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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR/A
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-3886
----------------------------------------------
AIM Advisor Funds
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
11 Greenway Plaza, Suite 100 Houston, Texas 77046
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Robert H. Graham 11 Greenway Plaza, Suite 100 Houston, Texas 77046
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (713) 626-1919
-----------------------------
Date of fiscal year end: 07/31
------------------
Date of reporting period: 7/31/2003
-----------------
Explanatory Note
The Registrant is filing this Amendment to its Certified Shareholder Report on
Form N-CSR originally filed with the Securities and Exchange Commission on
October 3, 2003 to provide the proper form of Certifications required by Rule
30a-2(a) of the Investment Company Act of 1940, as amended that were required at
the original time of filing. This Form N-CSR/A also updates Item 9 "Controls and
Procedures" and Item 10 "Exhibits" as required. Other than the aforementioned
revisions this Form N-CSR/A does not reflect events occurring after the filing
of the original Form N-CSR, or modify or update the disclosures therein in any
way.
[COVER ART]
AIM INTERNATIONAL CORE EQUITY FUND
JULY 31, 2003
ANNUAL REPORT
YOUR GOALS. OUR SOLUTIONS.
--Servicemark--
[AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark--
================================================================================
[COVER IMAGE]
PAVEMENT CAFE AT NIGHT
BY VINCENT VAN GOGH
================================================================================
AIM INTERNATIONAL CORE EQUITY FUND SEEKS HIGH TOTAL RETURN THROUGH GROWTH OF
CAPITAL AND CURRENT INCOME BY INVESTING IN A DIVERSIFIED PORTFOLIO OF FOREIGN
EQUITY SECURITIES.
ABOUT INFORMATION THROUGHOUT THIS REPORT:
o AIM International Core Equity Fund's performance figures are historical, and
they reflect fund expenses, the reinvestment of distributions and changes in
net asset value.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the fund's share classes will differ due to different
sales charge structures and class expenses.
o International investing presents certain risks not associated with investing
solely in the United States. These include risks relating to fluctuations in
the value of the U.S. dollar relative to the values of other currencies, the
custody arrangements made for the fund's foreign holdings, differences in
accounting, political risks and the lesser degree of public information
required to be provided by non-U.S. companies.
o The fund may participate in the initial public offering (IPO) market in some
market cycles. Because of the fund's small asset base, any investment the
fund may make in IPOs may significantly affect the fund's total return. As
the fund's assets grow, the impact of IPO investments will decline , which
may reduce the effect of IPO investments on the fund's total return.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o In this report, industry classifications used are generally according to the
Global Industry Classification Standard, which was developed by and is the
exclusive property and a service mark of Morgan Stanley Capital
International Inc. and Standard & Poor's.
o The unmanaged Lipper International Fund Index represents an average of the
performance of the 30 largest international mutual funds tracked by Lipper,
Inc., an independent mutual funds performance monitor.
o The unmanaged MSCI EAFE--Registered Trademark-- (Europe, Australasia and the
Far East) Index is a group of foreign securities tracked by Morgan Stanley
Capital International.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends and they do not reflect sales
charges or fund expenses. Performance of an index of funds reflects fund
expenses. Performance of a market index does not.
A DESCRIPTION OF THE POLICIES AND PROCEDURES THAT THE FUND USES TO DETERMINE HOW
TO VOTE PROXIES RELATING TO PORTFOLIO SECURITIES IS AVAILABLE WITHOUT CHARGE,
UPON REQUEST, BY CALLING 800-959-4246, OR ON THE AIM WEB SITE,
AIMinvestments.com.
NOT FDIC INSURED -- MAY LOSE VALUE -- NO BANK GUARANTEE
This report may be distributed only to shareholders or to persons who
have received a current prospectus of the fund.
TO OUR SHAREHOLDERS
Dear Shareholder:
[PHOTO OF This is the annual report for AIM International Core Equity
ROBERT H. Fund for the fiscal year ended July 31, 2003. The report
GRAHAM] includes a managers' discussion of relevant market
conditions and fund strategy, tables showing top holdings in
the portfolio, charts tracking fund and index performance, a
WE ENCOURAGE YOU complete list of portfolio holdings, and other relevant
TO CONTINUE TO WORK information as of July 31, 2003. We hope you will find the
CLOSELY WITH YOUR information in this report helpful.
FINANCIAL ADVISOR,
ESPECIALLY AS YOUR CONSULT WITH YOUR FINANCIAL ADVISOR
FINANCIAL GOALS MAY
CHANGE OVER TIME. Market conditions can be challenging, as the last few years
ROBERT H. GRAHAM have demonstrated. Moreover, a wide variety of investment
options now exists. We strongly believe that investors can
benefit from the guidance of a financial advisor, who can
help them make investment choices consistent with their
financial objectives and tolerance for risk. Your financial advisor also can
help you stay focused on your financial goals regardless of sometimes unsettling
market and economic trends. We encourage you to continue to work closely with
your financial advisor, especially as your financial goals may change over time.
VISIT OUR WEB SITE
Up-to-date information about your fund is available at our Web site,
aiminvestments.com. The Web site also offers economic and market commentary from
senior AIM investment officers, educational articles on various investment
topics, and other financial information. You also can order forms and literature
at our Web site. In addition, you can check your account, conduct transactions
and view your account statements. We encourage you to take advantage of the
services offered at our Web site. As always, members of our award-winning Client
Services department also are ready to help you. They can be reached at
800-959-4246.
THANK YOU FOR YOUR COMMITMENT TO AIM INVESTMENTS
As we review one of the most challenging periods from a market perspective in
recent decades, we want to express our appreciation to you for your continued
participation in AIM Investments. We realize the last few years have been trying
for many investors and future market trends are unpredictable. However, we
believe that those who maintain a long-term perspective and adhere to a
diversified approach to investing should ultimately be rewarded for their
perseverance.
Sincerely,
/s/ROBERT H. GRAHAM
Robert H. Graham
Chairman and President
July 31, 2003
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
FUND RECORDS POSITIVE RETURNS FOR FISCAL YEAR
This report covers the fiscal year ended July 31, 2003. During this period, your
fund recorded positive returns at net asset value. At net asset value, Class A
shares produced a total return of 1.99%. By comparison, the MSCI-EAFE Index
returned 6.30%. The fund's telecommunications services stocks underperformed
those of the EAFE Index, which detracted from the fund's performance relative to
its benchmark.
MARKET CONDITIONS
Relatively sluggish economic conditions persisted for most major foreign
economies during the reporting period. In Europe, economic growth remained
subdued for the first half of 2003, with euro area real gross domestic product
growth increasing just 0.1% in the first quarter over the fourth quarter of
2002. According to the European Central Bank's (ECB) August 2003 monthly
bulletin, however, there are signs that economic confidence in the euro zone is
stabilizing. Both the ECB and the Bank of England reduced interest rates during
2003, leaving their benchmark rates at 2.0% and 3.5%, respectively, at the end
of the reporting period.
In Asia, Japan's economy grew by a preliminary estimate of 0.6% in the
second quarter of 2003. As of June 30, 2003, Japan's industrial production also
had increased. During the same period, many major world economies witnessed a
fall in industrial production. Despite economic improvements, however, deflation
continued to plague Japan. The Bank of Japan continued to ease monetary policy
through the non-traditional approach of purchasing asset-backed securities.
After a few years of mostly negative market returns, international
markets--as represented by the MSCI-EAFE Index--posted positive returns for the
last four months of the reporting period. April 2003 proved a turning point,
with Europe (represented by the MSCI Europe Index) leading world performance
with a return of 13.49% for the month. Japanese stocks--represented by the MSCI
Japan Index--also posted positive returns for the final three months of the
reporting period.
On a sector basis, the best-performing sectors in the MSCI EAFE Index during
the reporting period were telecommunications services and information
technology; the worst performers were consumer staples and energy. Generally,
international value stocks outperformed foreign growth stocks and generally,
international small-caps led their large-cap peers.
================================================================================
WE SEEK TO OWN THE
FAVORABLY PRICED STOCKS
OF COMPANIES WITH
ESTABLISHED TRACK
RECORDS...
================================================================================
<Table>
<Caption>
==================================================================================================================
PORTFOLIO COMPOSITION
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
- ------------------------------------------------------------------------------------------------------------------
1. Endesa, S.A.-ADR (Spain) 2.9% 1. Diversified Banks 15.0%
2. Fuji Photo Film Co., Ltd.-ADR (Japan) 2.8 2. Integrated Oil & Gas 10.9
3. Nestle S.A.-ADR (Switzerland) 2.8 3. Pharmaceuticals 9.1
4. Novartis A.G.-ADR (Switzerland) 2.7 4. Integrated Telecommunication Services 6.2
5. ING Groep N.V.-ADR (Netherlands) 2.6 5. Electric Utilities 6.2
6. BP PLC (United Kingdom) 2.6 6. Packaged Foods & Meats 5.8
7. HSBC Holdings PLC-ADR (United Kingdom) 2.6 7. Consumer Electronics 3.7
8. Societe Generale-ADR (France) 2.4 8. Paper Products 3.0
9. Total S.A.-ADR (France) 2.3 9. Electronic Equipment Manufacturers 3.0
10. Roche Holdings A.G. (Switzerland) 2.3 10. Photographic Products 2.8
* Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the
fund will continue to hold any particular security.
==================================================================================================================
</Table>
2
The dollar continued to show weakness vs. many major foreign currencies,
particularly the euro. The British pound, Australian dollar, Swiss franc and
Canadian dollar also gained ground on the U.S. dollar during the reporting
period.
YOUR FUND
At the close of the reporting period, the fund's assets were diversified over 10
market sectors. The portfolio's largest sector weightings at that point were in
financials, consumer discretionary and energy. Financials, energy and utilities
were the best-performing sectors while consumer staples, consumer discretionary
and telecommunications services were the worst-performing sectors for the fund.
The highest percentage of the portfolio's total net assets, excluding money
market funds, was invested in the stocks of companies in the United Kingdom and
Japan, followed by Switzerland and the Netherlands. Please keep in mind that the
fund's sector and country allocations are primarily a by-product of our
stock-selection process. We seek to own the favorably priced stocks of companies
with established track records, regardless of sector or geographic location.
Stocks that enhanced fund performance included Endesa, a Spanish electricity
company, which reported an increase in income for the first half of 2003
compared to the same period for the previous year and Kingfisher, a UK-based
home improvement chain with more than 600 outlets in Europe and Asia. For its
most recent fiscal year, Kingfisher reported an 11% increase in sales.
Stocks that detracted from performance included BAE Systems (formerly
British Aerospace), a UK-based defense contractor, which reported a decline in
sales for its most recent fiscal year. We on the portfolio management team
believe, however, that there are increasing strong indications about the
company's long-term defense contracts. Sony, a Japanese electronics and
entertainment company, also detracted from the fund's performance. We continued
to hold this stock because we believe the company has an excellent brand name. A
telecommunications stock that did not perform up to the management team's
expectations was Telefonos de Mexico, Mexico's largest telecommunications
company.
IN CLOSING
We continue to work diligently to meet the fund's investment objective of growth
of capital and current income. Regardless of market trends, we will adhere to
the fund's strategy as outlined in its prospectus. We will continue to focus on
the reasonably priced stocks of companies that we believe have favorable growth
prospects.
<Table>
<Caption>
================================================================================
as of 7/31/03, based on total net assets
TOP 10 COUNTRIES*
- --------------------------------------------------------------------------------
1. United Kingdom 21.2% TOTAL NUMBER OF HOLDINGS* 65
2. Japan 20.1 TOTAL NET ASSETS $105.4 million
3. Switzerland 11.3
4. Netherlands 8.2
5. France 7.8
6. Spain 4.7
7. Finland 3.9
8. Germany 3.3
9. Italy 3.0
10. South Korea 2.8
================================================================================
</Table>
================================================================================
PORTFOLIO MANAGEMENT TEAM
AS OF 7/31/03
TEAM MANAGED BY INVESCO GLOBAL ASSET
MANAGEMENT (N.A.), INC.
================================================================================
See important fund and index
disclosures inside front cover.
[GRAPHIC] FOR MORE INFORMATION VISIT AIMinvestments.com
3
FUND PERFORMANCE
================================================================================
RESULTS OF A $10,000 INVESTMENT
5/1/95-7/31/03
[MOUNTAIN CHART]
<Table>
<Caption>
MSCI EAFE
AIM INTERNATIONAL --REGISTERED
CORE EQUITY FUND TRADEMARK-- LIPPER INTERNATIONAL
DATE CLASS C SHARES INDEX FUND INDEX
- ------ ----------------- ------------ --------------------
5/95 $ 10000 $ 10000 $ 10000
7/95 10622 10313 10694
10/95 10569 9841 10466
1/96 11338 10566 11139
4/96 11923 11141 11732
7/96 11736 10677 11427
10/96 12344 10873 11787
1/97 13254 10769 12467
4/97 13838 11043 12816
7/97 15754 12611 14645
10/97 14492 11375 13363
1/98 15433 11876 13678
4/98 17410 13131 15572
7/98 17391 13299 15704
10/98 15831 12470 13984
1/99 16636 13584 15137
4/99 16974 14373 15950
7/99 17198 14585 16443
10/99 17717 15342 17206
1/00 18628 16201 19524
4/00 18864 16373 19544
7/00 19164 15903 19242
10/00 18092 14900 17800
1/01 18596 14843 17789
4/01 17504 13704 16312
7/01 16213 12449 15066
10/01 14384 11184 13511
1/02 14647 11046 13688
4/02 16135 11802 14716
7/02 14059 10343 12906
10/02 12881 9706 12124
1/03 12652 9397 11841
4/03 13013 9884 12319
7/03 $ 14237 $ 10996 $ 13794
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results.
</Table>
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's share classes will differ due to different sales
charge structures and class expenses. For fund performance calculations and
indexes used in this report, please see the inside front cover. Performance
shown in the chart and table does not reflect deduction of taxes a shareholder
would pay on fund distributions or sale of fund shares. Performance of the
indexes does not reflect the effects of taxes.
This growth chart uses a logarithmic scale, which means the price scale
(vertical axis) is structured so that a given distance always represents the
same percent change in price, rather than the same absolute change in price. For
example, the distance from one to 10 is the same as the distance from 10 to 100
on a logarithmic chart, but the latter distance is 10 times greater on a linear
chart. A logarithmic scale better illustrates performance in the fund's early
years before reinvested distributions and compounding create the potential for
the original investment to grow to very large numbers.
================================================================================
FUND RETURNS
================================================================================
FUND VS. INDEXES
Total returns 7/31/02-7/31/03,
excluding sales charges
CLASS A SHARES 1.99%
CLASS B SHARES 1.28
CLASS C SHARES 1.28
CLASS R SHARES 1.91
MSCI EAFE--Registered Trademark-- INDEX
(Broad Market and
Style-specific Index) 6.30
LIPPER INTERNATIONAL FUND INDEX
(Peer Group Index) 6.89
Source: Lipper, Inc.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 7/31/03, including sales charges
CLASS A SHARES
Inception (12/31/96) 0.75%
5 Years -4.28
1 Year -3.61
CLASS B SHARES
Inception (3/3/98) -2.85%
5 Years -4.24
1 Year -3.72
CLASS C SHARES
Inception (5/1/95) 4.38%
5 Years -3.92
1 Year 0.28
CLASS R SHARES*
Inception 1.46%
5 Years -3.34
1 Year 1.91
*Class R shares are generally only available to retirement plans such as section
401 and 457 plans, section 403 plans sponsored by a section 501(c) (3)
organization and IRA rollovers from such plans if an AIM fund was offered. They
are sold at net asset value, that is, without up-front sales charges.
Class R shares were first offered on June 3, 2002. Returns prior to that date
are hypothetical results based on Class A share performance at net asset value,
adjusted to reflect Class R 12b-1 fees. (The inception date of Class A shares is
12/31/96.) Class R share returns do not include a 0.75% contingent deferred
sales charge that may be imposed on a total redemption of retirement plan assets
within the first year.
The fund's average annual total returns, including sales charges, for the
periods ended 6/30/03, the most recent calendar quarter-end, were as follows.
Class A shares, one year, -15.30%; five years, -4.62%; inception (12/31/96),
0.48%. Class B shares, one year, -15.50%; five years, -4.56%; inception
(3/3/98), -3.20%. Class C shares, one year, -12.02%; five years, -4.27%;
inception (5/1/95), 4.19%. Class R shares, one year, -10.54%; five years,
- -3.68%; inception, 1.20%.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
4
FINANCIALS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
JULY 31, 2003
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-98.09%
AUSTRALIA-2.44%
BHP Billiton Ltd. (Diversified Metals &
Mining) 175,700 $ 1,116,712
- ------------------------------------------------------------------------
National Australia Bank Ltd.-ADR (Diversified
Banks) 13,700 1,453,707
========================================================================
2,570,419
========================================================================
AUSTRIA-1.07%
Bank Austria Creditanstalt (Diversified
Banks)(a) 35,400 1,132,316
========================================================================
CANADA-0.93%
Barrick Gold Corp. (Gold) 57,000 975,840
========================================================================
DENMARK-1.75%
Danske Bank A.S. (Diversified Banks) 100,700 1,843,792
========================================================================
FINLAND-3.89%
Nokia Oyj (Communications Equipment) 59,800 915,715
- ------------------------------------------------------------------------
Stora Enso Oyj-Class R (Paper Products) 161,000 2,023,718
- ------------------------------------------------------------------------
UPM-Kymmene Oyj (Paper Products) 70,900 1,157,431
========================================================================
4,096,864
========================================================================
FRANCE-7.82%
Compagnie de Saint-Gobain (Building Products) 26,600 1,059,284
- ------------------------------------------------------------------------
Compagnie Generale des Etablissements
Michelin-Class B (Tires & Rubber) 60,450 2,189,798
- ------------------------------------------------------------------------
Societe Generale-ADR (Diversified Banks) 182,200 2,557,268
- ------------------------------------------------------------------------
Total S.A.-ADR (Integrated Oil & Gas) 33,200 2,443,520
========================================================================
8,249,870
========================================================================
GERMANY-3.30%
BASF A.G.-ADR (Diversified Chemicals) 47,700 2,260,026
- ------------------------------------------------------------------------
Deutsche Bank A.G. (Diversified Capital
Markets) 18,900 1,220,940
========================================================================
3,480,966
========================================================================
ITALY-2.95%
Eni S.p.A-ADR (Integrated Oil & Gas) 27,000 1,983,420
- ------------------------------------------------------------------------
Sanpaolo IMI S.p.A.-ADR (Diversified Banks) 57,100 1,131,722
========================================================================
3,115,142
========================================================================
JAPAN-20.09%
Canon Inc.-ADR (Office Electronics) 41,550 2,036,366
- ------------------------------------------------------------------------
Eisai Co., Ltd. (Pharmaceuticals) 41,300 811,886
- ------------------------------------------------------------------------
Fuji Photo Film Co., Ltd.-ADR (Photographic
Products) 97,000 2,923,580
- ------------------------------------------------------------------------
Hitachi, Ltd.-ADR (Electronic Equipment
Manufacturers) 27,900 1,254,663
- ------------------------------------------------------------------------
Ito-Yokado Co., Ltd. (Hypermarket & Super
Centers) 33,000 845,803
- ------------------------------------------------------------------------
</Table>
<Table>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
JAPAN-(CONTINUED)
Kao Corp. (Household Products) 56,000 $ 1,049,768
- ------------------------------------------------------------------------
Kyocera Corp.-ADR (Electronic Equipment
Manufacturers) 7,500 429,750
- ------------------------------------------------------------------------
NEC Electronics Corp. (Semiconductors)
(Acquired 07/14/03; Cost $535,259)(b) 15,000 714,167
- ------------------------------------------------------------------------
Nintendo Co., Ltd. (Home Entertainment
Software) 20,700 1,665,478
- ------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp.
(Integrated Telecommunications Services) 395 1,634,912
- ------------------------------------------------------------------------
Seiko Epson Corp. (Computer Storage &
Peripherals)(a) 10,500 296,118
- ------------------------------------------------------------------------
Sony Corp-ADR (Consumer Electronics) 70,200 2,190,240
- ------------------------------------------------------------------------
Takeda Chemical Industries, Ltd.
(Pharmaceuticals) 45,800 1,633,544
- ------------------------------------------------------------------------
Takefuji Corp. (Consumer Finance) 16,920 915,050
- ------------------------------------------------------------------------
TDK Corp. (Electronic Equipment
Manufacturers) 26,000 1,427,671
- ------------------------------------------------------------------------
Toyota Motor Corp. (Automobile Manufacturers) 53,500 1,353,476
========================================================================
21,182,472
========================================================================
MEXICO-1.74%
Telefonos de Mexico S.A. de C.V.-Series L-ADR
(Integrated Telecommunications Services) 59,600 1,839,256
========================================================================
NETHERLANDS-8.19%
ABN AMRO Holding N.V. (Diversified Banks) 65,500 1,257,063
- ------------------------------------------------------------------------
ING Groep N.V.-ADR (Other Diversified
Financial Services) 135,200 2,718,872
- ------------------------------------------------------------------------
Koninklijke (Royal) Philips Electronics
N.V.-New York Shares (Consumer Electronics) 83,700 1,738,449
- ------------------------------------------------------------------------
Royal Dutch Petroleum Co.-New York Shares
(Integrated Oil & Gas) 43,700 1,904,446
- ------------------------------------------------------------------------
Unilever N.V.-New York Shares (Packaged Foods
& Meats) 18,000 1,016,640
========================================================================
8,635,470
========================================================================
NORWAY-1.35%
Statoil A.S.A. (Integrated Oil & Gas) 158,900 1,424,461
========================================================================
PORTUGAL-1.17%
Portugal Telecom, SGPS, S.A.-ADR (Integrated
Telecommunications Services) 184,700 1,230,102
========================================================================
SOUTH KOREA-2.78%
Korea Electric Power Corp.-ADR (Electric
Utilities) 123,000 1,115,610
- ------------------------------------------------------------------------
KT Corp.-ADR (Integrated Telecommunications
Services) 95,400 1,811,646
========================================================================
2,927,256
========================================================================
SPAIN-4.74%
Banco Popular Espanol S.A. (Diversified
Banks) 21,100 1,010,588
- ------------------------------------------------------------------------
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
SPAIN-(CONTINUED)
Endesa, S.A.-ADR (Electric Utilities) 192,000 $ 3,014,400
- ------------------------------------------------------------------------
Repsol YPF, S.A.-ADR (Integrated Oil & Gas) 61,200 970,632
========================================================================
4,995,620
========================================================================
SWEDEN-1.43%
Volvo A.B.-Class B (Construction, Farm
Machinery & Heavy Trucks) 61,400 1,503,472
========================================================================
SWITZERLAND-11.29%
Compagnie Financiere Richemont A.G.-Class A
(Apparel, Accessories & Luxury Goods)(c) 14,100 256,345
- ------------------------------------------------------------------------
Nestle S.A.-ADR (Packaged Foods & Meats) 58,550 2,921,147
- ------------------------------------------------------------------------
Novartis A.G.-ADR (Pharmaceuticals) 74,600 2,878,814
- ------------------------------------------------------------------------
Roche Holding A.G. (Pharmaceuticals) 28,750 2,403,530
- ------------------------------------------------------------------------
Syngenta A.G. (Fertilizers & Agricultural
Chemicals) 30,400 1,676,928
- ------------------------------------------------------------------------
Zurich Financial Services A.G. (Multi-Line
Insurance) 14,200 1,767,742
========================================================================
11,904,506
========================================================================
UNITED KINGDOM-21.16%
Abbey National PLC (Diversified Banks) 119,600 1,042,209
- ------------------------------------------------------------------------
Amersham PLC (Health Care Equipment) 134,500 1,067,567
- ------------------------------------------------------------------------
BAE SYSTEMS PLC (Aerospace & Defense) 590,200 1,465,717
- ------------------------------------------------------------------------
BP PLC (Integrated Oil & Gas) 395,400 2,711,891
- ------------------------------------------------------------------------
Cadbury Schweppes PLC (Packaged Foods &
Meats) 364,700 2,213,620
- ------------------------------------------------------------------------
Diageo PLC (Distillers & Vintners) 173,500 1,775,174
- ------------------------------------------------------------------------
GlaxoSmithKline PLC-ADR (Pharmaceuticals) 47,500 1,819,725
- ------------------------------------------------------------------------
HSBC Holdings PLC-ADR (Diversified Banks) 44,000 2,708,200
- ------------------------------------------------------------------------
Kingfisher PLC (Home Improvement Retail) 329,350 1,487,361
- ------------------------------------------------------------------------
</Table>
<Table>
MARKET
SHARES VALUE
<Caption>
- ------------------------------------------------------------------------
UNITED KINGDOM-(CONTINUED)
Marks & Spencer Group PLC (Department Stores) 184,200 $ 925,273
- ------------------------------------------------------------------------
Rolls-Royce Group PLC (Aerospace & Defense) 425,000 1,043,481
- ------------------------------------------------------------------------
Royal Bank of Scotland Group PLC (Diversified
Banks) 59,400 1,680,289
- ------------------------------------------------------------------------
Scottish Power PLC (Electric Utilities) 406,000 2,372,786
========================================================================
22,313,293
========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $98,513,991) 103,421,117
========================================================================
MONEY MARKET FUNDS-0.32%
STIC Liquid Assets Portfolio(d) 170,733 170,733
- ------------------------------------------------------------------------
STIC Prime Portfolio(d) 170,733 170,733
========================================================================
Total Money Market Funds (Cost $341,466) 341,466
========================================================================
Total Investments-98.41% (excluding
investments purchased with cash
collateral from securities loaned)
(Cost $98,855,457) 103,762,583
========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-9.82%
STIC Liquid Assets Portfolio(d)(e) 5,178,979 5,178,979
- ------------------------------------------------------------------------
STIC Prime Portfolio(d)(e) 5,178,979 5,178,979
========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $10,357,958) 10,357,958
========================================================================
TOTAL INVESTMENTS-108.23% (Cost $109,213,415) 114,120,541
========================================================================
OTHER ASSETS LESS LIABILITIES-(8.23%) (8,681,423)
========================================================================
NET ASSETS-100.00% $105,439,118
________________________________________________________________________
========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
</Table>
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 market value of this securities at 07/31/03 represented 0.68% of the
Fund's net assets. Unless otherwise indicated, this security is not
considered to be illiquid.
(c) Consists of more than one class of securities traded together as a unit.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
(e) 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 Notes to Financial Statements.
F-2
STATEMENT OF ASSETS AND LIABILITIES
July 31, 2003
<Table>
ASSETS:
Investments, at market value (cost
$98,513,991) $103,421,117
- -----------------------------------------------------------
Investment in affiliated money market funds
(cost $10,699,424)* 10,699,424
- -----------------------------------------------------------
Cash 1,835,970
- -----------------------------------------------------------
Receivables for:
Investments sold 247,986
- -----------------------------------------------------------
Fund shares sold 205,974
- -----------------------------------------------------------
Dividends 161,851
- -----------------------------------------------------------
Investment for deferred compensation plan 26,504
- -----------------------------------------------------------
Other assets 36,705
===========================================================
Total assets 116,635,531
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 15,811
- -----------------------------------------------------------
Fund shares reacquired 637,188
- -----------------------------------------------------------
Deferred compensation plan 26,504
- -----------------------------------------------------------
Collateral upon return of securities loaned 10,357,958
- -----------------------------------------------------------
Accrued distribution fees 63,700
- -----------------------------------------------------------
Accrued trustees' fees 766
- -----------------------------------------------------------
Accrued transfer agent fees 41,479
- -----------------------------------------------------------
Accrued operating expenses 53,007
===========================================================
Total liabilities 11,196,413
===========================================================
Net assets applicable to shares outstanding $105,439,118
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $111,148,160
- -----------------------------------------------------------
Undistributed net investment income 130,598
- -----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities and foreign
currencies (10,746,936)
- -----------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 4,907,296
===========================================================
$105,439,118
___________________________________________________________
===========================================================
NET ASSETS:
Class A $ 50,146,608
___________________________________________________________
===========================================================
Class B $ 18,741,064
___________________________________________________________
===========================================================
Class C $ 35,815,699
___________________________________________________________
===========================================================
Class R $ 735,747
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 4,081,345
___________________________________________________________
===========================================================
Class B 1,578,780
___________________________________________________________
===========================================================
Class C 3,020,248
___________________________________________________________
===========================================================
Class R 59,967
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 12.29
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $12.29 divided by
94.50%) $ 13.01
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 11.87
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 11.86
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per
share $ 12.27
___________________________________________________________
===========================================================
</Table>
* At July 31, 2003, securities with an aggregate market value of $10,198,782
were on loan to brokers.
See Notes to Financial Statements.
F-3
STATEMENT OF OPERATIONS
For the year ended July 31, 2003
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $385,865) $ 2,602,823
- -------------------------------------------------------------------------
Dividends from affiliated money market funds 35,667
- -------------------------------------------------------------------------
Interest 5,610
- -------------------------------------------------------------------------
Securities lending 44,100
=========================================================================
Total investment income 2,688,200
=========================================================================
EXPENSES:
Advisory fees 907,452
- -------------------------------------------------------------------------
Administrative services fees 50,000
- -------------------------------------------------------------------------
Custodian fees 58,721
- -------------------------------------------------------------------------
Distribution fees -- Class A 131,896
- -------------------------------------------------------------------------
Distribution fees -- Class B 154,898
- -------------------------------------------------------------------------
Distribution fees -- Class C 372,986
- -------------------------------------------------------------------------
Distribution fees -- Class R 1,361
- -------------------------------------------------------------------------
Transfer agent fees 318,245
- -------------------------------------------------------------------------
Trustees' fees 8,990
- -------------------------------------------------------------------------
Other 162,699
=========================================================================
Total expenses 2,167,248
=========================================================================
Less: Fees waived and expenses paid indirectly (2,281)
=========================================================================
Net expenses 2,164,967
=========================================================================
Net investment income 523,233
=========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities (5,447,911)
- -------------------------------------------------------------------------
Foreign currencies (75,975)
=========================================================================
(5,523,886)
=========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities 7,700,020
- -------------------------------------------------------------------------
Foreign currencies (14,783)
=========================================================================
7,685,237
=========================================================================
Net gain from investment securities and foreign currencies 2,161,351
=========================================================================
Net increase in net assets resulting from operations $ 2,684,584
_________________________________________________________________________
=========================================================================
</Table>
See Notes to Financial Statements.
F-4
STATEMENT OF CHANGES IN NET ASSETS
For the years ended July 31, 2003 and 2002
<Table>
<Caption>
2003 2002
- ------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 523,233 $ 250,955
- ------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (5,523,886) (5,437,574)
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies 7,685,237 (8,137,146)
==========================================================================================
Net increase (decrease) in net assets resulting from
operations 2,684,584 (13,323,765)
==========================================================================================
Distributions to shareholders from net realized gains:
Class A -- (326,844)
- ------------------------------------------------------------------------------------------
Class B -- (112,822)
- ------------------------------------------------------------------------------------------
Class C -- (586,319)
==========================================================================================
Decrease in net assets resulting from distributions -- (1,025,985)
==========================================================================================
Share transactions-net:
Class A 13,820,400 10,710,635
- ------------------------------------------------------------------------------------------
Class B 4,793,866 6,669,654
- ------------------------------------------------------------------------------------------
Class C (6,730,611) (12,052,459)
- ------------------------------------------------------------------------------------------
Class R 634,995 13,905
==========================================================================================
Net increase in net assets resulting from share
transactions 12,518,650 5,341,735
==========================================================================================
Net increase (decrease) in net assets 15,203,234 (9,008,015)
==========================================================================================
NET ASSETS:
Beginning of year 90,235,884 99,243,899
==========================================================================================
End of year $105,439,118 $ 90,235,884
__________________________________________________________________________________________
==========================================================================================
</Table>
See Notes to Financial Statements.
F-5
NOTES TO FINANCIAL STATEMENTS
July 31, 2003
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM International Core Equity Fund (the "Fund") is a series portfolio of AIM
Advisor 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 two separate
portfolios, each having 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 high total return. Companies
are listed in the Schedule of Investments based on the country in which they are
organized.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued on the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, at the closing bid price. Debt obligations
(including convertible bonds) are valued on the basis of prices provided by
an independent pricing service. Prices provided by the pricing service may
be determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Securities for which market prices
are not provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in
the case of equity securities and in the case of debt obligations, the mean
between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Trust's officers in a manner specifically authorized by the Board of
Trustees. Short-term obligations having 60 days or less to maturity and
commercial paper are valued at amortized cost which approximates market
value. For purposes of determining net asset value per share, futures and
option contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the NYSE. Generally, trading in foreign securities
is substantially completed each day at various times prior to the close of
the NYSE. The values of such securities used in computing the net asset
value of the Fund's shares are determined as of the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes and the
close of the customary trading session of the NYSE which would not be
reflected in the computation of the Fund's net asset value. If a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE as determined in
good faith by or under the supervision of the Board of Trustees.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
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
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. Any capital loss
carryforwards listed are reduced for limitations, if any, to the extent
required by the Internal Revenue Code.
E. FOREIGN CURRENCY TRANSLATIONS -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately
F-6
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 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 sales of foreign currencies,
currency gains or losses realized between the trade and settlement dates on
securities transactions, and 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.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. EXPENSES -- 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. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 1.00% of the Fund's
average daily net assets. AIM has entered into a sub-advisory agreement with
INVESCO Global Asset Management (N.A.), Inc. (IGAM) whereby AIM pays IGAM 40% of
the net fee paid by the Fund to AIM. 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 in which the Fund has invested (excluding
investments made in affiliated money market funds with cash collateral from
securities loaned by the Fund). For the year ended July 31, 2003, AIM waived
fees of $428.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended July 31, 2003, AIM was paid
$50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended July 31, 2003, AFS
retained $154,276 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C and Class R shares of the Fund. The Trust has adopted
plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class
A shares, Class B shares, Class C shares and Class R shares (collectively the
"Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at
the annual rate of 0.35% of the Fund's average daily net assets of Class A
shares, 1.00% of the average daily net assets of Class B and Class C shares and
0.50% of the average daily net assets of Class R shares. Of these amounts, the
Fund may pay a service fee of 0.25% of the average daily net assets of the Class
A, Class B, Class C or Class R shares to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own the appropriate class of shares of the Fund. Any
amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. NASD Rules also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by any class of
shares of the Fund. Pursuant to the Plans, for the year ended July 31, 2003, the
Class A, Class B, Class C and Class R shares paid $131,896, $154,898, $372,986
and $1,361, 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 July 31, 2003, AIM Distributors retained $20,508 in front-end sales
commissions from the sale of Class A shares and $1,102, $57, $2,386 and $0 for
Class A, Class B, Class C and Class R shares, respectively, from CDSC imposed
upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
NOTE 3--INDIRECT EXPENSES
For the year ended July 31, 2003, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) of $1,835 and reduction in custodian
fees of $18 under expense offset arrangement which resulted in a reduction of
the Fund's total expenses of $1,853.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
During the year ended July 31, 2003, the Fund paid legal fees of $2,725 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a trustee of the Trust.
NOTE 5--BORROWINGS
The Fund may participate in an interfund lending facility that AIM has
established for temporary borrowings by the AIM Funds. An interfund
F-7
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.
Effective June 26, 2003, the Fund became a participant in an uncommitted
unsecured revolving line of 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 line of credit 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 reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the year ended July 31, 2003, the Fund did not borrow or lend under
the interfund lending facility or borrow under either the committed line of
credit facility or the uncommitted unsecured revolving line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value 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 pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day, 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.
At July 31, 2003, securities with an aggregate value of $10,198,782 were on
loan to brokers. The loans were secured by cash collateral of $10,357,958
received by the Fund and subsequently invested in affiliated money market funds.
For the year ended July 31, 2003, the Fund received fees of $44,100 for
securities lending.
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
Distributions to Shareholders:
The tax character of distributions paid during the years ended July 31, 2003 and
2002 were as follows:
<Table>
<Caption>
2003 2002
- --------------------------------------------------------------
Distributions paid from long-term
capital gain $ -- $1,025,985
______________________________________________________________
==============================================================
</Table>
Tax Components of Net Assets:
As of July 31, 2003, the components of net assets on a tax basis were as
follows:
<Table>
Undistributed ordinary income $ 165,156
- -----------------------------------------------------------
Unrealized appreciation -- investments 1,894,007
- -----------------------------------------------------------
Temporary book/tax differences (34,558)
- -----------------------------------------------------------
Capital loss carryforward (4,986,737)
- -----------------------------------------------------------
Post-October capital loss deferral (2,746,910)
- -----------------------------------------------------------
Shares of beneficial interest 111,148,160
===========================================================
Total net assets $105,439,118
___________________________________________________________
===========================================================
</Table>
The difference between book-basis and tax-basis unrealized appreciation is
due to differences in the timing of recognition of gains and losses on
investments for tax and book purposes. The Fund's unrealized appreciation
difference is attributable primarily to the tax deferral of losses on wash
sales. The tax basis unrealized appreciation on investments includes
appreciation on foreign currencies of $170.
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 trustee deferral of compensation and
retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ----------------------------------------------------------
July 31, 2010 $2,448,915
- ----------------------------------------------------------
July 31, 2011 2,537,822
==========================================================
Total capital loss carryforward $4,986,737
__________________________________________________________
==========================================================
</Table>
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the year ended
July 31, 2003 was $38,651,498 and $24,210,295, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENT SECURITIES ON TAX BASIS
- -----------------------------------------------------------
Aggregate unrealized appreciation of
investment securities $ 15,306,754
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (13,412,917)
===========================================================
Net unrealized appreciation of investment
securities $ 1,893,837
___________________________________________________________
===========================================================
Cost of investments for tax purposes is $112,226,704.
</Table>
F-8
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of foreign currency transactions, on
July 31, 2003, undistributed net investment income was decreased by $75,975 and
undistributed net realized gains increased by $75,975. This reclassification has
no affect on the net assets of the Fund.
NOTE 10--SHARE INFORMATION
The Fund currently offers four classes of shares: Class A shares, Class B
shares, Class C shares and Class R shares. Class A shares are sold with a
front-end sales charge. Class B shares and Class C shares are sold with CDSC.
Class R shares are sold at net asset value. Under some circumstances, Class A
shares and Class R shares are subject to CDSC. Generally, Class B shares will
automatically convert to Class A shares eight years after the end of the
calendar month of purchase.
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ------------------------------------------------------------------------------------------------------------------------
YEAR ENDED JULY 31,
----------------------------------------------------------
2003 2002
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 13,369,881 $ 154,655,622 3,602,188 $ 47,084,959
- ------------------------------------------------------------------------------------------------------------------------
Class B 876,762 9,678,278 784,310 10,006,307
- ------------------------------------------------------------------------------------------------------------------------
Class C 1,417,911 15,710,089 871,261 11,192,071
- ------------------------------------------------------------------------------------------------------------------------
Class R* 74,605 821,876 1,043 13,905
========================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 23,834 301,266
- ------------------------------------------------------------------------------------------------------------------------
Class B -- -- 8,627 106,544
- ------------------------------------------------------------------------------------------------------------------------
Class C -- -- 42,024 518,574
========================================================================================================================
Automatic conversion of Class B shares to Class A shares:**
Class A 43,932 498,237 -- --
- ------------------------------------------------------------------------------------------------------------------------
Class B (45,288) (498,237) -- --
========================================================================================================================
Reacquired:
Class A (12,167,001) (141,333,459) (2,788,316) (36,675,590)
- ------------------------------------------------------------------------------------------------------------------------
Class B (401,923) (4,386,175) (270,555) (3,443,197)
- ------------------------------------------------------------------------------------------------------------------------
Class C (2,036,767) (22,440,700) (1,870,536) (23,763,104)
- ------------------------------------------------------------------------------------------------------------------------
Class R* (15,681) (186,881) -- --
========================================================================================================================
1,116,431 $ 12,518,650 403,880 $ 5,341,735
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
* Class R shares commenced sales on June 3, 2002.
** Prior to the year ended July 31, 2003, conversion of Class B shares to Class
A shares were included in Class A shares sold and Class B shares reacquired.
NOTE 11--SIGNIFICANT EVENT
On June 11, 2003, the Board of Trustees unanimously approved an Agreement and
Plan of Reorganization (the "Plan") pursuant to which AIM International Core
Equity Fund ("Selling Fund"), a series of the Trust, would transfer all of its
assets to INVESCO International Blue Chip Value Fund ("Buying Fund"), a series
of INVESCO International Funds, Inc. (formerly INVESCO Global & International
Funds, Inc.) (the "Reorganization"). As a result of the Reorganization,
shareholders of Selling Fund would receive shares of Buying Fund in exchange for
their shares of Selling Fund, and Selling Fund would cease operations. The Plan
has been structured as a tax-free reorganization.
The Plan requires approval of Selling Fund shareholders and will be submitted
to the shareholders for their consideration at a meeting to be held on or around
October 21, 2003. If the Plan is approved by shareholders of Selling Fund and
certain conditions required by the Plan are satisfied, the transaction is
expected to become effective shortly thereafter.
During the fourth quarter of 2003, it is anticipated that Selling Fund will be
closed to new investors.
On July 30, 2003, the Board of Trustees approved an Agreement and Plan of
Reorganization (the "AAF Plan"), which provides for the restructuring of AIM
International Core Equity Fund and AIM Real Estate Fund, the two series
portfolios of the Trust (each a "Fund" and, collectively, the "Funds"), as new
series portfolios of AIM Investment Securities Funds ("AISF") and, in connection
therewith, the sale of all of each Fund's assets and the termination of each
Fund as a designated series of the Trust. AISF is an existing Delaware statutory
trust. The AAF Plan has been structured as a tax-free reorganization and will
only occur for the selling fund if the Plan above is not approved by
shareholders.
The AAF Plan provides for a series of transactions to convert each Fund to a
corresponding series (a "New Fund") of AISF. Under the AAF Plan, each Fund will
transfer all its assets to a corresponding New Fund in exchange solely for
voting shares of beneficial interest in the New Fund and the New
F-9
Fund's assumption of all the Fund's liabilities (collectively, the
"Restructuring"). The operations of each New Fund following the Restructuring
will be substantially similar to those of its predecessor Fund. AISF, like the
Trust, operates as an open-end management investment company.
The proposed Restructuring relates to an integration initiative announced on
March 27, 2003, by AMVESCAP PLC ("AMVESCAP"), the parent company of both AIM and
INVESCO, with respect to its North American mutual fund operations. AMVESCAP has
recommended that certain series portfolios of funds within The AIM Family of
Funds (the "AIM Funds") with few portfolios be restructured as new series of an
existing Delaware statutory trust. This change should simplify the
organizational structure and reduce costs of the AIM Funds.
The proposed Restructuring of each Fund requires the approval of such Fund's
shareholders and will be submitted to shareholders for their consideration at a
meeting to be held on October 21, 2003. If approved by shareholders and certain
closing conditions required by the AAF Plan are satisfied, the proposed
Restructuring is expected to be consummated shortly thereafter. If shareholders
of a Fund do not approve the proposed Restructuring, such Fund will continue to
operate as a series of the Trust.
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
----------------------------------------------------------------------
SEVEN MONTHS YEAR ENDED
YEAR ENDED JULY 31, ENDED DECEMBER 31,
-------------------------------- JULY 31, ------------------
2003 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.05 $ 13.96 $ 18.78 $ 19.92 $ 16.57 $ 14.99
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.11(a) 0.09(a) 0.08(a) 0.08(a) 0.13 0.09
- --------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.13 (1.86) (2.64) (1.22) 3.57 1.59
================================================================================================================================
Total from investment operations 0.24 (1.77) (2.56) (1.14) 3.70 1.68
================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.28) (0.10)
- --------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.14) (2.26) -- (0.07) --
================================================================================================================================
Total distributions -- (0.14) (2.26) -- (0.35) (0.10)
================================================================================================================================
Net asset value, end of period $ 12.29 $ 12.05 $ 13.96 $ 18.78 $ 19.92 $ 16.57
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(b) 1.99% (12.71)% (14.66)% (5.72)% 22.54% 11.20%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $50,147 $34,143 $27,870 $30,153 $31,412 $28,281
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets(c) 2.01%(d) 1.82% 1.57% 1.54%(e) 1.51% 1.57%
================================================================================================================================
Ratio of net investment income to average net assets 0.95%(d) 0.70% 0.49% 0.70%(e) 0.71% 0.84%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate(f) 28% 23% 23% 18% 24% 9%
________________________________________________________________________________________________________________________________
================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) After fee waivers and/or reimbursements. Ratio of expenses to average
net assets prior to fee waivers and/or expense reimbursements were
1.67%, 1.64% (annualized), 1.72% and 1.81% for the year ended July 31,
2001, the period ended July 31, 2000 and the years ended December 31,
1999 and 1998.
(d) Ratios are based on average daily net assets of $37,684,659.
(e) Annualized.
(f) Not annualized for periods less than one year.
F-10
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
------------------------------------------------------------------------------------------
MARCH 3, 1998
SEVEN MONTHS (DATE SALES
YEAR ENDED JULY 31, ENDED YEAR ENDED COMMENCED) TO
----------------------------------- JULY 31, DECEMBER 31, DECEMBER 31,
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.72 $ 13.67 $ 18.59 $19.81 $16.48 $16.21
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.03(a) 0.01(a) (0.05)(a) (0.01)(a) (0.01) 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) 0.12 (1.82) (2.61) (1.21) 3.56 0.27
=================================================================================================================================
Total from investment operations 0.15 (1.81) (2.66) (1.22) 3.55 0.27
=================================================================================================================================
Less distributions:
Dividends from net investment
income -- -- -- -- (0.15) --
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized
gains -- (0.14) (2.26) -- (0.07) --
=================================================================================================================================
Total distributions -- (0.14) (2.26) -- (0.22) --
=================================================================================================================================
Net asset value, end of period $ 11.87 $ 11.72 $ 13.67 $18.59 $19.81 $16.48
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 1.28% (13.27)% (15.42)% (6.16)% 21.70% 1.67%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $18,741 $13,471 $ 8,572 $5,883 $5,642 $4,289
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets(c) 2.66%(d) 2.48% 2.36% 2.32%(e) 2.27% 2.32%
=================================================================================================================================
Ratio of net investment income (loss)
to average net assets 0.30%(d) 0.04% (0.30)% (0.08)%(e) (0.05)% 0.09%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(f) 28% 23% 23% 18% 24% 9%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) After fee waivers and/or reimbursements. Ratio of expenses to average
net assets prior to fee waivers and/or expense reimbursements was 2.38%
and 2.46% (annualized) for the year ended December 31, 1999 and for the
period ended December 31, 1998.
(d) Ratios are based on average daily net assets of $15,489,772.
(e) Annualized.
(f) Not annualized for periods less than one year.
F-11
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
-------------------------------------------------------------------------
SEVEN MONTHS YEAR ENDED
YEAR ENDED JULY 31, ENDED DECEMBER 31,
------------------------------- JULY 31, --------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.71 $ 13.66 $ 18.58 $ 19.80 $ 16.48 $ 14.93
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.03(a) 0.01(a) (0.05)(a) (0.01)(a) (0.01)(a) 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.12 (1.82) (2.61) (1.21) 3.55 1.55
=================================================================================================================================
Total from investment operations 0.15 (1.81) (2.66) (1.22) 3.54 1.55
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.15) --
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.14) (2.26) -- (0.07) --
=================================================================================================================================
Total distributions -- (0.14) (2.26) -- (0.22) --
=================================================================================================================================
Net asset value, end of period $ 11.86 $ 11.71 $ 13.66 $ 18.58 $ 19.80 $ 16.48
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 1.28% (13.29)% (15.42)% (6.16)% 21.64% 10.38%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $35,816 $42,610 $62,802 $89,084 $108,821 $105,083
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets(c) 2.66%(d) 2.48% 2.36% 2.32%(e) 2.27% 2.32%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets 0.30%(d) 0.04% (0.30)% (0.08)%(e) (0.05)% 0.09%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(f) 28% 23% 23% 18% 24% 9%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) After fee waivers and/or reimbursements. Ratio of expenses to average
net assets prior to fee waivers and/or expense reimbursements was 2.38%
and 2.46% for the years ended December 31, 1999 and 1998.
(d) Ratios are based on average daily net assets of $37,298,628.
(e) Annualized.
(f) Not annualized for periods less than one year.
F-12
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS R
------------------------------
JUNE 3, 2002
(DATE SALES
YEAR ENDED COMMENCED) TO
JULY 31, JULY 31,
2003 2002
- --------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.04 $ 13.92
- --------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.09(a) 0.01(a)
- --------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.14 (1.89)
============================================================================================
Total from investment operations 0.23 (1.88)
============================================================================================
Net asset value, end of period $12.27 $ 12.04
____________________________________________________________________________________________
============================================================================================
Total return(b) 1.91% (13.51)%
____________________________________________________________________________________________
============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 736 $ 13
____________________________________________________________________________________________
============================================================================================
Ratio of expenses to average net assets 2.16%(c) 1.97%(d)
============================================================================================
Ratio of net investment income to average net assets 0.80%(c) 0.55%(d)
____________________________________________________________________________________________
============================================================================================
Portfolio turnover rate(e) 28% 23%
____________________________________________________________________________________________
============================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are based on average daily net assets of $272,109.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-13
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM International Core Equity Fund
and the Board of Trustees of AIM Advisor Funds:
We have audited the accompanying statement of assets and liabilities of AIM
International Core Equity Fund (a portfolio of AIM Advisor Funds), including the
schedule of investments, as of July 31, 2003, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the three years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for each of
the periods presented through July 31, 2000 were audited by other auditors whose
report dated September 1, 2000, expressed an unqualified opinion on those
financial highlights.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of July 31, 2003, by correspondence with the custodian and brokers or
by other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
International Core Equity Fund as of July 31, 2003, 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 three years in the period then ended, in conformity with accounting
principles generally accepted in the United States.
Houston, Texas /s/ ERNST & YOUNG LLP
September 10, 2003
F-14
OTHER INFORMATION
TRUSTEES AND OFFICERS
As of January 1, 2003
The address of each trustee and officer of AIM Advisor Funds is 11 Greenway
Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 86 portfolios in
the AIM Funds complex. Column two below includes length of time served with
predecessor entities, if any.
<Table>
<Caption>
TRUSTEE AND/
NAME, YEAR OF BIRTH AND OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
POSITION(S) HELD WITH THE TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED PERSONS
- ------------------------------------------------------------------------------------------------------------------------------------
Robert H. Graham(1) -- 1946 1997 Director and Chairman, A I M Management Group None
Trustee, Chairman and Inc. (financial services holding company); and
President Director and Vice Chairman, AMVESCAP PLC and
Chairman of AMVESCAP PLC -- AIM Division
(parent of AIM and a global investment
management firm)
Formerly: President and Chief Executive
Officer, A I M Management Group Inc.; Director,
Chairman and President, A I M Advisors, Inc.
(registered investment advisor); and Director
and Chairman, A I M Capital Management, Inc.
(registered investment advisor), A I M
Distributors, Inc. (registered broker dealer),
AIM Investment Services, Inc.(3), (registered
transfer agent), and Fund Management Company
(registered broker dealer); and Chief Executive
Officer, AMVESCAP PLC -- Managed Products
- ------------------------------------------------------------------------------------------------------------------------------------
Mark H. Williamson(2) -- 1951 2003 Director, President and Chief Executive Director and Chairman, INVESCO
Trustee and Executive Vice Officer, A I M Management Group Inc. (financial Bond Funds, Inc., INVESCO
President services holding company); Director, Chairman Combination Stock & Bond Funds,
and President, A I M Advisors, Inc. (registered Inc., INVESCO Counselor Series
investment advisor); Director, A I M Capital Funds, Inc., INVESCO
Management, Inc. (registered investment International Funds, Inc.,
advisor) and A I M Distributors, Inc. INVESCO Manager Series Funds,
(registered broker dealer); Director and Inc., INVESCO Money Market
Chairman, AIM Investment Services, Inc.(3) Funds, Inc., INVESCO Sector
(registered transfer agent); and Fund Funds, Inc., INVESCO Stock
Management Company (registered broker dealer); Funds, Inc., INVESCO
and Chief Executive Officer, AMVESCAP Treasurer's Series Funds, Inc.
PLC -- AIM Division (parent of AIM and a global and INVESCO Variable Investment
investment management firm) Funds, Inc.
Formerly: Director, Chairman, President and
Chief Executive Officer, INVESCO Funds Group,
Inc. and INVESCO Distributors, Inc.; Chief
Executive Officer, AMVESCAP PLC -- Managed
Products; Chairman and Chief Executive Officer
of NationsBanc Advisors, Inc.; and Chairman of
NationsBanc Investments, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2001 Of Counsel, law firm of Baker & McKenzie Badgley Funds, Inc. (registered
Trustee investment company)
- ------------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 1997 Chairman, Crockett Technology Associates ACE Limited (insurance
Trustee (technology consulting company) company); and Captaris, Inc.
(unified messaging provider)
- ------------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2000 Director of a number of public and private Cortland Trust, Inc. (Chairman)
Trustee business corporations, including the Boss Group (registered investment
Ltd. (private investment and management) and company); Annuity and Life Re
Magellan Insurance Company (Holdings), Ltd. (insurance
Formerly: Director, President and Chief company)
Executive Officer, Volvo Group North America,
Inc.; Senior Vice President, AB Volvo; and
director of various affiliated Volvo Group
companies
- ------------------------------------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. -- 1935 1998 Formerly: Chairman, Mercantile Mortgage Corp.; None
Trustee President and Chief Operating Officer,
Mercantile-Safe Deposit & Trust Co.; and
President, Mercantile Bankshares Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Century Administaff
Trustee Group, Inc. (government affairs company) and
Texana Timber LP
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
(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. Mr. Williamson became Executive Vice
President of the Trust on March 4, 2003.
(3) Effective September 30, 2003, A I M Fund Services, Inc. became known as
AIM Investment Services, Inc.
Trustees and Officers (continued)
As of January 1, 2003
The address of each trustee and officer of AIM Advisor Funds is 11 Greenway
Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 86 portfolios in
the AIM Funds complex. Column two below includes length of time served with
predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/ PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
POSITION(S) HELD WITH THE TRUST OR OFFICER SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 1997 Partner, law firm of Kramer Levin Naftalis and Cortland Trust, Inc.
Trustee Frankel LLP (registered investment
company)
- ------------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 1998 Formerly: Chief Executive Officer, YWCA of the None
Trustee USA
- ------------------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 1997 Partner, law firm of Pennock & Cooper None
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2001 Retired None
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Louis S. Sklar -- 1939 1997 Executive Vice President, Development and None
Trustee Operations Hines Interests Limited Partnership
(real estate development company)
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome(4) -- 1956 2003 Director, Senior Vice President, Secretary and N/A
Senior Vice President General Counsel, A I M Management Group Inc.
(financial services holding company) and A I M
Advisors, Inc.; Vice President, A I M Capital
Management, Inc., A I M Distributors, Inc. and
AIM Investment Services, Inc.(3); and Director,
Vice President and General Counsel, Fund
Management Company
Formerly: Senior Vice President and General
Counsel, Liberty Financial Companies, Inc.; and
Senior Vice President and General Counsel,
Liberty Funds Group, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
Robert G. Alley -- 1948 1997 Managing Director, A I M Capital Management, N/A
Vice President Inc.; and Vice President, A I M Advisors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Gary T. Crum(5) -- 1947 1997 Director, Chairman and Director of Investments, N/A
Senior Vice President A I M Capital Management, Inc.; Director and
Executive Vice President, A I M Management
Group Inc.; Director and Senior Vice President,
A I M Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC
- ------------------------------------------------------------------------------------------------------------------------------------
Stuart W. Coco -- 1955 1997 Managing Director and Chief Research N/A
Vice President Officer -- Fixed Income, A I M Capital
Management, Inc.; and Vice President, A I M
Advisors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Melville B. Cox -- 1943 1997 Vice President and Chief Compliance Officer, N/A
Vice President A I M Advisors, Inc. and A I M Capital
Management, Inc.; and Vice President, AIM
Investment Services, Inc.(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 1997 Managing Director and Chief Cash Management N/A
Vice President Officer, A I M Capital Management, Inc.;
Director and President, Fund Management
Company; and Vice President, A I M Advisors,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Edgar M. Larsen(5) -- 1940 1999 Vice President, A I M Advisors, Inc., and N/A
Vice President President, Chief Executive Officer and Chief
Investment Officer, A I M Capital Management,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Dana R. Sutton -- 1959 1997 Vice President and Fund Treasurer, A I M N/A
Vice President and Treasurer Advisors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
(3) Effective September 30, 2003, A I M Fund Services, Inc. became known as
AIM Investment Services, Inc.
(4) Mr. Carome became Senior Vice President of the Trust on May 13, 2003.
(5) Information is current as of January 10, 2003.
The Statement of Additional Information of the Trust includes additional
information about the Fund's Trustees and is available upon request, without
charge, by calling 1.800.347.4246.
<Table>
OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS SUB-ADVISOR
11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, Inc. Ernst & Young LLP INVESCO Global Asset
Suite 100 11 Greenway Plaza 11 Greenway Plaza 5 Houston Center Management (N.A.), Inc.
Houston, TX 77046 Suite 100 Suite 100 1401 McKinney 1315 Peachtree Street, N.E.
Houston, TX 77046 Houston, TX 77046 Suite 1200 Atlanta, GA 30309
Houston, TX 77010
COUNSEL TO THE FUND COUNSEL TO THE TRUSTEES TRANSFER AGENT CUSTODIAN
Ballard Spahr Kramer, Levin, Naftalis & AIM Investment Services, Inc. State Street Bank and
Andrews & Ingersoll, LLP Frankel LLP P.O. Box 4739 Trust Company
1735 Market Street 919 Third Avenue Houston, TX 77210-4739 225 Franklin Street
Philadelphia, PA 19103 New York, NY 10022 Boston, MA 02110
</Table>
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Asia Pacific Growth Fund TAXABLE
AIM Developing Markets Fund
AIM Aggressive Growth Fund AIM European Growth Fund AIM Floating Rate Fund
AIM Balanced Fund* AIM European Small Company Fund AIM High Yield Fund
AIM Basic Balanced Fund* AIM Global Aggressive Growth Fund AIM Income Fund
AIM Basic Value Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Blue Chip Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(5,6)
AIM Capital Development Fund AIM Global Value Fund(4) AIM Money Market Fund
AIM Charter Fund AIM International Core Equity Fund AIM Short-Term Bond Fund
AIM Constellation Fund AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Dent Demographic Trends Fund AIM International Growth Fund INVESCO Cash Reserves Fund
AIM Diversified Dividend Fund(1) INVESCO European Fund INVESCO High Yield Fund
AIM Emerging Growth Fund INVESCO International Blue Chip Value Fund INVESCO Select Income Fund
AIM Large Cap Basic Value Fund INVESCO U.S. Government Money Fund
AIM Large Cap Growth Fund SECTOR EQUITY INVESCO U.S. Government Securities Fund
AIM Libra Fund
AIM Mid Cap Basic Value Fund AIM Global Energy Fund TAX-FREE
AIM Mid Cap Core Equity Fund AIM Global Financial Services Fund
AIM Mid Cap Growth Fund AIM Global Health Care Fund AIM High Income Municipal Fund
AIM Opportunities I Fund(2) AIM Global Science and Technology Fund AIM Municipal Bond Fund
AIM Opportunities II Fund(2) AIM Global Utilities Fund AIM Tax-Exempt Cash Fund
AIM Opportunities III Fund(2) AIM New Technology Fund AIM Tax-Free Intermediate Fund(5,6)
AIM Premier Equity Fund AIM Real Estate Fund INVESCO Tax-Free Bond Fund
AIM Premier Equity II Fund INVESCO Advantage Global Health Sciences Fund INVESCO Tax-Free Money Fund
AIM Select Equity Fund INVESCO Energy Fund
AIM Small Cap Equity Fund INVESCO Financial Services Fund
AIM Small Cap Growth Fund(3) INVESCO Gold & Precious Metals Fund
AIM Weingarten Fund INVESCO Health Sciences Fund
INVESCO Advantage Fund INVESCO Leisure Fund
INVESCO Balanced Fund* INVESCO Multi-Sector Fund
INVESCO Core Equity Fund INVESCO Real Estate Opportunity Fund
INVESCO Dynamics Fund INVESCO Technology Fund
INVESCO Growth Fund INVESCO Telecommunications Fund
INVESCO Growth & Income Fund INVESCO Utilities Fund
INVESCO Mid-Cap Growth Fund
INVESCO Small Company Growth Fund
INVESCO S&P 500 Index Fund
INVESCO Total Return Fund*
INVESCO Value Equity Fund
* Domestic equity and income fund
</Table>
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) Effective October 1, 2002, the fund was reopened
to new investors. (3) AIM Small Cap Growth Fund was closed to most investors on
March 18, 2002. For information on who may continue to invest in AIM Small Cap
Growth Fund, please contact your financial advisor. (4) Effective April 30,
2003, AIM Worldwide Spectrum Fund was renamed AIM Global Value Fund. (5) Class A
shares closed to new investors on October 30, 2002. (6) Class A3 shares were
first offered on October 31, 2002.
Pending shareholder approval, the following fund reorganizations will occur
in late October or early November 2003: AIM Global Energy Fund into INVESCO
Energy Fund; AIM Global Financial Services Fund into INVESCO Financial Services
Fund; AIM Global Science and Technology Fund into INVESCO Technology Fund; AIM
Global Utilities Fund into INVESCO Utilities Fund; AIM International Core Equity
Fund into INVESCO International Blue Chip Value Fund; AIM New Technology Fund
into INVESCO Technology Fund; AIM Premier Equity II Fund into AIM Premier Equity
Fund; INVESCO Advantage Fund into AIM Opportunities III Fund; INVESCO Balanced
Fund into INVESCO Total Return Fund; INVESCO Cash Reserves Fund into AIM Money
Market Fund; INVESCO European Fund into AIM European Growth Fund; INVESCO Growth
Fund into AIM Large Cap Growth Fund; INVESCO Growth & Income Fund into AIM Blue
Chip Fund; INVESCO High Yield Fund into AIM High Yield Fund; INVESCO Real Estate
Opportunity Fund into AIM Real Estate Fund; INVESCO Select Income Fund into AIM
Income Fund; INVESCO Tax-Free Bond Fund into AIM Municipal Bond Fund; INVESCO
Telecommunications Fund into INVESCO Technology Fund; INVESCO U.S. Government
Securities Fund into AIM Intermediate Government Fund; INVESCO Tax-Free Money
Fund into aim Tax-Exempt Cash Fund; and INVESCO Value Equity Fund into AIM Large
Cap Basic Value Fund.
For more complete information about any AIM or INVESCO fund, including sales
charges and expenses, ask your financial advisor for a prospectus, which
contains more complete information, including sales charges and expenses. Please
read it carefully before investing. If used after October 20, 2003, this
brochure must be accompanied by a fund Performance & Commentary or by an AIM
Quarterly Performance Review for the most recent quarter-end. Mutual funds
distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $147 billion in assets for approximately 11
million shareholders, including individual investors, corporate clients and
financial institutions. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $348 billion in assets
under management. Data as of June 30, 2003.
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
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YOUR GOALS. OUR SOLUTIONS.
--Servicemark--
AIMinvestments.com ICE-AR-1
ANNUAL REPORT / JULY 31, 2003
AIM REAL ESTATE FUND
[COVER ART]
YOUR GOALS. OUR SOLUTIONS.
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[AIM INVESTMENTS LOGO APPEARS HERE]
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================================================================================
[COVER ART]
PARIS STREET, A RAINY DAY
BY GUSTAVE CAILLEBOTTE
================================================================================
AIM REAL ESTATE FUND IS FOR SHAREHOLDERS WHO SEEK TO ACHIEVE HIGH TOTAL RETURN.
About information throughout this report:
o AIM Real Estate Fund's performance figures are historical, and they reflect
fund expenses, the reinvestment of distributions and changes in net asset
value.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B and Class C
performance reflects the applicable contingent deferred sales charge (CDSC)
for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the fund's share classes will differ due to different
sales-charge structure and class expenses.
o Had the advisor not waived fees and/or reimbursed expenses in the past,
returns would have been lower.
o The fund may participate in the initial public offering (IPO) market in some
market cycles. Because of the fund's small asset base, any investment made
in an IPO may significantly affect the fund's total return. As the fund's
assets grow, the impact of IPO investments will decline, which may reduce
the effect of IPO investments on the fund's total return.
o Investing in a single sector mutual fund may involve greater risk and
potential reward than investing in a more diversified fund.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o The Morgan Stanley REIT Index is a total-return index composed of the most
actively traded real estate investment trusts and is designed to be a
measure of real estate equity performance. The index was developed with a
base value of 200 as of December 31, 1994.
o The unmanaged National Association of Real Estate Investment Trusts Equity
Index (the NAREIT) tracks the performance of all tax-qualified equity Real
Estate Investment Trusts (REITs) listed on the New York Stock Exchange, the
American Stock Exchange and the Nasdaq National Market System. Equity REITs
are defined as REITs with at least 75% of their gross invested book assets
invested in the equity ownership of real estate.
o The unmanaged Lipper Real Estate Fund Index represents an average of the
performance of the 30 largest real estate funds tracked by Lipper, Inc., an
independent mutual fund performance monitor.
o The unmanaged Russell 2000--Registered Trademark-- Index represents the
performance of the stocks of small-capitalization companies. The unmanaged
Russell Midcap--Registered Trademark-- Index represents the performance of
the stocks of domestic mid-capitalization companies. The unmanaged Russell
1000--Registered Trademark-- Index represents the performance of the stocks
of large-capitalization companies. The unmanaged Russell 3000--Registered
Trademark-- Growth Index is a subset of the Russell 3000 Index, an index of
common stocks that measures performance of the largest 3,000 U.S. companies
based on market capitalization; the Growth subset measures the performance
of Russell 3000 companies with higher price/book ratios and higher
forecasted growth values. The unmanaged Russell 3000--Registered Trademark--
Value Index is a subset of the Russell 3000 Index, an index of common stocks
that measures performance of the largest 3,000 U.S. companies based on
market capitalization; the Value subset measures the performance of Russell
3000 companies with lower price/book ratios and lower forecasted growth
values.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
is an index of common stocks frequently used as a general measure of U.S.
stock market performance.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges or fund expenses. Performance of an index of funds reflects fund
expenses; performance of a market index does not.
A DESCRIPTION OF THE POLICIES AND PROCEDURES THAT THE FUND USES TO DETERMINE
HOW TO VOTE PROXIES RELATING TO PORTFOLIO SECURITIES IS AVAILABLE WITHOUT
CHARGE, UPON REQUEST, BY CALLING 800-959-4246, OR ON THE AIM WEB SITE,
aiminvestments.com.
This report may be distributed only to shareholders or to persons who have
received a current prospectus of the fund.
NOT FDIC INSURED -- MAY LOSE VALUE -- NO BANK GUARANTEE
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
[PHOTO OF We are pleased to send you this annual report for AIM Real
ROBERT H. Estate Fund for the fiscal year ended July 31, 2003. The
GRAHAM] report includes a managers' discussion of relevant market
conditions and fund strategy, tables showing top holdings in
WE ENCOURAGE YOU the portfolio, charts tracking fund and index performance, a
TO CONTINUE TO complete list of portfolio holdings, and other relevant
WORK CLOSELY WITH information as of July 31, 2003. We hope you will find the
YOUR FINANCIAL information in this report helpful.
ADVISOR,
ESPECIALLY AS YOUR CONSULT WITH YOUR FINANCIAL ADVISOR
FINANCIAL GOALS
MAY CHANGE OVER Market conditions can be challenging, as the last few years
TIME. have demonstrated. Moreover, a wide variety of investment
ROBERT H. GRAHAM options now exist. We strongly believe that investors can
benefit from the guidance of a financial advisor, who can
help them make investment choices consistent with their
financial objectives and tolerance for risk. Your financial advisor also can
help you stay focused on your financial goals regardless of sometimes unsettling
market and economic trends. We encourage you to continue to work closely with
your financial advisor, especially as your financial goals may change over time.
VISIT OUR WEB SITE
Up-to-date information about your fund is available at our Web site,
aiminvestments.com. The Web site also offers economic and market commentary from
senior AIM investment officers, educational articles on various investment
topics, and other financial information. You also can order forms and literature
at our Web site. In addition, you can check your account, conduct transactions
and view your account statements. We encourage you to take advantage of the
services offered at our Web site. As always, members of our award-winning Client
Services department also are ready to help you. They can be reached at
800-959-4246.
THANK YOU FOR YOUR COMMITMENT TO AIM INVESTMENTS
As we review one of the most challenging periods from a market perspective in
recent decades, we want to express our appreciation to you for your continued
participation in AIM Investments. We realize the last few years have been trying
for many investors, and future market trends are unpredictable. However, we
believe that those who maintain a long-term perspective and adhere to a
diversified approach to investing should ultimately be rewarded for their
perseverance.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman and President
July 31, 2003
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
FUND GENERATES POSITIVE RETURNS; OUTPERFORMS INDEXES
During the fiscal year ended July 31, 2003, AIM Real Estate Fund recorded
positive returns and outperformed its key indexes.
At net asset value, Class A shares of the fund produced total returns of
18.12% for the year ended July 31, 2003. By contrast, the Morgan Stanley REIT
Index returned 15.93% for the same period, the NAREIT Equity Index (National
Association of Real Estate Investment Trusts Equity Index) returned 15.61%, and
the Lipper Real Estate Fund Index returned 16.28%.
MARKET CONDITIONS
The S&P 500 Index, frequently cited as a measure of the performance of the U.S.
stock market in general, returned 10.64% for the year ended July 31, 2003. The
index finished the year with five straight months of gains, after posting losses
in four of the first seven months of the reporting period. In the first half of
the fiscal year, the nation's gross domestic product (GDP), generally considered
the broadest measure of economic activity, expanded at an annualized rate of
4.0% in the third quarter of 2002 and only 1.4% in the fourth quarter of 2002.
The nation's GDP growth increased from an annualized rate of 1.4% in the first
quarter of 2003 to 3.1% in the second quarter. However, the U.S. unemployment
rate climbed from 6.1% in May to 6.4% in June before falling back to 6.2% in
July.
The Federal Reserve Board (the Fed) lowered the short-term federal funds
rate twice during the fiscal year, first in November 2002 and again in June 25,
when it lowered that rate to 1.00%, its lowest level since 1958. The Fed said it
favored a more expansive monetary policy because the economy had not yet
exhibited sustainable growth.
Should the U.S. economy continue to experience GDP expansion, history has
shown that tenant space demand may also expand.
Over time the property markets should respond with improving occupancies and
higher lease rates. Apartments and hotel companies have historically been the
most responsive to GDP expansion.
Information technology, consumer discretionary and financials were the
top-performing sectors in the S&P 500, posting double-digit gains for the fiscal
year. Consumer staples, utilities and energy were the weakest-performing sectors
over the same period.
================================================================================
"... WE POSITIONED THE
FUND TO BE OVERWEIGHT
IN RETAIL, AND UNDER-
WEIGHT IN LODGING AND
APARTMENTS, ALL OF WHICH
HELPED PERFORMANCE."
================================================================================
PORTFOLIO COMPOSITION
as of 7/31/03, based on total net assets
<Table>
<Caption>
=========================================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 PROPERTY TYPES*
- ---------------------------------------------------------------------------------------------------------
1. Simon Property Group, Inc. 6.5% 1. Regional Malls 21.6%
2. General Growth Properties, Inc. 6.5 2. Shopping Centers 16.5
3. ProLogis 6.2 3. Office Properties 15.8
4. Chelsea Property Group, Inc. 4.6 4. Apartments 13.2
5. Boston Properties, Inc. 4.2 5. Industrial Properties 11.6
6. Vornado Realty Trust 4.1 6. Diversified 5.4
7. Essex Property Trust, Inc. 4.0 7. Healthcare 4.3
8. CenterPoint Properties Corp. 3.9 8. Lodging-Resorts 4.1
9. SL Green Realty Corp. 3.7 9. Industrials/Office Properties 2.6
10. United Dominion Realty Trust, Inc. 3.6 10. Specialty Properties 1.4
The fund's holdings are subject to change, and there is no assurance that the
fund will continue to hold any particular security.
*Excludes money market fund holdings.
=========================================================================================================
</Table>
TOTAL NUMBER OF HOLDINGS* 55
TOTAL NET ASSETS $365.6 MILLION
2
Small-cap stocks generally outperformed large-cap and mid-cap stocks over
the fiscal year. The Russell 2000 Index, which tracks the performance of
small-cap stocks, gained 23.11%, compared to a 17.48% return for the Russell
Midcap Index and a 11.19% return for the Russell 1000 Index, which tracks the
performance of large-cap stocks.
Growth stocks generally outperformed value stocks for the fiscal year. The
Russell 3000 Growth Index gained 12.67% compared to 11.29% for the Russell 3000
Value Index.
YOUR FUND
At the close of the reporting period, the portfolio's largest sector weightings
were in regional malls and shopping centers. Retail outlet centers, retail
regional malls and retail shopping centers were the best performers; while
manufactured homes and self-storage facilities were the weakest performers.
Regional mall companies in the fund have benefited from external and
internal earnings growth. Many regional mall REITs have successfully acquired
attractive properties in the last year, while also improving the efficiency of
existing operations.
We positioned the fund to be overweight in retail, and underweight in
lodging and apartments, all of which helped performance. Portfolio performance
was hurt by our overweight position in industrial holdings.
Stocks that contributed positively to fund performance included Ventas,
General Growth and Developers Diversified. Ventas owns 40 hospitals and some 200
skilled nursing centers and General Growth is the second largest operator of
malls in the United States. Developers Diversified is a nationwide developer,
owner and operator of shopping centers.
Stocks that underperformed included AMB Property, Highwoods Properties, and
BRE Properties. AMB owns and operates 900 support industrial properties.
Highwoods owns and operates office and industrial properties in the Southeast.
BRE Properties develops and manages apartments in the Western/Pacific states.
IN CLOSING
We continue to work diligently to meet the fund's investment objective of high
total return. We are keenly focused on locating well-valued companies exhibiting
consistent earnings growth, flexible balance sheets, and increasing dividends.
We continue to urge investors to maintain a long-term focus and to remain well
diversified.
[PHOTO OF JOE V. RODRIGUEZ, JR.
JOE V.
RODRIGUEZ, JR.] Mr. Rodriguez is lead portfolio manager for the AIM Real
Estate Fund and Director of Securities Management for
INVESCO Realty Advisors. He began his investment career in 1983 and joined
INVESCO Realty Advisors in 1990. He is a member of the National Association of
Business Economists, The American Real Estate Society, and The Institute of
Certified Financial Planners. He has also served as adjunct professor of
economics at the University of Texas at Dallas. Mr. Rodriguez received his
B.B.A. in economics and finance as well as his M.B.A. from Baylor University.
[PHOTO OF MARK BLACKBURN
MARK BLACKBURN]
Mr. Blackburn, Chartered Financial Analyst, is Director of
Securities Research for INVESCO Realty Advisors and co-manager for the AIM Real
Estate Fund. He joined INVESCO in 1998 and has more than 16 years of experience
in institutional investing and risk management along with a background in
evaluating the high-yield and convertible securities markets. Mr. Blackburn
holds a B.S. in accounting from Louisiana State University and an M.B.A. from
Southern Methodist University. He is a Certified Public Accountant.
[PHOTO OF JAMES W. TROWBRIDGE
JAMES W.
TROWBRIDGE] Mr. Trowbridge is Portfolio Manager for INVESCO Realty
Advisors and co-manager of AIM Real Estate Fund. He joined
INVESCO Realty Advisors in 1989. Mr. Trowbridge received his B.S. in finance
from Indiana University, where he also completed graduate work. He has completed
numerous appraisal and income property courses sponsored by the American
Appraisal Institute and the Mortgage Bankers Association.
Assisted by Real Estate Team
For More Information Visit
[GRAPHIC]
AIMinvestments.com
See important fund and index
disclosures inside front cover.
3
FUND PERFORMANCE
================================================================================
RESULTS OF A $10,000 INVESTMENT
5/1/95-7/31/03
[MOUNTAIN CHART]
<Table>
<Caption>
AIM REAL ESTATE FUND S&P 500 MORGAN STANLEY
DATE CLASS C SHARES INDEX REIT INDEX
- ---- -------------------- ------- --------------
5/95 10000 10000 10000
7/95 10311 10992 10782
10/95 10293 11444 10753
1/96 11097 12589 11696
4/96 11090 13017 11818
7/96 11468 12810 12353
10/96 12688 14197 13481
1/97 14874 15900 15770
4/97 14229 16285 15272
7/97 16317 19483 17012
10/97 17287 18750 17995
1/98 17510 20175 18409
4/98 17073 22970 17885
7/98 15425 23242 16484
10/98 13455 22876 15556
1/99 13167 26732 15102
4/99 14216 27980 16201
7/99 13713 27933 15726
10/99 12758 28743 14582
1/00 13161 29492 14905
4/00 14531 30809 16228
7/00 16419 30437 18306
10/00 15605 30492 17236
1/01 16651 29229 18865
4/01 16610 26815 19127
7/01 17626 26081 20287
10/01 17328 22907 19521
1/02 18543 24518 21146
4/02 20163 23437 23101
7/02 20331 19926 22716
10/02 19017 19449 20827
1/03 19495 18878 21364
4/03 21142 20320 23140
7/03 23884 22044 26335
</Table>
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results.
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's share classes will differ due to different sales
charge structures and class expenses. For fund performance calculations and
indexes used in this report, please see the inside front cover. Performance
shown in the chart and table does not reflect deduction of taxes a shareholder
would pay on fund distributions or sale of fund shares. Performance of the
indexes does not reflect the effects of taxes.
This growth chart uses a logarithmic scale, which means the price scale
(vertical axis) is structured so that a given distance always represents the
same percent change in price, rather than the same absolute change in price. For
example, the distance from one to 10 is the same as the distance from 10 to 100
on a logarithmic chart, but the latter distance is 10 times greater on a linear
chart. A logarithmic scale better illustrates performance in the fund's early
years before reinvested distributions and compounding create the potential for
the original investment to grow to very large numbers.
================================================================================
FUND RETURNS
================================================================================
FUND VS. INDEXES
total returns 7/31/02-7/31/03,
excluding sales charges
Class A Shares 18.12%
Class B Shares 17.37
Class C Shares 17.41
Morgan Stanley REIT Index 15.93
Lipper Real Estate Fund Index 16.28
S&P 500 Index 10.64
NAREIT (National Association of Real
Estate Investment Trusts Equity Index) 15.61
The fund's average annual total returns, including sales charges, for the
periods ended 6/30/03, the most recent calendar quarter end, were as follows:
Class A shares, one year, 3.00%; five years, 6.34%; inception (12/31/96) 6.66%.
Class B shares, one year, 2.42%; five years, 6.35%; inception (3/3/98), 5.16%.
Class C shares, one year, 6.43%; five years, 6.63%; inception (5/1/95), 10.55%.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
as of 7/31/03, including sales charges
CLASS A SHARES
Inception (12/31/96) 7.41%
5 Years 8.81
1 Year 12.51
CLASS B SHARES
Inception (3/3/98) 6.08%
5 Years 8.86
1 Year 12.37
CLASS C SHARES
Inception (5/1/95) 11.13%
5 Years 9.13
1 Year 16.41
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
4
FINANCIALS
SCHEDULE OF INVESTMENTS
- -----------------------------------------------------------------------
JULY 31, 2003
<Table>
<Caption>
MARKET
SHARES VALUE
- -----------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS & COMMON
STOCKS-96.33%
APARTMENTS-13.15%
Archstone-Smith Trust 321,817 $ 8,318,969
- -----------------------------------------------------------------------
Avalonbay Communities, Inc. 79,900 3,753,702
- -----------------------------------------------------------------------
BRE Properties, Inc.-Class A 20,000 661,000
- -----------------------------------------------------------------------
Camden Property Trust 78,300 2,921,373
- -----------------------------------------------------------------------
Canadian Apartment Properties Real Estate
Investment Trust (Canada) 138,700 1,466,393
- -----------------------------------------------------------------------
Equity Residential 67,900 1,894,410
- -----------------------------------------------------------------------
Essex Property Trust, Inc. 241,800 14,653,080
- -----------------------------------------------------------------------
Residential Equities Real Estate Investment
Trust (Canada) 105,100 1,084,971
- -----------------------------------------------------------------------
United Dominion Realty Trust, Inc. 739,200 13,327,776
=======================================================================
48,081,674
=======================================================================
DIVERSIFIED-5.38%
Canadian Real Estate Investment Trust
(Canada) 32,200 317,507
- -----------------------------------------------------------------------
Catellus Development Corp.(a) 130,900 3,015,936
- -----------------------------------------------------------------------
Cominar Real Estate Investment Trust (Canada) 74,500 739,908
- -----------------------------------------------------------------------
H&R Real Estate Investment Trust (Canada) 69,000 763,883
- -----------------------------------------------------------------------
Vornado Realty Trust 323,800 14,842,992
=======================================================================
19,680,226
=======================================================================
HEALTHCARE-4.31%
Health Care Property Investors, Inc. 105,500 4,624,065
- -----------------------------------------------------------------------
Health Care REIT, Inc. 137,200 4,320,428
- -----------------------------------------------------------------------
Nationwide Health Properties, Inc. 102,000 1,746,240
- -----------------------------------------------------------------------
Senior Housing Properties Trust 110,000 1,523,500
- -----------------------------------------------------------------------
Ventas, Inc. 214,600 3,551,630
=======================================================================
15,765,863
=======================================================================
INDUSTRIAL PROPERTIES-11.62%
AMB Property Corp. 199,900 5,617,190
- -----------------------------------------------------------------------
CenterPoint Properties Corp. 225,400 14,335,440
- -----------------------------------------------------------------------
ProLogis 818,400 22,546,920
=======================================================================
42,499,550
=======================================================================
INDUSTRIAL/OFFICE PROPERTIES-2.60%
Kilroy Realty Corp. 121,500 3,495,555
- -----------------------------------------------------------------------
Liberty Property Trust 173,450 6,016,980
=======================================================================
9,512,535
=======================================================================
</Table>
<Table>
MARKET
SHARES VALUE
- -----------------------------------------------------------------------
<Caption>
LODGING-RESORTS-4.09%
Fairmont Hotels & Resorts Inc. (Canada) 191,400 $ 4,823,280
- -----------------------------------------------------------------------
Hilton Hotels Corp. 389,200 5,682,320
- -----------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. 137,000 4,466,200
=======================================================================
14,971,800
=======================================================================
OFFICE PROPERTIES-15.76%
Alexandria Real Estate Equities, Inc. 167,400 7,658,550
- -----------------------------------------------------------------------
Arden Realty, Inc. 110,700 3,099,600
- -----------------------------------------------------------------------
Boston Properties, Inc. 357,200 15,463,188
- -----------------------------------------------------------------------
Brookfield Properties Corp. (Canada) 20,000 451,600
- -----------------------------------------------------------------------
CarrAmerica Realty Corp. 17,400 508,254
- -----------------------------------------------------------------------
Highwoods Properties, Inc. 129,900 3,005,886
- -----------------------------------------------------------------------
Mack-Cali Realty Corp. 229,900 8,464,918
- -----------------------------------------------------------------------
Prentiss Properties Trust 171,600 5,311,020
- -----------------------------------------------------------------------
SL Green Realty Corp. 381,000 13,643,610
=======================================================================
57,606,626
=======================================================================
REGIONAL MALLS-21.56%
Borealis Retail Real Estate Investment Trust
(Canada) 237,600 1,708,501
- -----------------------------------------------------------------------
CBL & Associates Properties, Inc. 261,900 12,618,342
- -----------------------------------------------------------------------
General Growth Properties, Inc. 346,500 23,624,370
- -----------------------------------------------------------------------
Macerich Co. (The) 322,100 12,023,993
- -----------------------------------------------------------------------
Mills Corp. (The) 115,100 4,098,711
- -----------------------------------------------------------------------
Rouse Co. (The) 25,000 999,750
- -----------------------------------------------------------------------
Simon Property Group, Inc. 560,800 23,749,880
=======================================================================
78,823,547
=======================================================================
SHOPPING CENTERS-16.47%
Acadia Realty Trust 107,300 1,073,000
- -----------------------------------------------------------------------
Chelsea Property Group, Inc. 381,900 16,650,840
- -----------------------------------------------------------------------
Developers Diversified Realty Corp. 375,900 11,164,230
- -----------------------------------------------------------------------
Federal Realty Investment Trust 232,600 8,110,762
- -----------------------------------------------------------------------
New Plan Excel Realty Trust 226,700 5,078,080
- -----------------------------------------------------------------------
Pan Pacific Retail Properties, Inc. 167,700 7,175,883
- -----------------------------------------------------------------------
Ramco-Gershenson Properties Trust 27,100 666,118
- -----------------------------------------------------------------------
Regency Centers Corp. 142,700 5,191,426
- -----------------------------------------------------------------------
RioCan Real Estate Investment Trust (Canada) 154,900 1,599,067
- -----------------------------------------------------------------------
Urstadt Biddle Properties-Class A 259,100 3,510,805
=======================================================================
60,220,211
=======================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- -----------------------------------------------------------------------
SPECIALTY PROPERTIES-1.39%
American Financial Realty Trust 186,400 $ 2,747,536
- -----------------------------------------------------------------------
Entertainment Properties Trust 75,500 2,325,400
=======================================================================
5,072,936
=======================================================================
Total Real Estate Investment Trusts &
Common Stocks (Cost $288,260,116) 352,234,968
=======================================================================
MONEY MARKET FUNDS-4.98%
STIC Liquid Assets Portfolio(b) 9,094,930 9,094,930
- -----------------------------------------------------------------------
STIC Prime Portfolio(b) 9,094,930 9,094,930
=======================================================================
Total Money Market Funds (Cost
$18,189,860) 18,189,860
=======================================================================
TOTAL INVESTMENTS-101.31% (Cost $306,449,976) 370,424,828
=======================================================================
OTHER ASSETS LESS LIABILITIES-(1.31%) (4,783,046)
=======================================================================
NET ASSETS-100.00% $365,641,782
_______________________________________________________________________
=======================================================================
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
F-2
STATEMENT OF ASSETS AND LIABILITIES
- -----------------------------------------------------------
JULY 31, 2003
<Table>
ASSETS:
Investments, at market value (cost
$288,260,116) $352,234,968
- -----------------------------------------------------------
Investments in affiliated money market funds
(cost $18,189,860) 18,189,860
- -----------------------------------------------------------
Receivables for:
Investments sold 161,910
- -----------------------------------------------------------
Fund shares sold 3,431,207
- -----------------------------------------------------------
Dividends 531,532
- -----------------------------------------------------------
Investment for deferred compensation plan 26,177
- -----------------------------------------------------------
Other assets 47,571
===========================================================
Total assets 374,623,225
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 8,115,395
- -----------------------------------------------------------
Fund shares reacquired 466,713
- -----------------------------------------------------------
Dividends 4,379
- -----------------------------------------------------------
Deferred compensation plan 26,177
- -----------------------------------------------------------
Accrued distribution fees 203,576
- -----------------------------------------------------------
Accrued trustees' fees 845
- -----------------------------------------------------------
Accrued transfer agent fees 126,687
- -----------------------------------------------------------
Accrued operating expenses 37,671
===========================================================
Total liabilities 8,981,443
===========================================================
Net assets applicable to shares outstanding $365,641,782
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $316,741,425
- -----------------------------------------------------------
Undistributed net investment income 574,152
- -----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities and foreign
currencies (15,650,916)
- -----------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 63,977,121
===========================================================
$365,641,782
___________________________________________________________
===========================================================
NET ASSETS:
Class A $177,901,039
___________________________________________________________
===========================================================
Class B $123,092,658
___________________________________________________________
===========================================================
Class C $ 64,648,085
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 10,163,942
___________________________________________________________
===========================================================
Class B 7,013,258
___________________________________________________________
===========================================================
Class C 3,690,390
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 17.50
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $17.50 divided by
95.25%) $ 18.37
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 17.55
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 17.52
___________________________________________________________
===========================================================
</Table>
See Notes to Financial Statements.
F-3
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED JULY 31, 2003
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $63,610) $11,942,995
- -------------------------------------------------------------------------
Dividends from affiliated money market funds 180,305
- -------------------------------------------------------------------------
Interest 11,587
=========================================================================
Total investment income 12,134,887
=========================================================================
EXPENSES:
Advisory fees 2,327,770
- -------------------------------------------------------------------------
Administrative services fees 79,487
- -------------------------------------------------------------------------
Custodian fees 60,596
- -------------------------------------------------------------------------
Distribution fees -- Class A 414,390
- -------------------------------------------------------------------------
Distribution fees -- Class B 919,868
- -------------------------------------------------------------------------
Distribution fees -- Class C 482,573
- -------------------------------------------------------------------------
Transfer agent fees 885,755
- -------------------------------------------------------------------------
Trustees' fees 10,106
- -------------------------------------------------------------------------
Other 187,412
=========================================================================
Total expenses 5,367,957
=========================================================================
Less: Fees waived and expenses paid indirectly (7,374)
=========================================================================
Net expenses 5,360,583
=========================================================================
Net investment income 6,774,304
=========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities (4,083,840)
- -------------------------------------------------------------------------
Foreign currencies (23,020)
=========================================================================
(4,106,860)
=========================================================================
Change in net unrealized appreciation of:
Investment securities 48,776,717
- -------------------------------------------------------------------------
Foreign currencies 829
=========================================================================
48,777,546
=========================================================================
Net gain from investment securities and foreign currencies 44,670,686
=========================================================================
Net increase in net assets resulting from operations $51,444,990
_________________________________________________________________________
=========================================================================
</Table>
See Notes to Financial Statements.
F-4
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE YEARS ENDED JULY 31, 2003 AND 2002
<Table>
<Caption>
2003 2002
- ------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 6,774,304 $ 2,902,798
- ------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (4,106,860) 2,344,896
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 48,777,546 7,441,074
==========================================================================================
Net increase in net assets resulting from operations 51,444,990 12,688,768
==========================================================================================
Distributions to shareholders from net investment income:
Class A (3,329,708) (1,366,733)
- ------------------------------------------------------------------------------------------
Class B (2,034,884) (741,067)
- ------------------------------------------------------------------------------------------
Class C (1,070,734) (669,922)
==========================================================================================
Decrease in net assets resulting from distributions (6,435,326) (2,777,722)
==========================================================================================
Share transactions-net:
Class A 70,728,483 53,809,611
- ------------------------------------------------------------------------------------------
Class B 37,706,329 49,731,417
- ------------------------------------------------------------------------------------------
Class C 18,496,500 12,210,117
==========================================================================================
Net increase in net assets resulting from share
transactions 126,931,312 115,751,145
==========================================================================================
Net increase in net assets 171,940,976 125,662,191
==========================================================================================
NET ASSETS:
Beginning of year 193,700,806 68,038,615
==========================================================================================
End of year $365,641,782 $193,700,806
__________________________________________________________________________________________
==========================================================================================
</Table>
See Notes to Financial Statements.
F-5
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
JULY 31, 2003
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Real Estate Fund (the "Fund") is a series portfolio of AIM Advisor 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 two separate portfolios, each
having 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 high total return. Each
company listed in the Schedule of Investments is organized in the United States
unless otherwise noted.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued on the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, at the closing bid price. Debt obligations
(including convertible bonds) are valued on the basis of prices provided by
an independent pricing service. Prices provided by the pricing service may
be determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Securities for which market prices
are not provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in
the case of equity securities and in the case of debt obligations, the mean
between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Trust's officers in a manner specifically authorized by the Board of
Trustees. Short-term obligations having 60 days or less to maturity and
commercial paper are valued at amortized cost which approximates market
value. For purposes of determining net asset value per share, futures and
option contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the NYSE. Generally, trading in foreign securities
is substantially completed each day at various times prior to the close of
the NYSE. The values of such securities used in computing the net asset
value of the Fund's shares are determined as of the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes and the
close of the customary trading session of the NYSE which would not be
reflected in the computation of the Fund's net asset value. If a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE as determined in
good faith by or under the supervision of the Board of Trustees.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
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
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. Any capital loss
carryforwards listed are reduced for limitations, if any, to the extent
required by the Internal Revenue Code.
E. FOREIGN CURRENCY TRANSLATIONS -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately
F-6
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 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 sales of foreign currencies,
currency gains or losses realized between the trade and settlement dates on
securities transactions, and the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the fund's
book 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.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. EXPENSES -- 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. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.90% of the Fund's
average daily net assets. AIM has entered into a sub-advisory agreement with
INVESCO Institutional (N.A.), Inc. ("INVESCO") whereby AIM pays INVESCO 40% of
the fee paid by the Fund to AIM. 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 in which the Fund has invested. For the year ended
July 31, 2003, AIM waived fees of $2,113.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended July 31, 2003, AIM was paid
$79,487 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended July 31, 2003, AFS
retained $463,931 for such services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C and Investor Class shares of the Fund. Investor Class
shares have not commenced operations. 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 AIM Distributors compensation at the annual rate of 0.35% of the
Fund's average daily net assets of Class A shares, 1.00% of the average daily
net assets of Class B and Class C shares and 0.25% of the average daily net
assets of Investor Class shares. Of these amounts, the Fund may pay a service
fee up to 0.25% of the average daily net assets of the Class A, Class B, Class C
or Investor Class shares to selected dealers and financial institutions who
furnish continuing personal shareholder services to their customers who purchase
and own the appropriate class of shares of the Fund. Any amounts not paid as a
service fee under the Plans would constitute an asset-based sales charge. NASD
Rules also impose a cap on the total sales charges, including asset-based sales
charges that may be paid by any class of shares of the Fund. Pursuant to the
Plans, for the year ended July 31, 2003, the Class A, Class B and Class C shares
paid $414,390, $919,868 and $482,573, 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 July 31, 2003, AIM Distributors retained $162,429 in front-end sales
commissions from the sale of Class A shares and $9,515, $88 and $19,224 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, AFS and/or AIM Distributors.
NOTE 3--INDIRECT EXPENSES
For the year ended July 31, 2003, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) of $5,160 and reductions in custodian
fees of $101 under expense offset arrangements which resulted in a reduction of
the Fund's total expenses of $5,261.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
The law firm Kramer, Levin, Naftalis & Frankel LLP of which a trustee is a
member as counsel to the Independent Trustees. During the year ended July 31,
2003, the Fund paid legal fees of $2,993.
NOTE 5--BORROWINGS
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
F-7
investments in overnight repurchase agreements) is favorable to both the lending
fund and the borrowing fund.
Effective June 26, 2003, the Fund became a participant in an uncommitted
unsecured revolving line of 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 line of credit 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 reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the year ended July 31, 2003, the Fund did not borrow or lend under
the interfund lending facility or borrow under either the committed line of
credit facility or the uncommitted unsecured revolving line of credit facility.
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
Distributions to Shareholders:
The tax character of distributions paid during the years ended July 31, 2003 and
2002 were as follows:
<Table>
<Caption>
2003 2002
- --------------------------------------------------------------
Distributions paid from ordinary
income $6,435,326 $2,777,722
______________________________________________________________
==============================================================
</Table>
Tax Components of Net Assets:
As of July 31, 2003, the components of net assets on a tax basis were as
follows:
<Table>
Undistributed ordinary income $ 837,934
- -----------------------------------------------------------
Unrealized appreciation -- investments 62,694,429
- -----------------------------------------------------------
Temporary book/tax differences (34,380)
- -----------------------------------------------------------
Capital loss carryforward (13,350,647)
- -----------------------------------------------------------
Post-October capital loss deferral (1,246,979)
- -----------------------------------------------------------
Shares of beneficial interest 316,741,425
===========================================================
Total net assets $365,641,782
___________________________________________________________
===========================================================
</Table>
The difference between book-basis and tax-basis unrealized appreciation is
due to differences in the timing of recognition of gains and losses on
investments for tax and book purposes. The Fund's unrealized appreciation
difference is attributable to the tax deferral of losses on wash sales,
realization for tax purposes of unrealized gains on passive foreign investment
companies and other deferrals. The tax-basis unrealized appreciation on
investments includes appreciation on foreign currencies of $2,269.
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 trustee deferral of compensation and
retirement plan expenses.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ----------------------------------------------------------
July 31, 2007 $ 9,612,829
- ----------------------------------------------------------
July 31, 2008 1,275,744
- ----------------------------------------------------------
July 31, 2011 2,462,074
==========================================================
Total capital loss carryforward $13,350,647
__________________________________________________________
==========================================================
</Table>
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the year ended
July 31, 2003 was $340,224,591 and $214,512,526, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON
A TAX BASIS
- -------------------------------------------------------------------
Aggregate unrealized appreciation of investment
securities $62,714,500
- -------------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (22,340)
===================================================================
Net unrealized appreciation of investment
securities $62,692,160
___________________________________________________________________
===================================================================
Cost of investments for tax purposes is $307,732,668.
</Table>
NOTE 8--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of foreign currency
transactions and passive foreign investment companies on July 31, 2003,
undistributed net investment income was decreased by $5,973, undistributed net
realized gains (losses) increased by $5,938 and shares of beneficial interest
increased by $35. This reclassification had no effect on the net assets of the
Fund.
F-8
NOTE 9--SHARE INFORMATION
The Fund currently consists of four different classes of shares: Class A shares,
Class B shares, Class C 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.
Under some circumstances, Class A shares are subject to CDSC. Investor Class
shares are sold at net asset value. Generally, Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Investor Class shares have not commenced operations.
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED JULY 31,
--------------------------------------------------------
2003 2002
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 10,040,616 $153,310,327 5,154,009 $ 76,791,735
- ----------------------------------------------------------------------------------------------------------------------
Class B 4,612,513 69,835,946 4,236,687 63,066,596
- ----------------------------------------------------------------------------------------------------------------------
Class C 2,144,150 32,601,275 1,526,796 22,598,155
======================================================================================================================
Issued as reinvestment of dividends:
Class A 199,768 3,041,849 86,632 1,253,375
- ----------------------------------------------------------------------------------------------------------------------
Class B 118,414 1,804,757 45,952 669,735
- ----------------------------------------------------------------------------------------------------------------------
Class C 60,550 921,382 40,989 588,258
======================================================================================================================
Automatic conversion of Class B shares to Class A shares:*
Class A 158,310 2,459,992 -- --
- ----------------------------------------------------------------------------------------------------------------------
Class B (157,917) (2,459,992) -- --
======================================================================================================================
Reacquired:
Class A (5,900,039) (88,083,685) (1,670,317) (24,235,499)
- ----------------------------------------------------------------------------------------------------------------------
Class B (2,108,225) (31,474,382) (979,116) (14,004,914)
- ----------------------------------------------------------------------------------------------------------------------
Class C (986,180) (15,026,157) (770,478) (10,976,296)
======================================================================================================================
8,181,960 $126,931,312 7,671,154 $115,751,145
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
* Prior to the year ended July 31, 2003, conversion of Class B shares to Class A
shares were included in Class A shares sold and Class B shares reacquired.
NOTE 10--SIGNIFICANT EVENT
The Board of Trustees of AIM Advisor Funds (the "Trust") approved, on July 30,
2003, an Agreement and Plan of Reorganization (the "Plan"), which provides for
the restructuring of AIM International Core Equity Fund and AIM Real Estate
Fund, the two series portfolios of the Trust (each a "Fund" and, collectively,
the "Funds"), as new series portfolios of AIM Investment Securities Funds
("AISF") and, in connection therewith, the sale of all of each Fund's assets and
the termination of each Fund as a designated series of the Trust. AISF is an
existing Delaware statutory trust. The Plan has been structured as a tax-free
reorganization.
The Plan provides for a series of transactions to convert each Fund to a
corresponding series (a "New Fund") of AISF. Under the Plan, each Fund will
transfer all its assets to a corresponding New Fund in exchange solely for
voting shares of beneficial interest in the New Fund and the New Fund's
assumption of all the Fund's liabilities (collectively, the "Restructuring").
The operations of each New Fund following the Restructuring will be
substantially similar to those of its predecessor Fund. AISF, like the Trust
operates as an open-end management investment company.
The proposed Restructuring relates to an integration initiative announced on
March 27, 2003, by AMVESCAP PLC ("AMVESCAP"), the parent company of both AIM and
INVESCO, with respect to its North American mutual fund operations. AMVESCAP has
recommended that certain series portfolios of funds within The AIM Family of
Funds (the "AIM Funds") with few portfolios be restructured as new series of an
existing Delaware statutory trust. This change should simplify the
organizational structure and reduce costs of the AIM Funds.
The proposed Restructuring of each Fund requires the approval of such Funds's
shareholders and will be submitted to shareholders for their consideration at a
meeting to be held on October 21, 2003. If approved by shareholders and certain
closing conditions required by the Plan are satisfied, the proposed
Restructuring is expected to be consummated shortly thereafter. If shareholders
of a Fund do no approve the proposed Restructuring, such Fund will continue to
operate as a series of the Trust.
F-9
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
-----------------------------------------------------------------------
SEVEN MONTHS YEAR ENDED
YEAR ENDED JULY 31, ENDED DECEMBER 31,
--------------------------------- JULY 31, ------------------
2003 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.25 $ 13.56 $ 13.04 $ 10.61 $ 11.46 $ 15.74
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.45(a) 0.47(a) 0.50 0.30(a) 0.42 0.58(a)
- --------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 2.24 1.68 0.54 2.38 (0.75) (4.11)
================================================================================================================================
Total from investment operations 2.69 2.15 1.04 2.68 (0.33) (3.53)
================================================================================================================================
Less distributions:
Dividends from net investment income (0.44) (0.46) (0.52) (0.25) (0.52) (0.50)
- --------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- -- -- (0.25)
================================================================================================================================
Total distributions (0.44) (0.46) (0.52) (0.25) (0.52) (0.75)
================================================================================================================================
Net asset value, end of period $ 17.50 $ 15.25 $ 13.56 $ 13.04 $ 10.61 $ 11.46
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(b) 18.12% 16.10% 8.23% 25.61% (2.88)% (22.54)%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $177,901 $86,411 $28,400 $23,187 $16,279 $20,087
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.72%(c) 1.77% 1.63% 1.62%(d) 1.61% 1.55%
- --------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.72%(c) 1.77% 1.79% 2.05%(d) 1.73% 1.71%
================================================================================================================================
Ratio of net investment income to average net assets 2.97%(c) 3.25% 3.88% 4.49%(d) 3.70% 4.37%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate(e) 87% 77% 85% 39% 52% 69%
________________________________________________________________________________________________________________________________
================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $118,397,069.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-10
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
----------------------------------------------------------------------------------
MARCH 3, 1998
SEVEN MONTHS (DATE SALES
YEAR ENDED JULY 31, ENDED YEAR ENDED COMMENCED) TO
--------------------------------- JULY 31, DECEMBER 31, DECEMBER 31,
2003 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.29 $ 13.59 $ 13.07 $ 10.64 $11.48 $ 15.34
- ------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.36(a) 0.38(a) 0.41 0.25(a) 0.32 0.37(a)
- ------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 2.24 1.68 0.53 2.39 (0.72) (3.58)
==============================================================================================================================
Total from investment operations 2.60 2.06 0.94 2.64 (0.40) (3.21)
==============================================================================================================================
Less distributions:
Dividends from net investment income (0.34) (0.36) (0.42) (0.21) (0.44) (0.40)
- ------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- -- -- (0.25)
==============================================================================================================================
Total distributions (0.34) (0.36) (0.42) (0.21) (0.44) (0.65)
==============================================================================================================================
Net asset value, end of period $ 17.55 $ 15.29 $ 13.59 $ 13.07 $10.64 $ 11.48
______________________________________________________________________________________________________________________________
==============================================================================================================================
Total return(b) 17.37% 15.40% 7.42% 25.08% (3.53)% (21.02)%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $123,093 $69,557 $16,917 $12,722 $9,839 $ 6,901
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.37%(c) 2.41% 2.36% 2.37%(d) 2.35% 2.31%(d)
- ------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.37%(c) 2.41% 2.43% 2.70%(d) 2.37% 2.35%(d)
==============================================================================================================================
Ratio of net investment income to average
net assets 2.32%(c) 2.61% 3.15% 3.73%(d) 2.96% 3.62%(d)
______________________________________________________________________________________________________________________________
==============================================================================================================================
Portfolio turnover rate(e) 87% 77% 85% 39% 52% 69%
______________________________________________________________________________________________________________________________
==============================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $91,986,805.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-11
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
----------------------------------------------------------------------
SEVEN MONTHS YEAR ENDED
YEAR ENDED JULY 31, ENDED DECEMBER 31,
-------------------------------- JULY 31, ------------------
2003 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.26 $ 13.57 $ 13.05 $ 10.62 $ 11.46 $ 15.74
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.36(a) 0.38(a) 0.41 0.25(a) 0.33(a) 0.50(a)
- --------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 2.24 1.67 0.53 2.39 (0.73) (4.13)
================================================================================================================================
Total from investment operations 2.60 2.05 0.94 2.64 (0.40) (3.63)
================================================================================================================================
Less distributions:
Dividends from net investment income (0.34) (0.36) (0.42) (0.21) (0.44) (0.40)
- --------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- -- -- (0.25)
================================================================================================================================
Total distributions (0.34) (0.36) (0.42) (0.21) (0.44) (0.65)
================================================================================================================================
Net asset value, end of period $ 17.52 $ 15.26 $ 13.57 $ 13.05 $ 10.62 $ 11.46
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(b) 17.41% 15.35% 7.43% 25.13% (3.54)% (23.16)%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $64,648 $37,733 $22,722 $20,306 $19,992 $32,921
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.37%(c) 2.41% 2.36% 2.37%(d) 2.35% 2.31%
- --------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.37%(c) 2.41% 2.43% 2.70%(d) 2.37% 2.37%
================================================================================================================================
Ratio of net investment income to average net assets 2.32%(c) 2.61% 3.15% 3.73%(d) 2.96% 3.62%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate(e) 87% 77% 85% 39% 52% 69%
________________________________________________________________________________________________________________________________
================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $48,257,279.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-12
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Shareholders of AIM Real Estate Fund
and the Board of Trustees of AIM Advisor Funds:
We have audited the accompanying statement of assets and liabilities of AIM Real
Estate Fund (a portfolio of AIM Advisor Funds), including the schedule of
investments, as of July 31, 2003, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
three years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights for each of the periods presented
through July 31, 2000 were audited by other auditors whose report dated
September 1, 2000, expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of July 31, 2003, by correspondence with the custodian and brokers or
by other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Real Estate Fund as of July 31, 2003, 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 three years in
the period then ended, in conformity with accounting principles generally
accepted in the United States.
Houston, Texas -s- ERNST & YOUNG LLP
September 10, 2003
F-13
OTHER INFORMATION
TRUSTEES AND OFFICERS
As of January 1, 2003
The address of each trustee and officer of AIM Advisor Funds is 11 Greenway
Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 86 portfolios in
the AIM Funds complex. Column two below includes length of time served with
predecessor entities, if any.
<Table>
<Caption>
TRUSTEE AND/
NAME, YEAR OF BIRTH AND OR OFFICER PRINCIPAL OCCUPATION(S)
POSITION(S) HELD WITH THE TRUST SINCE DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------
INTERESTED PERSONS
- ------------------------------------------------------------------------------------------------------
Robert H. Graham(1) -- 1946 1997 Director and Chairman, A I M Management Group Inc.
Trustee, Chairman and (financial services holding company); and Director
President and Vice Chairman, AMVESCAP PLC and Chairman of
AMVESCAP PLC -- AIM Division (parent of AIM and a
global investment management firm)
Formerly: President and Chief Executive Officer,
A I M Management Group Inc.; Director, Chairman
and President, A I M Advisors, Inc. (registered
investment advisor); and Director and Chairman,
A I M Capital Management, Inc. (registered
investment advisor), A I M Distributors, Inc.
(registered broker dealer), AIM Investment
Services, Inc.(3), (registered transfer agent),
and Fund Management Company (registered broker
dealer); and Chief Executive Officer, AMVESCAP
PLC -- Managed Products
- ------------------------------------------------------------------------------------------------------
Mark H. Williamson(2) -- 1951 2003 Director, President and Chief Executive Officer,
Trustee and Executive Vice A I M Management Group Inc. (financial services
President holding company); Director, Chairman and
President, A I M Advisors, Inc. (registered
investment advisor); Director, A I M Capital
Management, Inc. (registered investment advisor)
and A I M Distributors, Inc. (registered broker
dealer); Director and Chairman, AIM Investment
Services, Inc.(3) (registered transfer agent); and
Fund Management Company (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. and
INVESCO Distributors, Inc.; Chief Executive
Officer, AMVESCAP PLC -- Managed Products;
Chairman and Chief Executive Officer of
NationsBanc Advisors, Inc.; and Chairman of
NationsBanc Investments, Inc.
- ------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2001 Of Counsel, law firm of Baker & McKenzie
Trustee
- ------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 1997 Chairman, Crockett Technology Associates
Trustee (technology consulting company)
- ------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2000 Director of a number of public and private
Trustee business corporations, including the Boss Group
Ltd. (private investment and management) and
Magellan Insurance Company
Formerly: Director, President and Chief Executive
Officer, Volvo Group North America, Inc.; Senior
Vice President, AB Volvo; and director of various
affiliated Volvo Group companies
- ------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. -- 1935 1998 Formerly: Chairman, Mercantile Mortgage Corp.;
Trustee President and Chief Operating Officer,
Mercantile-Safe Deposit & Trust Co.; and
President, Mercantile Bankshares Corp.
- ------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Century
Trustee Group, Inc. (government affairs company) and
Texana Timber LP
- ------------------------------------------------------------------------------------------------------
<Caption>
NAME, YEAR OF BIRTH AND OTHER DIRECTORSHIP(S)
POSITION(S) HELD WITH THE TRUST HELD BY TRUSTEE
- -------------------------------- -------------------------------
INTERESTED PERSONS
- -------------------------------------------------------------------------------------------------
Robert H. Graham(1) -- 1946 None
Trustee, Chairman and
President
- ------------------------------------------------------------------------------------------------------
Mark H. Williamson(2) -- 1951 Director and Chairman, INVESCO
Trustee and Executive Vice Bond Funds, Inc., INVESCO
President Combination Stock & Bond Funds,
Inc., INVESCO Counselor Series
Funds, Inc., INVESCO
International Funds, Inc.,
INVESCO Manager Series Funds,
Inc., INVESCO Money Market
Funds, Inc., INVESCO Sector
Funds, Inc., INVESCO Stock
Funds, Inc., INVESCO
Treasurer's Series Funds, Inc.
and INVESCO Variable Investment
Funds, Inc.
- ------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 Badgley Funds, Inc. (registered
Trustee investment company)
- ------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 ACE Limited (insurance
Trustee company); and Captaris, Inc.
(unified messaging provider)
- ------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 Cortland Trust, Inc. (Chairman)
Trustee (registered investment
company); Annuity and Life Re
(Holdings), Ltd. (insurance
company)
- ------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. -- 1935 None
Trustee
- ------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 Administaff
Trustee
- ------------------------------------------------------------------------------------------------------
</Table>
(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. Mr. Williamson became Executive Vice
President of the Trust on March 4, 2003.
(3) Effective September 30, 2003, A I M Fund Services, Inc. became known as
AIM Investment Services, Inc.
TRUSTEES AND OFFICERS (CONTINUED)
As of January 1, 2003
The address of each trustee and officer of AIM Advisor Funds is 11 Greenway
Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 86 portfolios in
the AIM Funds complex. Column two below includes length of time served with
predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/ PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
POSITION(S) HELD WITH THE TRUST OR OFFICER SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ---------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 1997 Partner, law firm of Kramer Levin Cortland Trust, Inc.
Trustee Naftalis and Frankel LLP (registered investment company)
- ---------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 1998 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- ---------------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 1997 Partner, law firm of Pennock & Cooper None
Trustee
- ---------------------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2001 Retired None
Trustee
- ---------------------------------------------------------------------------------------------------------------------------------
Louis S. Sklar -- 1939 1997 Executive Vice President, Development None
Trustee and Operations Hines Interests Limited
Partnership (real estate development
company)
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ---------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome(4) -- 1956 2003 Director, Senior Vice President, N/A
Senior Vice President Secretary and General Counsel, A I M
Management Group Inc. (financial
services holding company) and A I M
Advisors, Inc.; Vice President, A I M
Capital Management, Inc., A I M
Distributors, Inc. and AIM Investment
Services, Inc.(3); and Director, Vice
President and General Counsel, Fund
Management Company
Formerly: Senior Vice President and
General Counsel, Liberty Financial
Companies, Inc.; and Senior Vice
President and General Counsel, Liberty
Funds Group, LLC
- ---------------------------------------------------------------------------------------------------------------------------------
Robert G. Alley -- 1948 1997 Managing Director, A I M Capital N/A
Vice President Management, Inc.; and Vice President,
A I M Advisors, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Gary T. Crum(5) -- 1947 1997 Director, Chairman and Director of N/A
Senior Vice President Investments, A I M Capital Management,
Inc.; Director and Executive Vice
President, A I M Management Group Inc.;
Director and Senior Vice President,
A I M Advisors, Inc.; and Director,
A I M Distributors, Inc. and AMVESCAP
PLC
- ---------------------------------------------------------------------------------------------------------------------------------
Stuart W. Coco -- 1955 1997 Managing Director and Chief Research N/A
Vice President Officer -- Fixed Income, A I M Capital
Management, Inc.; and Vice President,
A I M Advisors, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Melville B. Cox -- 1943 1997 Vice President and Chief Compliance N/A
Vice President Officer, A I M Advisors, Inc. and A I M
Capital Management, Inc.; and Vice
President, AIM Investment Services,
Inc.(3)
- ---------------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 1997 Managing Director and Chief Cash N/A
Vice President Management Officer, A I M Capital
Management, Inc.; Director and
President, Fund Management Company; and
Vice President, A I M Advisors, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Edgar M. Larsen(5) -- 1940 1999 Vice President, A I M Advisors, Inc., N/A
Vice President and President, Chief Executive Officer
and Chief Investment Officer, A I M
Capital Management, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Dana R. Sutton -- 1959 1997 Vice President and Fund Treasurer, A I M N/A
Vice President and Treasurer Advisors, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
(3) Effective September 30, 2003, A I M Fund Services, Inc. became known as
AIM Investment Services, Inc.
(4) Mr. Carome became Senior Vice President of the Trust on May 13, 2003.
(5) Information is current as of January 10, 2003.
The Statement of Additional Information of the Trust includes additional
information about the Fund's Trustees and is available upon request, without
charge, by calling 1.800.347.4246.
<Table>
OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS SUB-ADVISOR
11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, Ernst & Young LLP INVESCO Institutional
Suite 100 11 Greenway Plaza Inc. 5 Houston Center (N.A.), Inc.
Houston, TX 77046 Suite 100 11 Greenway Plaza 1401 McKinney INVESCO Realty Advisors
Houston, TX 77046 Suite 100 Suite 1200 division
Houston, TX 77046 Houston, TX 77010 One Lincoln Center
5400 LBJ Freeway/LB2
Suite 700
Dallas, TX 75240
COUNSEL TO THE FUND COUNSEL TO THE TRUSTEES TRANSFER AGENT CUSTODIAN
Ballard Spahr Kramer, Levin, Naftalis AIM Investment State Street Bank and
Andrews & Ingersoll, & Frankel LLP Services, Inc. Trust Company
LLP 919 Third Avenue P.O. Box 4739 225 Franklin Street
1735 Market Street New York, NY 10022 Houston, TX 77210-4739 Boston, MA 02110
Philadelphia, PA 19103
</Table>
REQUIRED FEDERAL INCOME TAX INFORMATION (UNAUDITED)
Of ordinary dividends paid to shareholders during the Fund's tax year ended July
31, 2003, 0% is eligible for the dividends received deduction for corporations.
For its tax year ended 7/31/03, the Fund designates qualified dividend income to
the extent allowable under Internal Revenue Code sec. 1(h)(11). The actual
percentage for the calendar year will be designated in the Fund's year-end tax
statements.
REQUIRED STATE INCOME TAX INFORMATION (UNAUDITED)
Of the ordinary dividends paid, 0.09% was derived from U.S. Federal Obligations.
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(5,6)
AIM Constellation Fund AIM Global Value Fund(4) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund INVESCO Cash Reserves Fund
AIM Large Cap Basic Value Fund INVESCO European Fund INVESCO High Yield Fund
AIM Large Cap Growth Fund INVESCO International Blue Chip Value Fund INVESCO Select Income Fund
AIM Libra Fund INVESCO U.S. Government Money Fund
AIM Mid Cap Basic Value Fund INVESCO U.S. Government Securities Fund
AIM Mid Cap Core Equity Fund SECTOR EQUITY
AIM Mid Cap Growth Fund TAX-FREE
AIM Opportunities I Fund(2) AIM Global Energy Fund
AIM Opportunities II Fund(2) AIM Global Financial Services Fund AIM High Income Municipal Fund
AIM Opportunities III Fund(2) AIM Global Health Care Fund AIM Municipal Bond Fund
AIM Premier Equity Fund AIM Global Science and Technology Fund AIM Tax-Exempt Cash Fund
AIM Premier Equity II Fund AIM Global Utilities Fund AIM Tax-Free Intermediate Fund(5,6)
AIM Select Equity Fund AIM New Technology Fund INVESCO Tax-Free Bond Fund
AIM Small Cap Equity Fund AIM Real Estate Fund INVESCO Tax-Free Money Fund
AIM Small Cap Growth Fund(3) INVESCO Advantage Global Health Sciences Fund
AIM Weingarten Fund INVESCO Energy Fund
INVESCO Advantage Fund INVESCO Financial Services Fund
INVESCO Balanced Fund* INVESCO Gold & Precious Metals Fund
INVESCO Core Equity Fund INVESCO Health Sciences Fund
INVESCO Dynamics Fund INVESCO Leisure Fund
INVESCO Growth Fund INVESCO Multi-Sector Fund
INVESCO Growth & Income Fund INVESCO Real Estate Opportunity Fund
INVESCO Mid-Cap Growth Fund INVESCO Technology Fund
INVESCO Small Company Growth Fund INVESCO Telecommunications Fund
INVESCO S&P 500 Index Fund INVESCO Utilities Fund
INVESCO Total Return Fund*
INVESCO Value Equity Fund
* Domestic equity and income fund
</Table>
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) Effective October 1, 2002, the fund was reopened
to new investors. (3) AIM Small Cap Growth Fund was closed to most investors on
March 18, 2002. For information on who may continue to invest in AIM Small Cap
Growth Fund, please contact your financial advisor. (4) Effective April 30,
2003, AIM Worldwide Spectrum Fund was renamed AIM Global Value Fund. (5) Class A
shares closed to new investors on October 30, 2002. (6) Class A3 shares were
first offered on October 31, 2002.
Pending shareholder approval, the following fund reorganizations will
occur in late October or early November 2003: AIM Global Energy Fund into
INVESCO Energy Fund; AIM Global Financial Services Fund into INVESCO Financial
Services Fund; AIM Global Science and Technology Fund into INVESCO Technology
Fund; AIM Global Utilities Fund into INVESCO Utilities Fund; AIM International
Core Equity Fund into INVESCO International Blue Chip Value Fund; AIM New
Technology Fund into INVESCO Technology Fund; AIM Premier Equity II Fund into
AIM Premier Equity Fund; INVESCO Advantage Fund into AIM Opportunities III Fund;
INVESCO Balanced Fund into INVESCO Total Return Fund; INVESCO Cash Reserves Fund
into AIM Money Market Fund; INVESCO European Fund into AIM European Growth Fund;
INVESCO Growth Fund into AIM Large Cap Growth Fund; INVESCO Growth & Income Fund
into AIM Blue Chip Fund; INVESCO High Yield Fund into AIM High Yield Fund;
INVESCO Real Estate Opportunity Fund into AIM Real Estate Fund; INVESCO Select
Income Fund into AIM Income Fund; INVESCO Tax-Free Bond Fund into AIM Municipal
Bond Fund; INVESCO Telecommunications Fund into INVESCO Technology Fund; INVESCO
U.S. Government Securities Fund into AIM Intermediate Government Fund; INVESCO
Tax-Free Money Fund into aim Tax-Exempt Cash Fund; and INVESCO Value Equity Fund
into AIM Large Cap Basic Value Fund.
For more complete information about any AIM or INVESCO fund, including
sales charges and expenses, ask your financial advisor for a prospectus, which
contains more complete information, including sales charges and expenses. Please
read it carefully before investing. If used after October 20, 2003, this
brochure must be accompanied by a fund Performance & Commentary or by an AIM
Quarterly Performance Review for the most recent quarter-end. Mutual funds
distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $147 billion in assets for approximately 11
million shareholders, including individual investors, corporate clients and
financial institutions. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $348 billion in assets
under management. Data as of June 30, 2003.
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.
--Servicemark--
AIMinvestments.com REA-AR-1
ITEM 2. CODE OF ETHICS
Pursuant to rules of the Securities and Exchange Commission adopted
pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 that became
effective on March 1, 2003, a registered management investment company
must disclose, for each fiscal year ending on or after July 15, 2003,
whether the investment company has adopted a code of ethics for its
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons serving similar positions
(collectively, "Senior Officers"), and if not, why not.
Registrant is one of eighteen legal entities, consisting of 86 series
portfolios, known as "The AIM Family of Funds--Registered Trademark--"
(the "AIM Funds"). The AIM Funds have fiscal years that end at different
times throughout the year.
At a meeting in person held on September 16-17, 2003, the Boards of
Directors/Trustees of the AIM Funds adopted a uniform code of ethics for
the Senior Officers of all of the AIM Funds, including Registrant, a copy
of which is included in this filing under Item 10(a) (the "Code"). Most
of the AIM Funds have fiscal years ending in October and December. For
those Funds, the action taken by the Boards to adopt the Code occurred
prior to the end of their current fiscal years. For Funds with fiscal
years that ended July 31, 2003 or August 31, 2003, including Registrant,
this action occurred subsequent to the end of their 2003 fiscal year-end.
The Senior Officers have represented to the Registrant that there would
have been no waivers, including implied waivers, sought under the Code
had it been in effect during Registrant's most recent fiscal year. As
officers of the Registrant's investment adviser, which is a wholly owned
subsidiary of AMVESCAP PLC, the Senior Officers are also subject to
AMVESCAP's Code of Conduct. The AMVESCAP Code of Conduct requires the
Senior Officers to adhere to the highest standards of honest and ethical
conduct.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees has determined that the registrant has at least one audit
committee financial expert serving on its Audit Committee. The Audit Committee
financial expert is Prema Mathai-Davis. Ms. Mathai-Davis is "independent"
within the meaning of that term used in Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. [RESERVED]
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) As of June 18, 2004, an evaluation was performed under the supervision
and with the participation of the officers of the Registrant, including
the Principal Executive Officer ("PEO") and Principal Financial Officer
("PFO"), to assess the effectiveness of the Registrant's disclosure
controls and procedures, as that term is defined in Rule 30a-3(c) under
the Investment Company Act of 1940 (the "Act"), as amended. Based on that
evaluation, the Registrant's officers, including the PEO and PFO,
concluded that, as of June 18, 2004, the Registrant's disclosure controls
and procedures were reasonably designed so as to ensure: (1) that
information required to be disclosed by the Registrant on Form N-CSR/A is
recorded, processed, summarized and reported within the time periods
specified by the rules and forms of the Securities and Exchange
Commission; and (2) that material information relating to the Registrant
is made known to the PEO and PFO as appropriate to allow timely decisions
regarding required disclosure.
(b) There have been no changes in the Registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act) that
occurred during the period covered by the report on Form N-CSR/A that has
materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 10. EXHIBITS.
10(a)(1) Code of Ethics.
10(a)(2) Certifications of principal executive officer and principal
financial officer as required by Rule 30a-2(a) under the Investment
Company Act of 1940.
10(a)(3) Not applicable.
10(b) Certifications of principal executive officer and principal
financial officer as required by Rule 30a-2(b) under the Investment
Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: AIM Advisor Funds
By: /s/ ROBERT H. GRAHAM
-------------------------------------------
Robert H. Graham
Principal Executive Officer
Date: August 3, 2004
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the
Investments Company Act of 1940, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /s/ ROBERT H. GRAHAM
-------------------------------------------
Robert H. Graham
Principal Executive Officer
Date: August 3, 2004
By: /s/ SIDNEY M. DILGREN
-------------------------------------------
Sidney M. Dilgren
Principal Financial Officer
Date: August 3, 2004
EXHIBIT INDEX
10(a)(1) Code of Ethics.
10(a)(2) Certifications of principal executive officer and principal
financial officer as required by Rule 30a-2(a) under the Investment
Company Act of 1940.
10(a)(3) Not applicable.
10(b) Certifications of principal executive officer and principal
financial officer as required by Rule 30a-2(b) under the Investment
Company Act of 1940.