for a Fund in a particular security may be placed separately from, rather than aggregated with, such other accounts. Having separate transactions with respect to a security may temporarily affect the market price of the security or the execution of the transaction, or both, to the possible detriment of the Fund or other account(s) involved.
. Finally, the appearance of a conflict of interest may arise where AIM has an incentive, such as a performance-based management fee, which relates to the management of one Fund or account but not all Funds and accounts with respect to which a portfolio manager has day-to-day management responsibilities.
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 D
TRUSTEES AND OFFICERS
As of July 31, 2005
The address of each trustee and officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. 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 or removal as more specifically provided in the Trust's organizational documents. Column two below includes length of time served with predecessor entities, if any.
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TRUSTEE
NAME, YEAR OF BIRTH AND/OR OTHER
AND POSITION(S) OFFICER PRINCIPAL OCCUPATION(S) TRUSTEESHIP(S)
HELD WITH THE TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
--------------------------------------------------------------------------------
INTERESTED PERSONS
--------------------------------------------------------------------------------
Robert H. Graham/1/ 2003 Director and Chairman, None
-- 1946 A I M Management Group Inc.
Trustee, Vice Chair (financial services holding
and President company); Director and Vice
Chairman, AMVESCAP PLC and
Chairman, 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/ 1998 Director, President and None
-- 1951 Chief Executive Officer,
Trustee and A I M Management Group Inc.
Executive (financial services holding
Vice President 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
----------
|
/1/ Mr. Graham is considered an interested person of the Trust because he is a director of AMVESCAP PLC, parent of the advisor to the Trust. /2/ Mr. Williamson is considered an interested person of the Trust because he is an officer and a director of the advisor to, and a director of the principal underwriter of, the Trust.
--------------------------------------------------------------------------------
TRUSTEE
NAME, YEAR OF BIRTH AND/OR OTHER
AND POSITION(S) OFFICER PRINCIPAL OCCUPATION(S) TRUSTEESHIP(S)
HELD WITH THE TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
--------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
--------------------------------------------------------------------------------
Bruce L. Crockett/3/ 2003 Chairman, Crockett ACE Limited
-- 1944 Technology Associates (insurance
Trustee and Chair (technology consulting company); and
company) Captaris, Inc.
(unified
messaging
provider)
Bob R. Baker -- 1936 1983 Retired None
Trustee
Frank S. Bayley -- 2003 Retired Badgley Funds,
1939 Formerly: Partner, law Inc. (registered
Trustee firm of Baker & McKenzie investment
company (2
portfolios))
James T. Bunch -- 2000 Co-President and Founder, None
1942 Green, Manning & Bunch Ltd.
Trustee (investment banking firm);
and Director, Policy
Studies, Inc. and Van
Gilder Insurance
Corporation
Albert R. Dowden -- 2003 Director of a number of None
1941 public and private business
Trustee 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. 2003 Retired None
-- 1935
Trustee
Jack M. Fields -- 2003 Chief Executive Officer, Administaff ; and
1952 Twenty First Century Group, Discovery Global
Trustee Inc. (government affairs Education Fund
company) and Owner, Dos (non-profit)
Angelos Ranch, L.P.
Formerly: Chief Executive
Officer, Texana Timber LP
(sustainable forestry
company)
Carl Frischling -- 2003 Partner, law firm of Kramer Cortland Trust,
1937 Levin Naftalis and Frankel Inc. (registered
Trustee LLP investment
company (3
portfolios))
Gerald J. Lewis -- 2000 Chairman, Lawsuit General
1933 Resolution Services (San Chemical
Trustee Diego, California) Group, Inc.
Prema Mathai-Davis 2003 Formerly: Chief Executive None
-- 1950 Officer, YWCA of the USA
Trustee
Lewis F. Pennock -- 2003 Partner, law firm of None
1942 Pennock & Cooper
Trustee
----------
|
/3/ Mr. Crockett was elected Chair of the Board of Trustees of the Trust effective October 4, 2004.
TRUSTEE
NAME, YEAR OF BIRTH AND/OR OTHER
AND POSITION(S) OFFICER PRINCIPAL OCCUPATION(S) TRUSTEESHIP(S)
HELD WITH THE TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
--------------------------------------------------------------------------------
Ruth H. Quigley -- 2003 Retired None
1935
Trustee
Larry Soll, -- 1942 1997 Retired None
Trustee
--------------------------------------------------------------------------------
OTHER OFFICERS
--------------------------------------------------------------------------------
Lisa O. Brinkley/4/ -- 2004 Senior Vice President, N/A
1959 A I M Management Group Inc.
Senior Vice (financial services holding
President and Chief company); Senior Vice
Compliance Officer President and Chief
Compliance Officer A I M
Advisors, Inc.; Vice
President and Chief
Compliance Officer, AIM
Capital Management, Inc.
and Vice President, AIM
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/ -- 2005 Formerly: Director of N/A
1958 Compliance and Assistant
Senior Vice General Counsel, ICON
President Advisers, Inc.; Financial
(Senior Officer) Consultant, Merrill Lynch;
General Counsel and
Director of Compliance,
ALPS Mutual Funds, Inc.
Kevin M. Carome -- 2003 Director, Senior Vice N/A
1956 President, Secretary and
Senior Vice General Counsel,
President, A I M Management Group Inc.
Secretary and Chief (financial services holding
Legal Officer 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.;
Director, Vice President
and General Counsel, Fund
Management Company, and
Senior Vice President, AIM
Distributors, Inc.
Formerly: Senior Vice
President and General
Counsel, Liberty Financial
Companies, Inc.; Senior
Vice President and General
Counsel, Liberty Funds
Group, LLC, Vice President,
AIM Distributors, Inc. and
Director, Fund Management
Company
Robert G. Alley -- 2003 Managing Director, Chief N/A
1948 Fixed Income Officer, and
Vice President Senior Investment Officer,
A I M Capital Management,
Inc. and Vice President,
A I M Advisors, Inc.
----------
|
/4/ Ms. Brinkley was elected Senior Vice President and Chief Compliance
Officer of the Trust effective September 20, 2004.
/5/ Mr. Burk was elected Senior Vice President of the Trust effective
February 15, 2005.
--------------------------------------------------------------------------------
TRUSTEE
NAME, YEAR OF BIRTH AND/OR OTHER
AND POSITION(S) OFFICER PRINCIPAL OCCUPATION(S) TRUSTEESHIP(S)
HELD WITH THE TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
--------------------------------------------------------------------------------
Sidney M. Dilgren -- 2004 Vice President and Fund N/A
1961 Treasurer, A I M Advisors,
Vice President and Inc.;
Treasurer Formerly: Vice President,
A I M Distributors, Inc.;
and Senior Vice President,
AIM Investment Services,
Inc.
J. Philip Ferguson/6/ 2005 Senior Vice President and N/A
-- 1945 Chief Investment Officer,
Vice President 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.
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
Mark D. Greenberg -- 2004 Senior Vice President and N/A
1957 Senior Portfolio Manager,
Vice President A I M Capital Management,
Inc.
Formerly: Senior Vice
President and Senior
Portfolio Manager, INVESCO
Institutional (N.A.), Inc.
Karen Dunn Kelley -- 2003 Director of Cash N/A
1960 Management, Managing
Vice President Director 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.
William R. Keithler 2004 Senior Vice President and N/A
-- 1952 Senior Portfolio Manager,
Vice President A I M Capital Management,
Inc.
Formerly: Senior Vice
President, Director of
Sector Management and
Senior Portfolio Manager,
INVESCO Institutional
(N.A.), Inc.
----------
/6/ Mr. Ferguson was elected Vice President of the Trust effective February
24, 2005.
|
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
NAME OF TRUSTEE PER FUND AIM FAMILY OF FUNDS(R)
----------------------------------------------------------------------------------------------------------
Robert H. Graham -0- Over $100,000
----------------------------------------------------------------------------------------------------------
Mark H. Williamson AIM Financial Services Fund $10,001 - $50,000
Over $100,000
AIM Technology Fund $1 - $10,000
----------------------------------------------------------------------------------------------------------
Bob R. Baker AIM Leisure Fund Over $100,000
Over $100,000
AIM Technology Fund Over $100,000
----------------------------------------------------------------------------------------------------------
Frank S. Bayley -0- Over $100,000
----------------------------------------------------------------------------------------------------------
James T. Bunch AIM Energy Fund $1 - $10,000 Over $100,000
AIM Financial Services Fund $1 - $10,000
AIM Gold & Precious Metals Fund $1 - $10,000
AIM Leisure Fund $50,001 - $100,000
AIM Technology Fund $10,001 - $50,000
----------------------------------------------------------------------------------------------------------
Bruce L. Crockett -0- $10,001 - $50,000/(7)/
----------------------------------------------------------------------------------------------------------
Albert R. Dowden -0- Over $100,000
----------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. -0- Over $100,000/(7)/
----------------------------------------------------------------------------------------------------------
Jack M. Fields -0- Over $100,000/(7)/
----------------------------------------------------------------------------------------------------------
Carl Frischling -0- Over $100,000/(7)/
----------------------------------------------------------------------------------------------------------
|
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL REGISTERED
INVESTMENT COMPANIES OVERSEEN BY
DOLLAR RANGE OF EQUITY SECURITIES TRUSTEE IN THE
NAME OF TRUSTEE PER FUND AIM FAMILY OF FUNDS(R)
----------------------------------------------------------------------------------------------------------
Gerald J. Lewis AIM Energy Fund $10,001 - $50,000
Over $100,000
AIM Financial Services Fund $1 - $10,000
AIM Gold & Precious Metals Fund $1 - $10,000
AIM Leisure Fund $1 - $10,000
AIM Technology Fund $1 - $10,000
AIM Utilities Fund $1 - $10,000
----------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -0- $1 - $10,000/(7)/
----------------------------------------------------------------------------------------------------------
Lewis F. Pennock -0- Over $100,000
----------------------------------------------------------------------------------------------------------
Ruth H. Quigley AIM Gold & Precious Metals Fund $1 - $10,000 $10,001 - $50,000
----------------------------------------------------------------------------------------------------------
Larry Soll AIM Energy Fund Over $100,000 Over $100,000/(7)/
AIM Financial Services Fund $10,001 - $50,000
AIM Gold & Precious Metals Fund $50,001 - $100,000
AIM Leisure Fund $50,001 - $100,000
AIM Technology Fund $50,001 - $100,000
AIM Utilities Fund $1 - $10,000
|
APPENDIX E
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
AGGREGATE BENEFITS ESTIMATED TOTAL
COMPENSATION ACCRUED ANNUAL BENEFITS COMPENSATION FROM
THE FROM BY ALL UPON ALL AIM
TRUSTEE TRUST/(1)/,/(2)/ AIM FUNDS/(3)/ RETIREMENT/(4)/ FUNDS/(5)/,/(6)/
-----------------------------------------------------------------------------------------
Bob R. Baker $ 10,500 $ 198,871 $ 144,786 $ 189,750
-----------------------------------------------------------------------------------------
Frank S. Bayley 10,948 175,241 112,500 193,500
-----------------------------------------------------------------------------------------
James T. Bunch 10,152 143,455 112,500 186,000
-----------------------------------------------------------------------------------------
Bruce L. Crockett 14,130 75,638 112,500 223,500
-----------------------------------------------------------------------------------------
Albert R. Dowden 10,892 93,210 112,500 192,500
-----------------------------------------------------------------------------------------
Edward K. Dunn, Jr. 10,948 133,390 112,500 193,500
-----------------------------------------------------------------------------------------
Jack M. Fields 10,152 48,070 112,500 186,000
-----------------------------------------------------------------------------------------
Carl Frischling/(7)/ 10,152 62,040 112,500 185,000
-----------------------------------------------------------------------------------------
Gerald J. Lewis 10,152 143,455 112,500 186,000
-----------------------------------------------------------------------------------------
Prema Mathai-Davis 10,550 55,768 112,500 189,750
-----------------------------------------------------------------------------------------
Lewis F. Pennock 10,152 80,777 112,500 186,000
-----------------------------------------------------------------------------------------
Ruth H. Quigley 10,550 154,767 112,500 189,750
-----------------------------------------------------------------------------------------
Louis S. Sklar/(8)/ 7,520 115,160 101,250 186,000
-----------------------------------------------------------------------------------------
Larry Soll 10,152 184,356 130,823 186,000
-----------------------------------------------------------------------------------------
|
(1) Amounts shown are based upon the fiscal year ended March 31, 2005. The
total amount of compensation deferred by all trustees of the Trust
during the fiscal year ended March 31, 2005 including earnings was
$31,747.
(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 $957 of trustee
compensation which, pursuant to such agreement, was reimbursed by
AMVESCAP during the fiscal year ended March 31, 2005.
(3) During the fiscal year ended March 31, 2005, the total amount of
expenses allocated to the Trust in respect of such retirement benefits
was $94,955.
(4) These amounts represent the estimated annual benefits payable by the AIM
Funds upon the trustees' 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 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 March 31, 2005, the Trust paid $43,003 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 effective December 31, 2004.
APPENDIX F
PROXY VOTING 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. o 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.
APPENDIX G
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 ENERGY FUND
-----------------------------------------------------------------------------------------------
INVESTOR
CLASS CLASS A CLASS B CLASS C CLASS K
SHARES SHARES SHARES SHARES SHARES
-----------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
PRINCIPAL HOLDER OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
RECORD RECORD RECORD RECORD RECORD
-----------------------------------------------------------------------------------------------
American United Life
Insurance Company
Group Retirement Annuity II -- -- -- -- 27.83%
One American Square
P. O. Box 1995
Indianapolis IN 46206-1102
-----------------------------------------------------------------------------------------------
Charles Schwab & Co. Inc.
Special Custody Acct for
the Exclusive Benefit of
Customers 21.52% 12.99% -- -- --
Attn: Mutual Funds
101 Montgomery St.,
San Francisco, CA
94104-4122
-----------------------------------------------------------------------------------------------
Citigroup Global Markets
House Account
Attn: Cindy Tempesta, 7th Floor -- -- 8.45% 9.13% --
333 West 34th Street
New York, NY 10001-2402
-----------------------------------------------------------------------------------------------
|
-----------------------------------------------------------------------------------------------
INVESTOR
CLASS CLASS A CLASS B CLASS C CLASS K
SHARES SHARES SHARES SHARES SHARES
-----------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
PRINCIPAL HOLDER OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
RECORD RECORD RECORD RECORD RECORD
-----------------------------------------------------------------------------------------------
MCB Trust Services Cust.
Columbia Orthopaedic Group P PL -- -- -- -- 5.25%
700 17th St, Ste 300
Denver, CO 80202-3531
-----------------------------------------------------------------------------------------------
MCB Trust Services Cust.
Grand Vehicle Works
Holdings C -- -- -- -- 5.28%
700 17th St, Ste 300
Denver, CO 80202-3531
-----------------------------------------------------------------------------------------------
Merrill Lynch
4800 Deer Lake Dr East -- 6.04% 5.42% 18.38% --
Jacksonville FL, 32246-6484
-----------------------------------------------------------------------------------------------
|
AIM FINANCIAL SERVICES FUND
-----------------------------------------------------------------------------------------------
INVESTOR
CLASS CLASS A CLASS B CLASS C CLASS K
SHARES SHARES SHARES SHARES SHARES
-----------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
PRINCIPAL HOLDER OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
RECORD RECORD RECORD RECORD RECORD
-----------------------------------------------------------------------------------------------
Charles Schwab & Co. Inc.
Special Custody Acct for
the Exclusive Benefit of
Customers 27.70% -- -- -- --
Attn: Mutual Funds
101 Montgomery St.,
San Francisco, CA
94104-4122
-----------------------------------------------------------------------------------------------
Circle Trust Co. Cust
Hazel Land Companies Inc.
401K Plan -- -- -- -- 5.83%
Metro Center
1 Station Pl
Stamford, CT 06902-6800
-----------------------------------------------------------------------------------------------
|
-----------------------------------------------------------------------------------------------
INVESTOR
CLASS CLASS A CLASS B CLASS C CLASS K
SHARES SHARES SHARES SHARES SHARES
-----------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
PRINCIPAL HOLDER OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
RECORD RECORD RECORD RECORD RECORD
-----------------------------------------------------------------------------------------------
Citigroup Global Markets
House Account
Attn: Cindy Tempesta 7th Floor -- 5.44% 8.10% -- --
333 West 34th Street
New York NY 10001-2402
-----------------------------------------------------------------------------------------------
Merrill Lynch
4800 Deer Lake Dr. East -- 6.23% 6.50% 10.67% --
Jacksonville, FL
32246-6484
-----------------------------------------------------------------------------------------------
Nat'l Financial Services Corp
The Exclusive Benefit of Cust.
One World Financial Center 5.84% -- -- -- --
200 Liberty St. 5th Floor
Attn: Kate - Recon
New York, NY 10281-5503
-----------------------------------------------------------------------------------------------
Saxon & Co.
FBO
P. O. Box 7780-1888 -- -- -- -- 73.61%
Philadelphia PA 19182-0001
-----------------------------------------------------------------------------------------------
|
AIM GOLD & PRECIOUS METALS FUND
----------------------------------------------------------------------------------
INVESTOR
CLASS CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES
----------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
PRINCIPAL HOLDER OWNED OF OWNED OF OWNED OF OWNED OF
RECORD RECORD RECORD RECORD
----------------------------------------------------------------------------------
Charles Schwab & Co. Inc.
Special Custody Acct for the
Exclusive Benefit of Customers 21.73% -- -- --
Attn: Mutual Funds
101 Montgomery St.,
San Francisco, CA 94104-4122
----------------------------------------------------------------------------------
|
----------------------------------------------------------------------------------
INVESTOR
CLASS CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES
----------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
PRINCIPAL HOLDER OWNED OF OWNED OF OWNED OF OWNED OF
RECORD RECORD RECORD RECORD
----------------------------------------------------------------------------------
Citigroup Global Markets
House Account
Attn: Cindy Tempesta 7th Floor -- 5.28% 7.63% 27.18%
333 West 34th Street
New York NY 10001-2402
----------------------------------------------------------------------------------
FTC & Co.
Datalynx
P.O. Box 173 736 -- 7.02% -- --
Denver, Co. 80217-3736
----------------------------------------------------------------------------------
|
AIM LEISURE FUND
------------------------------------------------------------------------------------------------------------
INVESTOR
CLASS CLASS A CLASS B CLASS C CLASS K CLASS R
SHARES SHARES SHARES SHARES SHARES SHARES*
------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
PRINCIPAL HOLDER OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
RECORD RECORD RECORD RECORD RECORD RECORD
------------------------------------------------------------------------------------------------------------
Charles Schwab & Co. Inc.
Special Custody Acct for the
Exclusive Benefit of Customers 23.87% 34.60% -- -- -- --
Attn: Mutual Funds
101 Montgomery St.,
San Francisco, CA 94104-4122
------------------------------------------------------------------------------------------------------------
Citigroup Global Market House
Account
Attn: Cindy Tempesta 7th Floor -- -- 5.95% -- -- --
333 W 34th St.
New York, NY 10001-2402
------------------------------------------------------------------------------------------------------------
Delaware Charter Guarantee &
Trust
FBO Principal Financial Group
OMNIBUS Qualified -- -- -- -- 58.62% --
711 High St.
Des Moines, IA 50392-0002
------------------------------------------------------------------------------------------------------------
|
* Class R and Institutional Class shares commenced operations on October 25, 2005.
------------------------------------------------------------------------------------------------------------
INVESTOR
CLASS CLASS A CLASS B CLASS C CLASS K CLASS R
SHARES SHARES SHARES SHARES SHARES SHARES*
------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
PRINCIPAL HOLDER OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
RECORD RECORD RECORD RECORD RECORD RECORD
------------------------------------------------------------------------------------------------------------
Merrill Lynch
4800 Deer Lake Dr East -- -- -- 10.57% -- --
Jacksonville FL 32246-6484
------------------------------------------------------------------------------------------------------------
Morgan Stanley DW
Attn: Mutual Fund Operations -- - 6.39% -- -- --
3 Harborside PL FL 6
Jersey City, NJ 07311-3907
------------------------------------------------------------------------------------------------------------
Nat'l Financial Services Corp
The Exclusive Benefit of Cust.
One World Financial Center 6.16% -- -- -- -- --
200 Liberty St. 5th Floor
Attn: Kate - Recon
New York, NY 10281-5503
------------------------------------------------------------------------------------------------------------
Symetra Investment Services
Inc.
MF Controlers -- -- -- -- 5.11% --
P.O. Box 34443
Seattle , WA 98124-1443
------------------------------------------------------------------------------------------------------------
Transamerica Life Ins &
Annuity Co.
Attn: Daisy Lo
Retirement Services-Separate
Acct. -- 5.81% -- -- -- --
P. O. Box 30368
Los Angeles, CA 90030-0368
------------------------------------------------------------------------------------------------------------
|
* Class R and Institutional Class shares commenced operations on October 25, 2005.
AIM TECHNOLOGY FUND
---------------------------------------------------------------------------------------------------------------
INVESTOR
CLASS CLASS A CLASS B CLASS C CLASS K INSTITUTIONAL
SHARES SHARES SHARES SHARES SHARES SHARES*
---------------------------------------------------------------------------------------------------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD RECORD RECORD
---------------------------------------------------------------------------------------------------------------
A I M Advisors Inc./1/
Attn: Corporate
Controller
11 Greenway Plaza, Suite -- -- -- -- -- 100.00%
1919
Houston, TX 77046-1103
---------------------------------------------------------------------------------------------------------------
Charles Schwab & Co. Inc.
Special Custody For the
Exclusive Benefit of Customers 20.79% -- -- -- -- --
Attn: Mutual Funds
101 Montgomery St.,
San Francisco, CA
94104-4122
---------------------------------------------------------------------------------------------------------------
Citigroup Global Markets
House Acct
Attn: Cindy Tempesta 7th Floor -- 7.65% 8.81% -- -- --
333 West 34th Street
New York NY 10001-2402
---------------------------------------------------------------------------------------------------------------
Mid-Atlantic Capital
Corp.
Investors Bank & Trust Co.
FBO Various Retirement Plans -- -- -- -- 11.95% --
4 Manhattenville, Rd.
Purchase, NY 10577-2139
---------------------------------------------------------------------------------------------------------------
Merrill Lynch
4800 Deer Lake Dr East -- -- -- -- 7.92% --
Jacksonville FL 32246-6484
---------------------------------------------------------------------------------------------------------------
|
/1/ Owned of record beneficially
---------------------------------------------------------------------------------------------------------------
INVESTOR
CLASS CLASS A CLASS B CLASS C CLASS K INSTITUTIONAL
SHARES SHARES SHARES SHARES SHARES SHARES*
---------------------------------------------------------------------------------------------------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD RECORD RECORD
---------------------------------------------------------------------------------------------------------------
Nat'l Financial Services
Corp
The Exclusive Benefit of Cust.
One World Financial Center 5.31% -- -- -- -- --
200 Liberty St. 5th Floor
Attn: Kate - Recon
New York, NY 10281-5503
---------------------------------------------------------------------------------------------------------------
Saxon & Co.
P. O. Box 7780-1888 -- -- -- -- 51.37% --
Philadelphia PA
19182-0001
---------------------------------------------------------------------------------------------------------------
Transamerica Life Ins &
Annuity Co.
Attn: Daisy Lo
Retirement
Services-Separate Acct. -- 12.52% -- -- -- --
P. O. Box 30368
Los Angeles, CA
90030-0368
---------------------------------------------------------------------------------------------------------------
UMB Bank NA
Fiduciary for Various Tax
Deferred Accounts -- -- -- -- 8.20% --
1 SW Security Benefit PL
Topeka, KS 66636-0001
---------------------------------------------------------------------------------------------------------------
|
AIM UTILITIES FUND
--------------------------------------------------------------------------------------------------
INVESTOR
CLASS CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES SHARES SHARES*
--------------------------------------------------------------------------------------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD RECORD
--------------------------------------------------------------------------------------------------
Charles Schwab & Co. Inc.
Special Custody For the
Exclusive Benefit of Customers 25.40% 5.91% -- -- --
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
--------------------------------------------------------------------------------------------------
Merrill Lynch -- -- 8.46% 8.71% --
Attn: Fund Administration
4800 Deer Lake Dr East
Jacksonville FL 32246
--------------------------------------------------------------------------------------------------
|
* Class R and Institutional Class shares commenced operations on October 25, 2005.
MANAGEMENT OWNERSHIP
As of August 15, 2005, the trustees and officers as a group owned less than 1% of the shares outstanding of each class of each Fund.
APPENDIX H-1
PENDING LITIGATION ALLEDGING 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 June 20, 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.
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.) 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 H-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 June 20, 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 H-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 June 20, 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 H-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 June 20, 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 H-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 June 20, 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 H-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
FS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees
and Shareholders of AIM Energy 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 Energy Fund, formerly known as INVESCO Energy Fund (one of the funds constituting AIM Sector Funds, hereafter referred to as the "Fund") at March 31, 2005, 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 periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with 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 March 31, 2005 by correspondence with the custodian, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP May 20, 2005 Houston, Texas |
FS-1
FINANCIALS
SCHEDULE OF INVESTMENTS
March 31, 2005
MARKET
SHARES VALUE
------------------------------------------------------------
DOMESTIC COMMON STOCKS-64.93%
COMMODITY CHEMICALS-1.91%
Lyondell Chemical Co. 450,000 $ 12,564,000
------------------------------------------------------------
DIVERSIFIED METALS & MINING-4.40%
CONSOL Energy Inc. 280,000 13,165,600
------------------------------------------------------------
Peabody Energy Corp. 340,000 15,762,400
------------------------------------------------------------
28,928,000
------------------------------------------------------------
INTEGRATED OIL & GAS-13.76%
ChevronTexaco Corp. 168,000 9,796,080
------------------------------------------------------------
ConocoPhillips 180,000 19,411,200
------------------------------------------------------------
Exxon Mobil Corp. 180,000 10,728,000
------------------------------------------------------------
Murphy Oil Corp. 375,000 37,023,750
------------------------------------------------------------
Occidental Petroleum Corp. 190,000 13,522,300
------------------------------------------------------------
90,481,330
------------------------------------------------------------
OIL & GAS DRILLING-4.57%
Patterson-UTI Energy, Inc. 650,000 16,263,000
------------------------------------------------------------
Rowan Cos., Inc. 460,000 13,767,800
------------------------------------------------------------
30,030,800
------------------------------------------------------------
OIL & GAS EQUIPMENT & SERVICES-16.68%
BJ Services Co. 280,000 14,526,400
------------------------------------------------------------
Cal Dive International, Inc./(a)/ 290,000 13,137,000
------------------------------------------------------------
Cooper Cameron Corp./(a)/ 165,000 9,439,650
------------------------------------------------------------
FMC Technologies, Inc./(a)/ 440,000 14,599,200
------------------------------------------------------------
Grant Prideco, Inc./(a)/ 1,050,000 25,368,000
------------------------------------------------------------
National-Oilwell Varco Inc./(a)/ 470,000 21,949,000
------------------------------------------------------------
Smith International, Inc. 170,000 10,664,100
------------------------------------------------------------
109,683,350
------------------------------------------------------------
OIL & GAS EXPLORATION &
PRODUCTION-17.46%
Apache Corp. 250,000 15,307,500
------------------------------------------------------------
Cheniere Energy, Inc./(a)/ 240,000 15,482,400
------------------------------------------------------------
Devon Energy Corp. 230,000 10,982,500
------------------------------------------------------------
Kerr-McGee Corp. 240,000 18,799,200
------------------------------------------------------------
Magnum Hunter Resources, Inc./(a)/ 740,000 11,921,400
------------------------------------------------------------
Newfield Exploration Co./(a)/ 200,000 14,852,000
------------------------------------------------------------
Noble Energy, Inc. 150,000 10,203,000
------------------------------------------------------------
Unocal Corp. 280,000 17,273,200
------------------------------------------------------------
114,821,200
------------------------------------------------------------
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------------
OIL & GAS REFINING, MARKETING &
TRANSPORTATION-6.15%
Valero Energy Corp. 340,000 $ 24,911,800
-----------------------------------------------------------------------------
Williams Cos., Inc. (The) 825,000 15,518,250
-----------------------------------------------------------------------------
40,430,050
-----------------------------------------------------------------------------
Total Domestic Common Stocks
(Cost $281,939,279) 426,938,730
-----------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-30.97%
BERMUDA-5.70%
Nabors Industries, Ltd. (Oil & Gas Drilling)/(a)/ 320,000 18,924,800
-----------------------------------------------------------------------------
Weatherford International Ltd. (Oil & Gas Equipment &
Services)/(a)/ 320,000 18,540,800
-----------------------------------------------------------------------------
37,465,600
-----------------------------------------------------------------------------
CANADA-5.12%
Canadian Natural Resources Ltd. (Oil & Gas Exploration
& Production) 250,000 14,205,000
-----------------------------------------------------------------------------
Talisman Energy Inc. (Oil & Gas Exploration &
Production) 570,000 19,465,500
-----------------------------------------------------------------------------
33,670,500
-----------------------------------------------------------------------------
CAYMAN ISLANDS-7.54%
GlobalSantaFe Corp. (Oil & Gas Drilling) 390,000 14,445,600
-----------------------------------------------------------------------------
Noble Corp. (Oil & Gas Drilling) 360,000 20,235,600
-----------------------------------------------------------------------------
Transocean Inc. (Oil & Gas Drilling)/(a)/ 290,000 14,923,400
-----------------------------------------------------------------------------
49,604,600
-----------------------------------------------------------------------------
FRANCE-2.94%
Total S.A.-ADR (Integrated Oil & Gas) 165,000 19,342,950
-----------------------------------------------------------------------------
ITALY-2.37%
Eni S.p.A-ADR (Integrated Oil & Gas) 120,000 15,619,200
-----------------------------------------------------------------------------
NETHERLANDS-3.22%
Schlumberger Ltd. (Oil & Gas Equipment & Services) 300,000 21,144,000
-----------------------------------------------------------------------------
UNITED KINGDOM-4.08%
BP PLC-ADR (Integrated Oil & Gas) 360,000 22,464,000
-----------------------------------------------------------------------------
Wood Group (John) PLC (Oil & Gas Equipment &
Services)/(b)/ 1,525,000 4,363,842
-----------------------------------------------------------------------------
26,827,842
-----------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests
(Cost $152,962,414) 203,674,692
-----------------------------------------------------------------------------
|
FS-2
MARKET
SHARES VALUE
--------------------------------------------------------------------
MONEY MARKET FUNDS-4.00%
Premier Portfolio-Institutional Class
(Cost $26,315,584)/(c)/ 26,315,584 $ 26,315,584
--------------------------------------------------------------------
TOTAL INVESTMENTS-99.90% (Cost $461,217,277) 656,929,006
--------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.10% 659,044
--------------------------------------------------------------------
NET ASSETS-100.00% $657,588,050
--------------------------------------------------------------------
|
Investment Abbreviations:
ADR- American Depositary Receipt
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 prices. The
market value of this security at March 31, 2005 represented 0.66% of the
Fund's Total Investments. See Note 1A.
/(c)/The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
See accompanying notes which are an integral part of the financial statements.
FS-3
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2005
ASSETS:
Investments, at market value (cost $434,901,693) $630,613,422
-------------------------------------------------------------------------------
Investments in affiliated money market funds (cost $26,315,584) 26,315,584
-------------------------------------------------------------------------------
Total investments (cost $461,217,277) 656,929,006
-------------------------------------------------------------------------------
Receivables for:
Fund shares sold 6,242,639
-------------------------------------------------------------------------------
Dividends 374,201
-------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 40,833
-------------------------------------------------------------------------------
Other assets 67,840
-------------------------------------------------------------------------------
Total assets 663,654,519
-------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 5,583,754
-------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 52,916
-------------------------------------------------------------------------------
Accrued distribution fees 212,621
-------------------------------------------------------------------------------
Accrued trustees' fees 3,531
-------------------------------------------------------------------------------
Accrued transfer agent fees 139,502
-------------------------------------------------------------------------------
Accrued operating expenses 74,145
-------------------------------------------------------------------------------
Total liabilities 6,066,469
-------------------------------------------------------------------------------
Net assets applicable to shares outstanding $657,588,050
-------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Shares of beneficial interest $461,947,227
-------------------------------------------------------------------------------
Undistributed net investment income (loss) (37,209)
-------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (33,697)
-------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign
currencies 195,711,729
-------------------------------------------------------------------------------
$657,588,050
-------------------------------------------------------------------------------
|
NET ASSETS:
Class A $161,528,782
-----------------------------------------------------------
Class B $ 55,559,126
-----------------------------------------------------------
Class C $ 58,626,363
-----------------------------------------------------------
Class K $ 2,958,817
-----------------------------------------------------------
Investor Class $378,914,962
-----------------------------------------------------------
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 4,915,441
-----------------------------------------------------------
Class B 1,727,162
-----------------------------------------------------------
Class C 1,850,846
-----------------------------------------------------------
Class K 97,775
-----------------------------------------------------------
Investor Class 11,558,093
-----------------------------------------------------------
Class A:
Net asset value per share $ 32.86
-----------------------------------------------------------
Offering price per share:
(Net asset value of $32.86 / 94.50%) $ 34.77
-----------------------------------------------------------
Class B:
Net asset value and offering price per share $ 32.17
-----------------------------------------------------------
Class C:
Net asset value and offering price per share $ 31.68
-----------------------------------------------------------
Class K:
Net asset value and offering price per share $ 30.26
-----------------------------------------------------------
Investor Class:
Net asset value and offering price per share $ 32.78
-----------------------------------------------------------
|
See accompanying notes which are an integral part of the financial statements.
FS-4
STATEMENT OF OPERATIONS
For the year ended March 31, 2005
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $86,132) $ 4,503,513
--------------------------------------------------------------------------
Dividends from affiliated money market funds (includes
securities lending income of $233,654 less rebates of
$149,265) 328,128
--------------------------------------------------------------------------
Total investment income 4,831,641
--------------------------------------------------------------------------
EXPENSES:
Advisory fees 3,081,975
--------------------------------------------------------------------------
Administrative services fees 147,061
--------------------------------------------------------------------------
Custodian fees 31,813
--------------------------------------------------------------------------
Distribution fees:
Class A 262,371
--------------------------------------------------------------------------
Class B 317,963
--------------------------------------------------------------------------
Class C 286,422
--------------------------------------------------------------------------
Class K 5,527
--------------------------------------------------------------------------
Investor Class 709,185
--------------------------------------------------------------------------
Transfer agent fees 1,118,558
--------------------------------------------------------------------------
Trustees' fees and retirement benefits 21,981
--------------------------------------------------------------------------
Other 350,998
--------------------------------------------------------------------------
Total expenses 6,333,854
--------------------------------------------------------------------------
Less:Fees waived, expenses reimbursed and expense offset
arrangements (61,240)
--------------------------------------------------------------------------
Net expenses 6,272,614
--------------------------------------------------------------------------
Net investment income (loss) (1,440,973)
--------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain from:
Investment securities 36,042,396
--------------------------------------------------------------------------
Foreign currencies 1,464
--------------------------------------------------------------------------
36,043,860
--------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities 132,139,600
--------------------------------------------------------------------------
Foreign currencies (68)
--------------------------------------------------------------------------
132,139,532
--------------------------------------------------------------------------
Net gain from investment securities and foreign currencies 168,183,392
--------------------------------------------------------------------------
Net increase in net assets resulting from operations $166,742,419
--------------------------------------------------------------------------
|
See accompanying notes which are an integral part of the financial statements.
FS-5
STATEMENT OF CHANGES IN NET ASSETS
For the years ended March 31, 2005 and 2004
2005
-----------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (1,440,973)
-----------------------------------------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign currencies 36,043,860
-----------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment securities and foreign currencies 132,139,532
-----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 166,742,419
-----------------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 90,854,796
-----------------------------------------------------------------------------------------------------------------------------
Class B 22,905,878
-----------------------------------------------------------------------------------------------------------------------------
Class C 31,055,665
-----------------------------------------------------------------------------------------------------------------------------
Class K 1,543,733
-----------------------------------------------------------------------------------------------------------------------------
Investor Class 36,044,906
-----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from share transactions 182,404,978
-----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 349,147,397
-----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 308,440,653
-----------------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment income (loss) of $(37,209) and $(35,667), respectively) $657,588,050
-----------------------------------------------------------------------------------------------------------------------------
|
2004
----------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (1,002,201)
----------------------------------------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign currencies 35,332,170
----------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment securities and foreign currencies 41,847,988
----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 76,177,957
----------------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 23,652,348
----------------------------------------------------------------------------------------------------------------------------
Class B 14,992,063
----------------------------------------------------------------------------------------------------------------------------
Class C 3,253,853
----------------------------------------------------------------------------------------------------------------------------
Class K 406,656
----------------------------------------------------------------------------------------------------------------------------
Investor Class (61,553,907)
----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from share transactions (19,248,987)
----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 56,928,970
----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 251,511,683
----------------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment income (loss) of $(37,209) and $(35,667), respectively) $308,440,653
----------------------------------------------------------------------------------------------------------------------------
|
See accompanying notes which are an integral part of the financial statements.
FS-6
NOTES TO FINANCIAL STATEMENTS
March 31, 2005
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Energy Fund, formerly INVESCO Energy Fund, (the "Fund") is a series
portfolio of AIM Sector Funds (the "Trust"). The Trust is a Delaware statutory
trust registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end series management investment company consisting of
seven separate 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 to seek capital growth. 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.
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.
FS-7
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. 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.
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 $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 % ------------------------- |
Prior to September 30, 2004, AIM had entered into a sub-advisory agreement
with INVESCO Institutional (N.A.), Inc. ("INVESCO") whereby AIM paid INVESCO
40% of the fee paid by the Fund to AIM. Effective September 30, 2004, the
sub-advisory agreement between AIM and INVESCO was terminated.
AIM has voluntarily 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 K and
Investor Class shares to 1.65%, 2.30%, 2.30%, 1.75% and 1.55% of average daily
net assets, respectively. 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 K and Investor Class shares to 2.00%, 2.65%, 2.65%, 2.10% and
1.90% of average daily net assets, respectively, through March 31, 2006. 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")
FS-8
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.
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 year ended March 31, 2005, AIM waived fees of $7,020.
For the year ended March 31, 2005, at the request of the Trustees of the
Trust, AMVESCAP agreed to reimburse $47,747 of expenses incurred by the Fund in
connection with market timing matters in the AIM Funds, including 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 year ended
March 31, 2005, AIM was paid $147,061.
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 year ended March
31, 2005, the Fund paid AISI $1,118,558.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class
B, Class C, Class K and Investor 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, Class K and Investor Class 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, 0.45% of the average daily net assets of Class K shares and 0.25% of
the average daily net assets of Investor Class shares. Of these amounts, up to
0.25% of the average daily net assets of the Class A, Class B, Class C, Class K
or Investor Class 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 year ended March 31, 2005, the Class A, Class B,
Class C, Class K and Investor Class shares paid ADI $262,371, $317,963,
$286,422, $5,527 and $709,185, 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 March 31, 2005, ADI advised the Fund that it retained $206,184 in
front-end sales commissions from the sale of Class A shares and $3,853,
$51,271, $9,483 and $0 from Class A, Class B, Class C and Class K 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--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 March 31, 2005.
INVESTMENTS OF DAILY AVAILABLE CASH BALANCES:
UNREALIZED
MARKET VALUE PURCHASES PROCEEDS APPRECIATION MARKET VALUE DIVIDEND REALIZED
FUND 03/31/04 AT COST FROM SALES (DEPRECIATION) 03/31/05 INCOME GAIN (LOSS)
---------------------------------------------------------------------------------------------------------------
Premier Portfolio --
Institutional Class* $13,197,327 $231,905,620 $(218,787,363) $-- $26,315,584 $243,739 $--
---------------------------------------------------------------------------------------------------------------
|
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
UNREALIZED
MARKET VALUE PURCHASES PROCEEDS APPRECIATION MARKET VALUE DIVIDEND REALIZED
FUND 03/31/04 AT COST FROM SALES (DEPRECIATION) 03/31/05 INCOME** GAIN (LOSS)
---------------------------------------------------------------------------------------------------------------
Premier Portfolio --
Institutional Class* $ 5,896,789 $263,659,667 $(269,556,456) $-- $ -- $ 84,389 $--
---------------------------------------------------------------------------------------------------------------
Total $19,094,116 $495,565,287 $(488,343,819) $-- $26,315,584 $328,128 $--
---------------------------------------------------------------------------------------------------------------
|
* On February 25, 2005 the Premier Portfolio investments were transferred from the original shares with no name designation to the newly structured share class designated as Institutional Class. **Net of rebates.
FS-9
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 year ended March 31, 2005, the Fund received credits from these arrangements which resulted in the reduction of the Fund's total expenses of $6,473.
NOTE 5--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 March 31, 2005, the Fund paid legal fees of $4,669 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 year ended March 31, 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.
For the year ended March 31, 2005, the Fund received dividends on cash
collateral of $84,389 for securities lending transactions, which are net of
rebates. There were no securities out on loan as of March 31, 2005.
FS-10
NOTE 8--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 years ended March 31, 2005 and 2004.
TAX COMPONENTS OF NET ASSETS:
As of March 31, 2005, the components of net assets on a tax basis were as follows:
2005
----------------------------------------------------
Undistributed long-term gain $ 7,914,067
----------------------------------------------------
Unrealized appreciation -- investments 193,733,920
----------------------------------------------------
Temporary book/tax differences (37,209)
----------------------------------------------------
Capital loss carryforward (5,969,955)
----------------------------------------------------
Shares of Beneficial Interest 461,947,227
----------------------------------------------------
Total net assets $657,588,050
----------------------------------------------------
|
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 treatment of certain corporate actions.
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
March 31, 2005 to utilizing $1,577,866 of capital loss carryforward in the
fiscal year ended March 31, 2006.
The Fund utilized $28,124,660 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 March 31, 2005 which expires as
follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
---------------------------------------------
March 31, 2006 $(1,450,461)
---------------------------------------------
March 31, 2007 (338,540)
---------------------------------------------
March 31, 2009 (4,180,954)
---------------------------------------------
Total capital loss carryforward $(5,969,955)
---------------------------------------------
|
* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. To the extent that unrealized gains as of November 24, 2003, the date of the reorganization of AIM Global Energy Fund into the Fund, are realized on securities held in each fund at such date, the capital loss carryforward may be further limited for up to five years from the date of the reorganization.
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 year ended
March 31, 2005 was $353,655,427 and $186,602,925, respectively.
At the request of the Trustees, AIM recovered third party research credits
during the year ended March 31, 2005, in the amount of $10,818. The research
credits were recorded as realized gains.
UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENT SECURITIES ON A TAX BASIS
--------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $194,201,517
--------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (467,597)
--------------------------------------------------------------------------
Net unrealized appreciation of investment securities $193,733,920
--------------------------------------------------------------------------
|
Cost of investments for tax purposes is $463,195,086.
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of expenses related to the plan of reorganization, net operating losses and foreign currency transactions on March 31, 2005, undistributed net investment income (loss) was increased by $1,439,431, undistributed net realized gain (loss) decreased by $1,464 and shares of beneficial interest decreased by $1,437,967. This reclassification had no effect on the net assets of the Fund.
FS-11
NOTE 11--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A shares, Class B shares, Class C shares, Class K shares and Investor 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 K shares and Investor Class shares are sold at net asset value. Under certain circumstances, Class A shares and Class K 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 MARCH 31,
----------------------------------------------------
2005 2004
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------------------------------------------
Sold:
Class A 4,287,940 $ 122,706,107 851,516 $ 16,541,002
---------------------------------------------------------------------------------------------------------------
Class B 1,461,350 40,038,277 220,684 4,484,414
---------------------------------------------------------------------------------------------------------------
Class C 1,555,291 42,670,079 574,044 10,662,837
---------------------------------------------------------------------------------------------------------------
Class K 102,116 2,738,142 103,035 1,737,485
---------------------------------------------------------------------------------------------------------------
Investor Class 5,562,598 152,006,788 4,652,095 88,072,923
---------------------------------------------------------------------------------------------------------------
Issued in connection with acquisitions:/(b)/
Class A -- -- 967,661 17,431,821
---------------------------------------------------------------------------------------------------------------
Class B -- -- 733,587 13,048,685
---------------------------------------------------------------------------------------------------------------
Class C -- -- 160,292 2,807,811
---------------------------------------------------------------------------------------------------------------
Automatic conversion of Class B shares to Class A shares:
Class A 144,941 3,897,072 31,167 642,445
---------------------------------------------------------------------------------------------------------------
Class B (147,616) (3,897,072) (31,592) (642,445)
---------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (1,351,995) (35,748,383) (557,791) (10,962,920)
---------------------------------------------------------------------------------------------------------------
Class B (505,655) (13,235,327) (93,467) (1,898,591)
---------------------------------------------------------------------------------------------------------------
Class C (462,765) (11,614,414) (557,475) (10,216,795)
---------------------------------------------------------------------------------------------------------------
Class K (48,136) (1,194,409) (77,842) (1,330,829)
---------------------------------------------------------------------------------------------------------------
Investor Class (4,375,872) (115,961,882) (8,026,327) (149,626,830)
---------------------------------------------------------------------------------------------------------------
6,222,197 $ 182,404,978 (1,050,413) $ (19,248,987)
---------------------------------------------------------------------------------------------------------------
|
/(a)/There is one entity that is a record owner of more than 5% of the
outstanding shares of the Fund and owns 16% 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 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 a portion of the shares owned of record by this entity are also owned
beneficially.
/(b)/As of the opening of business on November 24, 2003, the Fund acquired all
of the net assets of AIM Global Energy Fund pursuant to a plan of
reorganization approved by the Trustees of the Fund on June 9, 2003 and of
AIM Global Energy Fund shareholders on October 28, 2003. The acquisition
was accomplished by a tax-free exchange of 1,861,540 shares of the Fund for
2,594,959 shares of of AIM Global Energy Fund outstanding as of the close
of business on November 21, 2003. AIM Global Energy Fund's net assets at
that date of $33,288,317, including $87,465 of unrealized appreciation,
were combined with those of the Fund. The aggregate net assets of the Fund
immediately before the acquisition were $227,218,065.
FS-12
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
-------------------------------------
YEAR ENDED MARCH 31,
-------------------------------------
2005 2004 2003
-----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 22.27 $ 16.85 $ 19.26
-----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)/(a)/ (0.05)/(a)/ (0.05)/(a)(b)/
-----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 10.68 5.47 (2.36)
-----------------------------------------------------------------------------------------------------------------
Total from investment operations 10.59 5.42 (2.41)
-----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 32.86 $ 22.27 $ 16.85
-----------------------------------------------------------------------------------------------------------------
Total return/(c)/ 47.55% 32.17% (12.51)%
-----------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $161,529 $40,847 $ 9,131
-----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.47%/(d)/ 1.66% 1.46%
-----------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.48%/(d)/ 1.74% 1.46%
-----------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (0.32)%/(d)/ (0.25)% (0.33)%
-----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 45% 123% 144%
-----------------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were
reclassified from accumulated net investment income (loss) to paid in
capital. Had net investment income (loss) per share been calculated using
the current method, which is before reclassification of net operating
losses, net investment income (loss) per share would have been $(0.05) for
the year ended March 31, 2003.
/(c)/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.
/(d)/Ratios are based on average daily net assets of $74,963,183.
CLASS B
------------------------------------
YEAR ENDED MARCH 31,
------------------------------------
2005 2004 2003
----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 21.94 $ 16.71 $ 19.26
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.25)/(a)/ (0.18)/(a)/ (0.17)/(a)(b)/
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 10.48 5.41 (2.38)
----------------------------------------------------------------------------------------------------------------
Total from investment operations 10.23 5.23 (2.55)
----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 32.17 $ 21.94 $ 16.71
----------------------------------------------------------------------------------------------------------------
Total return/(c)/ 46.63% 31.30% (13.24)%
----------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $55,559 $20,164 $ 1,502
----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.12%/(d)/ 2.31% 2.33%
----------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.13%/(d)/ 2.59% 2.41%
----------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (0.97)%/(d)/ (0.90)% (1.16)%
----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 45% 123% 144%
----------------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were
reclassified from accumulated net investment income (loss) to paid in
capital. Had net investment income (loss) per share been calculated using
the current method, which is before reclassification of net operating
losses, net investment income (loss) per share would have been $(0.17) for
the year ended March 31, 2003.
/(c)/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.
/(d)/Ratios are based on average daily net assets of $31,796,265.
FS-13
NOTE 12--FINANCIAL HIGHLIGHTS-(CONTINUED)
CLASS C
-----------------------------------------------------------
YEAR ENDED MARCH 31,
-----------------------------------------------------------
2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 21.60 $ 16.45 $ 18.98 $ 19.58
----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.25)/(a)/ (0.17)/(a)/ (0.11)/(a)(b)/ (0.07)/(b)/
----------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 10.33 5.32 (2.42) (0.53)
----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 10.08 5.15 (2.53) (0.60)
----------------------------------------------------------------------------------------------------------------------------------
Less distributions from net realized gains -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 31.68 $ 21.60 $ 16.45 $ 18.98
----------------------------------------------------------------------------------------------------------------------------------
Total return/(c)/ 46.67% 31.31% (13.33)% (3.06)%
----------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $58,626 $16,383 $ 9,566 $12,324
----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (including interest expense):
With fee waivers and/or expense reimbursements 2.12%/(d)/ 2.31% 2.33% 2.27%
----------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.13%/(d)/ 2.59% 2.53% 2.27%
----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (0.97)%/(d)/ (0.90)% (1.22)% (1.08)%
----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 45% 123% 144% 144%
----------------------------------------------------------------------------------------------------------------------------------
|
-------
-------
2001
----------------------------------------------------------------------------------
Net asset value, beginning of period $17.39
----------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)/(b)/
----------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 3.67
----------------------------------------------------------------------------------
Total from investment operations 3.62
----------------------------------------------------------------------------------
Less distributions from net realized gains (1.43)
----------------------------------------------------------------------------------
Net asset value, end of period $19.58
----------------------------------------------------------------------------------
Total return/(c)/ 22.35%
----------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $8,704
----------------------------------------------------------------------------------
Ratio of expenses to average net assets (including interest expense):
With fee waivers and/or expense reimbursements 2.05%
----------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.05%
----------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (1.10)%
----------------------------------------------------------------------------------
Portfolio turnover rate 166%
----------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current
method, which is before reclassification of net operating losses, net
investment income (loss) per share would have been $(0.11), $(0.16) and
$(0.10) for the years ended March 31, 2003, 2002 and 2001, respectively.
/(c)/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.
/(d)/Ratios based on average daily net assets of $28,642,181.
FS-14
NOTE 12--FINANCIAL HIGHLIGHTS-(CONTINUED)
CLASS K
---------------------------------------------------------
YEAR ENDED MARCH 31,
---------------------------------------------------
2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $20.53 $15.55 $ 17.98 $ 19.62
-----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10)/(a)/ (0.06)/(a)/ (0.14)/(a)(b)/ (0.05)/(b)/
-----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 9.83 5.04 (2.29) (1.59)
-----------------------------------------------------------------------------------------------------------------------------
Total from investment operations 9.73 4.98 (2.43) (1.64)
-----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $30.26 $20.53 $ 15.55 $ 17.98
-----------------------------------------------------------------------------------------------------------------------------
Total return/(c)/ 47.39% 32.03% (13.52)% (8.36)%
-----------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,959 $ 899 $ 289 $ 37
-----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.57%/(d)/ 1.76% 2.07% 11.62%
-----------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.58%/(d)/ 3.70% 5.36% 11.62%
-----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (0.42)%/(d)/ (0.35)% (0.90)% (10.45)%
-----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate/(f)/ 45% 123% 144% 144%
-----------------------------------------------------------------------------------------------------------------------------
|
----------------
NOVEMBER 30, 2000
(DATE SALES COMMENCED)
TO MARCH 31,
----------------------
2001
-----------------------------------------------------------------------------------------
Net asset value, beginning of period $16.76
-----------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15)/(b)/
-----------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 3.01
-----------------------------------------------------------------------------------------
Total from investment operations 2.86
-----------------------------------------------------------------------------------------
Net asset value, end of period $19.62
-----------------------------------------------------------------------------------------
Total return/(c)/ 17.06%
-----------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1
-----------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 3.11%/(e)/
-----------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.11%/(e)/
-----------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (2.34)%/(e)/
-----------------------------------------------------------------------------------------
Portfolio turnover rate/(f)/ 166%
-----------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current
method, which is before reclassification of net operating losses, net
investment income (loss) per share would have been $(0.14), $(0.27) and
$(0.15) for the years ended March 31, 2003, 2002 and 2001, respectively.
/(c)/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.
/(d)/Ratios are based on average daily net assets of $1,228,327.
/(e)/Annualized.
/(f)/Not annualized for periods less than one year.
--------------------------------
--------------------------------
2005 2004
----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 22.19 $ 16.81
----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)/(a)/ (0.07)/(a)/
----------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 10.65 5.45
----------------------------------------------------------------------------------------------------
Total from investment operations 10.59 5.38
----------------------------------------------------------------------------------------------------
Less distributions from net realized gains -- --
----------------------------------------------------------------------------------------------------
Net asset value, end of period $ 32.78 $ 22.19
----------------------------------------------------------------------------------------------------
Total return/(c)/ 47.72% 32.00%
----------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $378,915 $230,148
----------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.37%/(d)(e)/ 1.76%
----------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (0.22)%/(d)/ (0.35)%
----------------------------------------------------------------------------------------------------
Portfolio turnover rate 45% 123%
----------------------------------------------------------------------------------------------------
|
INVESTOR CLASS
---------------------------------------------
YEAR ENDED MARCH 31,
---------------------------------------------
2003 2002 2001
------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 19.26 $ 19.73 $ 17.40
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10)/(a)(b)/ (0.07)/(a)(b)/ (0.08)/(a)(b)/
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (2.35) (0.40) 3.84
------------------------------------------------------------------------------------------------------------------------
Total from investment operations (2.45) (0.47) 3.76
------------------------------------------------------------------------------------------------------------------------
Less distributions from net realized gains -- -- (1.43)
------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.81 $ 19.26 $ 19.73
------------------------------------------------------------------------------------------------------------------------
Total return/(c)/ (12.72)% (2.38)% 23.09%
------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $231,023 $358,439 $445,845
------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.69% 1.53% 1.41%
------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (0.57)% (0.34)% (0.35)%
------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 144% 144% 166%
------------------------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were
reclassified from accumulated net investment income (loss) to paid in
capital. Had net investment income (loss) per share been calculated using
the current method, which is before reclassification of net operating
losses, net investment income (loss) per share would have been $(0.10),
$(0.07) and $(0.08) for the years ended March 31, 2003, 2002 and 2001,
respectively.
/(c)/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.
/(d)/Ratios are based on average daily net assets of $283,673,891.
/(e)/After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.38%.
FS-15
NOTE 13--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) and A I M Advisors, Inc. ("AIM") (the Fund's
investment advisor) reached final settlements with certain regulators,
including without limitation the Securities and Exchange Commission ("SEC"),
the New York Attorney General ("NYAG") and the Colorado Attorney General
("COAG"), 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. 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 they 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 and AIM breached various Federal and state
securities, business and consumer protection laws. On the same date, A I M
Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached a
final settlement with the SEC to resolve an investigation relating to market
timing activity and related issues in the AIM Funds. The SEC also alleged that
ADI violated various Federal securities laws. The SEC also has settled related
market timing enforcement actions brought against certain former officers and
employees of IFG.
Under the terms of the settlements, IFG agreed to pay a total of $325
million, of which $110 million is civil penalties. Of this $325 million total
payment, half has been paid 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, all of which has been paid. The entire $325
million IFG settlement fund will be made 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 fund by AIM and
ADI will be made 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. The IFG and AIM
settlement 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. The settlement funds 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 certain equity and balanced 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, not to increase certain management fees and to
provide more information to investors regarding fees.
Under the terms of the settlements, AIM is undertaking certain governance and
compliance reforms, including maintaining an internal controls committee and
retaining an independent compliance consultant and a corporate ombudsman. 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 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.
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
such Funds related to market timing matters.
The SEC has also settled market timing enforcement actions 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), 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 these settlements, the SEC ordered these
individuals to pay restitution and civil penalties in various amounts and
prohibited them from associating with, or serving as an officer or director of,
an investment advisor, broker, dealer and/or investment company, as applicable,
for certain periods of time.
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 certain equity and balanced 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 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 payments 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 Regulatory Inquiries and Pending
Litigation described below may have on AIM, ADI or the Fund.
REGULATORY INQUIRIES AND PENDING LITIGATION
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 but not limited to revenue sharing and
directed-brokerage arrangements, investments in securities of other registered
investment companies, contractual plans, issues related to Section 529 college
savings plans, procedures for locating lost security holders and participation
in class action settlements.
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.
FS-16
NOTE 13--LEGAL PROCEEDINGS-(CONTINUED)
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 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, the U.S.
Postal Inspection Service and the Commodity Futures Trading Commission, some of
which concern one or more AIM Funds. AIM is providing full cooperation with
respect to these inquiries.
Pending Regulatory Civil Action Alleging Market Timing
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 (S) 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 proceedings, 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, 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.
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, 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 ("ERISA") purportedly brought on behalf of participants in
AMVESCAP's 401(k) plan. The plaintiffs in two of the underlying lawsuits
continue to seek remand of their lawsuit to state court.
FS-17
NOTE 13--LEGAL PROCEEDINGS-(CONTINUED)
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. Based on a recent court decision, the state court
action has been removed to Federal court.
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. All of these lawsuits have been transferred to the United States District Court for the Southern District of Texas, Houston Division and subsequently consolidated for pre-trial purposes into one lawsuit.
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 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. ("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. These actions have been consolidated for pre-trial purposes.
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. 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 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.
* * * * * * * * * * * * * * * * 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.
FS-18
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees
and Shareholders of AIM Financial Services 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 Financial Services Fund, formerly known as INVESCO Financial Services Fund (one of the funds constituting AIM Sector Funds, hereafter referred to as the "Fund") at March 31, 2005, 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 periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with 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 March 31, 2005 by correspondence with the custodian, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP May 20, 2005 Houston, Texas |
FS-19
FINANCIALS
SCHEDULE OF INVESTMENTS
March 31, 2005
MARKET
SHARES VALUE
----------------------------------------------------------------
COMMON STOCKS-96.82%
ASSET MANAGEMENT & CUSTODY
BANKS-8.81%
Bank of New York Co., Inc. (The) 1,271,700 $ 36,942,885
----------------------------------------------------------------
Federated Investors, Inc. -- Class B 454,050 12,854,156
----------------------------------------------------------------
Franklin Resources, Inc. 229,000 15,720,850
----------------------------------------------------------------
State Street Corp. 123,000 5,377,560
----------------------------------------------------------------
70,895,451
----------------------------------------------------------------
CONSUMER FINANCE-3.17%
Capital One Financial Corp. 341,200 25,511,524
----------------------------------------------------------------
DIVERSIFIED BANKS-15.30%
Anglo Irish Bank Corp. PLC (Ireland)/(a)/ 416,300 10,406,322
----------------------------------------------------------------
Bank of America Corp. 923,812 40,740,109
----------------------------------------------------------------
U.S. Bancorp 534,600 15,407,172
----------------------------------------------------------------
Wachovia Corp. 521,200 26,534,292
----------------------------------------------------------------
Wells Fargo & Co. 502,200 30,031,560
----------------------------------------------------------------
123,119,455
----------------------------------------------------------------
DIVERSIFIED CAPITAL MARKETS-1.25%
UBS A.G. (Switzerland) 119,000 10,043,600
----------------------------------------------------------------
DIVERSIFIED COMMERCIAL SERVICES-1.08%
H&R Block, Inc. 172,000 8,699,760
----------------------------------------------------------------
INSURANCE BROKERS-4.42%
Aon Corp. 637,700 14,565,068
----------------------------------------------------------------
Marsh & McLennan Cos., Inc. 690,000 20,989,800
----------------------------------------------------------------
35,554,868
----------------------------------------------------------------
INVESTMENT BANKING & BROKERAGE-10.17%
Goldman Sachs Group, Inc. (The) 45,200 4,971,548
----------------------------------------------------------------
Lehman Brothers Holdings Inc. 111,700 10,517,672
----------------------------------------------------------------
Merrill Lynch & Co., Inc. 665,600 37,672,960
----------------------------------------------------------------
Morgan Stanley 501,400 28,705,150
----------------------------------------------------------------
81,867,330
----------------------------------------------------------------
LIFE & HEALTH INSURANCE-2.48%
Prudential Financial, Inc. 347,000 19,917,800
----------------------------------------------------------------
|
MARKET
SHARES VALUE
---------------------------------------------------------------------
MULTI-LINE INSURANCE-9.41%
American International Group, Inc. 342,052 $ 18,953,101
---------------------------------------------------------------------
Genworth Financial Inc. -- Class A 556,500 15,314,880
---------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 604,300 41,430,808
---------------------------------------------------------------------
75,698,789
---------------------------------------------------------------------
OTHER DIVERSIFIED FINANCIAL
SERVICES-12.66%
Citigroup Inc. 1,179,801 53,020,257
---------------------------------------------------------------------
JPMorgan Chase & Co. 1,412,472 48,871,531
---------------------------------------------------------------------
101,891,788
---------------------------------------------------------------------
PROPERTY & CASUALTY INSURANCE-9.14%
ACE Ltd. (Cayman Islands) 678,200 27,989,314
---------------------------------------------------------------------
Chubb Corp. (The) 74,000 5,865,980
---------------------------------------------------------------------
MBIA Inc. 231,000 12,076,680
---------------------------------------------------------------------
SAFECO Corp. 323,000 15,733,330
---------------------------------------------------------------------
St. Paul Travelers Cos., Inc. (The) 323,467 11,880,943
---------------------------------------------------------------------
73,546,247
---------------------------------------------------------------------
REGIONAL BANKS-6.18%
Cullen/Frost Bankers, Inc. 197,000 8,894,550
---------------------------------------------------------------------
Fifth Third Bancorp 484,050 20,804,469
---------------------------------------------------------------------
North Fork Bancorp., Inc. 478,500 13,273,590
---------------------------------------------------------------------
Zions Bancorp. 98,200 6,777,764
---------------------------------------------------------------------
49,750,373
---------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE-12.75%
Fannie Mae 956,500 52,081,425
---------------------------------------------------------------------
Freddie Mac 543,700 34,361,840
---------------------------------------------------------------------
PMI Group, Inc. (The) 425,600 16,177,056
---------------------------------------------------------------------
102,620,321
---------------------------------------------------------------------
Total Common Stocks
(Cost $639,955,935) 779,117,306
---------------------------------------------------------------------
MONEY MARKET FUNDS-3.15%
Premier Portfolio-Institutional Class
(Cost $25,338,683)/(b)/ 25,338,683 25,338,683
---------------------------------------------------------------------
TOTAL INVESTMENTS-99.97% (Cost $665,294,618) 804,455,989
---------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.03% 205,870
---------------------------------------------------------------------
NET ASSETS-100.00% $804,661,859
---------------------------------------------------------------------
|
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 market value of this security at March 31, 2005 represented 1.29% of
the Fund's Total Investments. See Note 1A.
/(b)/ The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
See accompanying notes which are an integral part of the financial statements.
FS-20
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2005
ASSETS:
Investments, at market value (cost $639,955,935) $779,117,306
-----------------------------------------------------------------------------------
Investments in affiliated money market funds (cost $25,338,683) 25,338,683
-----------------------------------------------------------------------------------
Total investments (cost $665,294,618) 804,455,989
-----------------------------------------------------------------------------------
Receivables for:
Fund shares sold 1,917,801
-----------------------------------------------------------------------------------
Dividends 1,350,635
-----------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 142,343
-----------------------------------------------------------------------------------
Other assets 33,542
-----------------------------------------------------------------------------------
Total assets 807,900,310
-----------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 2,396,809
-----------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 189,629
-----------------------------------------------------------------------------------
Accrued distribution fees 234,675
-----------------------------------------------------------------------------------
Accrued trustees' fees 5,674
-----------------------------------------------------------------------------------
Accrued transfer agent fees 326,819
-----------------------------------------------------------------------------------
Accrued operating expenses 84,845
-----------------------------------------------------------------------------------
Total liabilities 3,238,451
-----------------------------------------------------------------------------------
Net assets applicable to shares outstanding $804,661,859
-----------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Shares of beneficial interest $616,411,856
-----------------------------------------------------------------------------------
Undistributed net investment income 3,092,198
-----------------------------------------------------------------------------------
Undistributed net realized gain from investment securities and foreign
currencies 45,996,434
-----------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign
currencies 139,161,371
-----------------------------------------------------------------------------------
$804,661,859
-----------------------------------------------------------------------------------
|
NET ASSETS:
Class A $ 81,761,267
-----------------------------------------------------------
Class B $ 65,389,757
-----------------------------------------------------------
Class C $ 23,931,856
-----------------------------------------------------------
Class K $ 1,128,636
-----------------------------------------------------------
Investor Class $632,450,343
-----------------------------------------------------------
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 3,010,304
-----------------------------------------------------------
Class B 2,413,212
-----------------------------------------------------------
Class C 902,906
-----------------------------------------------------------
Class K 42,462
-----------------------------------------------------------
Investor Class 23,170,441
-----------------------------------------------------------
Class A:
Net asset value per share $ 27.16
-----------------------------------------------------------
Offering price per share:
(Net asset value of $27.16 / 94.50%) $ 28.74
-----------------------------------------------------------
Class B:
Net asset value and offering price per share $ 27.10
-----------------------------------------------------------
Class C:
Net asset value and offering price per share $ 26.51
-----------------------------------------------------------
Class K:
Net asset value and offering price per share $ 26.58
-----------------------------------------------------------
Investor Class:
Net asset value and offering price per share $ 27.30
-----------------------------------------------------------
|
See accompanying notes which are an integral part of the financial statements.
FS-21
STATEMENT OF OPERATIONS
For the year ended March 31, 2005
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $275,832) $ 19,927,892
-----------------------------------------------------------------------------------------------------
Dividends from affiliated money market funds 580,830
-----------------------------------------------------------------------------------------------------
Total investment income 20,508,722
-----------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 6,238,104
-----------------------------------------------------------------------------------------------------
Administrative services fees 305,430
-----------------------------------------------------------------------------------------------------
Custodian fees 70,471
-----------------------------------------------------------------------------------------------------
Distribution fees:
Class A 337,588
-----------------------------------------------------------------------------------------------------
Class B 787,233
-----------------------------------------------------------------------------------------------------
Class C 306,114
-----------------------------------------------------------------------------------------------------
Class K 6,274
-----------------------------------------------------------------------------------------------------
Investor Class 1,840,273
-----------------------------------------------------------------------------------------------------
Transfer agent fees 2,698,643
-----------------------------------------------------------------------------------------------------
Trustees' fees and retirement benefits 39,482
-----------------------------------------------------------------------------------------------------
Other 472,069
-----------------------------------------------------------------------------------------------------
Total expenses 13,101,681
-----------------------------------------------------------------------------------------------------
Less:Fees waived, expenses reimbursed and expense offset arrangements (141,969)
-----------------------------------------------------------------------------------------------------
Net expenses 12,959,712
-----------------------------------------------------------------------------------------------------
Net investment income 7,549,010
-----------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain from:
Investment securities 92,852,002
-----------------------------------------------------------------------------------------------------
Foreign currencies 67,088
-----------------------------------------------------------------------------------------------------
92,919,090
-----------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities (135,097,683)
-----------------------------------------------------------------------------------------------------
Foreign currencies (8,352)
-----------------------------------------------------------------------------------------------------
(135,106,035)
-----------------------------------------------------------------------------------------------------
Net gain (loss) from investment securities and foreign currencies (42,186,945)
-----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (34,637,935)
-----------------------------------------------------------------------------------------------------
|
See accompanying notes which are an integral part of the financial statements.
FS-22
STATEMENT OF CHANGES IN NET ASSETS
For the years ended March 31, 2005 and 2004
2005
--------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 7,549,010
--------------------------------------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign currencies 92,919,090
--------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investment securities and foreign currencies (135,106,035)
--------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (34,637,935)
--------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (609,121)
--------------------------------------------------------------------------------------------------------------------------
Class B (140,374)
--------------------------------------------------------------------------------------------------------------------------
Class C (54,592)
--------------------------------------------------------------------------------------------------------------------------
Class K (7,095)
--------------------------------------------------------------------------------------------------------------------------
Investor Class (5,291,880)
--------------------------------------------------------------------------------------------------------------------------
Total distributions from net investment income (6,103,062)
--------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (7,597,576)
--------------------------------------------------------------------------------------------------------------------------
Class B (6,185,077)
--------------------------------------------------------------------------------------------------------------------------
Class C (2,405,416)
--------------------------------------------------------------------------------------------------------------------------
Class K (101,359)
--------------------------------------------------------------------------------------------------------------------------
Investor Class (58,366,582)
--------------------------------------------------------------------------------------------------------------------------
Total distributions from net realized gains (74,656,010)
--------------------------------------------------------------------------------------------------------------------------
Decrease in net assets resulting from distributions (80,759,072)
--------------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (18,261,084)
--------------------------------------------------------------------------------------------------------------------------
Class B (16,948,631)
--------------------------------------------------------------------------------------------------------------------------
Class C (10,921,389)
--------------------------------------------------------------------------------------------------------------------------
Class K (332,292)
--------------------------------------------------------------------------------------------------------------------------
Investor Class (124,630,423)
--------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from share transactions (171,093,819)
--------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (286,490,826)
--------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 1,091,152,685
--------------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment income of $3,092,198 and $1,619,762, respectively) $ 804,661,859
--------------------------------------------------------------------------------------------------------------------------
|
2004
-------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 4,683,539
-------------------------------------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign currencies 110,789,671
-------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investment securities and foreign currencies 212,794,322
-------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 328,267,532
-------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (32,046)
-------------------------------------------------------------------------------------------------------------------------
Class B (173)
-------------------------------------------------------------------------------------------------------------------------
Class C (1,386)
-------------------------------------------------------------------------------------------------------------------------
Class K (4,801)
-------------------------------------------------------------------------------------------------------------------------
Investor Class (2,983,902)
-------------------------------------------------------------------------------------------------------------------------
Total distributions from net investment income (3,022,308)
-------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A --
-------------------------------------------------------------------------------------------------------------------------
Class B --
-------------------------------------------------------------------------------------------------------------------------
Class C --
-------------------------------------------------------------------------------------------------------------------------
Class K --
-------------------------------------------------------------------------------------------------------------------------
Investor Class --
-------------------------------------------------------------------------------------------------------------------------
Total distributions from net realized gains --
-------------------------------------------------------------------------------------------------------------------------
Decrease in net assets resulting from distributions (3,022,308)
-------------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 91,472,322
-------------------------------------------------------------------------------------------------------------------------
Class B 79,803,551
-------------------------------------------------------------------------------------------------------------------------
Class C 21,470,386
-------------------------------------------------------------------------------------------------------------------------
Class K (312,490)
-------------------------------------------------------------------------------------------------------------------------
Investor Class (178,640,151)
-------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from share transactions 13,793,618
-------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 339,038,842
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 752,113,843
-------------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment income of $3,092,198 and $1,619,762, respectively) $1,091,152,685
-------------------------------------------------------------------------------------------------------------------------
|
See accompanying notes which are an integral part of the financial statements.
FS-23
NOTES TO FINANCIAL STATEMENTS
March 31, 2005
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Financial Services Fund, formerly INVESCO Financial Services Fund, (the
"Fund") is a series portfolio of AIM Sector Funds (the "Trust"). The Trust is a
Delaware statutory trust registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end series management investment
company consisting of seven separate 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 to seek capital growth. 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.
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.
FS-24
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. 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.
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 $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% ------------------------- |
Prior to September 30, 2004, AIM had entered into a sub-advisory agreement
with INVESCO Institutional (N.A.), Inc. ("INVESCO") whereby AIM paid INVESCO
40% of the fee paid by the Fund to AIM. Effective September 30, 2004, the
sub-advisory agreement between AIM and INVESCO was terminated.
AIM has voluntarily 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 K and
Investor Class shares to 1.40%, 2.05%, 2.05%, 1.50% and 1.30% of average daily
net assets, respectively. 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 K and Investor Class shares to 2.00%, 2.65%, 2.65%, 2.10% and
1.90% of average daily net assets, respectively, through March 31, 2006. 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")
FS-25
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.
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. 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 year ended March 31, 2005, AIM waived fees of $15,532.
For the year ended March 31, 2005, at the request of the Trustees of the
Trust, AMVESCAP agreed to reimburse $113,345 of expenses incurred by the Fund
in connection with market timing matters in the AIM Funds, including 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 year ended
March 31, 2005, AIM was paid $305,430.
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 year ended March
31, 2005, the Fund paid AISI $2,698,643.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class
B, Class C, Class K and Investor 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, Class K and Investor Class 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, 0.45% of the average daily net assets of Class K shares and 0.25% of
the average daily net assets of Investor Class shares. Of these amounts, up to
0.25% of the average daily net assets of the Class A, Class B, Class C, Class K
or Investor Class 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 year ended March 31, 2005, the Class A, Class B,
Class C, Class K and Investor Class shares paid ADI $337,588, $787,233,
$306,114, $6,274 and $1,840,273, 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 March 31, 2005, ADI advised the Fund that it retained $21,120 in
front-end sales commissions from the sale of Class A shares and $203, $11,539,
$3,138 and $0 from Class A, Class B, Class C and Class K 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--INVESTMENTS IN AFFILIATES
The Fund is permitted, pursuant to an exemptive order from the Securities and Exchange Commission ("SEC") and approved procedures by the Board of Trustees, to invest daily available cash balances in affiliated money market funds. The Fund and the money market fund below have the same investment advisor and therefore, are considered to be affiliated. The table below shows the transactions in and earnings from investments in an affiliated money market fund for the year ended March 31, 2005.
INVESTMENTS OF DAILY AVAILABLE CASH BALANCES:
UNREALIZED
MARKET VALUE PURCHASES PROCEEDS FROM APPRECIATION MARKET VALUE DIVIDEND
FUND 03/31/04 AT COST SALES (DEPRECIATION) 03/31/05 INCOME
------------------------------------------------------------------------------------------------------------------------
Premier Portfolio -- Institutional Class* $15,428,440 $262,481,563 $(252,571,320) $-- $25,338,683 $580,830
------------------------------------------------------------------------------------------------------------------------
|
REALIZED
FUND GAIN (LOSS)
-----------------------------------------------------
Premier Portfolio -- Institutional Class* $--
-----------------------------------------------------
|
* On February 25, 2005, the Premier Portfolio investments were transferred from the original share class with no name designation to the newly structured share class designated as Institutional Class.
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 March 31, 2005, the Fund engaged in purchases and sales of securities of $4,252,743 and $0, respectively.
FS-26
NOTE 5--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 year ended March 31, 2005, the Fund received credits from these arrangements which resulted in the reduction of the Fund's total expenses of $13,092.
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 March 31, 2005, the Fund paid legal fees of $6,684 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
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 March 31, 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 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years ended March 31, 2005 and 2004 were as follows:
2005 2004
-----------------------------------------------
Distributions paid from:
Ordinary income $16,719,790 $3,022,308
-----------------------------------------------
Long-term capital gain 64,039,282 --
-----------------------------------------------
Total distributions $80,759,072 $3,022,308
-----------------------------------------------
|
TAX COMPONENTS OF NET ASSETS:
As of March 31, 2005, the components of net assets on a tax basis were as follows:
2005
----------------------------------------------------
Undistributed ordinary income $ 3,220,360
----------------------------------------------------
Undistributed long-term gain 46,597,065
----------------------------------------------------
Unrealized appreciation -- investments 138,560,740
----------------------------------------------------
Temporary book/tax differences (128,162)
----------------------------------------------------
Shares of beneficial interest 616,411,856
----------------------------------------------------
Total net assets $804,661,859
----------------------------------------------------
|
FS-27
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is due to differences in the timing of recognition of gains and
losses on investments for tax and book purposes. The Fund's unrealized
appreciation (depreciation) difference is attributable primarily to the
deferral of losses on wash sales.
The temporary book/tax differences are a result of timing differences between
book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the trustee deferral of compensation and
retirement plan expenses.
The Fund does not have a capital loss carryforward as of March 31, 2005.
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 year ended
March 31, 2005 was $478,435,076 and $733,512,520, respectively.
At the request of the Trustees, AIM recovered third party research credits
during the year ended March 31, 2005, in the amount of $24,776. These research
credits were recorded as realized gains.
UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENT SECURITIES ON A TAX BASIS
--------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $167,640,531
--------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (29,079,791)
--------------------------------------------------------------------------
Net unrealized appreciation of investment securities $138,560,740
--------------------------------------------------------------------------
|
Cost of investments for tax purposes is $665,895,249.
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of foreign currency transactions, the use of a portion of the proceeds from redemptions as distributions and expenses related to the plan of reorganization on March 31, 2005, undistributed net investment income was increased by $26,488, undistributed net realized gain was decreased by $4,781,713 and shares of beneficial interest increased by $4,755,225. This reclassification had no effect on the net assets of the Fund.
FS-28
NOTE 11--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A shares, Class B shares, Class C shares, Class K shares and Investor 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 K shares and Investor Class shares are sold at net asset value. Under certain circumstances, Class A shares and Class K 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 MARCH 31,
-----------------------------------------------------
2005 2004
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------
Sold:
Class A 266,900 $ 7,830,418 323,245 $ 9,111,783
----------------------------------------------------------------------------------------------------------------
Class B 101,606 2,984,407 72,301 2,133,683
----------------------------------------------------------------------------------------------------------------
Class C 70,133 2,026,953 490,530 12,968,828
----------------------------------------------------------------------------------------------------------------
Class K 18,153 527,485 76,064 1,972,353
----------------------------------------------------------------------------------------------------------------
Investor Class 1,488,790 43,945,228 9,260,845 236,882,896
----------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 266,982 7,643,700 1,032 27,971
----------------------------------------------------------------------------------------------------------------
Class B 206,921 5,922,067 6 161
----------------------------------------------------------------------------------------------------------------
Class C 82,697 2,314,688 43 1,136
----------------------------------------------------------------------------------------------------------------
Class K 3,869 108,455 181 4,801
----------------------------------------------------------------------------------------------------------------
Investor Class 2,145,370 61,722,150 105,190 2,862,271
----------------------------------------------------------------------------------------------------------------
Issued in connection with acquisitions:/(b)/
Class A -- -- 3,643,293 99,414,455
----------------------------------------------------------------------------------------------------------------
Class B -- -- 3,213,587 87,853,557
----------------------------------------------------------------------------------------------------------------
Class C -- -- 975,439 26,155,491
----------------------------------------------------------------------------------------------------------------
Automatic conversion of Class B shares to Class A shares:
Class A 158,966 4,634,274 63,785 1,907,801
----------------------------------------------------------------------------------------------------------------
Class B (159,324) (4,634,274) (63,734) (1,907,801)
----------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (1,308,010) (38,369,476) (650,835) (18,989,688)
----------------------------------------------------------------------------------------------------------------
Class B (725,853) (21,220,831) (277,826) (8,276,049)
----------------------------------------------------------------------------------------------------------------
Class C (531,289) (15,263,030) (653,670) (17,655,069)
----------------------------------------------------------------------------------------------------------------
Class K (33,160) (968,232) (86,005) (2,289,644)
----------------------------------------------------------------------------------------------------------------
Investor Class (7,815,338) (230,297,801) (15,751,038) (418,385,318)
----------------------------------------------------------------------------------------------------------------
(5,762,587) $(171,093,819) 742,433 $ 13,793,618
----------------------------------------------------------------------------------------------------------------
|
/(a)/There is one entity that is a record owner of more than 5% of the
outstanding shares of the Fund and it owns 23% 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 entity are also owned
beneficially.
/(b)/As of the opening of business on November 24, 2003, the Fund acquired all
of the net assets of AIM Global Financial Services Fund pursuant to a plan
of reorganization approved by the Trustees of the Fund on June 9, 2003 and
of AIM Global Financial Services Fund shareholders on October 28, 2003. The
acquisition was accomplished by a tax-free exchange of 7,832,319 shares of
the Fund for 9,618,940 shares of of AIM Global Financial Services Fund
outstanding as of the close of business on November 21, 2003. AIM Global
Financial Services Fund's net assets at that date of $213,423,503,
including $28,871,384 of unrealized appreciation, were combined with those
of the Fund. The aggregate net assets of the Fund immediately before the
acquisition were $858,824,755.
FS-29
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
-----------------------------------
YEAR ENDED MARCH 31,
-----------------------------------
2005 2004 2003
--------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.83 $ 21.68 $ 28.22
--------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.23/(a)/ 0.16/(a)/ 0.06
--------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (1.19) 9.10 (6.37)
--------------------------------------------------------------------------------------------------------
Total from investment operations (0.96) 9.26 (6.31)
--------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.20) (0.11) (0.20)
--------------------------------------------------------------------------------------------------------
Distributions from net realized gains (2.51) -- (0.03)
--------------------------------------------------------------------------------------------------------
Total distributions (2.71) (0.11) (0.23)
--------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 27.16 $ 30.83 $ 21.68
--------------------------------------------------------------------------------------------------------
Total return/(b)/ (3.57)% 42.78% (22.36)%
--------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $81,761 $111,766 $ 5,311
--------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.38%/(c)/ 1.41% 1.38%
--------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.39%/(c)/ 1.66% 1.51%
--------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 0.79%/(c)/ 0.55% 0.49%
--------------------------------------------------------------------------------------------------------
Portfolio turnover rate 53% 57% 60%
--------------------------------------------------------------------------------------------------------
|
/(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 $96,453,575.
FS-30
NOTE 12--FINANCIAL HIGHLIGHTS-(CONTINUED)
CLASS B
-----------------------------------
YEAR ENDED MARCH 31,
-----------------------------------
2005 2004 2003
--------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.82 $ 21.74 $ 28.22
--------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.04/(a)/ (0.03)/(a)/ (0.03)
--------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (1.19) 9.11 (6.30)
--------------------------------------------------------------------------------------------------------
Total from investment operations (1.15) 9.08 (6.33)
--------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.06) (0.00) (0.11)
--------------------------------------------------------------------------------------------------------
Distributions from net realized gains (2.51) -- (0.04)
--------------------------------------------------------------------------------------------------------
Total distributions (2.57) (0.00) (0.15)
--------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 27.10 $ 30.82 $ 21.74
--------------------------------------------------------------------------------------------------------
Total return/(b)/ (4.19)% 41.78% (22.48)%
--------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $65,390 $92,137 $ 990
--------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.03%/(c)/ 2.06% 2.09%
--------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.04%/(c)/ 2.34% 2.40%
--------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets 0.14%/(c)/ (0.10)% (0.20)%
--------------------------------------------------------------------------------------------------------
Portfolio turnover rate 53% 57% 60%
--------------------------------------------------------------------------------------------------------
|
/(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 $78,723,304.
CLASS C
--------------------------------------------------
YEAR ENDED MARCH 31,
--------------------------------------------------
2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.20 $ 21.38 $ 27.89 $ 28.72
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.04/(a)/ (0.12)/(a)/ (0.25) (0.10)
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (1.16) 8.94 (6.22) 0.87
----------------------------------------------------------------------------------------------------------------------
Total from investment operations (1.12) 8.82 (6.47) 0.77
----------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.06) (0.00) -- --
----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (2.51) -- (0.04) (1.60)
----------------------------------------------------------------------------------------------------------------------
Total distributions (2.57) (0.00) (0.04) (1.60)
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 26.51 $ 30.20 $ 21.38 $ 27.89
----------------------------------------------------------------------------------------------------------------------
Total return/(b)/ (4.18)% 41.27% (23.22)% 2.98%
----------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $23,932 $38,696 $10,026 $16,880
----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 2.03%/(c)(d)/ 2.38% 2.45% 2.07%
----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets 0.14%/(c)/ (0.42)% (0.68)% (0.57)%
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 53% 57% 60% 81%
----------------------------------------------------------------------------------------------------------------------
|
--------
--------
2001
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 27.06
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)/(a)/
--------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 3.05
--------------------------------------------------------------------------------
Total from investment operations 2.96
--------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.08)
--------------------------------------------------------------------------------
Distributions from net realized gains (1.22)
--------------------------------------------------------------------------------
Total distributions (1.30)
--------------------------------------------------------------------------------
Net asset value, end of period $ 28.72
--------------------------------------------------------------------------------
Total return/(b)/ 10.87%
--------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,221
--------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.85%
--------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (0.31)%
--------------------------------------------------------------------------------
Portfolio turnover rate 99%
--------------------------------------------------------------------------------
|
/(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 $30,611,411.
/(d)/After fee waivers and/or expense reimbursements. Ratio of expense to
average net assets prior to fee waivers and/or expense reimbursements was
2.04%.
FS-31
NOTE 12--FINANCIAL HIGHLIGHTS-(CONTINUED)
CLASS K
-----------------------------------------------
YEAR ENDED MARCH 31,
-----------------------------------------
2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $30.23 $21.27 $ 27.69 $28.67
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.20/(a)/ 0.12/(a)/ 0.15 (0.03)/(a)/
-------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (1.16) 8.93 (6.41) 0.90
-------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.96) 9.05 (6.26) 0.87
-------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.18) (0.09) (0.12) (0.25)
-------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (2.51) -- (0.04) (1.60)
-------------------------------------------------------------------------------------------------------------------
Total distributions (2.69) (0.09) (0.16) (1.85)
-------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $26.58 $30.23 $ 21.27 $27.69
-------------------------------------------------------------------------------------------------------------------
Total return/(b)/ (3.66)% 42.61% (22.62)% 3.38%
-------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,129 $1,621 $ 1,348 $1,033
-------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.48%/(c)/ 1.51% 1.78% 1.63%
-------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.49%/(c)/ 2.24% 2.13% 1.63%
-------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets 0.69%/(c)/ 0.45% 0.18% (0.12)%
-------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate/(e)/ 53% 57% 60% 81%
-------------------------------------------------------------------------------------------------------------------
|
------------
NOVEMBER 30,
2000 (DATE SALES
COMMENCED) TO
MARCH 31,
2001
----------------
-------------------------------------------------------------------
Net asset value, beginning of period $29.35
-------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.17)
-------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (0.38)
-------------------------------------------------------------------------------------
Total from investment operations (0.55)
-------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.13)
-------------------------------------------------------------------------------------
Distributions from net realized gains --
-------------------------------------------------------------------------------------
Total distributions (0.13)
-------------------------------------------------------------------------------------
Net asset value, end of period $28.67
-------------------------------------------------------------------------------------
Total return/(b)/ (1.97)%
-------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1
-------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 3.35%/(d)/
-------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.35%/(d)/
-------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (1.80)%/(d)/
-------------------------------------------------------------------------------------
Portfolio turnover rate/(e)/ 99%
-------------------------------------------------------------------------------------
|
/(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.
/(c)/Ratios are based on average daily net assets of $1,394,171.
/(d)/Annualized.
/(e)/Not annualized for periods less than one year.
FS-32
NOTE 12--FINANCIAL HIGHLIGHTS-(CONTINUED)
INVESTOR CLASS
------------------------------------------------------
YEAR ENDED MARCH 31,
------------------------------------------------------
2005 2004 2003 2002
--------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.96 $ 21.77 $ 28.22 $ 28.88
--------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.27/(a)/ 0.15/(a)/ 0.10 0.07
--------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (1.19) 9.14 (6.42) 0.94
--------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.92) 9.29 (6.32) 1.01
--------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.23) (0.10) (0.10) (0.07)
--------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (2.51) -- (0.03) (1.60)
--------------------------------------------------------------------------------------------------------------------------
Total distributions (2.74) (0.10) (0.13) (1.67)
--------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 27.30 $ 30.96 $ 21.77 $ 28.22
--------------------------------------------------------------------------------------------------------------------------
Total return/(b)/ (3.44)% 42.73% (22.39)% 3.82%
--------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $632,450 $846,933 $734,440 $1,234,230
--------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.28%/(c)(d)/ 1.42% 1.40% 1.27%
--------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 0.89%/(c)/ 0.54% 0.38% 0.24%
--------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 53% 57% 60% 81%
--------------------------------------------------------------------------------------------------------------------------
|
-----------
-----------
2001
------------------------------------------------------------------------------
Net asset value, beginning of period $ 27.13
------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.10
------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 2.97
------------------------------------------------------------------------------
Total from investment operations 3.07
------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.10)
------------------------------------------------------------------------------
Distributions from net realized gains (1.22)
------------------------------------------------------------------------------
Total distributions (1.32)
------------------------------------------------------------------------------
Net asset value, end of period $ 28.88
------------------------------------------------------------------------------
Total return/(b)/ 11.25%
------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,368,583
------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.25%
------------------------------------------------------------------------------
Ratio of net investment income to average net assets 0.36%
------------------------------------------------------------------------------
Portfolio turnover rate 99%
------------------------------------------------------------------------------
|
/(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.
/(c)/Ratios are based on average daily net assets of $736,109,176.
/(d)/After fee waivers and/or expense reimbursements. Ratio of expense to
average net assets prior to fee waivers and/or expense reimbursements was
1.29%.
FS-33
NOTE 13--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) and A I M Advisors, Inc. ("AIM") (the Fund's
investment advisor) reached final settlements with certain regulators,
including without limitation the Securities and Exchange Commission ("SEC"),
the New York Attorney General ("NYAG") and the Colorado Attorney General
("COAG"), 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. 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 they 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 and AIM breached various Federal and state
securities, business and consumer protection laws. On the same date, A I M
Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached a
final settlement with the SEC to resolve an investigation relating to market
timing activity and related issues in the AIM Funds. The SEC also alleged that
ADI violated various Federal securities laws. The SEC also has settled related
market timing enforcement actions brought against certain former officers and
employees of IFG.
Under the terms of the settlements, IFG agreed to pay a total of $325
million, of which $110 million is civil penalties. Of this $325 million total
payment, half has been paid 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, all of which has been paid. The entire $325
million IFG settlement fund will be made 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 fund by AIM and
ADI will be made 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. The IFG and AIM
settlement 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. The settlement funds 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 certain equity and balanced 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, not to increase certain management fees and to
provide more information to investors regarding fees.
Under the terms of the settlements, AIM is undertaking certain governance and
compliance reforms, including maintaining an internal controls committee and
retaining an independent compliance consultant and a corporate ombudsman. 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 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.
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
such Funds related to market timing matters.
The SEC has also settled market timing enforcement actions 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), 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 these settlements, the SEC ordered these
individuals to pay restitution and civil penalties in various amounts and
prohibited them from associating with, or serving as an officer or director of,
an investment advisor, broker, dealer and/or investment company, as applicable,
for certain periods of time.
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 certain equity and balanced 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 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 payments 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 Regulatory Inquiries and Pending
Litigation described below may have on AIM, ADI or the Fund.
REGULATORY INQUIRIES AND PENDING LITIGATION
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 but not limited to revenue sharing and
directed-brokerage arrangements, investments in securities of other registered
investment companies, contractual plans, issues related to Section 529 college
savings plans, procedures for locating lost security holders and participation
in class action settlements.
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.
FS-34
NOTE 13--LEGAL PROCEEDINGS-(CONTINUED)
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 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, the U.S.
Postal Inspection Service and the Commodity Futures Trading Commission, some of
which concern one or more AIM Funds. AIM is providing full cooperation with
respect to these inquiries.
Pending Regulatory Civil Action Alleging Market Timing
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 (S) 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 proceedings, 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, 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.
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, 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 ("ERISA") purportedly brought on behalf of participants in
AMVESCAP's 401(k) plan. The plaintiffs in two of the underlying lawsuits
continue to seek remand of their lawsuit 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. Based on a recent court decision, the state court
action has been removed to Federal court.
FS-35
NOTE 13--LEGAL PROCEEDINGS-(CONTINUED)
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. All of these lawsuits have been transferred to the United States District Court for the Southern District of Texas, Houston Division and subsequently consolidated for pre-trial purposes into one lawsuit.
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 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. ("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. These actions have been consolidated for pre-trial purposes.
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. 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 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.
* * * * * * * * * * * * * * * * 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.
FS-36
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees
and Shareholders of AIM Gold & Precious Metals 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 Gold & Precious Metals Fund, formerly known as INVESCO Gold & Precious Metals Fund (one of the funds constituting AIM Sector Funds, hereafter referred to as the "Fund") at March 31, 2005, 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 periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with 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 investments at March 31, 2005 by correspondence with the custodian, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP May 20, 2005 Houston, Texas |
FS-37
FINANCIALS
SCHEDULE OF INVESTMENTS
March 31, 2005
MARKET
SHARES VALUE
------------------------------------------------------------------------
FOREIGN STOCKS & OTHER
EQUITY INTERESTS-80.49%
CANADA-59.11%
Aber Diamond Corp. (Precious Metals & Minerals) 140,000 $ 4,247,406
------------------------------------------------------------------------
Agnico-Eagle Mines Ltd. (Gold)/(a)/ 200,000 2,910,000
------------------------------------------------------------------------
Apollo Gold Corp. (Gold)/(b)/ 1,200,000 555,671
------------------------------------------------------------------------
Barrick Gold Corp. (Gold) 250,000 5,990,000
------------------------------------------------------------------------
Bema Gold Corp. (Gold)/(b)/ 1,000,000 2,680,000
------------------------------------------------------------------------
Cambior Inc. (Gold)/(b)/ 1,700,000 3,689,000
------------------------------------------------------------------------
Eldorado Gold Corp. (Gold)/(b)/ 1,650,000 4,707,074
------------------------------------------------------------------------
Gabriel Resources Ltd. (Gold)/(b)/ 239,700 356,770
------------------------------------------------------------------------
Gammon Lake Resources Inc.
(Precious Metals & Minerals)/(b)/ 550,000 3,234,000
------------------------------------------------------------------------
Glamis Gold Ltd. (Gold)/(b)/ 250,000 3,902,500
------------------------------------------------------------------------
Goldcorp. Inc. (Gold)/(a)/ 475,000 6,771,406
------------------------------------------------------------------------
IAMGOLD Corp. (Gold) 800,000 4,928,267
------------------------------------------------------------------------
Inco Ltd. (Diversified Metals & Mining)/(b)/ 120,000 4,776,000
------------------------------------------------------------------------
Kinross Gold Corp. (Gold)/(b)/ 550,000 3,347,253
------------------------------------------------------------------------
Meridian Gold Inc. (Gold)/(b)/ 250,000 4,210,000
------------------------------------------------------------------------
Pacific Rim Mining Corp.
(Precious Metals & Minerals)/(b)/ 1,254,900 830,132
------------------------------------------------------------------------
Pan American Silver Corp.
(Precious Metals & Minerals)/(a)(b)/ 320,000 5,073,600
------------------------------------------------------------------------
Placer Dome Inc. (Gold) 255,000 4,136,100
------------------------------------------------------------------------
Rio Narcea Gold Mines Ltd. (Gold)/(b)/ 515,900 874,515
------------------------------------------------------------------------
Southern Platinum Corp.
(Precious Metals & Minerals)/(a)(b)/ 1,025,000 2,152,809
------------------------------------------------------------------------
SouthernEra Diamonds, Inc. -- Class A
(Precious Metals & Minerals)/(a)(b)/ 1,025,000 525,489
------------------------------------------------------------------------
Teck Cominco Ltd. -- Class B
(Diversified Metals & Mining) 140,000 5,192,045
------------------------------------------------------------------------
75,090,037
------------------------------------------------------------------------
PERU-3.62%
Compania de Minas Buenaventura S.A.A.-ADR
(Precious Metals & Minerals) 202,000 4,601,560
------------------------------------------------------------------------
SOUTH AFRICA-11.32%
AngloGold Ashanti Ltd.-ADR (Gold)/(a)/ 54,000 1,860,300
------------------------------------------------------------------------
Gold Fields Ltd.-ADR (Gold)/(a)/ 410,000 4,710,900
------------------------------------------------------------------------
|
Investment Abbreviations:
ADR - AmericanDepositary Receipt
MARKET
SHARES VALUE
-----------------------------------------------------------------------------------
SOUTH AFRICA-(continued)
Harmony Gold Mining Co. Ltd.-ADR (Gold)/(a)/ 354,000 $ 2,761,200
-----------------------------------------------------------------------------------
Impala Platinum Holdings Ltd.
(Precious Metals & Minerals)/(c)/ 60,000 5,049,918
-----------------------------------------------------------------------------------
14,382,318
-----------------------------------------------------------------------------------
UNITED KINGDOM-6.44%
Randgold Resources Ltd.-ADR (Gold)/(b)/ 400,000 4,944,000
-----------------------------------------------------------------------------------
Rio Tinto PLC (Diversified Metals & Mining)/(c)/ 100,000 3,232,872
-----------------------------------------------------------------------------------
8,176,872
-----------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests
(Cost $95,383,061) 102,250,787
-----------------------------------------------------------------------------------
DOMESTIC COMMON STOCKS-13.82%
DIVERSIFIED METALS & MINING-9.36%
Freeport-McMoRan Copper & Gold, Inc. -- Class B 200,000 7,922,000
-----------------------------------------------------------------------------------
Phelps Dodge Corp. 39,000 3,967,470
-----------------------------------------------------------------------------------
11,889,470
-----------------------------------------------------------------------------------
GOLD-3.76%
Newmont Mining Corp. 113,000 4,774,250
-----------------------------------------------------------------------------------
PRECIOUS METALS & MINERALS-0.70%
Solitario Resources Corp./(a)(b)/ 631,000 887,005
-----------------------------------------------------------------------------------
Total Domestic Common Stocks
(Cost $17,679,122) 17,550,725
-----------------------------------------------------------------------------------
GOLD BULLION-5.05%
Gold Bullion/(d)/ (Cost $4,266,032) 14,974/(e)/ 6,420,103
-----------------------------------------------------------------------------------
MONEY MARKET FUNDS-0.83%
Premier Portfolio-Institutional Class
(Cost $1,047,383)/(f)/ 1,047,383 1,047,383
-----------------------------------------------------------------------------------
TOTAL INVESTMENTS-100.19% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $118,375,598) 127,268,998
-----------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH
COLLATERAL FROM SECURITIES LOANED
MONEY MARKET FUNDS-7.01%
Premier Portfolio-Institutional Class/(f)(g)/ 8,909,192 8,909,192
-----------------------------------------------------------------------------------
Total Money Market Funds (purchased with cash
collateral from securities loaned)
(Cost $8,909,192) 8,909,192
-----------------------------------------------------------------------------------
TOTAL INVESTMENTS-107.20% (Cost $127,284,790) 136,178,190
-----------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(7.20%) (9,145,048)
-----------------------------------------------------------------------------------
NET ASSETS-100.00% $ 127,033,142
-----------------------------------------------------------------------------------
|
Notes to Schedule of Investments:
/(a)/ All or a portion of this security has been pledged as collateral for
securities lending transactions at March 31, 2005.
/(b)/ Non-income producing security.
/(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 March 31, 2005 was
$8,282,790, which represented 6.08% of the Fund's Total Investments. See
Note 1A.
/(d)/ Investment in other than a securities -- Gold Bullion. See Note 1H.
/(e)/ Denoted in troy ounces.
/(f)/ The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
/(g)/ 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-38
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2005
ASSETS:
Investments, at market value (cost $113,062,183)* $ 119,801,512
------------------------------------------------------------------------------------
Investments in affiliated money market funds (cost $9,956,575) 9,956,575
------------------------------------------------------------------------------------
Investments in Gold Bullion (cost $4,266,032) 6,420,103
------------------------------------------------------------------------------------
Total investments (cost $127,284,790) 136,178,190
------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $51,268) 48,026
------------------------------------------------------------------------------------
Receivables for:
Fund shares sold 194,239
------------------------------------------------------------------------------------
Dividends 41,126
------------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 24,253
------------------------------------------------------------------------------------
Other assets 24,096
------------------------------------------------------------------------------------
Total assets 136,509,930
------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 326,781
------------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 31,205
------------------------------------------------------------------------------------
Collateral upon return of securities loaned 8,909,192
------------------------------------------------------------------------------------
Accrued distribution fees 38,699
------------------------------------------------------------------------------------
Accrued trustees' fees 3,375
------------------------------------------------------------------------------------
Accrued transfer agent fees 92,762
------------------------------------------------------------------------------------
Accrued operating expenses 74,774
------------------------------------------------------------------------------------
Total liabilities 9,476,788
------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $ 127,033,142
------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 256,381,370
------------------------------------------------------------------------------------
Undistributed net investment income (loss) (5,633,241)
------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment securities and
foreign currencies (132,605,145)
------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign
currencies 8,890,158
------------------------------------------------------------------------------------
$ 127,033,142
------------------------------------------------------------------------------------
|
NET ASSETS:
Class A $ 10,609,256
------------------------------------------------------------
Class B $ 8,592,913
------------------------------------------------------------
Class C $ 6,992,976
------------------------------------------------------------
Investor Class $100,837,997
------------------------------------------------------------
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 2,988,013
------------------------------------------------------------
Class B 2,428,329
------------------------------------------------------------
Class C 1,864,568
------------------------------------------------------------
Investor Class 28,232,096
------------------------------------------------------------
Class A:
Net asset value per share $ 3.55
------------------------------------------------------------
Offering price per share:
(Net asset value of $3.55 / 94.50%) $ 3.76
------------------------------------------------------------
Class B:
Net asset value and offering price per share $ 3.54
------------------------------------------------------------
Class C:
Net asset value and offering price per share $ 3.75
------------------------------------------------------------
Investor Class:
Net asset value and offering price per share $ 3.57
------------------------------------------------------------
|
* At March 31, 2005, securities with an aggregate market value of $8,590,617 were on loan to brokers.
See accompanying notes which are an integral part of the financial statements.
FS-39
STATEMENT OF OPERATIONS
For the year ended March 31, 2005
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $38,751) $ 986,581
----------------------------------------------------------------------------------------------
Dividends from affiliated money market funds (includes securities lending
income of $295,384 less rebates of $189,293) 167,725
----------------------------------------------------------------------------------------------
Total investment income 1,154,306
----------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 956,510
----------------------------------------------------------------------------------------------
Administrative services fees 53,577
----------------------------------------------------------------------------------------------
Custodian fees 62,985
----------------------------------------------------------------------------------------------
Distribution fees:
Class A 29,666
----------------------------------------------------------------------------------------------
Class B 74,674
----------------------------------------------------------------------------------------------
Class C 57,257
----------------------------------------------------------------------------------------------
Investor Class 264,664
----------------------------------------------------------------------------------------------
Transfer agent fees 460,217
----------------------------------------------------------------------------------------------
Trustees' fees and retirement benefits 16,202
----------------------------------------------------------------------------------------------
Professional services fees 101,875
----------------------------------------------------------------------------------------------
Other 82,971
----------------------------------------------------------------------------------------------
Total expenses 2,160,598
----------------------------------------------------------------------------------------------
Less:Fees waived, expenses reimbursed and expense offset arrangement (28,443)
----------------------------------------------------------------------------------------------
Net expenses 2,132,155
----------------------------------------------------------------------------------------------
Net investment income (loss) (977,849)
----------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain from:
Investment securities 28,620,733
----------------------------------------------------------------------------------------------
Foreign currencies 31,735
----------------------------------------------------------------------------------------------
28,652,468
----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities (37,529,348)
----------------------------------------------------------------------------------------------
Foreign currencies (4,081)
----------------------------------------------------------------------------------------------
(37,533,429)
----------------------------------------------------------------------------------------------
Net gain (loss) from investment securities and foreign currencies (8,880,961)
----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (9,858,810)
----------------------------------------------------------------------------------------------
|
See accompanying notes which are an integral part of the financial statements.
FS-40
STATEMENT OF CHANGES IN NET ASSETS
For the years ended March 31, 2005 and 2004
2005 2004
------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (977,849) $ (1,482,530)
------------------------------------------------------------------------------
Net realized gain from investment securities and
foreign currencies 28,652,468 33,866,103
------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities and
foreign currencies (37,533,429) 31,004,625
------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (9,858,810) 63,388,198
------------------------------------------------------------------------------
Distributions to shareholders from net investment
income:
Class A (93,795) (275,645)
------------------------------------------------------------------------------
Class B (73,836) (186,558)
------------------------------------------------------------------------------
Class C (46,359) (117,790)
------------------------------------------------------------------------------
Investor Class (1,172,562) (4,879,235)
------------------------------------------------------------------------------
Decrease in net assets resulting from
distributions (1,386,552) (5,459,228)
------------------------------------------------------------------------------
Share transactions-net:
Class A 2,697,442 5,196,934
------------------------------------------------------------------------------
Class B 2,105,942 3,070,280
------------------------------------------------------------------------------
Class C 2,395,226 1,162,774
------------------------------------------------------------------------------
Investor Class (15,067,517) (25,887,997)
------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from share transactions (7,868,907) (16,458,009)
------------------------------------------------------------------------------
Net increase (decrease) in net assets (19,114,269) 41,470,961
------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 146,147,411 104,676,450
------------------------------------------------------------------------------
End of year (including undistributed net
investment income (loss) of $(5,633,241) and
$(4,118,693), respectively) $127,033,142 $146,147,411
------------------------------------------------------------------------------
|
See accompanying notes which are an integral part of the financial statements.
FS-41
NOTES TO FINANCIAL STATEMENTS
March 31, 2005
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Gold & Precious Metals Fund, formerly INVESCO Gold & Precious Metals Fund,
(the "Fund") is a series portfolio of AIM Sector Funds (the "Trust"). The Trust
is a Delaware statutory trust registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end series management investment
company consisting of seven separate 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 to seek capital growth. 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.
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.
FS-42
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. 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.
H. GOLD BULLION -- The Fund may invest up to 10% at the time of purchase of its
total assets directly in gold bullion. The two largest national producers of
gold bullion are the Republic of South Africa and the former states of the
Soviet Union. International monetary and political developments such as
currency devaluations, central bank movements and social and economic
conditions affecting either country may have a direct impact on the gold
industry. The price of gold can be subject to substantial fluctuations over
short periods of time. Investments directly in gold bullion will earn no
income; appreciation is the sole manner in which the Fund can realize gains
on bullion investments. Gold bullion is valued based upon daily quotes
provided by banks or brokers dealing in such commodities.
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 $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% -------------------------------------------------------------- |
Prior to September 30, 2004, AIM had entered into a sub-advisory agreement
with INVESCO Institutional (N.A.), Inc. ("INVESCO") whereby AIM paid INVESCO
40% of the fee paid by the Fund to AIM. Effective September 30, 2004, the
sub-advisory agreement between AIM and INVESCO was terminated.
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 and Investor Class
shares to 2.00%, 2.65%, 2.65% and 1.90% of average daily net assets,
respectively, through March 31, 2006. In determining the advisor's obligation
to waive advisory fees and/or reimburse expenses, the following expenses are
not taken into account, and
FS-43
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 fee and/or reimburse
expenses during the period under this expense limitation.
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 year ended March 31, 2005, AIM waived fees of $3,699.
For the year ended March 31, 2005, at the request of the Trustees of the
Trust, AMVESCAP agreed to reimburse $22,944 of expenses incurred by the Fund in
connection with market timing matters in the AIM Funds, including 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 year ended
March 31, 2005, AIM was paid $53,577.
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 year ended March
31, 2005, the Fund paid AISI $460,217.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class
B, Class C and Investor 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 Investor Class 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 0.25% of the average daily
net assets of Investor Class shares. Of these amounts, up to 0.25% of the
average daily net assets of the Class A, Class B, Class C or Investor Class
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 year ended March 31, 2005, the Class A, Class B, Class C and
Investor Class shares paid ADI $29,666, $74,674, $57,257 and $264,664,
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 March 31, 2005, ADI advised the Fund that it retained $19,236 in
front-end sales commissions from the sale of Class A shares and $0, $35,631 and
$2,704 from Class A, Class B and Class C 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--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 March 31, 2005.
INVESTMENTS OF DAILY AVAILABLE CASH BALANCES:
MARKET UNREALIZED MARKET REALIZED
VALUE PURCHASE PROCEEDS APPRECIATION VALUE DIVIDEND GAIN
FUND 03/31/04 AT COST FROM SALES (DEPRECIATION) 03/31/05 INCOME (LOSS)
--------------------------------------------------------------------------------------------------------------------------
Premier Portfolio -- Institutional Class* $1,440,206 $64,556,326 $(64,949,149) $ -- $1,047,383 $61,634 $ --
--------------------------------------------------------------------------------------------------------------------------
|
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
MARKET UNREALIZED MARKET REALIZED
VALUE PURCHASE PROCEEDS APPRECIATION VALUE DIVIDEND GAIN
FUND 03/31/04 AT COST FROM SALES (DEPRECIATION) 03/31/05 INCOME** (LOSS)
-----------------------------------------------------------------------------------------------------------------------------
Premier Portfolio -- Institutional Class* $23,186,632 $225,320,597 $(239,598,037) $ -- $8,909,192 $106,091 $ --
-----------------------------------------------------------------------------------------------------------------------------
Total $24,626,838 $289,876,923 $(304,547,186) $ -- $9,956,575 $167,725 $ --
-----------------------------------------------------------------------------------------------------------------------------
|
* On February 25, 2005 the Premier Portfolio investments were transferred from the original share class with no name designation to newly structured share class designated as Institutional Share Class. **Net of rebates.
FS-44
NOTE 4--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 March 31, 2005, the Fund received credits from this arrangement which resulted in the reduction of the Fund's total expenses of $1,800.
NOTE 5--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 March 31, 2005, the Fund paid legal fees of $3,815 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 year ended March 31, 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 March 31, 2005, securities with an aggregate value of $8,590,617 were on
loan to brokers. The loans were secured by cash collateral of $8,909,192
received by the Fund and subsequently invested in an affiliated money market
fund. For the year ended March 31, 2005, the Fund received dividends on cash
collateral of $106,091 for securities lending transactions, which is net of
rebates.
FS-45
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years ended March 31, 2005 and 2004 was as follows:
2005 2004
-------------------------------------------------------------
Distributions paid from ordinary income $1,386,552 $5,459,228
-------------------------------------------------------------
|
TAX COMPONENTS OF NET ASSETS:
As of March 31, 2005, the components of net assets on a tax basis were as follows:
2005
-----------------------------------------------------
Unrealized appreciation -- investments $ 3,066,727
-----------------------------------------------------
Temporary book/tax differences (22,473)
-----------------------------------------------------
Capital loss carryforward (132,392,482)
-----------------------------------------------------
Shares of beneficial interest 256,381,370
-----------------------------------------------------
Total net assets $ 127,033,142
-----------------------------------------------------
|
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 on investments amount
includes appreciation (depreciation) on foreign currencies of $(3,242).
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, certain corporation actions and mark to market of
certain passive foreign investment companies.
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 utilized $28,089,019 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 March 31, 2005 which expires as
follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
---------------------------------------------
March 31, 2006 $ 62,921,708
---------------------------------------------
March 31, 2007 30,924,521
---------------------------------------------
March 31, 2009 37,453,344
---------------------------------------------
March 31, 2010 1,092,909
---------------------------------------------
Total capital loss carryforward $132,392,482
---------------------------------------------
|
* 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 year ended
March 31, 2005 was $64,018,416 and $73,585,029, respectively.
At the request of the Trustees, AIM recovered third party research credits
during the year ended March 31, 2005, in the amount of $15,226. These research
credits were recorded as realized gains.
UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENT SECURITIES ON A TAX BASIS
---------------------------------------------------------------------------------
Aggregate unrealized appreciation of:
Investment securities $ 12,024,483
---------------------------------------------------------------------------------
Gold Bullion 2,154,071
---------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (11,108,585)
---------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment securities $ 3,069,969
---------------------------------------------------------------------------------
|
Cost of investments for tax purposes is $128,842,189. Cost of Gold Bullion for tax purposes is $4,266,032.
FS-46
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of passive foreign investment companies, net operating losses, foreign currency transactions and expenses related to the plan of reorganization, on March 31, 2005, undistributed net investment income (loss) was increased by $849,853, undistributed net realized gain (loss) decreased by $486,916 and shares of beneficial interest decreased by $362,937. This reclassification had no effect on the net assets of the Fund.
NOTE 11--SHARE INFORMATION
The Fund currently offers four different classes of shares: Class A shares, Class B shares, Class C shares and the Investor Class shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with CDSC. Investor Class shares are sold at net asset value. 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 MARCH 31,
-----------------------------------------------------
2005 2004
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------
Sold:
Class A 3,288,755 $ 11,829,894 4,367,454 $ 14,190,104
----------------------------------------------------------------------------------------------------------------
Class B 1,946,374 6,878,345 1,695,415 5,884,727
----------------------------------------------------------------------------------------------------------------
Class C 1,718,862 6,596,274 3,460,076 11,274,482
----------------------------------------------------------------------------------------------------------------
Investor Class 6,331,925 22,395,640 41,101,369 125,772,587
----------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 24,681 88,604 55,772 209,700
----------------------------------------------------------------------------------------------------------------
Class B 17,083 61,330 48,308 182,118
----------------------------------------------------------------------------------------------------------------
Class C 11,479 43,618 28,837 115,049
----------------------------------------------------------------------------------------------------------------
Investor Class 311,578 1,124,797 1,247,840 4,716,834
----------------------------------------------------------------------------------------------------------------
Automatic conversion of Class B shares to Class A shares:
Class A 48,957 173,885 19,727 74,538
----------------------------------------------------------------------------------------------------------------
Class B (48,993) (173,885) (19,691) (74,538)
----------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (2,693,506) (9,394,941) (2,757,263) (9,277,408)
----------------------------------------------------------------------------------------------------------------
Class B (1,328,313) (4,659,848) (850,768) (2,922,027)
----------------------------------------------------------------------------------------------------------------
Class C (1,154,957) (4,244,666) (3,176,408) (10,226,757)
----------------------------------------------------------------------------------------------------------------
Investor Class (11,007,214) (38,587,954) (50,814,398) (156,377,418)
----------------------------------------------------------------------------------------------------------------
(2,533,289) $ (7,868,907) (5,593,730) $ (16,458,009)
----------------------------------------------------------------------------------------------------------------
|
/(a)/There is one entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 17% 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 entity are also owned beneficially.
FS-47
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
------------------------------
YEAR ENDED MARCH 31,
------------------------------
2005 2004 2003
----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 3.81 $ 2.39 $ 2.29
----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)/(a)/ (0.01) (0.02)/(a)(b)/
----------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (0.20) 1.56 0.12
----------------------------------------------------------------------------------------------------------
Total from investment operations (0.23) 1.55 0.10
----------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.03) (0.13) --
----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 3.55 $ 3.81 $ 2.39
----------------------------------------------------------------------------------------------------------
Total return/(c)/ (5.89)% 65.02% 4.37%
----------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $10,609 $8,844 $1,514
----------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.69%/(d)/ 2.13% 2.09%
----------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.71%/(d)/ 2.13% 2.11%
----------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (0.78)%/(d)/ (1.29)% (1.09)%
----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51% 48% 84%
----------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current
method, which is before reclassification of net operating losses, net
investment income (loss) per share would have been $(0.02) for the year
ended March 31, 2003.
/(c)/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.
/(d)/Ratios are based on average daily net assets of $8,475,956.
FS-48
NOTE 12--FINANCIAL HIGHLIGHTS-(CONTINUED)
CLASS B
-------------------------------
YEAR ENDED MARCH 31,
-------------------------------
2005 2004 2003
-----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 3.82 $ 2.39 $ 2.29
-----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)/(a)/ (0.01) (0.02)/(a)(b)/
-----------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (0.20) 1.57 0.12
-----------------------------------------------------------------------------------------------------------
Total from investment operations (0.25) 1.56 0.10
-----------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.03) (0.13) --
-----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 3.54 $ 3.82 $ 2.39
-----------------------------------------------------------------------------------------------------------
Total return/(c)/ (6.48)% 65.26% 4.37%
-----------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $8,593 $7,042 $2,315
-----------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 2.34%/(d)(e)/ 2.28% 2.18%
-----------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (1.43)%/(d)/ (1.44)% (1.12)%
-----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51% 48% 84%
-----------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current
method, which is before reclassification of net operating losses, net
investment income (loss) per share would have been $(0.02) for the year
ended March 31, 2003.
/(c)/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.
/(d)/Ratios are based on average daily net assets of $7,467,379.
/(e)/After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.36%.
FS-49
NOTE 12--FINANCIAL HIGHLIGHTS-(CONTINUED)
CLASS C
--------------------------------------------------
YEAR ENDED MARCH 31,
--------------------------------------------------
2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 4.04 $ 2.52 $ 2.42 $ 1.53
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)/(a)/ (0.04) (0.00)/(b)/ (0.07)/(b)/
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (0.22) 1.67 0.10 0.96
----------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.27) 1.63 0.10 0.89
----------------------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.02) (0.11) -- --
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 3.75 $ 4.04 $ 2.52 $ 2.42
----------------------------------------------------------------------------------------------------------------------
Total return/(c)/ (6.58)% 64.70% 4.13% 58.17%
----------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $6,993 $5,208 $2,459 $ 515
----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 2.34%/(d)(e)/ 2.69% 2.65% 3.33%
----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (1.43)%/(d)/ (1.85)% (1.60)% (1.67)%
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51% 48% 84% 46%
----------------------------------------------------------------------------------------------------------------------
|
-------
-------
2001
----------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.60
----------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)/(a)(b)/
----------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (0.02)
----------------------------------------------------------------------------------
Total from investment operations (0.03)
----------------------------------------------------------------------------------
Less dividends from net investment income (0.04)
----------------------------------------------------------------------------------
Net asset value, end of period $ 1.53
----------------------------------------------------------------------------------
Total return/(c)/ (1.95)%
----------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 57
----------------------------------------------------------------------------------
Ratio of expenses to average net assets 3.38%
----------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (1.41)%
----------------------------------------------------------------------------------
Portfolio turnover rate 90%
----------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current
method, which is before reclassification of net operating losses, net
investment income (loss) per share would have been $(0.04), $(0.07) and
$(0.01) for the years ended March 31, 2003, 2002 and 2001.
/(c)/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.
/(d)/Ratios are based on average daily net assets of $5,725,666.
/(e)/After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.36%.
FS-50
NOTE 12--FINANCIAL HIGHLIGHTS-(CONTINUED)
INVESTOR CLASS
--------------------------------------------------------------------
YEAR ENDED MARCH 31,
--------------------------------------------------------------------
2005 2004 2003 2002 2001
------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $ 3.84 $ 2.40 $ 2.29 $ 1.43 $ 1.60
------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income (loss) (0.02)/(a)/ (0.05) (0.02)/(a)(b)/ (0.01)/(b)/ (0.01)/(a)(b)/
------------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized
and unrealized) (0.21) 1.63 0.13 0.87 (0.12)
------------------------------------------------------------------------------------------------------------
Total from investment
operations (0.23) 1.58 0.11 0.86 (0.13)
------------------------------------------------------------------------------------------------------------
Less dividends from net
investment income (0.04) (0.14) -- -- (0.04)
------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 3.57 $ 3.84 $ 2.40 $ 2.29 $ 1.43
------------------------------------------------------------------------------------------------------------
Total return/(c)/ (6.00)% 65.92% 4.80% 60.14% (8.38)%
------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $100,838 $125,053 $98,388 $104,831 $64,429
------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets 1.59%/(d)(e)/ 1.93% 1.88% 2.10% 2.34%
------------------------------------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average net
assets (0.68)%/(d)/ (1.09)% (0.79)% (0.80)% (0.99)%
------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51% 48% 84% 46% 90%
------------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses, which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current
method, which is before reclassification of net operating losses, net
investment income (loss) per share would have been $(0.02), $(0.01) and
$(0.01) for the years ended March 31, 2003, 2002 and 2001.
/(c)/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.
/(d)/Ratios are based on average daily net assets of $105,865,709.
/(e)/After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.61%.
FS-51
NOTE 13--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) and A I M Advisors, Inc. ("AIM") (the Fund's
investment advisor) reached final settlements with certain regulators,
including without limitation the Securities and Exchange Commission ("SEC"),
the New York Attorney General ("NYAG") and the Colorado Attorney General
("COAG"), 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. 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 they 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 and AIM breached various Federal and state
securities, business and consumer protection laws. On the same date, A I M
Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached a
final settlement with the SEC to resolve an investigation relating to market
timing activity and related issues in the AIM Funds. The SEC also alleged that
ADI violated various Federal securities laws. The SEC also has settled related
market timing enforcement actions brought against certain former officers and
employees of IFG.
Under the terms of the settlements, IFG agreed to pay a total of $325
million, of which $110 million is civil penalties. Of this $325 million total
payment, half has been paid 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, all of which has been paid. The entire $325
million IFG settlement fund will be made 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 fund by AIM and
ADI will be made 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. The IFG and AIM
settlement 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. The settlement funds 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 certain equity and balanced 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, not to increase certain management fees and to
provide more information to investors regarding fees.
Under the terms of the settlements, AIM is undertaking certain governance and
compliance reforms, including maintaining an internal controls committee and
retaining an independent compliance consultant and a corporate ombudsman. 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 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.
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
such Funds related to market timing matters.
The SEC has also settled market timing enforcement actions 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), 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 these settlements, the SEC ordered these
individuals to pay restitution and civil penalties in various amounts and
prohibited them from associating with, or serving as an officer or director of,
an investment advisor, broker, dealer and/or investment company, as applicable,
for certain periods of time.
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 certain equity and balanced 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 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 payments 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 Regulatory Inquiries and Pending
Litigation described below may have on AIM, ADI or the Fund.
REGULATORY INQUIRIES AND PENDING LITIGATION
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 but not limited to revenue sharing and
directed-brokerage arrangements, investments in securities of other registered
investment companies, contractual plans, issues related to Section 529 college
savings plans, procedures for locating lost security holders and participation
in class action settlements.
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.
FS-52
NOTE 13--LEGAL PROCEEDINGS-(CONTINUED)
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 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, the U.S.
Postal Inspection Service and the Commodity Futures Trading Commission, some of
which concern one or more AIM Funds. AIM is providing full cooperation with
respect to these inquiries.
Pending Regulatory Civil Action Alleging Market Timing
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 (S) 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 proceedings, 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, 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.
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, 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 ("ERISA") purportedly brought on behalf of participants in
AMVESCAP's 401(k) plan. The plaintiffs in two of the underlying lawsuits
continue to seek remand of their lawsuit 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. Based on a recent court decision, the state court
action has been removed to Federal court.
FS-53
NOTE 13--LEGAL PROCEEDINGS-(CONTINUED)
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. All of these lawsuits have been transferred to the United States District Court for the Southern District of Texas, Houston Division and subsequently consolidated for pre-trial purposes into one lawsuit.
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 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. ("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. These actions have been consolidated for pre-trial purposes.
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. 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 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.
* * * * * * * * * * * * * * * * 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.
FS-54
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees
and Shareholders of AIM Leisure 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 Leisure Fund, formerly known as INVESCO Leisure Fund (one of the funds constituting AIM Sector Funds, hereafter referred to as the "Fund") at March 31, 2005, 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 periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with 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 March 31, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP May 20, 2005 Houston, Texas |
FS-55
FINANCIALS
SCHEDULE OF INVESTMENTS
March 31, 2005
MARKET
SHARES VALUE
-----------------------------------------------------------------------------
DOMESTIC COMMON STOCKS & OTHER
EQUITY INTERESTS-77.85%
ADVERTISING-7.32%
Harte-Hanks, Inc. 268,550 $ 7,401,238
-----------------------------------------------------------------------------
Omnicom Group Inc. 666,100 58,963,172
-----------------------------------------------------------------------------
66,364,410
-----------------------------------------------------------------------------
APPAREL, ACCESSORIES & LUXURY
GOODS-2.85%
Carter's, Inc./(a)/ 62,400 2,480,400
-----------------------------------------------------------------------------
Columbia Sportswear Co./(a)/ 94,100 5,008,943
-----------------------------------------------------------------------------
Polo Ralph Lauren Corp. 472,400 18,329,120
-----------------------------------------------------------------------------
25,818,463
-----------------------------------------------------------------------------
BREWERS-1.82%
Anheuser-Busch Cos., Inc. 349,000 16,539,110
-----------------------------------------------------------------------------
BROADCASTING & CABLE TV-16.43%
Cablevision Systems Corp.-New York Group-Class A/(a)/ 1,256,593 35,247,434
-----------------------------------------------------------------------------
Clear Channel Communications, Inc. 294,249 10,142,763
-----------------------------------------------------------------------------
Comcast Corp. -- Class A/(a)/ 467,200 15,782,016
-----------------------------------------------------------------------------
DIRECTV Group, Inc. (The)/(a)/ 154,823 2,232,548
-----------------------------------------------------------------------------
EchoStar Communications Corp. -- Class A 395,085 11,556,236
-----------------------------------------------------------------------------
Gray Television, Inc. 640,100 9,262,247
-----------------------------------------------------------------------------
Liberty Media Corp. -- Class A/(a)/ 3,056,389 31,694,754
-----------------------------------------------------------------------------
Liberty Media Corp. -- Class B/(a)/ 179,925 1,905,406
-----------------------------------------------------------------------------
Liberty Media International, Inc. -- Class A/(a)/ 153,689 6,722,357
-----------------------------------------------------------------------------
NTL Inc./(a)/ 63,100 4,017,577
-----------------------------------------------------------------------------
Scripps Co. (E.W.) (The) -- Class A 168,600 8,219,250
-----------------------------------------------------------------------------
Sinclair Broadcast Group, Inc. -- Class A 581,200 4,667,036
-----------------------------------------------------------------------------
Spanish Broadcasting System, Inc. -- Class A/(a)/ 271,200 2,782,512
-----------------------------------------------------------------------------
Univision Communications Inc. -- Class A/(a)/ 174,300 4,826,367
-----------------------------------------------------------------------------
149,058,503
-----------------------------------------------------------------------------
CASINOS & GAMING-12.01%
Aztar Corp./(a)/ 132,900 3,795,624
-----------------------------------------------------------------------------
Harrah's Entertainment, Inc. 838,500 54,150,330
-----------------------------------------------------------------------------
International Game Technology 1,001,000 26,686,660
-----------------------------------------------------------------------------
Mandalay Resort Group 61,300 4,321,037
-----------------------------------------------------------------------------
MGM MIRAGE/(a)/ 119,816 8,485,369
-----------------------------------------------------------------------------
Wynn Resorts, Ltd./(a)/ 169,200 11,461,608
-----------------------------------------------------------------------------
108,900,628
-----------------------------------------------------------------------------
DIVERSIFIED COMMERCIAL SERVICES-1.45%
Cendant Corp. 642,400 13,194,896
-----------------------------------------------------------------------------
FOOTWEAR-0.69%
NIKE, Inc. -- Class B 75,000 6,248,250
-----------------------------------------------------------------------------
|
MARKET
SHARES VALUE
----------------------------------------------------------------------
GENERAL MERCHANDISE STORES-0.94%
Target Corp. 169,700 $ 8,488,394
----------------------------------------------------------------------
HOME ENTERTAINMENT SOFTWARE-0.37%
Electronic Arts Inc./(a)/ 64,000 3,313,920
----------------------------------------------------------------------
HOTELS, RESORTS & CRUISE LINES-6.38%
Hilton Hotels Corp. 680,750 15,214,763
----------------------------------------------------------------------
Marriott International, Inc. -- Class A 241,000 16,113,260
----------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc./(b)/ 442,660 26,572,880
----------------------------------------------------------------------
57,900,903
----------------------------------------------------------------------
INTERNET RETAIL-0.70%
IAC/InterActiveCorp/(a)/ 286,700 6,384,809
----------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES-1.30%
Yahoo! Inc./(a)/ 348,900 11,827,710
----------------------------------------------------------------------
INVESTMENT COMPANIES-EXCHANGE TRADED
FUNDS-2.88%
iShares Russell 3000 Index Fund 135,100 9,092,230
----------------------------------------------------------------------
iShares S&P 500 Index Fund 68,100 8,024,904
----------------------------------------------------------------------
S&P 500 Depositary Receipts Trust-Series 1 76,700 9,050,600
----------------------------------------------------------------------
26,167,734
----------------------------------------------------------------------
LEISURE FACILITIES-0.34%
Cedar Fair, L.P./(c)/ 97,800 3,077,766
----------------------------------------------------------------------
LEISURE PRODUCTS-1.65%
Hasbro, Inc. 352,100 7,200,445
----------------------------------------------------------------------
Marvel Enterprises, Inc./(a)/ 117,800 2,356,000
----------------------------------------------------------------------
Mattel, Inc. 252,600 5,393,010
----------------------------------------------------------------------
14,949,455
----------------------------------------------------------------------
MOTORCYCLE MANUFACTURERS-0.21%
Harley-Davidson, Inc. 33,100 1,911,856
----------------------------------------------------------------------
MOVIES & ENTERTAINMENT-9.86%
Metro-Goldwyn-Mayer Inc./(a)/ 365,934 4,372,911
----------------------------------------------------------------------
News Corp. -- Class A 2,030,994 34,364,418
----------------------------------------------------------------------
Pixar/(a)/ 39,100 3,814,205
----------------------------------------------------------------------
Regal Entertainment Group -- Class A 174,900 3,678,147
----------------------------------------------------------------------
Time Warner Inc./(a)/ 1,214,800 21,319,740
----------------------------------------------------------------------
Viacom Inc. -- Class A 150,400 5,270,016
----------------------------------------------------------------------
Viacom Inc. -- Class B 153,400 5,342,922
----------------------------------------------------------------------
Walt Disney Co. (The) 390,999 11,233,401
----------------------------------------------------------------------
89,395,760
----------------------------------------------------------------------
PERSONAL PRODUCTS-0.46%
NBTY, Inc./(a)/ 165,300 4,147,377
----------------------------------------------------------------------
|
FS-56
MARKET
SHARES VALUE
-----------------------------------------------------------------------------
PUBLISHING-7.54%
Belo Corp. -- Class A 360,000 $ 8,690,400
-----------------------------------------------------------------------------
Gannett Co., Inc. 151,300 11,964,804
-----------------------------------------------------------------------------
Knight-Ridder, Inc. 232,800 15,655,800
-----------------------------------------------------------------------------
McClatchy Co. (The) -- Class A 161,500 11,976,840
-----------------------------------------------------------------------------
McGraw-Hill Cos., Inc. (The) 85,700 7,477,325
-----------------------------------------------------------------------------
Tribune Co. 316,000 12,598,920
-----------------------------------------------------------------------------
68,364,089
-----------------------------------------------------------------------------
RESTAURANTS-2.35%
CBRL Group, Inc. 345,200 14,256,760
-----------------------------------------------------------------------------
Yum! Brands, Inc. 136,900 7,092,789
-----------------------------------------------------------------------------
21,349,549
-----------------------------------------------------------------------------
SPECIALTY STORES-0.30%
PETsMART, Inc. 93,300 2,682,375
-----------------------------------------------------------------------------
Total Domestic Common Stocks & Other
Equity Interests (Cost $469,071,329) 706,085,957
-----------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-19.70%
BELGIUM-3.93%
Compagnie Nationale a Portefeuille (Multi-Sector
Holdings)/(d)/ 10,900 2,460,479
-----------------------------------------------------------------------------
Groupe Bruxelles Lambert S.A. (Multi-Sector
Holdings)/(c)(d)/ 309,400 28,195,826
-----------------------------------------------------------------------------
InBev N.V. (Brewers)/(d)/ 142,235 4,982,665
-----------------------------------------------------------------------------
35,638,970
-----------------------------------------------------------------------------
BRAZIL-0.70%
Companhia de Bebidas das Americas-ADR (Brewers) 219,100 6,329,799
-----------------------------------------------------------------------------
CANADA-0.79%
Intrawest Corp. (Hotels, Resorts & Cruise Lines) 375,280 7,179,106
-----------------------------------------------------------------------------
DENMARK-0.96%
Carlsberg A.S.-Class B (Brewers)/(c)(d)/ 176,400 8,739,016
-----------------------------------------------------------------------------
FRANCE-2.06%
Accor S.A. (Hotels, Resorts & Cruise Lines)/(d)/ 249,000 12,187,698
-----------------------------------------------------------------------------
JC Decaux S.A. (Advertising)/(a)(d)/ 238,000 6,487,983
-----------------------------------------------------------------------------
18,675,681
-----------------------------------------------------------------------------
HONG KONG-0.17%
Television Broadcasts Ltd.-ADR (Broadcasting &
Cable TV)/(e)/ 154,500 1,557,020
-----------------------------------------------------------------------------
JAPAN-0.35%
Jupiter Telecommunications Co., Ltd. (Broadcasting &
Cable TV) (Acquired 03/14/2005; Cost $320,646)/(a)(f)/ 417 332,480
-----------------------------------------------------------------------------
Sony Corp.-ADR (Consumer Electronics) 70,100 2,805,402
-----------------------------------------------------------------------------
3,137,882
-----------------------------------------------------------------------------
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------------------
LIBERIA-1.10%
Royal Caribbean Cruises Ltd. (Hotels, Resorts & Cruise
Lines) 223,544 $ 9,990,181
-----------------------------------------------------------------------------------
NETHERLANDS-1.20%
Jetix Europe N.V. (Broadcasting & Cable TV)/(a)(d)/ 604,143 10,908,432
-----------------------------------------------------------------------------------
PANAMA-2.00%
Carnival Corp. (Hotels, Resorts & Cruise Lines) 350,000 18,133,500
-----------------------------------------------------------------------------------
SPAIN-0.59%
NH Hoteles, S.A. (Hotels, Resorts & Cruise Lines)/(c)(d)/ 418,600 5,381,697
-----------------------------------------------------------------------------------
SWITZERLAND-1.58%
Compagnie Financiere Richemont A.G. -- Class A
(Apparel, Accessories & Luxury Goods)/(d)/ 214,700 6,746,839
-----------------------------------------------------------------------------------
Pargesa Holding A.G. -- Class B (Multi-Sector
Holdings)/(d)/ 1,984 7,544,686
-----------------------------------------------------------------------------------
14,291,525
-----------------------------------------------------------------------------------
UNITED KINGDOM-4.27%
Allied Domecq PLC (Distillers & Vintners)/(d)/ 1,905,220 19,207,936
-----------------------------------------------------------------------------------
Diageo PLC (Distillers & Vintners)/(d)/ 399,300 5,633,897
-----------------------------------------------------------------------------------
WPP Group PLC (Advertising)/(d)/ 1,221,530 13,888,544
-----------------------------------------------------------------------------------
38,730,377
-----------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests
(Cost $120,459,684) 178,693,186
-----------------------------------------------------------------------------------
MONEY MARKET FUNDS-2.72%
Premier Portfolio-Institutional Class
(Cost $24,712,532)/(g)/ 24,712,532 24,712,532
-----------------------------------------------------------------------------------
TOTAL INVESTMENTS-100.27% (excluding
investments purchased with cash collateral from
securities loaned) (Cost $614,243,545) 909,491,675
-----------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH
COLLATERAL FROM SECURITIES LOANED
MONEY MARKET FUNDS-2.91%
Premier Portfolio-Institutional Class/(g)(h)/ 26,348,886 26,348,886
-----------------------------------------------------------------------------------
Total Money Market Funds (purchased with cash
collateral from securities loaned)
(Cost $26,348,886) 26,348,886
-----------------------------------------------------------------------------------
TOTAL INVESTMENTS-103.18% (Cost $640,592,431) 935,840,561
-----------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(3.18%) (28,851,007)
-----------------------------------------------------------------------------------
NET ASSETS-100.00% $ 906,989,554
-----------------------------------------------------------------------------------
|
FS-57
Investment Abbreviations:
ADR- American Depositary Receipt
Notes to Schedule of Investments:
/(a)/Non-income producing security.
/(b)/Each unit represents one common share and one Class B share.
/(c)/All or a portion of this security has been pledged as collateral for
securities lending transactions at March 31, 2005.
/(d)/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 March 31, 2005 was
$132,365,698, which represented 14.14% of the Fund's Total Investments.
See Note 1A.
/(e)/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 March
31, 2005 represented 0.17% of the Fund's Total Investments. See Note 1A.
/(f)/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
this security. The market value of this security at March 31, 2005
represented 0.04% of the Fund's Net Assets. This security is not
considered to be illiquid.
/(g)/The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
/(h)/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-58
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2005
ASSETS:
Investments, at market value (cost $589,531,013)* $884,779,143
------------------------------------------------------------------------------------
Investments in affiliated money market funds (cost $51,061,418) 51,061,418
------------------------------------------------------------------------------------
Total investments (cost $640,592,431) 935,840,561
------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $123,693) 122,075
------------------------------------------------------------------------------------
Receivables for:
Fund shares sold 1,891,930
------------------------------------------------------------------------------------
Dividends 745,836
------------------------------------------------------------------------------------
Collateral for securities lending* 1,023,023
------------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 72,586
------------------------------------------------------------------------------------
Other assets 36,291
------------------------------------------------------------------------------------
Total assets 939,732,302
------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 2,714,601
------------------------------------------------------------------------------------
Fund shares reacquired 1,894,533
------------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 98,406
------------------------------------------------------------------------------------
Collateral upon return of securities loaned 27,371,909
------------------------------------------------------------------------------------
Accrued distribution fees 248,756
------------------------------------------------------------------------------------
Accrued trustees' fees 4,917
------------------------------------------------------------------------------------
Accrued transfer agent fees 314,050
------------------------------------------------------------------------------------
Accrued operating expenses 95,576
------------------------------------------------------------------------------------
Total liabilities 32,742,748
------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $906,989,554
------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Shares of beneficial interest $613,608,174
------------------------------------------------------------------------------------
Undistributed net investment income (loss) (9,330,263)
------------------------------------------------------------------------------------
Undistributed net realized gain from investment securities and foreign
currencies 7,462,130
------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign
currencies 295,249,513
------------------------------------------------------------------------------------
$906,989,554
------------------------------------------------------------------------------------
|
NET ASSETS:
Class A $ 87,068,297
------------------------------------------------------------
Class B $ 28,776,063
------------------------------------------------------------
Class C $ 29,706,432
------------------------------------------------------------
Class K $101,461,194
------------------------------------------------------------
Investor Class $659,977,568
------------------------------------------------------------
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 1,908,899
------------------------------------------------------------
Class B 641,474
------------------------------------------------------------
Class C 677,963
------------------------------------------------------------
Class K 2,250,142
------------------------------------------------------------
Investor Class 14,491,384
------------------------------------------------------------
Class A :
Net asset value per share $ 45.61
------------------------------------------------------------
Offering price per share:
(Net asset value of $45.61 / 94.50%) $ 48.26
------------------------------------------------------------
Class B :
Net asset value and offering price per share $ 44.86
------------------------------------------------------------
Class C :
Net asset value and offering price per share $ 43.82
------------------------------------------------------------
Class K :
Net asset value and offering price per share $ 45.09
------------------------------------------------------------
Investor Class:
Net asset value and offering price per share $ 45.54
------------------------------------------------------------
|
* At March 31, 2005, securities with an aggregate market value of $26,380,814 were on loan to brokers.
See accompanying notes which are an integral part of the financial statements.
FS-59
STATEMENT OF OPERATIONS
For the year ended March 31, 2005
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $270,363) $11,347,526
------------------------------------------------------------------------------------------------------
Dividends from affiliated money market funds 305,201
------------------------------------------------------------------------------------------------------
Securities lending (includes $144,637 from investments in affiliated money market funds)* 150,107
------------------------------------------------------------------------------------------------------
Total investment income 11,802,834
------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 5,986,641
------------------------------------------------------------------------------------------------------
Administrative services fees 289,567
------------------------------------------------------------------------------------------------------
Custodian fees 190,321
------------------------------------------------------------------------------------------------------
Distribution fees:
Class A 251,928
------------------------------------------------------------------------------------------------------
Class B 221,073
------------------------------------------------------------------------------------------------------
Class C 279,515
------------------------------------------------------------------------------------------------------
Class K 501,318
------------------------------------------------------------------------------------------------------
Investor Class 1,660,322
------------------------------------------------------------------------------------------------------
Transfer agent fees 2,679,680
------------------------------------------------------------------------------------------------------
Trustees' fees and retirement benefits 36,321
------------------------------------------------------------------------------------------------------
Other 540,167
------------------------------------------------------------------------------------------------------
Total expenses 12,636,853
------------------------------------------------------------------------------------------------------
Less:Fees waived, expenses reimbursed and expense offset arrangements (117,957)
------------------------------------------------------------------------------------------------------
Net expenses 12,518,896
------------------------------------------------------------------------------------------------------
Net investment income (loss) (716,062)
------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities 51,353,025
------------------------------------------------------------------------------------------------------
Foreign currencies (69,508)
------------------------------------------------------------------------------------------------------
51,283,517
------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 9,880,667
------------------------------------------------------------------------------------------------------
Foreign currencies 6,912
------------------------------------------------------------------------------------------------------
9,887,579
------------------------------------------------------------------------------------------------------
Net gain from investment securities and foreign currencies 61,171,096
------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $60,455,034
------------------------------------------------------------------------------------------------------
|
* Net of rebates of $490,205.
See accompanying notes which are an integral part of the financial statements.
FS-60
STATEMENT OF CHANGES IN NET ASSETS
For the years ended March 31, 2005 and 2004
2005 2004
----------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (716,062) $ (4,125,861)
----------------------------------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign currencies 51,283,517 33,634,980
----------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment securities and foreign currencies 9,887,579 230,311,216
----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 60,455,034 259,820,335
----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (527,790) --
----------------------------------------------------------------------------------------------------------------------
Class B (65,995) --
----------------------------------------------------------------------------------------------------------------------
Class C (81,397) --
----------------------------------------------------------------------------------------------------------------------
Class K (741,168) --
----------------------------------------------------------------------------------------------------------------------
Investor Class (5,286,809) --
----------------------------------------------------------------------------------------------------------------------
Total distributions from net investment income (6,703,159) --
----------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 16,189,948 25,316,369
----------------------------------------------------------------------------------------------------------------------
Class B 8,541,533 6,541,717
----------------------------------------------------------------------------------------------------------------------
Class C (266,170) 3,227,454
----------------------------------------------------------------------------------------------------------------------
Class K (22,985,488) 21,337,946
----------------------------------------------------------------------------------------------------------------------
Investor Class (82,709,983) (38,559,711)
----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from share transactions (81,230,160) 17,863,775
----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (27,478,285) 277,684,110
----------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 934,467,839 656,783,729
----------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment income (loss) of $(9,330,263) and
$(2,657,921), respectively) $906,989,554 $934,467,839
----------------------------------------------------------------------------------------------------------------------
|
See accompanying notes which are an integral part of the financial statements.
FS-61
NOTES TO FINANCIAL STATEMENTS
March 31, 2005
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Leisure Fund, formerly INVESCO Leisure Fund, (the "Fund") is a series
portfolio of AIM Sector Funds (the "Trust"). The Trust is a Delaware statutory
trust registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end series management investment company consisting of
seven separate 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 to seek capital growth. 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.
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.
FS-62
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. 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.
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 $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% ------------------------- |
Prior to September 30, 2004, AIM had entered into a sub-advisory agreement
with INVESCO Institutional (N.A.), Inc. ("INVESCO") whereby AIM paid INVESCO
40% of the fee paid by the Fund to AIM. Effective September 30, 2004, the
sub-advisory agreement between AIM and INVESCO was terminated.
AIM has voluntarily 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 K and
Investor Class shares to 1.50%, 2.15%, 2.15%, 1.60% and 1.40% of average daily
net assets, respectively. 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 K and Investor Class shares to 2.00%, 2.65%, 2.65%, 2.10% and
1.90% of average daily net assets, respectively, through March 31, 2006. 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")
FS-63
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.
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 year ended March 31, 2005, AIM waived fees of $11,083.
For the year ended March 31, 2005, at the request of the Trustees of the
Trust, AMVESCAP agreed to reimburse $94,499 of expenses incurred by the Fund in
connection with market timing matters in the AIM Funds, including 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 year ended
March 31, 2005, AIM was paid $289,567.
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 year ended March
31, 2005, the Fund paid AISI $2,679,680.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class
B, Class C, Class K and Investor 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, Class K and Investor Class 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, 0.45% of the average daily net assets of Class K shares and 0.25% of
the average daily net assets of Investor Class shares. Of these amounts, up to
0.25% of the average daily net assets of the Class A, Class B, Class C, Class K
or Investor Class 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 year ended March 31, 2005, the Class A, Class B,
Class C, Class K and Investor Class shares paid ADI $251,928, $221,073,
$279,515, $501,318 and $1,660,322, 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 March 31, 2005, ADI advised the Fund that it retained $46,679 in
front-end sales commissions from the sale of Class A shares and $49, $13,340,
$4,960 and $0 from Class A, Class B, Class C and Class K 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--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 an affiliated money market fund for the year ended March 31, 2005.
INVESTMENTS OF DAILY AVAILABLE CASH BALANCES:
PROCEEDS UNREALIZED REALIZED
MARKET VALUE PURCHASES FROM APPRECIATION MARKET VALUE DIVIDEND GAIN
FUND 03/31/04 AT COST SALES (DEPRECIATION) 03/31/05 INCOME (LOSS)
--------------------------------------------------------------------------------------------------------------------------------
Premier Portfolio -- Institutional Class* $15,887,810 $134,597,209 $(125,772,487) $-- $24,712,532 $305,201 $--
--------------------------------------------------------------------------------------------------------------------------------
|
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
PROCEEDS UNREALIZED REALIZED
MARKET VALUE PURCHASES FROM APPRECIATION MARKET VALUE DIVIDEND GAIN
FUND 03/31/04 AT COST SALES (DEPRECIATION) 03/31/05 INCOME** (LOSS)
--------------------------------------------------------------------------------------------------------------------------------
Premier Portfolio -- Institutional Class* $13,629,807 $364,709,563 $(351,990,484) $-- $26,348,886 $144,637 $--
--------------------------------------------------------------------------------------------------------------------------------
Total $29,517,617 $516,008,075 $(494,464,274) $-- $51,061,418 $449,838 $--
--------------------------------------------------------------------------------------------------------------------------------
|
* On February 25, 2005, the Premier Portfolio investments were transferred from the original share class with no name designation to the newly structured share class designated as Institutional Class. **Net of rebates.
FS-64
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 March 31, 2005, the Fund engaged in purchases and sales of securities of $0 and $2,196,180, respectively.
NOTE 5--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 year ended March 31, 2005, the Fund received credits from these arrangements which resulted in the reduction of the Fund's total expenses of $12,375.
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 March 31, 2005, the Fund paid legal fees of $6,362 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
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 March 31, 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 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 March 31, 2005, securities with an aggregate value of $26,380,814 were on
loan to brokers. The loans were secured by cash collateral of $26,348,886
received by the Fund and subsequently invested in an affiliated money market
fund and by non-cash collateral of $1,023,023 received by the Fund, consisting
of U.S. Treasury Securities. For the year ended March 31, 2005, the Fund
received dividends on cash collateral of $144,637 and non-cash collateral of
$5,470 for securities lending transactions, which are net of rebates.
FS-65
NOTE 9--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years ended March 31, 2005 and 2004 was as follows:
2005 2004
--------------------------------------------------------------
Distributions paid from ordinary income $6,703,159 --
--------------------------------------------------------------
|
TAX COMPONENTS OF NET ASSETS:
As of March 31, 2005, the components of net assets on a tax basis were as follows:
2005
----------------------------------------------------
Undistributed ordinary income $ 5,909,167
----------------------------------------------------
Undistributed long-term gain 7,473,574
----------------------------------------------------
Unrealized appreciation -- investments 280,057,311
----------------------------------------------------
Temporary book/tax differences (58,672)
----------------------------------------------------
Shares of beneficial interest 613,608,174
----------------------------------------------------
Total net assets $906,989,554
----------------------------------------------------
|
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 recognition of income on certain foreign passive investment
companies, and partnership basis adjustments. The tax-basis unrealized
appreciation (depreciation) on investments amount includes appreciation on
foreign currencies of $1,383.
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.
The Fund utilized $42,488,737 of capital loss carryforward in the current
period to offset net realized capital gain for federal income tax purposes. The
Fund has no capital loss carryforward as of March 31, 2005.
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
March 31, 2005 was $73,161,578 and $162,116,083, respectively.
At the request of the Trustees, AIM recovered third party research credits
during the year ended March 31, 2005, in the amount of $11,008. These research
credits were recorded as realized gains.
UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENT SECURITIES ON A TAX BASIS
--------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $286,690,183
--------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (6,634,255)
--------------------------------------------------------------------------
Net unrealized appreciation of investment securities $280,055,928
--------------------------------------------------------------------------
|
Cost of investments for tax purposes is $655,784,633.
NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of foreign currency transactions, expenses related to the plan of reorganization, excise taxes, partnership investments, passive foreign investment companies and net operating losses, on March 31, 2005, undistributed net investment income was increased by $746,879, undistributed net realized gain (loss) decreased by $2,099,938 and shares of beneficial interest increased by $1,353,059. This reclassification had no effect on the net assets of the Fund.
FS-66
NOTE 12--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A shares, Class B shares, Class C shares, Class K shares and Investor 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 K shares and Investor Class shares are sold at net asset value. Under certain circumstances, Class A shares and Class K 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 MARCH 31,
----------------------------------------------------
2005 2004
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------------------------------------------
Sold:
Class A 793,522 $ 34,832,067 1,038,600 $ 39,702,454
---------------------------------------------------------------------------------------------------------------
Class B 261,051 11,331,283 205,586 7,697,888
---------------------------------------------------------------------------------------------------------------
Class C 173,013 7,308,032 492,448 17,249,269
---------------------------------------------------------------------------------------------------------------
Class K 323,100 13,842,382 943,723 34,677,978
---------------------------------------------------------------------------------------------------------------
Investor Class 1,793,600 78,195,458 3,598,920 135,515,899
---------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 10,802 494,402 -- --
---------------------------------------------------------------------------------------------------------------
Class B 1,313 59,192 -- --
---------------------------------------------------------------------------------------------------------------
Class C 1,538 67,727 -- --
---------------------------------------------------------------------------------------------------------------
Class K 16,282 736,909 -- --
---------------------------------------------------------------------------------------------------------------
Investor Class 112,325 5,130,605 -- --
---------------------------------------------------------------------------------------------------------------
Automatic conversion of Class B shares to Class A shares:
Class A 3,955 172,948 583 23,845
---------------------------------------------------------------------------------------------------------------
Class B (4,023) (172,948) (591) (23,845)
---------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (452,330) (19,309,469) (366,379) (14,409,930)
---------------------------------------------------------------------------------------------------------------
Class B (62,523) (2,675,994) (29,116) (1,132,326)
---------------------------------------------------------------------------------------------------------------
Class C (184,864) (7,641,929) (396,440) (14,021,815)
---------------------------------------------------------------------------------------------------------------
Class K (870,192) (37,564,779) (357,595) (13,340,032)
---------------------------------------------------------------------------------------------------------------
Investor Class (3,857,390) (166,036,046) (4,547,447) (174,075,610)
---------------------------------------------------------------------------------------------------------------
(1,940,821) $ (81,230,160) 582,292 $ 17,863,775
---------------------------------------------------------------------------------------------------------------
|
/(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 32% of the outstanding shares of the Fund. AIM Distributors has an agreement with these entities to sell Fund share. 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.
FS-67
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 MARCH 31,
--------------------------------------
2005 2004 2003
------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 42.83 $ 30.88 $ 38.96
------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)/(a)/ (0.14)/(a)/ (0.17)/(a)(b)/
------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 3.15 12.09 (7.91)
------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.10 11.95 (8.08)
------------------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.32) -- --
------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 45.61 $ 42.83 $ 30.88
------------------------------------------------------------------------------------------------------------------
Total return/(c)/ 7.23% 38.70% (20.74)%
------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $87,068 $66,510 $27,175
------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.42%/(d)(e)/ 1.48% 1.42%
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (0.11)%/(d)/ (0.37)% (0.56)%
------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 8% 20% 20%
------------------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating which were reclassified from
accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current
method, which is before reclassification of net operating losses, net
investment income (loss) per share would have been $(0.17) for the year
ended March 31, 2003.
/(c)/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.
/(d)/Ratios are based on average daily net assets of $71,979,376.
/(e)/After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.43%
FS-68
NOTE 13--FINANCIAL HIGHLIGHTS-(CONTINUED)
CLASS B
------------------------------------
YEAR ENDED MARCH 31,
------------------------------------
2005 2004 2003
----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 42.22 $ 30.65 $ 38.96
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.32)/(a)/ (0.40)/(a)/ (0.38)/(a)(b)/
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 3.08 11.97 (7.93)
----------------------------------------------------------------------------------------------------------------
Total from investment operations 2.76 11.57 (8.31)
----------------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.12) -- --
----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 44.86 $ 42.22 $ 30.65
----------------------------------------------------------------------------------------------------------------
Total return/(c)/ 6.54% 37.75% (21.33)%
----------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $28,776 $18,814 $ 8,268
----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.07%/(d)/ 2.15% 2.14%
----------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.08%/(d)/ 2.26% 2.23%
----------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (0.76)%/(d)/ (1.04)% (1.29)%
----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 8% 20% 20%
----------------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating which were reclassified from
accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current
method, which is before reclassification of net operating losses, net
investment income (loss) per share would have been $(0.38) for the year
ended March 31, 2003.
/(c)/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.
/(d)/Ratios are based on average daily net assets of $22,107,318.
FS-69
NOTE 13--FINANCIAL HIGHLIGHTS-(CONTINUED)
CLASS C
-----------------------------------------------------------------
YEAR ENDED MARCH 31,
-----------------------------------------------------------------
2005 2004 2003 2002 2001
---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 41.24 $ 30.00 $ 38.29 $ 36.80 $47.09
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.31)/(a)/ (0.46)/(a)/ (0.18)/(b)/ (0.17)/(b)/ (0.13)/(b)/
---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 3.01 11.70 (8.11) 2.02 (3.22)
---------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.70 11.24 (8.29) 1.85 (3.35)
---------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.12) -- -- -- --
---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- (0.36) (6.94)
---------------------------------------------------------------------------------------------------------------------
Total distributions (0.12) -- -- (0.36) (6.94)
---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 43.82 $ 41.24 $ 30.00 $ 38.29 $36.80
---------------------------------------------------------------------------------------------------------------------
Total return/(c)/ 6.55% 37.47% (21.65)% 5.10% (6.18)%
---------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $29,706 $28,383 $17,768 $16,307 $5,388
---------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 2.07%/(d)(e)/ 2.36% 2.44% 2.26% 2.08%
---------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to
average net assets (0.76)%/(d)/ (1.25)% (1.62)% (1.48)% (1.08)%
---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 8% 20% 20% 27% 28%
---------------------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current
method, which is before reclassification of net operating losses, net
investment income (loss) per share would have been $(0.18), $(0.34) and
$(0.16) for the years ended March 31, 2003, 2002 and 2001, respectively.
/(c)/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.
/(d)/Ratios are based on average daily net assets of $27,951,451.
/(e)/After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.08%
NOTE 13--FINANCIAL HIGHLIGHTS-(CONTINUED)
CLASS K
---------------------------------------------------------
DECEMBER 14, 2001
(DATE SALES
YEAR ENDED MARCH 31, COMMENCED) TO
-------------------------------------- MARCH 31,
2005 2004 2003 2002
------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 42.36 $ 30.74 $ 38.98 $ 36.11
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)/(a)/ (0.39)/(a)/ (0.06)/(b)/ (0.09)/(a)(b)/
---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) 3.11 12.01 (8.18) 2.96
---------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.02 11.62 (8.24) 2.87
---------------------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.29) -- -- --
---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 45.09 $ 42.36 $ 30.74 $ 38.98
---------------------------------------------------------------------------------------------------------------------
Total return/(c)/ 7.13% 37.80% (21.14)% 7.95%
---------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $101,461 $117,792 $67,465 $62,226
---------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.52%/(d)/ 2.14% 1.87% 1.23%/(e)/
---------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.53%/(d)/ 2.14% 2.21% 1.23%/(e)/
---------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets (0.21)%/(d)/ (1.03)% (1.05)% (0.48)%/(e)/
---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate/(e)/ 8% 20% 20% 27%
---------------------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating which were reclassified from
accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current
method, which is before reclassification of net operating losses, net
investment income (loss) per share would have been $(0.06) and $(0.09) for
the year ended March 31, 2003 and 2002, respectively.
/(c)/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.
/(d)/Ratios are based on average daily net assets of $111,404,013.
/(e)/Annualized.
/(f)/Not annualized for periods less than one year.
FS-71
NOTE 13--FINANCIAL HIGHLIGHTS-(CONTINUED)
INVESTOR CLASS
-----------------------------------------------------------------------
YEAR ENDED MARCH 31,
-----------------------------------------------------------------------
2005 2004 2003 2002 2001
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 42.75 $ 30.83 $ 38.95 $ 37.13 $ 47.12
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.00)/(a)/ (0.14)/(a)/ (0.23)/(b)/ (0.03)/(b)/ (0.00)/(b)/
--------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) 3.14 12.06 (7.89) 2.21 (3.05)
--------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.14 11.92 (8.12) 2.18 (3.05)
--------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.35) -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- (0.36) (6.94)
--------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.35) -- -- (0.36) (6.94)
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 45.54 $ 42.75 $ 30.83 $ 38.95 $ 37.13
--------------------------------------------------------------------------------------------------------------------------------
Total return/(c)/ 7.35% 38.66% (20.87)% 6.01% (5.50)%
--------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $659,978 $702,969 $536,108 $799,465 $607,428
--------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.32%/(d)(e)/ 1.49% 1.50% 1.40% 1.36%
--------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets (0.01)%/(d)/ (0.38)% (0.69)% (0.64)% (0.51)%
--------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 8% 20% 20% 27% 28%
--------------------------------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current
method, which is before reclassification of net operating losses, net
investment income (loss) per share would have been $(0.23) $(0.22) and
$(0.18) for the years ended March 31, 2003, 2002 and 2001, respectively.
/(c)/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.
/(d)/Ratios are based on average daily net assets of $664,128,930.
/(e)/After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.33%
FS-72
NOTE 14--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) and A I M Advisors, Inc. ("AIM") (the Fund's
investment advisor) reached final settlements with certain regulators,
including without limitation the Securities and Exchange Commission ("SEC"),
the New York Attorney General ("NYAG") and the Colorado Attorney General
("COAG"), 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. 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 they 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 and AIM breached various Federal and state
securities, business and consumer protection laws. On the same date, A I M
Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached a
final settlement with the SEC to resolve an investigation relating to market
timing activity and related issues in the AIM Funds. The SEC also alleged that
ADI violated various Federal securities laws. The SEC also has settled related
market timing enforcement actions brought against certain former officers and
employees of IFG.
Under the terms of the settlements, IFG agreed to pay a total of $325
million, of which $110 million is civil penalties. Of this $325 million total
payment, half has been paid 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, all of which has been paid. The entire $325
million IFG settlement fund will be made 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 fund by AIM and
ADI will be made 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. The IFG and AIM
settlement 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. The settlement funds 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 certain equity and balanced 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, not to increase certain management fees and to
provide more information to investors regarding fees.
Under the terms of the settlements, AIM is undertaking certain governance and
compliance reforms, including maintaining an internal controls committee and
retaining an independent compliance consultant and a corporate ombudsman. 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 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.
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
such Funds related to market timing matters.
The SEC has also settled market timing enforcement actions 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), 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 these settlements, the SEC ordered these
individuals to pay restitution and civil penalties in various amounts and
prohibited them from associating with, or serving as an officer or director of,
an investment advisor, broker, dealer and/or investment company, as applicable,
for certain periods of time.
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 certain equity and balanced 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 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 payments 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 Regulatory Inquiries and Pending
Litigation described below may have on AIM, ADI or the Fund.
REGULATORY INQUIRIES AND PENDING LITIGATION
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 but not limited to revenue sharing and
directed-brokerage arrangements, investments in securities of other registered
investment companies, contractual plans, issues related to Section 529 college
savings plans, procedures for locating lost security holders and participation
in class action settlements.
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.
FS-73
NOTE 14--LEGAL PROCEEDINGS-(CONTINUED)
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 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, the U.S.
Postal Inspection Service and the Commodity Futures Trading Commission, some of
which concern one or more AIM Funds. AIM is providing full cooperation with
respect to these inquiries.
Pending Regulatory Civil Action Alleging Market Timing
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 (S) 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 proceedings, 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, 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.
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, 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 ("ERISA") purportedly brought on behalf of participants in
AMVESCAP's 401(k) plan. The plaintiffs in two of the underlying lawsuits
continue to seek remand of their lawsuit 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. Based on a recent court decision, the state court
action has been removed to Federal court.
FS-74
NOTE 14--LEGAL PROCEEDINGS-(CONTINUED)
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. All of these lawsuits have been transferred to the United States District Court for the Southern District of Texas, Houston Division and subsequently consolidated for pre-trial purposes into one lawsuit.
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 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. ("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. These actions have been consolidated for pre-trial purposes.
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. 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 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.
* * * * * * * * * * * * * * * * 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.
FS-75
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees
and Shareholders of AIM Technology Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Technology Fund, formerly known as INVESCO Technology Fund (one of the funds constituting AIM Sector Funds, hereafter referred to as the "Fund") at March 31, 2005, 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 periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with 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 March 31, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP May 20, 2005 Houston, Texas |
FS-76
FINANCIALS
SCHEDULE OF INVESTMENTS
March 31, 2005
MARKET
SHARES VALUE
-------------------------------------------------------------------------------
DOMESTIC COMMON STOCKS & OTHER
EQUITY INTERESTS-84.02%
APPLICATION SOFTWARE-3.40%
Kronos Inc./(a)/ 65,800 $ 3,363,038
-------------------------------------------------------------------------------
Macromedia, Inc./(a)/ 406,600 13,621,100
-------------------------------------------------------------------------------
Mercury Interactive Corp./(a)/ 228,500 10,826,330
-------------------------------------------------------------------------------
NAVTEQ Corp./(a)/ 265,900 11,526,765
-------------------------------------------------------------------------------
Siebel Systems, Inc./(a)/ 664,900 6,070,537
-------------------------------------------------------------------------------
45,407,770
-------------------------------------------------------------------------------
BIOTECHNOLOGY-0.93%
Genzyme Corp./(a)/ 217,800 12,466,872
-------------------------------------------------------------------------------
Ingenex, Inc.-Pfd., Series B (Acquired 09/27/94;
Cost $178,316)/(a)(b)(c)(d)(e)/ 30,627 0
-------------------------------------------------------------------------------
12,466,872
-------------------------------------------------------------------------------
BROADCASTING & CABLE TV-2.22%
Cablevision Systems Corp. New York Group -- Class A/(a)/ 130,200 3,652,110
-------------------------------------------------------------------------------
Comcast Corp. -- Class A/(a)/ 770,700 26,034,246
-------------------------------------------------------------------------------
29,686,356
-------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-8.23%
Avaya Inc./ (a)/ 557,200 6,508,096
-------------------------------------------------------------------------------
Cisco Systems, Inc./(a)/ 2,155,160 38,555,812
-------------------------------------------------------------------------------
Comverse Technology, Inc./(a)/ 1,076,000 27,136,720
-------------------------------------------------------------------------------
F5 Networks, Inc./(a)(f)/ 251,700 12,708,333
-------------------------------------------------------------------------------
Juniper Networks, Inc./(a)/ 311,622 6,874,381
-------------------------------------------------------------------------------
QUALCOMM Inc. 494,500 18,123,425
-------------------------------------------------------------------------------
109,906,767
-------------------------------------------------------------------------------
COMPUTER HARDWARE-10.55%
Apple Computer, Inc./(a)/ 982,200 40,928,274
-------------------------------------------------------------------------------
Avid Technology, Inc./(a)/ 298,300 16,143,996
-------------------------------------------------------------------------------
Dell Inc./(a)/ 1,003,600 38,558,312
-------------------------------------------------------------------------------
Hewlett-Packard Co. 604,800 13,269,312
-------------------------------------------------------------------------------
International Business Machines Corp. 350,400 32,019,552
-------------------------------------------------------------------------------
140,919,446
-------------------------------------------------------------------------------
COMPUTER STORAGE & PERIPHERALS-6.25%
Brocade Communications Systems, Inc./(a)/ 821,200 4,861,504
-------------------------------------------------------------------------------
EMC Corp./(a)/ 2,914,472 35,906,295
-------------------------------------------------------------------------------
Emulex Corp./(a)/ 533,200 10,045,488
-------------------------------------------------------------------------------
Network Appliance, Inc./(a)/ 483,500 13,373,610
-------------------------------------------------------------------------------
QLogic Corp./(a)/ 190,000 7,695,000
-------------------------------------------------------------------------------
Storage Technology Corp./(a)/ 375,400 11,562,320
-------------------------------------------------------------------------------
83,444,217
-------------------------------------------------------------------------------
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING-0.23%
Dycom Industries, Inc./(a)/ 135,200 $ 3,108,248
---------------------------------------------------------------------------
DATA PROCESSING & OUTSOURCED
SERVICES-3.18%
Automatic Data Processing, Inc. 215,300 9,677,735
---------------------------------------------------------------------------
CheckFree Corp./(a)/ 167,000 6,806,920
---------------------------------------------------------------------------
DST Systems, Inc./(a)/ 334,000 15,424,120
---------------------------------------------------------------------------
First Data Corp. 267,800 10,527,218
---------------------------------------------------------------------------
42,435,993
---------------------------------------------------------------------------
ELECTRONIC EQUIPMENT
MANUFACTURERS-1.00%
Amphenol Corp. -- Class A 340,600 12,615,824
---------------------------------------------------------------------------
Dolby Laboratories Inc. -- Class A/(a)/ 33,800 794,300
---------------------------------------------------------------------------
13,410,124
---------------------------------------------------------------------------
ELECTRONIC MANUFACTURING
SERVICES-0.62%
Trimble Navigation Ltd./(a)/ 245,450 8,298,665
---------------------------------------------------------------------------
HEALTH CARE EQUIPMENT-0.49%
Medtronic, Inc. 128,100 6,526,695
---------------------------------------------------------------------------
HEALTH CARE SERVICES-0.54%
Quest Diagnostics Inc. 68,700 7,222,431
---------------------------------------------------------------------------
HOME ENTERTAINMENT SOFTWARE-0.69%
Activision, Inc./(a)/ 620,799 9,187,825
---------------------------------------------------------------------------
INTEGRATED TELECOMMUNICATION
SERVICES-1.17%
Sprint Corp. 689,600 15,688,400
---------------------------------------------------------------------------
INTERNET RETAIL-1.04%
eBay Inc./(a)/ 374,100 13,938,966
---------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES-8.03%
Google Inc. -- Class A/(a)/ 94,700 17,094,297
---------------------------------------------------------------------------
InfoSpace, Inc./(a)/ 184,900 7,549,467
---------------------------------------------------------------------------
Niku Corp./(a)/ 163,200 2,945,760
---------------------------------------------------------------------------
Openwave Systems Inc./(a)/ 684,300 8,341,617
---------------------------------------------------------------------------
VeriSign, Inc./(a)(f)/ 970,200 27,844,740
---------------------------------------------------------------------------
Yahoo! Inc./(a)/ 1,281,400 43,439,460
---------------------------------------------------------------------------
107,215,341
---------------------------------------------------------------------------
IT CONSULTING & OTHER SERVICES-2.15%
Sapient Corp./(a)/ 105,700 776,367
---------------------------------------------------------------------------
Anteon International Corp./(a)/ 150,700 5,866,751
---------------------------------------------------------------------------
Cognizant Technology Solutions Corp. -- Class A/(a)/ 476,700 22,023,540
---------------------------------------------------------------------------
28,666,658
---------------------------------------------------------------------------
|
FS-77
MARKET
SHARES VALUE
--------------------------------------------------------------------
MOVIES & ENTERTAINMENT-1.87%
Time Warner Inc./(a)/ 1,420,500 $ 24,929,775
--------------------------------------------------------------------
OFFICE ELECTRONICS-0.53%
Zebra Technologies Corp. -- Class A/(a)/ 148,350 7,045,142
--------------------------------------------------------------------
OTHER DIVERSIFIED FINANCIAL
SERVICES-0.46%
BlueStream Ventures L.P.
(Acquired 08/30/00-01/07/05;
Cost $17,784,281)/(a)(b)(c)(d)(e)(g)(h)/ 18,800,865 6,153,899
--------------------------------------------------------------------
SEMICONDUCTOR EQUIPMENT-2.22%
ATMI, Inc./(a)/ 136,400 3,415,456
--------------------------------------------------------------------
KLA-Tencor Corp./(a)/ 291,000 13,388,910
--------------------------------------------------------------------
Lam Research Corp./(a)/ 168,300 4,857,138
--------------------------------------------------------------------
Novellus Systems, Inc./(a)/ 142,700 3,814,371
--------------------------------------------------------------------
Teradyne, Inc./(a)/ 285,100 4,162,460
--------------------------------------------------------------------
29,638,335
--------------------------------------------------------------------
SEMICONDUCTORS-17.94%
Altera Corp./(a)/ 1,187,000 23,478,860
--------------------------------------------------------------------
Analog Devices, Inc. 382,800 13,834,392
--------------------------------------------------------------------
Broadcom Corp. -- Class A/(a)/ 552,700 16,536,784
--------------------------------------------------------------------
Cypress Semiconductor Corp./(a)/ 551,100 6,943,860
--------------------------------------------------------------------
Freescale Semiconductor Inc. -- Class A/(a)/ 237,600 4,027,320
--------------------------------------------------------------------
Freescale Semiconductor Inc. -- Class B/(a)/ 226,377 3,905,003
--------------------------------------------------------------------
Integrated Device Technology, Inc./(a)/ 274,200 3,298,626
--------------------------------------------------------------------
Intel Corp. 1,960,500 45,542,415
--------------------------------------------------------------------
Linear Technology Corp. 375,000 14,366,250
--------------------------------------------------------------------
Maxim Integrated Products, Inc. 521,000 21,293,270
--------------------------------------------------------------------
Microchip Technology Inc. 512,500 13,330,125
--------------------------------------------------------------------
National Semiconductor Corp. 992,100 20,447,181
--------------------------------------------------------------------
PMC-Sierra, Inc./(a)/ 824,100 7,252,080
--------------------------------------------------------------------
Sigmatel Inc./(a)/ 86,400 3,233,952
--------------------------------------------------------------------
Texas Instruments Inc. 748,100 19,069,069
--------------------------------------------------------------------
Xilinx, Inc. 787,100 23,006,933
--------------------------------------------------------------------
239,566,120
--------------------------------------------------------------------
SYSTEMS SOFTWARE-6.25%
McAfee Inc./(a)/ 293,000 6,610,080
--------------------------------------------------------------------
Microsoft Corp. 1,117,000 26,997,890
--------------------------------------------------------------------
Oracle Corp./(a)/ 3,182,000 39,711,360
--------------------------------------------------------------------
Symantec Corp./(a)/ 162,300 3,461,859
--------------------------------------------------------------------
VERITAS Software Corp./(a)/ 286,900 6,661,818
--------------------------------------------------------------------
83,443,007
--------------------------------------------------------------------
WIRELESS TELECOMMUNICATION
SERVICES-4.03%
American Tower Corp. -- Class A/(a)/ 432,300 7,880,829
--------------------------------------------------------------------
Nextel Communications, Inc. -- Class A/(a)/ 476,900 13,553,498
--------------------------------------------------------------------
Nextel Partners, Inc. -- Class A/(a)/ 715,500 15,712,380
--------------------------------------------------------------------
NII Holdings Inc./(a)/ 189,300 10,884,750
--------------------------------------------------------------------
|
MARKET
SHARES VALUE
-------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION
SERVICES-(CONTINUED)
Syniverse Holdings Inc./(a)/ 416,900 $ 5,753,220
-------------------------------------------------------------------------------
53,784,677
-------------------------------------------------------------------------------
Total Domestic Common Stocks & Other Equity
Interests (Cost $877,747,454) 1,122,091,729
-------------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-12.78%
BERMUDA-2.04%
Marvell Technology Group Ltd. (Semiconductors)/(a)(f)/ 710,800 27,252,072
-------------------------------------------------------------------------------
CANADA-1.90%
ATI Technologies Inc. (Semiconductors)/(a)(f)/ 629,600 10,866,896
-------------------------------------------------------------------------------
Cognos, Inc. (Application Software)/(a)/ 344,900 14,465,106
-------------------------------------------------------------------------------
25,332,002
-------------------------------------------------------------------------------
FINLAND-1.59%
Nokia Oyj-ADR (Communications Equipment) 1,375,800 21,228,594
-------------------------------------------------------------------------------
GERMANY-0.27%
SAP A.G.-ADR (Application Software) 91,500 3,667,320
-------------------------------------------------------------------------------
INDIA-0.95%
Infosys Technologies Ltd.-ADR (IT Consulting & Other
Services) 44,200 3,258,866
-------------------------------------------------------------------------------
Wipro Ltd.-ADR (IT Consulting & Other Services)/(i)/ 462,900 9,447,789
-------------------------------------------------------------------------------
12,706,655
-------------------------------------------------------------------------------
ISRAEL-1.37%
Check Point Software Technologies Ltd.
(Systems Software)/(a)/ 838,800 18,235,512
-------------------------------------------------------------------------------
JAPAN-0.04%
Jupiter Telecommunications Co., Ltd.
(Internet Software & Services) (Acquired 03/14/05;
Cost $528,258)/(a)(b)/ 687 547,755
-------------------------------------------------------------------------------
MEXICO-0.74%
America Movil S.A. de C.V.-Series L-ADR
(Wireless Telecommunication Services) 191,500 9,881,400
-------------------------------------------------------------------------------
RUSSIA-0.98%
AO VimpelCom-ADR
(Wireless Telecommunication Services)/(a)/ 379,000 13,045,180
-------------------------------------------------------------------------------
TAIWAN-0.50%
Taiwan Semiconductor Manufacturing Co. Ltd.-ADR
(Semiconductors) 793,999 6,733,112
-------------------------------------------------------------------------------
UNITED KINGDOM-2.40%
Amdocs Ltd. (Application Software)/(a)/ 1,128,320 32,044,288
-------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests
(Cost $142,605,399) 170,673,890
-------------------------------------------------------------------------------
|
FS-78
NUMBER
OF EXERCISE EXPIRATION MARKET
CONTRACTS PRICE DATE VALUE
----------------------------------------------------------
OPTIONS PURCHASED-
0.00%
PUTS-0.00%
ATI Technologies Inc.
(Canada)
(Semiconductors)
(Cost $84,454) 3,262 $15 Apr-05 $8,155
----------------------------------------------------------
|
SHARES
MONEY MARKET FUNDS-4.43%
Premier Portfolio-Institutional Class
(Cost $59,112,303)/(j)/ 59,112,303 59,112,303
----------------------------------------------------------------------------------
TOTAL INVESTMENTS-101.23% (excluding investments
purchased with cash collateral from securities loaned)
(Cost $1,079,549,610) 1,351,886,077
----------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH
COLLATERAL FROM SECURITIES LOANED
MONEY MARKET FUNDS-0.55%
Premier Portfolio-Institutional Class/(j)(k)/ 7,397,327 7,397,327
----------------------------------------------------------------------------------
Total Money Market Funds (purchased with cash
collateral from securities loaned)
(Cost $7,397,327) 7,397,327
----------------------------------------------------------------------------------
TOTAL INVESTMENTS-101.78% (Cost $1,086,946,937) 1,359,283,404
----------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(1.78%) (23,825,713)
----------------------------------------------------------------------------------
NET ASSETS-100.00% $1,335,457,691
----------------------------------------------------------------------------------
|
Investment Abbreviations:
ADR- American Depositary Receipt
Pfd.- Preferred
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 March
31, 2005 was $6,701,654, which represented 0.50% of the Fund's Net Assets.
Unless otherwise indicated, these securities are not considered to be
illiquid.
/(c)/Security is considered venture capital. See Note 1J.
/(d)/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 March 31, 2005 was $6,153,899, which represented 0.45% of
the Fund's Total Investments. See Note 1A.
/(e)/Security considered to be illiquid; the Portfolio is limited to investing
15% of net assets in illiquid securities. The aggregate market value of
these securities considered illiquid at March 31, 2005 was $6,153,899,
which represented 0.46% of the Fund's Net Assets.
/(f)/A portion of this security is subject to call options written. See Note 1H
and Note 9.
/(g)/The Fund has a remaining commitment of $8,847,098 to purchase additional
interests in BlueStream Ventures L.P., which is subject to the terms of
the limited partnership agreement.
/(h)/The Investment Company Act of 1940 defines affiliates as those companies
in which a fund holds 5% or more of the outstanding voting securities. The
Fund has not owned enough of the outstanding voting securities of the
issuer to have control (as defined in the Investment Company Act of 1940)
of that issuer. The market value of this security at March 31, 2005
represented 0.46% of the Fund's Net Assets.
/(i)/All or a portion of this security has been pledged as collateral for
securities lending transactions at March 31, 2005.
/(j)/The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
/(k)/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-79
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2005
ASSETS:
Investments, at market value (cost $1,002,653,026)* $1,286,619,875
------------------------------------------------------------------------------------
Investments in affiliates (cost $84,293,911) 72,663,529
------------------------------------------------------------------------------------
Total investments (cost $1,086,946,937) 1,359,283,404
------------------------------------------------------------------------------------
Cash 425,430
------------------------------------------------------------------------------------
Receivables for:
Investments sold 13,462,418
------------------------------------------------------------------------------------
Fund shares sold 646,114
------------------------------------------------------------------------------------
Dividends 210,834
------------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 379,647
------------------------------------------------------------------------------------
Other assets 55,755
------------------------------------------------------------------------------------
Total assets 1,374,463,602
------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 23,549,308
------------------------------------------------------------------------------------
Fund shares reacquired 4,960,564
------------------------------------------------------------------------------------
Options written, at market value (premiums received $624,671) 539,717
------------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 491,229
------------------------------------------------------------------------------------
Collateral upon return of securities loaned 7,397,327
------------------------------------------------------------------------------------
Accrued distribution fees 499,624
------------------------------------------------------------------------------------
Accrued trustees' fees 6,575
------------------------------------------------------------------------------------
Accrued transfer agent fees 945,752
------------------------------------------------------------------------------------
Accrued operating expenses 615,815
------------------------------------------------------------------------------------
Total liabilities 39,005,911
------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $1,335,457,691
------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,858,492,051
------------------------------------------------------------------------------------
Undistributed net investment income (loss) (310,067)
------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment securities,
foreign currencies and option contracts (795,145,714)
------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign currencies
and option contracts 272,421,421
------------------------------------------------------------------------------------
$1,335,457,691
------------------------------------------------------------------------------------
|
NET ASSETS: Class A $314,754,836 ----------------------------------------------------------- Class B $ 88,240,210 ----------------------------------------------------------- Class C $ 27,016,346 ----------------------------------------------------------- Class K $ 12,804,922 ----------------------------------------------------------- Investor Class $892,630,304 ----------------------------------------------------------- Institutional Class $ 11,073 ----------------------------------------------------------- SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 13,341,796 ----------------------------------------------------------- Class B 3,829,677 ----------------------------------------------------------- Class C 1,204,658 ----------------------------------------------------------- Class K 555,241 ----------------------------------------------------------- Investor Class 38,201,829 ----------------------------------------------------------- Institutional Class 453 ----------------------------------------------------------- Class A: Net asset value per share $ 23.59 ----------------------------------------------------------- Offering price per share: (Net asset value of $23.59 / 94.50%) $ 24.96 ----------------------------------------------------------- Class B: Net asset value and offering price per share $ 23.04 ----------------------------------------------------------- Class C: Net asset value and offering price per share $ 22.43 ----------------------------------------------------------- Class K: Net asset value and offering price per share $ 23.06 ----------------------------------------------------------- Investor Class: Net asset value and offering price per share $ 23.37 ----------------------------------------------------------- Institutional Class: Net asset value and offering price per share $ 24.44 ----------------------------------------------------------- |
* At March 31, 2005, securities with an aggregate market value of $7,275,203 were on loan to brokers.
See accompanying notes which are an integral part of the financial statements.
FS-80
STATEMENT OF OPERATIONS
For the year ended March 31, 2005
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $327,940) $ 11,357,970
-----------------------------------------------------------------------------------------------------------------------
Dividends from affiliated money market funds 535,283
-----------------------------------------------------------------------------------------------------------------------
Securities lending (includes $185,090 from investments in affiliated money market funds)* 185,700
-----------------------------------------------------------------------------------------------------------------------
Total investment income 12,078,953
-----------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 10,500,091
-----------------------------------------------------------------------------------------------------------------------
Administrative services fees 560,226
-----------------------------------------------------------------------------------------------------------------------
Custodian fees 105,046
-----------------------------------------------------------------------------------------------------------------------
Distribution fees:
Class A 1,231,620
-----------------------------------------------------------------------------------------------------------------------
Class B 1,038,119
-----------------------------------------------------------------------------------------------------------------------
Class C 314,955
-----------------------------------------------------------------------------------------------------------------------
Class K 71,142
-----------------------------------------------------------------------------------------------------------------------
Investor Class 2,747,822
-----------------------------------------------------------------------------------------------------------------------
Transfer agent fees -- Class A, B, C, K and Investor Class 10,163,342
-----------------------------------------------------------------------------------------------------------------------
Transfer agent fees -- Institutional Class 131,472
-----------------------------------------------------------------------------------------------------------------------
Trustees' fees and retirement benefits 69,178
-----------------------------------------------------------------------------------------------------------------------
Other 766,960
-----------------------------------------------------------------------------------------------------------------------
Total expenses 27,699,973
-----------------------------------------------------------------------------------------------------------------------
Less:Fees waived, expenses reimbursed and expense offset arrangement (1,180,972)
-----------------------------------------------------------------------------------------------------------------------
Net expenses 26,519,001
-----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (14,440,048)
-----------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES, FOREIGN CURRENCIES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 267,108,601
-----------------------------------------------------------------------------------------------------------------------
Foreign currencies (388,854)
-----------------------------------------------------------------------------------------------------------------------
Option contracts written 145,675
-----------------------------------------------------------------------------------------------------------------------
266,865,422
-----------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities (422,628,576)
-----------------------------------------------------------------------------------------------------------------------
Foreign currencies (284)
-----------------------------------------------------------------------------------------------------------------------
Option contracts written (534,516)
-----------------------------------------------------------------------------------------------------------------------
(423,163,376)
-----------------------------------------------------------------------------------------------------------------------
Net gain (loss) from investment securities, foreign currencies and option contracts (156,297,954)
-----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(170,738,002)
-----------------------------------------------------------------------------------------------------------------------
|
* Net of rebates of $389,897
See accompanying notes which are an integral part of the financial statements.
FS-81
STATEMENT OF CHANGES IN NET ASSETS
For the years ended March 31, 2005 and 2004
2005 2004
------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (14,440,048) $ (30,592,087)
------------------------------------------------------------------------------
Net realized gain from investment
securities, foreign currencies and option
contracts 266,865,422 55,136,996
------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities,
foreign currencies and option contracts (423,163,376) 770,934,326
------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (170,738,002) 795,479,235
------------------------------------------------------------------------------
Share transactions-net:
Class A (77,627,447) 373,143,307
------------------------------------------------------------------------------
Class B (31,117,750) 116,125,985
------------------------------------------------------------------------------
Class C (8,376,194) 27,197,490
------------------------------------------------------------------------------
Class K (6,196,692) (11,012,370)
------------------------------------------------------------------------------
Investor Class (393,625,584) 122,403,961
------------------------------------------------------------------------------
Institutional Class (1,227,237,773) 233,563,587
------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from share transactions (1,744,181,440) 861,421,960
------------------------------------------------------------------------------
Net increase (decrease) in net assets (1,914,919,442) 1,656,901,195
------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 3,250,377,133 1,593,475,938
------------------------------------------------------------------------------
End of year (including undistributed net
investment income (loss) of $(310,067)
and $(322,064), respectively) $ 1,335,457,691 $3,250,377,133
------------------------------------------------------------------------------
|
See accompanying notes which are an integral part of the financial statements.
FS-82
NOTES TO FINANCIAL STATEMENTS
March 31, 2005
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Technology Fund, formerly INVESCO Technology Fund, (the "Fund") is a series
portfolio of AIM Sector Funds (the "Trust"). The Trust is a Delaware statutory
trust registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end series management investment company consisting of
seven separate 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 to seek capital growth. 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.
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.
FS-83
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.
H. COVERED CALL OPTIONS -- The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. When the Fund writes a
covered call option, an amount equal to the premium received by the Fund is
recorded as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market
value of the option written. The current market value of a written option is
the mean between the last bid and asked prices on that day. If a written
call option expires on the stipulated expiration date, or if the Fund enters
into a closing purchase transaction, the Fund realizes a gain (or a loss if
the closing purchase transaction exceeds the premium received when the
option was written) without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is
extinguished. If a written option is exercised, the Fund realizes a gain or
a loss from the sale of the underlying security and the proceeds of the sale
are increased by the premium originally received. A risk in writing a call
option is that the Fund gives up the opportunity for profit if the market
price of the security increases and the option is exercised.
I. PUT OPTIONS -- The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, the Fund pays an option premium. The option's underlying instrument
may be a security or a futures contract. Put options may be used by the Fund
to hedge securities it owns by locking in a minimum price at which the Fund
can sell. If security prices fall, the put option could be exercised to
offset all or a portion of the Fund's resulting losses. At the same time,
because the maximum the Fund has at risk is the cost of the option,
purchasing put options does not eliminate the potential for the Fund to
profit from an increase in the value of the securities hedged. A risk in
buying an option is that the Fund pays a premium whether or not the option
is exercised. In addition, there can be no assurance that a liquid secondary
market will exist for any option purchased or sold.
J. VENTURE CAPITAL INVESTMENTS -- The Fund has invested in non-publicly traded
companies, some of which are in the startup or development stages. These
investments are inherently risky, as the markets for the technologies or
products these companies are developing are typically in the early stages
and may never materialize. The Fund could lose its entire investment in
these companies. These investments are valued at fair value as determined in
good faith in accordance with procedures approved by the Board of Trustees.
Investments in privately held venture capital securities are illiquid.
FS-84
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 $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% ------------------------- |
Prior to September 30, 2004, AIM had entered into a sub-advisory agreement
with INVESCO Institutional (N.A.), Inc. ("INVESCO") whereby AIM paid INVESCO
40% of the fee paid by the Fund to AIM. Effective September 30, 2004, the
sub-advisory agreement between AIM and INVESCO was terminated.
AIM has voluntarily 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 and Class B, Class C and
Institutional Class shares to 1.50%, 2.15%, 2.15% and 1.15% of average daily
net assets, respectively. Additionally, the advisor had agreed to further limit
the total annual operating expenses of Class K and Investor Class shares to
1.95% and 1.77% of average daily net assets, respectively, through November 23,
2004. Effective April 1, 2005, AIM has voluntarily 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 K, Investor Class and Institutional Class shares to 1.65%,
2.30%, 2.30%, 1.75%, 1.65% and 1.30% of average daily net assets, respectively.
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 K and
Investor Class shares to 2.00%, 2.65%, 2.65%, 2.10% and 1.90% of average daily
net assets, respectively, through March 31, 2006. 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.
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 year ended March 31, 2005, AIM waived fees of $22,884.
For the year ended March 31, 2005, at the request of the Trustees of the
Trust, AMVESCAP agreed to reimburse $281,312 of expenses incurred by the Fund
in connection with market timing matters in the AIM Funds, including 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 year ended
March 31, 2005, AIM was paid $560,226.
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 year ended March
31, 2005, the Fund paid AISI $10,163,342 for Class A, Class B, Class C, Class K
and Investor Class share classes and $131,472 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 K, Investor Class 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, Class K and Investor Class
shares (collectively the "Plans"). The Fund, pursuant to the Class A, Class B,
Class C and Class K 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 0.45% of the average daily
net assets of Class K shares. The Fund, pursuant to the Investor Class Plan,
pays ADI for its allocated share of expenses incurred pursuant to the Investor
Class Plan for the period, up to a maximum annual rate of 0.25% of the average
daily net assets of the Investor Class shares. Of these amounts, up to 0.25% of
the average daily net assets of the Class A, Class B, Class C, Class K or
Investor Class 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.
FS-85
Pursuant to the Plans, for the year ended March 31, 2005, the Class A, Class B,
Class C, Class K and Investor Class shares paid ADI $1,231,620, $1,038,119,
$314,955, $71,142 and $2,747,822, respectively. Of these amounts, AIM
reimbursed Plan fees of $573,334, $169,789, $51,300, $0 and $61,111,
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 March 31, 2005, ADI advised the Fund that it retained $48,237 in
front-end sales commissions from the sale of Class A shares and $106, $40,365,
$5,029 and $0 from Class A, Class B, Class C and Class K 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--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 fund 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 an affiliated money market fund for the year ended March 31, 2005.
INVESTMENTS OF DAILY AVAILABLE CASH BALANCES:
MARKET UNREALIZED MARKET
VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED
FUND 03/31/04 AT COST FROM SALES (DEPRECIATION) 03/31/05 INCOME GAIN (LOSS)
------------------------------------------------------------------------------------------------------------------------------
Premier Portfolio -- Institutional Class* $-- $837,591,667 $(778,479,364) $-- $59,112,303 $535,283 $--
------------------------------------------------------------------------------------------------------------------------------
|
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
MARKET UNREALIZED MARKET
VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED
FUND 03/31/04 AT COST FROM SALES (DEPRECIATION) 03/31/05 INCOME** GAIN (LOSS)
--------------------------------------------------------------------------------------------------------------------------------
Premier Portfolio -- Institutional Class* $45,272,646 $640,470,151 $(678,345,470) $-- $7,397,327 $185,090 $--
--------------------------------------------------------------------------------------------------------------------------------
|
* On February 25, 2005, the Premier Portfolio investments were transferred from the original share class with no name designation to the newly structured share class designated as Institutional Class. **Net of rebates.
INVESTMENTS IN OTHER AFFILIATES:
The Investment Company Act of 1940 defines affiliates as those companies in which a fund holds 5% or more of the outstanding voting securities. The Fund has not owned enough of the outstanding voting securities of the issuer to have control (as defined in the Investment Company Act of 1940) of that issuer. The following is a summary of the transactions with affiliates for the year ended March 31, 2005.
INVESTMENTS IN OTHER AFFILIATES:
MARKET UNREALIZED MARKET
VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED
FUND 03/31/04 AT COST FROM SALES (DEPRECIATION) 03/31/05 INCOME GAIN (LOSS)
---------------------------------------------------------------------------------------------------------------------
BlueStream Ventures L.P. $ 9,480,168 $ 3,160,665 $ (3,622,731) $(2,864,203) $ 6,153,899 $ -- $(8,181,572)
---------------------------------------------------------------------------------------------------------------------
Total $54,752,814 $1,508,813,463 $(1,488,038,545) $(2,864,203) $72,663,529 $720,373 $(8,181,572)
---------------------------------------------------------------------------------------------------------------------
|
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 March 31, 2005, the Fund engaged in purchases and sales of securities of $6,985,866 and $4,484,025, respectively.
FS-86
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 March 31, 2005, the Fund received credits from this arrangement which resulted in the reduction of the Fund's total expenses of $21,242.
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 March 31, 2005, the Fund paid legal fees of $10,687 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
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.
During the year ended March 31, 2005, the average interfund borrowings for the
number of days the borrowings were outstanding was $11,952,833 with a weighted
average interest rate of 2.44% and interest expense of $4,778.
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. The Fund did not borrow under the
facility during the year ended March 31, 2005.
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 March 31, 2005, securities with an aggregate value of $7,275,203 were on
loan to brokers. The loans were secured by cash collateral of $7,397,327
received by the Fund and subsequently invested in an affiliated money market
fund. For the year ended March 31, 2005, the Fund received dividends on cash
collateral of $185,090 and non-cash collateral of $610 for securities lending
transactions, which are net of rebates.
FS-87
NOTE 9--OPTION CONTRACTS WRITTEN
TRANSACTIONS DURING THE PERIOD
----------------------------------------
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
----------------------------------------
Beginning of year 10,869 $ 1,325,954
----------------------------------------
Written 10,040 624,671
----------------------------------------
Closed (10,869) (1,325,954)
----------------------------------------
End of year 10,040 $ 624,671
----------------------------------------
|
OPEN CALL OPTIONS WRITTEN AT PERIOD END
--------------------------------------------------------------------------------------------
MARCH 31, UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS 2005 APPRECIATION
MONTH PRICE CONTRACTS RECEIVED MARKET VALUE (DEPRECIATION)
--------------------------------------------------------------------------------------------
ATI Technologies Inc. May-05 $20.0 3,262 $ 56,414 $ 57,085 $ (671)
--------------------------------------------------------------------------------------------
F5 Networks, Inc. Apr-05 60.0 1,933 187,495 19,330 168,165
--------------------------------------------------------------------------------------------
Marvell Technology Group Ltd. May-05 40.0 1,777 133,936 270,992 (137,056)
--------------------------------------------------------------------------------------------
Marvell Technology Group Ltd. May-05 42.5 1,562 121,832 113,245 8,587
--------------------------------------------------------------------------------------------
VeriSign, Inc. Apr-05 30.0 1,506 124,994 79,065 45,929
--------------------------------------------------------------------------------------------
10,040 $624,671 $539,717 $ 84,954
--------------------------------------------------------------------------------------------
|
NOTE 10--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 years ended March 31, 2005 and 2004.
TAX COMPONENTS OF NET ASSETS:
As of March 31, 2005, the components of net assets on a tax basis were as follows:
2005
------------------------------------------------------
Unrealized appreciation -- investments $ 261,420,529
------------------------------------------------------
Temporary book/tax differences (310,067)
------------------------------------------------------
Capital loss carryforward (784,144,822)
------------------------------------------------------
Shares of beneficial interest 1,858,492,051
------------------------------------------------------
Total net assets $1,335,457,691
------------------------------------------------------
|
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is due to differences in the timing of recognition of gains and
losses on investments for tax and book purposes. The Fund's unrealized
appreciation (depreciation) difference is attributable primarily to the
deferral of losses on wash sales, the treatment of certain corporation actions,
the treatment of partnerships and the deferral of losses on certain straddle
transactions. The tax-basis unrealized appreciation (depreciation) on
investments amount includes appreciation on options written of $84,954.
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
March 31, 2005 to utilizing $114,716,266 of capital loss carryforward in the
fiscal year ending March 31, 2006.
FS-88
The Fund utilized $35,492,825 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 March 31, 2005 which expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
---------------------------------------------
March 31, 2010 416,234,709
---------------------------------------------
March 31, 2011 367,910,113
---------------------------------------------
Total capital loss carryforward $784,144,822
---------------------------------------------
|
* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. To the extent that unrealized gains as of November 24, 2003, the date of the reorganization of AIM New Technology Fund, AIM Global Science & Technology Fund and INVESCO Telecommunications Fund into the Fund, are realized on securities held in each fund at such date, the capital loss carryforward may be further limited for up to five years from the date of the reorganization. On April 30, 2004, 51,524,128 Institutional Class shares valued at $1,223,182,804 were redeemed by an institutional investor and settled through a redemption-in-kind transaction, which resulted in a realized gain of $195,057,973 to the Fund for book purposes. From a federal income tax perspective, this redemption triggers limitations under the Internal Revenue Code and related regulations regarding the amount of the capital loss carryforward available for future utilization by the Fund. The actual amount of future capital loss carryforward reduction may fluctuate based on future transactions of the Fund.
NOTE 11--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
March 31, 2005 was $1,554,304,057 and 3,325,133,432, respectively.
At the request of the Trustees, AIM recovered third party research credits
during the year ended March 31, 2005, in the amount of $397,646. These research
credits were recorded as realized gains.
UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENT SECURITIES ON A TAX BASIS
--------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $279,385,299
--------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (18,049,724)
--------------------------------------------------------------------------
Net unrealized appreciation of investment securities $261,335,575
--------------------------------------------------------------------------
|
Cost of investments for tax purposes is $1,097,947,829.
NOTE 12--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of a shareholder redemption-in-kind, limitations on capital loss carryforward, net operating losses and foreign currency transactions on March 31, 2005, undistributed net investment income (loss) was increased by $14,452,045, undistributed net realized gain (loss) increased by $3,558,681,541 and shares of beneficial interest decreased by $3,573,133,586. This reclassification had no effect on the net assets of the Fund and is excluded from the financial highlights.
FS-89
NOTE 13--SHARE INFORMATION
The Fund currently offers six different classes of shares: Class A shares, Class B shares, Class C shares, Class K shares, Investor Class 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 K shares, Investor Class shares and Institutional Class shares are sold at net asset value. Under certain circumstances, Class A shares and Class K 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 MARCH 31,
----------------------------------------------------------
2005 2004
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------------------------------------------------
Sold:
Class A 1,091,737 $ 26,091,564 4,501,507 $ 81,641,531
---------------------------------------------------------------------------------------------------------------------
Class B 324,767 7,546,468 474,807 6,943,163
---------------------------------------------------------------------------------------------------------------------
Class C 199,704 4,490,729 675,589 13,469,521
---------------------------------------------------------------------------------------------------------------------
Class K 348,095 8,080,397 1,213,180 26,751,397
---------------------------------------------------------------------------------------------------------------------
Investor Class 7,578,874 177,927,956 38,943,355 851,155,627
---------------------------------------------------------------------------------------------------------------------
Institutional Class 1,199,210 30,689,266 28,076,536 647,568,629
---------------------------------------------------------------------------------------------------------------------
Issued in connection with acquisitions/(b)/
Class A -- -- 15,964,467 382,265,796
---------------------------------------------------------------------------------------------------------------------
Class B -- -- 5,443,226 128,396,678
---------------------------------------------------------------------------------------------------------------------
Class C -- -- 1,400,217 32,149,290
---------------------------------------------------------------------------------------------------------------------
Class K -- -- 36,756 863,988
---------------------------------------------------------------------------------------------------------------------
Investor Class -- -- 12,528,049 297,424,087
---------------------------------------------------------------------------------------------------------------------
Automatic conversion of Class B shares to Class A shares:
Class A 314,887 7,493,236 208,272 5,264,914
---------------------------------------------------------------------------------------------------------------------
Class B (321,273) (7,493,236) (211,644) (5,264,914)
---------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (4,673,472) (111,212,247) (4,328,243) (96,028,934)
---------------------------------------------------------------------------------------------------------------------
Class B (1,344,399) (31,170,982) (567,393) (13,948,942)
---------------------------------------------------------------------------------------------------------------------
Class C (568,055) (12,866,923) (854,206) (18,421,321)
---------------------------------------------------------------------------------------------------------------------
Class K (628,117) (14,277,089) (1,735,383) (38,627,755)
---------------------------------------------------------------------------------------------------------------------
Investor Class (24,400,287) (571,553,540) (46,959,085) (1,026,175,753)
---------------------------------------------------------------------------------------------------------------------
Institutional Class (52,868,543) (1,257,927,039) (17,177,406) (414,005,042)
---------------------------------------------------------------------------------------------------------------------
(73,746,872) $(1,744,181,440) 37,632,601 $ 861,421,960
---------------------------------------------------------------------------------------------------------------------
|
/(a)/There is one entity that is a record owner of more than 5% of the
outstanding shares of the Fund and it owns 14% 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 entity
are also owned beneficially.
/(b)/As of the opening of business on November 24, 2003, the Fund acquired all
of the net assets of AIM New Technology Fund, AIM Global Science &
Technology Fund and INVESCO Telecommunications Fund pursuant to a plan of
reorganization approved by the Board of Trustees of the Funds on June 11,
2003 and the shareholders of the above named funds on October 28, 2003.
The acquisition was accomplished by a tax-free exchange of 35,372,715
shares of the Fund for 17,601,164, 72,879,085 and 29,260,118 shares of AIM
New Technology Fund, AIM Global Science & Technology Fund and INVESCO
Telecommunications Fund, respectively, outstanding as of the close of
business November 21, 2003. AIM New Technology Fund's net assets at that
date of $52,643,435, including unrealized appreciation of $14,317,910; AIM
Global Science & Technology Fund's net assets at that date of
$487,006,166, including unrealized appreciation of $136,895,768 and
INVESCO Telecommunications Fund's net assets at that date of $301,450,238,
including unrealized appreciation of $49,952,398, were combined with those
of the Fund. The aggregate net assets of the Fund immediately before the
acquisition were $2,660,061,291.
NOTE 14--OTHER MATTERS
The AIM and INVESCO Families of Funds received requests from the SEC for information concerning the Funds' use of exchange traded funds and other registered investment companies, as well as compliance with Section 12(d)(1) of the Investment Company Act of 1940. After reviewing responsive information, the SEC issued a letter dated September 23, 2004 asserting that the Fund entered into certain securities transactions during the period June 2, 2002 to May 31, 2004 that may not have been in compliance with the percentage ownership restriction of certain investment companies and in particular HOLDRs. To the extent it is determined that these securities transactions were not in compliance, appropriate amounts will be reimbursed. At this time, the effect to the Shareholder is not expected to be material.
FS-90
NOTE 15--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------------
YEAR ENDED MARCH 31,
--------------------------------------
2005 2004 2003
------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 24.71 $ 16.98 $ 30.41
------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.19)/(a)/ (0.33)/(a)/ (0.20)/(a)(b)/
------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (0.93) 8.06 (13.23)
------------------------------------------------------------------------------------------------------------------
Total from investment operations (1.12) 7.73 (13.43)
------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 23.59 $ 24.71 $ 16.98
------------------------------------------------------------------------------------------------------------------
Total return/(c)/ (4.53)% 45.52% (44.16)%
------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $314,755 $410,407 $ 4,460
------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.50%/(d)/ 1.50% 1.47%
------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.68%/(d)/ 1.93% 1.51%
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (0.80)%/(d)/ (1.31)% (1.12)%
------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 92% 141% 107%
------------------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) been calculated using the current method, which is
before reclassification of net operating losses, net investment income
(loss) per share would have been $(0.20) for the year ended March 31, 2003.
/(c)/Includes adjustments in accordance with accounting principles generally
accepted in the United States of America as such, the net asset value for
financial reporting purposes and the returns based upon those net asset
value may differ from the net asset value and returns for shareholder
transactions. Does not include sales charges.
/(d)/Ratios are based on average daily net assets of $351,891,329.
CLASS B
-------------------------------------
YEAR ENDED MARCH 31,
-------------------------------------
2005 2004 2003
-----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 24.29 $ 16.84 $ 30.41
-----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.34)/(a)/ (0.48)/(a)/ (0.27)/(a)(b)/
-----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (0.91) 7.93 (13.30)
-----------------------------------------------------------------------------------------------------------------
Total from investment operations (1.25) 7.45 (13.57)
-----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 23.04 $ 24.29 $ 16.84
-----------------------------------------------------------------------------------------------------------------
Total return/(c)/ (5.15)% 44.24% (44.62)%
-----------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $88,240 $125,597 $ 532
-----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.15%/(d)/ 2.15% 2.15%
-----------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.33%/(d)/ 3.16% 2.74%
-----------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (1.45)%/(d)/ (1.96)% (1.71)%
-----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 92% 141% 107%
-----------------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) been calculated using the current method, which is
before reclassification of net operating losses, net investment income
(loss) per share would have been $(0.27) for the year ended March 31, 2003.
/(c)/Includes adjustments in accordance with accounting principles generally
accepted in the United States of America as such, the net asset value for
financial reporting purposes and the returns based upon those net asset
value may differ from the net asset value and returns for shareholder
transactions. Does not include sales charges.
/(d)/Ratios are based on average daily net assets of $103,811,919.
FS-91
NOTE 15--FINANCIAL HIGHLIGHTS-(CONTINUED)
CLASS C
----------------------------------------------------------------
YEAR ENDED MARCH 31,
----------------------------------------------------------------
2005 2004 2003 2002 2001
-----------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $ 23.64 $ 16.39 $ 29.73 $ 35.22 $101.85
-----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.33)/(a)/ (0.45)/(a)/ (0.62)/(b)/ (0.22)/(b)/ (0.18)/(b)/
-----------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) (0.88) 7.70 (12.72) (5.27) (63.81)
-----------------------------------------------------------------------------------------------------------
Total from investment operations (1.21) 7.25 (13.34) (5.49) (63.99)
-----------------------------------------------------------------------------------------------------------
Less distributions from net
realized gains -- -- -- -- (2.64)
-----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 22.43 $ 23.64 $ 16.39 $ 29.73 $ 35.22
-----------------------------------------------------------------------------------------------------------
Total return/(c)/ (5.12)% 44.23% (44.87)% (15.59)% (63.89)%
-----------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $27,016 $37,191 $ 5,759 $18,910 $15,919
-----------------------------------------------------------------------------------------------------------
Ratio of expenses to average net
assets:
With fee waivers and/or expense
reimbursements 2.15%/(d)/ 2.15% 2.69% 2.54% 1.86%
-----------------------------------------------------------------------------------------------------------
Without fee waivers and/or
expense reimbursements 2.33%/(d)/ 3.20% 3.95% 2.54% 1.86%
-----------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (1.45)%/(d)/ (1.96)% (2.39)% (2.26)% (1.30)%
-----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 92% 141% 107% 79% 85%
-----------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current
method, which is before reclassification of net operating losses, net
investment income (loss) per share would have been $(0.84),$(0.54) and
$(0.36) for the years ended March 31, 2003, 2002 and 2001, respectively.
/(c)/Includes adjustments in accordance with accounting principles generally
accepted in the United States of America as such, the net asset value for
financial reporting purposes and the returns based upon those net asset
value may differ from the net asset value and returns for shareholder
transactions. Does not include sales charges.
/(d)/Ratios are based on average daily net assets of $31,495,472.
CLASS K
---------------------------------------------------------------------
NOVEMBER 30,
2000
(DATE SALES
COMMENCED)
YEAR ENDED MARCH 31, TO MARCH 31,
-------------------------------------------------- 2001
2005 2004 2003 2002 ------------
-------------------------------------------------------------------------------------------
Net asset value, beginning of
period $ 24.21 $ 16.78 $ 30.22 $ 35.09 $ 60.01
-----------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income (loss) (0.25)/(a)/ (0.42)/(a)/ (0.07)/(b)/ (0.27)/(a)(b)/ (0.82)/(b)/
-----------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized
and unrealized) (0.90) 7.85 (13.37) (4.60) (24.10)
-----------------------------------------------------------------------------------------------------------
Total from investment
operations (1.15) 7.43 (13.44) (4.87) (24.92)
-----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 23.06 $ 24.21 $ 16.78 $ 30.22 $ 35.09
-----------------------------------------------------------------------------------------------------------
Total return/(c)/ (4.75)% 44.28% (44.47)% (13.85)% (41.54)%
-----------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $12,805 $20,224 $22,156 $27,147 $ 1
-----------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets:
With fee waivers and/or
expense reimbursements 1.76%/(d)/ 2.12% 1.88% 1.28% 5.18%/(e)/
-----------------------------------------------------------------------------------------------------------
Without fee waivers and/or
expense reimbursements 1.78%/(d)/ 2.74% 2.49% 1.28% 5.18%/(e)/
-----------------------------------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average net
assets (1.06)%/(d)/ (1.93)% (1.55)% (1.15)% (4.67)%/(e)/
-----------------------------------------------------------------------------------------------------------
Portfolio turnover rate/(f)/ 92% 141% 107% 79% 85%
-----------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current
method, which is before reclassification of net operating losses, net
investment income (loss) per share would have been $(0.30), $(0.27) and
$(0.86) for the years ended March 31, 2003 and 2002 and the period ended
March 31, 2001.
/(c)/Includes adjustments in accordance with accounting principles generally
accepted in the United States of America as such, the net asset value for
financial reporting purposes and the returns based upon those net asset
value may differ from the net asset value and returns for shareholder
transactions. Not annualized for periods less than one year.
/(d)/Ratios are based on average daily net assets of $15,809,387.
/(e)/Annualized.
/(f)/Not annualized for periods less than one year.
FS-92
NOTE 15--FINANCIAL HIGHLIGHTS-(CONTINUED)
INVESTOR CLASS
-----------------------------------------------------------------------------
YEAR ENDED MARCH 31,
-----------------------------------------------------------------------------
2005 2004 2003 2002 2001
------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $ 24.49 $ 16.90 $ 30.41 $ 35.60 $ 101.92
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.20)/(a)/ (0.35)/(a)/ (0.14)/(b)/ (0.08)/(b)/ (0.10)/(b)/
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) (0.92) 7.94 (13.37) (5.11) (63.58)
------------------------------------------------------------------------------------------------------------------------
Total from investment operations (1.12) 7.59 (13.51) (5.19) (63.68)
------------------------------------------------------------------------------------------------------------------------
Less distributions from net
realized gains -- -- -- -- (2.64)
------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 23.37 $ 24.49 $ 16.90 $ 30.41 $ 35.60
------------------------------------------------------------------------------------------------------------------------
Total return/(c)/ (4.57)% 44.91% (44.43)% (14.58)% (63.54)%
------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $892,630 $1,347,335 $853,530 $1,865,251 $2,181,879
------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net
assets 1.56%/(d)(e)/ 1.72%/(e)/ 1.77% 1.37% 0.98%
------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (0.86)%/(d)/ (1.53)% (1.46)% (1.08)% (0.47)%
------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 92% 141% 107% 79% 85%
------------------------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current
method, which is before reclassification of net operating losses, net
investment income (loss) per share would have been $(0.29), $(0.37) and
$(0.33) for the years ended March 31, 2003, 2002 and 2001.
/(c)/Includes adjustments in accordance with accounting principles generally
accepted in the United States of America as such, the net asset value for
financial reporting purposes and the returns based upon those net asset
value may differ from the net asset value and returns for shareholder
transactions.
/(d)/Ratios are based on average daily net assets of $1,099,128,961.
/(e)/After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.58 and 1.75% for the years ended March 31, 2005 and March 31, 2004,
respectively.
INSTITUTIONAL CLASS
---------------------------------------------------------------------------------
YEAR ENDED MARCH 31,
---------------------------------------------------------------------------------
2005 2004 2003 2002 2001
----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $25.35 $ 17.34 $ 30.93 $ 35.98 $ 102.55
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)/(a)/ (0.16)/(a)/ (0.12)/(a)(b)/ (0.16)/(a)(b)/ (0.06)/(b)/
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) (0.89) 8.17 (13.47) (4.89) (63.87)
----------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.91) 8.01 (13.59) (5.05) (63.93)
----------------------------------------------------------------------------------------------------------------------------
Less distributions from net
realized gains -- -- -- -- (2.64)
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $24.44 $ 25.35 $ 17.34 $ 30.93 $ 35.98
----------------------------------------------------------------------------------------------------------------------------
Total return/(c)/ (3.59)% 46.19% (43.94)% (14.04)% (63.39)%
----------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $ 11 $1,309,623 $707,040 $1,360,738 $1,396,788
----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net
assets 0.79%/(d)(e)/ 0.86% 0.90% 0.74% 0.58%
----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (0.09)%/(d)/ (0.67)% (0.59)% (0.46)% (0.08)%
----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 92% 141% 107% 79% 85%
----------------------------------------------------------------------------------------------------------------------------
|
/(a)/Calculated using average shares outstanding.
/(b)/The net investment income (loss) per share was calculated after permanent
book tax differences, such as net operating losses which were reclassified
from accumulated net investment income (loss) to paid in capital. Had net
investment income (loss) per share been calculated using the current
method, which is before reclassification of net operating losses, net
investment income (loss) per share would have been $(0.12), $(0.16) and
$(0.06) for the years ended March 31, 2003, 2002 and 2001.
/(c)/Includes adjustments in accordance with accounting principles generally
accepted in the United States of America as such, the net asset value for
financial reporting purposes and the returns based upon those net asset
value may differ from the net asset value and returns for shareholder
transactions.
/(d)/Ratios are based on average daily net assets of $116,061,224.
/(e)/After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements for
the year ended March 31, 2005 was 0.81%.
FS-93
NOTE 16--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) and A I M Advisors, Inc. ("AIM") (the Fund's
investment advisor) reached final settlements with certain regulators,
including without limitation the Securities and Exchange Commission ("SEC"),
the New York Attorney General ("NYAG") and the Colorado Attorney General
("COAG"), 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. 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 they 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 and AIM breached various Federal and state
securities, business and consumer protection laws. On the same date, A I M
Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached a
final settlement with the SEC to resolve an investigation relating to market
timing activity and related issues in the AIM Funds. The SEC also alleged that
ADI violated various Federal securities laws. The SEC also has settled related
market timing enforcement actions brought against certain former officers and
employees of IFG.
Under the terms of the settlements, IFG agreed to pay a total of $325
million, of which $110 million is civil penalties. Of this $325 million total
payment, half has been paid 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, all of which has been paid. The entire $325
million IFG settlement fund will be made 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 fund by AIM and
ADI will be made 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. The IFG and AIM
settlement 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. The settlement funds 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 certain equity and balanced 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, not to increase certain management fees and to
provide more information to investors regarding fees.
Under the terms of the settlements, AIM is undertaking certain governance and
compliance reforms, including maintaining an internal controls committee and
retaining an independent compliance consultant and a corporate ombudsman. 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 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.
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
such Funds related to market timing matters.
The SEC has also settled market timing enforcement actions 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), 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 these settlements, the SEC ordered these
individuals to pay restitution and civil penalties in various amounts and
prohibited them from associating with, or serving as an officer or director of,
an investment advisor, broker, dealer and/or investment company, as applicable,
for certain periods of time.
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 certain equity and balanced 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 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 payments 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 Regulatory Inquiries and Pending
Litigation described below may have on AIM, ADI or the Fund.
REGULATORY INQUIRIES AND PENDING LITIGATION
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 but not limited to revenue sharing and
directed-brokerage arrangements, investments in securities of other registered
investment companies, contractual plans, issues related to Section 529 college
savings plans, procedures for locating lost security holders and participation
in class action settlements.
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.
FS-94
NOTE 16--LEGAL PROCEEDINGS-(CONTINUED)
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 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, the U.S.
Postal Inspection Service and the Commodity Futures Trading Commission, some of
which concern one or more AIM Funds. AIM is providing full cooperation with
respect to these inquiries.
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 (S) 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 proceedings, 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, 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.
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, 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 ("ERISA") purportedly brought on behalf of participants in
AMVESCAP's 401(k) plan. The plaintiffs in two of the underlying lawsuits
continue to seek remand of their lawsuit 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. Based on a recent court decision, the state court
action has been removed to Federal court.
FS-95
NOTE 16--LEGAL PROCEEDINGS-(CONTINUED)
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. All of these lawsuits have been transferred to the United States District Court for the Southern District of Texas, Houston Division and subsequently consolidated for pre-trial purposes into one lawsuit.
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 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. ("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. These actions have been consolidated for pre-trial purposes.
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. 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 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.
* * * * * * * * * * * * * * * * 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.
FS-96
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees
and Shareholders of AIM Utilities Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Utilities Fund, formerly known as INVESCO Utilities Fund (one of the funds constituting AIM Sector Funds, hereafter referred to as the "Fund") at March 31, 2005, 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 periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with 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 March 31, 2005 by correspondence with the custodian, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP May 20, 2005 Houston, Texas |
FS-97
FINANCIALS
SCHEDULE OF INVESTMENTS
March 31, 2005
MARKET
SHARES VALUE
---------------------------------------------------------
DOMESTIC COMMON STOCKS-82.95%
DIVERSIFIED METALS & MINING-2.74%
Peabody Energy Corp. 138,800 $ 6,434,768
---------------------------------------------------------
ELECTRIC UTILITIES-42.54%
Ameren Corp. 120,000 5,881,200
---------------------------------------------------------
American Electric Power Co., Inc. 100,000 3,406,000
---------------------------------------------------------
CenterPoint Energy, Inc. 310,000 3,729,300
---------------------------------------------------------
Cinergy Corp. 100,000 4,052,000
---------------------------------------------------------
DTE Energy Co. 50,000 2,274,000
---------------------------------------------------------
Edison International 190,000 6,596,800
---------------------------------------------------------
Entergy Corp. 145,000 10,245,700
---------------------------------------------------------
Exelon Corp. 239,950 11,011,305
---------------------------------------------------------
FirstEnergy Corp. 180,000 7,551,000
---------------------------------------------------------
FPL Group, Inc. 215,000 8,632,250
---------------------------------------------------------
OGE Energy Corp. 100,000 2,695,000
---------------------------------------------------------
PG&E Corp. 305,000 10,400,500
---------------------------------------------------------
PPL Corp. 120,000 6,478,800
---------------------------------------------------------
TXU Corp. 180,000 14,333,400
---------------------------------------------------------
Westar Energy, Inc. 125,000 2,705,000
---------------------------------------------------------
99,992,255
---------------------------------------------------------
GAS UTILITIES-3.38%
KeySpan Corp. 145,000 5,650,650
---------------------------------------------------------
Peoples Energy Corp. 55,000 2,305,600
---------------------------------------------------------
7,956,250
---------------------------------------------------------
INTEGRATED TELECOMMUNICATION
SERVICES-4.92%
Citizens Communications Co. 420,000 5,434,800
---------------------------------------------------------
Sprint Corp. 270,000 6,142,500
---------------------------------------------------------
11,577,300
---------------------------------------------------------
MULTI-UTILITIES & UNREGULATED
POWER-19.62%
Calpine Corp./(a)(b)/ 1,400,000 3,920,000
---------------------------------------------------------
Dominion Resources, Inc. 140,000 10,420,200
---------------------------------------------------------
Duke Energy Corp. 90,000 2,520,900
---------------------------------------------------------
Equitable Resources, Inc. 100,000 5,744,000
---------------------------------------------------------
ONEOK, Inc. 140,000 4,314,800
---------------------------------------------------------
Questar Corp. 160,000 9,480,000
---------------------------------------------------------
SCANA Corp. 76,900 2,939,118
---------------------------------------------------------
Sempra Energy 170,000 6,772,800
---------------------------------------------------------
46,111,818
---------------------------------------------------------
|
MARKET
SHARES VALUE
----------------------------------------------------------------------------
OIL & GAS REFINING, MARKETING &
TRANSPORTATION-8.18%
Kinder Morgan, Inc. 120,000 $ 9,084,000
----------------------------------------------------------------------------
Williams Cos., Inc. (The) 540,000 10,157,400
----------------------------------------------------------------------------
19,241,400
----------------------------------------------------------------------------
WATER UTILITIES-1.57%
Aqua America Inc. 151,250 3,682,938
----------------------------------------------------------------------------
Total Domestic Common Stocks
(Cost $143,049,375) 194,996,729
----------------------------------------------------------------------------
FOREIGN STOCKS & OTHER
EQUITY INTERESTS-15.69%
FRANCE-1.80%
Veolia Environnement (Multi-Utilities & Unregulated
Power)/(b)(c)/ 119,400 4,231,506
----------------------------------------------------------------------------
GERMANY-2.35%
E.ON A.G. (Electric Utilities)/(c)/ 64,255 5,529,341
----------------------------------------------------------------------------
ITALY-3.86%
Enel S.p.A. (Electric Utilities)/(b)(c)/ 505,000 4,832,055
----------------------------------------------------------------------------
Telecom Italia S.p.A.-Savings Shares (Integrated
Telecommunication Services)/(c)/ 448,368 1,401,354
----------------------------------------------------------------------------
Terna S.p.A. (Electric Utilities)/(b)(c)/ 1,073,100 2,849,842
----------------------------------------------------------------------------
9,083,251
----------------------------------------------------------------------------
SPAIN-2.10%
Endesa, S.A. (Electric Utilities)/(b)(c)/ 110,938 2,496,768
----------------------------------------------------------------------------
Telefonica, S.A. (Integrated Telecommunication
Services)/(b)(c)/ 140,143 2,432,764
----------------------------------------------------------------------------
4,929,532
----------------------------------------------------------------------------
UNITED KINGDOM-5.58%
Centrica PLC (Gas Utilities)/(c)/ 809,820 3,533,485
----------------------------------------------------------------------------
National Grid Transco PLC (Multi-Utilities &
Unregulated Power)/(c)/ 400,000 3,708,663
----------------------------------------------------------------------------
Vodafone Group PLC (Wireless Telecommunication
Services)/(c)/ 1,468,018 3,898,729
----------------------------------------------------------------------------
Vodafone Group PLC-ADR (Wireless Telecommunication
Services) 74,100 1,968,096
----------------------------------------------------------------------------
13,108,973
----------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests
(Cost $29,850,440) 36,882,603
----------------------------------------------------------------------------
|
FS-98
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------
NOTES-0.87%
ELECTRIC UTILITIES-0.54%
AmerenEnergy Generating Co.-Series C, Sr. Unsec.
Global Notes, 7.75%, 11/01/05/(d)/ $750,000 $ 766,912
------------------------------------------------------------------------
Kansas City Power & Light Co., Sr. Unsec. Notes,
7.13%, 12/15/05/(d)/ 500,000 511,195
------------------------------------------------------------------------
1,278,107
------------------------------------------------------------------------
INTEGRATED TELECOMMUNICATION
SERVICES-0.33%
British Telecommunications PLC (United Kingdom),
Global Notes, 7.88%, 12/15/05/(d)/ 750,000 771,915
------------------------------------------------------------------------
Notes (Cost $2,249,652) 2,050,022
------------------------------------------------------------------------
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------------
MONEY MARKET FUNDS-0.44%
Premier Portfolio-Institutional Class
(Cost $1,026,579)/(e)/ 1,026,579 $ 1,026,579
-----------------------------------------------------------------------------
TOTAL INVESTMENTS-99.95% (excluding investments
purchased with cash collateral from securities
loaned) (Cost $176,176,046) 234,955,933
-----------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH
COLLATERAL FROM SECURITIES LOANED
MONEY MARKET FUNDS-4.91%
Premier Portfolio-Institutional Class/(e)(f)/ 11,544,702 11,544,702
-----------------------------------------------------------------------------
Total Money Market Funds (purchased with cash
collateral from securities loaned)
(Cost $11,544,702) 11,544,702
-----------------------------------------------------------------------------
TOTAL INVESTMENTS-104.86% (Cost $187,720,748) 246,500,635
-----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(4.86%) (11,435,748)
-----------------------------------------------------------------------------
NET ASSETS-100.00% $235,064,887
-----------------------------------------------------------------------------
|
Investment Abbreviations:
ADR- American Depositary Receipt
Sr.- Senior
Unsec.- Unsecured
Notes to Schedule of Investments:
/(a)/Non-income producing security.
/(b)/All or a portion of this security has been pledged as collateral for
securities lending transactions at March 31, 2005.
/(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 March 31, 2005 was
$34,914,507, which represented 14.16% of the Fund's Total Investments. See
Note 1A.
/(d)/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 March 31, 2005 was $2,050,022, which represented 0.83% of
the Fund's Total Investments. See Note 1A.
/(e)/The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
/(f)/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-99
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2005
ASSETS:
Investments, at market value (cost $175,149,467)* $233,929,354
-----------------------------------------------------------------------------------
Investments in affiliated money market funds (cost $12,571,281) 12,571,281
-----------------------------------------------------------------------------------
Total investments (cost $187,720,748) 246,500,635
-----------------------------------------------------------------------------------
Foreign currencies, at market value (cost $61) 60
-----------------------------------------------------------------------------------
Receivables for:
Fund shares sold 343,680
-----------------------------------------------------------------------------------
Dividends and interest 533,338
-----------------------------------------------------------------------------------
Collateral for securities loaned 749,230
-----------------------------------------------------------------------------------
Amount due from advisor 25,756
-----------------------------------------------------------------------------------
Investments matured (Note 9) 298,772
-----------------------------------------------------------------------------------
Investment for trustee deferred compensation and retirement plans 67,566
-----------------------------------------------------------------------------------
Other assets 31,044
-----------------------------------------------------------------------------------
Total assets 248,550,081
-----------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 880,984
-----------------------------------------------------------------------------------
Trustee deferred compensation and retirement plans 87,460
-----------------------------------------------------------------------------------
Collateral upon return of securities loaned 12,293,932
-----------------------------------------------------------------------------------
Accrued distribution fees 65,369
-----------------------------------------------------------------------------------
Accrued trustees' fees 3,308
-----------------------------------------------------------------------------------
Accrued transfer agent fees 81,187
-----------------------------------------------------------------------------------
Accrued operating expenses 72,954
-----------------------------------------------------------------------------------
Total liabilities 13,485,194
-----------------------------------------------------------------------------------
Net assets applicable to shares outstanding $235,064,887
-----------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Shares of beneficial interest $273,823,790
-----------------------------------------------------------------------------------
Undistributed net investment income (15,543)
-----------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment securities and
foreign currencies (93,224,947)
-----------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign
currencies 54,481,587
-----------------------------------------------------------------------------------
$235,064,887
-----------------------------------------------------------------------------------
|
NET ASSETS: Class A $113,324,815 ------------------------------------------------------------ Class B $ 35,303,124 ------------------------------------------------------------ Class C $ 6,900,457 ------------------------------------------------------------ Investor Class $ 79,536,491 ------------------------------------------------------------ SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 9,231,675 ------------------------------------------------------------ Class B 2,865,959 ------------------------------------------------------------ Class C 555,922 ------------------------------------------------------------ Investor Class 6,425,115 ------------------------------------------------------------ Class A: Net asset value per share $ 12.28 ------------------------------------------------------------ Offering price per share: (Net asset value of $12.28 / 94.50%) $ 12.99 ------------------------------------------------------------ Class B: Net asset value and offering price per share $ 12.32 ------------------------------------------------------------ Class C: Net asset value and offering price per share $ 12.41 ------------------------------------------------------------ Investor Class: Net asset value and offering price per share $ 12.38 ------------------------------------------------------------ |
* At March 31, 2005, securities with an aggregate market value of $11,866,206 were on loan to brokers.
See accompanying notes which are an integral part of the financial statements.
FS-100
STATEMENT OF OPERATIONS
For the year ended March 31, 2005
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $132,920) $ 8,730,411
-----------------------------------------------------------------------------------
Dividends from affiliated money market funds (including securities
lending income of $178,974 less rebates of $101,509) 119,541
-----------------------------------------------------------------------------------
Interest 153,889
-----------------------------------------------------------------------------------
Total investment income 9,003,841
-----------------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,624,156
-----------------------------------------------------------------------------------
Administrative services fees 85,884
-----------------------------------------------------------------------------------
Custodian fees 28,556
-----------------------------------------------------------------------------------
Distribution fees:
Class A 263,126
-----------------------------------------------------------------------------------
Class B 329,726
-----------------------------------------------------------------------------------
Class C 62,893
-----------------------------------------------------------------------------------
Investor Class 180,105
-----------------------------------------------------------------------------------
Transfer agent fees 794,855
-----------------------------------------------------------------------------------
Trustees' fees and retirement benefits 18,073
-----------------------------------------------------------------------------------
Other 63,530
-----------------------------------------------------------------------------------
Total expenses 3,450,904
-----------------------------------------------------------------------------------
Less:Fees waived, expenses reimbursed and expense offset arrangements (234,210)
-----------------------------------------------------------------------------------
Net expenses 3,216,694
-----------------------------------------------------------------------------------
Net investment income 5,787,147
-----------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain from:
Investment securities 7,917,518
-----------------------------------------------------------------------------------
Foreign currencies 11,687
-----------------------------------------------------------------------------------
7,929,205
-----------------------------------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 34,628,048
-----------------------------------------------------------------------------------
Foreign currencies 1,962
-----------------------------------------------------------------------------------
34,630,010
-----------------------------------------------------------------------------------
Net gain from investment securities and foreign currencies 42,559,215
-----------------------------------------------------------------------------------
Net increase in net assets resulting from operations $48,346,362
-----------------------------------------------------------------------------------
|
See accompanying notes which are an integral part of the financial statements.
FS-101
STATEMENT OF CHANGES IN NET ASSETS
For the years ended March 31, 2005 and 2004
2005
----------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 5,787,147
----------------------------------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign currencies 7,929,205
----------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment securities and foreign currencies 34,630,010
----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 48,346,362
----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (2,901,177)
----------------------------------------------------------------------------------------------------------------------
Class B (685,445)
----------------------------------------------------------------------------------------------------------------------
Class C (129,399)
----------------------------------------------------------------------------------------------------------------------
Investor Class (2,058,141)
----------------------------------------------------------------------------------------------------------------------
Decrease in net assets resulting from distributions (5,774,162)
----------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (9,390,014)
----------------------------------------------------------------------------------------------------------------------
Class B (5,658,456)
----------------------------------------------------------------------------------------------------------------------
Class C (751,072)
----------------------------------------------------------------------------------------------------------------------
Investor Class (3,714,283)
----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from share transactions (19,513,825)
----------------------------------------------------------------------------------------------------------------------
Net increase in net assets 23,058,375
----------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 212,006,512
----------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment income of $(15,543) and $(40,215), respectively) $235,064,887
----------------------------------------------------------------------------------------------------------------------
|
2004
---------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 2,850,802
---------------------------------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign currencies 16,033,275
---------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment securities and foreign currencies 15,852,281
---------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 34,736,358
---------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (685,258)
---------------------------------------------------------------------------------------------------------------------
Class B (122,921)
---------------------------------------------------------------------------------------------------------------------
Class C (31,061)
---------------------------------------------------------------------------------------------------------------------
Investor Class (1,882,805)
---------------------------------------------------------------------------------------------------------------------
Decrease in net assets resulting from distributions (2,722,045)
---------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 90,205,591
---------------------------------------------------------------------------------------------------------------------
Class B 30,514,206
---------------------------------------------------------------------------------------------------------------------
Class C 4,962,878
---------------------------------------------------------------------------------------------------------------------
Investor Class (19,748,567)
---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from share transactions 105,934,108
---------------------------------------------------------------------------------------------------------------------
Net increase in net assets 137,948,421
---------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 74,058,091
---------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment income of $(15,543) and $(40,215), respectively) $212,006,512
---------------------------------------------------------------------------------------------------------------------
|
See accompanying notes which are an integral part of the financial statements.
FS-102
NOTES TO FINANCIAL STATEMENTS
March 31, 2005
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Utilities Fund, formerly INVESCO Utilities Fund, (the "Fund") is a series
portfolio of AIM Sector Funds (the "Trust"). The Trust is a Delaware statutory
trust registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end series management investment company consisting of
seven separate 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 to achieve capital growth and current
income. 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.
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.
FS-103
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 are declared and paid quarterly
and are recorded on ex-dividend date. Distributions from 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. 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.
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 $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% -------------------------------------------------------------------------------- |
Prior to September 30, 2004, AIM had entered into a sub-advisory agreement
with INVESCO Institutional (N.A.), Inc. ("INVESCO") whereby AIM paid INVESCO
40% of the fee paid by the Fund to AIM. Effective September 30, 2004, the
sub-advisory agreement between AIM and INVESCO was terminated.
AIM has voluntarily 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 and Investor Class
shares to 1.40%, 2.05%, 2.05% and 1.30% of average daily net assets,
respectively. In addition, effective April 1, 2005, AIM has voluntarily 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 to 1.30% average daily net 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 and Investor Class shares to 1.90%, 2.65%, 2.65% and
1.90% of average daily net assets, respectively, through March 31, 2006. 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:
FS-104
(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. 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 year ended March 31, 2005, AIM waived fees of $88,199. For the year ended March 31, 2005, at the request of the Trustees of the Trust, AMVESCAP agreed to reimburse $30,770 of expenses incurred by the Fund in connection with market timing matters in the AIM Funds, including 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 year ended March 31, 2005, AIM was paid $85,884. 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 year ended March 31, 2005, the Fund paid AISI $794,855. The Trust has entered into a master distribution agreement with A I M Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class B, Class C and Investor 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 Investor Class shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays ADI compensation at the annual rate of 0.25% of the Fund's average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.25% of the average daily net assets of Investor Class shares. Of these amounts, up to 0.25% of the average daily net assets of the Class A, Class B, Class C or Investor Class 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 year ended March 31, 2005, the Class A, Class B, Class C and Investor Class shares paid ADI $263,126, $329,726, $62,893 and $180,105, respectively. Of these amounts, AIM reimbursed Plan fees of $0, $32,973, $6,289 and $72,042, 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 March 31, 2005, ADI advised the Fund that it retained $18,371 in front-end sales commissions from the sale of Class A shares and $35, $14,053 and $752 from Class A, Class B and Class C 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--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 an affiliated money market fund for the year ended March 31, 2005.
INVESTMENTS OF DAILY AVAILABLE CASH BALANCES:
UNREALIZED
MARKET VALUE PURCHASES PROCEEDS FROM APPRECIATION MARKET VALUE DIVIDEND REALIZED
FUND 03/31/04 AT COST SALES (DEPRECIATION) 03/31/05 INCOME GAIN (LOSS)
---------------------------------------------------------------------------------------------------------------------------------
Premier Portfolio -- Institutional Class* $4,862,426 $51,426,822 $(55,262,669) $-- $1,026,579 $42,076 $--
---------------------------------------------------------------------------------------------------------------------------------
|
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
UNREALIZED
MARKET VALUE PURCHASES PROCEEDS FROM APPRECIATION MARKET VALUE DIVIDEND REALIZED
FUND 03/31/04 AT COST SALES (DEPRECIATION) 03/31/05 INCOME** GAIN (LOSS)
---------------------------------------------------------------------------------------------------------------------------------
Premier Portfolio -- Institutional Class* $ -- $15,441,748 $ (3,897,046) $-- $11,544,702 $ 77,465 $--
---------------------------------------------------------------------------------------------------------------------------------
Total $4,862,426 $66,868,570 $(59,159,715) $-- $12,571,281 $119,541 $--
---------------------------------------------------------------------------------------------------------------------------------
|
* On February 25, 2005, the Premier Portfolio investments were transferred from the original share class with no name designation to the newly structured share class designated as Institutional Class. **Net of rebates.
FS-105
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 year ended March 31, 2005, the Fund received credits from these arrangements which resulted in the reduction of the Fund's total expenses of $3,937.
NOTE 5--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 March 31, 2005, the Fund paid legal fees of $4,201 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.
During the year ended March 31, 2005, the Fund had average interfund borrowings
for the number of days the borrowings were outstanding in the amount of
$3,144,000 with a weighted average interest rate of 2.20% and interest expense
of $189.
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. The Fund did not borrow under the
facility during the year ended March 31, 2005.
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 March 31, 2005, securities with an aggregate value of $11,866,206 were on
loan to brokers. The loans were secured by cash collateral of $11,544,702
received by the Fund and subsequently invested in an affiliated money market
fund and a receivable of $749,230 for cash collateral held by the agent. For
the year ended March 31, 2005, the Fund received dividends on cash collateral
of $77,465 for securities lending transactions, which are net of rebates.
FS-106
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years ended March 31, 2005 and 2004 was as follows:
2005 2004
----------------------------------------------------------------------------------
Distributions paid from ordinary income $5,774,162 $2,722,045
----------------------------------------------------------------------------------
|
TAX COMPONENTS OF NET ASSETS:
As of March 31, 2005, the components of net assets on a tax basis was as follows:
2005
------------------------------------------------------------------------------------
Undistributed ordinary income $ 87,029
------------------------------------------------------------------------------------
Unrealized appreciation -- investments 53,318,279
------------------------------------------------------------------------------------
Temporary book/tax differences (76,022)
------------------------------------------------------------------------------------
Capital loss carryforward (92,088,189)
------------------------------------------------------------------------------------
Shares of beneficial interest 273,823,790
------------------------------------------------------------------------------------
Total net assets $235,064,887
------------------------------------------------------------------------------------
|
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is due to differences in the timing of recognition of gains and
losses on investments for tax and book purposes. The Fund's unrealized
appreciation (depreciation) difference is attributable primarily to the
deferral of losses on wash sales, corporate actions and defaulted bonds. The
tax-basis unrealized appreciation on investments amount includes appreciation
on foreign currencies of $5,275.
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
March 31, 2005 to utilizing $74,376,234 of capital loss carryforward in the
fiscal year ended March 31, 2006.
The Fund utilized $8,612,509 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 March 31, 2005 which expires as
follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
--------------------------------------------------------------------------
March 31, 2010 $68,055,133
--------------------------------------------------------------------------
March 31, 2011 23,729,348
--------------------------------------------------------------------------
March 31, 2013 303,708
--------------------------------------------------------------------------
Total capital loss carryforward $92,088,189
--------------------------------------------------------------------------
|
* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. To the extent that unrealized gains (losses) as of November 24, 2003, the date of the reorganization of AIM Global Utilities Fund into the Fund, are realized on securities held in each fund at such day, the capital loss carryforward may be further limited for up to five years from the date of the reorganization.
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 year ended
March 31, 2005 was $70,248,856 and $88,612,389, respectively.
At the request of the Trustees, AIM recovered third party research credits
during the year ended March 31, 2005, in the amount of $13,881. These research
credits were recorded as realized gains.
Receivable for investments matured represents the estimated proceeds to the
Fund by Candescent Technologies Corp., which is in default with respect to the
principal payments on $4,866,000 par value, Senior Unsecured Guaranteed
Subordinated Debentures, 8.00%, which were due May 1, 2003. This estimate was
determined in accordance with the fair valuation procedures authorized by the
Board of Trustees. Unrealized appreciation (depreciation) at March 31, 2005 was
$(4,303,575).
UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENT SECURITIES ON A TAX BASIS
-------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $60,836,793
-------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (7,523,789)
-------------------------------------------------------------------------
Net unrealized appreciation of investment securities $53,313,004
-------------------------------------------------------------------------
|
Cost of investments for tax purposes is $193,486,403.
FS-107
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of foreign currency transactions on March 31, 2005, undistributed net investment income was increased by $11,687 and undistributed net realized gain (loss) decreased by $11,687. This reclassification had no effect on the net assets of the Fund.
NOTE 11--SHARE INFORMATION
The Fund currently offers four different classes of shares: Class A shares, Class B shares, Class C shares and Investor Class shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with CDSC. Investor Class shares are sold at net asset value. 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 MARCH 31,
--------------------------------------------------
2005 2004
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------------------
Sold:
Class A 1,349,057 $ 15,037,912 369,607 $ 3,431,799
-------------------------------------------------------------------------------------------------------------
Class B 686,957 7,827,572 176,285 1,853,321
-------------------------------------------------------------------------------------------------------------
Class C 218,268 2,494,228 807,064 7,343,248
-------------------------------------------------------------------------------------------------------------
Investor Class 1,519,629 17,110,449 3,818,233 34,835,240
-------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 229,550 2,550,083 62,226 612,670
-------------------------------------------------------------------------------------------------------------
Class B 53,977 599,076 10,830 108,358
-------------------------------------------------------------------------------------------------------------
Class C 9,938 111,371 2,821 27,715
-------------------------------------------------------------------------------------------------------------
Investor Class 172,440 1,934,858 188,941 1,774,589
-------------------------------------------------------------------------------------------------------------
Issued in connection with acquisitions:/(b)/
Class A -- -- 10,626,480 96,253,467
-------------------------------------------------------------------------------------------------------------
Class B -- -- 3,885,472 35,282,815
-------------------------------------------------------------------------------------------------------------
Class C -- -- 583,619 5,339,132
-------------------------------------------------------------------------------------------------------------
Automatic conversion of Class B shares to Class A shares:
Class A 388,776 4,257,299 352,095 3,459,012
-------------------------------------------------------------------------------------------------------------
Class B (387,695) (4,257,299) (351,068) (3,459,012)
-------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (2,825,080) (31,235,308) (1,376,346) (13,551,357)
-------------------------------------------------------------------------------------------------------------
Class B (901,951) (9,827,805) (330,477) (3,271,276)
-------------------------------------------------------------------------------------------------------------
Class C (302,675) (3,356,671) (844,282) (7,747,217)
-------------------------------------------------------------------------------------------------------------
Investor Class (2,049,799) (22,759,590) (6,105,643) (56,358,396)
-------------------------------------------------------------------------------------------------------------
(1,838,608) $(19,513,825) 11,875,857 $105,934,108
-------------------------------------------------------------------------------------------------------------
|
/(a)/There is one entity that is a record owner of more than 5% of the
outstanding shares of the Fund and owns 12% 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)/As of the opening of business on November 24, 2003, the Fund acquired all
of the net assets of AIM Global Utilities Fund pursuant to a plan of
reorganization approved by the Trustees of the Fund on June 9, 2003 and
AIM Global Utilities Fund shareholders on October 28, 2003. The
acquisition was accomplished by a tax-free exchange of 15,095,571 shares
of the Fund for 11,435,567 shares of AIM Global Utilities Fund outstanding
as of the close of business on November 21, 2003. AIM Global Utilities
Fund's net assets at that date of $136,875,414, including $5,828,940 of
unrealized appreciation, were combined with those of the Fund. The
aggregate net assets of the Fund immediately before the acquisition were
$73,189,229.
FS-108
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
------------------------------------
YEAR ENDED MARCH 31,
------------------------------------
2005 2004 2003
---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.10 $ 8.13 $ 10.66
---------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.30/(a)/ 0.22/(a)/ 0.16
---------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 2.18 1.98 (2.40)
---------------------------------------------------------------------------------------------------------
Total from investment operations 2.48 2.20 (2.24)
---------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.30) (0.23) (0.29)
---------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.28 $ 10.10 $ 8.13
---------------------------------------------------------------------------------------------------------
Total return/(b)/ 24.95% 27.33% (21.05)%
---------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $113,325 $101,899 $ 450
---------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.40%/(c)/ 1.40% 1.41%
---------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.46%/(c)/ 1.77% 1.74%
---------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.76%/(c)/ 2.27% 2.79%
---------------------------------------------------------------------------------------------------------
Portfolio turnover rate 33% 101% 64%
---------------------------------------------------------------------------------------------------------
|
/(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.
/(c)/Ratios are based on average daily net assets of $105,250,221.
FS-109
NOTE 12--FINANCIAL HIGHLIGHTS-(CONTINUED)
CLASS B
----------------------------------
YEAR ENDED MARCH 31,
----------------------------------
2005 2004 2003
-------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.13 $ 8.15 $ 10.66
-------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.23/(a)/ 0.16/(a)/ 0.13
-------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 2.19 1.98 (2.43)
-------------------------------------------------------------------------------------------------------
Total from investment operations 2.42 2.14 (2.30)
-------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.23) (0.16) (0.21)
-------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.32 $ 10.13 $ 8.15
-------------------------------------------------------------------------------------------------------
Total return/(b)/ 24.17% 26.47% (21.67)%
-------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $35,303 $34,606 $ 193
-------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.05%/(c)/ 2.05% 2.14%
-------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.21%/(c)/ 2.79% 2.69%
-------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.11%/(c)/ 1.62% 1.84%
-------------------------------------------------------------------------------------------------------
Portfolio turnover rate 33% 101% 64%
-------------------------------------------------------------------------------------------------------
|
/(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.
/(c)/Ratios are based on average daily net assets of $32,972,575.
FS-110
NOTE 12--FINANCIAL HIGHLIGHTS-(CONTINUED)
CLASS C
----------------------------------------------------
YEAR ENDED MARCH 31,
----------------------------------------------------
2005 2004 2003 2002 2001
-----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.21 $ 8.22 $ 10.63 $ 16.08 $ 20.40
-----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.23/(a)/ 0.16/(a)/ 0.15 0.03 (0.00)/(a)/
-----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 2.20 1.98 (2.47) (5.48) (3.22)
-----------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.43 2.14 (2.32) (5.45) (3.22)
-----------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.23) (0.15) (0.09) (0.00) (0.10)
-----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- -- (1.00)
-----------------------------------------------------------------------------------------------------------------------------
Total distributions (0.23) (0.15) (0.09) (0.00) (1.10)
-----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.41 $10.21 $ 8.22 $ 10.63 $ 16.08
-----------------------------------------------------------------------------------------------------------------------------
Total return/(b)/ 24.08% 26.17% (21.85)% (33.87)% (15.83)%
-----------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $6,900 $6,437 $ 667 $ 1,799 $ 3,579
-----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.05%/(c)/ 2.05% 2.05% 2.04% 2.07%
-----------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.21%/(c)/ 3.14% 3.70% 2.45% 2.11%
-----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets 2.11%/(c)/ 1.62% 1.75% 0.32% (0.02)%
-----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 33% 101% 64% 56% 49%
-----------------------------------------------------------------------------------------------------------------------------
|
/(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.
/(c)/Ratios are based on average daily net assets of $6,289,328.
INVESTOR CLASS
--------------------------------------------------------
YEAR ENDED MARCH 31,
--------------------------------------------------------
2005 2004 2003 2002 2001
-----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.18 $ 8.19 $ 10.66 $ 16.20 $ 20.42
-----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.31/(a)/ 0.22/(a)/ 0.23 0.15 0.13
-----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 2.21 2.01 (2.46) (5.54) (3.22)
-----------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.52 2.23 (2.23) (5.39) (3.09)
-----------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.32) (0.24) (0.24) (0.15) (0.13)
-----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- -- (1.00)
-----------------------------------------------------------------------------------------------------------------------------
Total distributions (0.32) (0.24) (0.24) (0.15) (1.13)
-----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.38 $ 10.18 $ 8.19 $ 10.66 $ 16.20
-----------------------------------------------------------------------------------------------------------------------------
Total return/(b)/ 25.08% 27.50% (20.99)% (33.34)% (15.18)%
-----------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $79,536 $69,065 $72,749 $124,578 $232,877
-----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.30%/(c)/ 1.30% 1.30% 1.30% 1.30%
-----------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.46%/(c)/ 2.01% 1.90% 1.57% 1.40%
-----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.86%/(c)/ 2.37% 2.63% 1.09% 0.74%
-----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 33% 101% 64% 56% 49%
-----------------------------------------------------------------------------------------------------------------------------
|
/(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.
/(c)/Ratios are based on average daily net assets of $72,041,996.
FS-111
NOTE 13--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) and A I M Advisors, Inc. ("AIM") (the Fund's
investment advisor) reached final settlements with certain regulators,
including without limitation the Securities and Exchange Commission ("SEC"),
the New York Attorney General ("NYAG") and the Colorado Attorney General
("COAG"), 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. 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 they 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 and AIM breached various Federal and state
securities, business and consumer protection laws. On the same date, A I M
Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached a
final settlement with the SEC to resolve an investigation relating to market
timing activity and related issues in the AIM Funds. The SEC also alleged that
ADI violated various Federal securities laws. The SEC also has settled related
market timing enforcement actions brought against certain former officers and
employees of IFG.
Under the terms of the settlements, IFG agreed to pay a total of $325
million, of which $110 million is civil penalties. Of this $325 million total
payment, half has been paid 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, all of which has been paid. The entire $325
million IFG settlement fund will be made 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 fund by AIM and
ADI will be made 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. The IFG and AIM
settlement 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. The settlement funds 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 certain equity and balanced 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, not to increase certain management fees and to
provide more information to investors regarding fees.
Under the terms of the settlements, AIM is undertaking certain governance and
compliance reforms, including maintaining an internal controls committee and
retaining an independent compliance consultant and a corporate ombudsman. 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 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.
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
such Funds related to market timing matters.
The SEC has also settled market timing enforcement actions 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), 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 these settlements, the SEC ordered these
individuals to pay restitution and civil penalties in various amounts and
prohibited them from associating with, or serving as an officer or director of,
an investment advisor, broker, dealer and/or investment company, as applicable,
for certain periods of time.
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 certain equity and balanced 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 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 payments 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 Regulatory Inquiries and Pending
Litigation described below may have on AIM, ADI or the Fund.
REGULATORY INQUIRIES AND PENDING LITIGATION
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 but not limited to revenue sharing and
directed-brokerage arrangements, investments in securities of other registered
investment companies, contractual plans, issues related to Section 529 college
savings plans, procedures for locating lost security holders and participation
in class action settlements.
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.
FS-112
NOTE 13--LEGAL PROCEEDINGS-(CONTINUED)
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 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, the U.S.
Postal Inspection Service and the Commodity Futures Trading Commission, some of
which concern one or more AIM Funds. AIM is providing full cooperation with
respect to these inquiries.
Pending Regulatory Civil Action Alleging Market Timing
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 (S) 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 proceedings, 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, 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.
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, 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 ("ERISA") purportedly brought on behalf of participants in
AMVESCAP's 401(k) plan. The plaintiffs in two of the underlying lawsuits
continue to seek remand of their lawsuit 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. Based on a recent court decision, the state court
action has been removed to Federal court.
FS-113
NOTE 13--LEGAL PROCEEDINGS-(CONTINUED)
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. All of these lawsuits have been transferred to the United States District Court for the Southern District of Texas, Houston Division and subsequently consolidated for pre-trial purposes into one lawsuit.
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 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. ("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. These actions have been consolidated for pre-trial purposes.
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. 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 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.
* * * * * * * * * * * * * * * * 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.
FS-114
PART C
OTHER INFORMATION
Item 23. Exhibits
a (1) - Certificate of Trust of AIM Sector Funds dated and
filed on July 29, 2003./(9)/
(2) - (a) Agreement and Declaration of Trust of AIM Sector
Funds dated July 29, 2003./(9)/
- (b) Amendment No. 1, dated December 10, 2003, to
Agreement and Declaration of Trust./(11)/
- (c) Amendment No. 2, dated October 15, 2004, to
Agreement and Declaration of Trust./(12)/
- (d) Amendment No. 3, dated December 2, 2004, to
Agreement and Declaration of Trust./(12)/
- (e) Amendment No. 4, dated August 4, 2005, to Agreement
and Declaration of Trust./(14)/
- (f) Amendment No. 5, dated August 4, 2005, to Agreement
and Declaration of Trust./(14)/
b (1) - Bylaws of AIM Sector Funds adopted effective July
29, 2003./(9)/
(2) - First Amendment dated November 6, 2003 to Bylaws of
AIM Sector Funds./(12)/
(3) - Second Amendment dated September 15, 2004 to Bylaws of
AIM Sector Funds./(12)/
(4) - Third Amendment dated June 30, 2005 to Bylaws of AIM
Sector Funds./(14)/
c - Provisions of instruments defining the rights of
holders of Registrant's securities are contained in
Articles II, VI, VII, VIII and IX of the Agreement and
Declaration of Trust and Articles IV, V and VI of the
Bylaws of the Registrant.
d (1) - (a) Master Investment Advisory Agreement dated
November 25, 2003 between Registrant and A I M Advisors,
Inc./(11)/
- (b) Amendment No. 1, dated October 15, 2004 to Master
Investment Advisory Agreement between Registrant and A I
M Advisors, Inc./(12)/
- (c) Amendment No. 2, dated July 18, 2005 to Master
Investment Advisory Agreement between Registrant and A I
M Advisors, Inc./(14)/
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./(10)/
- (b) Amendment No. 1, dated October 29, 2003, to 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./(10)/
- (c) Amendment No. 2, dated November 4, 2003, to 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./(10)/
- (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./(11)/
- (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./(11)/
- (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./(11)/
- (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./(11)/
- (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./(11)/
- (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./(11)/
- (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./(12)/
- (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./(12)/
- (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./(12)/
- (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./(12)/
- (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./(12)/
- (o) Amendment No. 14, dated February 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./(12)/
- (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./(12)/
- (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./(12)/
- (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./(13)/
- (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./(13)/
- (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./(14)/
- (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./(14)/
(2) - (a) Amended and Restated Master Distribution Agreement
dated August 18, 2003 (Class B shares), between
Registrant and A I M Distributors, Inc./(10)/
- (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./(10)/
- (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./(10)/
- (d) Amendment No. 3, dated November 3, 2003, to Amended
and Restated Master Distribution Agreement (Class B
shares) dated August 18, 2003, between Registrant and A
I M Distributors, Inc./(10)/
- (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./(10)/
- (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./(11)/
- (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./(11)/
- (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./(11)/
- (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./(11)/
- (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./(11)/
|
- (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./(12)/
- (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./(12)/
- (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./(12)/
- (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./(12)/
- (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./(12)/
- (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 Distributions, Inc./(13)/
f (1) - Retirement Plan for Independent Directors /(11)/
(2) - Form of AIM Funds Director Deferred Compensation
Agreement, as amended September 26, 2002./(14)/
g (1) - (a) Master Custodian Agreement between Registrant
and State Street Bank and Trust dated May 8, 2001./(4)/
- (b) Amendment No. 1, dated May 10, 2002, to the Master
Custodian Agreement between Registrant and State Street
Bank and Trust Company dated May 8, 2001./(4)/
- (c) Amendment No. 2, dated December 8, 2003, to the
Master Custodian Agreement between Registrant and State
Street Bank and Trust Company dated May 8, 2001./(12)/
- (d) Amendment No. 3, dated April 30, 2004, to the Master
Custodian Agreement between Registrant and State Street
Bank and Trust Company dated May 8, 2001./(12)/
- (e) Amendment No. 4, dated September 8, 2004, to the
Master Custodian Agreement between Registrant and State
Street Bank and Trust Company dated May 8, 2001./(12)/
h (1) - Transfer Agency and Service Agreement, dated July
1, 2004, between Registrant and AIM Investment Services,
Inc., formerly known as A I M Fund Services, Inc./(11)/
(2) - (a) Amended and Restated Master Administrative Services
Agreement dated July 1, 2004, between Registrant and
A I M Advisors, Inc./(12)/
- (b) Amendment No. 1, dated October 15, 2004, to Amended
and Restated Master Administrative Services
Agreement./(12)/
- (c) Amendment No. 2, dated December 2, 2004, to Amended
and Restated Master
|
Administrative Services Agreement./(12)/
- (d) Amendment No. 3, dated July 18, 2005, to Amended and
Restated Master Administrative Services Agreement./(14)/
(3) - (a) Memorandum of Agreement dated November 25, 2003,
regarding securities lending between Registrant, with
respect to all Funds and A I M Advisors, Inc./(11)/
- (b) Memorandum of Agreement dated as of May 5, 2005
between Registrant and A I M Advisors, Inc. with respect
to AIM Energy Fund, AIM Financial Services Fund, AIM
Gold & Precious Metals Fund, AIM Health Sciences Fund,
AIM Leisure Fund, AIM Technology Fund and AIM Utilities
Fund./(13)/
- (c) Memorandum of Agreement dated as of July 1, 2005,
between Registrant and A I M Advisors, Inc. with respect
to AIM Energy Fund, AIM Financial Services Fund, AIM
Gold & Precious Metals Fund, AIM Leisure Fund, AIM
Technology Fund and AIM Utilities Fund./(13)/
(4) - Second Amended and Restated Interfund Loan Agreement,
dated April 30, 2004, between Registrant and A I M
Advisers, Inc./(12)/
i - Opinion and Consent of Ballard, Spahr, Andrews &
Ingersoll, LLP./(14)/
j - Consent of PricewaterhouseCoopers LLP./(14)/
k - Omitted Financial Statements - None.
l - Not applicable.
m (1) - (a) Amended and Restated Master Distribution Plan dated
July 1, 2004 (Investor Class shares) with respect to
INVESCO Technology Fund./(11)/
- (b) Amendment No. 1, dated October 15, 2004, to Amended
and Restated Master Distribution Plan (Investor Class
shares) with respect to AIM Technology Fund./(12)/
- (c) Amendment No. 2, dated April 29, 2005, to Amended
and Restated Master Distribution Plan (Investor Class
shares) with respect to AIM Technology Fund./(12)/
- (d) Amendment No. 3, dated July 18, 2005, to Amended and
Restated Master Distribution Plan (Investor Class
shares) with respect to AIM Technology Fund./(13)/
- (e) Master Related Agreement to Amended and Restated
Master Distribution Plan (Investor Class Shares) with
respect to AIM Technology Fund./(14)/
(2) - (a) Amended and Restated Master Distribution Plan dated
July 1, 2004 (Investor Class shares) with respect
to INVESCO Energy Fund, INVESCO Financial Services Fund,
INVESCO Gold & Precious Metals Fund, INVESCO Health
Sciences Fund, INVESCO Leisure Fund and INVESCO
Utilities Fund./(11)/
- (b) Amendment No. 1, dated October 15, 2004, to Amended
and Restated Master Distribution Plan (Investor Class
shares) with respect to AIM Energy Fund, AIM Financial
Services Fund, AIM Gold & Precious Metals Fund, AIM
Health Sciences Fund, AIM Leisure Fund and AIM Utilities
Fund./(12)/
- (c) Amendment No. 2, dated November 30, 2004, to Amended
and Restated Master Distribution Plan (Investor Class
shares) with respect to AIM Energy Fund, AIM
|
Financial Services Fund, AIM Gold & Precious Metals
Fund, AIM Health Sciences Fund, AIM Leisure Fund and AIM
Utilities Fund./(12)/
- (d) Amendment No. 3, dated April 29, 2005, to Amended
and Restated Master Distribution Plan dated July 1, 2004
(Investor Class shares) with respect to AIM Energy Fund,
AIM Financial Services Fund, AIM Gold & Precious Metals
Fund, AIM Health Sciences Fund, AIM Leisure Fund and AIM
Utilities Fund./(12)/
- (e) Amendment No. 4, dated July 18, 2005, to the Amended
and Restated Master Distribution Plan dated July 1, 2004
(Investor Class shares) with respect to the AIM Energy
Fund, AIM Financial Services Fund, AIM Gold & Precious
Metals Funds, AIM Leisure Fund and AIM Utilities Funds.
/(13)/
- (f) Master Related Agreement to Amended and Restated
Master Distribution Plan (Investor Class Shares) with
respect to AIM Energy Fund, AIM Financial Services
Funds, AIM Gold & Precious Metals Funds, AIM Health
Sciences Funds, AIM Leisure Funds and AIM Utilities
Fund./(14)/
(3) - (a) Amended and Restated Master Distribution Plan
(Class A shares) effective as of August 18, 2003./(10)/
- (b) Amendment No. 1, dated October 29, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class A shares)./(10)/
- (c) Amendment No. 2, dated November 4, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class A shares)./(10)/
- (d) Amendment No. 3, dated November 20, 2003, to
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares)./(11)/
- (e) Amendment No. 4, dated November 24, 2003, to
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares)./(11)/
- (f) Amendment No. 5, dated November 25, 2003, to
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares)./(11)/
- (g) Amendment No. 6, dated March 31, 2004, to
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares)./(11)/
- (h) Amendment No. 7, dated April 30, 2004, to
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares)./(11)/
- (i) Amendment No. 8, dated September 15, 2004, to
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares)./(12)/
- (j) Amendment No. 9, dated October 15, 2004, to
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares)./(12)/
- (k) Amendment No. 10, dated December 30, 2004, to
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares)./(12)/
- (l) Amendment No. 11, dated January 1, 2005, to
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares)./(12)/
- (m) Amendment No. 12, dated March 15, 2005, to
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares)./(12)/
|
- (n) Amendment No. 13, dated April 29, 2005, to
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares)./(12)/
- (o) Amendment No. 14, dated July 1, 2005, to the
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares)./(13)/
- (p) Amendment No. 15, dated July 18, 2005, to the
Registrant's Amended and Restated Master Distribution
Plan (Class A Shares)./(13)/
- (q) Master Related Agreement to Amended and Restated
Master Distribution Plan (Class A Shares)./(14)/
(4) - (a) Amended and Restated Master Distribution Plan
(Class B shares) (Securitization Feature) ,effective as
of August 18, 2003./(10)/
- (b) Amendment No. 1, dated October 29, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B shares)./(10)/
- (c) Amendment No. 2, dated November 4, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B shares)./(10)/
- (d) Amendment No. 3, dated November 20, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature)./(11)/
- (e) Amendment No. 4, dated November 24, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature)./(11)/
- (f) Amendment No. 5, dated November 25, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature)./(11)/
- (g) Amendment No. 6, dated March 31, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature)./(11)/
- (h) Amendment No. 7, dated April 30, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature)./(11)/
- (i) Amendment No. 8, dated September 15, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature)./(12)/
- (j) Amendment No. 9, dated October 15, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature)./(12)/
- (k) Amendment No. 10, dated December 30, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature)./(12)/
- (l) Amendment No. 11, dated March 15, 2005, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature)./(12)/
- (m) Amendment No. 12, dated April 29, 2005, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature)./(12)/
- (n) Amendment No. 13, dated July 18, 2005, to the
Registrant's Amended and Restated Master Distribution
Plan (Class B Shares) (Securitization Feature)./(13)/
(5) - (a) Amended and Restated Master Distribution Plan
(Class C shares), effective as of August 18, 2003./(10)/
|
- (b) Amendment No. 1 dated October 29, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C shares)./(10)/
- (c) Amendment No. 2 dated November 4, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C shares)./(10)/
- (d) Amendment No. 3, dated November 20, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares)./(11)/
- (e) Amendment No. 4, dated November 24, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares)./(11)/
- (f) Amendment No. 5, dated November 25, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares)./(11)/
- (g) Amendment No. 6, dated March 31, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares)./(11)/
- (h) Amendment No. 7, dated April 30, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares)./(11)/
- (i) Amendment No. 8, dated September 15, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares)./(12)/
- (j) Amendment No. 9, dated October 15, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares)./(12)/
- (k) Amendment No. 10, dated December 30, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares)./(12)/
- (l) Amendment No. 11, dated March 15, 2005, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares)./(12)/
- (m) Amendment No. 12, dated April 29, 2005, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares)./(12)/
- (n) Amendment No. 13, dated July 18, 2005, to the
Registrant's Amended and Restated Master Distribution
Plan (Class C Shares)./(13)/
- (o) Master Related Agreement to Amended and Restated
Master Distribution Plan (Class C Shares)./(10)/
(6) - (a) Amended and Restated Master Distribution Plan
(Class K shares), effective as of August 18, 2003./(10)/
- (b) Amendment No. 1, dated October 1, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class K shares)./(10)/
- (c) Amendment No. 2, dated November 3, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class K shares)./(10)/
- (d) Amendment No. 3, dated November 20, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class K Shares)./(11)/
|
- (e) Amendment No. 4, dated November 24, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class K Shares)./(11)/
- (f) Amendment No. 5, dated November 25, 2003, to the
Registrant's Amended and Restated Master Distribution
Plan (Class K Shares)./(11)/
- (g) Amendment No. 6, dated October 15, 2004, to the
Registrant's Amended and Restated Master Distribution
Plan (Class K Shares)./(12)
- (h) Amendment No. 7, dated July 18, 2005, to the
Registrant's Amended and Restated Master Distribution
Plan (Class K Shares)./(13)/
- (i) Master Related Agreement to Amended and Restated
Master Distribution Plan (Class K shares)./(10)/
(7) - (a) Amended and Restated Master Distribution Plan
(Class R Shares), dated August 18, 2003 between
Registrant (Class R Shares) and A I M Distributors,
Inc./(14)/
- (b) Amendment No. 1, dated November 4, 2003, to the
Amended and Restated Master Distribution Plan (Class R
Shares) between Registrant (Class R Shares) and A I M
Distributors, Inc./(14)/
- (c) Amendment No. 2, dated November 24, 2003, to the
Amended and Restated Master Distribution Plan (Class R
Shares) between Registrant (Class R Shares) and A I M
Distributors, Inc./(14)/
- (d) Amendment No. 3, dated November 25, 2003, to the
Amended and Restated Master Distribution Plan (Class R
Shares) between Registrant (Class R Shares) and A I M
Distributors, Inc./(14)/
- (e) Amendment No. 4, dated April 30, 2004, to the
Amended and Restated Master Distribution Plan between
Registrant (Class R Shares) and A I M Distributors,
Inc./(14)/
- (f) Amendment No. 5, dated September 14, 2004, to the
Amended and Restated Master Distribution Plan between
Registrant (Class R Shares) and A I M Distributors,
Inc./(14)/
- (g) Amendment No. 6, dated October 15, 2004, to the
Amended and Restated Master Distribution Plan between
Registrant (Class R Shares) and A I M Distributors,
Inc./(14)/
- (h) Amendment No. 7, dated April 29, 2005, to the
Amended and Restated Master Distribution Plan between
Registrant (Class R Shares) and A I M Distributors,
Inc./(14)/
- (i) Amendment No. 8, dated July 18, 2005, to the Amended
and Restated Master Distribution Plan between Registrant
(Class R Shares) and A I M Distributors, Inc./(14)/
- (j) Form of Amendment No. 9, dated October 25, 2005,
to the Amended and Restated Master Distribution Plan
between Registrant (Class R Shares) and A I M
Distributors, Inc./(14)/
- (k) Master Related Agreement to Amended and Restated
Master Distribution Plan (Class R shares)./(14)/
n - Eighth Amended and Restated Multiple Class Plan of the
AIM Family of Funds,(R) effective December 12, 2001, as
further amended and restated August 4, 2005./(14)/
|
o - Reserved.
p (1) - Code of Ethics Pursuant to Rule 17j-1./(7)/
(2) - A I M Management Group, Inc. Code of Ethics, adopted
May 1, 1981, as last approved by the AIM's Funds Board
on December 2, 2004 effective January 1, 2005, relating
to A I M Management Group Inc. and A I M Advisors, Inc.
and its wholly owned and indirect subsidiaries./(12)/
q - Powers of Attorney for Baker, Bayley, Bunch, Crocket,
Dowden, Dunn, Fields, Frischling, Graham, Lewis,
Mathai-Davis, Pennock, Quigley, Soll and
Williamson./(12)/
----------
|
(1) Previously filed with PEA No. 21 to the Registration Statement on
December 24, 1997 and incorporated by reference herein. (Identical except
for the name of the Registrant (AIM Sector Funds) and the date of the
Agreement.)
(2) Previously filed with PEA No. 26 to the Registration Statement on
January 24, 2000 and incorporated by reference herein. (Identical except
for the name of the Registrant (AIM Sector Funds) and the date of the
Agreement.)
(3) Previously filed with PEA No. 27 to the Registration Statement on
July 24, 2000 and incorporated by (4) reference herein. (Identical except
for the name of the Registrant (AIM Sector Funds) and the date of the
Agreement.)
(4) Previously filed with PEA No. 38 to the Registration Statement on July 15,
2003 and incorporated by reference herein. (Identical except for the name
of the Registrant (AIM Sector Funds) and the date of the Agreement.)
(5) Previously filed with the Registration Statement on Form N-14 of INVESCO
Sector Funds, Inc. on August 13, 2003 and incorporated by reference herein.
(6) Previously filed with the Proxy Statement of INVESCO Sector Funds, Inc. on
August 13, 2003 and incorporated by reference herein.
(7) Previously filed with PEA No. 38 to the Registration Statement on
July 15, 2003 and incorporated by reference herein. (Identical except for
the name of the Registrant (AIM Sector Funds) and the date.)
(8) Previously filed with PEA No. 77 to the Registration Statement of AIM
Equity Funds filed on July 7, 2003 and incorporated by reference herein.
(9) Previously filed with PEA No. 39 to the Registration Statement on
August 22, 2003 and incorporated by reference herein.
(10) Previously filed with PEA No. 41 to the Registration Statement on
November 20, 2003 and incorporated by reference herein.
(11) Previously filed with PEA No. 42 to the Registration Statement on July 28,
2004 and incorporated by reference herein.
(12) Previously filed with PEA No. 43 to the Registration Statement on May 27,
2005 and incorporated by reference herein.
(13) Previously filed with PEA No. 44 to the Registration Statement on
July 27, 2005 and incorporated by reference herein.
(14) Filed herewith electronically.
Item 24. Persons Controlled by or Under Common Control With the Fund
No person is presently controlled by or under common control with the Trust.
Item 25. Indemnification
The Registrant's Amended and Restated Agreement and Declaration of Trust, dated July 29, 2003, as amended, provides, among other things (i) that trustees and officers of the Registrant, when acting as such, shall not be personally liable for any act, omission or obligation of the Registrant or any trustee or officer (except for liabilities to the Registrant or its shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard to duty); (ii) for the indemnification by the Registrant of the trustees, officers, employees and agents of the Registrant to the fullest extent permitted by the Delaware Statutory Trust Act and Bylaws and other applicable law; (iii) that shareholders of the Registrant shall not be personally liable for the debts, liabilities, obligations or expenses of the Registrant or any portfolio or class; and (iv) for the indemnification by the Registrant, out of the assets belonging to the applicable portfolio, of shareholders and former shareholders of the Registrant in case they are held personally liable solely by reason of being or having been shareholders of the Registrant or any portfolio or class and not because of their acts or omissions or for some other reason.
A I M Advisors, Inc. ("AIM"), the Registrant and other investment companies managed by AIM, their respective officers, trustees, directors and employees (the "Insured Parties") are insured under a joint Mutual Fund and Investment Advisory Professional and Directors and Officers Liability Policy, issued by ICI Mutual Insurance Company and certain other domestic insurers, with limits up to$60,000,000 (plus an additional $20,000,000 limit that 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.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act will be governed by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Advisor
The only employment of a substantial nature of the Advisor's directors and officers is with the Advisor and its affiliated companies. See "Fund Management" in the Funds' Prospectuses and "Management of the Funds" in the Statement of Additional Information for information regarding the business of the investment advisor.
Item 27. Principal Underwriters
(a) A I M Distributors, Inc., the Registrant's principal
underwriter, also act as 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 Funds
AIM Investment Securities 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)
Name and Principal Position and Officers with Positions and Offices
Business Address* Underwriter with Registrant
------------------ --------------------------- ---------------------
Gene L. Needles Chairman, Director, President None
& Chief Executive Officer
Mark H. Williamson Director Trustee & Executive Vice
President
John S. Cooper Executive Vice President None
James L. Salners Executive Vice President None
James E. Stueve Executive Vice President None
Michael A. Bredlau Senior Vice President None
Kevin M. Carome Senior Vice President Senior Vice President,
Chief Legal Officer and
Secretary
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. Wendell 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 Assistant Secretary
Counsel & 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 Anti-Money Laundering
Compliance Officer Compliance Officer
----------
|
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
(c) Not applicable.
Item 28. Location of Accounts and Records
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173, maintains physical possession of each such
account, book or other document of the Registrant at its
principal executive offices, except for those relating to
certain transactions in portfolio securities that are 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
Not applicable.
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 22nd day of August, 2005.
Registrant: AIM SECTOR 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 August 22, 2005
----------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ Bob R. Baker* Trustee August 22, 2005
-----------------------------
(Bob R. Baker)
/s/ Frank S. Bayley* Trustee August 22, 2005
-----------------------------
(Frank S. Bayley)
/s/ James T. Bunch* Trustee August 22, 2005
-----------------------------
(James T. Bunch)
/s/ Bruce L. Crockett* Chair & Trustee August 22, 2005
-----------------------------
(Bruce L. Crockett)
/s/ Albert R. Dowden* Trustee August 22, 2005
-----------------------------
(Albert R. Dowden)
/s/ Edward K. Dunn, Jr.* Trustee August 22, 2005
-----------------------------
(Edward K. Dunn, Jr.)
/s/ Jack M. Fields* Trustee August 22, 2005
-----------------------------
(Jack M. Fields)
/s/ Carl Frischling* Trustee August 22, 2005
-----------------------------
(Carl Frischling)
/s/ Gerald J. Lewis* Trustee August 22, 2005
-----------------------------
(Gerald J. Lewis)
/s/ Prema Mathai-Davis* Trustee August 22, 2005
-----------------------------
(Prema Mathai-Davis)
/s/ Lewis F. Pennock* Trustee August 22, 2005
-----------------------------
(Lewis F. Pennock)
/s/ Ruth H. Quigley* Trustee August 22, 2005
-----------------------------
(Ruth H. Quigley)
|
/s/ Larry Soll* Trustee August 22, 2005
-----------------------------
(Larry Soll)
/s/ Mark H. Williamson* Trustee & August 22, 2005
----------------------------- Executive Vice President
(Mark H. Williamson)
/s/ Sidney M. Dilgren Vice President & Treasurer August 22, 2005
----------------------------- (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 and filed herewith.
INDEX
a(2)(e) - Amendment No. 4, dated August 4, 2005, to Agreement and
Declaration of Trust
a(2)(f) - Amendment No. 5, dated August 4, 2005, to Agreement and
Declaration of Trust
b(4) - Third Amendment dated June 30, 2005 to Bylaws of AIM
Sector Funds
d(1)(c) - Amendment No. 2, dated July 18, 2005 to Master
Investment Advisory Agreement between Registrant and
A I M Advisors, 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, 20003, 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, 20003, between Registrant and A I M
Distributors, Inc.
f(2) - Form of AIM Funds Director Deferred Compensation
Agreement, as amended September 26, 2002
h(2)(d) - Amendment No. 3, dated July 18, 2005, to Amended and
Restated Master Administrative Services Agreement
i - Opinion and Consent of Ballard, Spahr, Andrews &
Ingersoll, LLP
j - Consent of PricewaterhouseCoopers LLP
m(1)(e) - Master Related Agreement to Amended and Restated Master
Distribution Plan (Investor Class Shares) with respect
to AIM Technology Fund
m(2)(f) - Master Related Agreement to Amended and Restated Master
Distribution Plan (Investor Class Shares) with respect
to AIM Energy Fund, AIM Financial Services Funds, AIM
Gold & Precious Metals Funds, AIM Health Sciences Funds,
AIM Leisure Funds and AIM Utilities Fund
m(3)(q) - Master Related Agreement to Amended and Restated Master
Distribution Plan (Class A Shares)
m(7)(a) - Amended and Restated Master Distribution Plan (Class R
Shares), dated August 18, 2003 between Registrant (Class
R Shares) and A I M Distributors, Inc.
m(7)(b) - Amendment No. 1, dated November 4, 2003, to the Amended
and Restated Master Distribution Plan between Registrant
(Class R Shares) and A I M Distributors, Inc.
m(7)(c) - Amendment No. 2, dated November 24, 2003, to the Amended
and Restated Master Distribution Plan between Registrant
(Class R Shares) and A I M Distributors, Inc.
m(7)(d) - Amendment No. 3, dated November 25, 2003, to the Amended
and Restated Master Distribution Plan between Registrant
(Class R Shares) and A I M Distributors, Inc.
|
m(7)(e) - Amendment No. 4, dated April 30, 2004, to the Amended
and Restated Master Distribution Plan between Registrant
(Class R Shares) and A I M Distributors, Inc.
m(7)(f) - Amendment No. 5, dated September 14, 2004, to the
Amended and Restated Master Distribution Plan between
Registrant (Class R Shares) and A I M Distributors, Inc.
m(7)(g) - Amendment No. 6, dated October 15, 2004, to the Amended
and Restated Master Distribution Plan between Registrant
(Class R Shares) and A I M Distributors, Inc.
m(7)(h) - Amendment No. 7, dated April 29, 2005, to the Amended
and Restated Master Distribution Plan between Registrant
(Class R Shares) and A I M Distributors, Inc.
m(7)(i) - Amendment No. 8, dated July 18, 2005, to the Amended and
Restated Master Distribution Plan between Registrant
(Class R Shares) and A I M Distributors, Inc.
m(7)(j) - Form of Amendment No. 9, dated October 25, 2005, to the
Amended and Restated Master Distribution Plan between
Registrant (Class R Shares) and A I M Distributors, Inc.
m(7)(k) - Master Related Agreement to Amended and Restated Master
Distribution Plan (Class R shares)
n - Eighth Amended and Restated Multiple Class Plan of the
AIM Family of Funds,(R) effective December 12, 2001, as
further amended and restated August 4, 2005
|
AMENDMENT NO. 4 TO
AGREEMENT AND DECLARATION OF TRUST OF AIM SECTOR FUNDS
This Amendment No. 4 (the "Amendment") to the Agreement and Declaration of Trust of AIM Sector Funds (the "Trust") amends the Agreement and Declaration of Trust of the Trust dated as of July 29, 2003, as amended (the "Agreement").
At a meeting held on August 4, 2005, the Board of Trustees of the Trust, in accordance with Section 9.7 of the Agreement, approved amendments to the Agreement. Under Section 9.7 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
NOW, THEREFORE, the Agreement is hereby amended as follows:
1. A new Section 2.6A of the Agreement is hereby added after Section 2.6 of the Agreement as set forth below:
"Section 2.6A. Additional Rights and Preferences of Class K Shares. In addition to the relative rights and preferences set forth in Section 2.5 and all other provisions of this Agreement relating to Shares of the Trust generally, any Class of any Portfolio designated as Class K Shares shall have the following rights and preferences:
(a) Conversion of Class K Shares. At the Effective Time described in
Section 2.6A(d) below, all of the issued and outstanding Class K
Shares of any Portfolio of the Trust offering Class K Shares
shall convert to Class A Shares of the applicable Portfolio based
upon their respective net asset values, and thereafter shall have
the attributes of Class A Shares of the applicable Portfolio. All
issued and outstanding Class K Shares shall thereafter be deemed
to be cancelled. The stock transfer books for Class K Shares of
a Portfolio will be closed at the Effective Time and only
requests for redemption of Class K Shares of a Portfolio received
in proper form prior to the close of trading on the New York
Stock Exchange on the date of the Effective Time shall be
accepted. Thereafter, redemption requests received by a
Portfolio for its Class K Shares shall be deemed to be a
redemption requests for Class A Shares into which Class K Shares
were converted.
(b) Attribution of Assets and Liabilities. At the Effective Time described in Section 2.6A(d) below, the proportionate undivided interest in the net assets of a Portfolio attributable to its Class K Shares shall become a part of the proportionate undivided interest in the net assets of the Portfolio attributable to its Class A Shares, and the expenses, costs, charges and reserves allocated to the Class K Shares of a Portfolio immediately prior to the Effective Time shall become expenses, costs, charges and reserves of Class A Shares of such Portfolio. The Portfolio shall instruct its transfer agent to reflect in the transfer agent's records the attribution of the Class K Shares in the manner described above.
(c) Shareholder Accounts. At the Effective Time described in Section 2.6A(d) below, each shareholder of record of Class K Shares of a Portfolio will receive that number of Class A Shares of such Portfolio having an aggregate net asset value equal to the net asset value of the Class K Shares of such Portfolio held by such shareholder immediately prior to the Effective Time. Each Portfolio will establish an open account on its records in the name of each Class K shareholder to which will be credited the respective number of Class A Shares of such Portfolio due to such shareholder. Fractional Class K Shares will be carried to the third decimal place. Certificates representing Class A Shares will not be issued. The net asset value of the Class A Shares and Class K Shares will be determined at the Effective Time in accordance with the policies and procedures of the applicable Portfolio as set forth in its registration statement.
(d) The conversion of Class K Shares into Class A Shares shall occur 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")."
(e) If, prior to the Effective Time, (1) the Class A Shareholders of a Portfolio approve any increase in expenses allocated to the Class A Shares of that Portfolio in connection with (A) a Plan of Distribution adopted pursuant to Rule 12b-1 under the 1940 Act, (B) a non-Rule 12b-1 shareholder services plan or (C) any other plan or arrangement whereby Classes of that Portfolio pay a different share of other expenses, not including advisory or custodial fees or other expenses related to the management of the Trust's assets, then (2) the Class K Shares of that Portfolio will not convert to the Class A Shares unless the Class K Shareholders of that Portfolio, voting separately, approve the increase in expenses. The Trustees shall have sole discretion in determining whether such increase in expenses is submitted to a vote of the Class K Shareholders. Should such increase in expenses not be submitted to a vote of the Class K Shareholders or, if submitted, should the Class K Shareholders fail to approve such increase in expenses, the Trustees shall take such action as is necessary to: (1) create a new class of that Portfolio (the "New Class A Shares") which shall be identical in all material respects to the Class A Shares of that Portfolio as they existed prior to the implementation of the increase in expenses; and (2) ensure that the existing Class K Shares of that Portfolio will be exchanged or converted into New Class A Shares no later than Effective Time. If deemed advisable by the Trustees to implement the foregoing, and at the sole discretion of the Trustees, such action may include the exchange of all Class K Shares of that Portfolio for a new class of that Portfolio (the "New Class K Shares"), identical in all material respects to the Class K Shares of that Portfolio except that the New Class K Shares will convert into the New Class A Shares at the Effective Time. Such exchanges or conversions shall be effected in a manner that the Trustees reasonably believe will not be subject to federal taxation.
2. Effective as of October 22, 2005, Schedule A of the Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1 to this
Amendment effective as of the Effective Time as set forth in Section 2.6A of the Agreement.
3. All references in the Agreement to "this Agreement" shall mean the Agreement as amended by this Amendment.
4. 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 August 4, 2005.
By: /s/ Robert H. Graham
--------------------------------
Name: Robert H. Graham
Title: President
|
EXHIBIT 1 TO AMENDMENT NO. 4
TO
AGREEMENT AND DECLARATION OF TRUST
OF AIM SECTOR FUNDS
"SCHEDULE A
AIM SECTOR FUNDS
PORTFOLIOS AND CLASSES THEREOF
PORTFOLIO CLASSES OF EACH PORTFOLIO
--------- -------------------------
AIM Energy Fund Class A Shares
Class B Shares
Class C Shares
Institutional Class Shares
Investor Class Shares
AIM Financial Services Fund Class A Shares
Class B Shares
Class C Shares
Institutional Class Shares
Investor Class Shares
AIM Gold & Precious Metals Fund Class A Shares
Class B Shares
Class C Shares
Institutional Class Shares
Investor Class Shares
AIM Leisure Fund Class A Shares
Class B Shares
Class C Shares
Class R Shares
Institutional Class Shares
Investor Class Shares
AIM Technology Fund Class A Shares
Class B Shares
Class C Shares
Institutional Class Shares
Investor Class Shares
A-1
|
PORTFOLIO CLASSES OF EACH PORTFOLIO
--------- -------------------------
AIM Utilities Fund Class A Shares
Class B Shares
Class C Shares
Institutional Class Shares
Investor Class Shares"
|
AMENDMENT NO. 5
TO
AGREEMENT AND DECLARATION OF TRUST OF
AIM SECTOR FUNDS
This Amendment No. 5 to the Agreement and Declaration of Trust of AIM Sector Funds (this "Amendment") amends, effective as of August 4, 2005, the Agreement and Declaration of Trust of AIM Sector Funds (the "Trust") dated as of July 29, 2003, 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 parties desire to add Class R Shares to AIM Leisure 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 August 4, 2005.
By: /s/ Robert H. Graham
--------------------------------
Name: Robert H. Graham
Title: President
|
EXHIBIT 1 TO AMENDMENT NO. 5
TO
AGREEMENT AND DECLARATION OF TRUST
OF AIM SECTOR FUNDS
"SCHEDULE A
AIM SECTOR FUNDS
PORTFOLIOS AND CLASSES THEREOF
PORTFOLIO CLASSES OF EACH PORTFOLIO
--------- -------------------------
AIM Energy Fund Class A Shares
Class B Shares
Class C Shares
Class K Shares
Institutional Class Shares
Investor Class Shares
AIM Financial Services Fund Class A Shares
Class B Shares
Class C Shares
Class K Shares
Institutional Class Shares
Investor Class Shares
AIM Gold & Precious Metals Fund Class A Shares
Class B Shares
Class C Shares
Institutional Class Shares
Investor Class Shares
AIM Leisure Fund Class A Shares
Class B Shares
Class C Shares
Class K Shares
Class R Shares
Institutional Class Shares
Investor Class Shares
AIM Technology Fund Class A Shares
Class B Shares
Class C Shares
Class K Shares
Institutional Class Shares
Investor Class Shares
AIM Utilities Fund Class A Shares
Class B Shares
Class C Shares
Institutional Class Shares
Investor Class Shares"
|
THIRD AMENDMENT TO
BYLAWS
OF AIM SECTOR FUNDS
Adopted effective June 30, 2005
The Bylaws of AIM Sector Funds (the "Trust"), adopted effective July 29, 2003, (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 Agreement and Declaration of Trust, as amended.
AMENDMENT NO. 2
TO
MASTER INVESTMENT ADVISORY AGREEMENT
This Amendment dated as of July 18, 2005, amends the Master Investment Advisory Agreement (the "Agreement"), dated November 25, 2003, between AIM Sector Funds, a Delaware statutory trust, and A I M Advisors, Inc., a Delaware corporation.
W I T N E S S E T H:
WHEREAS, the parties desire to amend the Agreement to delete AIM Health Sciences Fund from the Agreement;
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 Energy Fund November 25, 2003 AIM Financial Services Fund November 25, 2003 AIM Gold & Precious Metals Fund November 25, 2003 AIM Leisure Fund November 25, 2003 AIM Technology Fund November 25, 2003 AIM Utilities Fund November 25, 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 Energy Fund
AIM Financial Services Fund
AIM Gold & Precious Metals Fund
AIM Leisure Fund
AIM Technology Fund
AIM Utilities 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%"
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 SECTOR 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. 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
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
3
|
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
|
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
A I M distributors, inc.
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
Class C
Class R
Institutional Class
3
|
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
A I M distributors, inc.
AIM FUNDS
DIRECTOR DEFERRED COMPENSATION AGREEMENT
As Amended March 7, 2000, and September 28, 2001
AIM FUNDS
DIRECTOR DEFERRED COMPENSATION AGREEMENT
AGREEMENT, made on this __ day of _______, 20__, by and between the registered open-end investment companies listed on Appendix A hereto (the "Funds"), and _______________________________________________________ (the "Director") residing at __________________________________________________
WHEREAS, the Funds and the Director have entered into agreements pursuant to which the Director will serve as a director/trustee of the Funds; and
WHEREAS, if the Funds and the Director have previously entered into an additional agreement whereby the Funds will provide to the Director a vehicle under which the Director can defer receipt of directors' fees payable by the Funds, they now desire to amend and restate such agreement.
NOW, THEREFORE, in consideration of the mutual covenants and obligations set forth in this Agreement, the Funds and the Director hereby agree as follows:
1. DEFINITION OF TERMS AND CONSTRUCTION
1.1 Definitions. Unless a different meaning is plainly implied by the context, the following terms as used in this Agreement shall have the following meanings:
(a) "Beneficiary" shall mean such person or persons designated pursuant to Section 4.3 hereof to receive benefits after the death of the Director.
(b) "Boards of Directors" shall mean the respective Boards of Directors of the Funds.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute.
(d) "Compensation" shall mean the amount of directors' fees paid by each of the Funds to the Director during a Deferral Year prior to reduction for Compensation Deferrals made under this Agreement.
(e) "Compensation Deferral" shall mean the amount or amounts of the Director's Compensation deferred under the provisions of Section 3 of this Agreement.
(f) "Deferral Accounts" shall mean the accounts maintained to reflect the Director's Compensation Deferrals made pursuant to Section 3 hereof (or pursuant to any prior agreement) and any other credits or debits thereto.
(g) "Deferral Year" shall mean each calendar year during which the Director makes, or is entitled to make, Compensation Deferrals under Section 3 hereof.
(h) "Retirement" shall have the same meaning as set forth under the Retirement Plan.
(i) "Retirement Plan" shall mean the "AIM Funds Retirement Plan for Eligible Directors/Trustees."
(j) "Valuation Date" shall mean the last business day of each calendar year and any other day upon which the Funds makes valuations of the Deferral Accounts.
1.2 Plurals and Gender. Where appearing in this Agreement the singular shall include the plural and the masculine shall include the feminine, and vice versa, unless the context clearly indicates a different meaning.
1.3 Directors and Trustees. Where appearing in this Agreement, "Director" shall also refer to "Trustee" and "Board of Directors" shall also refer to "Board of Trustees."
1.4 Headings. The headings and sub-headings in this Agreement are inserted for the convenience of reference only and are to be ignored in any construction of the provisions hereof.
1.5 Separate Agreement for Each Fund. This Agreement is drafted, and shall be construed, as a separate agreement between the Director and each of the Funds.
2. PERIOD DURING WHICH COMPENSATION DEFERRALS ARE PERMITTED
2.1 Commencement of Compensation Deferrals. The Director may elect, on a form provided by, and submitted to, the Presidents of the respective Funds, to commence Compensation Deferrals under Section 3 hereof for the period beginning on the later of (i) the date this Agreement is executed or (ii) the date such form is submitted to the Presidents of the Funds.
2.2 Termination of Deferrals. The Director shall not be eligible to make Compensation Deferrals after the earliest of the following dates:
(a) The date on which he ceases to serve as a Director of all of the Funds; or
(b) The effective date of the termination of this Agreement.
3. COMPENSATION DEFERRALS
3.1 Compensation Deferral Elections.
(a) On or prior to the first day of any Deferral Year, the Director may elect, on the form described in Section 2.1 hereof, to defer the receipt of all or a portion of his Compensation for such Deferral Year. Such writing shall set forth the amount of such Compensation Deferral (in whole percentage amounts). Such election shall continue in effect for all subsequent Deferral Years unless it is canceled or modified as provided below.
(b) Compensation Deferrals shall be withheld from each payment of Compensation by the Funds to the Director based upon the percentage amount elected by the Director under Section 3.1(a) hereof.
(c) The Director may cancel or modify the amount of his Compensation Deferrals on a prospective basis by submitting to the Presidents of the Funds a revised Compensation Deferral election form. Such change will be effective as of the first day of the Deferral Year following the date such revision is submitted to the Presidents of the Funds.
3.2 Valuation of Deferral Account.
(a) Each Fund shall establish a bookkeeping Deferral Account to which will be credited an amount equal to the Director's Compensation Deferrals under this Agreement made with respect to Compensation earned from each such Fund. Compensation Deferrals shall be allocated to the Deferral Accounts on the first business day following the date such Compensation Deferrals are withheld from the Director's Compensation. As of the date of this Agreement, the Deferral Accounts also shall be credited with the amounts credited to the Director under each other outstanding elective deferred compensation agreement entered into by and between the Funds and the Director which is superseded by this Agreement pursuant to Section 6.11 hereof. The Deferral Accounts shall be debited to reflect any distributions from such Accounts. Such debits shall be allocated to the Deferral Accounts as of the date such distributions are made.
(b) As of each Valuation Date, income, gain and loss equivalents (determined as if the Deferral Accounts are invested in the manner set forth under Section 3.3, below) attributable to the period following the next preceding Valuation Date shall be credited to and/or deducted from the Director's Deferral Accounts.
3.3 Investment of Deferral Account Balances.
(a) (1) The Director may select, from various options made available by the Funds, the investment media in which all or part of his Deferral Accounts shall be deemed to be invested.
(2) The Director shall make an investment designation on a form provided by the Presidents of the Funds which shall remain effective until another valid direction has been made by the Director as herein provided. The Director may amend his investment designation by giving written direction to the Presidents of the Funds in such manner and at such time as the Funds may permit, but no less frequently than quarterly on thirty (30) days' notice prior to the end of a calendar quarter. A timely change to a Director's investment designation shall become effective as soon as practicable following receipt by the Presidents of the Funds.
(3) The investment media deemed to be made available to the Director, and any limitation on the maximum or minimum percentages of the Director's Deferral Accounts that may be invested any particular medium, shall be the same as from time-to-time communicated to the Director by the Presidents of the Funds.
(b) Except as provided below, the Director's Deferral Accounts shall be deemed to be invested in accordance with his investment designations, provided such designations conform to the provisions of this Section. If -
(1) the Director does not furnish the Presidents of the Funds with complete, written investment instructions, or
(2) the written investment instructions from the Director are unclear, then the Director's election to make Compensation Deferrals hereunder shall be held in abeyance and have no force or effect until such time as the Director shall provide the Presidents of the Funds with complete investment instructions. Notwithstanding the above, the Boards of Directors, in their sole discretion, may disregard the Director's election and determine that all Compensation Deferrals shall be deemed to be invested in a fund determined by the Boards of Directors. In the event that any fund under which any portion of the Director's Deferral Accounts is deemed to be invested ceases to exist, such portion of the Deferral Accounts thereafter shall be held in the successor to such fund, subject to subsequent deemed investment elections.
The Funds shall provide an annual statement to the Director showing such information as is appropriate, including the aggregate amount in the Deferral Accounts, as of a reasonably current date.
4. DISTRIBUTIONS FROM DEFERRAL ACCOUNTS
4.1 Payment Date and Methods.
(a) Designation of Date. Each deferral direction given pursuant to
Section 3.1 shall include designation of the Payment Date for the value of the
amount deferred. Such Payment Date shall be the first day of any calendar
quarter, subject to the limitation set forth in paragraph 4.1(c).
(b) Extension Date. At least one year before the Payment Date initially designated pursuant to paragraph 4.1(a) above, the Participant may irrevocably elect to extend such Payment Date to the first day of any calendar quarter, subject to the limitation set forth in paragraph 4.1(c).
(c) Limitation. The Director shall select a Payment Date (or extended Payment Date) that is no sooner than the earlier of (i) the January 1 that follows the second anniversary of the Participant's deferral election made pursuant to paragraph 4.1(a) or (b) or (ii) the January 1 of the year after the Participant's Retirement.
(d) Methods of Payment. Distributions from the Director's Deferral Accounts shall be paid in cash in a single sum unless the Participant elects, at the time a Payment Date is selected pursuant to paragraph 4.1(a) or 4.1(b), to receive the amount payable in generally equal quarterly installments over a period not to exceed ten (10) years. In addition, at least one year before the Payment Date, a Director may change the method of payment previously selected.
(e) Irrevocability. Except as provided in paragraphs 4.1(b) and 4.1(d), a designation of a Payment Date and an election of installment payments shall be irrevocable; provided, however, that payment shall be made or begin on a different date as follows:
(1) Upon the Director's death, payment shall be made in accordance with
Section 4.2,
(2) Upon the Director's ceasing to serve as a director of all of the Funds for reasons other than death or Retirement, payment shall be made or begin within three months after the end of the calendar year in which such termination occurs in accordance with the method elected by the Director pursuant to paragraph 4.1(d) provided the designation of such method had been made at least one year before such termination occurred, except that the Boards of Directors, in their sole discretion, may accelerate the distribution of such Deferral Accounts,
(3) Upon termination of this Agreement, payment shall be made in accordance with Section 5.2, and
(4) In the event of the liquidation, dissolution or winding up of a Fund or the distribution of all or substantially all of a Fund's assets and property relating to one or more series of its shares to the shareholders of such series (for this purpose a sale, conveyance or transfer of a Fund's assets to a trust, partnership, association or corporation in exchange for cash, shares or other securities with the transfer being made subject to, or with the assumption by the transferee of, the liabilities of the Fund shall not be deemed a termination of the Fund or such a distribution), all unpaid balances of the Deferral Accounts related to such Fund as of the effective date thereof shall be paid in a lump sum on such effective date.
4.2 Death Prior to Complete Distribution of Deferral Accounts. Upon the death of the Director prior to the commencement of the distribution of the amounts credited to his Deferral Accounts, the balance of such Accounts shall be distributed to his Beneficiary in accordance with the method of payment selected pursuant to paragraph 4.1(d), commencing as soon as practicable after the Director's death. In the event of the death of the Director after the commencement of such distribution, but prior to the complete distribution of his Deferral Accounts, the balance of the amounts credited to his Deferral Accounts shall be distributed to his Beneficiary over the remaining period during which such amounts were distributable to the Director under Section 4.1 hereof. Notwithstanding the above, the Boards of Directors, in their sole discretion, may accelerate the distribution of the Deferral Accounts.
4.3 Designation of Beneficiary. For purposes of Section 4.2 hereof, the
Director's Beneficiary shall be the person or persons so designated by the
Director in a written instrument submitted to the Presidents of the Funds. In
the event the Director fails to properly designate a Beneficiary, his
Beneficiary shall be the person or persons in the first of the following classes
of successive preference Beneficiaries surviving at the death of the Director:
the Director's (1) surviving spouse or (2) estate.
4.4 Payments Due Missing Persons. The Funds shall make a reasonable effort to locate all persons entitled to benefits under this Agreement. However, notwithstanding any provisions of this Agreement to the contrary, if, after a period of five (5) years from the date such
benefit shall be due, any such persons entitled to benefits have not been located, their rights under this Agreement shall stand suspended. Before this provision becomes operative, the Funds shall send a certified letter to all such persons to their last known address advising them that their benefits under this Agreement shall be suspended. Any such suspended amounts shall be held by the Funds for a period of three (3) additional years (or a total of eight (8) years from the time the benefits first become payable) and thereafter, if unclaimed, such amounts shall be forfeited.
5. AMENDMENTS AND TERMINATION
5.1 Amendments.
(a) The Funds and the Director may, by a written instrument signed by, or on behalf of, such parties, amend this Agreement at any time and in any manner.
(b) The Funds reserve the right to amend, in whole or in part, and in any manner, any or all of the provisions of this Agreement by action of their Boards of Directors for the purposes of complying with any provision of the Code or any other technical or legal requirements, provided that:
(1) No such amendment shall make it possible for any part of the Director's Deferral Accounts to be used for, or diverted to, purposes other than for the exclusive benefit of the Director or his Beneficiaries, except to the extent otherwise provided in this Agreement; and
(2) No such amendment may reduce the amount of the Director's Deferral Accounts as of the effective date of such amendment.
5.2 Termination. The Director and the Funds may, by written instrument signed by, or on behalf of, such parties, terminate this Agreement at any time. In the event of the termination of this Agreement, the Boards of Directors, in their sole discretion, may choose to pay out the Director's Deferral Accounts prior to the designated Payment Dates. Otherwise, following a termination of this Agreement, such Accounts shall continue to be maintained in accordance with the provisions of this Agreement until the time they are paid out.
6. MISCELLANEOUS.
6.1 Rights of Creditors.
(a) This Agreement is unfunded. Neither the Director nor any other persons shall have any interest in any specific asset or assets of the Funds by reason of any Deferral Accounts hereunder, nor any rights to receive distribution of his Deferral Accounts except and as to the extent expressly provided hereunder. The Funds shall not be required to purchase, hold or dispose of any investments pursuant to this Agreement; however, if in order to cover their obligations hereunder the Funds elect to purchase any investments the same shall continue for all purposes to be a part of the general assets and property of the Funds, subject to the claims of their general creditors and no person other than the Funds shall by virtue of the provisions of this Agreement have any interest in such assets other than an interest as a general creditor.
(b) The rights of the Director and the Beneficiaries to the amounts held in the Deferral Accounts are unsecured and shall be subject to the creditors of the Funds. With respect to the payment of amounts held under the Deferral Accounts, the Director and his Beneficiaries have the status of unsecured creditors of the Funds. This Agreement is executed on behalf of the Funds by an officer, or other representative, of the Funds as such and not individually. Any obligation of the Funds hereunder shall be an unsecured obligation of the Funds and not of any other person.
6.2 Agents. The Funds may employ agents and provide for such clerical, legal, actuarial, accounting, advisory or other services as it deems necessary to perform their duties under this Agreement. The Funds shall bear the cost of such services and all other expenses they incur in connection with the administration of this Agreement.
6.3 Liability and Indemnification. Except for their own gross negligence, willful misconduct or willful breach of the terms of this Agreement, the Funds shall be indemnified and held harmless by the Director against liability or losses occurring by reason of any act or omission of the Funds or any other person.
6.4 Incapacity. If the Funds shall receive evidence satisfactory to them that the Director or any Beneficiary entitled to receive any benefit under the Agreement is, at the time when such benefit becomes payable, a minor, or is physically or mentally incompetent to receive such benefit and to give a valid release therefor, and that another person or an institution is then maintaining or has custody of the Director or Beneficiary and that no guardian, committee or other representative of the estate of the Director or Beneficiary shall have been duly appointed, the Funds may make payment of such benefit otherwise payable to the Director or Beneficiary to such other person or institution, including a custodian under a Uniform Gifts to Minors Act, or corresponding legislation (who shall be an adult, a guardian of the minor or a trust company), and the release of such other person or institution shall be a valid and complete discharge for the payment of such benefit.
6.5 Cooperation of Parties. All parties to this Agreement and any person claiming any interest hereunder agree to perform any and all acts and execute any and all documents and papers which are necessary or desirable for carrying out this Agreement or any of its provisions.
6.6 Governing Law. This Agreement is made and entered into in the State of Texas and all matters concerning its validity, construction and administration shall be governed by the laws of the State of Texas.
6.7 Nonguarantee of Directorship. Nothing contained in this Agreement shall be construed as a contract or guarantee of the right of the Director to be, or remain as, a director of any of the Funds or to receive any, or any particular rate of, Compensation from any of the Funds.
6.8 Counsel. The Funds may consult with legal counsel with respect to the meaning or construction of this Agreement, their obligations or duties hereunder or with respect to any action or proceeding or any question of law, and they shall be fully protected with respect to any action taken or omitted by them in good faith pursuant to the advice of legal counsel.
6.9 Spendthrift Provision. The Director's and Beneficiaries' interests in the Deferral Accounts may not be anticipated, sold, encumbered, pledged, mortgaged, charged, transferred, alienated, assigned nor become subject to execution, garnishment or attachment and any attempt to do so by any person shall render the Deferral Accounts immediately forfeitable.
6.10 Notices. For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or mailed by United States registered or certified mail, return receipt requested, postage prepaid, or by nationally recognized overnight delivery service providing for a signed return receipt, addressed to the Director at the home address set forth in the Funds' records and to the Funds at the address set forth on the first page of this Agreement, provided that all notices to the Funds shall be directed to the attention of the Presidents of the Funds or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
6.11 Entire Agreement. This Agreement contains the entire understanding between the Funds and the Director with respect to the payment of non-qualified elective deferred compensation by the Fund to the Director. Effective as of the date hereof, this Agreement replaces, and supersedes, all other non-qualified elective deferred compensation agreements by and between the Director and the Funds.
6.12 Interpretation of Agreement. Interpretations of, and determinations (including factual determinations) related to, this Agreement made by the Funds in good faith, including any determinations of the amounts of the Deferral Accounts, shall be conclusive and binding upon all parties; and the Funds shall not incur any liability to the Director for any such interpretation or determination so made or for any other action taken by it in connection with this Agreement in good faith.
6.13 Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, the Funds and their successors and assigns and to the Director and his heirs, executors, administrators and personal representatives.
6.14 Severability. In the event any one or more provisions of this Agreement are held to be invalid or unenforceable, such illegality or unenforceability shall not affect the validity or enforceability of the other provisions hereof and such other provisions shall remain in full force and effect unaffected by such invalidity or unenforceability.
6.15 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.
The Funds
-------------------- --------------------
Witness By:
Name:
Title:
-------------------- --------------------
|
Witness Director
As revised September 26, 2002
APPENDIX A
For the purposes of the Deferred Compensation Agreement "AIM Funds" shall mean each of the regulated investment companies constituting classes or series of shares of the following entities:
AIM ADVISOR FUNDS
AIM EQUITY FUNDS
AIM FLOATING RATE FUND
AIM FUNDS GROUP
AIM GROWTH SERIES
AIM INTERNATIONAL FUNDS, INC.
AIM INVESTMENT FUNDS
AIM INVESTMENT SECURITIES FUNDS
AIM SERIES TRUST
AIM SPECIAL OPPORTUNITIES FUNDS
AIM SUMMIT FUND
AIM TAX-EXEMPT FUNDS
AIM VARIABLE INSURANCE FUNDS
SHORT-TERM INVESTMENTS CO.
SHORT-TERM INVESTMENTS TRUST
TAX-FREE INVESTMENTS CO.
DEFERRED COMPENSATION AGREEMENT
DEFERRAL ELECTION FORM
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation agreement (the "Agreement") dated as of ________________________ by and between the undersigned and the AIM Funds, I hereby make the following elections:
Deferral of Compensation
Starting with Compensation to be paid to me with respect to services provided by me to the AIM Funds after the date this election Form is received by the AIM Funds, I hereby elect that ______ percent (_____%) of my Compensation (as defined under the Agreement) be reduced and that the Fund establish a bookkeeping account credited with amounts equal to the amount so reduced (the "Deferral Account"). The Deferral Account shall be further credited with income equivalents as provided under the Agreement. I understand that this election will remain in effect with respect to Compensation I earn in subsequent years unless I modify or revoke it. I further understand that such modification or revocation will be effective only prospectively and will apply commencing with the Compensation I earn in the calendar year that begins after the change is received by you.
Payment Date
I hereby designate ________ 1 (select the first month in any calendar quarter) in the year ______ (select a year that is at least two years after the year this election is made) as the Payment Date for the amounts credited to my Deferral Account pursuant to the election made above. If my Retirement (as defined in the Agreement) occurs sooner, I [ ] do [ ] do not (check the appropriate box) want payment of such amounts to commence effective the January 1 following my Retirement. I understand that amounts credited to my Deferral Account may be paid to me prior to the Payment Date as provided in the Agreement.
Payment Method
I hereby elect to receive the amounts credited to my Deferral Account in
(check one)
[ ] a single payment in cash
[ ] annual installments for a period of ____ (select no more than 10 years)
beginning within 30 days following the payment date selected above.
I understand that the amounts credited to my Deferral Account shall remain the general assets of the AIM Funds and that, with respect to the payment of such amounts, I am merely a general creditor of the AIM Funds. I may not sell, encumber, pledge, assign or otherwise alienate the amounts credited to my Deferral Account.
I hereby agree that the terms of the Agreement are incorporated herein and are made a part hereof. Dated as of the day and year first above written.
WITNESS: DIRECTOR:
----------------------------- ----------------------------------
WITNESS: RECEIVED:
AIM Funds
-----------------------
By:
----------------------
Date:
-----------------------
|
DEFERRED COMPENSATION AGREEMENT
INVESTMENT DIRECTION FORM
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation Agreement (the "Agreement") by and between the undersigned and the AIM Funds, I hereby elect that my Deferral Account under the Agreement be considered to be invested as follows (in multiples of 10%):
NAME OF FUND
---------------- -- % ---------------- -- % ---------------- -- % -------------- -- % ----------- -- % ---------------- -- % |
I acknowledge that I may amend this Investment Agreement in the manner, and at such time, as permitted under the Agreement. Furthermore, I acknowledge that, pursuant to Section 3.3(b) of the Agreement, the Fund has reserved the right to disregard the elections made above to consider my Deferral Account to be deemed to be invested in a fund of its choosing.
WITNESS: DIRECTOR:
-------------------------------- -----------------------------------
WITNESS: RECEIVED:
----------------------- AIM Funds
By: ---------------------------
Date: -------------------------
|
DEFERRED COMPENSATION AGREEMENT
BENEFICIARY DESIGNATION FORM
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation Agreement (the "Agreement") by and between the undersigned and the AIM Funds, I hereby make the following beneficiary designations:
I. Primary Beneficiary
I hereby appoint the following as my Primary Beneficiary(ies) to receive at my death the amounts credited to my Deferral Account under the Agreement. In the event I am survived by more than one Primary Beneficiary, such Primary Beneficiaries shall share equally in such amounts unless I indicate otherwise on an attachment to this form:
--------------------------------- Name Relationship --------------------------------- Address --------------------------------- City State Zip |
II. Secondary Beneficiary
In the event I am not survived by any Primary Beneficiary, I hereby appoint the following as Secondary Beneficiary(ies) to receive death benefits under the Agreement. In the event I am survived by more than one Secondary Beneficiary, such Secondary Beneficiaries shall share equally unless I indicate otherwise on an attachment to this form:
--------------------------------- Name Relationship --------------------------------- Address --------------------------------- City State Zip |
I understand that I may revoke or amend the above designations at any time. I further understand that if I am not survived by a Primary or Secondary Beneficiary, my Beneficiary shall be as set forth under the Agreement.
WITNESS: DIRECTOR:
------------------------------- -----------------------------------
WITNESS: RECEIVED:
------------------------- AIM Funds
By: ---------------------------
Date: -------------------------
|
PAYMENT DATE ELECTION FORM
FOR PREVIOUSLY DEFERRED COMPENSATION
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation agreement (the "Agreement") by and between the undersigned and the AIM Funds, pursuant to which I have previously elected to defer Compensation,
Payment Date Change:
I hereby designate ________ 1 (select the first month in any calendar quarter) in the year ______ (select a year that is at least two years after the year this election is made) as the Payment Date for the amounts previously credited to my Deferral Account and amounts subsequently credited thereto. If my Retirement (as defined in the Agreement) occurs sooner, I [ ] do [ ] do not (check the appropriate box) want payment of such amounts to commence effective the January 1 following my Retirement. I understand that amounts credited to my Deferral Account may be paid to me prior to the Payment Date as provided in the Agreement.
Payment Method Change
I hereby elect to receive the amounts credited to my Deferral Account in
(check one)
[ ] a single payment in cash
[ ] annual installments for a period of ____ (select no more than 10 years)
I understand that this change in payment method will not be given effect unless my Payment Date is at least one year from the date hereof and I do not cease to be a Director within such year.
I understand that I may amend this designation in the manner, and at such time, as permitted under the Agreement.
WITNESS: DIRECTOR:
--------------------------------------------------------------------------------
WITNESS: RECEIVED:
------------------------- AIM Funds
By: ---------------------------
Date: -------------------------
|
DEFERRED COMPENSATION AGREEMENT
SUMMARY
Your Deferred Compensation Agreement (the "Agreement") allows you to defer some or all of your annual trustee's fees otherwise payable by the Funds. Deferred fees are deemed invested in certain mutual funds selected by you. The deferral is pre-tax, and the deferred amount and the credited gains, losses and income are not subject to tax until paid out to you.
Your deferrals (and investment experience) are posted to a bookkeeping account maintained by the Funds in your name. In order for you to enjoy the tax deferral, the payments due under the Agreement will be paid from the Funds' general assets, and you are considered a general unsecured creditor of the Funds; you may not transfer your right to receive payments under the Agreement to any other person, nor may you pledge that right to secure any debt or other obligation; finally, an election to defer must be made in writing before the first day of the calendar year for which the fees are earned (the "Election Date") and elections can be changed only prospectively, effective for the next calendar year.
An important change has been made to your Agreement to give you greater
flexibility to select the time and method of payment of amounts that you defer:
for amounts previously deferred and for future elections you now designate a
specific Payment Date and payment method which generally may be changed with at
least one year's advance notice.
PAYMENT DATE ELECTION
Deferred fees (and the income, gains and losses credited during the deferral period) generally will be paid out as elected by you in installments or a single sum in cash within 30 days of the Payment Date elected. (For payments in connection with your termination of service as a trustee, see below.)
Deferrals must be for a minimum two year period (unless your retirement date under the Retirement Plan is earlier). Thus, the Payment Date may be the first day of any calendar quarter that follows the second anniversary of the applicable Election Date or your retirement date. Thus, fees previously deferred and fees payable for the calendar year beginning January 1, 1997 may be deferred to the first day of any calendar quarter in any year from 1999.
EXTENDING A PAYMENT DATE
At least one year prior to any Payment Date, you may extend that Date, provided that the additional period of deferral is at least two years. You may make this change in Payment Date only once.
PAYMENT METHOD
The value of your deferrals (based on your election as to how your deferral account is to be considered invested) will be paid in cash, in one lump sum or in annual
installments (over a period not to exceed 10 years) as you select at the time you select your Payment Date. You may change this election, but the change will not be given effect unless it is made at least one year before your Payment Date or your ceasing to be a trustee (whichever occurs first). This one year requirement is waived in the case of your death (see Termination of Service, below).
TERMINATION OF SERVICE
Upon your death, your account under the Agreement will be paid out as elected by you in installments or in a single sum in cash as soon as practicable. Payment will be made to your designated Beneficiary or Beneficiaries or to your estate if there is no surviving Beneficiary.
Upon termination of your service as trustee for any reason other than death or your retirement (as defined in the Retirement Plan), your account will be paid to you as a single sum (or in installments if you had timely elected that method) in cash within three months following the end of the fiscal year in which you terminate, regardless of the Payment Dates you elected.
AMENDMENT NO. 3
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 Sector 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 Health Sciences 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 SECTOR FUNDS
Portfolios Effective Date of Agreement ---------- --------------------------- AIM Energy Fund July 1, 2004 AIM Financial Services Fund July 1, 2004 AIM Gold & Precious Metals Fund July 1, 2004 AIM Leisure Fund July 1, 2004 AIM Technology Fund July 1, 2004 AIM Utilities 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
|
(SEAL)
AIM SECTOR FUNDS
Attest: /s/ John H. Lively By: /s/ Robert H. Graham
---------------------------- ------------------------------
Assistant Secretary Robert H. Graham
President
|
(SEAL)
August 19, 2005
AIM Sector Funds
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Re: AIM Sector Funds Registration Statement on Form N-1A
Ladies and Gentlemen:
We have acted as counsel to AIM Sector 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. 45 to the Registration Statement on Form N-1A under the Securities Act of 1933, as amended, and Amendment No. 45 to such Registration Statement under the 1940 Act (collectively, the "Registration Statement") relating to (i) the registration of an indefinite number of Class R shares of beneficial interest, par value $.01 per share (the "Class R Shares"), of AIM Leisure Fund, and (ii) the registration of an indefinite number of Institutional Class shares of beneficial interest, par value $.01 per share (together with the Class R Shares, the "Shares"), of AIM Utilities Fund (together with AIM Leisure Fund, the "Funds" and each of the Funds, individually, a "Fund").
In connection with our 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, June 30, 2005 and August 4, 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 prospectuses for the Funds, which are included in the Registration Statement, substantially in the form in which they are to be filed (the "Prospectuses"). As to various questions of fact material to our opinion, we have relied upon information provided by officers of the Trust.
The Prospectuses provide for issuance of the Shares from time to time at the net asset value thereof, plus any applicable sales charge. 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 Prospectuses are duly authorized and, when sold, issued and paid for as described in the Prospectuses, 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 each Fund for all loss and expense of any shareholder held personally liable for the obligations of that Fund. Therefore, the risk of any shareholder incurring financial loss beyond his investment due to shareholder liability is limited to circumstances in which a 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 Funds, which is included in the Registration Statement.
Very truly yours,
/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 six reports dated May 20, 2005, relating to the financial statements and financial highlights of AIM Energy Fund, AIM Financial Services Fund, AIM Gold & Precious Metals Fund, AIM Leisure Fund, AIM Technology Fund and AIM Utilities Fund (six of the portfolios constituting AIM Sector 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.
/s/ PricewaterhouseCoopers LLP Houston, Texas August 22, 2005 |
[LOGO OF AIM INVESTMENTS MASTER RELATED AGREEMENT TO
COMPANY] AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(REIMBURSEMENT)
(INVESTOR CLASS 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 Investor Class 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 its allocated share of expenses incurred pursuant to the Amended and Restated Master Distribution Plan (Investor Class 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, on behalf of a Portfolio, shall expend, on a monthly basis, and shall reimburse Distributors to such extent, for Distributors' actual direct expenditures incurred over a rolling twelve-month period (or the rolling twenty-four month period specified below) in engaging in the activities and providing the services specified in Sections 3 and 4 of the Plan, an amount computed at an annual rate of 0.25% of the average daily net assets of such Portfolio during the month as applied to the average net asset value of the shares of such Portfolio purchased or acquired through exchange on or after the Plan Calculation Date shown for such Portfolio on Schedule A. Distributors shall not be entitled hereunder to reimbursement for overhead expenses (overhead expenses defined as customary overhead not including the costs of Distributors' personnel whose primary responsibilities involve marketing of the Funds). Payments by a Fund on behalf of a Portfolio hereunder, for any month, may be made only with respect to: (a) expenditures incurred by Distributors during the rolling twelve-month period in which that month falls, or (b) to the extent permitted by applicable law, for any month during the first twenty-four months following a Portfolio's commencement of operations, expenditures incurred by Distributors during the rolling twenty-four month period in which that month falls, and any expenditures incurred in excess of the limitations described above are not reimbursable. No Fund on behalf of a Portfolio shall be authorized to expend, for any month, a greater amount out of its assets to reimburse Distributors for expenditures incurred during the rolling twenty-four month period referred to above than it would otherwise be authorized to expend out of its assets to reimburse Distributors for expenditures incurred during the rolling twelve-month period referred to above.
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 within10 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 July 1, 2004. FUND (listed in Schedule A)
on behalf of the Investor Class Shares
of each Portfolio listed on Schedule A
By: /s/ Robert H. Graham
--------------------------------
Name: Robert H. Graham
Title: President
|
SCHEDULE "A" TO
RELATED AGREEMENT
AIM Large Cap Growth Fund Investor Shares November 3, 2003 AIM Diversified Dividend Fund Investor Shares July 18, 2005 AIM FUNDS GROUP AIM Basic Balanced Fund Investor Shares July 18, 2005 AIM INTERNATIONAL MUTUAL FUNDS AIM European Growth Fund Investor Shares November 24, 2003 |
AIM INVESTMENT SECURITIES FUNDS
AIM High Yield Fund Investor Shares November 3, 2003 AIM Income Fund Investor
Shares November 3, 2003 AIM Intermediate Government Fund Investor Shares
November 24, 2003 AIM Municipal Bond Fund Investor Shares November 24, 2003 AIM
Real Estate Fund Investor Shares/1/ November 3, 2003
AIM SECTOR FUNDS
AIM Technology Fund Investor Shares November 24, 2003 AIM STOCK FUNDS AIM Dynamics Fund Investor Shares June 1, 2000 AIM Small Company Growth Fund Investor Shares June 1, 2000 ---------- |
1 AIM Real Estate Fund is closed to new investors.
[LOGO OF AIM INVESTMENTS MASTER RELATED AGREEMENT TO
COMPANY] AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(COMPENSATION)
(INVESTOR CLASS 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 Investor Class 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 (Investor Class 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 within10 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 July 1, 2004. FUND (listed in Schedule A)
on behalf of the Investor Class Shares
of each Portfolio listed on Schedule A
By: /s/ Robert H. Graham
---------------------------------
Name: Robert H. Graham
Title: President
|
SCHEDULE "A" TO
RELATED AGREEMENT
Maximum Aggregate
AIM Blue Chip Fund Investor Shares 0.25 September 30, 2003 AIM Capital Development Fund Investor Shares 0.25 November 30, 2004 AIM Large Cap Basic Value Fund Investor Shares 0.25 September 30, 2003 AIM INTERNATIONAL MUTUAL FUNDS AIM International Core Equity Fund Investor Shares 0.25 June 1, 2000 AIM INVESTMENT FUNDS AIM Global Health Care Fund Investor Shares 0.25 July 18, 2005 AIM SECTOR FUNDS AIM Energy Fund Investor Shares 0.25 June 1, 2000 AIM Financial Services Fund Investor Shares 0.25 June 1, 2000 AIM Gold & Precious Metals Fund Investor Shares 0.25 June 1, 2000 AIM Leisure Fund Investor Shares 0.25 June 1, 2000 AIM Utilities Fund Investor Shares 0.25 June 1, 2000 AIM STOCK FUNDS AIM S&P 500 Index Fund Investor Shares 0.25 June 1, 2000 |
[LOGO OF AIM INVESTMENTS]
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
|
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
|
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
|
/5/ Effective July 10, 2003, this fee rate was reduced from 0.35% to 0.25%.
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS R SHARES)
(Effective August 18, 2003)
SECTION 1. Each registered investment company, as described in Schedule A to this plan (each individually referred to as "Fund", or collectively, "Funds"), severally, on behalf of each of its series of common stock or of beneficial interest, as the case may be, set forth in Schedule A to this plan (each, a "Portfolio"), may act as a distributor of the Class R Shares of such Portfolio (the "Shares") of which such Fund is the issuer, pursuant to Rule12b-1 under the Investment Company Act of 1940 (the "1940 Act"), according to the terms of this Amended and Restated Master Distribution Plan (the "Plan").
SECTION 2. The Fund may incur expenses pursuant to this Plan on behalf of a Portfolio at the applicable annual rate set forth on Schedule A under "Maximum Aggregate Fee" of the average daily net assets of the Portfolio attributable to the Shares. Such expenses shall be subject to any applicable limitations imposed from time to time by the applicable rules of NASD Inc. ("NASD").
SECTION 3. The Fund may expend amounts under this Plan to finance distribution-related services for the Shares of each Portfolio. 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 this Plan.
The Fund has selected A I M Distributors, Inc. ("Distributors") to provide distribution-related services on behalf of and for the Shares of each Portfolio. Distributors may provide such distribution-related services either directly or through third parties.
SECTION 4. The Fund may also expend amounts under this Plan to finance
payments of service fees under arrangements for personal continuing shareholder
services. Personal continuing shareholder services may include, but shall not be
limited to, the following: (I) distributing sales literature to customers; (ii)
answering routine customer inquiries concerning the Fund and the Shares; (iii)
assisting customers in changing dividend options, account designations and
addresses, and in enrolling in any of several retirement plans offered in
connection with the purchase of Shares; (iv) assisting customers in the
establishment and maintenance of customer accounts and records, and in the
placement of purchase and redemption transactions; (v) assisting customers in
investing dividends and capital gains distributions automatically in Shares; and
(vi) providing such other information and services as the Fund or the customer
may reasonably request.
Distributors may implement these arrangements either directly or through third parties.
SECTION 5. All amounts expended pursuant to this Plan shall be paid to Distributors pursuant to the related agreement to this Plan attached hereto as Exhibit A and are the legal obligation of the Fund and not of Distributors. The maximum service fee payable by the Fund on behalf of a Portfolio for personal continuing shareholder services shall be twenty-five one-
hundredths of one percent (0.25%), or such lower rate for the Portfolio as is specified on Schedule A, per annum of the average daily net assets of the Portfolio attributable to the Shares owned by the customers of entity providing such shareholder services.
No provision of this Plan shall be interpreted to prohibit any payments by the Fund with respect to the Shares of a Portfolio during periods when the Fund has suspended or otherwise limited sales of such Shares.
SECTION 6. Distributors shall provide to the Fund's Board of Directors/Trustees ("Board of Trustees") and the Board of Trustees shall review, at least quarterly, a written report of the amounts expended under this Plan and the purposes for which such expenditures were made.
SECTION 7. This Plan and any agreement related to this Plan shall become effective immediately, with respect to any Portfolio, upon the receipt by the applicable Fund of both (a) the affirmative vote of a majority of the Board of Trustees of the Fund, and (b) the affirmative vote of a majority of those Directors\Trustees ("Trustees") of the Fund who are not "interested persons" of the Fund (as defined in the 1940 Act) and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it (the "Dis-interested Trustees"), cast in person at a meeting called for the purpose of voting on this Plan or such agreement.
SECTION 8. Any material amendments to this Plan must be approved, with respect to any Portfolio, by both (a) the affirmative vote of a majority of the Board of Trustees of the applicable Fund, and (b) the affirmative vote of a majority of the Dis-interested Trustees, cast in person at a meeting called for the purpose of voting on the amendment. In addition, this Plan may not be amended with respect to the Shares of any Portfolio to increase materially the amount to be spent for distribution provided for in Section 2 hereof unless such amendment is approved by a "majority of the outstanding voting securities" (as defined in the 1940 Act) of the Shares of such Portfolio.
SECTION 9. Unless sooner terminated pursuant to Section 10, this Plan and any related agreement shall continue in effect for the Shares of each Portfolio until June 30, 2004 and thereafter each shall continue in effect so long as such continuance is specifically approved, at least annually, in the manner provided for approval of this Plan in Section 7.
SECTION 10. This Plan may be terminated with respect to the Shares of any Portfolio at any time by vote of a majority of the Dis-interested Trustees of the applicable Fund, or by vote of a majority of the outstanding Shares of such Portfolio. If this Plan is terminated with respect to a Portfolio, the obligation of the Fund to make payments pursuant to this Plan with respect to such Portfolio will also cease and the Fund will not be required to make any payments with respect to such Portfolio beyond the termination date.
SECTION 11. Any agreement related to this Plan shall be made in writing, and shall provide:
(a) that such agreement may be terminated at any time, with respect to the Shares of any Portfolio, without payment of any penalty, by vote of a majority of the Dis-interested Trustees of the applicable Fund or by a vote of the outstanding Shares of such Portfolio, on not more than sixty (60) days' written notice to any other party to the agreement; and
(b) that such agreement shall terminate automatically in the event of its assignment.
SECTION 12. This Plan amends and restates the plan of distribution in effect immediately prior to August 18, 2003 (the "Prior Plan") for each Portfolio listed on Schedule A which had adopted the Prior Plan, insofar as such Prior Plan pertains to Class R Shares of the Portfolio.
SCHEDULE A
TO
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
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
AIM International Core Equity Fund 0.25% 0.25% 0.50%
AIM EQUITY FUNDS
----------------
Minimum
Asset
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%
AIM FUNDS GROUP
---------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
AIM Balanced Fund 0.25% 0.25% 0.50%
AIM Premier Equity Fund 0.25% 0.25% 0.50%
AIM Small Cap Equity Fund 0.25% 0.25% 0.50%
4
|
AIM GROWTH SERIES
-----------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
AIM Basic Value Fund 0.25% 0.25% 0.50%
AIM Mid Cap Core Equity Fund 0.25% 0.25% 0.50%
AIM Small Cap Growth Fund 0.25% 0.25% 0.50%
AIM INTERNATIONAL FUNDS, INC.
-----------------------------
Minimum
Asset
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 Growth Fund 0.25% 0.25% 0.50%
AIM INVESTMENT SECURITIES FUNDS
-------------------------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
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%
|
AMENDMENT NO. 1
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 November 4, 2003, as follows:
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
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
AIM International Core Equity Fund 0.25% 0.25% 0.50%
AIM EQUITY FUNDS
----------------
Minimum
Asset
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%
|
AIM FUNDS GROUP
---------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
AIM Balanced Fund 0.25% 0.25% 0.50%
AIM Premier Equity Fund 0.25% 0.25% 0.50%
AIM Small Cap Equity Fund 0.25% 0.25% 0.50%
AIM GROWTH SERIES
-----------------
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 Mid Cap Core Equity Fund 0.25% 0.25% 0.50%
AIM Small Cap Growth Fund 0.25% 0.25% 0.50%
AIM INTERNATIONAL FUNDS, INC.
-----------------------------
Minimum
Asset
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 Growth Fund 0.25% 0.25% 0.50%
AIM INVESTMENT FUNDS
--------------------
Minimum
Asset
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%
AIM INVESTMENT SECURITIES FUNDS
-------------------------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
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%
|
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: November 4, 2003
AMENDMENT NO. 2
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 November 24, 2003, as follows:
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
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%
AIM FUNDS GROUP
---------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
AIM Balanced Fund 0.25% 0.25% 0.50%
AIM Premier Equity Fund 0.25% 0.25% 0.50%
AIM Small Cap Equity Fund 0.25% 0.25% 0.50%
|
AIM GROWTH SERIES
-----------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
AIM Basic Value Fund 0.25% 0.25% 0.50%
AIM Mid Cap Core Equity Fund 0.25% 0.25% 0.50%
AIM Small Cap Growth Fund 0.25% 0.25% 0.50%
AIM INTERNATIONAL FUNDS, INC.
-----------------------------
Minimum
Asset
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 Growth Fund 0.25% 0.25% 0.50%
AIM INVESTMENT FUNDS
--------------------
Minimum
Asset
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%
AIM INVESTMENT SECURITIES FUNDS
-------------------------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
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%
|
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: November 24, 2003
AMENDMENT NO. 3
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 November 25, 2003, as follows:
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
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%
AIM FUNDS GROUP
---------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
AIM Balanced Fund 0.25% 0.25% 0.50%
AIM Premier Equity Fund 0.25% 0.25% 0.50%
AIM Small Cap Equity Fund 0.25% 0.25% 0.50%
|
AIM GROWTH SERIES
-----------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
AIM Basic Value Fund 0.25% 0.25% 0.50%
AIM Mid Cap Core Equity Fund 0.25% 0.25% 0.50%
AIM Small Cap Growth Fund 0.25% 0.25% 0.50%
AIM INTERNATIONAL MUTUAL FUNDS
------------------------------
Minimum
Asset
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 Growth Fund 0.25% 0.25% 0.50%
INVESCO International Core
Equity Fund 0.25% 0.25% 0.50%
AIM INVESTMENT FUNDS
--------------------
Minimum
Asset
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%
AIM INVESTMENT SECURITIES FUNDS
-------------------------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
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 TREASURER'S SERIES TRUST
----------------------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
INVESCO Stable Value 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: November 25, 2003
AMENDMENT NO. 4
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 30, 2004, as follows:
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
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%
AIM FUNDS GROUP
---------------
Minimum
Asset
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%
|
AIM GROWTH SERIES
-----------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
AIM Aggressive Allocation Fund 0.25% 0.25% 0.50%
AIM Basic Value Fund 0.25% 0.25% 0.50%
AIM Conservative 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 Small Cap Growth Fund 0.25% 0.25% 0.50%
AIM INTERNATIONAL MUTUAL FUNDS
------------------------------
Minimum
Asset
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 Growth Fund 0.25% 0.25% 0.50%
INVESCO International Core
Equity Fund 0.25% 0.25% 0.50%
AIM INVESTMENT FUNDS
--------------------
Minimum
Asset
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%
AIM INVESTMENT SECURITIES FUNDS
-------------------------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
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%
AIM TREASURER'S SERIES TRUST
----------------------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
INVESCO Stable Value 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 30, 2004
AMENDMENT NO. 5
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 September 14, 2004, as follows:
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
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%
AIM FUNDS GROUP
---------------
Minimum
Asset
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%
|
AIM GROWTH SERIES
-----------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
AIM Aggressive Allocation Fund 0.25% 0.25% 0.50%
AIM Basic Value Fund 0.25% 0.25% 0.50%
AIM Conservative 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 Small Cap Growth Fund 0.25% 0.25% 0.50%
AIM INTERNATIONAL MUTUAL FUNDS
------------------------------
Minimum
Asset
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 Growth Fund 0.25% 0.25% 0.50%
INVESCO International Core
Equity Fund 0.25% 0.25% 0.50%
AIM INVESTMENT FUNDS
--------------------
Minimum
Asset
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%
AIM INVESTMENT SECURITIES FUNDS
-------------------------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
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: September 14, 2004
AMENDMENT NO. 6
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 15, 2004, as follows:
WHEREAS, the parties desire to amend the Plan to rename each INVESCO Fund by replacing "INVESCO" with "AIM";
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
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%
AIM FUNDS GROUP
---------------
Minimum
Asset
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%
|
AIM GROWTH SERIES
-----------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
AIM Aggressive Allocation Fund 0.25% 0.25% 0.50%
AIM Basic Value Fund 0.25% 0.25% 0.50%
AIM Conservative 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 Small Cap Growth Fund 0.25% 0.25% 0.50%
AIM INTERNATIONAL MUTUAL FUNDS
------------------------------
Minimum
Asset
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%
AIM INVESTMENT FUNDS
--------------------
Minimum
Asset
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%
AIM INVESTMENT SECURITIES FUNDS
-------------------------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
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: October 15, 2004
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
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%
AIM FUNDS GROUP
---------------
Minimum
Asset
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%
|
AIM GROWTH SERIES
-----------------
Minimum
Asset
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%
AIM INTERNATIONAL MUTUAL FUNDS
------------------------------
Minimum
Asset
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%
AIM INVESTMENT FUNDS
--------------------
Minimum
Asset
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%
AIM INVESTMENT SECURITIES FUNDS
-------------------------------
Minimum
Asset
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
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%
AIM FUNDS GROUP
---------------
Minimum
Asset
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%
|
AIM GROWTH SERIES
-----------------
Minimum
Asset
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%
AIM INTERNATIONAL MUTUAL FUNDS
------------------------------
Minimum
Asset
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%
AIM INVESTMENT FUNDS
--------------------
Minimum
Asset
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%
AIM INVESTMENT SECURITIES FUNDS
-------------------------------
Minimum
Asset
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
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%
AIM FUNDS GROUP
---------------
Minimum
Asset
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%
|
AIM GROWTH SERIES
-----------------
Minimum
Asset
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%
AIM INTERNATIONAL MUTUAL FUNDS
------------------------------
Minimum
Asset
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%
AIM INVESTMENT FUNDS
--------------------
Minimum
Asset
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%
AIM INVESTMENT SECURITIES FUNDS
-------------------------------
Minimum
Asset
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%"
AIM SECTOR FUNDS
----------------
Minimum
Asset
Based Maximum Maximum
Sales Service Aggregate
Portfolio - Class R Shares Charge Fee Fee
------- ------- ---------
AIM Leisure Fund 0.25% 0.25% 0.50%
2
|
AIM STOCK FUNDS
---------------
Minimum
Asset
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
[LOGO OF AIM INVESTMENTS]
MASTER RELATED AGREEMENT TO
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
(CLASS R 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 R 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 R 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 within10 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-InterestedTrustees, 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 R Shares of
each Portfolio listed on Schedule A
By: /s/ Robert H. Graham
----------------------------
Name: Robert H. Graham
Title: President
|
SCHEDULE "A" TO
RELATED AGREEMENT
Maximum Aggregate
Fund Fee Rate* Plan Calculation Date
---------------------------------------------------- ----------------- ---------------------
AIM EQUITY FUNDS
AIM Aggressive Growth Fund R Shares 0.50 June 3, 2002
AIM Blue Chip Fund R Shares 0.50 June 3, 2002
AIM Capital Development Fund R Shares 0.50 June 3, 2002
AIM Charter Fund R Shares 0.50 June 3, 2002
AIM Constellation Fund R Shares 0.50 June 3, 2002
AIM Large Cap Basic Value Fund R Shares 0.50 June 3, 2002
AIM Large Cap Growth Fund R Shares 0.50 June 3, 2002
AIM Mid Cap Growth Fund R Shares 0.50 June 3, 2002
AIM Weingarten Fund R Shares 0.50 June 3, 2002
AIM FUNDS GROUP
AIM Basic Balanced Fund R Shares 0.50 April 30, 2004
AIM Mid Cap Basic Value Fund R Shares 0.50 April 30, 2004
AIM Premier Equity Fund R Shares 0.50 June 3, 2002
AIM Small Cap Equity Fund R Shares 0.50 June 3, 2002
AIM GROWTH SERIES
AIM Basic Value Fund R Shares 0.50 June 3, 2002
AIM Conservative Allocation Fund R Shares 0.50 April 30, 2004
AIM Growth Allocation Fund R Shares 0.50 April 30, 2004
AIM Mid Cap Core Equity Fund R Shares/(1)/ 0.50 June 3, 2002
AIM Moderate Allocation Fund R Shares 0.50 April 30, 2004
AIM Moderate Growth Allocation Fund R Shares 0.50 April 29, 2005
AIM Moderately Conservative Allocation Fund R Shares 0.50 April 29, 2005
AIM Small Cap Growth Fund R Shares/(4)/ 0.50 June 3, 2002
AIM INTERNATIONAL MUTUAL FUNDS
AIM European Growth Fund R Shares 0.50 June 3, 2002
AIM International Core Equity Fund R Shares 0.50 November 24, 2003
AIM International Growth Fund R Shares 0.50 June 3, 2002
AIM INVESTMENT FUNDS
AIM Trimark Endeavor Fund R Shares 0.50 April 30, 2004
AIM Trimark Fund R Shares 0.50 April 30, 2004
AIM Trimark Small Companies Fund R Shares 0.50 April 30, 2004
AIM INVESTMENT SECURITIES FUNDS
AIM Global Real Estate Fund R Shares 0.50 April 29, 2005
AIM Income Fund R Shares 0.50 June 3, 2002
AIM Intermediate Government Fund R Shares 0.50 June 3, 2002
AIM Money Market Fund R Shares 0.50 June 3, 2002
AIM Real Estate Fund R Shares/(1)/ 0.50 April 30, 2004
AIM Short Term Bond Fund R Shares 0.50 April 30, 2004
AIM Total Return Bond Fund R Shares 0.50 April 30, 2004
|
1 AIM Mid Cap Core Equity Fund, AIM Real Estate Fund and AIM Small Cap Growth Fund are closed to new investors.
EIGHTH AMENDED AND RESTATED
MULTIPLE CLASS PLAN
OF
THE AIM FAMILY OF FUNDS(R)
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.