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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-2606
----------------------------------------------
AIM Money Market Funds, Inc. (Formerly: INVESCO Money Market Funds, Inc.)
- --------------------------------------------------------------------------------
(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: 8/31/03
-------------------
Date of reporting period: 8/31/03
------------------
Explanatory Note
This Certified Shareholder Report on Form N-CSR relates to the period ended
August 31, 2003 and constitutes a late filing.
[GRAPHIC APPEARS HERE]
August 31, 2003
ANNUAL REPORT
INVESCO MONEY MARKET FUNDS, INC.
Effective October 1, 2003, INVESCO Money Market Funds, Inc. will change its name
to AIM Money Market Funds, Inc.
U.S. GOVERNMENT MONEY FUND "During the summer, the economy finally
started its long hoped for upswing."
See page 3
[INVESCO LOGO APPEARS HERE]
--Registered Trademark--
FELLOW SHAREHOLDER:
[CUNNINGHAM PHOTO]
New Distributor for INVESCO Funds
In recent months, we at INVESCO have taken some key steps in our ongoing effort
to provide you with high-quality investment products and services. As you may
have already heard, we've decided to work more closely with our affiliates at
AIM Investments,(SM*) a well-respected leader in the asset management industry.
As a result, A I M Distributors, Inc. became the distributor of INVESCO Money
Market Funds, Inc. effective July 1, 2003. This move has allowed us to create a
single distribution system for both our companies that is supported by more than
200,000 financial consultants.
In addition, the INVESCO Web site is now integrated into aiminvestments.com,
which has been rated the top financial Web site for 10 consecutive quarters by
the DALBAR financial professional MutualFund WebMonitor report.** You can access
important information about our funds, including investment objectives and
portfolio manager biographies, at AIM's Web site.
Thank you for your continued support. If you have questions about any of these
changes, please don't hesitate to call us at 1-800-959-4246.
Sincerely,
/s/ Ray Cunningham
Ray Cunningham
President and CEO, INVESCO Funds Group, Inc.
*AIM Investments is a service mark of A I M Management Group Inc., and is the
subject of a pending application for trademark registration. A I M Advisors,
Inc., A I M Capital Management, Inc., A I M Private Asset Management, Inc., and
A I M Alternative Asset Management Company, Inc., are the investment advisors
for the products and services represented by AIM Investments. A I M
Distributors, Inc., is the distributor for the retail mutual funds and Fund
Management Company is the distributor for the institutional money market funds
represented by AIM Investments.
**DALBAR, Inc., is an independent organization that provides benchmarks and
ratings for financial services companies. The DALBAR WebMonitor Award is based
on four evaluation criteria: site functions, usability, currency and relevance
of content, and consistency of Web site image and content.
An investment in the fund is not insured nor guaranteed by the Federal Deposit
Insurance Corporation (FDIC) or any other government agency. Although the fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the fund.
1
"During the year, the corporate credit situation remained shaky, and our
emphasis stayed on maintaining high credit quality..."
- See page 4
[GRAPHIC APPEARS HERE]
table of contents
LETTER FROM THE PRESIDENT & CEO 1
AN INTERVIEW WITH LYMAN MISSIMER 3
INVESTMENT HOLDINGS 5
FINANCIAL STATEMENTS 7
NOTES TO FINANCIAL STATEMENTS 10
FINANCIAL HIGHLIGHTS 12
OTHER INFORMATION 13
For the latest yield information, call us at 1-800-959-4246.
[GRAPHIC APPEARS HERE]
2
QUESTIONS & answers
[GRAPHIC APPEARS HERE]
AN INTERVIEW WITH FUND MANAGER LYMAN MISSIMER
Please note that this report marks a change in the fiscal year for U.S.
Government Money Fund. Formerly, the fund's annual reporting period covered the
months from June through May. Beginning with this report, the fund's fiscal year
reporting will cover September through August.
What conditions and events influenced overall money market performance during
the past year?
LYMAN MISSIMER: Many of the same factors we reported three months ago remained
issues for the annual period that ended on August 31. The economy continued on
its sluggish path for most of the reporting period. The manufacturing sector
struggled, while companies continued to cut costs. The members of the Federal
Open Market Committee (FOMC) felt that the economy needed a jumpstart, and in
November 2002 lowered the federal funds rate target 50 basis points to 1.25%.
This action kept long-term yields at around 4%, which helped to further
stimulate the housing sector. Meanwhile, the overall gross domestic product
(GDP) continued to show little growth, with both the fourth quarter of 2002 and
the first quarter of 2003 barely rising at an annual rate of 1.4%.
Of course, the dominant influence on economic activity in the first half of 2003
was the turmoil in the Middle East, which eventually resulted in the United
States invading Iraq in March. This helped to push oil prices higher, which
further limited activity. As it became apparent that the U.S.-led invasion would
be successful, the equity markets began to rally, and the future for economic
growth appeared brighter. However, Chairman Alan Greenspan of the Federal
Reserve spoke to Congress in May and roiled the fixed-income markets with his
discussion of the risks of deflation.
FUND MANAGEMENT
[MISSIMER PHOTO]
LYMAN MISSIMER, CFA
TEAM LEADER
U.S. GOVERNMENT MONEY FUND
Lyman Missimer III, senior vice president of A I M Capital Management, leads a
team of managers for the fund. He joined AIM Investments in 1995 and has more
than 20 years of investing experience. Lyman earned his bachelor's degree from
Dartmouth College and an MBA from the University of Chicago Graduate School of
Business. He is a member of the Association of Investment Management Research.
The Treasury market rallied further, with 10-year yields dropping to a 40-year
low of 3.10%. The Fed determined that the economy needed further insurance and
lowered the federal funds target again in June, citing the fight against
deflationary forces. This brought the target to 1%, the lowest level since the
1950s.
During the summer, the economy finally started its long hoped for upswing. The
combined monetary and fiscal stimuli helped push GDP growth to 3.1% for the
second quarter, and many economists have said they expect 4% to 5% growth for
the third quarter of 2003. The big cloud which continued to hang over the
economy was sustained weak employment. Despite the growth in the economy,
companies remained loath to add workers, relying on strong productivity to fuel
rising earnings. I think that this phenomenon could make the sustainability of a
recovery a question mark.
3
What is your current strategy, and how have specific decisions influenced the
portfolio's performance?
LYMAN MISSIMER: At the beginning of the period, the economy had started to
weaken, while the yield curve began to flatten out (that is, the difference
between long- and short-term interest rates lessened). In response, the Federal
Reserve changed its balance of risks to weakness after the August 2002 FOMC
meeting, which further encouraged the fall of longer-term yields. As that
transition was happening, the portfolio was extended to lock in the higher
yields. The Fed reduced rates in November to a 40-year low of 1.25%. For the
next six months, our goal was to maintain the weighted average maturities (WAMs)
in the 40- to 50-day range pending further developments. With deflation talk
from the Fed in May, the markets became convinced that the Fed would lower rates
again at its June meeting, and the WAMs were extended again to close to 60 days.
At this point, the new 1% target was the lowest in around 50 years, and yet the
market still thought that there could be another easing. Once those hopes were
dashed by the Fed and the improving economy, the yield curve steepened,
encouraging buying at the longer end of the maturity spectrum. Since cash flows
generally remained volatile, our barbell strategy was maintained, with overnight
cash positions held at high levels to provide liquidity. During the year, the
corporate credit situation remained shaky, and our emphasis stayed on
maintaining high credit quality. As high quality credits continued to be harder
to find and spreads narrowed, we utilized more government-sponsored agencies to
extend maturities.
How are you currently positioning the portfolios?
LYMAN MISSIMER: Since the June FOMC meeting, the Fed members have been
encouraging the markets to expect no increase in rates for a considerable period
of time. Some Fed watchers expect that to mean no hike until 2005. However, with
the recent pickup in economic activity and turbulence in the fixed-income
markets, many market participants are looking for the Fed to move as soon as the
first quarter of 2004. The federal funds futures market is expecting the target
to be as high as 1.50% by mid-2004. With volatility and uncertainty back in the
markets, we've reduced the WAMs across the board into the 45 to 50 day range.
With little reason to expect a move up in rates for at least six months, we will
look for buying opportunities out longer where the curve is steepest.
What will you be watching for during the remainder of 2003?
LYMAN MISSIMER: The Fed is expected to be on hold for the rest of the year at
the historically low 1% federal funds target. In the last couple of months, the
economy has picked up and the fixed-income markets have seen yields rise
dramatically. This has caused yields in the nine-month to one-year sector to
fluctuate and rise significantly. Since the members of the Fed continue to
emphasize that there will be no tightening anytime soon, it appears the yields
in the 1.30% and higher range are attractive. The portfolio team will continue
to take advantage of these yields while maintaining WAMs in the 45-50 day range.
If it appears inflation is beginning to rise and that a tightening is any
closer, WAMs will be reduced.
"In the last couple of months, the economy has picked up and the fixed-income
markets have seen yields rise dramatically."
4
INVESTMENT HOLDINGS
STATEMENT OF INVESTMENT SECURITIES
INVESCO Money Market Funds, Inc.
August 31, 2003
EFFECTIVE
INTEREST PRINCIPAL
% DESCRIPTION RATE % AMOUNT VALUE
- ------------------------------------------------------------------------------------------
U. S. GOVERNMENT MONEY FUND
99.65 SHORT-TERM INVESTMENTS
52.81 US GOVERNMENT AGENCY OBLIGATIONS
Fannie Mae
Benchmark Notes
11/15/2003 1.35 $ 500,000 $ 501,811
4/15/2004 0.99 700,000 711,377
6/15/2004 1.29 825,000 836,001
Medium-Term Notes, 6/28/2004 1.21 500,000 521,447
Medium-Term Notes, Series B
10/27/2003 1.20 500,000 502,928
12/1/2003 1.22 500,000 505,250
Federal Farm Credit Bank, Medium-Term Notes
9/2/2003 1.85 1,610,000 1,610,164
11/6/2003 1.50 300,000 301,772
Federal Home Loan Bank
9/2/2003 1.85 1,000,000 1,000,102
9/15/2003 1.15 5,000,000 4,999,904
11/4/2003 1.50 250,000 251,664
11/14/2003 1.50 2,545,000 2,565,619
12/4/2003 0.97 1,000,000 1,004,548
4/15/2004 1.10 1,500,000 1,524,476
6/15/2004 1.12 500,000 508,786
6/28/2004 1.31 1,000,000 1,028,037
7/2/2004 1.25 1,000,000 1,000,000
Freddie Mac
11/6/2003 1.08 5,000,000 4,990,231
5/20/2004 1.11 713,000 707,365
6/17/2004 1.11 500,000 495,606
Overseas Private Investment, Gtd
Participation Certificates, Variable
Quarterly Rate
Series 2000-044-A, 5/15/2015 (a) 1.06 5,700,000 5,700,000
Series 2000-044-A3, 4/1/2014 (a) 1.06 3,000,000 3,000,000
==========================================================================================
TOTAL US GOVERNMENT AGENCY OBLIGATIONS
(Amortized Cost $34,267,088) 34,267,088
==========================================================================================
46.84 REPURCHASE AGREEMENTS
Repurchase Agreement with Bank of Nova
Scotia dated 8/29/2003 due 9/2/2003 at
1.050% repurchased at $15,390,451 (Joint
Repurchase Agreement (b) entered into on
8/29/2003 with a maturing value of
$500,058,333. Collateralized by U.S.
Government Obligations, Zero Coupon to
7.250%, due 12/15/2003 to 5/15/2030 with
an aggregate market value at 8/29/2003 of
$510,000,259.) 15,388,656 15,388,656
5
EFFECTIVE
INTEREST PRINCIPAL
% DESCRIPTION RATE % AMOUNT VALUE
- ------------------------------------------------------------------------------------------
Repurchase Agreement with Deutsche Bank AG
dated 8/29/2003 due 9/2/2003 at 1.060%
repurchased at $15,001,767 (Joint
Repurchase Agreement (b) entered into on
8/29/2003 with a maturing value of
$500,058,889. Collateralized by U.S.
Government Obligations, 1.875% to 6.250%,
due 1/15/2005 to 1/5/2027 with an
aggregate market value at 8/29/2003 of
$510,000,195.) $ 15,000,000 $ 15,000,000
==========================================================================================
TOTAL REPURCHASE AGREEMENTS
(Cost $30,388,656) 30,388,656
==========================================================================================
99.65 TOTAL INVESTMENTS AT VALUE
(AMORTIZED COST $64,655,744) (c) 64,655,744
==========================================================================================
0.35 OTHER ASSETS LESS LIABILITIES 227,676
==========================================================================================
100.00 NET ASSETS AT VALUE $ 64,883,420
==========================================================================================
(a) All securities with a maturity date greater than one year have a variable
rate resulting in an effective maturity of one year or less.
(b) Joint Repurchase Agreement with affiliates, the Fund has been allocated a
portion of the collateral pool.
(c) Also represents cost of investments for income tax purposes.
See Notes to Financial Statements
6
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
INVESCO Money Market Funds, Inc.
AUGUST 31, 2003
U.S. GOVERNMENT
MONEY
FUND
- ---------------------------------------------------------------------------
ASSETS
Investment Securities:
At Cost (a) $ 64,655,744
===========================================================================
At Value (a) $ 64,655,744
Receivables:
Fund Shares Sold 84,467
Interest 231,254
Prepaid Expenses and Other Assets 37,621
===========================================================================
TOTAL ASSETS 65,009,086
===========================================================================
LIABILITIES
Payables:
Custodian 4
Distributions to Shareholders 194
Fund Shares Repurchased 99,086
Accrued Expenses and Other Payables 26,382
===========================================================================
TOTAL LIABILITIES 125,666
===========================================================================
NET ASSETS AT VALUE, Applicable to Shares Outstanding $ 64,883,420
===========================================================================
Shares Outstanding (b) 64,883,420
===========================================================================
NET ASSET VALUE, Offering and Redemption Price per Share $ 1.00
===========================================================================
(a) Investment securities at cost and value at August 31, 2003 includes
repurchase agreements of $30,388,656.
(b) The INVESCO Money Market Funds, Inc. have 20 billion authorized shares of
common stock, par value of $0.01 per share. Of such shares, 500 million
has been allocated to U.S. Government Money Fund-Investor Class.
Paid-in-capital for U.S. Government Money Fund was $64,883,420.
See Notes to Financial Statements
7
STATEMENT OF OPERATIONS
INVESCO Money Market Funds, Inc.
U.S. GOVERNMENT
MONEY FUND
PERIOD YEAR
ENDED ENDED
AUGUST 31 MAY 31
- ---------------------------------------------------------------------------
2003 2003
(Note 1)
INVESTMENT INCOME
INTEREST INCOME $ 193,689 $ 1,162,651
===========================================================================
EXPENSES
Investment Advisory Fees 81,575 368,428
Transfer Agent Fees 74,233 299,092
Administrative Services Fees 9,842 43,159
Custodian Fees and Expenses 4,277 11,788
Directors' Fees and Expenses 3,038 14,784
Professional Fees and Expenses 16,192 21,483
Registration Fees and Expenses 6,615 24,369
Reports to Shareholders 5,448 32,617
Other Expenses 2,925 4,677
===========================================================================
TOTAL EXPENSES 204,145 820,397
Fees and Expenses Absorbed by Investment Adviser (64,660) (191,120)
Fees and Expenses Paid Indirectly (47) 0
===========================================================================
NET EXPENSES 139,438 629,277
===========================================================================
NET INVESTMENT INCOME AND NET INCREASE IN NET
ASSETS FROM OPERATIONS $ 54,251 $ 533,374
===========================================================================
See Notes to Financial Statements
8
STATEMENT OF CHANGES IN NET ASSETS
U. S. Government Money Fund
PERIOD
ENDED
AUGUST 31 YEAR ENDED MAY 31
- ---------------------------------------------------------------------------------------
2003 2003 2002
(Note 1)
OPERATIONS AND DISTRIBUTIONS
TO SHAREHOLDERS
Net Investment Income Earned and
Distributed to Shareholders $ 54,251 $ 533,374 $ 1,540,454
=======================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares $ 16,056,651 $ 231,418,527 $ 1,448,716,464
Reinvestment of Distributions 52,808 502,735 1,454,825
=======================================================================================
16,109,459 231,921,262 1,450,171,289
Amounts Paid for Repurchases of Shares (18,323,386) (240,544,136) (1,449,830,999)
=======================================================================================
NET INCREASE (DECREASE) IN NET ASSETS
FROM FUND SHARE TRANSACTIONS (2,213,927) (8,622,874) 340,290
NET ASSETS
Beginning of Period 67,097,347 75,720,221 75,379,931
=======================================================================================
End of Period $ 64,883,420 $ 67,097,347 $ 75,720,221
=======================================================================================
-------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 16,056,651 231,418,527 1,448,716,464
Shares Issued from Reinvestment of
Distributions 52,808 502,735 1,454,825
=======================================================================================
16,109,459 231,921,262 1,450,171,289
Shares Repurchased (18,323,386) (240,544,136) (1,449,830,999)
=======================================================================================
NET INCREASE (DECREASE) IN FUND SHARES (2,213,927) (8,622,874) 340,290
=======================================================================================
See Notes to Financial Statements
9
NOTES TO FINANCIAL STATEMENTS
INVESCO Money Market Funds, Inc.
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. Invesco Money
Market Funds, Inc. is incorporated in Maryland and presently consists of three
separate funds: U.S. Government Money Fund (the "Fund" presented herein), Cash
Reserves Fund and Tax-Free Money Fund. The investment objective of U.S.
Government Money Fund is to seek current income by investing only in debt
obligations issued or guaranteed by the U.S. Government or its agencies. Cash
Reserves and Tax-Free Money Funds are presented in a separate report to
shareholders. INVESCO Money Market Funds, Inc. is registered under the
Investment Company Act of 1940 (the "Act") as a diversified, open-end management
investment company. Effective October 1, 2003, the name of INVESCO Money Market
Funds, Inc. will change to A I M Money Market Funds, Inc. In 2003, the Fund's
year end changed from May 31 to August 31.
Effective April 1, 2002, the Investor Class shares are offered only to
grandfathered investors who have established and maintained an account in any of
the funds managed by INVESCO Funds Group, Inc. ("IFG") and distributed by A I M
Distributors, Inc. ("ADI") in Investor Class shares.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
A. SECURITY VALUATION -- Securities held by the Fund are valued at their market
value determined by the amortized cost method of valuation. If management
believes that such valuation does not reflect the securities' fair value, or
events or circumstances that may affect the value of portfolio securities are
identified by the time that the net asset value per share is determined, these
securities are valued at fair value as determined in good faith under procedures
established by the Fund's board of directors.
B. REPURCHASE AGREEMENTS -- Repurchase agreements held by the Fund are fully
collateralized by securities issued by the U.S. Government, its agencies or
instrumentalities and such collateral is in the possession of the Fund's
sub-custodian. The collateral is evaluated daily to ensure its market value
exceeds the current market value of the repurchase agreements including accrued
interest. In the event of default on the obligation to repurchase, the Fund has
the right to liquidate the collateral and apply the proceeds in satisfaction of
the obligation. In the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings.
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Security transactions
are accounted for on the trade date. Interest income, which may be comprised of
stated coupon rate, market discount, original issue discount or amortized
premium, is recorded on the accrual basis. The Fund amortizes discounts or
premiums paid on purchases of securities to the earliest put, call or maturity
date. Cost is determined on the specific identification basis.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- All of the Fund's net
investment income is distributed to shareholders by dividends declared daily and
paid monthly. Such dividends are automatically reinvested at the month-end net
asset value, unless the shareholder requests a cash payment.
E. TAX INFORMATION -- The Fund has complied, and continues to comply, with the
provisions of the Internal Revenue Code applicable to regulated investment
companies and, accordingly, has made or intends to make sufficient distributions
of net investment income and net realized capital gains, if any, to relieve it
from all federal and state income taxes and federal excise taxes. Dividends paid
by the Fund from net investment income are, for federal income tax purposes,
taxable as ordinary income to shareholders.
F. EXPENSES -- The Fund bears expenses incurred specifically on its behalf and,
in addition, the Fund bears a portion of general expenses, based on the relative
net assets of each Fund or Class.
Under an agreement between the Fund and the Fund's Custodian, certain Custodian
Fees and Expenses are reduced by credits granted by the Custodian from any
temporarily uninvested cash. Such credits are included in Fees and Expenses Paid
Indirectly in the Statement of Operations.
NOTE 2 -- INVESTMENT ADVISORY AND OTHER AGREEMENTS. IFG serves as the Fund's
investment adviser. As compensation for its services to the Fund, IFG receives
an investment advisory fee which is accrued daily at the applicable rate and
paid monthly. The fee is based on the annual rate of average net assets as
follows: 0.50% on the first $300 million of average net assets; reduced to 0.40%
on the next $200 million of average net assets; and 0.30% on average net assets
in excess of $500 million.
A Sub-Advisory Agreement between IFG and A I M Capital Management, Inc. ("AIM"),
affiliated with IFG, provides that investment decisions of the Fund are made by
AIM. Fees for such sub-advisory services are paid by IFG.
10
IFG receives a transfer agent fee from each Class at an annual rate of $29.50
per shareholder account, or, where applicable, per participant in an omnibus
account, per year. IFG may pay such fee for participants in omnibus accounts to
affiliates or third parties. Aggregate fees collected for such omnibus accounts
for the period ended August 31, 2003 amounted to $5,969 for the Fund of which
$755 were retained by IFG. Aggregate fees collected for such omnibus accounts
for the year ended May 31, 2003 amounted to $23,558 for the Fund, of which
$1,839 were retained by IFG. The fee is paid monthly at one-twelfth of the
annual fee and is based upon the actual number of accounts in existence during
each month. Effective October 1, 2003, A I M Fund Services, Inc. will assume all
responsibilities under the existing Transfer Agency Agreement.
In accordance with an Administrative Services Agreement, the Fund pays IFG an
annual fee of $10,000, plus an additional amount computed at an annual rate of
0.045% of average net assets to provide administrative, accounting and clerical
services. The fee is accrued daily and paid monthly.
IFG has voluntarily agreed to absorb and assume certain fees and expenses
incurred by the Fund for the period ended August 31, 2003 and the year ended May
31, 2003. IFG is entitled to reimbursement from a Fund that has fees and
expenses voluntarily absorbed pursuant to this arrangement if such
reimbursements do not cause a share class to exceed voluntary expense
limitations and the reimbursement is made within three years after IFG incurred
the expense.
At August 31, 2003, the reimbursement that may be potentially made by the Fund
to IFG that will expire during the years ended August 31, 2005 and 2006, are
$44,777 and $210,342, respectively.
NOTE 3 -- TRANSACTIONS WITH AFFILIATES. Certain of the Funds' officers and
directors are also officers and directors of IFG, AIM or ADI.
Each Fund has adopted a retirement plan covering all independent directors of
the Fund who will have served as an independent director for at least five years
at the time of retirement. Benefits under this plan are based on an annual rate
as defined in the plan agreement, as amended March 1, 2001. Effective November
8, 2002, the plan provides that a director, prior to retirement, may elect to
convert amounts accrued under this plan into a new deferred retirement plan and
all eligible directors have elected to convert to the new deferred retirement
plan.
Pension expenses for the period ended August 31, 2003, included in Directors'
Fees and Expenses in the Statement of Operations were $0, and pension liability
included in Accrued Expenses, in the Statement of Assets and Liabilities is
$3,158.
The independent directors have contributed to a deferred fee agreement plan,
pursuant to which they have deferred receipt of a portion of the compensation
which they would otherwise have been paid as directors of the INVESCO Funds. The
deferred amounts may be invested in the shares of any of the INVESCO Funds,
excluding the INVESCO Variable Investment Funds.
NOTE 4 -- ADDITIONAL INFORMATION. On August 12-13 2003, the Board of Directors
for the Fund approved a new investment advisory agreement and a new
administrative services agreement with A I M Advisors, Inc. The Board of
Directors is also seeking approval for a redomestication of the Fund, changing
the domicile and form of organization of the Fund (which is currently organized
as Maryland Corporation) to a Delaware statutory trust. The above is more fully
described in a proxy statement presented for shareholder consideration on August
25, 2003.
----------
Report of Independent Auditors
To the Board of Directors and Shareholders of
INVESCO Money Market Funds, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the statement of investment securities, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of INVESCO U.S. Government Money Fund
(one of the portfolios constituting INVESCO Money Market Funds, Inc., hereafter
referred to as the "Fund") at August 31, 2003, the results of each of their
operations for the periods indicated, the changes in each of their net assets
and the financial highlights for each of the periods indicated, in conformity
with accounting principles generally accepted in the United States of America.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at August 31, 2003 by correspondence with the
custodians and the application of alternative auditing procedures where
securities purchased had not been received, provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Denver, Colorado
October 9, 2003
11
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT MONEY FUND -- INVESTOR CLASS
- --------------------------------------------------------------------------------
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
PERIOD
ENDED
AUGUST 31 YEAR ENDED MAY 31
- -------------------------------------------------------------------------------------------------------------------------------
2003 (a) 2003 2002 2001 2000 1999
PER SHARE DATA
Net Asset Value -- Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===============================================================================================================================
INCOME AND DISTRIBUTIONS FROM
INVESTMENT OPERATIONS
NET INVESTMENT INCOME EARNED AND
DISTRIBUTED TO SHAREHOLDERS (b) 0.00 0.01 0.02 0.05 0.05 0.04
===============================================================================================================================
Net Asset Value -- End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===============================================================================================================================
TOTAL RETURN 0.08% (c) 0.72% 1.67% 5.24% 4.74% 4.36%
RATIOS
Net Assets -- End of Period ($000 Omitted) $ 64,883 $ 67,097 $ 75,720 $ 75,380 $ 86,060 $ 91,509
Ratio of Expenses to Average Net Assets (d)(e) 0.85% (f) 0.85% 0.85% 0.86% 0.86% 0.86%
Ratio of Net Investment Income to Average Net
Assets (e) 0.33% (f) 0.72% 1.65% 5.10% 4.63% 4.28%
(a) From June 1, 2003 to August 31, 2003, the Fund's current fiscal year-end.
(b) Net Investment Income Earned and Distributed to Shareholders aggregated
less than $0.01 per share for the period ended August 31, 2003.
(c) Based on operations for the period shown and, accordingly, is not
representative of a full year.
(d) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements (which
may include custodian fees).
(e) Various expenses of the Fund were voluntarily absorbed by IFG for the
period ended August 31, 2003 and the years ended May 31, 2003, 2002, 2001,
2000 and 1999. If such expenses had not been voluntarily absorbed, ratio
of expenses to average net assets would have been 1.25% (annualized),
1.11%, 1.04%, 1.18%, 1.16% and 1.08%, respectively, and ratio of net
investment income (loss) to average net assets would have been (0.07%)
(annualized), 0.46%, 1.46%, 4.78%, 4.33% and 4.06%, respectively.
(f) Annualized
12
OTHER INFORMATION
UNAUDITED
The table below provides information about each of the Independent and
Interested Directors. Their affiliations represent their principal occupations.
NUMBER OF
POSITION(S) HELD FUNDS IN
WITH COMPANY, FUND
TERM OF OFFICE COMPLEX OTHER
AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE TIME SERVED* DURING PAST FIVE YEARS* DIRECTOR HELD BY DIRECTOR
- --------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS
Bob R. Baker Vice Chairman of Consultant (2000-present). Formerly, 47
37 Castle Pines Dr. N. the Board President and Chief Executive
Castle Rock, Colorado (Since 2003) Officer (1988-2000) of AMC Cancer
Research Center, Denver, Colorado.
Until Mid-December 1988, Vice
Age: 67 Chairman of the Board of First
Columbia Financial Corporation,
Englewood, Colorado; formerly,
Chairman of the Board and Chief
Executive Officer of First Columbia
Financial Corporation.
Sueann Ambron, Ph.D. Director Dean of the Business School, College 47
University of Colorado (Since 2003) of Business, University of Colorado
at Denver of Denver (2000-present). Formerly,
1250 14th Street President and Chief Executive
Denver, Colorado Officer of Avulet, Inc., Sunnyvale,
California (1998-1999); and formerly
Vice President and General Manager,
Age: 58 Multimedia Services Division,
Motorola, Inc., Schaumburg,
Illinois (1996-1998).
Victor L. Andrews, Ph.D. Director Professor Emeritus, Chairman 47
34 Seawatch Drive Emeritus and Chairman and CFO of the
Savannah, Georgia Roundtable of the Department of
Finance of Georgia State University;
and President, Andrews Financial
Associates, Inc. (consulting firm).
Age: 73 Formerly, member of the faculties of
the Harvard Business School; and the
Sloan School of Management of MIT.
Lawrence H. Budner Director Trust Consultant. Formerly, Senior 47
7608 Glen Albens Circle Vice President and Senior Trust
Dallas, Texas Officer of InterFirst Bank, Dallas,
Texas.
Age: 73
13
OTHER INFORMATION
UNAUDITED
NUMBER OF
POSITION(S) HELD FUNDS IN
WITH COMPANY, FUND
TERM OF OFFICE COMPLEX OTHER
AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE TIME SERVED* DURING PAST FIVE YEARS* DIRECTOR HELD BY DIRECTOR
- --------------------------------------------------------------------------------------------------------------------
James T. Bunch Director Co-President and Founder of Green,
3600 Republic Plaza (since 2000) Manning & Bunch, Ltd., Denver, 47
370 Seventeenth Street Colorado (1988-present) (investment
Denver, Colorado banking firm); Director, Policy
Studios Inc. and Van Gilder
Insurance Corporation. Formerly,
Age: 60 General Counsel and Director of
Boettcher & Company, Denver,
Colorado; and formerly, Chairman and
Managing Partner of Davis, Graham &
Stubbs, Denver, Colorado.
Gerald J. Lewis Director Chairman of Lawsuit Resolution 47 Director of General
701 "B" Street (since 2000) Services, San Diego, California Chemical Group, Inc.,
Suite 2100 (1987-present). Formerly, Associate Hampdon, New
San Diego, California Justice of the California Court of Hampshire (1996-
Appeals; and of Counsel, Latham & present). Director of
Watkins, San Diego, California Wheelabrator
Age: 69 (1987-1997). Technologies, Inc.,
Fisher Scientific,
Inc., Henley
Manufacturing, Inc.,
and California
Coastal Properties,
Inc.
John W. McIntyre Director Retired. Trustee of Gables 47
7 Piedmont Center Residential Trust. Trustee and
Suite 100 Chairman of the J.M. Tull
Atlanta, Georgia Charitable Foundation; Director of
Kaiser Foundation Health Plans of
Georgia, Inc. Formerly, Vice
Age: 72 Chairman of the Board of Directors
of The Citizens and Southern
Corporation and Chairman of the
Board and Chief Executive Officer
of The Citizens and Southern Georgia
Corporation and The Citizens and
Southern National Bank. Formerly,
Trustee of INVESCO Global Health
Sciences Fund and Trustee of
Employee's Retirement System
of Georgia, Emory University.
Larry Soll, Ph. D. Director Retired. Formerly, Chairman of the 47 Director of Synergen
2358 Sunshine Canyon Dr. (since 1997) Board (1987-1994), Chief Executive since incorporation
Boulder, Colorado Officer (1982-1989 and 1993-1994) in 1982; Director of
and President (1982-1989) of Isis Pharmaceuticals,
Synergen Inc.; and formerly, Trustee Inc.
Age: 61 of INVESCO Global Health Sciences
Fund.
14
OTHER INFORMATION
UNAUDITED
NUMBER OF
POSITION(S) HELD FUNDS IN
WITH COMPANY, FUND
TERM OF OFFICE COMPLEX OTHER
AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE TIME SERVED* DURING PAST FIVE YEARS* DIRECTOR HELD BY DIRECTOR
- --------------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTORS AND OFFICERS
These directors are "interested persons" of IFG as defined in the Act, and they
are interested persons by virtue of the fact that he/she is an officer or
director of IFG, IDI or an affiliate of IFG.
Mark H. Williamson Chairman of the President and Chief Executive 47
4350 South Monaco Street Board (since Officer A I M Investment Management
Denver, Colorado 1999). Formerly, and Chief Executive Officer of the
President A I M Division of AMVESCAP PLC
(1998-2002); and (2003-present). Formerly, Chief
Age: 52 Chief Executive Executive Officer, Managed Products
Officer Division, AMVESCAP PLC (2001-2002).
(1998-2002). Formerly, Chairman of the Board
(1998-2002), President (1998-2002),
and Chief Executive Officer
(1998-2002) of INVESCO Funds Group,
Inc. and of INVESCO Distributors,
Inc. Formerly, Chief Operating
Officer and Chairman of the Board of
INVESCO Global Health Sciences Fund;
formerly, Chairman and Chief
Executive Officer of NationsBanc
Advisors, Inc.; and formerly,
Chairman of NationsBanc Investments,
Inc.
Raymond R. Cunningham President President (2001-present) and Chief 47 Director of INVESCO
4350 South Monaco Street (2001-present), Executive Officer (2003-present) of Funds Group, Inc. and
Denver, Colorado Chief Executive INVESCO Funds Group, Inc.; Chairman Chairman of the Board
Officer of the Board (2003-present), of INVESCO
(2003-present) President (2003-present), and Chief Distributors, Inc.
Age: 52 and Director Executive Officer (2003-present) of
(2001-present). INVESCO Distributors, Inc.
Formerly, Vice Formerly, Chief Operating Officer
President (2001-2003) and Senior Vice
(2001-2002). President (1999-2002) of INVESCO
Funds Group, Inc. and INVESCO
Distributors, Inc.; and Formerly,
Senior Vice President of GT Global -
North America (1992-1998).
Richard W. Healey Director Senior Vice President of INVESCO 39 Director of INVESCO
4350 South Monaco Street (since 2000) Funds Group, Inc.; Senior Vice Funds Group, Inc. and
Denver, Colorado President of INVESCO Distributors, INVESCO Distributors,
Inc. Formerly, Senior Vice President Inc.
of GT Global - North America
Age: 48 (1996-1998) and The Boston Company
(1993-1996).
15
OTHER INFORMATION
UNAUDITED
NUMBER OF
POSITION(S) HELD FUNDS IN
WITH COMPANY, FUND
TERM OF OFFICE COMPLEX OTHER
AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE TIME SERVED* DURING PAST FIVE YEARS* DIRECTOR HELD BY DIRECTOR
- --------------------------------------------------------------------------------------------------------------------
Glen A. Payne Secretary Senior Vice President, General
4350 South Monaco Street Counsel and Secretary of INVESCO
Denver, Colorado Funds Group, Inc.; Senior Vice
President, Secretary and General
Counsel of INVESCO Distributors,
Age: 55 Inc. Formerly, Secretary of INVESCO
Global Health Sciences Fund; General
Counsel of INVESCO Trust Company
(1989-1998); and employee of a U.S.
regulatory agency, Washington, D.C.
(1973-1989).
Ronald L. Grooms Chief Accounting Senior Vice President and Treasurer Director of INVESCO
4350 South Monaco Street Officer, Chief of INVESCO Funds Group, Inc.; and Funds Group, Inc. and
Denver, Colorado Financial Senior Vice President and Treasurer INVESCO Distributors,
Officer and of INVESCO Distributors, Inc. Inc.
Treasurer Formerly, Treasurer and Principal
Age: 56 Financial and Accounting Officer of
INVESCO Global Health Sciences Fund;
and Senior Vice President and
Treasurer of INVESCO Trust Company
(1988-1998).
William J. Galvin, Jr. Assistant Senior Vice President and Assistant Director of INVESCO
4350 South Monaco Street Secretary Secretary of INVESCO Funds Group, Funds Group, Inc. and
Denver, Colorado Inc.; and Senior Vice President and INVESCO Distributors,
Assistant Secretary of INVESCO Inc.
Distributors, Inc. Formerly, Trust
Age: 47 Officer of INVESCO Trust Company
(1995-1998).
Pamela J. Piro Assistant Vice President and Assistant
4350 South Monaco Street Treasurer Treasurer of INVESCO Funds Group,
Denver, Colorado Inc.; and Assistant Treasurer of
INVESCO Distributors, Inc. Formerly,
Assistant Vice President
Age: 43 (1996-1997).
Tane T. Tyler Assistant Vice President and Assistant General
4350 South Monaco Street Secretary (since Counsel of INVESCO Funds Group, Inc.
Denver, Colorado 2002)
Age: 38
* Except as otherwise indicated, each individual has held the position(s) shown
for at least the last five years.
The Statement of Additional Information ("SAI") includes additional information
about Fund directors and is available, without charge, upon request. To obtain a
free copy of the current SAI, call 1-800-525-8085.
For dividends paid during the fiscal year ended May 31, 2003 and the period
ended August 31, 2003, the Funds designate qualified dividend income to the
maximum extent allowable.
16
[INVESCO LOGO APPEARS HERE]
- --Registered Trademark--
1-800-525-8085
1-800-959-4246
Automated AIM Investor Line: 1-800-246-5463
AIMinvestments.com
Effective 7/1/03 A I M Distributors, Inc., (Servicemark)
became the distributor of the retail INVESCO funds
11 Greenway Plaza, Suite 100, Houston, Texas 77046
This information must be preceded or accompanied
by a current prospectus.
AMF 900530 9/03 I-MMA-AR-1
ITEM 2. CODE OF ETHICS
As of the end of the period covered by the report, Registrant had adopted a code
of ethics (the "Code") that applied to the Registrant's principal executive
officer ("PEO") and principal financial officer ("PFO"). There were no
amendments to the Code during the period covered by the report. During the
period covered by this report, Registrant did not grant any waiver, and does not
believe it granted an implicit waiver, from a provision of the Code that is
applicable to the PEO and PFO. However, it should be noted that Raymond
Cunningham was the PEO of Registrant on August 31, 2003. Since the end of
the period covered by this report, the Securities and Exchange Commission, the
New York State Attorney General's Office and the Colorado Attorney General's
Office filed civil actions against INVESCO Funds Group, Inc. and Raymond
Cunningham alleging violations of various federal and state laws due to
selectively permitting market timing.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Audit Committee of the Boards of Directors of the INVESCO Mutual Funds is
composed of four of the Fund's directors who are not affiliated with the Funds'
investment adviser. All members are independent. The Board has determined that
each of the Committee members is "financially literate" and that at least two
members have "accounting or related financial management expertise" as used in
the New York Stock Exchange definitions of the terms.
Under the recently enacted Sarbanes-Oxley Act, if the Boards of Directors have
not determined that an "audit committee financial expert," a new term defined by
the SEC and based on criteria contained in the Act, is serving on the Audit
Committee, it must disclose this fact and explain why it does not have such an
expert. The Boards of Directors have determined that none of the members of the
Audit Committee meet the technical requirements of the definition. Moreover, the
Boards believe that for the following reasons it is not necessary for registered
investment companies such as the Funds, with an audit committee that meets the
New York Stock Exchange requirements of financial literacy, to have a "financial
expert" as a member of the committee.
1. The financial statements of and accounting principles applying to
registered investment companies such as the Funds are relatively
simple, straightforward and transparent compared to operating
companies. The significant accounting issues are valuation of
securities and other assets (regulated under the Investment Company
Act of 1940 and computed daily), accrual of expenses, allocation of
joint expenses shared with other entities such as insurance premiums
and disclosures of all related party transactions. Equally important
is a knowledge of the tax laws applying to registered investment
companies. None of the accounting issues involving corporate America
that have received recent publicity such as sophisticated derivative
transactions and special purpose entities are present in financial
reporting for registered investment companies.
2. During the years that the Funds has been filing financial reports
under the 1940 Act since their inception, there has never been a
requirement for a financial report or statement to be restated.
3. The current members of the Audit Committee have the experience of 23.5
years serving on this Audit Committee and in the Boards' judgement,
through this experience and experience with other public corporation's
financial affairs, they have an understanding of the relevant
generally accepted accounting principles governing the Funds'
financial statements, tax laws applying to the Funds, the Funds
internal accounting controls and audit committee functions necessary
to satisfy the objectives of the Sarbanes-Oxley Act with respect to
the financial statements, auditing process and internal controls of
the Funds.
4. The Audit Committee has the capability of employing a consultant who
satisfies the technical definition of a "financial expert" and will do
so from time to time if circumstances warrant."
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable to this filing.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable to this filing.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not Applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable to this filing.
ITEM 10. 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 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
that has materially affected, or is reasonably likely to materially
affect, the Registrant's internal control over financial reporting.
ITEM 11. EXHIBITS
11(a)(1) Code of Ethics.
11(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.
Certifications dated October 31, 2003 of principal executive
officer and principal financial officer as required by Rule
30a-2(a) under the Investment Company Act of 1940.
11(a)(3) Not applicable.
11(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 Money Market Funds, Inc.
(Formerly: INVESCO Money Market Funds, Inc.)
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
11(a)(1) Code of Ethics.
11(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.
Certifications dated October 31, 2003 of principal executive
officer and principal financial officer as required by Rule
30a-2(a) under the Investment Company Act of 1940.
11(a)(3) Not applicable.
11(b) Certifications of principal executive officer and principal
financial officer as required by Rule 30a-2(b) under the
Investment Company Act of 1940.