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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 811-09913
AIM Counselor Series Trust
(Exact name of registrant as specified in charter)
11 Greenway Plaza, Suite 100 Houston, Texas 77046
(Address of principal executive offices) (Zip code)
Philip A. Taylor 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____
Date of reporting period: 8/31/06
Item 1. Reports to Stockholders.
AIM ADVANTAGE HEALTH SCIENCES FUND
Annual Report to Shareholders o August 31, 2006
[COVER GLOBE IMAGE]
SECTOR EQUITY
Sectors
Table of Contents
Supplemental Information 2
Letters to Shareholders 3
Performance Summary 5
Management Discussion 5
Fund Expenses 7
Long-term Fund Performance 8
Approval of Advisory Agreement 10
Schedule of Investments F-1
Financial Statements F-4
Notes to Financial Statements F-8
Financial Highlights F-16
Auditor's Report F-20
Tax Disclosures F-21
Trustees and Officers F-22
[AIM INVESTMENT SOLUTIONS]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[DOMESTIC [INTERNATIONAL/ [SECTOR
EQUITY] GLOBAL EQUITY] EQUITY]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[FIXED [ALLOCATION [DIVERSIFIED
INCOME] SOLUTIONS] PORTFOLIOS]
[AIM INVESTMENTS LOGO APPEARS HERE]
- --Registered Trademark--
AIM ADVANTAGE HEALTH SCIENCES FUND
AIM ADVANTAGE HEALTH SCIENCES FUND seeks capital growth.
o Unless otherwise stated, information presented in this report is as of August 31, 2006, and is based on total net assets.
ABOUT SHARE CLASSES ance due to higher brokerage commissions net asset values for shareholder
and may also result in taxable gain transactions and the returns based on
o Class B shares are not available as an distributions to the Fund's those net asset values may differ from
investment for retirement plans shareholders. the net asset values and returns
maintained pursuant to Section 401 of reported in the Financial Highlights.
the Internal Revenue Code, including o The Fund is non-diversified and a
401(k) plans, money purchase pension single-sector mutual fund which increase o Industry classifications used in this
plans and profit sharing plans. Plans the risk of wider share price report are generally according to the
that had existing accounts invested in fluctuation. Global Industry Classification Standard,
Class B shares prior to September 30, which was developed by and is the
2003, will continue to be allowed to ABOUT INDEXES USED IN THIS REPORT exclusive property and a service mark of
make additional purchases. Morgan Stanley Capital International
o The unmanaged LIPPER HEALTH/ Inc. and Standard & Poor's.
PRINCIPAL RISKS OF INVESTING IN THE FUND BIOTECHNOLOGY FUNDS INDEX represents an
average of the 30 largest health and The Fund provides a complete list of its
o Foreign securities have additional biotechnology funds tracked by Lipper holdings four times in each fiscal year,
risks, including exchange rate changes, Inc., an independent mutual fund at the quarterends. For the second and
political and economic upheaval, the performance monitor. fourth quarters, the lists appear in the
relative lack of information about these Fund's semiannual and annual reports to
companies, relatively low market o The MORGAN STANLEY HEALTH CARE PRODUCT shareholders. For the first and third
liquidity and the potential lack of INDEX is an equal-dollar weighted index quarters, the Fund files the lists with
strict financial and accounting controls of companies involved in the business of the Securities and Exchange Commission
and standards. pharmaceuticals, including biotechnology (SEC) on Form N-Q. The most recent list
and medical technology. of portfolio holdings is available at
o Investing in a fund that invests in AIMinvestments.com. From our home page,
smaller companies involved risks not o The unmanaged STANDARD & POOR'S click on Products & Performance, then
associated with investing in more COMPOSITE INDEX OF 500 STOCKS (the S&P Mutual Funds, then Fund Overview. Select
established companies, such as business 500--Registered Trademark-- Index) is an your Fund from the drop-down menu and
risk, stock price fluctuations and index of common stocks frequently used click on Complete Quarterly Holdings.
illiquidity. as a general measure of U.S. stock Shareholders can also look up the Fund's
market performance. Forms N-Q on the SEC Web site at
o Equity stocks are subject to market sec.gov. Copies of the Fund's Forms N-Q
risk, meaning equity stock prices vary o A direct investment cannot be made in may be reviewed and copied at the SEC
and may fall, thus reducing the value an index. Unless otherwise indicated, Public Reference Room in Washington,
of the Fund's investments. Certain stocks index results include reinvested D.C. You can obtain information on the
selected for the Fund's portfolio may dividends, and they do not reflect sales operation of the Public Reference Room,
decline in value more than the overall charges. Performance of an index of including information about duplicating
stock market. funds reflects fund expenses; fee charges, by calling 202-942-8090 or
performance of a market index does not. 800-732-0330, or by electronic request
o The Fund may use enhanced investment at the following e-mail address:
techniques such as leverage, o The Fund is not managed to track the publicinfo@sec.gov. The SEC file numbers
derivatives, and short sales. Leveraging performance of any particular index, for the Fund are 811-09913 and
entails special risks such as magnifying including the indexes defined here, and 333-36074.
changes in the value of the portfolio's consequently, the performance of the
securities. Derivatives are subject to Fund may deviate significantly from the A description of the policies and
counter party risk-the risk that the performance of the indexes. procedures that the Fund uses to
other party will not complete the determine how to vote proxies relating
transaction with the Fund. Short sales OTHER INFORMATION to portfolio securities is available
carry the risk of buying a security back without charge, upon request, from our
at a higher price at which the Fund's o The returns shown in the management's Client Services department at
exposure is unlimited. discussion of Fund performance are based 800-959-4246 or on the AIM Web site,
on net asset values calculated for AIMinvestments.com. On the home page,
o Portfolio turnover is greater than shareholder transactions. Generally scroll down and click on AIM Funds Proxy
most funds, which may affect the Fund's accepted accounting principles require Policy. The information is also
perform- adjustments to be made to the net assets available on the SEC Web site, sec.gov.
of the Fund at period end for financial
reporting purposes, and as such, the Information regarding how the Fund voted
proxies related to its portfolio
securities during the 12 months ended
June 30, 2006, is available at our Web
site. Go to AIMinvestments.com, access
the About Us tab, click on Required
Notices and then click on Proxy Voting
Activity. Next, select the Fund from the
drop-down menu. The information is also
available on the SEC Web site, sec.gov.
================================================================================= =========================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND FUND NASDAQ SYMBOLS
PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND
EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Class A Shares IAGHX
================================================================================= Class B Shares IGHBX
Class C Shares IGHCX
====================================================== =========================================
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
======================================================
AIMinvestments.com
2
AIM ADVANTAGE HEALTH SCIENCES FUND
Dear Shareholders of The AIM Family of Funds--Registered
Trademark--:
We're pleased to provide you with this report, which
[TAYLOR includes a discussion of how your Fund was managed during
PHOTO] the period under review in this report, and what factors
affected its performance. That discussion begins on page 5.
It's been said nothing is certain but death and taxes. We
PHILIP TAYLOR would venture to add that one other thing is certain:
Markets change--and change often--in the short term, in
response to constantly changing economic, geopolitical and
other factors. For example, domestic and global markets were
generally strong from November 2005 through April 2006, as
economic growth appeared robust and inflation seemed
contained. But as new economic data suggested inflation
might be higher than previously estimated in the U.S. and
elsewhere, those same markets often demonstrated weakness
and volatility in the May-August period.
While we can't do anything about the ambiguity and
uncertainty surrounding death and taxes, we can suggest an
alternative to reacting to fluctuating short-term market
conditions: Maintain a diversified portfolio. AIM
Investments--Registered Trademark-- can help by offering a
broad product line that gives your financial advisor the
necessary tools to build a portfolio that's right for you
regardless of market conditions. AIM offers a comprehensive
range of retail mutual funds, including domestic, global and
international equity funds, taxable and tax-exempt
fixed-income funds, and a variety of allocation
portfolios--with varied risk and return characteristics to
match your needs. We maintain this extensive set of product
solutions for one reason: We believe in the value of
comprehensive, diversified investment portfolios.
We've changed the look of our annual reports to reflect
that belief. In our marketing and now our shareholder
literature, we represent a fully diversified portfolio
graphically as an allocation pie chart and assign each asset
class a color--green for domestic equity, blue for
international, orange for sector and purple for fixed
income. A legend in the left column illustrates the
methodology. Your report cover now shows your Fund's asset
class color, plus the asset class and sub-asset class name
are shown in the upper-left corner. The reason for these
changes is to help you better understand where your Fund
fits into your overall portfolio.
AIM has a variety of investment solutions, and knowing
which ones are right for your portfolio is complex. That's
why we also believe in the value of a trusted financial
advisor who will work with you to create an investment plan
you can stick with for the long term. Your financial advisor
can help allocate your portfolio appropriately and review
your investments regularly to ensure they remain suitable as
your financial situation changes. While there are no
guarantees with any investment program, a long-term plan
that's based on your financial goals, risk tolerance and
time horizon is more likely to keep you and your investments
on track.
At a recent meeting of the AIM Funds board, Robert H.
Graham relinquished his position as president of AIM Funds,
a post customarily held by the chief executive officer of
AIM Investments. Bob--one of three founders of AIM
Investments in 1976--has a well-earned reputation for being
one of the most knowledgeable leaders in the mutual fund
industry. As I assume Bob's previous responsibilities, I'm
pleased that he'll remain actively involved as the vice
chair of AIM Funds.
OUR COMMITMENT TO YOU
In the short term, the one sure thing about markets is their
unpredictability. While past performance cannot guarantee
comparable future results, we believe that staying invested
for the long term with a thoughtful plan offers the best
opportunity for weathering that unpredictability. We at AIM
Investments remain committed to building enduring solutions
to help you achieve your investment goals, and we're pleased
you've placed your trust in us.
Information about investing, the markets and your Fund is
always available on our Web site, AIMinvestments.com. If you
have questions about your individual account, we invite you
to contact one of our highly trained client services
representatives at 800-959-4246.
Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
President -- AIM Funds
CEO, AIM Investments
October 18, 2006
AIM Investments is a registered service mark of A I M
Management Group Inc. A I M Advisors, Inc. and A I M Capital
Management, Inc. are the investment advisors. A I M
Distributors, Inc. is the distributor for the retail funds
represented by AIM Investments.
3
AIM ADVANTAGE HEALTH SCIENCES FUND
Dear Fellow AIM Fund Shareholders:
At our meeting at the end of June, your Board completed its
[CROCKETT comprehensive review* of each fund's advisory agreement with
PHOTO] A I M Advisors, Inc. (AIM) to make certain your interests
are being served in terms of fees, performance and
operations.
Looking ahead, your Board finds many reasons to be
BRUCE L. CROCKETT positive about AIM's management and strategic direction.
Most importantly, AIM management's investment management
discipline is paying off in terms of improved overall
performance. While work remains to be done, AIM's
complex-wide, asset-weighted mutual fund performance for the
trailing one-, three- and five-year periods is at its
highest since 2000 for the periods ended August 31, 2006. We
are also pleased with AIM management's efforts to seek more
cost-effective ways of delivering superior service.
In addition, AIM is realizing the benefits of belonging
to a leading independent global investment management
organization in its parent company, AMVESCAP PLC, which is
dedicated to helping people worldwide build their financial
security. AMVESCAP managed approximately $429 billion
globally as of August 31, 2006, operating under the AIM,
INVESCO, AIM Trimark, INVESCO PERPETUAL and Atlantic Trust
brands. These companies are home to an abundance of
investment talent that is gradually being integrated and
leveraged into centers of excellence, each focusing on a
given market segment or asset class. Over the next few
years, your Board will be meeting at these various centers
of excellence to learn about their progress and how they can
serve you by enhancing performance and reducing costs.
The seven new AIM funds--which include Asian funds,
structured U.S. equity funds and specialized bond funds--are
an early example of the kind of opportunities the AMVESCAP
organization can provide AIM clients. More information on
these funds can be found on AIM's Web site.
Your Board is very pleased with the overall direction and
progress of the AIM Funds. We're working closely and
effectively with AIM's management to continue this momentum.
As always, your Board is eager to hear your views on how we
might better serve you. Please send your comments in a
letter addressed to me at AIM Investments, AIM Investments
Tower, 11 Greenway Plaza, Suite 100, Houston TX 77046.
Sincerely,
/s/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board
October 18, 2006
*To learn more about all the factors we considered before
approving each fund's advisory agreement, go to the
"Products & Performance" tab at the AIM Web site
(AIMinvestments.com) and click on "Investment Advisory
Agreement Renewals." The approval of advisory agreement
information for your Fund is also included in this annual
report on pages 10-11.
AIM ADVANTAGE HEALTH SCIENCES FUND
MANAGEMENT'S DISCUSSION The Fund's investments also include
OF FUND PERFORMANCE securities of privately held venture
================================================================================ capital companies considered illiquid.
PERFORMANCE SUMMARY We seek to manage risk by generally:
AIM Advantage Health Sciences Fund posted gains and excluding sales charges, o Limiting investments in a single
outperformed all of its benchmark indexes for the fiscal year ended August stock.
31, 2006. The Fund outperformed the S&P 500 Index as pharmaceutical stocks
outperformed during the last four months of the reporting period. The Fund o Diversifying across industries.
outperformed its style-specific index, as represented by the Morgan Stanley
Health Care Product Index, aided by stock selection mostly within health care o Monitoring political trends that
equipment and pharmaceuticals. could negatively affect a specific
industry.
Your Fund's long-term performance appears on pages 8 and 9.
o We may sell a holding when:
FUND VS. INDEXES
o We identify a more attractive
Total returns, 8/31/05-8/31/06, excluding applicable sales charges. If sales investment opportunity.
charges were included, returns would be lower.
o We see a deterioration of a company's
Class A Shares 9.10% fundamentals.
Class B Shares 8.25 o A company fails to capitalize on a
market opportunity.
Class C Shares 8.26
o A change in management occurs.
S&P 500 Index (Broad Market Index) 8.87
MARKET CONDITIONS AND YOUR FUND
Morgan Stanley Health Care Product Index (Style-specific Index) 6.97
Despite widespread concern about the
Lipper Health/Biotechnology Funds Index (Peer Group Index) 4.25 potential impact of rising short-term
interest rates, historically high energy
================================================================================ prices, ongoing concern about a housing
bubble and the long-term economic
HOW WE INVEST mercial potential of each company's effects of two devastating Gulf Coast
current and prospective products, hurricanes, equity markets generally
We seek health care stocks of all market especially products that meet otherwise generated positive returns for the
capitalizations we believe are unfilled market segments. fiscal year. The U.S. Federal Reserve
attractively priced and have the Board (the Fed) continued its tightening
potential to benefit from long-term In addition, we may short policy, raising the key federal funds
earnings and cash flow growth. stocks--borrowing a stock when we rate to 5.25% as Ben Bernanke became the
believe it is likely to decline in new Fed Chairman. After 17 consecutive
We typically invest in four segments value, later replacing it at a lower rate increases, the Fed left its key
of the health care sector: price, allowing us to profit from the policy rate unchanged at 5.25% at its
pharmaceuticals, biotechnology, medical decline. We may, for example, short August 8, 2006, meeting--the first
technology and health services. We look stocks of companies that our research policy meeting without a hike since May
for companies that are financially suggests are facing product 2004.
healthy and, in our opinion, likely to obsolescence.
sustain their profitability. We assess Against this backdrop, health care
the long-term com- was one of the worst performing sectors
for the first quarter of 2006. However,
========================================== ========================================== this trend reversed when the market
rotated toward more defensive stocks
PORTFOLIO COMPOSITION TOP 10 EQUITY LONG HOLDINGS* beginning in May. Strong stock selection
in the health care equipment,
By industry, based on total investments 1. Roche Holding A.G. pharmaceuticals and health care
Long and short positions (Switzerland) 6.3% providers and services industries helped
the Fund outperform its style-specific
Pharmaceuticals 25.60% 2. Johnson & Johnson 4.9 index while the biotechnology industries
detracted from performance.
Biotechnology 19.1 3. Gilead Sciences, Inc. 4.3
Health Care Equipment 17.0 4. Novartis A.G.-ADR (continued)
(Switzerland) 4.2
Health Care Services 9.0
5. Genzyme Corp. 4.2
Life Sciences Tools & Services 6.7
6. DaVita, Inc. 3.5
Managed Health Care 5.7
7. Mentor Corp. 3.4
Health Care Technology 2.2
8. Allergan, Inc. 3.2
Industrial Conglomerates 1.6
9. Medco Health Solutions, Inc. 3.1
Drug Retail 1.5
10. Amgen Inc. 2.9
Health Care Facilities 0.8
Total Net Assets $149.5 million
Life & Health Insurance 0.4
Number of Long Holdings* 101 The Fund's holdings are subject to
Health Care Supplies 0.4 change, and there is no assurance that
Number of Short Holdings 2 the Fund will continue to hold any
Health Care Distributors 0.4 particular security.
Money Market Holdings 9.6 *Excluding money market fund holdings.
========================================== ==========================================
5
AIM ADVANTAGE HEALTH SCIENCES FUND
Throughout the year, two of the We decreased our foreign exposure by Derek M. Taner
Fund's privately held medical device selling off the majority of Japanese
companies, DEXCOM and MASIMO, were among holdings as these stocks hit our price Chartered Financial
our top contributors to performance. targets and valuations became less [TANER Analyst, portfolio
Dexcom, which makes monitoring systems compelling. In addition, we increased PHOTO] manager, is manager
for diabetic patients, continued to do portfolio concentration by decreasing of AIM Advantage
well since its initial public offering the number of holdings, including money Health Sciences
last year amid increasing prospects that market funds. At the industry level, we Fund. Mr. Taner
its product may get Food and Drug reduced our exposure to pharmaceuticals began his investment career in 1993 with
Administration (FDA) approval. We sold and increased biotechnology and health another employer, where he worked as a
the position as the stock reached our care services. Finally, we positioned fixed income analyst, assistant
price target. Masimo, which develops the Fund in anticipation of the impact portfolio manager and manager of a
products for the noninvasive monitoring of the Medicare Modernization Act. This health care fund. Mr. Taner assumed his
of patient vital signs, was a notable landmark legislation, passed in 2003, current position with AIM in 2005. He
contributor as investors were encouraged and effective January 2006, provided earned a B.S. in accounting and an
by its recent victory in a court case seniors and individuals with M.B.A. from the Haas School of Business
involving patent infringement and news disabilities with a prescription drug at the University of California at
of an upcoming initial public offering. benefit and improved health care Berkeley.
benefits under Medicare.
One of the Fund's top holdings, ROCHE Assisted by the Global Health Care Team
HOLDING, a Swiss drug company, was also IN CLOSING
a strong contributor to our performance
for the period. The company has very few We would like to thank any new
expiring patents. It remained one of our shareholders who joined the Fund during
top performing stocks due to its the period and thank existing
significant ownership of Genentech, a shareholders for their continued
biotech company that continued to see commitment to AIM Advantage Health
positive indications related to its Sciences Fund.
cancer drug Avastin--Registered
Trademark--. THE VIEWS AND OPINIONS EXPRESSED IN
MANAGEMENT'S DISCUSSION OF FUND
Despite positive performance, a few PERFORMANCE ARE THOSE OF A I M ADVISORS,
holdings detracted from Fund INC. THESE VIEWS AND OPINIONS ARE
performance. NABI BIOPHARMACEUTICALS, a SUBJECT TO CHANGE AT ANY TIME BASED ON
small biotechnology company, was a FACTORS SUCH AS MARKET AND ECONOMIC
performance detractor during the period. CONDITIONS. THESE VIEWS AND OPINIONS MAY
Shares of the stock declined after the NOT BE RELIED UPON AS INVESTMENT ADVICE
company announced that its flagship OR RECOMMENDATIONS, OR AS AN OFFER FOR A
product, StaphVAX--Registered PARTICULAR SECURITY. THE INFORMATION IS
Trademark--, had a disappointing NOT A COMPLETE ANALYSIS OF EVERY ASPECT
clinical trial. We sold the stock after OF ANY MARKET, COUNTRY, INDUSTRY,
the announcement. In addition, TARO SECURITY OR THE FUND. STATEMENTS OF FACT
PHARMACEUTICAL INDUSTRIES, a generic ARE FROM SOURCES CONSIDERED RELIABLE,
pharmaceutical producer, reported BUT A I M ADVISORS, INC. MAKES NO
disappointing earnings. Generics in REPRESENTATION OR WARRANTY AS TO THEIR
general came under pressure due to a COMPLETENESS OR ACCURACY. ALTHOUGH
weaker pricing environment. Taro was HISTORICAL PERFORMANCE IS NO GUARANTEE
affected by this trend as well as a lack OF FUTURE RESULTS, THESE INSIGHTS MAY
of generic drug approvals. This resulted HELP YOU UNDERSTAND OUR INVESTMENT
in the sale of all shares from the MANAGEMENT PHILOSOPHY.
portfolio.
See important Fund and index
We marginally used our ability to disclosures on the inside front cover.
sell short during the
period--approximately 2% of
assets--which resulted in mixed
performance. We also used our ability to
leverage, as much as 15% of Fund assets,
to enhance Fund returns during the
period. We borrowed through a line of
credit and our leveraging strategy was a
positive contributor to Fund
performance.
FOR A PRESENTATION OF YOUR FUND'S
LONG-TERM PERFORMANCE, PLEASE SEE
PAGES 8 AND 9.
6
AIM ADVANTAGE HEALTH SCIENCES FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE together with the amount you invested, The hypothetical account values and
to estimate the expenses that you paid expenses may not be used to estimate the
As a shareholder of the Fund, you incur over the period. Simply divide your actual ending account balance or
two types of costs: (1) transaction account value by $1,000 (for example, an expenses you paid for the period. You
costs, which may include sales charges $8,600 account value divided by $1,000 = may use this information to compare the
(loads) on purchase payments; contingent 8.6), then multiply the result by the ongoing costs of investing in the Fund
deferred sales charges on redemptions; number in the table under the heading and other funds. To do so, compare this
and redemption fees, if any; and (2) entitled "Actual Expenses Paid During 5% hypothetical example with the 5%
ongoing costs, including management Period" to estimate the expenses you hypothetical examples that appear in the
fees; distribution and/or service fees paid on your account during this period. shareholder reports of the other funds.
(12b-1); and other Fund expenses. This
example is intended to help you HYPOTHETICAL EXAMPLE FOR Please note that the expenses shown
understand your ongoing costs (in COMPARISON PURPOSES in the table are meant to highlight your
dollars) of investing in the Fund and to ongoing costs only and do not reflect
compare these costs with ongoing costs The table below also provides any transactional costs, such as sales
of investing in other mutual funds. The information about hypothetical account charges (loads) on purchase payments,
example is based on an investment of values and hypothetical expenses based contingent deferred sales charges on
$1,000 invested at the beginning of the on the Fund's actual expense ratio and redemptions, and redemption fees, if
period and held for the entire period an assumed rate of return of 5% per year any. Therefore, the hypothetical
March 1, 2006, through August 31, 2006. before expenses, which is not the Fund's information is useful in comparing
actual return. The Fund's actual ongoing costs only, and will not help
ACTUAL EXPENSES cumulative total returns at net asset you determine the relative total costs
value after expenses for the six months of owning different funds. In addition,
The table below provides information ended August 31, 2006, appear in the if these transactional costs were
about actual account values and actual table "Cumulative Total Returns" on page included, your costs would have been
expenses. You may use the information in 9. higher.
this table,
====================================================================================================================================
ACTUAL HYPOTHETICAL
(5% ANNUAL RETURN BEFORE EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (3/1/06) (8/31/06)(1) PERIOD(2) (8/31/06) PERIOD(2) RATIO
A $1,000.00 $967.00 $16.70 $1,008.23 $17.05 3.37%
B 1,000.00 962.70 20.38 1,004.44 20.82 4.12
C 1,000.00 963.20 20.39 1,004.44 20.82 4.12
(1) The actual ending account value is based on the actual total return of the Fund for the period March 1, 2006, through August
31, 2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's
expense ratio and a hypothetical annual return of 5% before expenses. The Fund's actual cumulative total returns at net
asset value after expenses for the six months ended August 31, 2006, appear in the table "Cumulative Total Returns" on page
9.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the
period, multiplied by 184/365 to reflect the most recent fiscal half year.
====================================================================================================================================
7
AIM ADVANTAGE HEALTH SCIENCES FUND
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
Fund data from 1/23/92, index data from 1/31/92
<Table>
================================================================================
[MOUNTAIN CHART]
DATE AIM ADVANTAGE HEALTH- S&P 500 LIPPER HEALTH/
SCIENCES FUND INDEX BIOTECHNOLOGY FUNDS
CLASS A SHARES INDEX
1/23/92 $ 9450
1/92 9457 $10000 $10000
2/92 9294 10129 9549
3/92 8935 9933 8939
4/92 8597 10224 8362
5/92 8793 10274 8588
6/92 8325 10121 8248
7/92 8759 10534 8674
8/92 8454 10319 8384
9/92 8352 10440 8125
10/92 8562 10476 8399
11/92 8969 10832 9013
12/92 8939 10965 9036
1/93 8783 11056 8646
2/93 7720 11207 7514
3/93 7638 11443 7639
4/93 7549 11167 7695
5/93 7720 11465 8127
6/93 7693 11498 8128
7/93 7557 11452 7926
8/93 7741 11886 8104
9/93 8020 11794 8383
10/93 8258 12038 8821
11/93 8135 11923 8802
12/93 8446 12068 9175
1/94 9014 12478 9651
2/94 8896 12139 9371
3/94 8384 11611 8742
4/94 8432 11760 8806
5/94 8383 11952 8882
6/94 7836 11659 8421
7/94 7885 12042 8611
8/94 8467 12534 9522
9/94 8556 12228 9625
10/94 8577 12503 9645
11/94 8514 12048 9501
12/94 8632 12226 9556
1/95 9089 12543 9916
2/95 9443 13031 10183
3/95 9837 13415 10583
4/95 9997 13810 10512
5/95 10025 14361 10530
6/95 10690 14694 10924
7/95 11411 15181 11658
8/95 12027 15219 11902
9/95 12796 15861 12574
10/95 12824 15804 12564
11/95 13225 16497 13238
12/95 14445 16815 14009
1/96 15386 17387 14661
2/96 15851 17548 14805
3/96 15845 17717 14954
4/96 16704 17978 15260
5/96 17265 18441 15536
6/96 16253 18512 15015
7/96 14452 17694 13820
8/96 15422 18068 14639
9/96 16191 19084 15531
10/96 15401 19610 14912
11/96 15971 21091 15336
12/96 15791 20673 15821
1/97 16926 21964 16605
2/97 16884 22137 16660
3/97 15800 21229 15400
4/97 15972 22495 15401
5/97 17073 23870 16948
6/97 18001 24931 17805
7/97 18637 26915 18384
8/97 17597 25408 17891
9/97 18705 26799 19325
10/97 18268 25905 18841
11/97 18987 27103 18981
12/97 18560 27568 19070
1/98 19594 27873 19466
2/98 20190 29882 20558
3/98 21153 31411 21331
4/98 21421 31732 21487
5/98 20933 31188 20862
6/98 22053 32454 21466
7/98 21971 32111 21226
8/98 19607 27471 18127
9/98 21574 29233 20350
10/98 22055 31607 21127
11/98 23069 33522 22219
12/98 24560 35452 24028
1/99 24906 36934 24421
2/99 24639 35786 23787
3/99 25056 37218 24398
4/99 23735 38659 23215
5/99 22952 37747 23091
6/99 22814 39836 24211
7/99 22452 38598 24241
8/99 23370 38407 24906
9/99 21965 37355 23106
10/99 23138 39718 24201
11/99 23863 40525 25221
12/99 24378 42909 26513
1/00 26292 40753 28407
2/00 34153 39983 32345
3/00 26342 43892 29014
4/00 24772 42572 28718
5/00 25079 41699 29238
6/00 32638 42726 34233
7/00 30660 42058 33175
8/00 35443 44669 36149
9/00 37673 42312 37734
10/00 35341 42132 37266
11/00 31160 38813 36122
12/00 32235 39003 38093
1/01 28825 40386 34945
2/01 27308 36706 34592
3/01 24203 34382 30658
4/01 25065 37052 33037
5/01 25789 37301 34285
6/01 25944 36393 34718
7/01 25651 36035 33650
8/01 25133 33781 33193
9/01 24530 31053 31402
10/01 25339 31646 32451
11/01 26824 34073 34084
12/01 26271 34371 34108
1/02 24821 33870 32077
2/02 24218 33217 31041
3/02 24218 34466 31903
4/02 22838 32377 30287
5/02 22940 32140 29405
6/02 21975 29851 27022
7/02 20992 27525 26033
8/02 20423 27705 25700
9/02 20009 24697 24836
10/02 20509 26868 25756
11/02 19594 28448 26200
12/02 19095 26778 25169
1/03 19181 26078 25073
2/03 18956 25686 24521
3/03 19715 25935 25396
4/03 20939 28070 26660
5/03 22128 29547 28936
6/03 22765 29925 29614
7/03 22834 30453 30621
8/03 22231 31045 30228
9/03 22300 30717 30355
10/03 22197 32453 30761
11/03 23130 32739 31590
12/03 24198 34454 32853
1/04 25234 35087 34266
2/04 25355 35574 34701
3/04 24906 35038 34566
4/04 24924 34488 35126
5/04 25200 34961 34982
6/04 25251 35640 35086
7/04 23801 34461 32582
8/04 23870 34599 32827
9/04 23784 34974 33703
10/04 23561 35508 33104
11/04 23733 36944 34409
12/04 26028 38201 36709
1/05 24802 37270 35459
2/05 24975 38054 35297
3/05 24975 37381 34645
4/05 25440 36672 35582
5/05 25801 37838 36587
6/05 25956 37892 37149
7/05 27215 39301 39255
8/05 28249 38942 39684
9/05 28215 39257 40047
10/05 27490 38603 39115
11/05 28144 40061 40183
12/05 28749 40075 40921
1/06 31061 41136 42224
2/06 31871 41248 42743
3/06 31785 41761 42466
4/06 30870 42321 41002
5/06 29302 41105 39593
6/06 29284 41159 39672
7/06 29647 41413 40172
8/06 30823 42397 41370
================================================================================
SOURCE: LIPPER INC.
Past performance cannot guarantee taxes a shareholder would pay on Fund each segment representing a percent
comparable future results. distributions or sale of Fund shares. change in the value of the investment.
Performance of the indexes does not In this chart, each segment represents a
The data shown in the chart include reflect the effects of taxes. doubling, or 100% change, in the value
reinvested distributions, applicable of the investment. In other words, the
sales charges, Fund expenses and This chart, which is a logarithmic space between $5,000 and $10,000 is the
management fees. Index results include chart, presents the fluctuations in the same size as the space between $10,000
reinvested dividends, but they do not value of the Fund and its indexes. We and $20,000 and so on.
reflect sales charges. Performance of an believe that a logarithmic chart is more
index of funds reflects fund expenses effective than other types of charts in
and management fees; performance of a illustrating changes in value during the
market index does not. Performance shown early years shown in the chart. The
in the chart and table(s) does not vertical axis, the one that indicates
reflect deduction of the dollar value of an investment, is
constructed with
8
AIM ADVANTAGE HEALTH SCIENCES FUND
======================================= ======================================= =======================================
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
As of 8/31/06, including applicable As of 6/30/06, the most recent calendar 6 months ended 8/31/06, excluding
sales charges quarter-end, including applicable sales applicable sales charges
charges
CLASS A SHARES Class A Shares -3.30%
Inception (1/23/92) 8.01% CLASS A SHARES Class B Shares -3.73
10 Years 6.56 Inception (1/23/92) 7.73% Class C Shares -3.68
5 Years 2.99 10 Years 5.46
1 Year 3.12 5 Years 1.30 =======================================
1 Year 6.59
CLASS B SHARES
Inception (5/15/01) 3.16% CLASS B SHARES
5 Years 2.69 Inception (5/15/01) 2.27%
1 Year 3.25 5 Years 0.94
1 Year 7.00
CLASS C SHARES
Inception (5/15/01) 2.68% CLASS C SHARES
5 Years 2.70 Inception (5/15/01) 1.78%
1 Year 7.26 5 Years 0.96
1 Year 10.97
======================================= =======================================
THE PERFORMANCE DATA QUOTED REPRESENT AND CLASS B AND CLASS C SHARE
PAST PERFORMANCE AND CANNOT GUARANTEE PERFORMANCE REFLECTS THE APPLICABLE
COMPARABLE FUTURE RESULTS; CURRENT CONTINGENT DEFERRED SALES CHARGE (CDSC)
PERFORMANCE MAY BE LOWER OR HIGHER. FOR THE PERIOD INVOLVED. THE CDSC ON
PLEASE VISIT AIMinvestments.com FOR THE CLASS B SHARES DECLINES FROM 5%
MOST RECENT MONTH-END PERFORMANCE. BEGINNING AT THE TIME OF PURCHASE TO 0%
PERFORMANCE FIGURES REFLECT REINVESTED AT THE BEGINNING OF THE SEVENTH YEAR.
DISTRIBUTIONS, CHANGES IN NET ASSET THE CDSC ON CLASS C SHARES IS 1% FOR THE
VALUE AND THE EFFECT OF THE MAXIMUM FIRST YEAR AFTER PURCHASE.
SALES CHARGE UNLESS OTHERWISE STATED.
INVESTMENT RETURN AND PRINCIPAL VALUE THE PERFORMANCE OF THE FUND'S SHARE
WILL FLUCTUATE SO THAT YOU MAY HAVE A CLASSES WILL DIFFER PRIMARILY DUE TO
GAIN OR LOSS WHEN YOU SELL SHARES. DIFFERENT SALES CHARGE STRUCTURES AND
CLASS EXPENSES.
CLASS A SHARE PERFORMANCE REFLECTS
THE MAXIMUM 5.50% SALES CHARGE, HAD THE ADVISOR NOT WAIVED FEES AND/OR
REIMBURSED EXPENSES, PERFORMANCE WOULD
HAVE BEEN LOWER.
9
AIM ADVANTAGE HEALTH SCIENCES FUND
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
The Board of Trustees of AIM Counselor o The quality of services to be provided Board also reviewed more recent Fund
Series Trust (the "Board") oversees the by AIM. The Board reviewed the performance, which did not change their
management of AIM Advantage Health credentials and experience of the conclusions.
Sciences Fund (the "Fund") and, as officers and employees of AIM who will
required by law, determines annually provide investment advisory services to o Meetings with the Fund's portfolio
whether to approve the continuance of the Fund. In reviewing the managers and investment personnel. With
the Fund's advisory agreement with A I M qualifications of AIM to provide respect to the Fund, the Board is
Advisors, Inc. ("AIM"). Based upon the investment advisory services, the Board meeting periodically with such Fund's
recommendation of the Investments considered such issues as AIM's portfolio managers and/or other
Committee of the Board, at a meeting portfolio and product review process, investment personnel and believes that
held on June 27, 2006, the Board, various back office support functions such individuals are competent and able
including all of the independent provided by AIM and AIM's equity and to continue to carry out their
trustees, approved the continuance of fixed income trading operations. Based responsibilities under the Advisory
the advisory agreement (the "Advisory on the review of these and other Agreement.
Agreement") between the Fund and AIM for factors, the Board concluded that the
another year, effective July 1, 2006. quality of services to be provided by o Overall performance of AIM. The Board
AIM was appropriate and that AIM considered the overall performance of
The Board considered the factors currently is providing satisfactory AIM in providing investment advisory and
discussed below in evaluating the services in accordance with the terms of portfolio administrative services to the
fairness and reasonableness of the the Advisory Agreement. Fund and concluded that such performance
Advisory Agreement at the meeting on was satisfactory.
June 27, 2006 and as part of the Board's o The performance of the Fund relative
ongoing oversight of the Fund. In their to comparable funds. The Board reviewed o Fees relative to those of clients of
deliberations, the Board and the the performance of the Fund during the AIM with comparable investment
independent trustees did not identify past one, three and five calendar years strategies. The Board reviewed the
any particular factor that was against the performance of funds advised effective advisory fee rate (before
controlling, and each trustee attributed by other advisors with investment waivers) for the Fund under the Advisory
different weights to the various strategies comparable to those of the Agreement. The Board noted that this
factors. Fund. The Board noted that the Fund's rate was (i) above the effective
performance in such periods was below advisory fee rate (before waivers) for a
One responsibility of the independent the median performance of such mutual fund advised by AIM with
Senior Officer of the Fund is to manage comparable funds. The Board also noted investment strategies comparable to
the process by which the Fund's proposed that AIM began serving as investment those of the Fund; (ii) above the
management fees are negotiated to ensure advisor to the Fund in November 2003. effective sub-advisory fee rates for
that they are negotiated in a manner The Board noted that AIM has recently four offshore funds advised and
which is at arms' length and reasonable. made changes to the Fund's portfolio sub-advised by AIM affiliates with
To that end, the Senior Officer must management team, which need more time to investment strategies comparable to
either supervise a competitive bidding be evaluated before a conclusion can be those of the Fund, although the total
process or prepare an independent made that the changes have addressed the advisory fees for three such offshore
written evaluation. The Senior Officer Fund's under-performance. Based on this funds were above those for the Fund; and
has recommended an independent written review and after taking account of all (iii) above the effective sub-advisory
evaluation in lieu of a competitive of the other factors that the Board fee rates for two variable insurance
bidding process and, upon the direction considered in determining whether to funds sub-advised by an AIM affiliate
of the Board, has prepared such an continue the Advisory Agreement for the and offered to insurance company
independent written evaluation. Such Fund, the Board concluded that no separate accounts with investment
written evaluation also considered changes should be made to the Fund and strategies comparable to those of the
certain of the factors discussed below. that it was not necessary to change the Fund, although the total advisory fees
In addition, as discussed below, the Fund's portfolio management team at this for such variable insurance funds were
Senior Officer made a recommendation to time. Although the independent written comparable to those for the Fund. The
the Board in connection with such evaluation of the Fund's Senior Officer Board noted that AIM has agreed to waive
written evaluation. (discussed below) only considered Fund advisory fees of the Fund, as discussed
performance through the most recent below. Based on this review, the Board
The discussion below serves as a calendar year, the Board also reviewed concluded that the advisory fee rate for
summary of the Senior Officer's more recent Fund performance, which did the Fund under the Advisory Agreement
independent written evaluation and not change their conclusions. was fair and reasonable.
recommendation to the Board in
connection therewith, as well as a o The performance of the Fund relative o Fees relative to those of comparable
discussion of the material factors and to indices. The Board reviewed the funds with other advisors. The Board
the conclusions with respect thereto performance of the Fund during the past reviewed the advisory fee rate for the
that formed the basis for the Board's one, three and five calendar years Fund under the Advisory Agreement. The
approval of the Advisory Agreement. against the performance of the Lipper Board noted that the Fund's advisory fee
After consideration of all of the Health/Biotech Fund Index. The Board is structured as a fulcrum fee, with a
factors below and based on its informed noted that the Fund's performance was base component and a performance
business judgment, the Board determined comparable to the performance of such adjustment component. The Board compared
that the Advisory Agreement is in the Index for the one year and below such effective contractual advisory fee rates
best interests of the Fund and its Index for the three and five year at a common asset level at the end of
shareholders and that the compensation periods. The Board also noted that AIM the past calendar year and noted that
to AIM under the Advisory Agreement is began serving as investment advisor to the Fund's rate was above the median
fair and reasonable and would have been the Fund in November 2003. The Board rate of the funds advised by other
obtained through arm's length noted that AIM has recently made changes advisors with investment strategies
negotiations. to the Fund's portfolio management team, comparable to those of the Fund that the
which need more time to be evaluated Board reviewed. The Board noted that AIM
Unless otherwise stated, information before a conclusion can be made that the has agreed to waive advisory fees of the
presented below is as of June 27, 2006 changes have addressed the Fund's Fund, as discussed below. Based on this
and does not reflect any changes that under-performance. Based on this review review, the Board concluded that the
may have occurred since June 27, 2006, and after taking account of all of the advisory fee rate for the Fund under the
including but not limited to changes to other factors that the Board considered Advisory Agreement was fair and
the Fund's performance, advisory fees, in determining whether to continue the reasonable.
expense limitations and/or fee waivers. Advisory Agreement for the Fund, the
Board concluded that no changes should o Expense limitations and fee waivers.
o The nature and extent of the advisory be made to the Fund and that it was not The Board noted that AIM has
services to be provided by AIM. The necessary to change the Fund's portfolio contractually agreed to waive advisory
Board reviewed the services to be management team at this time. Although fees to the extent necessary such that
provided by AIM under the Advisory the independent written evaluation of the advisory fee AIM receives does not
Agreement. Based on such review, the the Fund's Senior Officer (discussed exceed an annual base management fee of
Board concluded that the range of below) only considered Fund performance 1.25%, subject to a maximum annual
services to be provided by AIM under the through the most recent calendar year, performance adjustment upward or
Advisory Agreement was appropriate and the downward of 0.75%, through June 30,
that AIM currently is providing services 2007. As a result of this waiver, the
in accordance with the terms of the Board noted that the net advisory fees
Advisory Agreement. are limited to a maximum of 2.00% and a
minimum of 0.50%. The Board considered
the con-
(continued)
10
AIM ADVANTAGE HEALTH SCIENCES FUND
tractual nature of this fee waiver and tinue the Advisory Agreement for the taken by AIM have improved, and are
noted that it remains in effect until Fund, the Board considered the Senior likely to continue to improve, the
June 30, 2007. The Board considered the Officer's written evaluation. quality and efficiency of the services
effect this fee waiver would have on the AIM and its affiliates provide to the
Fund's estimated expenses and concluded o Profitability of AIM and its Fund in each of these areas, and support
that the levels of fee waivers/expense affiliates. The Board reviewed the Board's approval of the continuance
limitations for the Fund were fair and information concerning the profitability of the Advisory Agreement for the Fund.
reasonable. of AIM's (and its affiliates')
investment advisory and other activities
o Breakpoints and economies of scale. and its financial condition. The Board
The Board reviewed the structure of the considered the overall profitability of
Fund's advisory fee under the Advisory AIM, as well as the profitability of AIM
Agreement, noting that it does not in connection with managing the Fund.
include any breakpoints. The Board The Board noted that AIM's operations
considered whether it would be remain profitable, although increased
appropriate to add advisory fee expenses in recent years have reduced
breakpoints for the Fund or whether, due AIM's profitability. Based on the review
to the nature of the Fund and the of the profitability of AIM's and its
advisory fee structures of comparable affiliates' investment advisory and
funds, it was reasonable to structure other activities and its financial
the advisory fee without breakpoints. condition, the Board concluded that the
Based on this review, the Board compensation to be paid by the Fund to
concluded that it was not necessary to AIM under its Advisory Agreement was not
add advisory fee breakpoints to the excessive.
Fund's advisory fee schedule. The Board
reviewed the level of the Fund's o Benefits of soft dollars to AIM. The
advisory fees, and noted that such fees, Board considered the benefits realized
as a percentage of the Fund's net by AIM as a result of brokerage
assets, would remain constant under the transactions executed through "soft
Advisory Agreement because the Advisory dollar" arrangements. Under these
Agreement does not include any arrangements, brokerage commissions paid
breakpoints. The Board concluded that by the Fund and/or other funds advised
the Fund's fee levels under the Advisory by AIM are used to pay for research and
Agreement therefore would not reflect execution services. This research may be
economies of scale. used by AIM in making investment
decisions for the Fund. The Board
o Investments in affiliated money market concluded that such arrangements were
funds. The Board also took into account appropriate.
the fact that uninvested cash and cash
collateral from securities lending o AIM's financial soundness in light of
arrangements, if any (collectively, the Fund's needs. The Board considered
"cash balances") of the Fund may be whether AIM is financially sound and has
invested in money market funds advised the resources necessary to perform its
by AIM pursuant to the terms of an SEC obligations under the Advisory
exemptive order. The Board found that Agreement, and concluded that AIM has
the Fund may realize certain benefits the financial resources necessary to
upon investing cash balances in AIM fulfill its obligations under the
advised money market funds, including a Advisory Agreement.
higher net return, increased liquidity,
increased diversification or decreased o Historical relationship between the
transaction costs. The Board also found Fund and AIM. In determining whether to
that the Fund will not receive reduced continue the Advisory Agreement for the
services if it invests its cash balances Fund, the Board also considered the
in such money market funds. The Board prior relationship between AIM and the
noted that AIM receives no advisory fees Fund, as well as the Board's knowledge
on the portion of the Fund's assets, if of AIM's operations, and concluded that
any, invested in other funds advised by it was beneficial to maintain the
AIM, including the affiliated money current relationship, in part, because
market funds. The Board further of such knowledge. The Board also
determined that the proposed securities reviewed the general nature of the
lending program and related procedures non-investment advisory services
with respect to the lending Fund is in currently performed by AIM and its
the best interests of the lending Fund affiliates, such as administrative,
and its respective shareholders. The transfer agency and distribution
Board therefore concluded that the services, and the fees received by AIM
investment of cash collateral received and its affiliates for performing such
in connection with the securities services. In addition to reviewing such
lending program in the money market services, the trustees also considered
funds according to the procedures is in the organizational structure employed by
the best interests of the lending Fund AIM and its affiliates to provide those
and its respective shareholders. services. Based on the review of these
and other factors, the Board concluded
o Independent written evaluation and that AIM and its affiliates were
recommendations of the Fund's Senior qualified to continue to provide
Officer. The Board noted that, upon non-investment advisory services to the
their direction, the Senior Officer of Fund, including administrative, transfer
the Fund, who is independent of AIM and agency and distribution services, and
AIM's affiliates, had prepared an that AIM and its affiliates currently
independent written evaluation in order are providing satisfactory
to assist the Board in determining the non-investment advisory services.
reasonableness of the proposed
management fees of the AIM Funds, o Other factors and current trends. The
including the Fund. The Board noted that Board considered the steps that AIM and
the Senior Officer's written evaluation its affiliates have taken over the last
had been relied upon by the Board in several years, and continue to take, in
this regard in lieu of a competitive order to improve the quality and
bidding process. In determining whether efficiency of the services they provide
to con- to the Funds in the areas of investment
performance, product line
diversification, distribution, fund
operations, shareholder services and
compliance. The Board concluded that
these steps
11
AIM Advantage Health Sciences Fund
SCHEDULE OF INVESTMENTS
August 31, 2006
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------
DOMESTIC COMMON STOCKS & OTHER EQUITY
INTERESTS-84.93%
BIOTECHNOLOGY-22.60%
Altus Pharmaceuticals Inc.(a) 80,053 $ 1,162,370
- ------------------------------------------------------------------------
Amgen Inc.(a)(b) 64,565 4,385,937
- ------------------------------------------------------------------------
Arena Pharmaceuticals, Inc.(a) 67,251 825,170
- ------------------------------------------------------------------------
Biogen Idec Inc.(a) 50,174 2,214,680
- ------------------------------------------------------------------------
Cubist Pharmaceuticals, Inc.(a)(b) 32,514 762,778
- ------------------------------------------------------------------------
Evolutionary Genomics / GenoPlex, Inc.
(Acquired 09/15/97-06/25/98; Cost
$408,490)(a)(c)(d)(e)(f)(l) 3,663,120 0
- ------------------------------------------------------------------------
Genentech, Inc.(a) 18,133 1,496,335
- ------------------------------------------------------------------------
Genzyme Corp.(a) 94,662 6,269,464
- ------------------------------------------------------------------------
Gilead Sciences, Inc.(a) 101,888 6,459,699
- ------------------------------------------------------------------------
Human Genome Sciences, Inc.(a) 74,893 841,048
- ------------------------------------------------------------------------
InterMune, Inc.(a)(g) 47,123 812,400
- ------------------------------------------------------------------------
Keryx Biopharmaceuticals, Inc.(a) 25,537 350,623
- ------------------------------------------------------------------------
Mannkind Corp.(a)(g) 34,954 643,853
- ------------------------------------------------------------------------
Medarex, Inc.(a) 63,766 684,847
- ------------------------------------------------------------------------
Myogen, Inc.(a) 35,232 1,226,074
- ------------------------------------------------------------------------
OSI Pharmaceuticals, Inc.(a) 11,539 430,059
- ------------------------------------------------------------------------
Panacos Pharmaceuticals Inc.(a)(b) 97,108 548,660
- ------------------------------------------------------------------------
PDL BioPharma Inc.(a) 61,297 1,207,551
- ------------------------------------------------------------------------
SONUS Pharmaceuticals, Inc.(a) 145,299 671,281
- ------------------------------------------------------------------------
Theravance, Inc.(a) 15,700 416,678
- ------------------------------------------------------------------------
TorreyPines Therapeutics, Inc. (Acquired
09/15/97-06/25/98; Cost
$202,031)(a)(c)(d)(e)(f) 67,828 83,263
- ------------------------------------------------------------------------
United Therapeutics Corp.(a) 20,669 1,128,321
- ------------------------------------------------------------------------
Vertex Pharmaceuticals Inc.(a) 11,372 391,765
- ------------------------------------------------------------------------
ZymoGenetics, Inc.(a) 39,473 763,408
========================================================================
33,776,264
========================================================================
DRUG RETAIL-1.75%
CVS Corp. 78,020 2,617,571
========================================================================
HEALTH CARE DISTRIBUTORS-0.82%
PSS World Medical, Inc.(a) 63,072 1,223,597
========================================================================
HEALTH CARE EQUIPMENT-16.73%
Baxter International Inc. 35,118 1,558,537
- ------------------------------------------------------------------------
Cambridge Heart, Inc.(a) 301,363 708,203
- ------------------------------------------------------------------------
Cytyc Corp.(a) 174,118 4,159,679
- ------------------------------------------------------------------------
Dade Behring Holdings Inc. 36,055 1,459,867
- ------------------------------------------------------------------------
EPIX Pharmaceuticals Inc.(a) 106,603 689,721
- ------------------------------------------------------------------------
Mentor Corp. 104,418 5,068,450
- ------------------------------------------------------------------------
Northstar Neuroscience, Inc.(a) 90,152 1,059,286
- ------------------------------------------------------------------------
</Table>
<Table>
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
HEALTH CARE EQUIPMENT-(CONTINUED)
NxStage Medical, Inc.(a) 79,722 $ 775,695
- ------------------------------------------------------------------------
Respironics, Inc.(a) 54,026 1,994,100
- ------------------------------------------------------------------------
Sensys Medical, Inc. (Acquired
04/23/04-08/09/06; Cost
$1,302)(a)(c)(d)(e)(f)(l) 8,750 875
- ------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 62,523 2,276,462
- ------------------------------------------------------------------------
Thoratec Corp.(a) 111,586 1,635,851
- ------------------------------------------------------------------------
Varian Medical Systems, Inc. 22,100 1,177,930
- ------------------------------------------------------------------------
Wright Medical Group, Inc.(a) 29,494 674,528
- ------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 26,110 1,775,480
========================================================================
25,014,664
========================================================================
HEALTH CARE FACILITIES-0.97%
Brookdale Senior Living Inc. 30,199 1,444,418
========================================================================
HEALTH CARE SERVICES-10.78%
Allion Healthcare, Inc.(a)(g) 50,650 220,328
- ------------------------------------------------------------------------
DaVita, Inc.(a) 89,981 5,251,291
- ------------------------------------------------------------------------
Express Scripts, Inc.(a) 41,879 3,521,186
- ------------------------------------------------------------------------
HMS Holdings Corp.(a) 69,700 1,012,741
- ------------------------------------------------------------------------
Medco Health Solutions, Inc.(a) 73,549 4,660,800
- ------------------------------------------------------------------------
Omnicare, Inc. 31,859 1,443,531
========================================================================
16,109,877
========================================================================
HEALTH CARE SUPPLIES-0.51%
Cooper Cos., Inc. (The)(b) 15,343 766,843
========================================================================
HEALTH CARE TECHNOLOGY-2.64%
Allscripts Healthcare Solutions, Inc.(a) 66,726 1,358,541
- ------------------------------------------------------------------------
Eclipsys Corp.(a) 71,959 1,230,499
- ------------------------------------------------------------------------
TriZetto Group, Inc. (The)(a) 98,802 1,355,564
========================================================================
3,944,604
========================================================================
INDUSTRIAL CONGLOMERATES-1.88%
Tyco International Ltd. 107,250 2,804,588
========================================================================
LIFE & HEALTH INSURANCE-0.51%
Universal American Financial Corp.(a) 50,302 771,130
========================================================================
LIFE SCIENCES TOOLS & SERVICES-6.60%
Advanced Magnetics, Inc.(a) 22,931 840,421
- ------------------------------------------------------------------------
Charles River Laboratories International,
Inc.(a) 32,131 1,305,804
- ------------------------------------------------------------------------
Dionex Corp.(a) 15,165 764,619
- ------------------------------------------------------------------------
eResearch Technology, Inc.(a) 85,000 740,350
- ------------------------------------------------------------------------
Exelixis, Inc.(a) 45,700 444,661
- ------------------------------------------------------------------------
Fisher Scientific International Inc.(a) 10,278 804,048
- ------------------------------------------------------------------------
Invitrogen Corp.(a) 32,088 1,952,555
- ------------------------------------------------------------------------
Pharmaceutical Product Development, Inc. 45,198 1,722,948
- ------------------------------------------------------------------------
</Table>
F-1
AIM Advantage Health Sciences Fund
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES-(CONTINUED)
Thermo Electron Corp.(a) 20,331 $ 796,975
- ------------------------------------------------------------------------
Varian Inc.(a) 10,683 498,682
========================================================================
9,871,063
========================================================================
MANAGED HEALTH CARE-6.91%
Aetna Inc.(b) 45,399 1,692,021
- ------------------------------------------------------------------------
Aveta, Inc. (Acquired 12/21/05; Cost
$947,876)(a)(c)(e) 70,213 1,123,408
- ------------------------------------------------------------------------
Coventry Health Care, Inc.(a) 28,235 1,531,466
- ------------------------------------------------------------------------
Health Net Inc.(a) 33,187 1,387,548
- ------------------------------------------------------------------------
UnitedHealth Group Inc. 60,349 3,135,131
- ------------------------------------------------------------------------
WellPoint Inc.(a) 18,810 1,456,082
========================================================================
10,325,656
========================================================================
PHARMACEUTICALS-12.23%
Allergan, Inc.(b) 41,904 4,800,522
- ------------------------------------------------------------------------
Cypress Bioscience, Inc.(a) 65,902 474,495
- ------------------------------------------------------------------------
Endo Pharmaceuticals Holdings Inc.(a) 23,573 778,616
- ------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 32,370 1,617,853
- ------------------------------------------------------------------------
Impax Laboratories, Inc.(a) 75,482 456,666
- ------------------------------------------------------------------------
Johnson & Johnson 112,949 7,303,282
- ------------------------------------------------------------------------
Lilly (Eli) and Co. 25,174 1,407,982
- ------------------------------------------------------------------------
Sepracor Inc.(a) 22,232 1,045,126
- ------------------------------------------------------------------------
Xenoport Inc.(a) 17,895 392,616
========================================================================
18,277,158
========================================================================
Total Domestic Common Stocks & Other
Equity Interests (Cost $115,767,692) 126,947,433
========================================================================
FOREIGN COMMON STOCKS & OTHER EQUITY
INTERESTS-20.20%
CANADA-2.82%
Biovail Corp. (Pharmaceuticals) 38,901 635,643
- ------------------------------------------------------------------------
Cardiome Pharma Corp. (Pharmaceuticals)(a) 106,168 1,482,105
- ------------------------------------------------------------------------
MDS Inc. (Life Sciences Tools & Services)(g) 103,900 2,095,391
========================================================================
4,213,139
========================================================================
FRANCE-2.51%
Ipsen S.A. (Pharmaceuticals) (Acquired
12/06/05; Cost $1,562,002)(c)(g)(h) 59,673 2,163,670
- ------------------------------------------------------------------------
Sanofi-Aventis-ADR (Pharmaceuticals) 35,386 1,590,601
========================================================================
3,754,271
========================================================================
GERMANY-1.16%
Merck KGaA (Pharmaceuticals)(h) 17,474 1,735,211
========================================================================
JAPAN-0.76%
Shionogi & Co., Ltd. (Pharmaceuticals) 63,270 1,137,135
========================================================================
SPAIN-0.28%
Grifols S.A. (Biotechnology) (Acquired
05/16/06; Cost $273,482)(a)(c) 48,608 419,105
========================================================================
</Table>
<Table>
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
SWITZERLAND-10.55%
Novartis A.G.-ADR (Pharmaceuticals) 110,082 $ 6,287,884
- ------------------------------------------------------------------------
Roche Holding A.G. (Pharmaceuticals)(g) 51,435 9,482,204
========================================================================
15,770,088
========================================================================
UNITED KINGDOM-2.12%
AstraZeneca PLC-ADR (Pharmaceuticals) 22,455 1,462,719
- ------------------------------------------------------------------------
Shire PLC-ADR (Pharmaceuticals) 33,310 1,707,137
========================================================================
3,169,856
========================================================================
Total Foreign Common Stocks & Other
Equity Interests (Cost $22,409,676) 30,198,805
========================================================================
PREFERRED STOCKS-5.41%
BIOTECHNOLOGY-0.16%
Athersys Inc., Series F, Conv. Pfd. (Acquired
04/17/00; Cost $5,000,000)(a)(c)(d)(e)(f) 416,667 235,293
- ------------------------------------------------------------------------
Ingenex, Inc., Series B, Pfd. (Acquired
09/27/94; Cost $600,000)(a)(c)(d)(e)(f) 103,055 0
========================================================================
235,293
========================================================================
HEALTH CARE DISTRIBUTORS-0.68%
Locus Pharmaceuticals, Inc.,
Series C, Pfd. (Acquired 11/21/00; Cost
$4,500,000)(a)(c)(d)(e)(f) 2,000,000 781,640
- ------------------------------------------------------------------------
Series D, Pfd. (Acquired 09/06/01; Cost
$2,352,940)(a)(c)(d)(e)(f) 588,235 229,894
========================================================================
1,011,534
========================================================================
HEALTH CARE EQUIPMENT-4.51%
Masimo Corp.,
Series C, Pfd. (Acquired 10/07/98; Cost
$1,000,000)(a)(c)(d)(e)(f) 125,000 2,607,500
- ------------------------------------------------------------------------
Series F, Conv. Pfd. (Acquired 09/14/99;
Cost $174,999)(a)(c)(d)(e)(f) 15,909 331,862
- ------------------------------------------------------------------------
Intact Medical Corp., Series C, Pfd.
(Acquired 03/26/01; Cost
$2,000,001)(a)(c)(d)(e)(f) 2,439,026 1,664,635
- ------------------------------------------------------------------------
Sensys Medical, Inc.
Series A-2, Pfd. (Acquired
02/25/98-09/30/05; Cost
$7,627,992)(a)(c)(d)(e)(f)(l) 2,173,209 1,890,692
- ------------------------------------------------------------------------
Series B, Conv. Pfd. (Acquired 03/16/05-
06/15/05; Cost $245,305)(a)(c)(d)(e)(f)(l) 281,959 245,304
========================================================================
6,739,993
========================================================================
PHARMACEUTICALS-0.06%
BioImagene, Inc.,
Series B-2, Pfd. (Acquired 05/24/01; Cost
$1,350,000)(a)(c)(d)(e)(f) 93,867 94,336
========================================================================
Total Preferred Stocks (Cost $24,851,238) 8,081,156
========================================================================
</Table>
F-2
AIM Advantage Health Sciences Fund
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------
MONEY MARKET FUNDS-4.40%
Liquid Assets Portfolio-Institutional
Class(i)(j) 3,289,787 $ 3,289,787
- ------------------------------------------------------------------------
Premier Portfolio-Institutional Class(i)(j) 3,289,787 3,289,787
========================================================================
Total Money Market Funds (Cost
$6,579,574) 6,579,574
========================================================================
TOTAL INVESTMENTS (excluding investments
purchased with cash collateral from
securities loaned)-114.94% (Cost
$169,608,180) 171,806,968
========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-7.17%
Premier Portfolio-Institutional Class(i)(k) 10,713,166 10,713,166
========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $10,713,166) 10,713,166
========================================================================
TOTAL INVESTMENTS-122.11% (Cost $180,321,346) 182,520,134
========================================================================
OTHER ASSETS LESS LIABILITIES-(22.11)% (33,049,061)
========================================================================
NET ASSETS-100.00% $149,471,073
________________________________________________________________________
========================================================================
</Table>
<Table>
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
</Table>
<Table>
SECURITIES SOLD SHORT
SHARES VALUE
- ------------------------------------------------------------------------
COMMON STOCKS-1.84%
HEALTH CARE DISTRIBUTORS-1.03%
AmerisourceBergen Corp. 34,929 $ 1,542,465
========================================================================
HEALTH CARE EQUIPMENT-0.81%
Quidel Corp. 105,450 1,206,348
========================================================================
TOTAL SECURITIES SOLD SHORT
(Proceeds $2,695,768) $ 2,748,813
________________________________________________________________________
========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
Conv. - Convertible
Pfd. - Preferred
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) All or portion of this security was pledged as collateral to cover margin
requirements for securities sold short. The aggregate value of collateral
segregated by the Fund was $2,972,733 which represented 108.15% of the value
of securities sold short.
(c) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction). The security may be resold pursuant to an exemption from
registration under the 1933 Act, typically to qualified institutional
buyers. The Fund has no rights to demand registration of these securities.
The aggregate value of these securities at August 31, 2006 was $11,871,477,
which represented 7.94% of the Fund's Net Assets. Unless otherwise
indicated, these securities are not considered to be illiquid.
(d) Security fair valued in good faith in accordance with the procedures
established by the Board of Trustees. The aggregate value of these
securities at August 31, 2006 was $8,165,294, which represented 5.46% of the
Fund's Net Assets. See Note 1A.
(e) Security considered to be illiquid. The Fund is limited to investing 15% of
net assets in illiquid securities at the time of purchase. The aggregate
value of these securities considered illiquid at August 31, 2006 was
$9,288,702, which represented 6.21% of the Fund's Net Assets.
(f) Security is considered venture capital. See Note 1O.
(g) All or a portion of this security was out on loan at August 31, 2006.
(h) In accordance with the procedures established by the Board of Trustees, the
foreign security is fair valued using adjusted closing market prices. The
aggregate value of these securities at August 31, 2006 was $3,898,881, which
represented 2.61% of the Fund's Net Assets. See Note 1A.
(i) The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
(j) Security is considered a cash and cash equivalent for the purpose of the
Statement of Cash Flows. See Note 1I.
(k) The security has been segregated to satisfy the commitment to return the
cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 8.
(l) Affiliated company during the period. The Investment Company Act of 1940
defines affiliates as those companies in which a fund holds 5% or more of
the outstanding voting securities. The Fund has not owned enough of the
outstanding voting securities of the issuer to have control (as defined in
the Investment Company Act of 1940) of that issuer. The aggregate value of
these securities as of August 31, 2006 was $2,136,871, which represented
1.43% of the Fund's Net Assets. See Note 3.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-3
AIM Advantage Health Sciences Fund
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2006
<Table>
ASSETS:
Investments, at value (cost $154,745,517)* $163,090,523
- -----------------------------------------------------------
Investments in affiliates (cost $25,575,829) 19,429,611
===========================================================
Total investments (cost $180,321,346) 182,520,134
===========================================================
Foreign currencies, at value (cost $731) 734
- -----------------------------------------------------------
Receivables for:
Deposits with brokers for securities sold
short 4,417,628
- -----------------------------------------------------------
Fund shares sold 15,405
- -----------------------------------------------------------
Dividends and Interest 111,543
- -----------------------------------------------------------
Short stock rebates 10,685
- -----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 55,482
- -----------------------------------------------------------
Other assets 327,779
===========================================================
Total assets 187,459,390
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Fund shares reacquired 200,969
- -----------------------------------------------------------
Trustee deferred compensation and
retirement plans 63,110
- -----------------------------------------------------------
Collateral upon return of securities loaned 10,713,166
- -----------------------------------------------------------
Loan outstanding 24,000,000
- -----------------------------------------------------------
Short stock account dividends 873
- -----------------------------------------------------------
Securities sold short, at value (proceeds
$2,695,768) 2,748,813
- -----------------------------------------------------------
Accrued interest expense 120,593
- -----------------------------------------------------------
Accrued distribution fees 32,296
- -----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 2,885
- -----------------------------------------------------------
Accrued transfer agent fees 42,596
- -----------------------------------------------------------
Accrued operating expenses 63,016
===========================================================
Total liabilities 37,988,317
===========================================================
Net assets applicable to shares outstanding $149,471,073
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $137,194,110
- -----------------------------------------------------------
Undistributed net investment income (loss) (20,577)
- -----------------------------------------------------------
Undistributed net realized gain from
investment securities, foreign currencies
and securities sold short 10,068,445
- -----------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and
securities sold short 2,229,095
===========================================================
$149,471,073
___________________________________________________________
===========================================================
NET ASSETS:
Class A $144,410,454
___________________________________________________________
===========================================================
Class B $ 3,152,426
___________________________________________________________
===========================================================
Class C $ 1,908,193
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 8,082,968
___________________________________________________________
===========================================================
Class B 184,759
___________________________________________________________
===========================================================
Class C 115,577
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 17.87
- -----------------------------------------------------------
Offering price per share
(Net asset value of $17.87 divided by
94.50%) $ 18.91
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 17.06
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 16.51
___________________________________________________________
===========================================================
</Table>
* At August 31, 2006, securities with an aggregate value of $10,250,455 were on
loan to brokers.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-4
AIM Advantage Health Sciences Fund
STATEMENT OF OPERATIONS
For the year ended August 31, 2006
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $86,230) $ 2,238,459
- -------------------------------------------------------------------------
Dividends from affiliates (includes securities lending
income of $54,078) 226,607
- -------------------------------------------------------------------------
Interest 16,266
- -------------------------------------------------------------------------
Short stock rebates 333,083
=========================================================================
Total investment income 2,814,415
=========================================================================
EXPENSES:
Advisory fees 3,393,864
- -------------------------------------------------------------------------
Administrative services fees 50,000
- -------------------------------------------------------------------------
Custodian fees 50,203
- -------------------------------------------------------------------------
Distribution fees:
Class A 369,384
- -------------------------------------------------------------------------
Class B 24,756
- -------------------------------------------------------------------------
Class C 12,704
- -------------------------------------------------------------------------
Dividends on short sales 4,747
- -------------------------------------------------------------------------
Interest and line of credit fees 1,217,528
- -------------------------------------------------------------------------
Transfer agent fees 304,235
- -------------------------------------------------------------------------
Trustees' and officer's fees and benefits 18,994
- -------------------------------------------------------------------------
Other 188,369
=========================================================================
Total expenses 5,634,784
=========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (729,209)
=========================================================================
Net expenses 4,905,575
=========================================================================
Net investment income (loss) (2,091,160)
=========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND SECURITIES SOLD SHORT:
Net realized gain (loss) from:
Investment securities (includes net gains from securities
sold to affiliates of $443,262) 19,279,869
- -------------------------------------------------------------------------
Foreign currencies (62,518)
- -------------------------------------------------------------------------
Securities sold short (1,838,414)
=========================================================================
17,378,937
=========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (3,886,179)
- -------------------------------------------------------------------------
Foreign currencies 17,181
- -------------------------------------------------------------------------
Securities sold short 1,136,341
=========================================================================
(2,732,657)
=========================================================================
Net gain from investment securities, foreign currencies and
securities sold short 14,646,280
=========================================================================
Net increase in net assets resulting from operations $12,555,120
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are a integral part of the
financial statements.
F-5
AIM Advantage Health Sciences Fund
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 2006 and 2005
<Table>
<Caption>
2006 2005
- ------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (2,091,160) $ (2,109,028)
- ------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, option contracts and securities sold short 17,378,937 18,251,414
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and securities
sold short (2,732,657) 9,376,062
==========================================================================================
Net increase in net assets resulting from operations 12,555,120 25,518,448
==========================================================================================
Share transactions-net:
Class A (20,265,001) (45,297,223)
- ------------------------------------------------------------------------------------------
Class B 1,383,938 606,496
- ------------------------------------------------------------------------------------------
Class C 1,344,401 151,035
==========================================================================================
Net increase (decrease) in net assets resulting from
share transactions (17,536,662) (44,539,692)
==========================================================================================
Net increase (decrease) in net assets (4,981,542) (19,021,244)
==========================================================================================
NET ASSETS:
Beginning of year 154,452,615 173,473,859
==========================================================================================
End of year (including undistributed net investment income
(loss) of $(20,577) and $(19,052), respectively) $149,471,073 $154,452,615
__________________________________________________________________________________________
==========================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-6
AIM Advantage Health Sciences Fund
STATEMENT OF CASH FLOWS
For the year ended August 31, 2006
<Table>
CASH PROVIDED BY OPERATING ACTIVITIES:
Net increase in net assets resulting from operations $ 12,555,120
============================================================================
ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS TO NET
CASH PROVIDED BY OPERATIONS:
Purchases of investments (204,374,642)
- ----------------------------------------------------------------------------
Proceeds from disposition of investments 228,544,018
- ----------------------------------------------------------------------------
Decrease in foreign currencies 2,609,457
- ----------------------------------------------------------------------------
Decrease in deposits with brokers for securities sold
short 6,146,798
- ----------------------------------------------------------------------------
Increase in cash collateral from securities loaned (6,628,047)
- ----------------------------------------------------------------------------
Decrease in dividends and interest receivables 27,877
- ----------------------------------------------------------------------------
Increase in other assets (170,723)
- ----------------------------------------------------------------------------
Decrease in securities sold short (7,062,407)
- ----------------------------------------------------------------------------
Increase in payable of collateral upon return of
securities loaned 6,628,047
- ----------------------------------------------------------------------------
Increase in accrued expenses and other payables 25,563
- ----------------------------------------------------------------------------
Unrealized appreciation (depreciation) on investment
securities 3,886,179
- ----------------------------------------------------------------------------
Net realized gain on investment securities (19,279,869)
============================================================================
Net cash provided by operating activities 22,907,371
============================================================================
CASH USED IN FINANCING ACTIVITIES:
Proceeds from shares of beneficial interest sold 21,669,490
- ----------------------------------------------------------------------------
Disbursements from shares of beneficial interest
reacquired (39,302,135)
============================================================================
Net cash provided by (used in) financing activities (17,632,645)
============================================================================
Net increase in cash and cash equivalents 5,274,726
============================================================================
Cash and cash equivalents at beginning of year 1,304,848
============================================================================
Cash and cash equivalents at end of year $ 6,579,574
____________________________________________________________________________
============================================================================
</Table>
Supplemental disclosure of cash flow information:
Cash paid during the period for interest and line of credit fees was $1,188,626.
F-7
AIM Advantage Health Sciences Fund
NOTES TO FINANCIAL STATEMENTS
August 31, 2006
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Advantage Health Sciences Fund (the "Fund") is a series portfolio of AIM
Counselor Series Trust (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 six
separate portfolios, each authorized to issue an unlimited number of shares of
beneficial interest. The Fund currently offers multiple classes of shares.
Matters affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund.
The Fund's investment objective is to seek capital growth.
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. Securities traded in the over-the-counter
market (but not securities reported on the NASDAQ Stock Exchange) are
valued based on the prices furnished by independent pricing services, in
which case the securities may be considered fair valued, or by market
makers. Each security reported on the NASDAQ Stock Exchange is valued at
the NASDAQ Official Closing Price ("NOCP") as of the close of the customary
trading session on the valuation date or absent a NOCP, at the closing bid
price.
Futures contracts are valued at the final settlement price set by an
exchange on which they are principally traded. Listed options are valued at
the mean between the last bid and the ask prices from the exchange on which
they are principally traded. Options not listed on an exchange are valued
by an independent source at the mean between the last bid and ask prices.
For purposes of determining net asset value per share, futures and option
contracts generally are valued 15 minutes after the close of the customary
trading session of the New York Stock Exchange ("NYSE").
Investments in open-end registered investment companies and closed-end
registered investment companies that do not trade on an exchange are valued
at the end of day net asset value per share. Investments in closed-end
registered investment companies that trade on an exchange are valued at the
last sales price as of the close of the customary trading session on the
exchange where the security is principally traded.
Debt obligations (including convertible bonds) are fair valued using an
evaluated quote provided by an independent pricing service. Evaluated
quotes provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
institution-size trading in similar groups of securities, developments
related to specific securities, dividend rate, yield, quality, type of
issue, coupon rate, maturity, individual trading characteristics and other
market data. Short-term obligations having 60 days or less to maturity and
commercial paper are recorded at amortized cost which approximates value.
Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and
are valued at the last bid price in the case of equity securities and in
the case of debt obligations, the mean between the last bid and asked
prices.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable exchange rates as of the
close of the NYSE. Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in computing the net asset value
of the Fund's shares are determined as of the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes and the
close of the customary trading session of the NYSE which would not
ordinarily be reflected in the computation of the Fund's net asset value.
If the event is likely to have affected the closing price of the security,
the security will be valued at fair value in good faith using procedures
approved by the Board of Trustees. Adjustments to closing prices to reflect
fair value may also be based on a screening process of an independent
pricing service to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign
security trades is not the current value as of the close of the NYSE.
Foreign securities meeting the approved degree of certainty that the price
is not reflective of current value will be priced at the indication of fair
value from the independent pricing service. Multiple factors may be
considered by the independent pricing service in determining adjustments to
reflect fair value and may include information relating to sector indices,
ADRs and domestic and foreign index futures.
Securities for which market quotations are not readily available or are
unreliable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers following procedures approved by
the Board of Trustees. Issuer specific events, market trends, bid/ask
quotes of brokers and information providers and other market data may be
reviewed in the course of making a good faith determination of a security's
fair value.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and,
F-8
AIM Advantage Health Sciences Fund
accordingly, they reduce the Fund's total returns. These transaction costs
are not considered operating expenses and are not reflected in net
investment income reported in the Statement of Operations and Statement of
Changes in Net Assets, or the net investment income per share and ratios of
expenses and net investment income reported in the Financial Highlights,
nor are they limited by any expense limitation arrangements between the
Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, AIM may
determine the country in which an issuer is located and/or credit risk
exposure based on various factors. These factors include the laws of the
country under which the issuer is organized, where the issuer maintains a
principal office, the country in which the issuer derives 50% or more of
its total revenues and the country that has the primary market for the
issuer's securities, as well as other criteria. Among the other criteria
that may be evaluated for making this determination are the country in
which the issuer maintains 50% or more of its assets, the type of security,
financial guarantees and enhancements, the nature of the collateral and the
sponsor organization. Country of issuer and/or credit risk exposure has
been determined to be the United States of America unless otherwise noted.
D. 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 treat a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of
Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial statements.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- 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 including estimates and assumptions related to
taxation. Actual results could differ from those estimates.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust (including the
Trust's investment manager) is indemnified against certain liabilities that
may arise out of performance of their duties to the Fund. Additionally, in
the normal course of business, the Fund enters into contracts that contain
a variety of indemnification clauses. The Fund's maximum exposure under
these arrangements is unknown as this would involve future claims that may
be made against the Fund that have not yet occurred. The risk of material
loss as a result of such indemnification claims is considered remote.
I. CASH AND CASH EQUIVALENTS -- For the purposes of the Statement of Cash
Flows the Fund defines Cash and Cash Equivalents as cash, money market
funds and other investments held in lieu of cash and excludes investments
made with cash collateral received.
J. SECURITIES SOLD SHORT -- The Fund may enter into short sales of securities
which it concurrently holds ("covered") or for which it holds no
corresponding position ("not covered"). Securities sold short represent a
liability of the Fund to acquire specific securities at prevailing market
prices at a future date in order to satisfy the obligation to deliver the
securities sold. The liability is recorded on the books of the Fund at the
market value of the common stock determined each day in accordance with the
Fund's security valuations policy. The Fund will incur a loss if the price
of the security increases between the date of short sale and the date on
which the Fund replaces the borrowed security. The Fund realizes a gain if
the price of the security declines between those dates. For positions not
covered, there is no ceiling on the ultimate price paid for the securities
to cover the short position and therefore, the loss could exceed the amount
of proceeds received.
The Fund is required to segregate cash or securities as collateral in
margin accounts at a level that is equal to the obligation to the broker
who delivered such securities to the buyer on behalf of the Fund. The short
stock rebate presented in the Statement of Operations represents the net
income earned on short sale proceeds held on deposit with the broker and
margin interest earned or incurred on short sale transactions. The Fund may
also earn or incur margin interest on short sale transactions. Margin
interest is the income earned (or expenses incurred) as a result of the
market value of securities sold short being less than (or greater than) the
proceeds received on the short sales.
K. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of
the NYSE based on quotations posted by banks and major currency dealers.
Portfolio securities and other assets and liabilities denominated in
foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
Reported net realized foreign currency gains or losses arise from (i) sales
of foreign currencies, (ii) currency gains or losses realized between the
trade and settlement dates on securities transactions, and (iii) the
difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
currency gains and losses arise from changes in the fair values of assets
and liabilities, other than investments in securities at fiscal period end,
resulting from changes in exchange rates.
F-9
AIM Advantage Health Sciences Fund
L. 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.
Realized and unrealized gains and losses on these contracts are included in
the Statement of Operations. The Fund could be exposed to risk, which may
be in excess of the amount reflected in the Statement of Assets and
Liabilities, if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
M. COVERED CALL OPTIONS WRITTEN AND PURCHASED -- The Fund may write and buy
call options, including securities index options. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal
to, or above the current market value of the underlying security at the
time the option is written. When the Fund writes a call option, an amount
equal to the premium received by the Fund is recorded as an asset and an
equivalent liability in the Statement of Assets and Liabilities. The amount
of the liability is subsequently "marked-to-market" to reflect the current
market value of the option written. If a written call option expires on the
stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or a loss if the closing purchase
transaction exceeds the premium received when the option was written)
without regard to any unrealized gain or loss on the underlying security,
and the liability related to such option is extinguished. If a written
option is exercised, the Fund realizes a gain or a loss from the sale of
the underlying security and the proceeds of the sale are increased by the
premium originally received. Realized and unrealized gains and losses on
these contracts are included in the Statement of Operation. A risk in
writing a call option is that the Fund gives up the opportunity for profit
if the market price of the security increases and the option is exercised.
An option on a securities index gives the holder the right to receive a
cash "exercise settlement amount" equal to the difference between the
exercise price of the option and the value of the underlying stock index on
the exercise date, multiplied by a fixed "index multiplier." A securities
index fluctuates with changes in the market values of the securities
included in the index. In the purchase of securities index options, the
principal risk is that the premium and transaction costs paid by the Fund
in purchasing an option will be lost if the changes in the level of the
index do not exceed the cost of the option. In writing securities index
options, the principal risk is that the Fund could bear a loss on the
options that would be only partially offset (or not offset at all) by the
increased value or reduced cost of underlying portfolio securities. Risks
may exceed amounts recognized in the Statement of Assets and Liabilities.
N. PUT OPTIONS PURCHASED -- The Fund may purchase put options including
options on securities indexes and/or futures contracts. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, the Fund pays an option premium. The option's underlying instrument
may be a security, securities index, or a futures contract. Put options may
be used by the Fund to hedge securities it owns by locking in a minimum
price at which the Fund can sell. If security prices fall, the put option
could be exercised to offset all or a portion of the Fund's resulting
losses. At the same time, because the maximum the Fund has at risk is the
cost of the option, purchasing put options does not eliminate the potential
for the Fund to profit from an increase in the value of the securities
hedged. Realized and unrealized gains and losses on these contracts are
included in the Statement of Operations. A risk in buying an option is that
the Fund pays a premium whether or not the option is exercised. In
addition, there can be no assurance that a liquid secondary market will
exist for any option purchased or sold.
O. VENTURE CAPITAL INVESTMENTS -- The Fund has invested in non-publicly traded
companies, some of which are in the startup or development stages. These
investments are inherently risky, as the market for the technologies or
products these companies are developing are typically in the early stages
and may never materialize. The Fund could lose its entire investment in
these companies. These investments are valued at fair value as determined
in good faith in accordance with procedures approved by the Board of
Trustees. Investments in privately held venture capital securities are
illiquid.
P. COLLATERAL -- To the extent the Fund has pledged or segregated a security
as collateral and that security is subsequently sold, it is the Fund's
practice to replace such collateral no later than the next business day.
This practice does not apply to securities pledged as collateral for
securities lending transactions.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays a base management fee calculated at the annual rate of 1.50% of
the Fund's average daily net assets. The base management fee will be adjusted on
a monthly basis by a calculated rate ("Fee Adjustment Rate") (i) upward at the
rate of 0.20%, on a pro rata basis, for each percentage point the investment
performance of the Class A shares of the Fund for the previous 12 month period
("Performance Period") exceeds the sum of 2.00% plus the investment record of
the Morgan Stanley Health Care Product Index for the Performance Period, but
shall be capped at 2.50% of the Fund's average daily net assets for the fiscal
period, or (ii) downward at the rate of 0.20%, on a pro rata basis, for each
percentage point the investment record of the Morgan Stanley Health Care Product
Index for the Performance Period less 2.00% exceeds the investment performance
of the Class A shares of the Fund for the Performance Period, but shall be no
less than 0.50% of the average daily net assets for the fiscal period. After the
Fee Adjustment Rate is determined, AIM will determine the dollar amount of
additional fees or fee reductions to be accrued for each day of a month by
multiplying the Fee Adjustment Rate by the average daily net assets of the Class
A shares of the Fund during the Performance Period and dividing that number by
the number of days in the Performance Period. The management fee, as adjusted,
is accrued daily and paid monthly. AIM has contractually agreed through June 30,
2007 to waive advisory fees to the extent necessary so that advisory fees AIM
receives do not exceed an annual base management fee of 1.25% of
F-10
AIM Advantage Health Sciences Fund
average daily net assets, subject to an annual maximum performance adjustment
upward or downward of 0.75%. The performance adjustment rate is 0.15%, on a pro
rata basis, upward or downward as described in the Fee Adjustment Rate above. As
a result, AIM may receive a net management fee that ranges from 0.50% to 2.00%
of average daily net assets, based on the Fund's performance. Further, under the
terms of the advisory agreement, the Fund is not permitted to pay management
fees on those assets of the Fund that are invested in other funds advised by
AIM.
For the year ended August 31, 2006, AIM waived advisory fees of $718,265.
At the request of the Trustees of the Trust, AMVESCAP PLC ("AMVESCAP")
agreed to reimburse expenses incurred by the Fund in connection with market
timing matters in the AIM Funds, which may include legal, audit, shareholder
reporting, communications and trustee expenses. These expenses along with the
related expense reimbursement are included in the Statement of Operations. For
the year ended August 31, 2006, AMVESCAP reimbursed expenses of the Fund in the
amount of $2,261.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. Pursuant to such agreement, for the year ended
August 31, 2006, AIM was paid $50,000.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay AIM Investment Services, Inc. ("AIS") a fee for providing transfer agency
and shareholder services to the Fund and reimburse AIS for certain expenses
incurred by AIS in the course of providing such services. AIS may make payments
to intermediaries that provide omnibus account services, sub-accounting services
and/or networking services. All fees payable by AIS to intermediaries that
provide omnibus account services or sub-accounting are charged back to the Fund,
subject to certain limitations approved by the Trust's Board of Trustees. For
the year ended August 31, 2006, the Fund paid AIS $304,235.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class B
and Class C shares of the Fund. The Trust has adopted plans pursuant to Rule
12b-1 under the 1940 Act with respect to the Fund's Class A, Class B and Class C
shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays ADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Class A shares and 1.00% of the average daily net assets of Class B and Class
C shares. Of the Rule 12b-1 payments, up to 0.25% of the average daily net
assets of the Class A, Class B or Class C shares may be paid to furnish
continuing personal shareholder services to customers who purchase and own
shares of such classes. Any amounts not paid as a service fee under the Plans
would constitute an asset-based sales charge. National Association of Securities
Dealers ("NASD") Rules impose a cap on the total sales charges, including
asset-based sales charges that may be paid by any class of shares of the Fund.
Pursuant to the Plans, for the year ended August 31, 2006, the Class A, Class B
and Class C shares paid $369,384, $24,756 and $12,704, 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 August 31, 2006, ADI advised the Fund that it retained $23,946 in
front-end sales commissions from the sale of Class A shares and $9,458, $1,366
and $653 from Class A, Class B and Class C shares, respectively, for CDSC
imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AIS and/or ADI.
F-11
AIM Advantage Health Sciences Fund
NOTE 3--INVESTMENTS IN AFFILIATES
The Fund is permitted, pursuant to an exemptive order from the Securities and
Exchange Commission ("SEC") and procedures approved by the Board of Trustees, to
invest daily available cash balances and cash collateral from securities lending
transactions in an affiliated money market fund. The Fund and the money market
fund below have the same investment advisor and therefore, are considered to be
affiliated. The tables below show the transactions in and earnings from
investments in an affiliated money market fund for the year ended August 31,
2006.
INVESTMENTS OF DAILY AVAILABLE CASH BALANCES:
<Table>
<Caption>
CHANGE IN
UNREALIZED
VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED
FUND 08/31/05 AT COST FROM SALES (DEPRECIATION) 08/31/06 INCOME GAIN (LOSS)
- ----------------------------------------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-
Institutional
Class $ -- $ 7,944,850 $ (4,655,063) $ -- $3,289,787 $ 15,039 $ --
- ----------------------------------------------------------------------------------------------------------------------------------
Premier
Portfolio-
Institutional
Class 1,304,848 92,565,332 (90,580,393) -- 3,289,787 157,490 --
==================================================================================================================================
Subtotal $1,304,848 $100,510,182 $ (95,235,456) $ -- $6,579,574 $172,529 $ --
==================================================================================================================================
</Table>
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
<Table>
<Caption>
CHANGE IN
UNREALIZED
VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED
FUND 08/31/05 AT COST FROM SALES (DEPRECIATION) 08/31/06 INCOME(A) GAIN (LOSS)
- ---------------------------------------------------------------------------------------------------------------------------------
Premier
Portfolio-
Institutional
Class $4,085,119 $184,010,305 $(177,382,258) $ -- $10,713,166 $ 54,078 $ --
=================================================================================================================================
</Table>
(a) Net of compensation to counterparties.
INVESTMENTS IN OTHER AFFILIATES:
The Investment Company Act of 1940 defines affiliates as those issuances in
which a fund holds 5% or more of the outstanding voting securities. The Fund has
not owned enough of the outstanding voting securities of the issuer to have
control (as defined in the Investment Company Act of 1940) of that issuer. The
following is a summary of the transactions with affiliates for the year ended
August 31, 2006
<Table>
<Caption>
CHANGE IN
UNREALIZED
VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED
08/31/05 AT COST FROM SALES (DEPRECIATION) 08/31/06 INCOME GAIN (LOSS)
- ---------------------------------------------------------------------------------------------------------------------------
Evolutionary
Genomics / GenoPlex,
Inc.(b) $ 0 $ -- $ -- $ -- $ 0 $ -- $ --
- ---------------------------------------------------------------------------------------------------------------------------
Sensys Medical,
Inc.(b) 688 614(c) -- (427) 875 -- --
- ---------------------------------------------------------------------------------------------------------------------------
Sensys Medical,
Inc., Series
A-2,
Pfd.(b)(d) 1,301,846 306,328 -- 282,518 1,890,692 -- --
- ---------------------------------------------------------------------------------------------------------------------------
Sensys Medical,
Inc., Series
B, Conv.
Pfd.(b)(e) 222,563 -- -- 22,741 245,304 -- --
===========================================================================================================================
Subtotal $1,525,097 $ 306,942 $ -- $304,832 $2,136,871 $ -- $ --
===========================================================================================================================
Total $6,915,064 $284,827,429 $(272,617,714) $304,832 $19,429,611 $226,607 $ --
___________________________________________________________________________________________________________________________
===========================================================================================================================
</Table>
(b) As of August 31, 2006, security is no longer considered an affiliate of
the Fund.
(c) Sensys Medical, Inc., Warrants, expiring 08/13/06, 09/17/06 and 10/19/06
were converted into Sensys Medical, Inc. shares.
(d) Sensys Medical, Inc., Series A-1, Pfd. shares were converted into Sensys
Medical, Inc., Series A-2 Pfd. shares.
(e) Sensys Medical, Inc., Secured Notes, 8.00%, 12/31/05, including $22,741
of accrued interest, were converted into Sensys Medical, Inc., Series B,
Conv. Pfd. shares.
NOTE 4--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
The Fund is permitted to purchase or sell securities from or to certain other
AIM Funds under specified conditions outlined in procedures adopted by the Board
of Trustees of the Trust. The procedures have been designed to ensure that any
purchase or sale of securities by the Fund from or to another fund or portfolio
that is or could be considered an affiliate by virtue of having a common
investment advisor (or affiliated investment advisors), common Trustees and/or
common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined
under the procedures, each transaction is effected at the current market price.
Pursuant to these procedures, for the year ended August 31, 2006, the Fund
engaged in securities sales of $1,571,071, which resulted in net realized gains
of $443,262, and securities purchases of $3,272,912.
F-12
AIM Advantage Health Sciences Fund
NOTE 5--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions and (ii) custodian credits which
result from periodic overnight cash balances at the custodian. For the year
ended August 31, 2006, the Fund received credits from these arrangements, which
resulted in the reduction of the Fund's total expenses of $8,683.
NOTE 6--TRUSTEES' AND OFFICER'S FEES AND BENEFITS
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to each Trustee and Officer of the Fund who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also
include amounts accrued by the Fund to fund such deferred compensation amounts.
Those Trustees who defer compensation have the option to select various AIM
Funds in which their deferral accounts shall be deemed to be invested. Finally,
current Trustees are eligible to participate in a retirement plan that provides
for benefits to be paid upon retirement to Trustees over a period of time based
on the number of years of service. The Fund may have certain former Trustees who
also participate in a retirement plan and receive benefits under such plan.
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund
to fund such retirement benefits. Obligations under the deferred compensation
and retirement plans represent unsecured claims against the general assets of
the Fund.
During the year ended August 31, 2006, the Fund paid legal fees of $4,212
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 7--BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by JPMorgan Chase Bank. The Fund may borrow up to the
lesser of (i) $250,000,000, or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. The funds which
are party to the line of credit are charged a commitment fee of 0.06% on the
unused balanced of the committed line.
During the year ended August 31, 2006, the average borrowings for the 365
days the borrowings were outstanding was $24,000,000 with a weighted average
interest rate of 5.05% and interest expense of $1,207,947.
Pursuant to an exemptive order from the SEC, the Fund may participate in an
interfund lending facility that AIM has established for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund. A loan will be secured by collateral if the
Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total
assets. To the extent that the loan is required to be secured by collateral, the
collateral is marked to market daily to ensure that the market value is at least
102% of the outstanding principal value of the loan.
Additionally, the Fund is permitted to temporarily carry a negative or
overdrawn balance in its account with State Street Bank and Trust Company, the
custodian bank. To compensate the custodian bank for such overdrafts, the
overdrawn Fund may either (i) leave funds as a compensating balance in the
account so the custodian bank can be compensated by earning the additional
interest; or (ii) compensate by paying the custodian bank at a rate agreed upon
by the custodian bank and AIM, not to exceed the rate contractually agreed upon.
NOTE 8--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities having a market value up to one-third of
the Fund's total assets. Such loans are secured by collateral equal to no less
than the market value of the loaned securities determined daily. Such collateral
will be cash or debt securities issued or guaranteed by the U.S. Government or
any of its agencies. Cash collateral received in connection with these loans is
invested in short-term money market instruments or affiliated money market
funds. It is the Fund's policy to obtain additional collateral from or return
excess collateral to the borrower by the end of the next business day, following
the valuation date of the securities loaned. Therefore, the value of the
collateral held may be temporarily less than the value of the securities on
loan. Lending securities entails a risk of loss to the Fund if and to the extent
that the market value of the securities loaned were to increase and the borrower
did not increase the collateral accordingly, and the borrower fails to return
the securities. The Fund could also experience delays and costs in gaining
access to the collateral. The Fund bears the risk of any deficiency in the
amount of the collateral available for return to the borrower due to any loss on
the collateral invested.
At August 31, 2006, securities with an aggregate value of $10,250,455 were
on loan to brokers. The loans were secured by cash collateral of $10,713,166
received by the Fund and subsequently invested in an affiliated money market
fund. For the year ended August 31, 2006, the Fund received dividends on cash
collateral investments of $54,078 for securities lending transactions, which are
net of compensation to counterparties.
F-13
AIM Advantage Health Sciences Fund
NOTE 9--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
There were no ordinary income or long-term capital gain distributions paid
during the years ended August 31, 2005 and 2006.
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2006, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2006
- --------------------------------------------------------------------------
Undistributed long-term gain $ 11,773,255
- --------------------------------------------------------------------------
Unrealized appreciation--investments 524,285
- --------------------------------------------------------------------------
Temporary book/tax differences (20,577)
- --------------------------------------------------------------------------
Shares of beneficial interest 137,194,110
==========================================================================
Total net assets $149,471,073
__________________________________________________________________________
==========================================================================
</Table>
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is due to differences in the timing of recognition of gains and
losses on investments for tax and book purposes. The Fund's unrealized
appreciation (depreciation) difference is attributable primarily to losses on
wash sales. The tax-basis unrealized appreciation on investments amount includes
appreciation on foreign currencies of $283 and remaining proceeds to be received
from Predix Pharmaceuticals of $83,069.
The temporary book/tax differences are a result of timing differences
between book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the trustee deferral of compensation and
retirement plan expenses.
The Fund utilized $5,262,663 of capital loss carryforward in the current
period to offset net realized capital gain for federal income tax purposes. The
Fund does not have a capital loss carryforward as of August 31, 2006.
NOTE 10--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the year ended
August 31, 2006 was $202,723,582 and $227,321,156, respectively.
At the request of the Trustee, AIM recovered third party research credits
during the year ended August 31, 2006, in the amount of $12,067. These research
credits were recorded as realized gains.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------
Aggregate unrealized appreciation of:
Investment securities $ 24,871,163
- ------------------------------------------------------------------------------
Securities sold short 181,306
- ------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of:
Investment securities (24,377,185)
- ------------------------------------------------------------------------------
Securities sold short (234,351)
==============================================================================
Net unrealized appreciation of investment securities $ 440,933
______________________________________________________________________________
==============================================================================
Cost of investments for tax purposes is $182,026,156.
Proceeds from securities sold short is the same for tax and
financial statement purposes.
</Table>
F-14
AIM Advantage Health Sciences Fund
NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of foreign currency
transactions, sale of passive foreign investment companies and net operating
losses, on August 31, 2006, undistributed net investment income (loss) was
increased by $2,089,635, undistributed net realized gain was decreased by
$183,102 and shares of beneficial interest decreased by $1,906,533. This
reclassification had no effect on the net assets of the Fund.
NOTE 12--SHARE INFORMATION
The Fund currently consists of three different classes of shares: Class A, Class
B and Class C. Class A shares are sold with a front-end sales charge. Class B
shares and Class C shares are sold with CDSC. Under certain circumstances, Class
A shares are sold without a sales charge. In addition, under certain
circumstances, Class A shares are subject to CDSC. Generally, Class B shares
will automatically convert to Class A shares on or about the month-end which is
at least eight years after the date of purchase.
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
--------------------------------------------------------
2006(A) 2005
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 952,797 $ 16,775,110 270,249 $ 4,138,571
- ----------------------------------------------------------------------------------------------------------------------
Class B 143,650 2,407,563 70,115 1,013,303
- ----------------------------------------------------------------------------------------------------------------------
Class C 143,614 2,353,865 26,724 372,803
======================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 6,075 104,553 610 8,962
- ----------------------------------------------------------------------------------------------------------------------
Class B (6,345) (104,553) (631) (8,962)
- ----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (2,172,475) (37,144,664) (3,425,230) (49,444,756)
- ----------------------------------------------------------------------------------------------------------------------
Class B (56,503) (919,072) (27,455) (397,845)
- ----------------------------------------------------------------------------------------------------------------------
Class C (63,445) (1,009,464) (16,408) (221,768)
======================================================================================================================
(1,052,632) $(17,536,662) (3,102,026) $(44,539,692)
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
(a) There are five entities that are each record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate they own 37% of the
outstanding shares of the Fund. ADI has an agreement with these entities to
sell Fund shares. The Fund, AIM and/or AIM affiliates may make payments to
these entities, which are considered to be related to the Fund, for
providing services to the Fund, AIM and/or AIM affiliates including but not
limited to services such as securities brokerage, distribution, third party
record keeping and account servicing. The Trust has no knowledge as to
whether all or any portion of the shares owned of record by these entities
are also owned beneficially.
NOTE 13--NEW ACCOUNTING STANDARD
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48").
FIN 48 prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement for a tax position taken or
expected to be taken in a tax return. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. The provisions for FIN 48 are effective for
fiscal years beginning after December 15, 2006. Management is currently
assessing the impact of FIN 48, if any, on the Fund's financial statements and
intends for the Fund to adopt the FIN 48 provisions during 2007.
F-15
AIM Advantage Health Sciences Fund
NOTE 14-- FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
-----------------------------------------------------------------
YEAR ENDED AUGUST 31,
-----------------------------------------------------------------
2006 2005 2004 2003 2002
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 16.38 $ 13.84 $ 12.89 $ 11.84 $ 14.57
- -------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.23)(a) (0.20)(a) (0.13) (0.00)(b) (0.00)(b)
- -------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.72 2.74(c) 1.08 1.05 (2.77)
===============================================================================================================================
Total from investment operations 1.49 2.54 0.95 1.05 (2.77)
===============================================================================================================================
Redemption fees added to shares of beneficial interest -- -- -- -- 0.04
===============================================================================================================================
Net asset value, end of period $ 17.87 $ 16.38 $ 13.84 $ 12.89 $ 11.84
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Total return(d) 9.10% 18.35%(c) 7.37% 8.87% (18.74)%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $144,410 $152,274 $172,318 $230,955 $275,037
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets (including interest
expense and/or dividends on short sales expense):
With fee waivers and/or expense reimbursements 3.23%(e) 2.34% 1.66% 1.67% 2.35%
- -------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.70%(e) 2.61% 1.93% 1.74% 2.35%
===============================================================================================================================
Ratio of expenses to average net assets (excluding interest
expense and/or dividends on short sales expense):
With fee waivers and/or expense reimbursements 2.42%(e) 1.80% 1.22% 1.65% 2.33%
- -------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.89%(e) 2.07% 1.49% 1.72% 2.33%
===============================================================================================================================
Ratio of interest expense and dividends on short sales
expense to average net assets(f) 0.81%(e) 0.54% 0.44% 0.02% 0.02%
===============================================================================================================================
Ratio of net investment income (loss) to average net assets (1.36)%(e) (1.36)% (0.75)% (0.68)% (1.52)%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 119% 128% 116% 125% 127%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) The net investment income (loss) per share was calculated after
permanent book tax differences, such as net operating losses, were
reclassified from accumulated net investment income (loss) to paid in
capital. Had net investment income (loss) per share been calculated
using the current method, which is before reclassification of net
operating losses, net investment income (loss) per share would have been
$(0.09) and $(0.26) for the years ended August 31, 2003 and 2002,
respectively.
(c) Net gains (losses) on securities (both realized and unrealized) per
share and total return include litigation proceeds received from a class
action lawsuit against Oxford Health Plans, Inc. Net gains (losses) on
securities (both realized and unrealized) per share and total return
excluding these proceeds would have been $2.64 and 17.63%, respectively.
(d) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges.
(e) Ratios are based on average daily net assets of $147,753,479.
(f) Ratio includes interest expense and fees on the committed line of
credit.
F-16
AIM Advantage Health Sciences Fund
NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS B
-------------------------------------------------------
YEAR ENDED AUGUST 31,
-------------------------------------------------------
2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $15.76 $13.41 $12.61 $11.77 $14.68
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.35)(a) (0.28)(a) (0.23) (0.22)(b) (0.11)(b)
- ---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.65 2.63(c) 1.03 1.06 (2.80)
=====================================================================================================================
Total from investment operations 1.30 2.35 0.80 0.84 (2.91)
=====================================================================================================================
Net asset value, end of period $17.06 $15.76 $13.41 $12.61 $11.77
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(d) 8.25% 17.52%(c) 6.34% 7.14% (19.82)%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $3,152 $1,638 $ 830 $ 761 $ 882
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets (including interest
expense and/or dividends on short sales expense):
With fee waivers and/or expense reimbursements 3.98%(e) 3.01% 2.57% 3.27% 3.44%
- ---------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 4.45%(e) 3.28% 3.05% 3.33% 3.44%
=====================================================================================================================
Ratio of expenses to average net assets (excluding interest
expense and/or dividends on short sales expense):
With fee waivers and/or expense reimbursements 3.17%(e) 2.47% 2.13% 3.25% 3.43%
- ---------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.64%(e) 2.74% 2.61% 3.31% 3.43%
=====================================================================================================================
Ratio of interest expense and dividends on short sales
expense to average net assets(f) 0.81%(e) 0.54% 0.44% 0.02% 0.01%
=====================================================================================================================
Ratio of net investment income (loss) to average net assets (2.11)%(e) (2.03)% (1.66)% (2.27)% (2.54)%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate 119% 128% 116% 125% 127%
_____________________________________________________________________________________________________________________
=====================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) The net investment income (loss) per share was calculated after
permanent book tax differences, such as net operating losses, were
reclassified from accumulated net investment income (loss) to paid in
capital. Had net investment income (loss) per share been calculated
using the current method, which is before reclassification of net
operating losses, net investment income (loss) per share would have been
$(0.31) and $(0.37) for the years ended August 31, 2003 and 2002,
respectively.
(c) Net gains (losses) on securities (both realized and unrealized) per
share and total return include litigation proceeds received from a class
action lawsuit against Oxford Health Plans, Inc. Net gains (losses) on
securities (both realized and unrealized) per share and total return
excluding these proceeds would have been $2.54 and 16.85%, respectively.
(d) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges.
(e) Ratios are based on average daily net assets of $2,475,636.
(f) Ratio includes interest expense and fees on the committed line of
credit.
F-17
AIM Advantage Health Sciences Fund
NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS C
-------------------------------------------------------
YEAR ENDED AUGUST 31,
-------------------------------------------------------
2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $15.25 $12.97 $12.27 $11.57 $14.45
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.34)(a) (0.28)(a) (0.28) (0.46)(b) (0.13)(b)
- ---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.60 2.56(c) 0.98 1.16 (2.75)
=====================================================================================================================
Total from investment operations 1.26 2.28 0.70 0.70 (2.88)
=====================================================================================================================
Net asset value, end of period $16.51 $15.25 $12.97 $12.27 $11.57
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(d) 8.26% 17.58%(c) 5.71% 6.14% (20.00)%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,908 $ 540 $ 325 $ 316 $ 501
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets (including interest
expense and/or dividends on short sales expense):
With fee waivers and/or expense reimbursements 3.98%(e) 3.01% 3.16% 4.02% 3.54%
- ---------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 4.45%(e) 3.28% 4.13% 4.07% 3.54%
=====================================================================================================================
Ratio of expenses to average net assets (excluding interest
expense and/or dividends on short sales expense):
With fee waivers and/or expense reimbursements 3.17%(e) 2.47% 2.72% 4.00% 3.52%
- ---------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 3.64%(e) 2.74% 3.69% 4.05% 3.52%
=====================================================================================================================
Ratio of interest expense and dividends on short sales
expense to average net assets(f) 0.81%(e) 0.54% 0.44% 0.02% 0.02%
=====================================================================================================================
Ratio of net investment income (loss) to average net assets (2.11)%(e) (2.03)% (2.25)% (3.09)% (2.63)%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate 119% 128% 116% 125% 127%
_____________________________________________________________________________________________________________________
=====================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) The net investment income (loss) per share was calculated after
permanent book tax differences, such as net operating losses, were
reclassified from accumulated net investment income (loss) to paid in
capital. Had net investment income (loss) per share been calculated
using the current method, which is before reclassification of net
operating losses, net investment income (loss) per share would have been
$(0.55) and $(0.38) for the years ended August 31, 2003 and 2002,
respectively.
(c) Net gains (losses) on securities (both realized and unrealized) per
share and total return include litigation proceeds received from a class
action lawsuit against Oxford Health Plans, Inc. Net gains (losses) on
securities (both realized and unrealized) per share and total return
excluding these proceeds would have been $2.47 and 16.89%, respectively.
(d) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges.
(e) Ratios are based on average daily net assets of $1,270,415.
(f) Ratio includes interest expense and fees on the committed line of
credit.
NOTE 15--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING
On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment
advisor to certain AIM Funds), AIM and A I M Distributors, Inc. ("ADI") (the
distributor of the retail AIM Funds) reached final settlements with certain
regulators, including the Securities and Exchange Commission ("SEC"), the New
York Attorney General and the Colorado Attorney General, to resolve civil
enforcement actions and/or investigations related to market timing and related
activity in the AIM Funds, including those formerly advised by IFG. As part of
the settlements, a $325 million fair fund ($110 million of which is civil
penalties) has been created to compensate shareholders harmed by market timing
and related activity in funds formerly advised by IFG. Additionally, AIM and ADI
created a $50 million fair fund ($30 million of which is civil penalties) to
compensate shareholders harmed by market timing and related activity in funds
advised by AIM, which was done pursuant to the terms of the settlement. These
two fair funds may increase as a result of contributions from third parties who
reach final settlements with the SEC or other regulators to resolve allegations
of market timing and/or late trading that also may have harmed applicable AIM
Funds. These two fair funds will be distributed in accordance with a methodology
to be determined by AIM's independent distribution consultant, in consultation
with AIM and the independent trustees of the AIM Funds and acceptable to the
staff of the SEC. Management of AIM and the Fund are unable to estimate the
impact, if any, that the distribution of these two fair funds may have on the
Fund or whether such distribution will have an impact on the Fund's financial
statements in the future.
At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"),
the parent company of IFG and AIM, has agreed to reimburse expenses incurred by
the AIM Funds related to market timing matters.
PENDING LITIGATION AND REGULATORY INQUIRIES
On August 30, 2005, the West Virginia Office of the State Auditor--Securities
Commission ("WVASC") issued a Summary Order to Cease and Desist and Notice of
Right to Hearing to AIM and ADI (Order No. 05-1318). The WVASC makes findings of
fact that AIM and ADI entered into certain arrangements permitting market timing
of the AIM Funds, and failed to disclose these arrangements in the prospectuses
for such Funds, and conclusions of law to the effect that AIM and ADI violated
the West Virginia securities laws. The WVASC orders AIM and ADI to cease any
further violations and seeks to impose
F-18
AIM Advantage Health Sciences Fund
NOTE 15--LEGAL PROCEEDINGS--(CONTINUED)
monetary sanctions, including restitution to affected investors, disgorgement of
fees, reimbursement of investigatory, administrative and legal costs and an
"administrative assessment," to be determined by the Commissioner. Initial
research indicates that these damages could be limited or capped by statute.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or
related entities and individuals, depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related activity in
the AIM Funds;
- that certain AIM Funds inadequately employed fair value pricing;
- that the defendants charged excessive advisory and/or distribution fees and
failed to pass on to shareholders the perceived savings generated by
economies of scale and that the defendants adopted unlawful distribution
plans; and
- that the defendants improperly used the assets of the AIM Funds to pay
brokers to aggressively promote the sale of the AIM Funds over other mutual
funds and that the defendants concealed such payments from investors by
disguising them as brokerage commissions (all the claims in this category of
lawsuits were dismissed with prejudice by the court on September 29, 2006,
except for the Section 36(b) claim which was dismissed with leave to amend
to plead it properly as a derivative claim).
These lawsuits allege as theories of recovery, depending on the lawsuit,
violations of various provisions of the Federal and state securities laws,
negligence, breach of fiduciary duty and/or breach of contract. These lawsuits
seek remedies that include, depending on the lawsuit, damages, restitution,
injunctive relief, imposition of a constructive trust, removal of certain
directors and/or employees, rescission of certain AIM Funds' advisory agreements
and/or distribution plans and recovery of all fees paid, an accounting of all
fund-related fees, commissions and soft dollar payments, restitution of all
commissions and fees paid, and prospective relief in the form of reduced fees.
All lawsuits based on allegations of market timing, late trading and related
issues have been transferred to the United States District Court for the
District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court,
plaintiffs in these lawsuits consolidated their claims for pre-trial purposes
into three amended complaints against various AIM- and IFG-related parties: (i)
a Consolidated Amended Class Action Complaint purportedly brought on behalf of
shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative
Complaint purportedly brought on behalf of the AIM Funds and fund registrants;
and (iii) an Amended Class Action Complaint for Violations of the Employee
Retirement Income Securities Act ("ERISA") purportedly brought on behalf of
participants in AMVESCAP's 401(k) plan. Based on orders issued by the MDL Court,
all claims asserted against the AIM Funds that have been transferred to the MDL
Court have been dismissed, although certain Funds remain nominal defendants in
the Consolidated Amended Fund Derivative Complaint. On September 15, 2006, Judge
Motz for the MDL Court granted the AMVESCAP defendants' motion to dismiss the
Amended Class Action Complaint for Violations of ERISA and dismissed such
Complaint. The plaintiff has commenced an appeal from that decision.
IFG, AIM, ADI and/or related entities and individuals have received inquiries
from numerous regulators in the form of subpoenas or other oral or written
requests for information and/or documents related to one or more of the
following issues, among others, some of which concern one or more AIM Funds:
market timing activity, late trading, fair value pricing, excessive or improper
advisory and/or distribution fees, mutual fund sales practices, including
revenue sharing and directed-brokerage arrangements, investments in securities
of other registered investment companies, contractual plans, issues related to
Section 529 college savings plans and procedures for locating lost security
holders. IFG, AIM and ADI have advised the Fund that they are providing full
cooperation with respect to these inquiries. Regulatory actions and/or
additional civil lawsuits related to these or other issues may be filed against
the AIM Funds, IFG, AIM and/or related entities and individuals in the future.
At the present time, management of AIM and the Fund are unable to estimate the
impact, if any, that the outcome of the Pending Litigation and Regulatory
Inquiries described above may have on AIM, ADI or the Fund.
F-19
AIM Advantage Health Sciences Fund
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Counselor Series Trust and
Shareholders of AIM Advantage Health Sciences Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations, of
changes in net assets and of cash flows and the financial highlights present
fairly, in all material respects, the financial position of AIM Advantage Health
Sciences Fund (one of the funds constituting AIM Counselor Series Trust,
hereafter referred to as the "Fund") at August 31, 2006, the results of its
operations and its cash flows for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 2006 by
correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
October 26, 2006
Houston, Texas
F-20
AIM Advantage Health Sciences Fund
TAX DISCLOSURE
TAX INFORMATION FOR NON-RESIDENT ALIEN SHAREHOLDER
The percentage of qualifying assets not subject to the U.S. estate tax for the
fiscal quarters ended November 30, 2005, February 28, 2006, May 31, 2006 and
August 31, 2006, are 19.00%, 19.46%, 19.29% and 21.80%, respectively.
F-21
AIM Advantage Health Sciences Fund
TRUSTEES AND OFFICERS
The address of each trustee and officer of AIM Counselor Series Trust (the
"Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee
oversees 109 portfolios in the AIM Funds complex. The trustees serve for the
life of the Trust, subject to their earlier death, incapacitation, resignation,
retirement or removal as more specifically provided in the Trust's
organizational documents. Column two below includes length of time served with
predecessor entities, if any.
<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 2003 Director and Chairman, A I M Management None
Trustee and Vice Chair Group Inc. (financial services holding
company); Director and Vice Chairman,
AMVESCAP PLC; Chairman, AMVESCAP
PLC -- AIM Division (parent of AIM and a
global investment management firm) and
Trustee and Vice Chair of The AIM Family
of Funds--Registered Trademark--
Formerly: President and Chief Executive
Officer, A I M Management Group Inc.;
Director, Chairman and President, A I M
Advisors, Inc. (registered investment
advisor); Director and Chairman, A I M
Capital Management, Inc. (registered
investment advisor), A I M Distributors,
Inc. (registered broker dealer), AIM
Investment Services, Inc., (registered
transfer agent), and Fund Management
Company (registered broker dealer); and
Chief Executive Officer, AMVESCAP
PLC -- Managed Products; and President
and Principal Executive Officer of The
AIM Family of Funds--Registered
Trademark--
- -------------------------------------------------------------------------------------------------------------------------------
Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None
Trustee, President and President, A I M Management Group Inc.,
Principal AIM Mutual Fund Dealer Inc., AIM Funds
Executive Officer Management Inc. and 1371 Preferred Inc.;
Director and President, A I M Advisors,
Inc., INVESCO Funds Group, Inc. and AIM
GP Canada Inc.; Director, A I M Capital
Management, Inc. and A I M Distributors,
Inc.; Director and Chairman, AIM
Investment Services, Inc., Fund
Management Company and INVESCO
Distributors, Inc.; Director, President
and Chairman, AVZ Callco Inc.; AMVESCAP
Inc. and AIM Canada Holdings Inc.;
Director and Chief Executive Officer,
AIM Trimark Global Fund Inc. and AIM
Trimark Canada Fund Inc.; Trustee,
President and Principal Executive
Officer of The AIM Family of
Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust); and Trustee
and Executive Vice President, The AIM
Family of Funds--Registered Trademark--
(AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust only)
Formerly: President and Principal
Executive Officer, The AIM Family of
Funds--Registered Trademark-- (AIM
Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free
Investments Trust only); Chairman, AIM
Canada Holdings, Inc.; Executive Vice
President and Chief Operations Officer,
AIM Funds Management Inc.; President,
AIM Trimark Global Fund Inc. and AIM
Trimark Canada Fund Inc.; and Director,
Trimark Trust
- -------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 2003 Chairman, Crockett Technology Associates ACE Limited (insurance company);
Trustee and Chair (technology consulting company) and Captaris, Inc. (unified
messaging provider)
- -------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 1983 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2003 Retired Badgley Funds, Inc. (registered
Trustee investment company (2 portfolios))
Formerly: Partner, law firm of Baker &
McKenzie
- -------------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2000 Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm); and Director,
Policy Studies, Inc. and Van Gilder
Insurance Corporation
- -------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2003 Director of a number of public and None
Trustee private business corporations, including
the Boss Group Ltd. (private investment
and management); Cortland Trust, Inc.
(Chairman) (registered investment
company (3 portfolios)); Annuity and
Life Re (Holdings), Ltd. (insurance
company); CompuDyne Corporation
(provider of products and services to
the public security market); and
Homeowners of America Holding
Corporation
Formerly: Director, President and Chief
Executive Officer, Volvo Group North
America, Inc.; Senior Vice President, AB
Volvo; and Director of various
affiliated Volvo companies; and
Director, Magellan Insurance Company
- -------------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 2003 Chief Executive Officer, Twenty First Administaff, and Discovery Global
Trustee Century Group, Inc. (government affairs Education Fund (non-profit)
company); and Owner, Dos Angelos Ranch,
L.P.
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company)
- -------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Cortland Trust, Inc. (registered
Trustee Naftalis and Frankel LLP investment company (3 portfolios))
- -------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2003 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- -------------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 2003 Partner, law firm of Pennock & Cooper None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Larry Soll -- 1942 1997 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Raymond Stickel, Jr. -- 1944 2005 Retired Director, Mainstay VP Series
Trustee Funds, Inc. (21 portfolios)
Formerly: Partner, Deloitte & Touche
- -------------------------------------------------------------------------------------------------------------------------------
</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. Taylor 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.
F-22
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Advantage Health Sciences Fund
The address of each trustee and officer of AIM Counselor Series Trust (the
"Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee
oversees 109 portfolios in the AIM Funds complex. The trustees serve for the
life of the Trust, subject to their earlier death, incapacitation, resignation,
retirement or removal as more specifically provided in the Trust's
organizational documents. Column two below includes length of time served with
predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/
POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------
Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer N/A
Senior Vice President and of The AIM Family of Funds--Registered
Senior Officer Trademark--
Formerly: Director of Compliance and
Assistant General Counsel, ICON
Advisers, Inc.; Financial Consultant,
Merrill Lynch; General Counsel and
Director of Compliance, ALPS Mutual
Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
John M. Zerr -- 1962 2006 Director, Senior Vice President, N/A
Senior Vice President, Chief Secretary and General Counsel, A I M
Legal Officer and Secretary Management Group Inc. (financial
services holding company) and A I M
Advisors, Inc.; Director, Vice President
and Secretary, INVESCO Distributors,
Inc.; Vice President and Secretary,
A I M Capital Management, Inc., AIM
Investment Services, Inc., and Fund
Management Company; Senior Vice
President and Secretary, A I M
Distributors, Inc.; Director, INVESCO
Funds Group Inc.; and Senior Vice
President, Chief Legal Officer and
Secretary of The AIM Family of
Funds--Registered Trademark--
Formerly: Chief Operating Officer,
Senior Vice President, General Counsel,
and Secretary, Liberty Ridge Capital,
Inc. (an investment adviser); Vice
President and Secretary, PBHG Funds (an
investment company); Vice President and
Secretary, PBHG Insurance Series Fund
(an investment company); General Counsel
and Secretary, Pilgrim Baxter Value
Investors (an investment adviser); Chief
Operating Officer, General Counsel and
Secretary, Old Mutual Investment
Partners (a broker-dealer); General
Counsel and Secretary, Old Mutual Fund
Services (an administrator); General
Counsel and Secretary, Old Mutual
Shareholder Services (a shareholder
servicing center); Executive Vice
President, General Counsel and
Secretary, Old Mutual Capital, Inc. (an
investment adviser); and Vice President
and Secretary, Old Mutual Advisors Funds
(an investment company)
- ------------------------------------------------------------------------------------------------------------------------------
Lisa O. Brinkley -- 1959 2004 Global Compliance Director, AMVESCAP N/A
Vice President PLC; and Vice President of The AIM
Family of Funds--Registered Trademark--
Formerly: Senior Vice President, A I M
Management Group Inc. (financial
services holding company); Senior Vice
President and Chief Compliance Officer,
A I M Advisors, Inc. and The AIM Family
of Funds--Registered Trademark--; Vice
President and Chief Compliance Officer,
A I M Capital Management, Inc. and A I M
Distributors, Inc.; Vice President, AIM
Investment Services, Inc. and Fund
Management Company; Senior Vice
President and Chief Compliance Officer
of The AIM Family of Funds--Registered
Trademark--; and Senior Vice President
and Compliance Director, Delaware
Investments Family of Funds
- ------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome -- 1956 2003 Senior Vice President and General
Vice President Counsel, AMVESCAP PLC; Director, INVESCO
Funds Group, Inc.; and Vice President of
The AIM Family of Funds--Registered
Trademark--
Formerly: Director, General Counsel, and N/A
Vice President Fund Management Company;
Director, Senior Vice President,
Secretary and General Counsel, A I M
Management Group Inc. (financial
services holding company) and A I M
Advisors, Inc.; Director and Vice
President, INVESCO Distributors, Inc.;
Senior Vice President, A I M
Distributors, Inc.; Vice President,
A I M Capital Management, Inc. and AIM
Investment Services, Inc.; Senior Vice
President, Chief Legal Officer and
Secretary of The AIM Family of
Funds--Registered Trademark--; Chief
Executive Officer and President, INVESCO
Funds Group, Inc.; and Senior Vice
President, Chief Legal Officer and
General Counsel, Liberty Financial
Companies, Inc. and Liberty Funds Group,
LLC
- ------------------------------------------------------------------------------------------------------------------------------
Sidney M. Dilgren -- 1961 2004 Vice President and Fund Treasurer, A I M N/A
Vice President, Principal Advisors, Inc.; and Vice President,
Financial Officer and Treasurer and Principal Officer of The
Treasurer AIM Family of Funds--Registered
Trademark--
Formerly: Senior Vice President, AIM
Investment Services, Inc.; and Vice
President, A I M Distributors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
J. Philip Ferguson -- 1945 2005 Senior Vice President and Chief N/A
Vice President Investment Officer, A I M Advisors Inc.;
Director, Chairman, Chief Executive
Officer, President and Chief Investment
Officer, A I M Capital Management, Inc.;
Executive Vice President, A I M
Management Group Inc. and Vice President
of The AIM Family of Funds--Registered
Trademark--
Formerly: Senior Vice President, AIM
Private Asset Management, Inc.; and
Chief Equity Officer, Senior Vice
President and Senior Investment Officer,
A I M Capital Management, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2003 Director of Cash Management, Managing N/A
Vice President Director and Chief Cash Management
Officer, A I M Capital Management, Inc;
Director and President, Fund Management
Company; and Vice President, A I M
Advisors, Inc. and The AIM Family of
Funds--Registered Trademark--
- ------------------------------------------------------------------------------------------------------------------------------
Todd L. Spillane -- 1958 2006 Senior Vice President, A I M Management N/A
Chief Compliance Officer Group Inc.; Senior Vice President and
Chief Compliance Officer, A I M
Advisors, Inc.; Chief Compliance Officer
of The AIM Family of Funds--Registered
Trademark--; Vice President and Chief
Compliance Officer, A I M Capital
Management, Inc.; and Vice President,
A I M Distributors, Inc., AIM Investment
Services, Inc. and Fund Management
Company
Formerly: Global Head of Product
Development, AIG-Global Investment
Group, Inc.; Chief Compliance Officer
and Deputy General Counsel,
AIG-SunAmerica Asset Management; and
Chief Compliance Officer, Chief
Operating Officer and Deputy General
Counsel, American General Investment
Management
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
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 1.800.959.4246.
<Table>
OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS
11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, PricewaterhouseCoopers
Suite 100 11 Greenway Plaza Inc. LLP
Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana Street
Houston, TX 77046-1173 Suite 100 Suite 2900
Houston, TX 77046-1173 Houston, TX 77002-5678
COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN
Ballard Spahr INDEPENDENT TRUSTEES AIM Investment State Street Bank and
Andrews & Ingersoll, LLP Kramer, Levin, Naftalis Services, Inc. Trust Company
1735 Market Street, 51st & Frankel LLP P.O. Box 4739 225 Franklin Street
Floor 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801
Philadelphia, PA 19103-7599 Americas
New York, NY 10036-2714
</Table>
F-23
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Basic Balanced Fund* AIM Asia Pacific Growth Fund TAXABLE
AIM Basic Value Fund AIM China Fund
AIM Capital Development Fund AIM Developing Markets Fund AIM Enhanced Short Bond Fund
AIM Charter Fund AIM European Growth Fund AIM Floating Rate Fund
AIM Constellation Fund AIM European Small Company Fund(1) AIM High Yield Fund
AIM Diversified Dividend Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Dynamics Fund AIM Global Equity Fund AIM Intermediate Government Fund
AIM Large Cap Basic Value Fund AIM Global Growth Fund AIM International Bond Fund
AIM Large Cap Growth Fund AIM Global Value Fund AIM Limited Maturity Treasury Fund
AIM Mid Cap Basic Value Fund AIM Japan Fund AIM Money Market Fund
AIM Mid Cap Core Equity Fund(1) AIM International Core Equity Fund AIM Short Term Bond Fund
AIM Opportunities I Fund AIM International Growth Fund AIM Total Return Bond Fund
AIM Opportunities II Fund AIM International Small Company Fund(1) Premier Portfolio
AIM Opportunities III Fund AIM Trimark Fund Premier U.S. Government Money Portfolio
AIM S&P 500 Index Fund
AIM Select Equity Fund TAX-FREE
AIM Small Cap Equity Fund SECTOR EQUITY
AIM Small Cap Growth Fund AIM High Income Municipal Fund(1)
AIM Structured Core Fund AIM Advantage Health Sciences Fund AIM Municipal Bond Fund
AIM Structured Growth Fund AIM Energy Fund AIM Tax-Exempt Cash Fund
AIM Structured Value Fund AIM Financial Services Fund AIM Tax-Free Intermediate Fund
AIM Summit Fund AIM Global Health Care Fund Premier Tax-Exempt Portfolio
AIM Trimark Endeavor Fund AIM Global Real Estate Fund
AIM Trimark Small Companies Fund AIM Gold & Precious Metals Fund ALLOCATION SOLUTIONS
AIM Leisure Fund
AIM Multi-Sector Fund AIM Conservative Allocation Fund
AIM Real Estate Fund(1) AIM Growth Allocation Fund
AIM Technology Fund AIM Moderate Allocation Fund
AIM Utilities Fund AIM Moderate Growth Allocation Fund
AIM Moderately Conservative Allocation
Fund
DIVERSIFIED PORTFOLIOS
AIM Income Allocation Fund
AIM International Allocation Fund
==============================================================================
CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES CAREFULLY.
FOR THIS AND OTHER INFORMATION ABOUT AIM FUNDS, OBTAIN A PROSPECTUS FROM YOUR
FINANCIAL ADVISOR AND READ IT CAREFULLY BEFORE INVESTING.
==============================================================================
*Domestic equity and income fund
(1) This Fund has limited public sales of its shares to certain investors. For
more information on who may continue to invest in the Fund, please see the
appropriate prospectus.
If used after January 20, 2007, this report 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. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $429 billion in assets
under management. Data as of August 31, 2006.
AIMinvestments.com I-AHS-AR-1 A I M Distributors, Inc.
<Table>
YOUR GOALS. OUR SOLUTIONS.--Registered Trademark--
- ------------------------------------------------------------------------
Mutual Retirement Annuities College Separately Offshore Cash [AIM INVESTMENTS LOGO APPEARS HERE]
Funds Products Savings Managed Products Management --Registered Trademark--
Plans Accounts
- ------------------------------------------------------------------------
</Table>
FIXED INCOME AIM FLOATING RATE FUND
Annual Report to Shareholders o August 31, 2006
Taxable Noninvestment Grade
Table of Contents
- ---------------------------------------
Supplemental Information .......... 2
Letters to Shareholders ........... 3
Performance Summary ............... 5
Management Discussion ............. 5
Fund Expenses ..................... 7
Long-term Fund Performance ........ 8
Approval of Advisory Agreement .... 10
Schedule of Investments ........... F-1
Financial Statements ............. F-13
Notes to Financial Statements .... F-17
Financial Highlights ............. F-25
Auditor's Report ................. F-31
Tax Disclosures .................. F-32 [COVER GLOBE IMAGE]
Trustees and Officers ............ F-34
[AIM INVESTMENT SOLUTIONS]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[DOMESTIC] [INTERNATIONAL [SECTOR
EQUITY] GLOBAL EQUITY] EQUITY]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[FIXED [ALLOCATION [DIVERSIFIED
INCOME] SOLUTIONS] PORTFOLIOS]
YOUR GOALS. OUR SOLUTIONS. [AIM INVESTMENTS LOGO APPEARS HERE]
--Registered Trademark-- --Registered Trademark--
AIM FLOATING RATE FUND
AIM FLOATING RATE FUND SEEKS TO PROVIDE A HIGH LEVEL OF CURRENT INCOME, AND
SECONDARILY, PRESERVATION OF CAPITAL.
o Unless otherwise stated, information presented in this report is as of
August 31, 2006, and is based on total net assets.
<Table>
<Caption>
ABOUT SHARE CLASSES interest rates and market price reflect sales charges. Performance of an
fluctuations will affect the index of funds reflects fund expenses;
o As of the close of business on April performance of the Fund's investments performance of a market index does not.
13, 2006, AIM Floating Rate Fund in synthetic instruments.
reorganized from a Closed-End to an OTHER INFORMATION
Open-End Fund. Information presented o The Fund may hold loans and
for Class A shares prior to the securities that are illiquid and o The Fund's fiscal year was changed to
reorganization includes financial data involve greater risk than securities August 31, 2006.
for Class B shares of the Closed-End with more liquid markets.
Fund. Information presented for Class o The Fund's 30-day distribution rate is
C shares prior to the reorganization ABOUT INDEXES USED IN THIS REPORT calculated by dividing the annualized sum
includes financial data for Class C of the previous 30 days' dividends
shares of the Closed-End Fund. o The unmanaged LEHMAN BROTHERS U.S. declared by the offering price per share
AGGREGATE BOND INDEX (the Lehman on the last day of the period.
o On July 27, 2006, all Class B1 Aggregate), which represents the U.S.
shares converted into Class A shares investment-grade fixed-rate bond o The returns shown in management's
market (including government and discussion of Fund performance are based
o Class R shares are available only to corporate securities, mortgage on net asset values calculated for
certain retirement plans. Please see pass-through securities and shareholder transactions. Generally
the prospectus for more information. asset-backed securities), is compiled accepted accounting principles require
by Lehman Brothers, a global adjustments to be made to the net assets
PRINCIPAL RISKS OF INVESTING IN THE investment bank. of the Fund at period end for financial
FUND reporting purposes, and as such, the net
o The unmanaged LIPPER CLOSED-END LOAN asset values for shareholder transactions
o The Fund may invest all or PARTICIPATION FUNDS INDEX represents and the returns based on those net asset
substantially all of its assets in an average of the 10 largest values may differ from the net asset
senior secured floating rate loans and Closed-End loan participation funds values and returns reported in the
senior secured debt securities or tracked by Lipper Inc., an independent Financial Highlights.
other securities rated below mutual fund performance monitor.
investment grade. These securities are o Industry classifications used in this
generally considered to have o The unmanaged LIPPER OPEN-END LOAN report are generally according to the
speculative characteristics and are PARTICIPATION FUNDS CATEGORY AVERAGE Global Industry Classification Standard,
subject to greater risk of loss of is the average of the returns for all which was developed by and is the
principal and interest than higher Open-End funds in the loan exclusive property and a service mark of
rated securities. Foreign loans and participation category, as classified Morgan Stanley Capital International Inc.
debt securities have additional risks, by Lipper. These funds invest primarily and Standard & Poor's.
including exchange rate changes, in participation interests in
political and economic developments, collateralized senior corporate loans The Fund provides a complete list of its
the relative lack of information about that have floating or variable rates. holdings four times in each fiscal year,
those companies and the potential lack at the quarter-ends. For the second and
of strict financial and accounting o The unmanaged CSFB LEVERAGED LOAN fourth quarters, the lists appear in the
controls and standards. INDEX is an index of below-investment- Fund's semiannual and annual reports to
grade loans designed to mirror the shareholders. For the first and third
o The Fund may use leverage, which investable universe of the U.S. dollar- quarters, the Fund files the lists with
entails special risks such as denominated leveraged loan market. The the Securities and Exchange Commission
magnifying changes in the value of the index is compiled by Credit Suisse First (SEC) on Form N-Q. The most recent list of
portfolios securities. Boston Corporation, a well-known global portfolio holdings is available at
investment bank. AlMinvestments.com. From our home page,
o The Fund is nondiversified, which click on Products & Performance, then
increases risks. o The Fund is not managed to track the Mutual Funds, then Fund Overview. Select
performance of any particular index, your Fund from the drop-down menu and
o Floating Rate investments are not including the indexes defined here, click on Complete Quarterly Holdings.
money market funds, and the Fund does and consequently, the performance of Shareholders can also look up the Fund's
not seek to maintain a stable net the Fund may deviate significantly Forms N-Q on the SEC Web site at sec.gov.
asset value (NAV). from the performance of the indexes.
o The Fund invests in synthetic o A direct investment cannot be made Continued on page 9
instruments, the value of which may in an index. Unless otherwise
not correlate perfectly with the indicated, index results include
overall securities markets. Rising reinvested dividends, and they do not
===================================================================================== ==========================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, FUND NASDAQ SYMBOLS
WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES.
INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Class A Shares AFRAX
===================================================================================== Class C Shares AFRCX
Class R Shares AFRRX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE ==========================================
AIMinvestments.com
</Table>
2
AIM FLOATING RATE FUND
Dear Fellow AIM Fund Shareholders:
At our meeting at the end of June, your Board completed its
comprehensive review* of each fund's advisory agreement with
A I M Advisors, Inc. (AIM) to make certain your interests
are being served in terms of fees, performance and
operations.
[CROCKETT Looking ahead, your Board finds many reasons to be
PHOTO] positive about AIM's management and strategic direction.
Most importantly, AIM management's investment management
discipline is paying off in terms of improved overall
performance While work remains to be done, AIM's
complex-wide, asset-weighted mutual fund performance for the
trailing one-, three- and five-year periods is at its
highest since 2000 for the periods ended August 31, 2006. We
are also pleased with AIM management's efforts to seek more
cost-effective ways of delivering superior service.
BRUCE L. CROCKETT In addition, AIM is realizing the benefits of belonging
to a leading independent global investment management
organization in its parent company, AMVESCAP PLC, which is
dedicated to helping people worldwide build their financial
security. AMVESCAP managed approximately $429 billion
globally as of August 31, 2006, operating under the AIM,
INVESCO, AIM Trimark, INVESCO PERPETUAL and Atlantic Trust
brands. These companies are home to an abundance of
investment talent that is gradually being integrated and
leveraged into centers of excellence, each focusing on a
given market segment or asset class. Over the next few
years, your Board will be meeting at these various centers
of excellence to learn about their progress and how they can
serve you by enhancing performance and reducing costs.
The seven new AIM funds--which include Asian funds,
structured U.S. equity funds and specialized bond funds--are
an early example of the kind of opportunities the AMVESCAP
organization can provide AIM clients. More information on
these funds can be found on AIM's Web site.
Your Board is very pleased with the overall direction and
progress of the AIM Funds. We're working closely and
effectively with AIM's management to continue this momentum.
As always, your Board is eager to hear your views on how we
might better serve you. Please send your comments in a
letter addressed to me at AIM Investments, AIM Investments
Tower, 11 Greenway Plaza, Suite 100, Houston TX 77046.
Sincerely,
/s/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board
October 18, 2006
* To learn more about all the factors we considered before
approving each fund's advisory agreement, go to the
"Products & Performance" tab at the AIM Web site
(AIMinvestments.com) and click on "Investment Advisory
Agreement Renewals." The approval of advisory agreement
information for your Fund is also included in this annual
report on pages 10-11.
4
AIM FLOATING RATE FUND
MANAGEMENT'S DISCUSSION o Industry position and
OF FUND PERFORMANCE dynamics--company niche, size,
vulnerabilities and suppliers, as well
========================================================================================= as industry challenges and potential.
PERFORMANCE SUMMARY o Assets--their quality (valuation and
convertibility to cash) and
For the eight-month period ending August 31, 2006, the Fund, excluding divisibility.
applicable sales charges, outperformed the Lehman U.S. Aggregate Bond Index (the
Lehman Aggregate). The Fund invests in lower-rated fixed income instruments, o Cash flow--sales and earnings
primarily senior secured corporate loans, and these outperformed the broad breakdown, current and planned cash
market of investment-grade bonds, which the Lehman Aggregate represents. The requirements and earnings
Fund slightly underperformed the CSFB Leveraged Loan Index largely because of predictability.
our conservative investment approach.
o Financial flexibility--access to
Your Fund's long-term performance appears on pages 8 and 9. additional capital.
FUND VS. INDEXES We manage risk by holding daily credit
and trading discussions, combined with
Cumulative total returns, 12/31/05-8/31/06, excluding applicable sales charges. If sales frequent comprehensive credit reviews of
charges were included, returns would be lower. all holdings in the portfolio to
determine whether each company has the
Class A Shares 4.32% ability to meets its objectives.
Class C Shares 4.05
Class R Shares* 4.23 Our sell discipline is designed to
Lehman Brothers U.S. Aggregate Bond Index (Broad Market Index) 2.16 avoid loss of principal. Some conditions
CSFB Leveraged Loan Index (Style-Specific Index) 4.65 that may cause us to reduce or sell a
Lipper Open-End Loan Participation+ Funds Category Average (Peer Group Index) 3.65 position include:
Lipper Closed-End Loan Participation Funds Index (Former Peer Group Index) 4.65
o Unfavorable industry trends, poor
SOURCES: LIPPER INC., BLOOMBERG L.P. performance, or lack of access to
capital that may cause the company to
+ Lipper recently reclassified AIM Floating Rate Fund from the Lipper fail to meet its planned objectives.
Closed-End Loan Participation Funds category to the Lipper Open-End Loan
Participation Funds category. o Earnings potential and/or price
potential improvement has been met or
* Share class incepted during the reporting period. See page 9 for detailed exceeded.
explanation of Fund performance.
o More attractive investment
========================================================================================= opportunities.
HOW WE INVEST low volatility. We choose holdings based MARKET CONDITIONS AND YOUR FUND
on our risk/return and relative value
We believe a carefully selected analysis, conducting an in-depth credit Despite concerns that rising inflation
portfolio of senior secured loans, analysis on all available loans in both would lead the U.S. Federal Reserve
chosen from a broad source of issuers the primary (new issue) and secondary Board (the Fed) to continue raising
and carefully selected based on credit (or trading) markets. We examine each interest rates, the broad bond market,
quality considerations may provide a company's: represented by the Lehman Aggregate,
steady stream of income with some posted a respectable 2.16% return for
capital protection. o Management--experience, depth and the reporting period. The Federal
track record. Reserve increased the target federal
We construct the portfolio with a funds rate four times in increments of
conservative approach, focusing on 0.25%. The reporting period began
credit quality and
(continued)
========================================= ========================================== =========================================
PORTFOLIO COMPOSITION TOP 5 INDUSTRIES* TOP 10 ISSUERS*
By sector, based on total investments 1. Broadcasting & Cable TV 9.4% 1. Spectrum Brands, Inc. 1.4%
2. Diversified Commercial & 2. Cequel III LLC 1.3
Consumer Discretionary 25.8% Professional Services 4.3 3. Level 3 Communications, Inc. 1.3
Industrials 15.3 3. Specialty Chemicals 3.9 4. Adelphia (Olympus Cable
Materials 11.8 4. Leisure Facilities 3.6 Holdings) Communications Corp. 1.3
Health Care 6.8 5. Integrated Telecommunications 5. HealthSouth Corp. 1.2
Telecommunication Services 6.4 Services 3.4 6. Metro-Goldwyn-Mayer, Inc. 1.1
Consumer Staples 6.3 7. Graham Packaging Co., L.P. 1.1
Financials 3.9 Total Net Assets $225.2 million 8. RH Donnelley Corp. 1.1
Energy 3.5 9. Starbound Holdings 1.1
Information Technology 3.0 Total Number of Holdings* 399 10. Qwest Corp. 1.1
Utilities 2.8
Money Market Funds 14.4
The Fund's holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
*Excluding money market fund holdings.
========================================= ========================================== =========================================
5
AIM FLOATING RATE FUND
with this key rate at 4.25% and ended secured loans. While we do have a sector TOM EWALD
with it at 5.25%. After 17 consecutive strategy overlay, our main emphasis is
rate increases, the Fed left its key on fundamentals such as credit quality Portfolio manager, lead
policy rate unchanged at its August 8 and relative valuation. [EWALD manager of AIM Floating
meeting--the first policy meeting PHOTO] Rate Fund. Mr. Ewald
without a hike since May 2004. Continuing our view from late 2005, joined INVESCO in 2000 as
we selectively favored loans in the a credit analyst and was
The bank loan asset class your Fund energy, consumer discretionary, promoted to portfolio manager of certain
invests in fared better than the broad industrials and materials sectors. In other funds in 2001. Prior to joining
bond market as it is not adversely the consumer discretionary sector, our INVESCO, Mr. Ewald was a portfolio
affected by rising interest rates. The largest industry exposure was in manager at another firm. Mr. Ewald
loans in which the Fund invests usually broadcasting and cable TV. In the earned an A.B. from Harvard College and
float above the three-month London industrials sector, loans fell most an M.B.A. from the Darden School of
Interbank Offered Rate (LIBOR), which is often in diversified commercial and Business at the University of Virginia.
the rate of interest at which banks professional services followed by
borrow from each other. Adjusted daily, industrial conglomerates. In materials, GREG STOECKLE
the LIBOR began the period at 4.54% and we favored the specialty chemicals
ended at 5.40%. In line with the move in industry. For the reporting period, we Portfolio manager, manager of AIM
LIBOR, your Fund's yield generally were underweight airlines, automobiles Floating Rate Fund. Mr. Stoeckle joined
increased as the LIBOR rose. and real estate. INVESCO in 1999 and has held several
senior management positions within the
Against this backdrop, bank loans, Our sector allocations changed little bank loan group. He began his investment
represented by the CFSB Leveraged Loan over the eight-month reporting period. career in 1987 as a credit analyst for
Index, returned 4.65% while Class A The small changes were primarily a another firm. Mr. Stoeckle earned a B.S.
shares returned 4.32%, excluding sales result of adjustments in the portfolio from Ursinus College and an M.B.A. from
charges. The Fund slightly as we sought to improve the spread and Saint Joseph's University.
underperformed the CSFB Index mostly due reduce leverage on the Fund. The Fund
to our conservative approach and broadly had been running approximately 10 to 15%
diversified portfolio. leverage. During the reporting period,
we temporarily reduced the leverage to
Key market factors affecting the zero as we transitioned from a
asset class and your Fund for the Closed-End structure to an Open-End
reporting period include loan supply and structure in April. The Closed-End
demand, interest rate spreads, and structure allowed for daily purchases
defaults. In our calendar year report and limited redemptions to a quarterly
for 2005, we indicated that loan supply interval. The new open-end structure
was strong and that demand was rising allows for daily purchases and daily
even faster. This trend continued into redemptions.
the first quarter of 2006 but began to
reverse in the second quarter as supply IN CLOSING
began to outpace demand.
We would like to welcome any new
The surplus of bank loans has shareholders to the Fund and would like
affected both the leveraged loan new to thank existing shareholders for their
issue and secondary markets. As supply continued investment in AIM Floating
has increased, spreads began to widen Rate Fund.
resulting in lower prices and higher
yields. We viewed the softening of the THE VIEWS AND OPINIONS EXPRESSED IN
secondary market as a positive trend as MANAGEMENT'S DISCUSSION OF FUND
it drove down unsustainable prices and PERFORMANCE ARE THOSE OF A I M ADVISORS,
reduced the risk of loss associated with INC. THESE VIEWS AND OPINIONS ARE
the pay down of loans purchased at a SUBJECT TO CHANGE AT ANY TIME BASED ON
premium over par value. Consistent with FACTORS SUCH AS MARKET AND ECONOMIC
your Fund's more conservative approach, CONDITIONS. THESE VIEWS AND OPINIONS MAY
we avoided paying up for loans, NOT BE RELIED UPON AS INVESTMENT ADVICE
especially for companies with higher OR RECOMMENDATIONS, OR AS AN OFFER FOR A
leverage and lower credit quality. PARTICULAR SECURITY. THE INFORMATION IS
NOT A COMPLETE ANALYSIS OF EVERY ASPECT
After a small spike in defaults at OF ANY MARKET, COUNTRY, INDUSTRY,
the end of 2005 to 3.02% the default SECURITY OR THE FUND. STATEMENTS OF FACT
rate fell back to 2.08% as of August 31, ARE FROM SOURCES CONSIDERED RELIABLE,
2006; your Fund experienced no defaults BUT A I M ADVISORS, INC. MAKES NO
during the reporting period. REPRESENTATION OR WARRANTY AS TO THEIR
COMPLETENESS OR ACCURACY. ALTHOUGH
Because the loan market is driven by HISTORICAL PERFORMANCE IS NO GUARANTEE
businesses' specific needs, we are OF FUTURE RESULTS, THESE INSIGHTS MAY
limited to the loans that are available HELP YOU UNDERSTAND OUR INVESTMENT
in the market at any given time. Also, MANAGEMENT PHILOSOPHY.
certain sectors and industries are more
likely than others to use senior See important Fund and index
disclosures on the inside front cover.
FOR A PRESENTATION OF YOUR FUND'S
LONG-TERM PERFORMANCE, PLEASE SEE PAGES
8 AND 9.
6
AIM FLOATING RATE FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE ended August 31, 2006, appear in the
table "Cumulative Total Returns" on page
As a shareholder of the Fund, you incur together with the amount you invested, 9. The actual cumulative total returns
two types of costs: (1) transaction to estimate the expenses that you paid at net asset value after expenses for
costs, which may include sales charges over the period. Simply divide your Class R for the period as of close of
(loads) on purchase payments or account value by $1,000 (for example, an business April 13, 2006 through August
contingent deferred sales charges on $8,600 account value divided by $1,000 = 31, 2006, appear on page 9.
redemptions; and redemption fees, if 8.6), then multiply the result by the
any; and (2) ongoing costs, including number in the table under the heading The hypothetical account values and
management fees; distribution and/or entitled "Actual Expenses Paid During expenses may not be used to estimate the
service fees (12b-1); and other Fund Period" to estimate the expenses you actual ending account balance or
expenses. This example is intended to paid on your account during this period expenses you paid for the period. You
help you understand your ongoing costs (as of close of business April 13, 2006 may use this information to compare the
(in dollars) of investing in the Fund through August 31, 2006 for the Class R ongoing costs of investing in the Fund
and to compare these costs with ongoing shares). Because the actual ending and other funds. To do so, compare this
costs of investing in other mutual account value and expense information in 5% hypothetical example with the 5%
funds. With the exception of the actual the example is not based upon a six hypothetical examples that appear in the
ending account value and expenses of the month period for the Class R shares, the shareholder reports of the other funds.
Class R shares, the example is based on ending account value and expense
an investment of $1,000 invested at the information may not provide a meaningful Please note that the expenses shown
beginning of the period and held for the comparison to mutual funds that provide in the table are meant to highlight your
entire period March 1, 2006, through such information for a full six month ongoing costs only and do not reflect
August 31, 2006. The actual ending period. any transactional costs, such as sales
account value and expenses of the Class charges (loads) on purchase payments,
R shares in the below example are based HYPOTHETICAL EXAMPLE FOR contingent deferred sales charges on
on an investment of $1,000 invested as COMPARISON PURPOSES redemptions, and redemption fees, if
of close of business April 13, 2006 (the any. Therefore, the hypothetical
date the share class commenced The table below also provides information is useful in comparing
operations) and held through August 31, information about hypothetical account ongoing costs only, and will not help
2006. values and hypothetical expenses based you determine the relative total costs
on the Fund's actual expense ratio and of owning different funds. In addition,
ACTUAL EXPENSES an assumed rate of return of 5% per year if these transactional costs were
before expenses, which is not the Fund's included, your costs would have been
The table below provides information actual return. The Fund's actual higher.
about actual account values and actual cumulative total returns at net asset
expenses. You may use the information in value after expenses (except Class R)
this table, for the period
====================================================================================================================================
ACTUAL HYPOTHETICAL
(5% ANNUAL RETURN BEFORE EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (3/1/06) (8/31/06)(1) PERIOD(2,4) (8/31/06) PERIOD(5) RATIO(3)
Class A $1,000.00 $1,029.50 $7.62 $1,017.69 $7.58 1.49%
Class C 1,000.00 1,028.40 9.87 1,015.48 9.80 1.93
Class R (1) 1,000.00 1,018.00 5.88 1,017.54 7.73 1.52
(1) The actual ending account value is based on the actual total return of the Fund for the period March 1, 2006, through August 31,
2006 (as of close of business April 13, 2006, through August 31, 2006, for the Class R shares), after actual expenses and will
differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of
5% before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the
period, multiplied by 184/365 to reflect the most recent fiscal half-year. For the Class R shares actual expenses are equal to
the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 140 (as of
close of business April 13, 2006, through August 31, 2006)/365. Because the Class R shares have not been in existence for a full
six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund
expense information of classes that show such data for a full six month period and, because the actual ending account value and
expense information in the expense example covers a short time period, return and expense data may not be indicative of return
and expense data for longer time periods.
(3) As of close of business April 13, 2006, the Fund, which was previously a closed-end fund, was reorganized as an open-end fund.
In addition, prior to the reorganization, the closed-end fund employed a leverage strategy. The Fund intends to implement the
leverage strategy in the future. The annualized expense ratio restated as if the expenses of the open end fund and the use of
the leverage strategy had been in effect throughout the entire most recent fiscal half year (as of close of business on April
13, 2006, through August 31, 2006, for the Class R shares) is 1.81%, 2.31% and 2.06% for the Class A, C and R shares,
respectively.
(4) The actual expenses paid restated as if the changes discussed above in footnote 3 had been in effect throughout the entire most
recent fiscal half year 2006 (as of close of business on April 13, 2006, through August 31, 2006, for the Class R shares) are
$9.26, $11.81, and $7.97 for the Class A, C and R shares, respectively.
(5) Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the
period, multiplied by 184/365 to reflect a one-half year period. The hypothetical ending account value and expenses may be used
to compare ongoing costs of investing in Class R shares of the Fund and other funds because such data is based on a full six
month period. The hypothetical expenses paid restated as if the changes discussed above in footnote 3 had been in effect
throughout the entire most recent fiscal half year are $9.20, $11.72, and $10.46 for the Class A, C and R shares, respectively.
====================================================================================================================================
7
AIM FLOATING RATE FUND
YOUR FUND'S LONG-TERM PERFORMANCE
====================================================================================================================================
Past performance cannot guarantee RESULTS OF A $10,000 INVESTMENT
comparable future results. Index data from 5/1/97, Fund data from 4/30/97
The data shown in the chart include [MOUNTAIN CHART]
reinvested distributions, applicable
sales charges, Fund expenses and LEHMAN BROTHERS CSFB
management fees. Index results include DATE AIM FLOATING RATE FUND- U.S. AGGREGATE LEVERAGED
reinvested dividends, but they do not CLASS A SHARES BOND INDEX LOAN INDEX
reflect sales charges. Performance of an
index of funds reflects fund expenses 4/30/97 $10000 $10000
and management fees; performance of a 5/97 $9812 10095 10075
market index does not. Performance shown 6/97 9872 10215 10164
in the chart and table(s) does not 7/97 9935 10491 10236
reflect deduction of taxes a shareholder 8/97 10009 10402 10309
would pay on Fund distributions or sale 9/97 10070 10555 10373
of Fund shares. Performance of the 10/97 10143 10708 10412
indexes does not reflect the effects of 11/97 10202 10757 10453
taxes. 12/97 10266 10866 10514
1/98 10330 11005 10575
This chart, which is a logarithmic 2/98 10386 10996 10632
chart, presents the fluctuations in the 3/98 10437 11033 10715
value of the Fund and its indexes. We 4/98 10495 11091 10799
believe that a logarithmic chart is more 5/98 10545 11196 10876
effective than other types of charts in 6/98 10605 11291 10949
illustrating changes in value during the 7/98 10672 11315 11009
early years shown in the chart. The 8/98 10737 11499 11029
vertical axis, the one that indicates 9/98 10680 11768 10979
the dollar value of an investment, is 10/98 10699 11706 10887
constructed with each segment 11/98 10725 11773 10964
representing a percent change in the 12/98 10806 11808 11073
value of the investment. In this chart, 1/99 10878 11892 11101
each segment represents a doubling, or 2/99 10909 11684 11053
100% change, in the value of the 3/99 10969 11748 11120
investment. In other words, the space 4/99 11018 11786 11201
between $5,000 and $10,000 is the same 5/99 11083 11682 11345
size as the space between $10,000 and 6/99 11146 11645 11448
$20,000. 7/99 11215 11594 11524
8/99 11238 11589 11482
9/99 11270 11723 11455
10/99 11315 11766 11439
11/99 11346 11765 11513
12/99 11401 11709 11591
1/00 11474 11670 11704
2/00 11531 11811 11743
3/00 11557 11967 11650
4/00 11605 11933 11693
5/00 11652 11927 11791
6/00 11732 12175 11863
7/00 11781 12286 11947
8/00 11852 12464 12009
9/00 11883 12542 12048
10/00 11903 12625 12053
11/00 11934 12832 12080
12/00 11973 13071 12164
1/01 12000 13285 12238
2/01 12112 13401 12343
3/01 12075 13468 12358
4/01 12031 13411 12307
5/01 12022 13492 12454
6/01 12059 13543 12469
7/01 12045 13846 12500
8/01 12069 14005 12601
9/01 12022 14169 12360
10/01 11834 14465 12167
11/01 11802 14266 12358
12/01 11794 14174 12487
1/02 11904 14289 12555
2/02 11927 14428 12507
3/02 12067 14188 12652
4/02 12166 14464 12787
5/02 12213 14587 12779
6/02 12245 14712 12586
7/02 12151 14890 12395
8/02 12098 15142 12359
9/02 12115 15387 12386
10/02 12005 15316 12220
11/02 12003 15312 12430
12/02 12118 15629 12625
1/03 12220 15643 12796
2/03 12256 15858 12863
3/03 12258 15846 12905
4/03 12404 15977 13086
5/03 12524 16274 13262
6/03 12640 16242 13449
7/03 12715 15696 13541
8/03 12725 15800 13570
9/03 12805 16219 13707
10/03 12858 16068 13830
11/03 12939 16106 13930
12/03 12974 16271 14016
1/04 13090 16401 14162
2/04 13159 16578 14206
3/04 13181 16702 14265
4/04 13260 16268 14330
5/04 13279 16203 14362
6/04 13349 16295 14454
7/04 13396 16456 14504
8/04 13434 16771 14527
9/04 13596 16816 14582
10/04 13668 16957 14654
11/04 13754 16822 14734
12/04 13799 16976 14801
1/05 13861 17083 14878
2/05 13967 16983 14965
3/05 14002 16896 15041
4/05 14006 17124 15054
5/05 13983 17309 15066
6/05 14069 17404 15167
7/05 14173 17246 15285
8/05 14275 17467 15392
9/05 14315 17287 15464
10/05 14361 17150 15514
11/05 14407 17226 15565
12/05 14489 17389 15643
1/06 14573 17391 15746
2/06 14682 17448 15856
3/06 14786 17277 15973
4/06 14876 17246 16049
5/06 14936 17227 16111
6/06 14946 17263 16178
7/06 15032 17497 16262
8/06 15110 17766 16371
====================================================================================================================================
8
AIM FLOATING RATE FUND
======================================== ======================================== ========================================
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
As of 8/31/06, including applicable As of 6/30/06, the most recent calendar 6 months ended 8/31/06,excluding
sales charges quarter-end, including applicable sales applicable sales charges
charges
CLASS A SHARES Class A Shares 2.95%
Inception (5/1/97) 4.52% CLASS A SHARES Class C Shares 2.84
5 Years 4.08 Inception (5/1/97) 4.48%
1 Year 3.27 5 Years 3.87 4/13/06-8/31/06
1 Year 3.59 Class R Shares 1.80%
CLASS C SHARES
Inception (3/31/00) 3.97% CLASS C SHARES
5 Years 4.33 Inception (3/31/00) 3.90%
1 Year 4.64 5 Years 4.12
1 Year 5.05
CLASS R SHARES
Inception 4.80% CLASS R SHARES
5 Years 4.59 Inception 4.77%
1 Year 5.79 5 Years 4.38
1 Year 6.19
======================================== ======================================== ========================================
AS OF THE CLOSE OF BUSINESS ON APRIL THE PERFORMANCE DATA QUOTED REPRESENT IS 1% FOR THE FIRST YEAR AFTER PURCHASE.
13, 2006, THE FUND REORGANIZED FROM A PAST PERFORMANCE AND CANNOT GUARANTEE CLASS R SHARES DO NOT HAVE A FRONT-END
CLOSED-END FUND TO AN OPEN-END FUND. COMPARABLE FUTURE RESULTS; CURRENT SALES CHARGE; RETURNS ARE SHOWN AT NET
PERFORMANCE MAY BE LOWER OR HIGHER. ASSET VALUE AND DO NOT REFLECT A 0.75%
CLASS A AND C SHARE RETURNS PRIOR TO PLEASE VISIT AIMINVESTMENTS.COM FOR THE CDSC WHICH MAY BE IMPOSED ON A TOTAL
APRIL 13, 2006, ARE THE HISTORICAL MOST RECENT MONTH-END PERFORMANCE. REDEMPTION OF RETIREMENT PLAN ASSETS
PERFORMANCE OF THE CLOSED-END FUND'S PERFORMANCE FIGURES REFLECT FUND WITHIN THE FIRST YEAR.
CLASS B AND C SHARES, RESPECTIVELY. EXPENSES, THE REINVESTMENT OF
DISTRIBUTIONS, AND CHANGES IN NET ASSET THE PERFORMANCE OF THE FUND'S SHARE
THE INCEPTION DATE FOR THE CLASS R VALUE. INVESTMENT RETURN AND PRINCIPAL CLASSES WILL DIFFER PRIMARILY DUE TO
SHARES IS APRIL 13, 2006; RETURNS SINCE WILL FLUCTUATE SO THAT YOU MAY HAVE A DIFFERENT SALES CHARGE STRUCTURES AND
THAT DATE ARE HISTORICAL RETURNS. ALL GAIN OR LOSS WHEN YOU SELL SHARES. CLASS EXPENSES.
OTHER RETURNS ARE BLENDED RETURNS OF
HISTORICAL CLASS R SHARES, AND RESTATED CLASS A SHARE PERFORMANCE REFLECTS A REDEMPTION FEE OF 2% WILL BE
PERFORMANCE OF THE CLOSED-END FUND'S THE MAXIMUM 2.50% SALES CHARGE. CLASS C IMPOSED ON CERTAIN REDEMPTIONS OR
CLASS B SHARES (FOR THE PERIODS PRIOR TO SHARE PERFORMANCE REFLECTS THE EXCHANGES OUT OF THE FUND WITHIN 30 DAYS
THE INCEPTION DATE OF THE CLASS R APPLICABLE CONTINGENT DEFERRED SALES OF PURCHASE. EXCEPTIONS TO THE
SHARES) AT NAV OF THE CLOSED-END FUND'S CHARGE (CDSC) FOR THE PERIOD INVOLVED. REDEMPTION FEE ARE LISTED IN THE FUND'S
CLASS B SHARES. THE CLOSED-END FUND'S THE CDSC ON CLASS C SHARES PROSPECTUS.
CLASS B SHARE INCEPTION DATE IS MAY
1, 1997. HAD FEES NOT BEEN WAIVED AND/OR
EXPENSES REIMBURSED ON CLASS C SHARES,
RETURNS WOULD HAVE BEEN LOWER.
Continued from inside front cover
Copies of the Fund's Forms N-Q may be A description of the policies and Information regarding how the Fund voted
reviewed and copied at the SEC Public procedures that the Fund uses to proxies related to its portfolio
Reference Room in Washington, D.C. You determine how to vote proxies relating securities during the 12 months ended
can obtain information on the operation to portfolio securities is available June 30, 2006, is available at our Web
of the Public Reference Room, including without charge, upon request, from our site. Go to AIMinvestments.com, access
information about duplicating fee Client Services department at the About Us tab, click on Required
charges, by calling 202-942-8090 or 800-959-4246 or on the AIM Web site, Notices and then click on Proxy Voting
800-732-0330, or by electronic request AIMinvestments.com. On the home page, Activity. Next, select the Fund from the
at the following e-mail address: scroll down and click on AIM Funds Proxy drop-down menu. The information is also
publicinfo@sec.gov. The SEC file numbers Policy. The information is also available on the SEC Web site, sec.gov.
for the Fund are 811-09913 and available on the SEC Web site, sec.gov.
333-36074.
9
AIM FLOATING RATE FUND
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
The Board of Trustees of AIM Counselor the review of these and other factors, Advisory Agreement was fair and
Series Trust (the "Board") oversees the the Board concluded that the quality of reasonable.
management of AIM Floating Rate Fund (the services to be provided by AIM was
"Fund") and, as required by law, appropriate and that AIM currently is o Fees relative to those of comparable
determines annually whether to approve providing satisfactory services in funds with other advisors. The Board
the continuance of the Fund's advisory accordance with the terms of the Advisory reviewed the advisory fee rate for the
agreement with A I M Advisors, Inc. Agreement. Fund under the Advisory Agreement. The
("AIM"). Based upon the recommendation of Board compared effective contractual
the Investments Committee of the Board, o The performance of the Fund relative to advisory fee rates at a common asset
at a meeting held on June 27, 2006, the comparable funds. The Board reviewed the level at the end of the past calendar
Board, including all of the independent performance of AIM Floating Rate Fund, a year and noted that the Fund's rate was
trustees, approved the continuance of the closed-end interval fund which was below the median rate of the funds
advisory agreement (the "Advisory converted into the Fund (the "Predecessor advised by other advisors with investment
Agreement") between the Fund and AIM for Fund"), during the past one, three and strategies comparable to those of the
another year, effective July 1, 2006. five calendar years against the Fund that the Board reviewed. The Board
performance of funds advised by other noted that AIM has agreed to limit the
The Board considered the factors advisors with investment strategies Fund's total annual operating expenses,
discussed below in evaluating the comparable to those of the Predecessor as discussed below. Based on this review,
fairness and reasonableness of the Fund. The Board noted that the the Board concluded that the advisory fee
Advisory Agreement at the meeting on June Predecessor Fund's performance was rate for the Fund under the Advisory
27, 2006 and as part of the Board's comparable to the median performance of Agreement was fair and reasonable.
ongoing oversight of the Fund. In their such comparable funds for the one year
deliberations, the Board and the period and below such median performance o Expense limitations and fee waivers.
independent trustees did not identify any for the three and five year periods. The Board noted that AIM has voluntarily
particular factor that was controlling, Based on this review and after taking agreed to waive fees and/or limit
and each trustee attributed different account of all of the other factors that expenses of the Fund in an amount
weights to the various factors. the Board considered in determining necessary to limit total annual operating
whether to continue the Advisory expenses to a specified percentage of
One responsibility of the independent Agreement for the Fund, the Board average daily net assets for each class
Senior Officer of the Fund is to manage concluded that no changes should be made of the Fund. The Board considered the
the process by which the Fund's proposed to the Fund and that it was not necessary voluntary nature of this fee
management fees are negotiated to ensure to change the Fund's portfolio management waiver/expense limitation and noted that
that they are negotiated in a manner team at this time. Although the it can be terminated at any time by AIM
which is at arms' length and reasonable. independent written evaluation of the without further notice to investors. The
To that end, the Senior Officer must Fund's Senior Officer (discussed below) Board considered the effect this fee
either supervise a competitive bidding only considered Fund performance through waiver/expense limitation would have on
process or prepare an independent written the most recent calendar year, the Board the Fund's estimated expenses and
evaluation. The Senior Officer has also reviewed more recent Fund concluded that the levels of fee
recommended an independent written performance, which did not change their waivers/expense limitations for the Fund
evaluation in lieu of a competitive conclusions. were fair and reasonable.
bidding process and, upon the direction
of the Board, has prepared such an o The performance of the Fund relative to o Breakpoints and economies of scale. The
independent written evaluation. Such indices. The Board reviewed the Board reviewed the structure of the
written evaluation also considered performance of the Predecessor Fund Fund's advisory fee under the Advisory
certain of the factors discussed below. during the past one, three and five Agreement, noting that it contains three
In addition, as discussed below, the calendar years against the performance of breakpoints. The Board reviewed the level
Senior Officer made a recommendation to the Lipper Closed-End Loan Participation of the Fund's advisory fees, and noted
the Board in connection with such written Index. The Board noted that the that such fees, as a percentage of the
evaluation. Predecessor Fund's performance was Fund's net assets, would decrease as net
comparable to the performance of such assets increase because the Advisory
The discussion below serves as a Index for the one year period and below Agreement includes breakpoints. The Board
summary of the Senior Officer's such Index for the three and five year noted that, due to the Fund's asset
independent written evaluation and periods. Based on this review and after levels at the end of the past calendar
recommendation to the Board in connection taking account of all of the other year and the way in which the advisory
therewith, as well as a discussion of the factors that the Board considered in fee breakpoints have been structured, the
material factors and the conclusions with determining whether to continue the Fund has yet to benefit from the
respect thereto that formed the basis for Advisory Agreement for the Fund, the breakpoints. The Board concluded that the
the Board's approval of the Advisory Board concluded that no changes should be Fund's fee levels under the Advisory
Agreement. After consideration of all of made to the Fund and that it was not Agreement therefore would reflect
the factors below and based on its necessary to change the Fund's portfolio economies of scale at higher asset levels
informed business judgment, the Board management team at this time. Although and that it was not necessary to change
determined that the Advisory Agreement is the independent written evaluation of the the advisory fee breakpoints in the
in the best interests of the Fund and its Fund's Senior Officer (discussed below) Fund's advisory fee schedule.
shareholders and that the compensation to only considered Fund performance through
AIM under the Advisory Agreement is fair the most recent calendar year, the Board o Investments in affiliated money market
and reasonable and would have been also reviewed more recent Fund funds. The Board also took into account
obtained through arm's length performance, which did not change their the fact that uninvested cash and cash
negotiations. conclusions. collateral from securities lending
arrangements, if any (collectively, "cash
Unless otherwise stated, information o Meetings with the Fund's portfolio balances") of the Fund may be invested in
presented below is as of June 27, 2006 managers and investment personnel. With money market funds advised by AIM
and does not reflect any changes that may respect to the Fund, the Board is pursuant to the terms of an SEC exemptive
have occurred since June 27, 2006, meeting periodically with such Fund's order. The Board found that the Fund may
including but not limited to changes to portfolio managers and/or other realize certain benefits upon investing
the Fund's performance, advisory fees, investment personnel and believes that cash balances in AIM advised money market
expense limitations and/or fee waivers. such individuals are competent and able funds, including a higher net return,
to continue to carry out their increased liquidity, increased
o The nature and extent of the advisory responsibilities under the Advisory diversification or decreased transaction
services to be provided by AIM. The Board Agreement. costs. The Board also found that the Fund
reviewed the services to be provided by will not receive reduced services if it
AIM under the Advisory Agreement. Based o Overall performance of AIM. The Board invests its cash balances in such money
on such review, the Board concluded that considered the overall performance of AIM market funds. The Board noted that, to
the range of services to be provided by in providing investment advisory and the extent the Fund invests uninvested
AIM under the Advisory Agreement was portfolio administrative services to the cash in affiliated money market funds,
appropriate and that AIM currently is Fund and concluded that such performance AIM has voluntarily agreed to waive a
providing services in accordance with the was satisfactory. portion of the advisory fees it receives
terms of the Advisory Agreement. from the Fund attributable to such
o Fees relative to those of clients of investment. The Board further determined
o The quality of services to be provided AIM with comparable investment that the proposed securities lending
by AIM. The Board reviewed the strategies. The Board reviewed the program and related procedures with
credentials and experience of the effective advisory fee rate (before respect to the lending Fund is in the
officers and employees of AIM who will waivers) for the Fund under the Advisory best interests of the lending Fund and
provide investment advisory services to Agreement. The Board noted that this rate its respective shareholders. The Board
the Fund. In reviewing the qualifications was above the total advisory fee rates therefore concluded that the investment
of AIM to provide investment advisory for two separately managed accounts/wrap of cash collateral received in connection
services, the Board considered such accounts managed by an AIM affiliate with with the securities lending program in
issues as AIM's portfolio and product investment strategies comparable to those the money market funds according to the
review process, various back office of the Fund. The Board noted that AIM has procedures is in the best interests of
support functions provided by AIM and agreed to limit the Fund's total the lending Fund and its respective
AIM's equity and fixed income trading operating expenses, as discussed below. shareholders.
operations. Based on Based on this review, the Board concluded
that the advisory fee rate for the Fund o Independent written evaluation and
under the recommendations of the Fund's Senior
Officer. The Board noted
(continued)
10
AIM FLOATING RATE FUND
that, upon their direction, the Senior APPROVAL OF SUB-ADVISORY AGREEMENT o The performance of the Fund relative
Officer of the Fund, who is independent to indices. The Board reviewed the
of AIM and AIM's affiliates, had prepared The Board oversees the management of performance of the Predecessor Fund
an independent written evaluation in the Fund and, as required by law, during the past one, three and five
order to assist the Board in determining determines annually whether to approve calendar years against the performance
the reasonableness of the proposed the continuance of the Fund's of the Lipper Closed-End Loan
management fees of the AIM Funds, sub-advisory agreement. Based upon the Participation Index. The Board noted
including the Fund. The Board noted that recommendation of the Investments that the Predecessor Fund's performance
the Senior Officer's written evaluation Committee of the Board, at a meeting was comparable to the performance of
had been relied upon by the Board in this held on June 27, 2006, the Board, such Index for the one year period and
regard in lieu of a competitive bidding including all of the independent below such Index for the three and five
process. In determining whether to trustees, approved the continuance of year periods. Based on this review and
continue the Advisory Agreement for the the sub-advisory agreement (the after taking account of all of the other
Fund, the Board considered the Senior "Sub-Advisory Agreement") between factors that the Board considered in
Officer's written evaluation. INVESCO Senior Secured Management, Inc. determining whether to continue the
(the "Sub-Advisor") and AIM with respect Advisory Agreement for the Fund, the
o Profitability of AIM and its to the Fund for another year, effective Board concluded that no changes should
affiliates. The Board reviewed July 1, 2006. be made to the Fund and that it was not
information concerning the profitability necessary to change the Fund's portfolio
of AIM's (and its affiliates') investment The Board considered the factors management team at this time. Although
advisory and other activities and its discussed below in evaluating the the independent written evaluation of
financial condition. The Board considered fairness and reasonableness of the the Fund's Senior Officer (discussed
the overall profitability of AIM, as well Sub-Advisory Agreement at the meeting on below) only considered Fund performance
as the profitability of AIM in connection June 27, 2006 and as part of the Board's through the most recent calendar year,
with managing the Fund. The Board noted ongoing oversight of the Fund. In their the Board also reviewed more recent Fund
that AIM's operations remain profitable, deliberations, the Board and the performance, which did not change their
although increased expenses in recent independent trustees did not identify conclusions.
years have reduced AIM's profitability. any particular factor that was
Based on the review of the profitability controlling, and each trustee attributed o Meetings with the Fund's portfolio
of AIM's and its affiliates' investment different weights to the various managers and investment personnel. With
advisory and other activities and its factors. respect to the Fund, the Board is
financial condition, the Board concluded meeting periodically with such Fund's
that the compensation to be paid by the The discussion below serves as a portfolio managers and/or other
Fund to AIM under its Advisory Agreement discussion of the material factors and investment personnel and believes that
was not excessive. the conclusions with respect thereto such individuals are competent and able
that formed the basis for the Board's to continue to carry out their
o Benefits of soft dollars to AIM. The approval of the Sub-Advisory Agreement. responsibilities under the Sub-Advisory
Board considered the benefits realized by After consideration of all of the Agreement.
AIM as a result of brokerage transactions factors below and based on its informed
executed through "soft dollar" business judgment, the Board determined o Overall performance of the
arrangements. Under these arrangements, that the Sub-Advisory Agreement is in Sub-Advisor. The Board considered the
brokerage commissions paid by the Fund the best interests of the Fund and its overall performance of the Sub-Advisor
and/or other funds advised by AIM are shareholders and that the compensation in providing investment advisory
used to pay for research and execution to the Sub-Advisor under the services to the Fund and concluded that
services. This research may be used by Sub-Advisory Agreement is fair and such performance was satisfactory.
AIM in making investment decisions for reasonable.
the Fund. The Board concluded that such o Fees relative to those of clients of
arrangements were appropriate. Unless otherwise stated, information the Sub-Advisor with comparable
presented below is as of June 27, 2006 investment strategies. The Board
o AIM's financial soundness in light of and does not reflect any changes that reviewed the sub-advisory fee rate for
the Fund's needs. The Board considered may have occurred since June 27, 2006, the Fund under the Sub-Advisory
whether AIM is financially sound and has including but not limited to changes to Agreement and the sub-advisory fees paid
the resources necessary to perform its the Fund's performance. thereunder. The Board noted that this
obligations under the Advisory Agreement, rate was below the total advisory fee
and concluded that AIM has the financial o The nature and extent of the advisory rate for two separately managed
resources necessary to fulfill its services to be provided by the accounts/wrap accounts managed by the
obligations under the Advisory Agreement. Sub-Advisor. The Board reviewed the Sub-Advisor with investment strategies
services to be provided by the comparable to those of the Fund. The
o Historical relationship between the Sub-Advisor under the Sub-Advisory Board noted that AIM has agreed to limit
Fund and AIM. In determining whether to Agreement. Based on such review, the the Fund's total annual operating
approve the Advisory Agreement for the Board concluded that the range of expenses. The Board also considered the
Fund, the Board also considered the prior services to be provided by the services to be provided by the
relationship between AIM, the Predecessor Sub-Advisor under the Sub-Advisory Sub-Advisor pursuant to the Sub-Advisory
Fund and the Fund, as well as the Board's Agreement was appropriate and that the Agreement and the services to be
knowledge of AIM's operations, and Sub-Advisor currently is providing provided by AIM pursuant to the Advisory
concluded that it was beneficial to services in accordance with the terms of Agreement, as well as the allocation of
maintain the current relationship, in the Sub-Advisory Agreement. fees between AIM and the Sub-Advisor
part, because of such knowledge. The pursuant to the Sub-Advisory Agreement.
Board also reviewed the general nature of o The quality of services to be provided The Board noted that the sub-advisory
the non-investment advisory services by the Sub-Advisor. The Board reviewed fees have no direct effect on the Fund
currently performed by AIM and its the credentials and experience of the or its shareholders, as they are paid by
affiliates, such as administrative, officers and employees of the AIM to the Sub-Advisor, and that AIM and
transfer agency and distribution Sub-Advisor who will provide investment the Sub-Advisor are affiliates. Based on
services, and the fees received by AIM advisory services to the Fund. Based on this review, the Board concluded that
and its affiliates for performing such the review of these and other factors, the sub-advisory fee rate under the
services. In addition to reviewing such the Board concluded that the quality of Sub-Advisory Agreement was fair and
services, the trustees also considered services to be provided by the reasonable.
the organizational structure employed by Sub-Advisor was appropriate and that the
AIM and its affiliates to provide those Sub-Advisor currently is providing o Profitability of AIM and its
services. Based on the review of these satisfactory services in accordance with affiliates. The Board reviewed
and other factors, the Board concluded the terms of the Sub-Advisory Agreement. information concerning the profitability
that AIM and its affiliates were of AIM's (and its affiliates')
qualified to continue to provide o The performance of the Fund relative to investment advisory and other activities
non-investment advisory services to the comparable funds. The Board reviewed the and its financial condition. The Board
Fund, including administrative, transfer performance of the Predecessor Fund considered the overall profitability of
agency and distribution services, and during the past one, three and five AIM, as well as the profitability of AIM
that AIM and its affiliates currently are calendar years against the performance of in connection with managing the
providing satisfactory non-investment funds advised by other advisors with Predecessor Fund. The Board noted that
advisory services to the Fund. investment strategies comparable to those AIM's operations remain profitable,
of the Predecessor Fund. The Board noted although increased expenses in recent
o Other factors and current trends. The that the Predecessor Fund's performance years have reduced AIM's profitability.
Board considered the steps that AIM and was comparable to the median performance Based on the review of the profitability
its affiliates have taken over the last of such comparable funds for the one year of AIM's and its affiliates' investment
several years, and continue to take, in period and below such median performance advisory and other activities and its
order to improve the quality and for the three and five year periods. financial condition, the Board concluded
efficiency of the services they provide Based on this review and after taking that the compensation to be paid by the
to the Funds in the areas of investment account of all of the other factors that Fund to AIM under its Advisory Agreement
performance, product line the Board considered in determining was not excessive.
diversification, distribution, fund whether to continue the Advisory
operations, shareholder services and Agreement for the Fund, the Board o The Sub-Advisor's financial soundness
compliance. The Board concluded that concluded that no changes should be made in light of the Fund's needs. The Board
these steps taken by AIM have improved, to the Fund and that it was not necessary considered whether the Sub-Advisor is
and are likely to continue to improve, to change the Fund's portfolio management financially sound and has the resources
the quality and efficiency of the team at this time. Although the necessary to perform its obligations
services AIM and its affiliates provide independent written evaluation of the under the Sub-Advisory Agreement, and
to the Fund in each of these areas, and Fund's Senior Officer (discussed below) concluded that the Sub-Advisor has the
support the Board's approval of the only considered Fund performance through financial resources necessary to fulfill
continuance of the Advisory Agreement for the most recent calendar year, the Board its obligations under the Sub-Advisory
the Fund. also reviewed more recent Fund Agreement.
performance, which did not change their
conclusions.
11
Supplement to Annual Report dated 8/31/06
AIM FLOATING RATE FUND
======================================== INSTITUTIONAL CLASS SHARES HAVE NO SALES
INSTITUTIONAL CLASS SHARES AVERAGE ANNUAL TOTAL RETURNS CHARGE; THEREFORE, PERFORMANCE IS AT NET
For periods ended 8/31/06 ASSET VALUE (NAV). PERFORMANCE OF
The following information has been INSTITUTIONAL CLASS SHARES WILL DIFFER
prepared to provide Institutional Class Inception 4.82% FROM PERFORMANCE OF OTHER SHARE CLASSES
shareholders with a performance overview 5 Years 4.63 PRIMARILY DUE TO DIFFERING SALES CHARGES
specific to their holdings. 1 Year 5.99 AND CLASS EXPENSES.
Institutional Class shares are offered 6 Months* 3.05
exclusively to institutional investors, ======================================== PLEASE NOTE THAT PAST PERFORMANCE IS
including defined contribution plans NOT INDICATIVE OF FUTURE RESULTS. MORE
that meet certain criteria. AVERAGE ANNUAL TOTAL RETURNS RECENT RETURNS MAY BE MORE OR LESS THAN
For periods ended 6/30/06, most recent THOSE SHOWN. ALL RETURNS ASSUME
calendar quarter-end REINVESTMENT OF DISTRIBUTIONS AT NAV.
INVESTMENT RETURN AND PRINCIPAL VALUE
Inception 4.78% WILL FLUCTUATE SO YOUR SHARES, WHEN
5 Years 4.40 REDEEMED, MAY BE WORTH MORE OR LESS THAN
1 Year 6.30 THEIR ORIGINAL COST. SEE FULL REPORT FOR
6 Months* 3.21 INFORMATION ON COMPARATIVE BENCHMARKS.
PLEASE CONSULT YOUR FUND PROSPECTUS FOR
*Cumulative total return that has not MORE INFORMATION. FOR THE MOST CURRENT
been annualized MONTH-END PERFORMANCE, PLEASE CALL
======================================== 800-451-4246 OR VISIT
AIMinvestments.com.
CUMULATIVE TOTAL RETURNS
4/13/06--8/31/06
Institutional Class 2.00%
========================================
AS OF THE CLOSE OF BUSINESS ON APRIL 13,
2006, THE FUND REORGANIZED FROM A
CLOSED-END FUND TO AN OPEN-END FUND. THE
INCEPTION DATE FOR THE OPEN-END FUND'S
INSTITUTIONAL CLASS SHARES IS APRIL 13,
2006; RETURNS SINCE THAT DATE ARE
HISTORICAL RETURNS. ALL OTHER RETURNS
ARE BLENDED RETURNS OF HISTORICAL
INSTITUTIONAL CLASS SHARES AND RESTATED
PERFORMANCE OF THE CLOSED-END FUND'S
CLASS B SHARES (FOR PERIODS PRIOR TO THE
INCEPTION DATE OF OPEN-END FUND'S
======================================== INSTITUTIONAL CLASS SHARES) AT NET ASSET
VALUE. THE CLOSED-END FUND'S CLASS B
NASDAQ Symbol AFRIX SHARE INCEPTION DATE IS MAY 1, 1997.
========================================
Over for information on your Fund's expenses.
================================================================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND
PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES
AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING.
================================================================================
[YOUR GOALS. OUR SOLUTIONS.]
FOR INSTITUTIONAL INVESTOR USE ONLY --Registered Trademark--
This material is for institutional investor use only and may not be quoted,
reproduced or shown to the public, nor used in written form as sales literature
for public use.
[AIM INVESTMENTS LOGO APPEARS HERE]
--Registered Trademark--
AIMinvestments.com FLR-INS-1 A I M Distributors, Inc.
Information about your Fund's expenses
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur together with the amount you invested, expense ratio and an assumed rate of
ongoing costs, including management fees to estimate the expenses that you paid return of 5% per year before expenses,
and other Fund expenses. This example is over the period. Simply divide your which is not the Fund's actual return.
intended to help you understand your account value by $1,000 (for example, an The Fund's actual cumulative total
ongoing costs (in dollars) of investing $8,600 account value divided by $1,000 = return after expenses for the period as
in the Fund and to compare these costs 8.6), then multiply the result by the of close of business April 13, 2006,
with ongoing costs of investing in other number in the table under the heading through August 31, 2006, appears in the
mutual funds. The actual ending account entitled "Actual Expenses Paid During table on the front of this supplement.
value and expenses in the below example Period" to estimate the expenses you
are based on an investment of $1,000 paid on your account during the period, The hypothetical account values and
invested as of close of business April as of close of business April 13, 2006, expenses may not be used to estimate the
13, 2006 (the date the share class through August 31, 2006. Because the actual ending account balance or
commenced sales) and held through August actual ending account value and expense expenses you paid for the period. You
31, 2006. The hypothetical ending information in the example is not based may use this information to compare the
account value and expenses in the below upon a six month period, the ending ongoing costs of investing in the Fund
example are based on an investment of account value and expense information and other funds. To do so, compare this
$1,000 invested at the beginning of the may not provide a meaningful comparison 5% hypothetical example with the 5%
period and held for the entire six month to mutual funds that provide such hypothetical examples that appear in the
period March 1, 2006, through August 31, information for a full six month period. shareholder reports of the other funds.
2006.
HYPOTHETICAL EXAMPLE FOR Please note that the expenses shown in
ACTUAL EXPENSES COMPARISON PURPOSES the table are meant to highlight your
ongoing costs only. Therefore, the
The table below provides information The table below also provides hypothetical information is useful in
about actual account values and actual information about hypothetical account comparing ongoing costs only, and will
expenses. You may use the information in values and hypothetical expenses based not help you determine the relative
this table, on the Fund's actual total costs of owning different funds.
====================================================================================================================================
ACTUAL HYPOTHETICAL
(5% annual return before expenses)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
SHARE CLASS (3/1/06)(1) (8/31/06)(1) PERIOD(2,4) (8/31/06) PERIOD(5) RATIO(3)
Institutional $1,000.00 $1,020.00 $3.80 $1,020.27 $4.99 0.98%
(1) The actual ending account value is based on the actual total return of the Fund for the period as of close of business April 13,
2006, through August 31, 2006, after actual expenses and will differ from the hypothetical ending account value which is based
on the Fund's expense ratio and a hypothetical annual return of 5% before expenses over the six month period March 1, 2006,
through August 31, 2006.
(2) Actual expenses are equal to the annualized expense ratio as indicated above multiplied by the average account value over the
period, multiplied by 140 (as of close of business April 13, 2006, through August 31, 2006)/365. Because the share class has not
been in existence for a full six month period, the actual ending account value and expense information shown may not provide a
meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the
actual ending account value and expense information in the expense example covers a short time period, return and expense data
may not be indicative of return and expense data for longer time periods.
(3) As of close of business April 13, 2006, the Fund, which was previously a closed-end fund, was reorganized as an open-end fund.
Prior to the reorganization, the closed-end fund employed a leverage strategy. The Fund intends to implement the leverage
strategy in the future. The annualized expense ratio restated as if the use of the leverage strategy had been effect throughout
the period as of close of business April 13, 2006, through August 31, 2006 is 1.52%.
(4) The actual expenses paid restated as if the changes discussed above in footnote 3 had been in effect throughout the period as of
close of business April 13, 2006, through August 31, 2006 are $5.89.
(5) Hypothetical expenses are equal to the annualized as indicated above multiplied by the average account value over the period,
multiplied by 184/365 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to
compare ongoing costs of investing the Institutional Class shares of the Fund and other funds because such data is based on a
full six month period. The hypothetical expenses paid restated as if the changes discussed above in footnote 3 had been in
effect throughout the entire most recent fiscal half year are $7.73.
====================================================================================================================================
AIMinvestments.com FLR-INS-1 A I M Distributors, Inc.
AIM Floating Rate Fund
SCHEDULE OF INVESTMENTS
August 31, 2006
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
SENIOR SECURED FLOATING RATE INTERESTS-86.11%(B)(C)
AEROSPACE & DEFENSE-1.34%
Alion Science & Technology Corp.
Term Loan
8.25%, 08/02/09(d) B1 $ 872,612 $ 872,612
- ----------------------------------------------------------------------------------
Unsec. Term Loan
11.00%, 01/15/08(d)(e) B3 1,000,000 997,500
- ----------------------------------------------------------------------------------
B/E Aerospace, Inc. Term Loan 8.25%,
08/22/12(d) B1 82,333 82,470
- ----------------------------------------------------------------------------------
K&F Industries, Inc. Term Loan 7.33%,
11/18/12(d) B2 674,399 675,032
- ----------------------------------------------------------------------------------
Spirit Aerosystems, Inc. Term Loan B 7.75%,
12/31/11(d) B1 391,050 392,614
==================================================================================
3,020,228
==================================================================================
AIRLINES-0.28%
United Air Lines, Inc.
Delay Draw Term Loan
9.08%, 02/01/12(d) B1 87,326 88,454
- ----------------------------------------------------------------------------------
Term Loan B
9.25%, 02/01/12(d) B1 545,288 552,331
==================================================================================
640,785
==================================================================================
AIRPORT SERVICES-0.80%
Hertz Corp. (The)
Syn LOC
5.42%, 12/21/12(d) Ba2 101,010 101,605
- ----------------------------------------------------------------------------------
Term Loan B
7.62-7.73%, 12/21/12(d) Ba2 1,698,583 1,708,593
==================================================================================
1,810,198
==================================================================================
ALTERNATIVE CARRIERS-1.46%
Iridium LLC/Capital Corp.
First Lien Term Loan A
9.74%, 06/30/10(d) B3 201,333 198,565
- ----------------------------------------------------------------------------------
Second Lien Term Loan
13.74%, 07/27/12(d) B3 64,200 62,475
- ----------------------------------------------------------------------------------
Level 3 Communications, Inc. Term Loan 8.41%,
12/01/11(d) B2 3,000,000 3,016,251
==================================================================================
3,277,291
==================================================================================
APPAREL RETAIL-0.51%
Neiman Marcus Group, Inc. (The) Term Loan
7.77%, 04/06/13(d) B1 1,133,844 1,141,970
==================================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-0.57%
Jostens, Inc. Term Loan C 7.07%, 12/21/11(d) B1 1,286,406 1,290,908
==================================================================================
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
<Caption>
AUTO PARTS & EQUIPMENT-2.50%
Accuride Corp. Term Loan B 7.31%, 01/31/12(d) B1 $ 381,828 $ 382,496
- ----------------------------------------------------------------------------------
American Axle & Manufacturing Holdings, Inc.
Term Loan
9.81%, 04/12/10(d) Ba3 283,733 282,847
- ----------------------------------------------------------------------------------
Term Loan B
9.50%, 04/12/10(d) -- 81,067 80,813
- ----------------------------------------------------------------------------------
Federal-Mogul Corp.
DIP Term Loan
7.50%, 12/09/06(d) Caa1 110,000 110,069
- ----------------------------------------------------------------------------------
Revolving Loan
0.00-7.08%, 09/29/06(d)(f) Caa1 1,396,503 1,342,389
- ----------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. (The) Second Lien
Term Loan 7.95%, 04/30/10(d) Ba3 400,000 402,714
- ----------------------------------------------------------------------------------
Mark IV Industries (Dayco Products, Inc.)
Second Lien Term Loan
11.15-11.35%, 12/31/11(d) B1 76,000 77,520
- ----------------------------------------------------------------------------------
Term Loan B
7.90-8.10%, 06/21/11(d) B1 1,044,286 1,052,553
- ----------------------------------------------------------------------------------
Pep Boys-Manny, Moe & Jack (The) Term Loan
8.33%, 01/27/11(d) Ba2 77,805 78,583
- ----------------------------------------------------------------------------------
RJ Tower Corp. DIP Term Loan B 8.25%,
02/02/07(d) Ba3 500,000 502,917
- ----------------------------------------------------------------------------------
Tenneco Automotive Inc.
Term Loan B
7.40%, 12/12/10(d) Ba3 632,212 635,057
- ----------------------------------------------------------------------------------
Term Loan B1
7.40%, 12/12/10(d) Ba3 275,259 276,498
- ----------------------------------------------------------------------------------
United Components Inc. Term Loan D 7.70%,
06/30/12(d) B2 410,480 412,020
==================================================================================
5,636,476
==================================================================================
AUTOMOBILE MANUFACTURERS-0.44%
TRW Automotive, Inc. Term Loan B 7.19%,
06/30/12(d) Ba2 985,000 983,085
==================================================================================
BROADCASTING & CABLE TV-8.45%
Adelphia (Olympus Cable Holdings)
Communications Corp. Term Loan B 10.25%,
09/30/10(d) B1 3,000,000 2,896,875
- ----------------------------------------------------------------------------------
Alliance Atlantis Communications Inc.
(Canada) Term Loan C 7.00%, 12/20/11(d) Ba2 493,750 492,927
- ----------------------------------------------------------------------------------
Atlantic Broadband LLC Term Loan B1
0.00-7.99%, 09/01/11(d)(f) B2 1,219,026 1,228,169
- ----------------------------------------------------------------------------------
Barrington Broadcasting Group LLC Term Loan
7.65%, 08/12/13(d) Ba3 96,000 96,480
- ----------------------------------------------------------------------------------
Bragg Communications Inc. (Canada) Term Loan
7.33%, 08/31/11(d) B1 1,020,833 1,020,833
- ----------------------------------------------------------------------------------
</Table>
F-1
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
BROADCASTING & CABLE TV-(CONTINUED)
Cequel III, LLC
Second Lien Term Loan A
9.99%, 05/05/14(d)(e) B1 $ 78,000 $ 75,140
- ----------------------------------------------------------------------------------
Term Loan
10.49%, 11/05/07(d) B1 2,000,000 1,992,500
- ----------------------------------------------------------------------------------
Term Loan
7.74%, 11/05/13(d) B1 980,000 972,475
- ----------------------------------------------------------------------------------
Charter Communications, Inc. Term Loan 8.13%,
04/28/13(d) B2 948,916 950,959
- ----------------------------------------------------------------------------------
CSC Holdings Inc. Term Loan B 6.99-7.26%,
03/29/13(d) Ba3 1,995,000 1,983,299
- ----------------------------------------------------------------------------------
Cumulus Media Inc. Term Loan 7.33-7.63%,
06/07/13(d) Ba3 251,420 252,009
- ----------------------------------------------------------------------------------
Emmis Communications Corp. Term Loan B 7.08%,
11/10/11(d) Ba2 277,778 277,865
- ----------------------------------------------------------------------------------
Insight Communications Co., Inc. Term Loan C
7.38%, 12/31/09(d) Ba3 1,950,000 1,958,531
- ----------------------------------------------------------------------------------
MCC Iowa LLC Term Loan D 7.00-7.37%,
01/31/15(d) Ba3 990,000 984,586
- ----------------------------------------------------------------------------------
NTL Investment Holding Ltd. Term Loan B4
7.32%, 12/19/12(d)(e) Ba3 337,440 338,705
- ----------------------------------------------------------------------------------
NextMedia Operating, Inc.
Delay Draw Term Loan
7.41%, 11/15/12(d) B1 70,170 69,776
- ----------------------------------------------------------------------------------
Second Lien Term Loan
9.83%, 11/15/13(d) B3 221,093 221,553
- ----------------------------------------------------------------------------------
Term Loan A
7.33%, 11/15/12(d) B1 157,883 156,995
- ----------------------------------------------------------------------------------
PanAmSat Holding Corp.E Term Loan B2 8.01%,
01/03/14(d) Ba1 997,378 1,003,456
- ----------------------------------------------------------------------------------
Paxson Communications Corp. Term Loan 8.76%,
01/15/12(d)(e) B2 536,364 543,068
- ----------------------------------------------------------------------------------
Persona Communications LLC (Canada) Term Loan
B 8.50%, 08/01/11(d) B2 490,000 489,388
- ----------------------------------------------------------------------------------
Susquehanna Media Co. Term Loan 7.25-7.38%,
05/05/13(d) B1 166,357 166,123
- ----------------------------------------------------------------------------------
WideOpenWest Illinois Inc.
First Lien Term Loan
7.48-7.76%, 05/01/13(d) B2 801,600 801,028
- ----------------------------------------------------------------------------------
Second Lien Term Loan
9.83%, 05/01/14(d) B2 58,200 58,593
==================================================================================
19,031,333
==================================================================================
BUILDING PRODUCTS-1.72%
Atrium Companies, Inc.
Delay Draw Term Loan
0.00%, 12/09/12(d)(e)(f) B2 27,232 26,279
- ----------------------------------------------------------------------------------
Term Loan B
8.08-8.25%, 05/31/12(d)(e) B2 421,662 406,904
- ----------------------------------------------------------------------------------
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
<Caption>
BUILDING PRODUCTS-(CONTINUED)
Custom Building Products Inc.
Second Lien Term Loan
10.62%, 04/29/12(d) B1 $1,540,000 $ 1,543,850
- ----------------------------------------------------------------------------------
Term Loan
7.75%, 10/29/11(d) B1 103,972 104,232
- ----------------------------------------------------------------------------------
Premdor Inc. Canada
Term Loan
7.49-7.50%, 04/05/13(d) B2 659,191 647,819
- ----------------------------------------------------------------------------------
U.S. Term Loan
7.49-7.50%, 04/05/13(d) B2 660,314 648,923
- ----------------------------------------------------------------------------------
United Subcontractors, Inc. Term Loan B
8.36%, 12/27/12(d) B2 497,500 496,256
==================================================================================
3,874,263
==================================================================================
CASINOS & GAMING-1.85%
Alliance Gaming Corp. Term Loan 9.33%,
09/04/09(d) B2 113,807 113,902
- ----------------------------------------------------------------------------------
BLB Investors, LLC
First Lien Term Loan
6.99-7.95%, 07/18/11(d) B1 898,500 900,746
- ----------------------------------------------------------------------------------
Second Lien Term Loan
8.74-9.70%, 07/18/12(d) B1 510,000 513,188
- ----------------------------------------------------------------------------------
Columbia Sussex Corp. (Wimar Tahoe Corp.)
Term Loan B 8.00%, 10/24/11(d) B2 177,232 177,564
- ----------------------------------------------------------------------------------
Global Cash Access, LLC Term Loan B 7.08%,
03/10/10(d) Ba3 189,278 189,041
- ----------------------------------------------------------------------------------
Herbst Gaming, Inc. Term Loan B 7.11-7.50%,
01/31/11(d) B1 118,500 118,574
- ----------------------------------------------------------------------------------
Isle of Capri Black Hawk, LLC Term Loan
7.47-7.51%, 10/24/11(d) B1 160,362 159,961
- ----------------------------------------------------------------------------------
Isle of Capri Casino, Inc. Delay Draw Term
Loan 7.25%, 02/04/11(d) Ba2 495,000 494,629
- ----------------------------------------------------------------------------------
Resorts International Unlimited
Term Loan B
9.50%, 04/26/12(d) Caa1 979,851 984,751
- ----------------------------------------------------------------------------------
Term Loan B PIK
9.50%, 04/26/12(d) Caa1 2,483 2,495
- ----------------------------------------------------------------------------------
Yonkers Racing Corp. Loan Facility 8.83%,
08/12/11(d) B3 500,001 503,751
==================================================================================
4,158,602
==================================================================================
COAL & CONSUMABLE FUELS-0.03%
United Central Industrial Supply Co. Term
Loan B 8.33-8.61%, 03/31/12(d) B3 70,756 71,051
==================================================================================
</Table>
F-2
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
COMMERCIAL PRINTING-0.74%
Cenveo, Inc. Term Loan B 7.44%, 06/21/13(d) Ba3 $ 41,778 $ 41,778
- ----------------------------------------------------------------------------------
Xsys (BASF Inks) (Luxembourg)
Term Loan B5
8.00%, 12/31/12(d) -- 795,787 800,760
- ----------------------------------------------------------------------------------
Term Loan C1
8.50%, 12/31/13(d) -- 813,772 822,928
==================================================================================
1,665,466
==================================================================================
COMMODITY CHEMICALS-1.72%
Brenntag A.G. (Germany)
Term Loan
8.08%, 01/20/14(d) B2 51,322 51,836
- ----------------------------------------------------------------------------------
Term Loan B2
8.08%, 01/20/14(d) B2 210,041 210,871
- ----------------------------------------------------------------------------------
Georgia Gulf Corp. Term Loan
7.32%, 11/30/13(d) B1 397,857 399,349
- ----------------------------------------------------------------------------------
INVISTA
Term Loan B1
7.00%, 04/29/11(d) Ba2 500,722 500,513
- ----------------------------------------------------------------------------------
Term Loan B2
7.00%, 04/29/11(d) Ba2 254,533 254,427
- ----------------------------------------------------------------------------------
Lyondel Petrochemical Credit Linked Notes
8.11%, 12/20/09(e)(g) Ba3 2,200,000 2,298,035
- ----------------------------------------------------------------------------------
Wellman, Inc. First Lien Loan 9.49%,
02/10/09(d) B1 150,000 150,187
==================================================================================
3,865,218
==================================================================================
COMMUNICATIONS EQUIPMENT-1.29%
Crown Castle International Corp. Term Loan
7.65%, 06/01/14(d)(e) B2 384,100 386,100
- ----------------------------------------------------------------------------------
IPC Acquisition Corp.
Second Lien Term Loan
12.52%, 08/05/12(d) B2 525,000 532,000
- ----------------------------------------------------------------------------------
Term Loan B
8.02-8.14%, 08/05/11(d) B2 850,295 851,996
- ----------------------------------------------------------------------------------
NTELOS, Inc. Term Loan B1 7.58%, 08/24/11(d) B2 873,544 872,670
- ----------------------------------------------------------------------------------
Trilogy, Inc.
Second Lien Term Loan
11.75%, 06/28/13(d) Ba3 55,000 55,292
- ----------------------------------------------------------------------------------
Term Loan
9.50%, 06/30/12(d) Ba3 204,000 205,615
==================================================================================
2,903,673
==================================================================================
CONSTRUCTION & ENGINEERING-0.09%
Maxim Crane Works Term Loan 7.33-9.25%,
01/28/10(d) B2 202,877 202,750
==================================================================================
CONSTRUCTION MATERIALS-0.11%
Hillman Group (The) Term Loan B 8.44-8.50%,
03/31/11(d) B2 244,375 245,902
==================================================================================
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
<Caption>
DATA PROCESSING & OUTSOURCED SERVICES-0.11%
Affiliated Computer Services, Inc. Add Loan B
7.40-7.41%, 06/30/06(d)(e) Ba2 $ 251,856 $ 252,233
==================================================================================
DISTILLERS & VINTNERS-0.10%
Constellation Brands, Inc. Term Loan B
6.81-7.00%, 06/01/13(d) Ba2 230,461 231,037
==================================================================================
DIVERSIFIED CHEMICALS-0.15%
AGY Holding Corp. Term Loan B 8.25%,
04/09/12(d) B2 121,944 122,554
- ----------------------------------------------------------------------------------
Texas Petrochemicals L.P.
Loan C
5.41%, 06/27/13(d) Ba3 56,250 56,531
- ----------------------------------------------------------------------------------
Term Loan B
7.88-8.00%, 06/27/13(d) Ba3 168,750 169,594
==================================================================================
348,679
==================================================================================
DIVERSIFIED COMMERCIAL & PROFESSIONAL
SERVICES-4.28%
Aspect Software, Inc. First Lien Term Loan
8.50%, 07/11/11(d) B2 445,000 445,334
- ----------------------------------------------------------------------------------
Bankruptcy Management Solutions, Inc.
Second Lien Term Loan
11.74%, 07/28/13(d) B1 36,667 37,240
- ----------------------------------------------------------------------------------
Term Loan 8.24%, 07/28/12(d) B1 64,000 64,360
- ----------------------------------------------------------------------------------
Billing Services Group, LLC
First Lien Term Loan
8.00-8.13%, 05/11/12(d) B1 144,175 144,175
- ----------------------------------------------------------------------------------
Second Lien Term Loan
11.50%, 05/06/13(d) B3 58,000 58,000
- ----------------------------------------------------------------------------------
Brock Holdings III, Inc. Term Loan B 7.87%,
08/18/13(d) B2 135,150 135,657
- ----------------------------------------------------------------------------------
Coinmach Corp. Term Loan B-1 7.88-7.94%,
12/19/12(d) B2 1,167,132 1,173,697
- ----------------------------------------------------------------------------------
Eastman Kodak Co.
Delay Draw Term Loan
7.66-7.76%, 10/18/12(d) Ba3 674,714 674,112
- ----------------------------------------------------------------------------------
Term Loan B
7.65-7.75%, 10/18/12(d) Ba3 1,399,966 1,398,715
- ----------------------------------------------------------------------------------
Fidelity National Information Solutions Inc.
Term Loan B 7.08%, 03/09/13(d) Ba1 1,228,300 1,230,919
- ----------------------------------------------------------------------------------
Iron Mountain, Inc.
Term Loan
7.09%, 04/02/11(d) Ba3 491,250 491,045
- ----------------------------------------------------------------------------------
Term Loan C
7.16%, 04/02/11(d) Ba3 737,617 737,309
- ----------------------------------------------------------------------------------
Merrill Corp. Term Loan 7.58-7.75%,
05/15/11(d) B1 199,000 199,560
- ----------------------------------------------------------------------------------
Nuance Communications, Inc.
Revolving Loan
0.00%, 04/01/12(d)(f) B1 121,000 114,799
- ----------------------------------------------------------------------------------
Term Loan B
7.33%, 04/01/13(d) B1 363,090 359,686
- ----------------------------------------------------------------------------------
</Table>
F-3
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
DIVERSIFIED COMMERCIAL & PROFESSIONAL
SERVICES-(CONTINUED)
Sedgwick Claims Management Services, Inc.
Term Loan B 7.33-7.50%, 01/31/13(d) B1 $ 90,423 $ 90,272
- ----------------------------------------------------------------------------------
UGS Corp. Term Loan 7.08-7.24%, 03/31/12(d) B1 660,809 659,983
- ----------------------------------------------------------------------------------
US Investigations Services, Inc.
Tranche B Term Loan
7.92%, 10/14/12(d) B2 571,763 571,763
- ----------------------------------------------------------------------------------
Tranche C Term Loan
7.92%, 10/14/12(d) B2 39,563 39,612
- ----------------------------------------------------------------------------------
VNU Group B.V. Term Loan B 08/09/13(d)(e)(h) -- 937,500 933,252
- ----------------------------------------------------------------------------------
Walter Industries, Inc. Term Loan 6.87-7.25%,
10/03/12(d) Ba3 84,267 84,351
==================================================================================
9,643,841
==================================================================================
DIVERSIFIED METALS & MINING-0.70%
Boart Longyear Co. Canada
Term Loan
8.50%, 07/28/12(d) B2 72,990 73,263
- ----------------------------------------------------------------------------------
U.S. Term Loan
8.50%, 07/28/12(d) B2 505,315 507,210
- ----------------------------------------------------------------------------------
Magnum Coal Co.
LOC Term Loan
8.58%, 03/21/13(d) B3 91,818 91,703
- ----------------------------------------------------------------------------------
Term Loan
8.75%, 03/21/13(d) B3 903,636 902,507
==================================================================================
1,574,683
==================================================================================
DIVERSIFIED REIT'S-0.76%
Apollo-Newkirk Holding LLC Term Loan 7.83%,
12/21/07(d) Ba3 1,342,140 1,341,301
- ----------------------------------------------------------------------------------
Capital Automotive REIT Term Loan B 7.16%,
12/15/10(d) Ba1 302,804 303,140
- ----------------------------------------------------------------------------------
Newkirk Master Ltd. Partnership
Term Loan
7.15%, 08/11/08(d) Ba2 32,059 32,039
- ----------------------------------------------------------------------------------
Term Loan B
7.15%, 08/11/08(d) Ba2 41,151 41,126
==================================================================================
1,717,606
==================================================================================
DRUG RETAIL-0.42%
General Nutrition Centers, Inc. Tranche C
Term Loan 8.08-8.15%, 12/05/09(d) B1 167,856 168,800
- ----------------------------------------------------------------------------------
Jean Coutu Group Inc. (The) Term Loan B
8.00%, 07/30/11(d) B2 594,271 595,075
- ----------------------------------------------------------------------------------
MAPCO Express, Inc. Term Loan 8.20%,
04/28/11(d) B2 179,192 180,088
==================================================================================
943,963
==================================================================================
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
<Caption>
ELECTRIC UTILITIES-1.98%
AES Corp. Syn LOC 7.66-7.80%, 03/29/10(d) Ba2 $1,121,212 $ 1,122,614
- ----------------------------------------------------------------------------------
Calpine Corp.
DIP First Priority Lien Term Loan
7.75%, 12/20/07(d) Ba3 27,841 27,946
- ----------------------------------------------------------------------------------
DIP Second Priority Lien Term Loan
9.50%, 12/24/07(d) Ba3 148,864 150,538
- ----------------------------------------------------------------------------------
Revolving Loan
0.00%, 12/24/07(d)(f) Ba3 65,846 65,023
- ----------------------------------------------------------------------------------
Cogentrix Energy, Inc. Term Loan 7.00%,
04/14/12(d) Ba2 84,933 84,915
- ----------------------------------------------------------------------------------
Dynegy Holdings Inc. Loan C 7.15%,
01/31/12(d) Ba3 261,600 261,273
- ----------------------------------------------------------------------------------
LSP General Finance Co., LLC
Delay Draw Term Loan
0.00%, 05/06/13(d)(f) Ba3 196 195
- ----------------------------------------------------------------------------------
First Lien Term Loan
7.08%, 05/06/13(d) Ba3 14,059 14,006
- ----------------------------------------------------------------------------------
Second Lien Term Loan
9.00%, 05/05/14(d) Ba3 19,400 19,578
- ----------------------------------------------------------------------------------
Term Loan B
7.25%, 05/06/13(d) Ba3 338,555 337,285
- ----------------------------------------------------------------------------------
NRG Energy Inc.
Syn LOC
7.50%, 02/01/13(d) Ba2 92,201 92,443
- ----------------------------------------------------------------------------------
Term Loan
7.33%, 02/01/13(d) Ba2 1,876,407 1,882,858
- ----------------------------------------------------------------------------------
NSG Holdings II Term Loan 8.35%, 12/13/11(d) B1 263,666 266,632
- ----------------------------------------------------------------------------------
Primary Energy Finance LLC Term Loan 7.33%,
08/24/12(d) Ba2 127,219 127,537
==================================================================================
4,452,843
==================================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-0.87%
Cellnet Technology, Inc.
Second Lien Term Loan
12.25%, 04/26/13(d) B2 333,333 338,333
- ----------------------------------------------------------------------------------
Term Loan B
8.50%, 04/26/12(d) B2 410,473 414,578
- ----------------------------------------------------------------------------------
VeriFone, Inc. Term Loan B 7.24%, 06/30/11(d) B1 1,201,421 1,199,919
==================================================================================
1,952,830
==================================================================================
ELECTRONIC MANUFACTURING SERVICES-0.11%
Revere Industries LLC Term Loan 8.50%,
12/14/10(d) B2 248,779 249,090
==================================================================================
</Table>
F-4
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
ENVIRONMENTAL & FACILITIES SERVICES-0.95%
Allied Waste Industries, Inc.
Loan C
5.11%, 01/15/12(d) B1 $ 366,708 $ 365,753
- ----------------------------------------------------------------------------------
Term Loan
7.20-7.27%, 01/15/12(d) B1 944,061 941,504
- ----------------------------------------------------------------------------------
Covanta Holding Corp.
First Term Loan B
7.58-7.71%, 06/24/12(d) B1 166,777 169,696
- ----------------------------------------------------------------------------------
Loan C 5.46%, 06/24/12(d) B1 658,810 662,378
==================================================================================
2,139,331
==================================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-0.11%
Coffeyville Resources, LLC
Second Lien Term Loan
12.13%, 06/24/13(d) B1 105,000 108,019
- ----------------------------------------------------------------------------------
Syn LOC
5.40%, 07/08/11(d) B1 55,034 55,351
- ----------------------------------------------------------------------------------
Term Loan B
7.63-9.75%, 07/08/12(d) B1 81,729 82,199
==================================================================================
245,569
==================================================================================
FOOD DISTRIBUTORS-0.65%
Bumble Bee Seafoods, LLC Term Loan B
7.04-7.25%, 05/02/12(d) Ba3 76,500 76,500
- ----------------------------------------------------------------------------------
Carrols Corp. Six Year Term Loan 8.00%,
12/31/10(d) Bl 217,045 217,453
- ----------------------------------------------------------------------------------
OSI Group LLC
Dutch Term Loan
7.25%, 09/02/11(d) Ba3 134,821 134,484
- ----------------------------------------------------------------------------------
German Term Loan
7.25%, 09/02/11(d) Ba3 107,857 107,587
- ----------------------------------------------------------------------------------
U.S. Term Loan
7.25%, 09/02/11(d) Ba3 242,678 242,071
- ----------------------------------------------------------------------------------
Pinnacle Foods Group, Inc. (Aurora Foods)
Term Loan 7.45-7.48%, 11/25/10(d) B1 535,948 536,116
- ----------------------------------------------------------------------------------
Wm. Bolthouse Farms, Inc. Term Loan 7.81%,
12/17/12(d) B2 159,200 160,261
==================================================================================
1,474,472
==================================================================================
FOOD RETAIL-0.57%
Arby's, LLC Term Loan B 7.74-7.75%,
07/25/12(d)(e) B1 305,152 304,898
- ----------------------------------------------------------------------------------
Burger King Corp. Term Loan B1 7.00%,
06/30/12(d) Ba2 334,563 333,674
- ----------------------------------------------------------------------------------
Chiquita Brands International, Inc.
Term Loan B
7.58%, 06/28/12(d) B1 13,850 13,804
- ----------------------------------------------------------------------------------
Term Loan C
7.58%, 06/28/12(d) B1 294,671 294,793
- ----------------------------------------------------------------------------------
Quizno's Corp. (The)
First Term Loan B
7.75%, 05/05/13(d) B2 108,267 107,929
- ----------------------------------------------------------------------------------
Second Lien Term Loan
11.25%, 11/05/13(d) B2 57,000 57,677
- ----------------------------------------------------------------------------------
Roundy's Supermarkets, Inc. Term Loan
8.29-8.44%, 11/03/11(d) B2 163,180 164,540
==================================================================================
1,277,315
==================================================================================
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
<Caption>
FOREST PRODUCTS-1.46%
Georgia-Pacific Corp.
Term Loan B
7.30-7.50%, 12/21/12(d) Ba2 $ 810,214 $ 810,889
- ----------------------------------------------------------------------------------
Term Loan C
8.30%, 12/23/13(d) Ba2 1,091,429 1,100,433
- ----------------------------------------------------------------------------------
Graphic Packaging International Corp. Term
Loan C 7.62-8.14%, 08/08/10(d) B1 1,219,150 1,229,164
- ----------------------------------------------------------------------------------
Roseburg Forest Products Co. Term Loan B
7.00%, 02/24/10(d) Ba2 156,082 155,887
==================================================================================
3,296,373
==================================================================================
HEALTH CARE DISTRIBUTORS-1.27%
CompBenefits Corp. Term Loan B 8.33-8.62%,
04/12/12(d) B1 72,088 72,448
- ----------------------------------------------------------------------------------
Kendle International Inc. Term Loan 8.08%,
08/16/12(d) B1 95,600 96,317
- ----------------------------------------------------------------------------------
MultiPlan, Inc. Term Loan B 7.50%,
04/12/13(d) B2 1,165,888 1,158,115
- ----------------------------------------------------------------------------------
Team Health, Inc. Term Loan B 7.83-7.90%,
11/23/12(d) B2 91,540 91,855
- ----------------------------------------------------------------------------------
VWR International Inc. Term Loan B 7.77%,
04/07/11(d) B2 629,931 630,719
- ----------------------------------------------------------------------------------
Warner Chilcott PLC
Dovobet Delayed Loan
7.93%, 01/18/12(d) B2 26,616 26,641
- ----------------------------------------------------------------------------------
Dovonex Delayed Loan
7.61-8.00%, 01/18/12(d) B2 133,081 133,204
- ----------------------------------------------------------------------------------
Term Loan B
7.61-7.97%, 01/18/12(d) B2 415,289 415,808
- ----------------------------------------------------------------------------------
Term Loan C
7.61%, 01/18/12(d) B2 167,341 167,550
- ----------------------------------------------------------------------------------
Term Loan D
7.61%, 01/18/12(d) B2 77,307 77,404
==================================================================================
2,870,061
==================================================================================
HEALTH CARE EQUIPMENT-0.29%
Angiotech Pharmaceuticals, Inc. Term Loan
6.83-7.00%, 03/23/13(d) Ba3 57,467 56,569
- ----------------------------------------------------------------------------------
CONMED Corp. Term Loan 7.33%, 04/13/13(d) Ba2 366,581 366,123
- ----------------------------------------------------------------------------------
Sunrise Medical Inc. Term Loan B1 8.56-8.69%,
05/13/10(d) B1 221,937 221,937
==================================================================================
644,629
==================================================================================
</Table>
F-5
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
HEALTH CARE FACILITIES-1.98%
Beverly Enterprises, Inc. Term Loan B
7.96-8.25%, 03/14/11(d) B1 $ 140,648 $ 141,175
- ----------------------------------------------------------------------------------
DaVita Inc. Term Loan B 7.11-7.69%,
10/05/12(d) B1 908,367 910,232
- ----------------------------------------------------------------------------------
IASIS Healthcare Corp. Term Loan B
7.73-7.75%, 06/22/11(d) B1 1,708,385 1,715,504
- ----------------------------------------------------------------------------------
LifePoint Hospitals, Inc. Term Loan B 7.13%,
04/15/12(d) Ba3 1,619,681 1,610,458
- ----------------------------------------------------------------------------------
United Surgical Partners Term Loan B 7.08%,
08/04/13(d) Ba2 87,450 87,669
==================================================================================
4,465,038
==================================================================================
HEALTH CARE SERVICES-1.94%
AGA Medical Corp. Term Loan B 7.68-7.72%,
04/29/13(d) B2 129,808 129,808
- ----------------------------------------------------------------------------------
Genoa Healthcare LLC
Term Loan
13.08%, 02/10/13(d) B2 132,000 133,073
- ----------------------------------------------------------------------------------
Term Loan B
8.58-10.50%, 08/10/12(d) B2 93,399 93,749
- ----------------------------------------------------------------------------------
Gentiva Health Services, Inc. Term Loan
7.37-7.89%, 03/31/13(d) Ba3 102,534 102,630
- ----------------------------------------------------------------------------------
Harlan Sprague Dawley, Inc. Term Loan 8.00%,
12/19/11(d) B2 77,500 77,791
- ----------------------------------------------------------------------------------
HealthSouth Corp. Term Loan B 8.52%,
03/10/13(d) B2 2,687,500 2,696,084
- ----------------------------------------------------------------------------------
Radiation Therapy Services, Inc. Term Loan B
7.25-8.50%, 12/16/12(d) B1 63,680 63,521
- ----------------------------------------------------------------------------------
Skilled Healthcare LLC Term Loan 7.78%,
06/15/12(d) B1 371,250 373,802
- ----------------------------------------------------------------------------------
US Oncology, Inc. Term Loan B 7.65-7.88%,
08/20/11(d) B1 699,417 700,728
==================================================================================
4,371,186
==================================================================================
HEALTH CARE SUPPLIES-1.22%
Accellent Corp. Term Loan B 7.33-7.40%,
11/22/12(d) B2 2,092,197 2,084,351
- ----------------------------------------------------------------------------------
Fresenius Medical Care AG & Co. KGaA Term
Loan B 6.78-6.87%, 03/31/13(d) Ba2 659,348 653,487
==================================================================================
2,737,838
==================================================================================
HOMEBUILDING-0.33%
Headwaters, Inc. Fist Lien Term Loan B1
7.33-7.50%, 04/30/11(d) Ba3 735,461 737,912
==================================================================================
HOMEFURNISHING RETAIL-0.89%
Sears Canada Inc. Term Loan B 7.00%,
12/22/12(d) Ba1 1,995,000 1,995,000
==================================================================================
HOTELS, RESORTS & CRUISE LINES-0.25%
Ginn Co. (The)
First Lien Term Loan
8.41%, 06/08/11(d) B1 275,102 270,976
- ----------------------------------------------------------------------------------
Second Lien Term Loan
12.41%, 06/08/12(d) B1 164,000 162,360
- ----------------------------------------------------------------------------------
Term Loan
8.29%, 06/08/11(d) B1 126,088 124,197
==================================================================================
557,533
==================================================================================
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
<Caption>
HOUSEHOLD APPLIANCES-0.39%
Goodman Global Holdings, Inc. Term Loan C
7.25%, 12/23/11(d) B1 $ 884,643 $ 880,497
==================================================================================
HOUSEHOLD PRODUCTS-2.43%
Amscan Holdings, Inc. Term Loan B
8.30-10.25%, 12/23/12(d)(e) B1 48,629 48,791
- ----------------------------------------------------------------------------------
Central Garden & Pet Co. Term Loan
6.83-6.91%, 09/30/12(d) Ba2 120,332 120,131
- ----------------------------------------------------------------------------------
Jarden Corp. Term Loan 7.50%, 01/24/12(d) B1 972,577 972,881
- ----------------------------------------------------------------------------------
Prestige Brands International, Inc. Term Loan
B 7.71-9.50%, 04/06/11(d) B1 1,021,099 1,023,652
- ----------------------------------------------------------------------------------
Spectrum Brands, Inc. Term Loan 8.08-8.44%,
02/06/12(d) B2 3,120,573 3,120,573
- ----------------------------------------------------------------------------------
Waterpik Technologies, Inc.
First Lien Term Loan
7.73%, 06/28/13(d) B1 82,500 82,397
- ----------------------------------------------------------------------------------
Second Lien Term Loan
11.98%, 12/31/13(d) B1 95,000 95,950
==================================================================================
5,464,375
==================================================================================
HUMAN RESOURCE & EMPLOYMENT SERVICES-0.07%
AMN Healthcare Services, Inc. Term Loan B
7.25%, 11/02/11(d) Ba2 157,244 157,342
==================================================================================
INDUSTRIAL CONGLOMERATES-1.97%
Aearo Corp.
First Lien Term Loan
7.96%, 03/22/13(d) B2 127,148 128,208
- ----------------------------------------------------------------------------------
Second Lien Term Loan
11.96%, 09/24/13(d) B2 77,333 78,590
- ----------------------------------------------------------------------------------
AMSTED Industries Inc.
Delay Draw Term Loan B
0.00%, 04/05/13(d)(f) B1 562,500 554,063
- ----------------------------------------------------------------------------------
Term Loan B
7.27-7.50%, 04/05/13(d) B1 1,320,260 1,316,959
- ----------------------------------------------------------------------------------
Blount International Inc. Term Loan B
7.15-7.26%, 08/09/10(d) Ba3 464,441 467,344
- ----------------------------------------------------------------------------------
Covalence Specialty Materials Corp. Second
Lien Term Loan 8.63%, 08/16/13(d)(e) Ba3 393,333 396,447
- ----------------------------------------------------------------------------------
Dresser Inc. Term Loan C 7.83%, 04/10/09(d) B1 79,352 79,947
- ----------------------------------------------------------------------------------
</Table>
F-6
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES-(CONTINUED)
Mueller Group, Inc. (The) Term Loan B
7.11-7.62%, 10/03/12(d) B1 $ 124,288 $ 124,976
- ----------------------------------------------------------------------------------
Norcross Safety Products LLC Term Loan
7.51-9.25%, 06/30/12(d) B1 602,583 602,583
- ----------------------------------------------------------------------------------
Polypore International, Inc. Term Loan 8.33%,
11/12/11(d) B2 222,525 223,823
- ----------------------------------------------------------------------------------
Unifrax Holding Corp. Term Loan 7.63%,
05/02/13(d) B2 470,430 470,430
==================================================================================
4,443,370
==================================================================================
INDUSTRIAL MACHINERY-0.99%
CLFX Corp. Term Loan B 7.50%, 12/19/11(d) Ba3 515,492 517,425
- ----------------------------------------------------------------------------------
EnerSys Capital Inc. Term Loan 7.03-7.59%,
03/17/11(d) Ba3 465,677 466,841
- ----------------------------------------------------------------------------------
Gleason Corp. First Lien Term Loan
7.94-8.00%, 06/15/13(d)(e) B2 108,800 109,276
- ----------------------------------------------------------------------------------
Pro Mach, Inc. Term Loan 7.75%, 12/14/11(d) B1 598,500 601,493
- ----------------------------------------------------------------------------------
Rexnord Corp. Term Loan B 7.94-8.06%,
06/30/13(d) B1 334,000 335,461
- ----------------------------------------------------------------------------------
Synventive Molding Solutions, Inc. Term Loan
9.00%, 07/30/12(d) B2 215,042 197,838
==================================================================================
2,228,334
==================================================================================
INSURANCE BROKERS-1.33%
ARG Holdings, Inc.
First Lien Term Loan
8.50%, 11/30/11(d) B2 77,610 77,852
- ----------------------------------------------------------------------------------
Second Lien Term Loan
12.75%, 11/30/12(d) B2 31,000 31,310
- ----------------------------------------------------------------------------------
Starbound Holdings Term Loan 9.40%,
03/01/08(d) -- 2,500,000 2,500,000
- ----------------------------------------------------------------------------------
Swett & Crawford Group, Inc. (The) First Lien
Term Loan 8.19-8.24%, 11/16/11(d) B1 377,953 377,953
==================================================================================
2,987,115
==================================================================================
INTEGRATED TELECOMMUNICATION SERVICES-2.08%
Cavalier Telephone Corp. Term Loan B 9.99%,
03/24/12(d) B2 1,075,305 1,087,402
- ----------------------------------------------------------------------------------
Country Road Communications, Inc.
First Lien Term Loan
8.33-8.50%, 07/15/12(d) B2 816,927 821,012
- ----------------------------------------------------------------------------------
Second Lien Term Loan
13.30%, 07/15/13(d) B2 571,429 577,143
- ----------------------------------------------------------------------------------
D&E Communications, Inc. Term Loan B
7.27-9.25%, 12/31/11(d) Ba3 828,548 830,620
- ----------------------------------------------------------------------------------
Madison River Communications, LLC Term Loan
B1 7.73%, 07/29/12(d) B1 1,090,000 1,093,406
- ----------------------------------------------------------------------------------
PAETEC Communications, Inc. First Lien 8.88%,
06/12/12(d)(e) -- 267,200 268,536
==================================================================================
4,678,119
==================================================================================
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
<Caption>
INTERNET SOFTWARE & SERVICES-0.31%
Language Line LLC Term Loan B 9.69-9.74%,
06/10/11(d) B2 $ 683,538 $ 689,946
==================================================================================
INVESTMENT BANKING & BROKERAGE-0.08%
JG Wentworth LLC Term Loan 9.01%, 04/12/11(d) B2 82,000 82,718
- ----------------------------------------------------------------------------------
Oppenheimer Holdings, Inc. Term Loan 8.20%,
07/31/13(d) B1 95,143 95,737
==================================================================================
178,455
==================================================================================
IT CONSULTING & OTHER SERVICES-0.81%
SunGard Data Systems Inc. U.S. Term Loan
8.00%, 02/11/13(d) B1 1,815,000 1,826,830
==================================================================================
LEISURE FACILITIES-3.60%
4 Hour Fitness Worldwide Inc. Term Loan B
7.99-8.12%, 06/08/12(d) B2 1,296,750 1,303,234
- ----------------------------------------------------------------------------------
AMC Entertainment Inc. Term Loan B 7.53%,
01/26/13(d) Ba3 2,111,741 2,122,300
- ----------------------------------------------------------------------------------
AMF Bowling Worldwide, Inc.
Revolving Loan
0.00%, 02/27/09(d)(f) B2 500,000 485,000
- ----------------------------------------------------------------------------------
Term Loan B
8.26-8.62%, 08/27/09(d) B2 387,346 389,767
- ----------------------------------------------------------------------------------
Greektown Casino LLC Term Loan B 8.00%,
12/03/12(d) B1 150,000 150,750
- ----------------------------------------------------------------------------------
Metro-Goldwyn-Mayer, Inc. Term Loan B 8.75%,
04/08/12(d) Ba3 2,575,418 2,563,780
- ----------------------------------------------------------------------------------
Regal Cinemas, Inc. Term Loan 7.07-7.25%,
11/10/10(d) Ba2 390,017 388,433
- ----------------------------------------------------------------------------------
Universal City Development Partners Term Loan
B 7.33-7.51%, 06/09/11(d) Ba3 245,000 245,000
- ----------------------------------------------------------------------------------
Wallace Theater Corp. First Lien Term Loan
8.75%, 08/09/09(d) B2 448,618 450,300
==================================================================================
8,098,564
==================================================================================
LEISURE PRODUCTS-0.95%
Bombardier Recreation Products Term Loan
8.24%, 06/28/13(d)(e) B1 216,310 215,904
- ----------------------------------------------------------------------------------
Deluxe Entertainment Services
First Lien Term Loan B
9.25%, 01/28/11(d) B1 127,433 128,124
- ----------------------------------------------------------------------------------
First Lien Term Loan C
9.25%, 01/28/11(d) B1 23,624 24,274
- ----------------------------------------------------------------------------------
Second Lien Term Loan
13.75%, 07/30/11(d) B1 666,667 685,000
- ----------------------------------------------------------------------------------
Easton-Bell Sports, Inc. Term Loan
6.81-7.08%, 03/16/12(d) B1 91,451 91,413
- ----------------------------------------------------------------------------------
HIT Entertainment Ltd. Term Loan 7.70%,
03/20/12(d) B1 474,566 475,752
- ----------------------------------------------------------------------------------
</Table>
F-7
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
LEISURE PRODUCTS-(CONTINUED)
Panavision Inc.
First Lien Term Loan
8.33-8.49%, 03/30/11(d) B1 $ 31,920 $ 32,179
- ----------------------------------------------------------------------------------
Second Lien Term Loan
12.49%, 03/30/12(d) B1 9,500 9,630
- ----------------------------------------------------------------------------------
True Temper Sports, Inc. Delay Draw Term Loan
8.03-10.25%, 03/15/11(d)(e) B2 482,281 483,487
==================================================================================
2,145,763
==================================================================================
MARINE-0.53%
Horizon Lines LLC Term Loan C 7.75%,
07/07/11(d) B2 735,000 736,837
- ----------------------------------------------------------------------------------
US Shipping LLC
Delay Draw Term Loan
0.00%, 08/06/07(d)(f) B1 89,632 90,136
- ----------------------------------------------------------------------------------
8.91%, 03/31/12(d) B1 373,468 375,569
==================================================================================
1,202,542
==================================================================================
MARINE PORTS & SERVICES-0.15%
Atlantic Marine Term Loan B 7.94%,
08/02/13(d) B1 64,000 64,240
- ----------------------------------------------------------------------------------
FleetCor Technologies Operating Co., LLC Term
Loan B 8.90-8.93%, 06/30/11(d) B2 265,588 264,260
==================================================================================
328,500
==================================================================================
METAL & GLASS CONTAINERS-3.13%
Berry Plastics Corp. Term Loan 7.08%,
08/21/13(e)(g) B1 2,250,000 2,250,000
- ----------------------------------------------------------------------------------
BNY Convergex Group Term Loan B 8.38%,
08/21/13(d) B1 286,800 287,338
- ----------------------------------------------------------------------------------
Concord RE Term Loan 9.58%, 08/30/12(d) B1 334,400 336,908
- ----------------------------------------------------------------------------------
Graham Packaging Co., L.P.
Second Lien Term Loan
9.75%, 04/07/12(d) B2 1,071,429 1,083,035
- ----------------------------------------------------------------------------------
Term Loan B
7.56-7.88%, 10/07/11(d) B2 1,476,266 1,479,034
- ----------------------------------------------------------------------------------
Hanesbrands Inc.
Second Lien Term Loan
9.13%, 03/05/14(d) Ba2 582,000 591,640
- ----------------------------------------------------------------------------------
Term Loan B
7.63%, 09/05/13(d) Ba2 1,014,000 1,021,786
==================================================================================
7,049,741
==================================================================================
MOVIES & ENTERTAINMENT-1.09%
LodgeNet Entertainment Corp. Term Loan 7.75%,
08/29/08(d) Ba3 395,243 395,490
- ----------------------------------------------------------------------------------
NEP Supershooters
Term Loan A
9.47-9.50%, 02/03/11(d) B1 92,192 92,884
- ----------------------------------------------------------------------------------
Term Loan B
9.00%, 02/03/11(d) B1 38,028 38,313
- ----------------------------------------------------------------------------------
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
<Caption>
MOVIES & ENTERTAINMENT-(CONTINUED)
Warner Music Group Term Loan 7.21-7.51%,
02/28/11(d) Ba2 $1,927,246 $ 1,932,064
==================================================================================
2,458,751
==================================================================================
OFFICE SERVICES & SUPPLIES-0.21%
Knoll, Inc. Term Loan 7.25%, 10/03/12(d) Ba3 471,233 472,411
==================================================================================
OIL & GAS-0.06%
CDX Funding LLC Second Lien Term Loan 10.75%,
03/31/13(d) B2 102,000 103,530
- ----------------------------------------------------------------------------------
MarkWest Energy Partners, L.P. Term Loan
7.66%, 12/29/10(d) B1 26,923 26,923
==================================================================================
130,453
==================================================================================
OIL & GAS DRILLING-0.77%
Newpark Resources, Inc. Delay Draw Term Loan
8.64%, 08/18/11(d) B2 1,076,923 1,080,961
- ----------------------------------------------------------------------------------
Niska/CR Gas & Storage
Canada Term Loan
7.03%, 05/13/13(d) Ba3 300,234 299,484
- ----------------------------------------------------------------------------------
Revolving Loan
0.00%, 05/13/13(d)(f) Ba3 38,303 38,183
- ----------------------------------------------------------------------------------
Term Loan
7.03%, 05/13/11(d) Ba3 54,719 54,548
- ----------------------------------------------------------------------------------
U.S. Term Loan
7.03%, 05/13/13(d) Ba3 57,311 57,168
- ----------------------------------------------------------------------------------
Venoco, Inc Second Lien Term Loan
9.75-10.00%, 03/30/09(d) Caa1 204,000 204,892
==================================================================================
1,735,236
==================================================================================
OIL & GAS EQUIPMENT & SERVICES-2.02%
EPCO Holdings Inc. Term Loan C 7.22-7.49%,
08/18/10(d) Ba3 744,480 747,970
- ----------------------------------------------------------------------------------
Key Energy Services, Inc.
Loan C
5.48%, 07/29/10(d) -- 250,000 251,094
- ----------------------------------------------------------------------------------
Term Loan B
8.90-9.23%, 06/30/12(d) -- 587,050 589,618
- ----------------------------------------------------------------------------------
Petroleum Geo-Services A.S.A Term Loan 7.75%,
12/16/12(d) Ba3 390,688 393,325
- ----------------------------------------------------------------------------------
Sem Group L.P.
Canada Term Loan
7.75%, 03/16/11(d) Ba3 430,702 431,779
- ----------------------------------------------------------------------------------
U.S. Term Loan
7.58-7.69%, 03/16/11(d) Ba3 181,301 181,754
- ----------------------------------------------------------------------------------
Stallion Oilfield Services Term Loan
8.58-10.50%, 03/06/12(d) -- 500,000 500,000
- ----------------------------------------------------------------------------------
</Table>
F-8
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
OIL & GAS EQUIPMENT & SERVICES-(CONTINUED)
Targa Resources, Inc.
Bridge Term Loan
7.58%, 10/31/07(d) Ba3 $ 286,475 $ 286,236
- ----------------------------------------------------------------------------------
Syn LOC
5.37%, 10/31/12(d) Ba3 115,851 116,202
- ----------------------------------------------------------------------------------
Term Loan
7.58-7.75%, 10/31/12(d) Ba3 458,591 459,927
- ----------------------------------------------------------------------------------
Universal Compression Inc. Term Loan 7.00%,
02/15/12(d) Ba2 588,274 587,784
==================================================================================
4,545,689
==================================================================================
OIL & GAS EXPLORATION & PRODUCTION-0.20%
Helix Energy Solutions Group, Inc. Term Loan
B 7.39-7.64%, 07/01/13(d)(e) B2 444,444 444,246
==================================================================================
OIL & GAS REFINING & MARKETING-0.57%
CITGO Petroleum Corp. Term Loan 6.68%,
11/15/12(d) Ba1 621,875 621,875
- ----------------------------------------------------------------------------------
LB Pacific, L.P. Term Loan B 7.73-8.25%,
03/03/12(d) B1 296,250 296,250
- ----------------------------------------------------------------------------------
Regency Gas Services LLC Term Loan
7.87%, 08/10/13(d) B1 366,160 369,211
==================================================================================
1,287,336
==================================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-0.49%
Ameritrade Holdings Corp. Term Loan B 6.83%,
12/31/12(d) Ba1 13,711 13,688
- ----------------------------------------------------------------------------------
Conseco, Inc. Term Loan 7.08%, 06/22/10(d) Ba3 969,901 969,901
- ----------------------------------------------------------------------------------
Lionbridge Technologies, Inc. Term Loan B
8.58-8.65%, 09/01/11(d) B1 128,706 128,707
==================================================================================
1,112,296
==================================================================================
PACKAGED FOODS & MEATS-1.14%
Birds Eye Foods Inc.
Revolving Loan
0.00%, 08/17/07(d)(e)(f) B1 1,000,000 985,000
- ----------------------------------------------------------------------------------
Term Loan B
8.08%, 06/30/08(d) B1 457,007 457,579
- ----------------------------------------------------------------------------------
Dole Food Co., Inc.
Loan C
5.37%, 04/12/13(d) Ba3 37,953 37,368
- ----------------------------------------------------------------------------------
Term Loan B
7.38-9.25%, 04/12/13(d) Ba3 85,182 83,868
- ----------------------------------------------------------------------------------
Term Loan C
7.38-9.25%, 04/12/13(d) Ba3 283,940 279,562
- ----------------------------------------------------------------------------------
Michael Foods Inc. Term Loan B 7.03-7.55%,
11/21/10(d) B1 716,881 718,375
==================================================================================
2,561,752
==================================================================================
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
<Caption>
PAPER PACKAGING-0.88%
Bluegrass Container
Delay Draw Term Loan
7.58%, 06/30/13(d) Ba3 $ 41,455 $ 41,727
- ----------------------------------------------------------------------------------
Term Loan
7.58%, 07/31/13(d)(e) Ba3 138,545 139,455
- ----------------------------------------------------------------------------------
Intertape Polymer Group Inc. Term Loan B
7.55-7.76%, 07/28/11(d) Ba3 491,250 495,241
- ----------------------------------------------------------------------------------
Smurfit-Stone Container Corp.
Syn LOC
4.98%, 11/01/10(d) Ba3 122,308 122,885
- ----------------------------------------------------------------------------------
Term Loan B
7.50-7.69%, 11/01/11(d) Ba3 630,359 633,332
- ----------------------------------------------------------------------------------
Term Loan C
7.50-7.69%, 11/01/11(d) Ba3 300,229 301,645
- ----------------------------------------------------------------------------------
Term Loan C-1
7.69%, 11/01/11(d) Ba3 96,215 96,669
- ----------------------------------------------------------------------------------
Verso Papers Holding, LLC Term Loan 7.25%,
08/01/13(d) Ba2 143,100 143,100
==================================================================================
1,974,054
==================================================================================
PAPER PRODUCTS-0.14%
Xerium S.A. (Luxembourg) U.S. Term Loan
7.75%, 05/18/12(d) B1 321,988 320,378
==================================================================================
PERSONAL PRODUCTS-0.58%
American Safety Razor Co.
Second Lien Term Loan
11.72%, 01/13/14(d) B2 183,000 185,745
- ----------------------------------------------------------------------------------
Term Loan
7.87%, 07/31/13(d) B2 207,000 208,552
- ----------------------------------------------------------------------------------
Burt's Bees Inc. First Lien Term Loan
7.92-8.37%, 03/29/11(d) B2 105,679 105,547
- ----------------------------------------------------------------------------------
Department 56, Inc. Term Loan 9.08%,
09/01/11(d) B1 153,638 150,565
- ----------------------------------------------------------------------------------
Hunter Fan Co. Term Loan 7.76%, 03/24/12(d) B1 597,519 596,025
- ----------------------------------------------------------------------------------
HVHC, Inc. Term Loan B 7.70%, 08/01/13(d) Ba3 63,467 63,625
==================================================================================
1,310,059
==================================================================================
PHARMACEUTICALS-0.58%
Quintiles Transnational Corp.
Second Lien Term Loan
9.50%, 03/31/14(d) B1 1,059,400 1,071,814
- ----------------------------------------------------------------------------------
Term Loan B
7.50%, 03/31/13(d) B1 237,605 237,233
==================================================================================
1,309,047
==================================================================================
PUBLISHING-3.30%
American Media, Inc. Term Loan B 8.12%,
01/30/13(d) B1 1,029,412 1,034,302
- ----------------------------------------------------------------------------------
</Table>
F-9
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
PUBLISHING-(CONTINUED)
Black Press U.S. Partnership
Term Loan B-1
7.50%, 08/02/13(d) Ba3 $ 62,037 $ 62,347
- ----------------------------------------------------------------------------------
Canada Term Loan B-2
7.47-7.50%, 08/02/13(d) Ba3 37,665 37,854
- ----------------------------------------------------------------------------------
Caribe Information Investment Inc. Term Loan
7.46-7.66%, 03/31/13(d) B1 90,972 90,915
- ----------------------------------------------------------------------------------
Dex Media East LLC Term Loan B 6.80-7.00%,
05/08/09(d) Ba2 540,608 538,430
- ----------------------------------------------------------------------------------
Dex Media West LLC Term Loan B 6.80-7.00%,
03/09/10(d) Ba2 1,188,362 1,182,150
- ----------------------------------------------------------------------------------
Endurance Business Media, Inc.
Second Lien Term Loan
12.58%, 01/26/14(d) B1 59,090 59,385
- ----------------------------------------------------------------------------------
Term Loan
8.08%, 07/26/13(d) B1 128,000 128,320
- ----------------------------------------------------------------------------------
F+W Publications, Inc. Second Lien Term Loan
B 12.76%, 02/05/13(d) B2 500,000 503,334
- ----------------------------------------------------------------------------------
RH Donnelley Corp. Term Loan D2 6.74-7.01%,
06/30/11(d) Ba3 2,538,401 2,519,759
- ----------------------------------------------------------------------------------
Sun Media Corp. (Canada) Term Loan B 7.24%,
02/07/09(d) Ba2 642,228 641,960
- ----------------------------------------------------------------------------------
Yell Group Ltd. Term Loan B 01/31/13(d)(e)(h) Ba3 640,444 642,606
==================================================================================
7,441,362
==================================================================================
RAILROADS-0.23%
Helm Holding Corp. Term Loan B 7.96-8.00%,
07/08/11(d) B2 518,583 519,231
==================================================================================
REAL ESTATE MANAGEMENT & DEVELOPMENT-0.89%
Kyle Acquisition Group, LLC Term Loan B
7.38%, 07/20/08(d) Ba3 195,000 194,512
- ----------------------------------------------------------------------------------
Lake Las Vegas Resort First Lien Term Loan
8.21-8.25%, 02/01/10(d) B2 1,129,554 1,127,940
- ----------------------------------------------------------------------------------
Lion Gables Realty L.P. Term Loan 7.12%,
09/30/07(d) Ba2 48,684 48,674
- ----------------------------------------------------------------------------------
Rhodes Homes First Lien Term Loan 8.75%,
11/21/10(d) Ba3 51,791 51,791
- ----------------------------------------------------------------------------------
Technical Olympic USA, Inc. (TOUSA) Sr. Term
Loan 8.25%, 07/29/08(d) B1 346,448 344,283
- ----------------------------------------------------------------------------------
Yellowstone Mountain Club, LLC Term Loan
7.71%, 09/30/10(d) B1 237,733 236,396
==================================================================================
2,003,596
==================================================================================
RESTAURANTS-0.11%
CBRL Group, Inc. Term Loan 6.93-6.97%,
04/29/13(d) B2 245,843 243,938
==================================================================================
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
<Caption>
SEMICONDUCTORS-0.43%
AMI Semiconductors, Inc. Term Loan 6.83%,
04/01/12(d) Ba3 $ 972,696 $ 973,102
==================================================================================
SPECIALIZED CONSUMER SERVICES-0.28%
LPL Holdings Inc. Term Loan B 8.13-8.75%,
06/28/13(d) B2 623,533 629,769
==================================================================================
SPECIALIZED FINANCE-0.45%
Citco Group Ltd. (The) Term Loan 8.14-8.64%,
07/13/14(d) B1 127,467 128,423
- ----------------------------------------------------------------------------------
Clarke American Checks, Inc. Term Loan B
8.75-8.87%, 12/15/11(d) B1 289,972 293,596
- ----------------------------------------------------------------------------------
Clayton Holdings, Inc. Term Loan 8.40%,
12/08/11(d) B1 106,399 106,665
- ----------------------------------------------------------------------------------
NASDAQ Stock Market, Inc. (The)
Term Loan B
6.97-7.25%, 04/18/12(d)(e) Ba3 312,243 311,697
- ----------------------------------------------------------------------------------
Term Loan C
7.03-7.25%, 04/18/12(d)(e) Ba3 181,000 180,684
==================================================================================
1,021,065
==================================================================================
SPECIALTY CHEMICALS-3.86%
Basell B.V.
Term Loan B2
7.58%, 08/01/13(d) -- 271,667 274,723
- ----------------------------------------------------------------------------------
Term Loan B4
7.58%, 08/01/13(d) -- 54,333 54,889
- ----------------------------------------------------------------------------------
Term Loan C2
8.33%, 08/01/14(d) -- 271,667 274,723
- ----------------------------------------------------------------------------------
Term Loan C4
8.33%, 08/01/14(d) -- 54,333 55,127
- ----------------------------------------------------------------------------------
Cognis Deutschland GmbH & Co. KG (Germany)
Second Lien Term Loan
10.03%, 11/15/13(d) B1 320,000 324,800
- ----------------------------------------------------------------------------------
Term Loan B
8.17%, 03/30/12(d) B1 307,018 308,745
- ----------------------------------------------------------------------------------
Term Loan B4
8.17%, 03/30/12(d) B1 192,982 194,068
- ----------------------------------------------------------------------------------
Term Loan C
8.67%, 03/29/13(d) B1 500,000 503,750
- ----------------------------------------------------------------------------------
Hexion Specialty Chemicals, Inc.
Syn LOC
5.15%, 05/05/13(d) B2 93,581 92,567
- ----------------------------------------------------------------------------------
Term Loan C1
7.56%, 05/05/13(d) B2 656,204 649,095
- ----------------------------------------------------------------------------------
Term Loan C2
7.50%, 05/05/13(d) B2 142,546 141,002
- ----------------------------------------------------------------------------------
Huntsman ICI Chemicals LLC Term Loan B 7.08%,
08/16/12(d) Ba3 2,171,562 2,164,437
- ----------------------------------------------------------------------------------
</Table>
F-10
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
SPECIALTY CHEMICALS-(CONTINUED)
Ineos Group Ltd.
Term Loan A4
7.34%, 12/16/12(d) Ba3 $ 157,500 $ 158,140
- ----------------------------------------------------------------------------------
Term Loan B2
7.34%, 12/16/13(d) Ba3 224,438 226,121
- ----------------------------------------------------------------------------------
Term Loan C2
7.84%, 12/16/14(d) Ba3 224,438 226,121
- ----------------------------------------------------------------------------------
KRATON Polymers LLC Term Loan 7.38%,
12/23/10(d) B1 435,563 435,291
- ----------------------------------------------------------------------------------
Mosaic Global Holdings Inc. Term Loan B
6.81-7.06%, 02/21/12(d) Ba2 770,250 768,084
- ----------------------------------------------------------------------------------
Nalco Co. Term Loan B 7.12-7.30%, 11/04/10(d) B1 1,388,825 1,388,193
- ----------------------------------------------------------------------------------
Supresta Holdings LLC Term Loan 8.75%,
07/20/11(d) B1 469,821 462,774
==================================================================================
8,702,650
==================================================================================
SPECIALTY STORES-0.26%
Eye Care Centers of America, Inc. Term Loan
8.33-8.55%, 03/01/12(d) B2 493,750 494,059
- ----------------------------------------------------------------------------------
Savers, Inc. Term Loan 8.16%, 08/11/12(d) B1 79,333 79,730
==================================================================================
573,789
==================================================================================
SYSTEM SOFTWARE-0.04%
SERENA Software, Inc. Term Loan 7.41%,
03/10/13(d) B1 100,313 100,137
==================================================================================
THRIFTS & MORTGAGE FINANCE-0.13%
CharterMac Corp. Term Loan B 7.90%,
08/21/12(d) Ba3 300,000 300,000
==================================================================================
TOBACCO-0.80%
Alliance One International, Inc. Term Loan B
8.99%, 05/13/10(d) B2 665,575 668,903
- ----------------------------------------------------------------------------------
Commonwealth Brands, Inc. Term Loan 7.75%,
12/22/12(d) B1 324,021 325,641
- ----------------------------------------------------------------------------------
Reynolds American Inc. Term Loan 7.19-7.31%,
05/31/12(d)(e) Ba1 801,600 804,481
==================================================================================
1,799,025
==================================================================================
TRUCKING-0.11%
Greatwide Logistics Services, Inc. Term Loan
8.00%, 09/30/11(d)(e) B2 33,546 33,629
- ----------------------------------------------------------------------------------
Transport Industries L.P. Term Loan B 8.00%,
09/30/11(d) B2 213,407 213,941
==================================================================================
247,570
==================================================================================
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
<Caption>
WATER UTILITIES-0.97%
Thermal North America, Inc.
Bridge Term Loan
8.33%, 10/23/13(e)(g) Ba3 $2,000,000 $ 2,000,000
- ----------------------------------------------------------------------------------
Term Loan
7.16%, 10/12/13(d) Ba3 40,000 39,850
- ----------------------------------------------------------------------------------
Term Loan B
7.25%, 10/12/13(d) Ba3 136,943 136,601
==================================================================================
2,176,451
==================================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.41%
Cellular South Inc. Term Loan B 7.24-8.75%,
05/04/11(d) Ba3 117,600 117,600
- ----------------------------------------------------------------------------------
Centennial Communications Corp. Term Loan
7.32-7.75%, 02/09/11(d) B1 1,332,188 1,339,800
- ----------------------------------------------------------------------------------
FairPoint Communications, Inc. Term Loan B
7.25%, 02/08/12(d) B1 1,000,000 992,500
- ----------------------------------------------------------------------------------
Hawaiian Telcom, Inc. Term Loan B 7.75%,
10/31/12(d) B1 249,444 249,711
- ----------------------------------------------------------------------------------
IWL Communications, Inc./ CapRock Holdings,
Inc. Term Loan B 8.83-9.01%, 02/01/12(d) B2 61,810 60,651
- ----------------------------------------------------------------------------------
NuVox Communications, Inc. Term Loan
10.27-10.61%, 05/12/12(d) B2 250,000 250,312
- ----------------------------------------------------------------------------------
US TelePacific Communications
Second Lien Term Loan
13.67%, 08/04/12(d) B2 52,000 52,520
- ----------------------------------------------------------------------------------
Term Loan
9.92%, 08/04/11(d) B2 122,286 122,897
==================================================================================
3,185,991
==================================================================================
Total Senior Secured Floating Rate
Interests (Cost $193,886,014) 193,937,138
==================================================================================
FLOATING RATE NOTES-3.34%
BROADCASTING & CABLE TV-0.90%
EchoStar Communications Corp., Sr. Unsec.
Floating Rate Global Notes, 8.76%,
10/01/08(d)(i) Ba3 2,000,000 2,035,000
==================================================================================
INTEGRATED TELECOMMUNICATION SERVICES-1.31%
Qwest Corp. Sr. Unsec. Floating Rate Global
Notes, 8.58%, 06/15/13(d)(i) Ba2 2,250,000 2,432,813
- ----------------------------------------------------------------------------------
Time Warner Telecom Inc. Sr. Sec. Second
Priority Floating Rate Global Notes, 9.41%,
02/15/11(d)(i) B2 500,000 512,500
==================================================================================
2,945,313
==================================================================================
PAPER PACKAGING-0.15%
Verso Paper Holdings, LLC Sr. Sec. Floating
Rate Notes, 9.24%, 08/01/14 (Acquired
07/28/06; Cost $326,563)(d)(i)(j) B2 325,000 328,656
==================================================================================
</Table>
F-11
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ----------------------------------------------------------------------------------
SPECIALTY STORES-0.52%
Linens 'n Things, Inc. Sr. Sec. Floating Rate
Notes, 11.13%, 01/15/14 (Acquired
06/08/06-08/17/06; Cost
$1,203,750)(d)(i)(j) B3 $1,260,000 $ 1,178,100
==================================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.46%
Rogers Wireless Communications Inc. (Canada),
Sr. Sec. Gtd. Floating Rate Global Notes,
8.45%, 12/15/10(d)(i) Ba2 1,000,000 1,033,750
==================================================================================
Total Floating Rate Notes (Cost
$7,280,852) 7,520,819
==================================================================================
</Table>
<Table>
<Caption>
<Caption>
SHARES VALUE
- ----------------------------------------------------------------------------------
DOMESTIC COMMON STOCKS-0.81%
ENVIRONMENTAL & FACILITIES
SERVICES - 0.81%
Safety-Kleen Corp. (Acquired 12/24/03; Cost
$2,062,077)(e)(j)(k)(l) 102,803 1,824,753
==================================================================================
</Table>
<Table>
<Caption>
SHARES VALUE
- ----------------------------------------------------------------------------------
MONEY MARKET FUNDS-15.17%
Liquid Assets Portfolio-Institutional Class(m)(n) 17,084,220 17,084,220
- ----------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(m)(n) 17,084,220 17,084,220
==================================================================================
Total Money Market Funds (Cost $34,168,440) 34,168,440
==================================================================================
TOTAL INVESTMENTS-105.43% (Cost $237,397,383) 237,451,150
==================================================================================
OTHER ASSETS LESS LIABILITIES-(5.43)% (12,232,515)
==================================================================================
NET ASSETS-100.00% $225,218,635
__________________________________________________________________________________
==================================================================================
</Table>
Abbreviations:
<Table>
DIP - Debtor-in-possession
LOC - Letter of Credit
PIK - Payment-in-kind
REIT - Real Estate Investment Trust
Sec. - Secured
Sr. - Senior
Syn LOC - Synthetic Letter of Credit
Unsec. - Unsecured
</Table>
Notes to Schedule of Investments:
(a) Ratings are assigned by Moody's Investors Service, Inc. ("Moody's"). Ratings
are not covered by the Report of Independent Registered Public Accounting
Firm.
(b) Senior secured corporate loans and senior secured debt securities are, at
present, not readily marketable, not registered under the Securities Act of
1933, as amended and may be subject to contractual and legal restrictions on
sale. Senior secured corporate loans and senior secured debt securities in
the Fund's portfolio generally have variable rates which adjust to a base,
such as the London Inter-Bank Offered Rate ("LIBOR"), on set dates,
typically every 30 days but not greater than one year; and/or have interest
rates that float at a margin above a widely recognized base lending rate
such as the Prime Rate of a designated U.S. bank.
(c) Senior secured floating rate interests often require prepayments from excess
cash flow or permit the borrower to repay at its election. The degree to
which borrowers repay, whether as a contractual requirement or at their
election, cannot be predicted with accuracy. As a result, the actual
remaining maturity may be substantially less than the stated maturities
shown. However, it is anticipated that the senior secured floating rate
interests will have an expected average life of three to five years.
(d) In accordance with the procedures established by the Board of Trustees,
security fair valued based on an evaluated quote provided by an independent
pricing service. The aggregate value of these securities at August 31, 2006
was $194,909,922, which represented 86.54% of the Fund's Net Assets. See
Note 1A.
(e) Security considered to be illiquid. The aggregate value of these securities
considered illiquid at August 31, 2006 was $17,701,106, which represented
7.86% of the Fund's Net Assets.
(f) All or a portion of this holding is subject to unfunded loan commitments.
See Note 7.
(g) Security fair valued in good faith in accordance with the procedures
established by the Board of Trustees. The aggregate value of these
securities at August 31, 2006 was $6,548,035, which represented 2.91% of the
Fund's Net Assets. See Note 1A.
(h) This floating rate interest will settle after August 31, 2006, at which time
the interest rate will be determined.
(i) Interest rate is redetermined quarterly. Rate shown is the rate in effect on
August 31, 2006.
(j) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction). The security may be resold only pursuant to an exemption from
registration under the 1933 Act, typically to qualified institutional
buyers. The Fund has no rights to demand registration of these securities.
The aggregate value of these securities at August 31, 2006 was $3,331,509,
which represented 1.48% of the Fund's Net Assets. Unless otherwise
indicated, these securities are not considered to be illiquid.
(k) Non-income producing security.
(l) Acquired as a part of a bankruptcy restructuring.
(m) The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
(n) Security is considered a cash equivalent for the purpose of the Statement of
Cash Flows. See Note 1J.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-12
AIM Floating Rate Fund
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2006
<Table>
ASSETS:
Investments, at value (cost $203,228,943) $203,282,710
- -----------------------------------------------------------
Investments in affiliated money market funds
(cost $34,168,440) 34,168,440
===========================================================
Total investments (cost $237,397,383) 237,451,150
===========================================================
Cash 392,073
- -----------------------------------------------------------
Receivables for:
Investments sold 3,541,869
- -----------------------------------------------------------
Fund shares sold 1,192,210
- -----------------------------------------------------------
Dividends and Interest 1,988,299
- -----------------------------------------------------------
Fund expenses absorbed 89,818
- -----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 17,286
- -----------------------------------------------------------
Other assets 156,552
===========================================================
Total assets 244,829,257
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 17,986,914
- -----------------------------------------------------------
Fund shares reacquired 856,727
- -----------------------------------------------------------
Dividends 387,410
- -----------------------------------------------------------
Trustee deferred compensation and
retirement plans 30,158
- -----------------------------------------------------------
Accrued distribution fees 109,843
- -----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 2,682
- -----------------------------------------------------------
Accrued transfer agent fees 17,267
- -----------------------------------------------------------
Accrued operating expenses 219,621
===========================================================
Total liabilities 19,610,622
===========================================================
Net assets applicable to shares outstanding $225,218,635
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $277,939,140
- -----------------------------------------------------------
Undistributed net investment income 166,144
- -----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (52,940,416)
- -----------------------------------------------------------
Unrealized appreciation of investment
securities 53,767
===========================================================
$225,218,635
___________________________________________________________
===========================================================
NET ASSETS:
Class A $155,953,037
___________________________________________________________
===========================================================
Class C $ 44,853,027
___________________________________________________________
===========================================================
Class R $ 78,019
___________________________________________________________
===========================================================
Institutional Class $ 24,334,552
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 17,212,380
___________________________________________________________
===========================================================
Class C 4,962,577
___________________________________________________________
===========================================================
Class R 8,615
___________________________________________________________
===========================================================
Institutional Class 2,685,917
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 9.06
- -----------------------------------------------------------
Offering price per share
(Net asset value of $9.06 divided by
97.50%) $ 9.29
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 9.04
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per
share $ 9.06
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per
share $ 9.06
___________________________________________________________
===========================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-13
AIM Floating Rate Fund
STATEMENT OF OPERATIONS
For the period January 1, 2006 through August 31, 2006 and year ended December
31, 2005
<Table>
<Caption>
EIGHT MONTHS
ENDED YEAR ENDED
AUGUST 31, DECEMBER 31,
2006 2005
- -----------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 9,735,235 $14,198,261
- -----------------------------------------------------------------------------------------
Dividends from affiliated money market funds 274,662 62,573
- -----------------------------------------------------------------------------------------
Dividends 10,794 --
- -----------------------------------------------------------------------------------------
Facilities fees earned 167,810 280,727
=========================================================================================
Total investment income 10,188,501 14,541,561
=========================================================================================
EXPENSES:
Advisory fees 1,040,149 2,055,310
- -----------------------------------------------------------------------------------------
Administrative services fees 33,288 50,000
- -----------------------------------------------------------------------------------------
Custodian fees 41,222 61,234
- -----------------------------------------------------------------------------------------
Distribution fees:
Class A 240,894 437,365
- -----------------------------------------------------------------------------------------
Class B1 15,873 --
- -----------------------------------------------------------------------------------------
Class C 226,897 310,519
- -----------------------------------------------------------------------------------------
Class R 91 --
- -----------------------------------------------------------------------------------------
Interest and line of credit fees 277,144 1,168,474
- -----------------------------------------------------------------------------------------
Transfer agent fees 139,538 196,939
- -----------------------------------------------------------------------------------------
Transfer agent fees -- Institutional 337 --
- -----------------------------------------------------------------------------------------
Trustees' and officer's fees and benefits 13,395 21,464
- -----------------------------------------------------------------------------------------
Reports to shareholders 132,417 --
- -----------------------------------------------------------------------------------------
Professional services fees 358,065 306,340
- -----------------------------------------------------------------------------------------
Other 108,789 291,908
=========================================================================================
Total expenses 2,628,099 4,899,553
=========================================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (421,797) (399,081)
=========================================================================================
Net expenses 2,206,302 4,500,472
=========================================================================================
Net investment income 7,982,199 10,041,089
=========================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES:
Net realized gain (loss) from Investment securities (2,670,820) (432,027)
=========================================================================================
Change in net unrealized appreciation of investment
securities 3,108,144 803,050
=========================================================================================
Net gain from investment securities 437,324 371,023
=========================================================================================
Net increase in net assets resulting from operations $ 8,419,523 $10,412,112
_________________________________________________________________________________________
=========================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-14
AIM Floating Rate Fund
STATEMENT OF CHANGES IN NET ASSETS
For the period January 1, 2006 through August 31, 2006, the year ended December
31,
2005 and the year ended December 31, 2004
<Table>
<Caption>
EIGHT MONTHS
ENDED YEAR ENDED YEAR ENDED
AUGUST 31, DECEMBER 31, DECEMBER 31,
2006 2005 2004
- ----------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 7,982,199 $ 10,041,089 $ 7,648,726
- ----------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (2,670,820) (432,027) (6,992,122)
- ----------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 3,108,144 803,050 13,529,654
================================================================================================================
Net increase in net assets resulting from operations 8,419,523 10,412,112 14,186,258
================================================================================================================
Distributions to shareholders from net investment income:
Class A (5,810,039) (8,127,666) (6,749,808)
- ----------------------------------------------------------------------------------------------------------------
Class B1 (386,936) -- --
- ----------------------------------------------------------------------------------------------------------------
Class C (1,705,327) (1,834,764) (821,292)
- ----------------------------------------------------------------------------------------------------------------
Class R (1,139) -- --
- ----------------------------------------------------------------------------------------------------------------
Institutional Class (36,471) -- --
================================================================================================================
Total distributions from net investment income (7,939,912) (9,962,430) (7,571,100)
================================================================================================================
Return of Capital:
Class A -- -- (164,251)
- ----------------------------------------------------------------------------------------------------------------
Class B1 -- -- --
- ----------------------------------------------------------------------------------------------------------------
Class C -- -- (21,727)
- ----------------------------------------------------------------------------------------------------------------
Class R -- -- --
- ----------------------------------------------------------------------------------------------------------------
Institutional Class -- -- --
================================================================================================================
Total return of capital -- -- (185,978)
================================================================================================================
Decrease in net assets resulting from distributions (7,939,912) (9,962,430) (7,757,078)
================================================================================================================
Share transactions-net:
Class A (3,625,306) (31,980,239) (36,826,936)
- ----------------------------------------------------------------------------------------------------------------
Class C (2,878,806) 13,028,465 12,972,750
- ----------------------------------------------------------------------------------------------------------------
Class R 78,252 -- --
- ----------------------------------------------------------------------------------------------------------------
Institutional Class 24,334,860 -- --
================================================================================================================
Net increase (decrease) in net assets resulting from
share transactions 17,909,000 (18,951,774) (23,854,186)
================================================================================================================
Net increase (decrease) in net assets 18,388,611 (18,502,092) (17,425,006)
================================================================================================================
NET ASSETS:
Beginning of period 206,830,024 225,332,116 242,757,122
================================================================================================================
End of period (including undistributed net investment
income of $166,144, $124,223 and $69,625, respectively) $225,218,635 $206,830,024 $225,332,116
________________________________________________________________________________________________________________
================================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-15
AIM Floating Rate Fund
STATEMENT OF CASH FLOWS
For the period January 1, 2006 through August 31, 2006 and the year ended
December 31, 2005
<Table>
<Caption>
EIGHT MONTHS
ENDED YEAR ENDED
AUGUST 31, DECEMBER 31,
2006 2005
- ------------------------------------------------------------------------------------------
CASH PROVIDED BY OPERATING ACTIVITIES:
Net increase in net assets resulting from operations $ 8,419,523 $ 10,412,112
==========================================================================================
ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS TO NET
CASH PROVIDED BY OPERATIONS:
Purchases of investments (96,552,533) (138,190,388)
- ------------------------------------------------------------------------------------------
Proceeds from disposition of investments and principal
payments 130,898,588 174,439,877
- ------------------------------------------------------------------------------------------
Increase in dividends and interest receivable (663,983) (237,814)
- ------------------------------------------------------------------------------------------
Increase (decrease ) in other assets (134,505) 26,580
- ------------------------------------------------------------------------------------------
Amortization of premiums and accretion of discounts on
investment securities 4,636 (184,545)
- ------------------------------------------------------------------------------------------
Increase in accrued expenses and other payables 52,328 11,715
- ------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) on investment
securities (3,108,144) (803,050)
- ------------------------------------------------------------------------------------------
Net realized gain (loss) on investment securities 2,670,820 432,027
==========================================================================================
Net cash provided by operating activities 41,586,730 45,906,514
==========================================================================================
CASH USED IN FINANCING ACTIVITIES:
Net decrease in borrowings on line of credit (19,500,000) (16,500,000)
- ------------------------------------------------------------------------------------------
Dividends paid to shareholders (2,779,008) (3,599,738)
- ------------------------------------------------------------------------------------------
Proceeds from shares of beneficial interest sold 66,762,390 28,920,819
- ------------------------------------------------------------------------------------------
Disbursements from shares of beneficial interest
reacquired (54,233,751) (54,204,337)
==========================================================================================
Net cash provided by (used in) financing activities (9,750,369) (45,383,256)
==========================================================================================
Net increase in cash and cash equivalents 31,836,361 523,258
==========================================================================================
Cash and cash equivalents at beginning of period 2,724,152 2,200,894
==========================================================================================
Cash and cash equivalents at end of period $34,560,513 2,724,152
==========================================================================================
NON-CASH FINANCING ACTIVITIES:
Value of shares of beneficial interest issued in
reinvestment of dividends paid to shareholders $ 5,093,272 $ 6,315,889
__________________________________________________________________________________________
==========================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during for the eight months ended August 31, 2006 and the year ended December
31, 2006 for interest was $170,818 and $1,167,665, respectively.
</Table>
F-16
AIM Floating Rate Fund
NOTES TO FINANCIAL STATEMENTS
August 31, 2006
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Floating Rate Fund (the "Fund") is a series portfolio of AIM Counselor
Series Trust (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 six separate
portfolios, each authorized to issue an unlimited number of shares of beneficial
interest. The Fund currently offers multiple classes of shares. Matters
affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund.
Prior to April 14, 2006, the Fund operated as AIM Floating Rate Fund (the
"Closed-End Fund"). The Closed-End Fund was reorganized as an open-end fund as
of the close of business on April 13, 2006 through the transfer of all of its
assets and liabilities to the Fund. As part of the reorganization, the
Closed-End Fund was restructured from a sole series portfolio of AIM Floating
Rate Fund, to a new series portfolio of the Trust, at which time the Fund's
fiscal year-end changed to August 31. Upon closing of the reorganization,
shareholders of (i) Class B shares of the Closed-End Fund that were not subject
to an early withdrawal charge ("EWC") received Class A shares of the Fund, (ii)
Class B shares of the Closed-End Fund that were subject to an EWC received Class
B1 shares of the Fund, and (iii) Class C shares of the Closed-End Fund received
Class C shares of the Fund. Information presented in this report for Class A
shares includes financial data for Class B shares of the Closed-End Fund prior
to the reorganization date. Information included in this report for Class C
shares includes data for Class C shares of the Closed-End Fund.
The Board of Trustees of the Trust approved, on July 5, 2006, the conversion
of Class B1 shares into Class A shares of the Fund. The conversion of Class B1
shares into Class A shares occurred on July 27, 2006 (the "Conversion Date"). On
the Conversion Date, each shareholder of record of Class B1 shares of the Fund
received that number of Class A shares of the Fund having an aggregate net asset
value equal to the net assets value of the Class B1 shares of the Fund held by
such shareholder immediately prior to the Conversion Date. Class B1 shareholders
are not expected to recognize gain or loss for federal income tax purposes in
connection with the conversion.
The Fund's investment objective is to provide a high level of current income
and, secondarily, preservation of capital.
The following is a summary of the significant accounting policies followed
by the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Senior secured floating rate loans and senior
secured floating rate debt securities are fair valued using an evaluated
quote provided by an independent pricing service. Evaluated quotes provided
by the pricing service may reflect appropriate factors such as ratings,
tranche type, industry, company performance, spread, individual trading
characteristics, institution-size trading in similar groups of securities
and other market data.
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. Securities traded in the
over-the-counter market (but not securities reported on the NASDAQ Stock
Exchange) are valued based on the prices furnished by independent pricing
services, in which case the securities may be considered fair valued, or by
market makers. Each security reported on the NASDAQ Stock Exchange is
valued at the NASDAQ Official Closing Price ("NOCP") as of the close of the
customary trading session on the valuation date or absent a NOCP, at the
closing bid price.
Futures contracts are valued at the final settlement price set by an
exchange on which they are principally traded. Listed options are valued at
the mean between the last bid and the ask prices from the exchange on which
they are principally traded. Options not listed on an exchange are valued
by an independent source at the mean between the last bid and ask prices.
For purposes of determining net asset value per share, futures and option
contracts generally are valued 15 minutes after the close of the customary
trading session of the New York Stock Exchange ("NYSE").
Investments in open-end registered investment companies and closed-end
registered investment companies that do not trade on an exchange are valued
at the end of day net asset value per share. Investments in closed-end
registered investment companies that trade on an exchange are valued at the
last sales price as of the close of the customary trading session on the
exchange where the security is principally traded.
Debt obligations (including convertible bonds) are fair valued using an
evaluated quote provided by an independent pricing service. Evaluated
quotes provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
institution-size trading in similar groups of securities, developments
related to specific securities, dividend rate, yield, quality, type of
issue, coupon rate, maturity, individual trading characteristics and other
market data. Short-term obligations having 60 days or less to maturity and
commercial paper are presented at amortized cost which approximates value.
Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and
are valued at the last bid price in the case of equity securities and in
the case of debt obligations, the mean between the last bid and asked
prices.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable exchange rates as of the
close of the NYSE. Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in computing the net asset value
of the Fund's shares are determined as of the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes and the
close of the customary trading session of the NYSE which would not
ordinarily be reflected in the computation of the Fund's net asset value.
If the event is likely
F-17
AIM Floating Rate Fund
to have affected the closing price of the security, the security will be
valued at fair value in good faith using procedures approved by the Board
of Trustees. Adjustments to closing prices to reflect fair value may also
be based on a screening process of an independent pricing service to
indicate the degree of certainty, based on historical data, that the
closing price in the principal market where a foreign security trades is
not the current value as of the close of the NYSE. Foreign securities
meeting the approved degree of certainty that the price is not reflective
of current value will be priced at the indication of fair value from the
independent pricing service. Multiple factors may be considered by the
independent pricing service in determining adjustments to reflect fair
value and may include information relating to sector indices, ADRs and
domestic and foreign index futures.
Fund securities primarily traded in foreign markets may be traded in such
markets on days that are not business days of the Fund. Because the net
asset value per share of each Fund is determined only on business days of
the Fund, the value of the portfolio securities of a Fund that invests in
foreign securities may change on days when an investor cannot exchange or
redeem shares of the Fund.
Securities for which market quotations are not readily available or are
unreliable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers following procedures approved by
the Board of Trustees. Issuer specific events, market trends, bid/ask
quotes of brokers and information providers and other market data may be
reviewed in the course of making a good faith determination of a security's
fair value.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transaction 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 the settlement date.
Facility fees received may be amortized over the life of the loan. Dividend
income is recorded on the ex-dividend date. Bond premiums and discounts are
amortized and/or accreted for financial reporting purposes.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates realized and unrealized capital gains and losses to a
class based on the relative net assets of each class. The Fund allocates
income to a class based on the relative value of the settled shares of each
class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, AIM may
determine the country in which an issuer is located and/or credit risk
exposure based on various factors. These factors include the laws of the
country under which the issuer is organized, where the issuer maintains a
principal office, the country in which the issuer derives 50% or more of
its total revenues and the country that has the primary market for the
issuer's securities, as well as other criteria. Among the other criteria
that may be evaluated for making this determination are the country in
which the issuer maintains 50% or more of its assets, the type of security,
financial guarantees and enhancements, the nature of the collateral and the
sponsor organization. Country of issuer and/or credit risk exposure has
been determined to be the United States of America unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income are declared daily and paid
monthly. Distributions from net realized capital gain, if any, are
generally paid annually and recorded on ex-dividend date. The Fund may
elect to treat a portion of the proceeds from redemptions as distributions
for federal income tax purposes.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of
Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial statements.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund are charged to the operations of such class. Transfer
agency fees and expenses and other shareholder recordkeeping fees and
expenses attributable to the Institutional Class are charged to such class.
Transfer agency fees and expenses and other shareholder recordkeeping fees
and expenses relating to all other classes are allocated among those
classes based on relative net assets. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- 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 including estimates and assumptions related to
taxation. Actual results could differ from those estimates.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust (including the
Trust's investment manager) is indemnified against certain liabilities that
may arise out of performance of their duties to the Fund. Additionally, in
the normal course of business, the Fund enters into contracts that contain
a variety of indemnification clauses. The Fund's maximum exposure under
these arrangements is unknown as this would involve future claims that may
be made against the Fund that have not yet occurred. The risk of material
loss as a result of such indemnification claims is considered remote.
I. REDEMPTION FEES -- The Fund has a 2% redemption fee that is to be retained
by the Fund to offset transaction costs and other expenses associated with
short-term redemptions and exchanges. The fee, subject to certain
exceptions, is imposed on certain redemptions, including exchanges
F-18
AIM Floating Rate Fund
of shares held less than 30 days. The redemption fee is recorded as an
increase in shareholder capital and is allocated among the share classes
based on the relative net assets of each class.
J. CASH AND CASH EQUIVALENTS -- For the purpose of the Statement of Cash
Flows, the Fund defines Cash and Cash Equivalents as cash (including
foreign currency), money market funds and other investments held in lieu of
cash and excludes investments made with cash collateral received.
K. SECURITIES PURCHASED ON A WHEN-ISSUED AND DELAYED DELIVERY BASIS -- The
Fund may purchase and sell interests in Corporate Loans and Corporate Debt
Securities and other portfolio securities on a when-issued and delayed
delivery basis, with payment and delivery scheduled for a future date. No
income accrues to the Fund on such interests or securities in connection
with such transactions prior to the date the Fund actually takes delivery
of such interests or securities. These transactions are subject to market
fluctuations and are subject to the risk that the value at delivery may be
more or less than the trade date purchase price. Although the Fund will
generally purchase these securities with the intention of acquiring such
securities, they may sell such securities prior to the settlement date.
L. INTERMEDIATE PARTICIPANTS -- The Fund invests in Corporate Loans from U.S.
or non-U.S. companies (the "Borrowers"). The investment of the Fund in a
Corporate Loan may take the form of participation interests or assignments.
If the Fund purchases a participation interest from a syndicate of lenders
("Lenders") or one of the participants in the syndicate ("Participant"),
one or more of which administers the loan on behalf of all the Lenders (the
"Agent Bank"), the Fund would be required to rely on the Lender that sold
the participation interest not only for the enforcement of the Fund's
rights against the Borrower but also for the receipt and processing of
payments due to the Fund under the Corporate Loans. As such, the Fund is
subject to the credit risk of the Borrower and the Participant. Lenders and
Participants interposed between the Fund and a Borrower, together with
Agent Banks, are referred to as "Intermediate Participants".
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM based on the annual rate of the Fund's
average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- --------------------------------------------------------------------
First $500 million 0.65%
- --------------------------------------------------------------------
Next $4.5 billion 0.60%
- --------------------------------------------------------------------
Next $5 billion 0.575%
- --------------------------------------------------------------------
Over $10 billion 0.55%
___________________________________________________________________
====================================================================
</Table>
Prior to April 14, 2006, the Closed-End Fund paid an advisory fee to AIM at
an annual rate of 0.95% of the Fund's average daily net assets.
Effective April 14, 2006, AIM has entered in a sub-advisory agreement with
INVESCO Senior Secured Management, Inc. ("ISSM"). Under the terms of the
Sub-advisory agreement AIM pays ISSM 40% of the amount of AIM's compensation on
the sub-advised assets annually. Prior to April 14, 2006, AIM had a similar
agreement with respect to Closed-End Fund.
The advisor has voluntarily agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Class A, Class B1, Class C, Class R
and Institutional Class shares to 1.50%, 1.50%, 2.00%, 1.75% and 1.25% of
average daily net assets, respectively. Prior to April 14, 2006, the advisor had
voluntarily agreed to waive advisory fees and/or reimburse expenses to the
extent necessary to limit total annual operating expenses Class C shares to
1.75% of average net assets. In determining the advisor's obligation to waive
advisory fees and/or reimburse expenses, the following expenses are not taken
into account, and could cause the net annual operating expenses to exceed the
numbers reflected above: (i) interest; (ii) taxes; (iii) dividend expense on
short sales; (iv) extraordinary items; and (v) expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement.
Currently, in addition to the expense reimbursement arrangement with AMVESCAP
PLC ("AMVESCAP") described more fully below, the expense offset arrangements
from which the Fund may benefit are in the form of credits that the Fund
receives from banks where the Fund or its transfer agent has deposit accounts in
which it holds uninvested cash. Those credits are used to pay certain expenses
incurred by the Fund.
Further, AIM has voluntarily agreed to waive advisory fees of the Fund in
the amount of 25% of the advisory fee AIM receives from the affiliated money
market funds on investments by the Fund in such affiliated money market funds.
AIM is also voluntarily waiving a portion of the advisory fee payable by the
Fund equal to the difference between the income earned from investing in the
affiliated money market fund and the hypothetical income earned from investing
in an appropriate comparative benchmark. Voluntary fee waivers or reimbursements
may be modified or discontinued at any time upon consultation with the Board of
Trustees without further notice to investors.
For period January 1, 2006 to August 31, 2006 and the year ended December
31, 2005, AIM waived advisory fees of $376,615 and $282,192, respectively.
At the request of the Trustees of the Trust, AMVESCAP agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. These expenses along with the related expense
reimbursement are included in the Statement of Operations. For period January 1,
2006 to August 31, 2006 and the year ended December 31, 2005, AMVESCAP
reimbursed expenses of the Fund in the amount of $2,300 and $1,804,
respectively..
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. Pursuant to such agreement, for period January
1, 2006 to August 31, 2006 and the year ended December 31, 2005, AIM was paid
$33,288 and $50,000, respectively.
F-19
AIM Floating Rate Fund
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay AIM Investment Services, Inc. ("AIS") a fee for providing transfer agency
and shareholder services to the Fund and reimburse AIS for certain expenses
incurred by AIS in the course of providing such services. AIS may make payments
to intermediaries that provide omnibus account services, sub-accounting services
and/or networking services. All fees payable by AIS to intermediaries that
provide omnibus account services or sub-accounting are charged back to the Fund,
subject to certain limitations approved by the Trust's Board of Trustees. For
period January 1, 2006 to August 31, 2006, the Fund paid AIS $139,538 for Class
A, Class B1, Class C and Class R share classes and $337 for Institutional Class
shares. For the year ended December 31, 2005, the Fund paid AIS $196,939 for
Class B and Class C shares classes.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class
B1, 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,
Class B1, Class C and Class R shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays ADI compensation at the annual rate of 0.25% of the
Fund's average daily net assets of Class A and Class B1 shares, 0.75% of the
average daily net assets of Class C shares and 0.50% of the average daily net
assets of Class R shares. Prior to April 14, 2006, ADI had voluntarily agreed to
waive 0.25% of the Class C Plan fees. Of the Rule 12b-1 payments, up to 0.25% of
the average daily net assets of the Class A, Class B1, Class C or Class R shares
may be paid to furnish continuing personal shareholder services to customers who
purchase and own shares of such classes. Any amounts not paid as a service fee
under the Plans would constitute an asset-based sales charge. National
Association of Securities Dealers ("NASD") Rules impose a cap on the total sales
charges, including asset-based sales charges that may be paid by any class of
shares of the Fund. Pursuant to the Plans, for the period January 1, 2006 to
August 31, 2006, the Class A, Class B1, Class C and Class R shares paid
$240,894, $15,873, $194,110 and $91, respectively, after ADI waived plan fees of
$32,787 for Class C shares during the period January 1, 2006 to April 13, 2006.
For the year ended December 31, 2005, the Class B and Class C shares paid
$437,365 and $207,013, respectively, after ADI waived Plan fees of $103,506 for
Class C shares.
Front-end sales commissions and contingent deferred sales charges ("CDSC")
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. CDSC are deducted from
redemption proceeds prior to remittance to the shareholder. During the period
April 14, 2006 to August 31, 2006, ADI advised the Fund that it retained $8,204
in front-end sales commissions from the sale of Class A shares and $0, $23,877,
$12,279 and $0 from Class A, Class B1, Class C and Class R shares, respectively,
for CDSC imposed on redemptions by shareholders. For the period January 1, 2006
through April 13, 2006, ADI advised the Fund that it received $13,316 and
$10,110 from Class B and Class C shares, respectively, in EWC's imposed on
redemptions of the Closed-End fund. For the year ended December 31, 2005, ADI
advised the Fund that it received $50,028 and $19,378 from Class B and Class C
shares, respectively, in EWCs imposed on redemptions of Closed-End Fund shares.
Certain officers and trustees of the Trust are officers and directors of
AIM, AIS and/or ADI.
NOTE 3--INVESTMENTS IN AFFILIATES
The Fund is permitted, pursuant to an exemptive order from the Securities and
Exchange Commission ("SEC") and procedures approved by the Board of Trustees, to
invest daily available cash balances in affiliated money market funds. The Fund
and the money market funds below have the same investment advisor and therefore,
are considered to be affiliated. The table below shows the transactions in and
earnings from investments in affiliated money market funds for period January 1,
2006 to August 31, 2006.
<Table>
<Caption>
CHANGE IN
UNREALIZED
VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED
FUND 12/31/05 AT COST FROM SALES (DEPRECIATION) 08/31/06 INCOME GAIN (LOSS)
- --------------------------------------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $1,362,076 $ 59,142,716 $(43,420,572) $ -- $17,084,220 $137,012 $ --
- --------------------------------------------------------------------------------------------------------------------------------
Premier
Portfolio-Institutional
Class -- 24,224,601 (7,140,381) -- 17,084,220 62,770 --
- --------------------------------------------------------------------------------------------------------------------------------
STIC Prime
Portfolio-Institutional
Class 1,362,076 37,860,101 (39,222,177) -- -- 74,880 --
================================================================================================================================
Total $2,724,152 $121,227,418 $(89,783,130) $ -- $34,168,440 $274,662 $ --
________________________________________________________________________________________________________________________________
================================================================================================================================
</Table>
NOTE 4--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions and (ii) custodian credits which
result from periodic overnight cash balances at the custodian. For period
January 1, 2006 to August 31, 2006 and the year ended December 31, 2005, the
Fund received credits from these arrangements, which resulted in the reduction
of the Fund's total expenses of $10,095 and $11,579, respectively.
NOTE 5--TRUSTEES' AND OFFICER'S FEES AND BENEFITS
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to each Trustee and Officer of the Fund who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also
include amounts accrued by the Fund to fund such deferred compensation amounts.
Those Trustees who defer compensation have the option to select various AIM
Funds in which their deferral accounts shall be deemed to be invested. Finally,
current Trustees are eligible to participate in a retirement plan that provides
for benefits to be paid upon retirement to Trustees over a period of time based
on the number of years of service. The Fund may have certain former Trustees who
also participate in a retirement plan and receive benefits under such plan.
"Trustees' and Officer's Fees and Benefits" include
F-20
AIM Floating Rate Fund
amounts accrued by the Fund to fund such retirement benefits. Obligations under
the deferred compensation and retirement plans represent unsecured claims
against the general assets of the Fund.
During period January 1, 2006 to August 31, 2006 and the year ended December
31, 2005, the Fund paid legal fees of $2,550 and $4,747, respectively, for
services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6--BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by JPMorgan Chase Bank. The Fund may borrow up to the
lesser of (i) $250,000,000, or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. The funds which
are party to the line of credit are charged a commitment fee of 0.06% on the
unused balanced of the committed line. During the period January 1, 2006 to
August 31, 2006, the average borrowings for the 107 days the borrowings were
outstanding was $17,780,374 with a weighted average interest rate of 4.97% and
interest expense of $259,022. During the year ended December 31, 2005, the
average borrowings for the 365 days the borrowings were outstanding was
$29,065,753 with a weighted average interest rate of 3.95% and interest expense
of $1,148,651.
Pursuant to an exemptive order from the SEC, the Fund may participate in an
interfund lending facility that AIM has established for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund. A loan will be secured by collateral if the
Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total
assets. To the extent that the loan is required to be secured by collateral, the
collateral is marked to market daily to ensure that the market value is at least
102% of the outstanding principal value of the loan. During the period January
1, 2006 through August 31, 2006 and the year ended December 31, 2005, the Fund
did not borrow or lend under the interfund lending facility.
Additionally, the Fund is permitted to temporarily carry a negative or
overdrawn balance in its account with State Street Bank and Trust Company, the
custodian bank. To compensate the custodian bank for such overdrafts, the
overdrawn Fund may either (i) leave funds as a compensating balance in the
account so the custodian bank can be compensated by earning the additional
interest; or (ii) compensate by paying the custodian bank at a rate agreed upon
by the custodian bank and AIM, not to exceed the rate contractually agreed upon.
NOTE 7--UNFUNDED LOAN COMMITMENTS
As of August 31, 2006, the Fund had unfunded loan commitments of $2,644,266,
which could be extended at the option of the borrower, pursuant to the following
loan agreements with the following borrowers:
<Table>
<Caption>
BORROWER UNFUNDED COMMITMENTS
- -----------------------------------------------------------------------------------------------------------------------------
AMF Bowling Worldwide, Inc. Revolving Loan $ 485,000
- -----------------------------------------------------------------------------------------------------------------------------
AMSTED Industries Inc. Delay Draw Term Loan B 554,063
- -----------------------------------------------------------------------------------------------------------------------------
Atlantic Broadband LLC Term Loan B1 223,188
- -----------------------------------------------------------------------------------------------------------------------------
Atrium Companies, Inc. Delay Draw Term Loan 26,279
- -----------------------------------------------------------------------------------------------------------------------------
Birds Eye Foods Inc. Revolving Loan 985,000
- -----------------------------------------------------------------------------------------------------------------------------
Calpine Corp. Revolving Loan 65,023
- -----------------------------------------------------------------------------------------------------------------------------
Federal-Mogul Corp. Revolving Loan 62,400
- -----------------------------------------------------------------------------------------------------------------------------
LSP General Finance Co., LLC Delay Draw Term Loan 195
- -----------------------------------------------------------------------------------------------------------------------------
Niska/CR Gas & Storage Revolving Loan 38,183
- -----------------------------------------------------------------------------------------------------------------------------
Nuance Communications, Inc. Revolving Loan 114,799
- -----------------------------------------------------------------------------------------------------------------------------
US Shipping LLC Delay Draw Term Loan 90,136
=============================================================================================================================
$2,644,266
_____________________________________________________________________________________________________________________________
=============================================================================================================================
</Table>
F-21
AIM Floating Rate Fund
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the period January 1, 2006 to
August 31, 2006 and the years ended December 31, 2005 and 2004 was as follows:
<Table>
<Caption>
2006 2005 2004
- ----------------------------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $7,939,912 $9,962,430 $7,571,100
- ----------------------------------------------------------------------------------------------------
Return of capital -- -- 185,978
====================================================================================================
Total Distribution $7,939,912 $9,962,430 $7,757,078
____________________________________________________________________________________________________
====================================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2006 and December 31, 2005, the components of net assets on a
tax basis were as follows:
<Table>
<Caption>
2006 2005
- ------------------------------------------------------------------------------------------
Undistributed ordinary income $ 191,959 $ 14,756
- ------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) -- investments 53,767 (2,921,694)
- ------------------------------------------------------------------------------------------
Temporary book/tax differences (25,815) (23,699)
- ------------------------------------------------------------------------------------------
Capital loss carryover (52,940,416) (50,441,499)
- ------------------------------------------------------------------------------------------
Shares of beneficial interest 277,939,140 260,202,160
==========================================================================================
Total net assets $225,218,635 $206,830,024
__________________________________________________________________________________________
==========================================================================================
</Table>
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is due to differences in the timing of recognition of gains and
losses on investments for tax and book purposes. The Fund's unrealized
appreciation (depreciation) difference is attributable primarily to losses on
wash sales.
The temporary book/tax differences are a result of timing differences
between book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the trustee deferral of compensation and
retirement plan expenses.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund has a capital loss carryforward as of August 31, 2006 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------
August 31, 2007 $ 453,428
- -----------------------------------------------------------------------------
August 31, 2009 10,188,057
- -----------------------------------------------------------------------------
August 31, 2010 21,273,718
- -----------------------------------------------------------------------------
August 31, 2011 10,298,295
- -----------------------------------------------------------------------------
August 31, 2012 2,745,717
- -----------------------------------------------------------------------------
August 31, 2013 5,482,284
- -----------------------------------------------------------------------------
August 31, 2014 2,498,917
=============================================================================
Total capital loss carryforward $52,940,416
_____________________________________________________________________________
=============================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code due
to fiscal year end change.
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of non-deductible
organizational expenses and adjustments on the sale of a restructured bond, on
August 31, 2006, undistributed net investment income was decreased by $366,
undistributed net realized gain (loss) was increased by $172,386 and shares of
beneficial interest decreased by $172,020. This reclassification had no effect
on the net assets of the Fund.
F-22
AIM Floating Rate Fund
NOTE 10--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during period January 1,
2006 to August 31, 2006 was $111,959,519 and $124,032,650, respectively and
during the year ended December 31, 2005 was $136,272,783 and $173,825,477,
respectively.
<Table>
<Caption>
EIGHT MONTHS
ENDED YEAR ENDED
AUGUST 31, DECEMBER 31,
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS 2006 2005
- ------------------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 829,877 $ 1,885,317
- ------------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (776,110) (4,807,011)
============================================================================================================
Net unrealized appreciation (depreciation) of investment securities $ 53,767 $(2,921,694)
____________________________________________________________________________________________________________
============================================================================================================
Cost of investments is the same for tax and financial statement purposes for the eight months ended August
31, 2006. Cost of investments for tax purposes was $229,843,687 for the year ended December 31, 2005.
</Table>
F-23
AIM Floating Rate Fund
NOTE 11--SHARE INFORMATION
The Fund currently offers four different classes of shares: Class A, Class C,
Class R and Institutional Class. Prior to the Reorganization, the Fund offered
Class B shares (see footnotes to the table below). Class A shares are sold with
a front-end sales charge. Class C shares are sold with CDSC. Class R shares and
Institutional Class shares are sold at net asset value. Under certain
circumstances, Class A shares are sold without a sales charge. In addition,
under certain circumstances, Class A shares and Class R shares are subject to
CDSC. As of the close of business on April 13, 2006, Class B1 shares were closed
to current and new investors. Effective on July 27, 2006, all outstanding Class
B1 shares were converted into Class A shares of the Fund.
Information presented below for Class A and Class C shares, respectively,
includes financial data for Closed-End Fund Class B and Class C shares,
respectively, prior to the reorganization.
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED
EIGHT MONTHS ENDED DECEMBER 31,
AUGUST 31, --------------------------------------------------------
2006(A)(F) 2005 2004
-------------------------- -------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 2,829,517 $ 25,667,525 697,277 $ 6,298,550 1,110,006 $ 9,865,550
- ---------------------------------------------------------------------------------------------------------------------------------
Class B1(b)(c) 153 1,341 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 1,970,507 17,847,704 2,511,732 22,638,124 2,034,158 18,066,194
- ---------------------------------------------------------------------------------------------------------------------------------
Class R(b) 8,489 77,109 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class(b) 2,683,496 24,312,527 -- -- -- --
=================================================================================================================================
Issued as reinvestment of dividends:
Class A 382,801 3,406,979 537,184 4,853,113 456,936 4,068,921
- ---------------------------------------------------------------------------------------------------------------------------------
Class B1(b)(c) 27,645 318,656 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 146,924 1,330,027 162,391 1,462,776 72,970 649,066
- ---------------------------------------------------------------------------------------------------------------------------------
Class R(b) 126 1,139 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class(b) 4,025 36,471 -- -- -- --
=================================================================================================================================
Conversion of Class B1 shares to Class A
shares:
Class A 2,296,583 20,991,472 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Class B1(b)(c) (2,296,583) (20,991,472) -- -- -- --
=================================================================================================================================
Reacquired:(d)
Class A(e) (3,041,753) (27,605,025) (4,782,363) (43,131,902) (5,710,581) (50,761,407)
- ---------------------------------------------------------------------------------------------------------------------------------
Class B1(b)(c) (594,690) (5,414,782) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Class C(e) (2,436,846) (22,056,537) (1,230,185) (11,072,435) (645,752) (5,742,510)
- ---------------------------------------------------------------------------------------------------------------------------------
Class R(b) -- 4 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class(b) (1,604) (14,138) -- -- -- --
=================================================================================================================================
1,978,790 $ 17,909,000 (2,103,964) $(18,951,774) (2,682,263) $(23,854,186)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) There is one entity that is record owner of more than 5% of the
outstanding shares of the Fund and owns 17% of the outstanding shares of
the Fund. ADI has an agreement with this entity to sell Fund shares. The
Fund, AIM and/or AIM affiliates may make payments to this entity, which
is considered to be related to the Fund, for providing services to the
Fund, AIM and/or AIM affiliates including but not limited to such
services such as, securities brokerage, distribution, third party record
keeping and account servicing. The trust has no knowledge as to whether
all or any portion of the shares owned of record by this entity are also
owned beneficially. In addition, 11% of the outstanding shares of the
Fund are owned by affiliated mutual funds. Affiliated mutual funds are
other mutual funds that are also advised by AIM.
(b) Class B1, Class R and Institutional Class shares commenced sales on
April 13, 2006.
(c) Effective July 27, 2006, all outstanding Class B1 shares were converted
into Class A shares of the Fund.
(d) Amount is net of redemption fees of $8,328, $2,405, $4 and $394 for
Class A, Class C, Class R and Institutional Class, respectively, for the
period January 1, 2006 to August 31, 2006.
(e) Includes redemption activity for Class B shares and Class C shares of
the Closed-End Fund through April 13, 2006 (date of reorganization) as
follows: Class B shares -- 828,994 shares and $7,518,875; Class C
shares -- 708,337 shares and $6,403,362.
F-24
AIM Floating Rate Fund
(f) Upon the closing of the reorganization of the Closed-End Fund into the
Fund on April 13, 2006 the Fund issued the following shares in
connection with such reorganization:
<Table>
<Caption>
FUND CLOSED-END FUND
CLASS SHARES AMOUNT CLASS SHARES AMOUNT
- -------------------------------------------------------------------------------
A 14,204,828 $129,405,986 -- -- $ --
- -------------------------------------------------------------------------------
B1 2,863,475 26,086,257 B 17,068,303 155,492,243
- -------------------------------------------------------------------------------
C 4,942,796 44,930,012 C 4,942,796 44,930,012
===============================================================================
Net Assets 22,011,099 $200,422,255 22,011,099 $200,422,255
_______________________________________________________________________________
===============================================================================
</Table>
NOTE 12--NEW ACCOUNTING STANDARD
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48").
FIN 48 prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement for a tax position taken or
expected to be taken in a tax return. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. The provisions for FIN 48 are effective for
fiscal years beginning after December 15, 2006. Management is currently
assessing the impact of FIN 48, if any, on the Fund's financial statements and
intends for the Fund to adopt the FIN 48 provisions during 2007.
NOTE 13--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated. Information presented prior to the
close of business on April 13, 2006 (date of reorganization) includes financial
data for Class B shares of the Closed-End Fund.
<Table>
<Caption>
CLASS A
-------------------------------------------------------------------------
JANUARY 1,
2006 TO YEAR ENDED DECEMBER 31,
AUGUST 31, --------------------------------------------------------
2006 2005 2004 2003 2002 2001
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.04 $ 9.02 $ 8.77 $ 8.51 $ 8.64 $ 9.37
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.37(a) 0.43 0.30 0.33 0.38 0.60(a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.02 0.01 0.25 0.25 (0.13) (0.73)
=================================================================================================================================
Total from investment operations 0.39 0.44 0.55 0.58 0.25 (0.13)
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.37) (0.42) (0.29) (0.32) (0.38) (0.60)
- ---------------------------------------------------------------------------------------------------------------------------------
Return of capital -- -- (0.01) -- -- --
=================================================================================================================================
Total distributions (0.37) (0.42) (0.30) (0.32) (0.38) (0.60)
=================================================================================================================================
Redemption fees added to shares of beneficial interest 0.00 -- -- -- -- --
=================================================================================================================================
Net asset value, end of period $ 9.06 $ 9.04 $ 9.02 $ 8.77 $ 8.51 $ 8.64
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 4.32% 5.00% 6.36% 6.94% 2.88% (1.49)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $155,953 $159,206 $190,814 $221,964 $266,260 $357,841
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets (including
interest expense):
With fee waivers and/or expense reimbursements 1.58%(c) 2.04% 1.65% 1.48% 1.49% 1.38%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.86%(c) 2.17% 1.69% 1.48% 1.49% 1.38%
=================================================================================================================================
Ratio of expenses to average net assets (excluding
interest expense):
With fee waivers and/or expense reimbursements 1.37%(c) 1.50% 1.50% 1.48% 1.49% 1.38%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.65%(c) 1.63% 1.54% 1.48% 1.49% 1.38%
=================================================================================================================================
Ratio of net investment income to average net assets 6.06%(c) 4.69% 3.31% 3.80% 4.40% 6.66%
=================================================================================================================================
Ratio of interest expense to average net assets(d) 0.21%(c) 0.54% 0.15% --% --% --%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(e) 54% 56% 82% 72% 56% 38%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$144,734,730.
(d) Ratio includes interest expense and fees on the committed line of
credit.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
F-25
AIM Floating Rate Fund
NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED)
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS B1
---------------
APRIL 13, 2006
(DATE SHARES
CONVERTED) TO
JULY 27, 2006
(DATE SHARES
CONVERTED TO
CLASS A SHARES)
- -------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.11
- -------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.16(a)
- -------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.05)
===============================================================================
Total from investment operations 0.11
===============================================================================
Less dividends from net investment income (0.16)
===============================================================================
Redemption fees added to shares of beneficial interest 0.00
===============================================================================
Net asset value, end of period $ 9.06
_______________________________________________________________________________
===============================================================================
Total return(b) 1.26%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ --
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers and/or expense reimbursements 1.47%(c)
- -------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.75%(c)
===============================================================================
Ratio of expenses to average net assets (excluding interest
expense):
With fee waivers and/or expense reimbursements 1.26%(c)
- -------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.54%(c)
===============================================================================
Ratio of net investment income to average net assets 6.17%(c)
===============================================================================
Ratio of interest expense to average net assets(d) 0.21%(c)
_______________________________________________________________________________
===============================================================================
Portfolio turnover rate(e) 54%
_______________________________________________________________________________
===============================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$22,070,646.
(d) Ratio includes interest expense and fees on the committed line of
credit.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
F-26
AIM Floating Rate Fund
NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED)
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated. Information presented prior to the
close of business on April 13, 2006 (date of reorganization) includes activity
for Class C shares of the Closed-End Fund.
<Table>
<Caption>
CLASS C
--------------------------------------------------------------------
JANUARY 1,
2006 TO YEAR ENDED DECEMBER 31,
AUGUST 31, ---------------------------------------------------
2006 2005 2004 2003 2002 2001
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.02 $ 8.99 $ 8.75 $ 8.49 $ 8.62 $ 9.35
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.34(a) 0.40 0.27 0.31 0.36 0.58(a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.02 0.03 0.25 0.25 (0.14) (0.73)
=================================================================================================================================
Total from investment operations 0.36 0.43 0.52 0.56 0.22 (0.15)
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.34) (0.40) (0.27) (0.30) (0.35) (0.58)
- ---------------------------------------------------------------------------------------------------------------------------------
Return of capital -- -- (0.01) -- -- --
=================================================================================================================================
Total distributions (0.34) (0.40) (0.28) (0.30) (0.35) (0.58)
=================================================================================================================================
Redemption fees added to shares of beneficial interest 0.00 -- -- -- -- --
=================================================================================================================================
Net asset value, end of period $ 9.04 $ 9.02 $ 8.99 $ 8.75 $ 8.49 $ 8.62
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 4.05% 4.85% 5.98% 6.68% 2.62% (1.75)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $44,853 $47,624 $34,518 $20,793 $20,421 $31,274
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers and/or expense reimbursements 1.97%(c) 2.29% 1.89% 1.73% 1.74% 1.63%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.36%(c) 2.67% 2.19% 1.98% 1.99% 1.88%
=================================================================================================================================
Ratio of expenses to average net assets (excluding interest
expense):
With fee waivers and/or expense reimbursements 1.76%(c) 1.75% 1.74% 1.73% 1.74% 1.63%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.15%(c) 2.13% 2.04% 1.98% 1.99% 1.88%
=================================================================================================================================
Ratio of net investment income to average net assets 5.67%(c) 4.44% 3.07% 3.55% 4.15% 6.40%
=================================================================================================================================
Ratio of interest expense to average net assets(d) 0.21%(c) 0.54% 0.15% --% --% --%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(e) 54% 56% 82% 72% 56% 38%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$45,441,727.
(d) Ratio includes interest expense and fees on the committed line of
credit.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
F-27
AIM Floating Rate Fund
NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED)
The following presents financial highlights for a share of the Fund outstanding
throughout the periods indicated.
<Table>
<Caption>
CLASS R
--------------
APRIL 13, 2006
(DATE SALES
COMMENCED) TO
AUGUST 31,
2006
- ------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.11
- ------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.21(a)
- ------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.05)
==============================================================================
Total from investment operations 0.16
==============================================================================
Less dividends from net investment income (0.21)
==============================================================================
Redemption fees added to shares of beneficial interest 0.00
==============================================================================
Net asset value, end of period $ 9.06
______________________________________________________________________________
==============================================================================
Total return(b) 1.80%
______________________________________________________________________________
==============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 78
______________________________________________________________________________
==============================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers and/or expense reimbursements 1.53%(c)
- ------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.53%(c)
==============================================================================
Ratio of expenses to average net assets (excluding interest
expense):
With fee waivers and/or expense reimbursements 1.52%(c)
- ------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.52%(c)
==============================================================================
Ratio of net investment income to average net assets 6.11%(c)
==============================================================================
Ratio of interest expense to average net assets(d) 0.01%(c)
______________________________________________________________________________
==============================================================================
Portfolio turnover rate(e) 54%
______________________________________________________________________________
==============================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $47,859.
(d) Ratio includes interest expense and fees on the committed line of
credit.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
F-28
AIM Floating Rate Fund
NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED)
The following presents financial highlights for a share of the Fund outstanding
throughout the periods indicated.
<Table>
<Caption>
INSTITUTIONAL CLASS
-------------------
APRIL 13, 2006
(DATE SALES
COMMENCED) TO
AUGUST 31,
2006
- -----------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.11
- -----------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.23(a)
- -----------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.05)
===================================================================================
Total from investment operations 0.18
===================================================================================
Less dividends from net investment income (0.23)
===================================================================================
Redemption fees added to shares of beneficial interest 0.00
===================================================================================
Net asset value, end of period $ 9.06
___________________________________________________________________________________
===================================================================================
Total return(b) 2.00%
___________________________________________________________________________________
===================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $24,335
___________________________________________________________________________________
===================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers and/or expense reimbursements 0.98%(c)
- -----------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.98%(c)
===================================================================================
Ratio of expenses to average net assets (excluding interest
expense):
With fee waivers and/or expense reimbursements 0.97%(c)
- -----------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.97%(c)
===================================================================================
Ratio of net investment income to average net assets 6.66%(c)
===================================================================================
Ratio of interest expense to average net assets(d) 0.01%(c)
___________________________________________________________________________________
===================================================================================
Portfolio turnover rate(e) 54%
___________________________________________________________________________________
===================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$1,393,660.
(d) Ratio includes interest expense and fees on the committed line of
credit.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
NOTE 14--LEGAL PROCEEDING
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING
On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment
advisor to certain AIM Funds), AIM and A I M Distributors, Inc. ("ADI") (the
distributor of the retail AIM Funds) reached final settlements with certain
regulators, including the Securities and Exchange Commission ("SEC"), the New
York Attorney General and the Colorado Attorney General, to resolve civil
enforcement actions and/or investigations related to market timing and related
activity in the AIM Funds, including those formerly advised by IFG. As part of
the settlements, a $325 million fair fund ($110 million of which is civil
penalties) has been created to compensate shareholders harmed by market timing
and related activity in funds formerly advised by IFG. Additionally, AIM and ADI
created a $50 million fair fund ($30 million of which is civil penalties) to
compensate shareholders harmed by market timing and related activity in funds
advised by AIM, which was done pursuant to the terms of the settlement. These
two fair funds may increase as a result of contributions from third parties who
reach final settlements with the SEC or other regulators to resolve allegations
of market timing and/or late trading that also may have harmed applicable AIM
Funds. These two fair funds will be distributed in accordance with a methodology
to be determined by AIM's independent distribution consultant, in consultation
with AIM and the independent trustees of the AIM Funds and acceptable to the
staff of the SEC. Management of AIM and the Fund are unable to estimate the
impact, if any, that the distribution of these two fair funds may have on the
Fund or whether such distribution will have an impact on the Fund's financial
statements in the future.
At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"),
the parent company of IFG and AIM, has agreed to reimburse expenses incurred by
the AIM Funds related to market timing matters.
PENDING LITIGATION AND REGULATORY INQUIRIES
AIM Floating Rate Fund, along with numerous unrelated funds and financial
institutions, has been named as a defendant in two private civil lawsuits filed
in the United States Bankruptcy Court, Southern District of New York (Enron
Corp. v. J.P. Morgan Securities, Inc., et al., Case No. 01-16034(AJG) and
F-29
AIM Floating Rate Fund
NOTE 14--LEGAL PROCEEDING--(CONTINUED)
Adelphia Communications Corp. and its Affiliate Debtors in Possession and
Official Committee of Unsecured Creditors of Adelphia v. Bank of America,
individually and as Agent for various Banks Party to Credit Agreements, et al.,
Case No. 02-41729). These lawsuits seek, respectively, avoidance of certain
payments made by Enron Corp. and avoidance of certain loans to Adelphia
Communications Corp. The Enron lawsuit alleges that payments made to the Fund
and other creditors to prepay and/or redeem certain commercial paper prior to
its maturity were preferential transfers. The amount sought to be recovered from
the Fund in the Enron lawsuit is the aggregate amount of the repurchases of
Enron's commercial paper from the fund during the 90 days prior to the filing by
Enron of a bankruptcy petition (approximately $10 million) plus interest and
Enron's court costs. The Adelphia lawsuit alleges that the purchasers of
Adelphia's bank debt knew, or should have known, that the loan proceeds would
not benefit Adelphia, but instead would be used to enrich Adelphia insiders. The
amount sought to be recovered from the Fund in the Adelphia lawsuit is not
specified in such lawsuit. Adelphia has also filed a bankruptcy petition.
Accordingly, any recoveries by the plaintiffs in these lawsuits may result in a
corresponding claim against the respective bankruptcy estate, which may be paid
in part through distributions under a plan of reorganization to the extent the
claim is allowed under such plan.
At this time, management of AIM and the Fund are unable to make an
assessment of the likelihood of loss in the Enron and Adelphia lawsuits, and the
Fund therefore has not recorded a liability in its financial statements for any
potential loss in either of these lawsuits.
On August 30, 2005, the West Virginia Office of the State
Auditor -- Securities Commission ("WVASC") issued a Summary Order to Cease and
Desist and Notice of Right to Hearing to AIM and ADI (Order No. 05-1318). The
WVASC makes findings of fact that AIM and ADI entered into certain arrangements
permitting market timing of the AIM Funds and failed to disclose these
arrangements in the prospectuses for such Funds, and conclusions of law to the
effect that AIM and ADI violated the West Virginia securities laws. The WVASC
orders AIM and ADI to cease any further violations and seeks to impose monetary
sanctions, including restitution to affected investors, disgorgement of fees,
reimbursement of investigatory, administrative and legal costs and an
"administrative assessment," to be determined by the Commissioner. Initial
research indicates that these damages could be limited or capped by statute.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or
related entities and individuals, depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related activity
in the AIM Funds;
- that certain AIM Funds inadequately employed fair value pricing;
- that the defendants charged excessive advisory and/or distribution fees
and failed to pass on to shareholders the perceived savings generated by
economies of scale and that the defendants adopted unlawful distribution
plans; and
- that the defendants improperly used the assets of the AIM Funds to pay
brokers to aggressively promote the sale of the AIM Funds over other
mutual funds and that the defendants concealed such payments from
investors by disguising them as brokerage commissions (all the claims in
this category of lawsuits were dismissed with prejudice by the court on
September 29, 2006, except for the Section 36(b) claim which was dismissed
with leave to amend to plead it properly as a derivative claim).
These lawsuits allege as theories of recovery, depending on the lawsuit,
violations of various provisions of the Federal and state securities laws,
negligence, breach of fiduciary duty and/or breach of contract. These lawsuits
seek remedies that include, depending on the lawsuit, damages, restitution,
injunctive relief, imposition of a constructive trust, removal of certain
directors and/or employees, rescission of certain AIM Funds' advisory agreements
and/or distribution plans and recovery of all fees paid, an accounting of all
fund-related fees, commissions and soft dollar payments, restitution of all
commissions and fees paid, and prospective relief in the form of reduced fees.
All lawsuits based on allegations of market timing, late trading and related
issues have been transferred to the United States District Court for the
District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court,
plaintiffs in these lawsuits consolidated their claims for pre-trial purposes
into three amended complaints against various AIM- and IFG-related parties: (i)
a Consolidated Amended Class Action Complaint purportedly brought on behalf of
shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative
Complaint purportedly brought on behalf of the AIM Funds and fund registrants;
and (iii) an Amended Class Action Complaint for Violations of the Employee
Retirement Income Securities Act ("ERISA") purportedly brought on behalf of
participants in AMVESCAP's 401(k) plan. Based on orders issued by the MDL Court,
all claims asserted against the AIM Funds that have been transferred to the MDL
Court have been dismissed, although certain Funds remain nominal defendants in
the Consolidated Amended Fund Derivative Complaint. On September 15, 2006, the
MDL Court granted the AMVESCAP defendants' motion to dismiss the Amended Class
Action Complaint for Violations of ERISA and dismissed such Complaint. The
plaintiff has commenced an appeal from that decision.
IFG, AIM, ADI and/or related entities and individuals have received
inquiries from numerous regulators in the form of subpoenas or other oral or
written requests for information and/or documents related to one or more of the
following issues, among others, some of which concern one or more AIM Funds:
market timing activity, late trading, fair value pricing, excessive or improper
advisory and/or distribution fees, mutual fund sales practices, including
revenue sharing and directed-brokerage arrangements, investments in securities
of other registered investment companies, contractual plans, issues related to
Section 529 college savings plans and procedures for locating lost security
holders. IFG, AIM and ADI have advised the Fund that they are providing full
cooperation with respect to these inquiries. Regulatory actions and/or
additional civil lawsuits related to these or other issues may be filed against
the AIM Funds, IFG, AIM and/or related entities and individuals in the future.
At the present time, management of AIM and the Fund are unable to estimate
the impact, if any, that the outcome of the Pending Litigation and Regulatory
Inquiries described above may have on AIM, ADI or the Fund.
F-30
AIM Floating Rate Fund
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Counselor Series Trust
and Shareholders of AIM Floating Rate Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations, of
changes in net assets and of cash flows and the financial highlights present
fairly, in all material respects, the financial position of AIM Floating Rate
Fund (one of the funds constituting AIM Counselor Series Trust, formerly the
sole portfolio constituting AIM Floating Rate Fund, hereafter referred to as the
"Fund") at August 31, 2006, and the results of its operations, the changes in
its net assets, its cash flows and the financial highlights for each of the
periods indicated, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at August 31, 2006 by correspondence with the
custodian and intermediate participants, provide a reasonable basis for our
opinion.
PricewaterhouseCoopers LLP
October 26, 2006
Houston, Texas
F-31
AIM Floating Rate Fund
TAX DISCLOSURES
REQUIRED FEDERAL INCOME TAX INFORMATION
Of ordinary dividends paid to shareholders during the Fund's tax year ended
August 31, 2006, 0% is eligible for the dividends received deduction for
corporations.
For its tax year ended August 31, 2006, the Fund designates 0%, or the maximum
amount allowable of its dividend distributions as qualified dividend income.
Your actual amount of qualified dividend income for the calendar year will be
reported in your Form 1099-DIV. You should consult your tax advisor regarding
treatment of the amounts.
REQUIRED STATE INCOME TAX INFORMATION
Of the ordinary dividends paid, 0% was derived from U.S. Treasury Obligations.
TAX INFORMATION FOR NON-RESIDENT ALIEN SHAREHOLDERS
For its tax year ended August 31, 2006, the Fund designates 0%, or the maximum
amount allowable, of its dividend distributions as qualified interest income
exempt from U.S. income tax for non-resident alien shareholders. Your actual
amount of qualified interest income for the calendar year will be reported in
your Form 1042-S mailing. You should consult your tax advisor regarding
treatment of the amounts.
The percentage of qualifying assets not subject to the U.S. estate tax for the
fiscal quarters ended February 28, 2006, May 31, 2006 and August 31, 2006, are
3.75%, 8.68% and 17.06%, respectively.
F-32
AIM Floating Rate Fund
PROXY RESULTS
A Special Meeting of Shareholders of AIM Floating Rate Fund, an investment
portfolio of AIM Floating Rate Fund, a Delaware statutory trust ("Trust"), was
held on April 11, 2006. The meeting was held for the following purpose:
(1) Approve an Agreement and Plan of Reorganization which provides for the
conversion of AIM Floating Rate Fund, a closed-end interval fund, into an
open-end fund.
The results of the voting on the above matter were as follows:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ----------------------------------------------------------------------------------------------------------
(Class B Shares)
(1) Approve an Agreement and Plan of Reorganization which
provides for the conversion of AIM Floating Rate Fund, a
closed-end interval fund, into an open-end fund............. 8,364,800 295,372 523,933
</Table>
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ----------------------------------------------------------------------------------------------------------
(Class C Shares)
(1) Approve an Agreement and Plan of Reorganization which
provides for the conversion of AIM Floating Rate Fund, a
closed-end interval fund, into an open-end fund............. 2,768,936 82,828 130,799
</Table>
F-33
AIM Floating Rate Fund
TRUSTEES AND OFFICERS
The address of each trustee and officer of AIM Counselor Series Trust (the
"Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee
oversees 109 portfolios in the AIM Funds complex. The trustees serve for the
life of the Trust, subject to their earlier death, incapacitation, resignation,
retirement or removal as more specifically provided in the Trust's
organizational documents. Column two below includes length of time served with
predecessor entities, if any.
<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 2003 Director and Chairman, A I M Management None
Trustee and Vice Chair Group Inc. (financial services holding
company); Director and Vice Chairman,
AMVESCAP PLC; Chairman, AMVESCAP
PLC -- AIM Division (parent of AIM and a
global investment management firm) and
Trustee and Vice Chair of The AIM Family
of Funds--Registered Trademark--
Formerly: President and Chief Executive
Officer, A I M Management Group Inc.;
Director, Chairman and President, A I M
Advisors, Inc. (registered investment
advisor); Director and Chairman, A I M
Capital Management, Inc. (registered
investment advisor), A I M Distributors,
Inc. (registered broker dealer), AIM
Investment Services, Inc., (registered
transfer agent), and Fund Management
Company (registered broker dealer); and
Chief Executive Officer, AMVESCAP
PLC -- Managed Products; and President
and Principal Executive Officer of The
AIM Family of Funds--Registered
Trademark--
- -------------------------------------------------------------------------------------------------------------------------------
Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None
Trustee, President and President, A I M Management Group Inc.,
Principal AIM Mutual Fund Dealer Inc., AIM Funds
Executive Officer Management Inc. and 1371 Preferred Inc.;
Director and President, A I M Advisors,
Inc., INVESCO Funds Group, Inc. and AIM
GP Canada Inc.; Director, A I M Capital
Management, Inc. and A I M Distributors,
Inc.; Director and Chairman, AIM
Investment Services, Inc., Fund
Management Company and INVESCO
Distributors, Inc.; Director, President
and Chairman, AVZ Callco Inc.; AMVESCAP
Inc. and AIM Canada Holdings Inc.;
Director and Chief Executive Officer,
AIM Trimark Global Fund Inc. and AIM
Trimark Canada Fund Inc.; Trustee,
President and Principal Executive
Officer of The AIM Family of
Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust); and Trustee
and Executive Vice President, The AIM
Family of Funds--Registered Trademark--
(AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust only)
Formerly: President and Principal
Executive Officer, The AIM Family of
Funds--Registered Trademark-- (AIM
Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free
Investments Trust only); Chairman, AIM
Canada Holdings, Inc.; Executive Vice
President and Chief Operations Officer,
AIM Funds Management Inc.; President,
AIM Trimark Global Fund Inc. and AIM
Trimark Canada Fund Inc.; and Director,
Trimark Trust
- -------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 2003 Chairman, Crockett Technology Associates ACE Limited (insurance company);
Trustee and Chair (technology consulting company) and Captaris, Inc. (unified
messaging provider)
- -------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 1983 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2003 Retired Badgley Funds, Inc. (registered
Trustee investment company (2 portfolios))
Formerly: Partner, law firm of Baker &
McKenzie
- -------------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2000 Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm); and Director,
Policy Studies, Inc. and Van Gilder
Insurance Corporation
- -------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2003 Director of a number of public and None
Trustee private business corporations, including
the Boss Group Ltd. (private investment
and management); Cortland Trust, Inc.
(Chairman) (registered investment
company (3 portfolios)); Annuity and
Life Re (Holdings), Ltd. (insurance
company); CompuDyne Corporation
(provider of products and services to
the public security market); and
Homeowners of America Holding
Corporation
Formerly: Director, President and Chief
Executive Officer, Volvo Group North
America, Inc.; Senior Vice President, AB
Volvo; and Director of various
affiliated Volvo companies; and
Director, Magellan Insurance Company
- -------------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 2003 Chief Executive Officer, Twenty First Administaff, and Discovery Global
Trustee Century Group, Inc. (government affairs Education Fund (non-profit)
company); and Owner, Dos Angelos Ranch,
L.P.
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company)
- -------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Cortland Trust, Inc. (registered
Trustee Naftalis and Frankel LLP investment company (3 portfolios))
- -------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2003 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- -------------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 2003 Partner, law firm of Pennock & Cooper None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Larry Soll -- 1942 1997 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Raymond Stickel, Jr. -- 1944 2005 Retired Director, Mainstay VP Series
Trustee Funds, Inc. (21 portfolios)
Formerly: Partner, Deloitte & Touche
- -------------------------------------------------------------------------------------------------------------------------------
</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. Taylor 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.
F-34
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Floating Rate Fund
The address of each trustee and officer of AIM Counselor Series Trust (the
"Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee
oversees 109 portfolios in the AIM Funds complex. The trustees serve for the
life of the Trust, subject to their earlier death, incapacitation, resignation,
retirement or removal as more specifically provided in the Trust's
organizational documents. Column two below includes length of time served with
predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/
POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------
Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer N/A
Senior Vice President and of The AIM Family of Funds--Registered
Senior Officer Trademark--
Formerly: Director of Compliance and
Assistant General Counsel, ICON
Advisers, Inc.; Financial Consultant,
Merrill Lynch; General Counsel and
Director of Compliance, ALPS Mutual
Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
John M. Zerr -- 1962 2006 Director, Senior Vice President, N/A
Senior Vice President, Chief Secretary and General Counsel, A I M
Legal Officer and Secretary Management Group Inc. (financial
services holding company) and A I M
Advisors, Inc.; Director, Vice President
and Secretary, INVESCO Distributors,
Inc.; Vice President and Secretary,
A I M Capital Management, Inc., AIM
Investment Services, Inc., and Fund
Management Company; Senior Vice
President and Secretary, A I M
Distributors, Inc.; Director, INVESCO
Funds Group Inc.; and Senior Vice
President, Chief Legal Officer and
Secretary of The AIM Family of
Funds--Registered Trademark--
Formerly: Chief Operating Officer,
Senior Vice President, General Counsel,
and Secretary, Liberty Ridge Capital,
Inc. (an investment adviser); Vice
President and Secretary, PBHG Funds (an
investment company); Vice President and
Secretary, PBHG Insurance Series Fund
(an investment company); General Counsel
and Secretary, Pilgrim Baxter Value
Investors (an investment adviser); Chief
Operating Officer, General Counsel and
Secretary, Old Mutual Investment
Partners (a broker-dealer); General
Counsel and Secretary, Old Mutual Fund
Services (an administrator); General
Counsel and Secretary, Old Mutual
Shareholder Services (a shareholder
servicing center); Executive Vice
President, General Counsel and
Secretary, Old Mutual Capital, Inc. (an
investment adviser); and Vice President
and Secretary, Old Mutual Advisors Funds
(an investment company)
- ------------------------------------------------------------------------------------------------------------------------------
Lisa O. Brinkley -- 1959 2004 Global Compliance Director, AMVESCAP N/A
Vice President PLC; and Vice President of The AIM
Family of Funds--Registered Trademark--
Formerly: Senior Vice President, A I M
Management Group Inc. (financial
services holding company); Senior Vice
President and Chief Compliance Officer,
A I M Advisors, Inc. and The AIM Family
of Funds--Registered Trademark--; Vice
President and Chief Compliance Officer,
A I M Capital Management, Inc. and A I M
Distributors, Inc.; Vice President, AIM
Investment Services, Inc. and Fund
Management Company; Senior Vice
President and Chief Compliance Officer
of The AIM Family of Funds--Registered
Trademark--; and Senior Vice President
and Compliance Director, Delaware
Investments Family of Funds
- ------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome -- 1956 2003 Senior Vice President and General
Vice President Counsel, AMVESCAP PLC; Director, INVESCO
Funds Group, Inc.; and Vice President of
The AIM Family of Funds--Registered
Trademark--
Formerly: Director, General Counsel, and N/A
Vice President Fund Management Company;
Director, Senior Vice President,
Secretary and General Counsel, A I M
Management Group Inc. (financial
services holding company) and A I M
Advisors, Inc.; Director and Vice
President, INVESCO Distributors, Inc.;
Senior Vice President, A I M
Distributors, Inc.; Vice President,
A I M Capital Management, Inc. and AIM
Investment Services, Inc.; Senior Vice
President, Chief Legal Officer and
Secretary of The AIM Family of
Funds--Registered Trademark--; Chief
Executive Officer and President, INVESCO
Funds Group, Inc.; and Senior Vice
President, Chief Legal Officer and
General Counsel, Liberty Financial
Companies, Inc. and Liberty Funds Group,
LLC
- ------------------------------------------------------------------------------------------------------------------------------
Sidney M. Dilgren -- 1961 2004 Vice President and Fund Treasurer, A I M N/A
Vice President, Principal Advisors, Inc.; and Vice President,
Financial Officer and Treasurer and Principal Officer of The
Treasurer AIM Family of Funds--Registered
Trademark--
Formerly: Senior Vice President, AIM
Investment Services, Inc.; and Vice
President, A I M Distributors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
J. Philip Ferguson -- 1945 2005 Senior Vice President and Chief N/A
Vice President Investment Officer, A I M Advisors Inc.;
Director, Chairman, Chief Executive
Officer, President and Chief Investment
Officer, A I M Capital Management, Inc.;
Executive Vice President, A I M
Management Group Inc. and Vice President
of The AIM Family of Funds--Registered
Trademark--
Formerly: Senior Vice President, AIM
Private Asset Management, Inc.; and
Chief Equity Officer, Senior Vice
President and Senior Investment Officer,
A I M Capital Management, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2005 Director of Cash Management, Managing N/A
Vice President Director and Chief Cash Management
Officer, A I M Capital Management, Inc;
Director and President, Fund Management
Company; and Vice President, A I M
Advisors, Inc. and The AIM Family of
Funds--Registered Trademark--
- ------------------------------------------------------------------------------------------------------------------------------
Todd L. Spillane -- 1958 2006 Senior Vice President, A I M Management N/A
Chief Compliance Officer Group Inc.; Senior Vice President and
Chief Compliance Officer, A I M
Advisors, Inc.; Chief Compliance Officer
of The AIM Family of Funds--Registered
Trademark--; Vice President and Chief
Compliance Officer, A I M Capital
Management, Inc.; and Vice President,
A I M Distributors, Inc., AIM Investment
Services, Inc. and Fund Management
Company
Formerly: Global Head of Product
Development, AIG-Global Investment
Group, Inc.; Chief Compliance Officer
and Deputy General Counsel,
AIG-SunAmerica Asset Management; and
Chief Compliance Officer, Chief
Operating Officer and Deputy General
Counsel, American General Investment
Management
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
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 1.800.959.4246.
<Table>
OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS SUB-ADVISOR
11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, PricewaterhouseCoopers INVESCO Senior Secured
Suite 100 11 Greenway Plaza Inc. LLP Management, Inc.
Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana Street 1166 Avenue of the
Houston, TX 77046-1173 Suite 100 Suite 2900 Americas
Houston, TX 77046-1173 Houston, TX 77002-5678 New York, NY 10036-2727
COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN
Ballard Spahr INDEPENDENT TRUSTEES AIM Investment State Street Bank and
Andrews & Ingersoll, LLP Kramer, Levin, Naftalis Services, Inc. Trust Company
1735 Market Street, 51st & Frankel LLP P.O. Box 4739 225 Franklin Street
Floor 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801
Philadelphia, PA 19103-7599 Americas
New York, NY 10036-2714
</Table>
F-35
<Table>
DOMESTIC EQUITY SECTOR EQUITY ALLOCATION SOLUTIONS
AIM Basic Balanced Fund* AIM Advantage Health Sciences Fund AIM Conservative Allocation Fund
AIM Basic Value Fund AIM Energy Fund AIM Growth Allocation Fund
AIM Capital Development Fund AIM Financial Services Fund AIM Moderate Allocation Fund
AIM Charter Fund AIM Global Health Care Fund AIM Moderate Growth Allocation Fund
AIM Constellation Fund AIM Global Real Estate Fund AIM Moderately Conservative Allocation Fund
AIM Diversified Dividend Fund AIM Gold & Precious Metals Fund
AIM Dynamics Fund AIM Leisure Fund DIVERSIFIED PORTFOLIOS
AIM Large Cap Basic Value Fund AIM Multi-Sector Fund
AIM Large Cap Growth Fund AIM Real Estate Fund(1) AIM Income Allocation Fund
AIM Mid Cap Basic Value Fund AIM Technology Fund AIM International Allocation Fund
AIM Mid Cap Core Equity Fund(1) AIM Utilities Fund
AIM Opportunities I Fund
AIM Opportunities II Fund FIXED INCOME
AIM Opportunities III Fund
AIM S&P 500 Index Fund
AIM Select Equity Fund TAXABLE
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund AIM Enhanced Short Bond Fund
AIM Structured Core Fund AIM Floating Rate Fund
AIM Structured Growth Fund AIM High Yield Fund
AIM Structured Value Fund AIM Income Fund
AIM Summit Fund AIM Intermediate Government Fund
AIM Trimark Endeavor Fund AIM International Bond Fund
AIM Trimark Small Companies Fund AIM Limited Maturity Treasury Fund
AIM Money Market Fund
*Domestic equity and income fund AIM Short Term Bond Fund
AIM Total Return Bond Fund
Premier Portfolio
INTERNATIONAL/GLOBAL EQUITY Premier U.S. Government Money Portfolio
AIM Asia Pacific Growth Fund TAX-FREE
AIM China Fund
AIM Developing Markets Fund AIM High Income Municipal Fund(1)
AIM European Growth Fund AIM Municipal Bond Fund
AIM European Small Company Fund(1) AIM Tax-Exempt Cash Fund
AIM Global Aggressive Growth Fund AIM Tax-Free Intermediate Fund
AIM Global Equity Fund Premier Tax-Exempt Portfolio
AIM Global Growth Fund
AIM Global Value Fund =====================================================================================
AIM Japan Fund CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES CAREFULLY. FOR
AIM International Core Equity Fund THIS AND OTHER INFORMATION ABOUT AIM FUNDS, OBTAIN A PROSPECTUS FROM YOUR FINANCIAL
AIM International Growth Fund ADVISOR AND READ IT CAREFULLY BEFORE INVESTING.
AIM International Small Company Fund(1) =====================================================================================
AIM Trimark Fund
(1) This Fund has limited public sales of its shares to certain investors. For
more information on who may continue to invest in the Fund, please see the
appropriate prospectus.
If used after January 20, 2007, this report 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. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $429 billion in assets
under management. Data as of August 31, 2006.
AIMinvestments.com FLR-AR-1 A I M Distributors, Inc.
YOUR GOALS. OUR SOLUTIONS.--Registered Trademark--
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Mutual Retirement Annuities College Separately Offshore Cash [AIM INVESTMENTS LOGO APPEARS HERE]
Funds Products Savings Managed Products Management --Registered Trademark--
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AIM MULTI-SECTOR FUND
Annual Report to Shareholders o August 31, 2006
[COVER GLOBE IMAGE]
SECTOR EQUITY
Sectors
Table of Contents
Supplemental Information 2
Letters to Shareholders 3
Performance Summary 5
Management Discussion 5
Fund Expenses 7
Long-term Fund Performance 8
Approval of Advisory Agreement 10
Schedule of Investments F-1
Financial Statements F-4
Notes to Financial Statements F-6
Financial Highlights F-13
Auditor's Report F-17
Tax Disclosures F-18
Trustees and Officers F-19
[AIM INVESTMENT SOLUTIONS]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[DOMESTIC [INTERNATIONAL/ [SECTOR
EQUITY] GLOBAL EQUITY] EQUITY]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[FIXED [ALLOCATION [DIVERSIFIED
INCOME] SOLUTIONS] PORTFOLIOS]
[AIM INVESTMENTS LOGO APPEARS HERE]
- --Registered Trademark--
AIM Multi-Sector Fund
AIM MULTI-SECTOR FUND SEEKS CAPITAL GROWTH.
o Unless otherwise stated, information presented in this report is as of August 31, 2006, and is based on total net assets.
ABOUT SHARE CLASSES o The Fund may use enhanced investment of funds reflects fund expenses;
techniques such as derivatives. The performance of a market index does not.
o Class B shares are not available as an principal risk of investments in
investment for retirement plans derivatives is that the fluctuation in Other information
maintained pursuant to Section 401 of the their values may not correlate perfectly
Internal Revenue Code, including 401(k) with the overall securities markets. o Industry classifications used in this
plans, money purchase pension plans and Derivatives are subject to counter party report are generally according to the
profit sharing plans. Plans that had risk--the risk that the other party will Global Industry Classification Standard,
existing accounts invested in Class B not complete the transaction with the which was developed by and is the
shares prior to September 30, 2003, will Fund. exclusive property and a service mark of
continue to be allowed to make additional Morgan Stanley Capital International Inc.
purchases. o The Fund's investments in different, and Standard & Poor's.
independently managed sectors create
PRINCIPAL RISKS OF INVESTING IN THE FUND allocation risk, which is the risk that o The returns shown in management's
the allocation of investments among the discussion of Fund performance are based
o Foreign securities have additional sectors may have a more significant on net asset values calculated for
risks, including exchange rate changes, effect on the Fund's net asset value when shareholder transactions. Generally
political and economic upheaval, the one of the sectors performs more poorly accepted accounting principles require
relative lack of information about these than the other(s). Additionally, the adjustments to be made to the net assets
companies, relatively low market active rebalancing of the Fund among the of the Fund at period end for financial
liquidity and the potential lack of sectors may result in increased reporting purposes, and as such, the net
strict financial and accounting controls transaction costs. The independent asset values for shareholder transactions
and standards. management of five sectors may also and the returns based on those net asset
result in adverse tax consequences if the values may differ from the net asset
o Investing in a fund that invests in managers responsible for the Fund's five values and returns reported in the
smaller companies involves risks not sectors effect transactions in the same Financial Highlights.
associated with investing in more security on or about the same time.
established companies, such as business The Fund provides a complete list of its
risk, stock price fluctuations and ABOUT INDEXES USED IN THIS REPORT holdings four times in each fiscal
illiquidity. year, at the quarter-ends. For the second
o The unmanaged STANDARD & POOR'S and fourth quarters, the lists appear in
o Stocks are subject to market risk, COMPOSITE INDEX OF 500 STOCKS (the S&P the Fund's semiannual and annual reports
meaning stock prices vary and may fall, 500 --Registered Trademark-- Index) is an to shareholders. For the first and third
thus reducing the value of the Fund's index of common stocks frequently used as quarters, the Fund files the lists with
investments. Certain stocks selected for a general measure of U.S. stock market the Securities and Exchange Commission
the Fund's portfolio may decline in value performance. (SEC) on Form N-Q. The most recent list
more than the overall stock market. of portfolio holdings is available at
o The unmanaged LIPPER MULTI-CAP CORE AIMinvestments.com. From our home page,
o Portfolio turnover is greater than most FUNDS INDEX represents an average of the click on Products & Performance, then
funds, which may affect the Fund's performance of the 30 largest Mutual Funds, then Fund Overview. Select
performance due to higher brokerage multi-capitalization core funds tracked your Fund from the drop-down menu and
commissions and may also result in by Lipper Inc., an independent mutual click on Complete Quarterly Holdings.
taxable gain distributions to the Fund's fund performance monitor. Shareholders can also look up the Fund's
shareholders. Forms N-Q on the SEC Web site at sec.gov.
o The Fund is not managed to track the Copies of the Fund's Forms N-Q may be
o Investing in emerging markets involves performance of any particular index, reviewed and copied at the SEC Public
greater risks than investing in more including the indexes defined here, and Reference Room in Washington, D.C. You can
established markets. Risks for emerging consequently, the performance of the Fund obtain information on the operation of
markets include risks relating to the may deviate significantly from the the Public Reference Room, including
relatively smaller size and lesser performance of the indexes. information about duplicating fee
liquidity of these markets, high charges, by calling 202-942-8090 or
inflation rates, adverse political o A direct investment cannot be made in 800-732-0330, or by electronic request at
developments and lack of timely an index. Unless otherwise indicated, the following e-mail address:
information. index results include reinvested publicinfo@sec.gov. The SEC file numbers
dividends, and they do not reflect sales for the Fund are 811-09913 and 333-36074.
charges. Performance of an index
Continued on page 9
====================================================================================== =========================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, FUND NASDAQ SYMBOLS
WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES.
INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Class A Shares IAMSX
====================================================================================== Class B Shares IBMSX
Class C Shares ICMSX
=========================================
=====================================================
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
=====================================================
AIMinvestments.com
2
AIM Multi-Sector Fund
Dear Shareholders of The AIM Family of Funds--Registered
Trademark--:
We're pleased to provide you with this report, which
includes a discussion of how your Fund was managed during
the period under review in this report, and what factors
affected its performance. That discussion begins on page 5.
It's been said nothing is certain but death and taxes. We
[TAYLOR would venture to add that one other thing is certain:
PHOTO] Markets change--and change often--in the short term, in
response to constantly changing economic, geopolitical and
other factors. For example, domestic and global markets were
Philip Taylor generally strong from November 2005 through April 2006, as
economic growth appeared robust and inflation seemed
contained. But as new economic data suggested inflation
might be higher than previously estimated in the U.S. and
elsewhere, those same markets often demonstrated weakness
and volatility in the May-August period.
While we can't do anything about the ambiguity and
uncertainty surrounding death and taxes, we can suggest an
alternative to reacting to fluctuating short-term market
conditions: Maintain a diversified portfolio. AIM
Investments--Registered Trademark-- can help by offering a
broad product line that gives your financial advisor the
necessary tools to build a portfolio that's right for you
regardless of market conditions. AIM offers a comprehensive
range of retail mutual funds, including domestic, global and
international equity funds, taxable and tax-exempt
fixed-income funds, and a variety of allocation
portfolios--with varied risk and return characteristics to
match your needs. We maintain this extensive set of product
solutions for one reason: We believe in the value of
comprehensive, diversified investment portfolios.
We've changed the look of our annual reports to reflect
that belief. In our marketing and now our shareholder
literature, we represent a fully diversified portfolio
graphically as an allocation pie chart and assign each asset
class a color--green for domestic equity, blue for
international, orange for sector and purple for fixed
income. A legend in the left column illustrates the
methodology. Your report cover now shows your Fund's asset
class color, plus the asset class and sub-asset class name
are shown in the upper-left corner. The reason for these
changes is to help you better understand where your Fund
fits into your overall portfolio.
AIM has a variety of investment solutions, and knowing
which ones are right for your portfolio is complex. That's
why we also believe in the value of a trusted financial
advisor who will work with you to create an investment plan
you can stick with for the long term. Your financial advisor
can help allocate your portfolio appropriately and review
your investments regularly to ensure they remain suitable as
your financial situation changes. While there are no
guarantees with any investment program, a long-term plan
that's based on your financial goals, risk tolerance and
time horizon is more likely to keep you and your investments
on track.
At a recent meeting of the AIM Funds board, Robert H.
Graham relinquished his position as president of AIM Funds,
a post customarily held by the chief executive officer of
AIM Investments. Bob--one of three founders of AIM
Investments in 1976--has a well-earned reputation for being
one of the most knowledgeable leaders in the mutual fund
industry. As I assume Bob's previous responsibilities, I'm
pleased that he'll remain actively involved as the vice
chair of AIM Funds.
OUR COMMITMENT TO YOU
In the short term, the one sure thing about markets is their
unpredictability. While past performance cannot guarantee
comparable future results, we believe that staying invested
for the long term with a thoughtful plan offers the best
opportunity for weathering that unpredictability. We at AIM
Investments remain committed to building enduring solutions
to help you achieve your investment goals, and we're pleased
you've placed your trust in us.
Information about investing, the markets and your Fund is
always available on our Web site, AIMinvestments.com. If you
have questions about your individual account, we invite you
to contact one of our highly trained client services
representatives at 800-959-4246.
Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
President - AIM Funds
CEO, AIM Investments
October 18, 2006
AIM Investments is a registered service mark of A I M
Management Group Inc. A I M Advisors, Inc. and A I M Capital
Management, Inc. are the investment advisors. A I M
Distributors, Inc. is the distributor for the retail funds
represented by AIM Investments.
3
AIM Multi-Sector Fund
Dear Fellow AIM Fund Shareholders:
At our meeting at the end of June, your Board completed its
comprehensive review* of each fund's advisory agreement with
A I M Advisors, Inc. (AIM) to make certain your interests
are being served in terms of fees, performance and
operations.
Looking ahead, your Board finds many reasons to be
[CROCKETT positive about AIM's management and strategic direction.
PHOTO] Most importantly, AIM management's investment management
discipline is paying off in terms of improved overall
performance. While work remains to be done, AIM's
complex-wide, asset-weighted mutual fund performance for the
trailing one-, three- and five-year periods is at its
Bruce L. Crockett highest since 2000 for the periods ended August 31, 2006. We
are also pleased with AIM management's efforts to seek more
cost-effective ways of delivering superior service.
In addition, AIM is realizing the benefits of belonging
to a leading independent global investment management
organization in its parent company, AMVESCAP PLC, which is
dedicated to helping people worldwide build their financial
security. AMVESCAP managed approximately $429 billion
globally as of August 31, 2006, operating under the AIM,
INVESCO, AIM Trimark, INVESCO PERPETUAL and Atlantic Trust
brands. These companies are home to an abundance of
investment talent that is gradually being integrated and
leveraged into centers of excellence, each focusing on a
given market segment or asset class. Over the next few
years, your Board will be meeting at these various centers
of excellence to learn about their progress and how they can
serve you by enhancing performance and reducing costs.
The seven new AIM funds--which include Asian funds,
structured U.S. equity funds and specialized bond funds--are
an early example of the kind of opportunities the AMVESCAP
organization can provide AIM clients. More information on
these funds can be found on AIM's Web site.
Your Board is very pleased with the overall direction and
progress of the AIM Funds. We're working closely and
effectively with AIM's management to continue this momentum.
As always, your Board is eager to hear your views on how we
might better serve you. Please send your comments in a
letter addressed to me at AIM Investments, AIM Investments
Tower, 11 Greenway Plaza, Suite 100, Houston TX 77046.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board
October 18, 2006
*To learn more about all the factors we considered before
approving each fund's advisory agreement, go to the
"Products & Performance" tab at the AIM Web site
(AIMinvestments.com) and click on "Investment Advisory
Agreement Renewals." The approval of advisory agreement
information for your Fund is also included in this annual
report on pages 10-11.
4
AIM Multi-Sector Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
We consider selling a stock when we
see:
======================================================================================
PERFORMANCE SUMMARY o Fundamental deterioration in the
company.
For the fiscal year ended August 31,2006, AIM Multi-Sector Fund, excluding
applicable sales charges, produced positive returns but underperformed the S&P o More attractive investment
500 Index, the Fund's broad market and style-specific index. The S&P 500 Index opportunities.
consists of 10 sectors; AIM Multi-Sector Fund invests at least 80% of its assets
approximately equally in only five market sectors. During the period, the industrials, o Inability of the company to capitalize
consumer staples, materials and telecommunication services sectors posted solid gains. on market opportunity.
Given our mandate, our lack of exposure to those sectors--sectors in which the Fund
does not typically invest--detracted from our performance relative to the S&P o A questionable change in management's
500 Index. strategic direction.
Your Fund's long-term performance appears on pages 8 and 9.
MARKET CONDITIONS AND YOUR FUND
FUND VS. INDEXES
Despite widespread concern about the
Total returns, 8/31/05-8/31/06, excluding applicable sales charges. If sales charges potential impact of rising short-term
were included, returns would be lower. interest rates, historically high energy
prices, ongoing concern about a housing
Class A Shares 7.74% bubble and the long-term economic effects
of two devastating Gulf Coast hurricanes,
Class B Shares 6.97 equity markets generally generated
positive returns for the fiscal year. The
Class C Shares 6.97 second half of the reporting period saw
an increase in volatility and a pause in
S&P 500 Index (Broad Market and Style-Specific Index) 8.87 interest rate increases. After 17
consecutive interest rate increases the
Lipper Multi-Cap Core Funds Index (Peer Group Index) 8.05 U.S. Federal Reserve Board (the Fed) left
the federal funds target rate unchanged
SOURCE: LIPPER INC. at 5.25% at its August 8, 2006 meeting.
====================================================================================== This was the first policy meeting without
an interest hike since May 2004.
HOW WE INVEST Managers use fundamental and
quantitative analysis to identify market Against this backdrop, consumer
Your Fund invests the bulk of its assets leading companies with competitive discretionary and information technology
in stocks from five market sectors: positioning and strong anticipated growth were two of the worst performing sectors
energy, financial services, health care, relative to their peers. They focus on of the S&P 500 Index. On the other hand,
information technology and "leisure" companies that exhibit strong return on materials and telecommunication
(represented by the consumer capital, cash flow, sustainable growth services--sectors that the Fund, by
discretionary sector). To provide and superior business strategies that mandate, does not normally invest
diversification, Fund assets are divided make them market leaders. in--were the best performers. The table
more or less equally among securities of on page 6 shows the performance of the 10
companies from each of the sectors in In the resulting portfolios, each sectors of the S&P 500 Index. Although
which the Fund invests. Fund managers act sector has approximately 20 to 25 consumer discretionary, health care and
independently within sectors. At any holdings. The Fund is rebalanced annually information technology were the weakest
given time, 20% of the Fund's assets are at fiscal year-end to return the sectors performing sectors of the market, our
not required to be invested in the five to their approximate equal weightings. strong stock selection within these
previously mentioned sectors. sectors was a positive contributor and
resulted in only slight underperformance
overall.
(continued)
========================================= ========================================= =========================================
TOP FIVE INDUSTRIES*
PORTFOLIO COMPOSITION TOP 10 EQUITY HOLDINGS*
1. Oil & Gas Exploration &
By sector Production 5.8% 1. Omnicom Group Inc. 2.0%
Financials 19.2% 2. Pharmaceuticals 5.6 2. Harrah's Entertainment, Inc. 1.8
Information Technology 19.0 3. Hotels, Resorts & Cruise 3. News Corp.-Class A 1.8
Lines 4.8
Energy 18.8 4. Kinder Morgan, Inc. 1.8
4. Integrated Oil & Gas 4.3
Health Care 17.9 5. Fannie Mae 1.2
5. Health Care Services 3.7
Consumer Discretionary 17.4 6. Citigroup Inc. 1.2
Total Net Assets $542.2 million
Utilities 1.2 7. Questar Corp. 1.2
Total Number of Holdings* 113
Telecommunication Services 1.0 8. Hewlett-Packard Co. 1.2
Consumer Staples 0.7 9. Groupe Bruxelles Lambert S.A.
(Belgium) 1.2
Money Market Funds Plus Other
Assets Less Liabilities 4.8 10. Plains Exploration & Production
Co. 1.1
The Fund's holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
*Excluding money market fund holdings.
========================================= ========================================= =========================================
5
AIM Multi-Sector Fund
Despite being overweight in both McLennan suffered from a general malaise Michelle E. Fenton
consumer discretionary and information in insurance stocks as investors, after [FENTON Chartered Financial
technology, our stock selection in these becoming excited late last year about the PHOTO] Analyst, portfolio
two sectors fared better than that of the prospect of higher insurance prices, began manager, is lead
S&P 500 Index. AKAMAI TECHNOLOGIES, a to worry about the end of a robust manager of AIM
leading global service provider for property-casualty insurance pricing cycle. Multi-Sector Fund with respect to the
accelerating content and business Shares of Murphy Oil declined as the Fund's investments in the information
processes online, and INTERCONTINENTAL company trimmed its daily oil production technology sector. She has been associated
HOTELS, the world's largest hotel group outlook, citing lower output from a with AIM and/or its affiliates since 1998.
that includes InterContinental problematic offshore field in Canada and Ms. Fenton earned her bachelor's degree in
- --Registered Trademark--, Crowne Plaza further delays restoring output at a finance from Montana State University.
- --Registered Trademark--, Holiday Inn hurricane-damaged facility in the Gulf of
- --Registered Trademark-- and Candlewood Mexico. Nonetheless, we remained strong Mark D. Greenberg
Suites --Registered Trademark--, believers in Murphy Oil, as it continued [GREENBERG Chartered Financial
to execute its business plan. We believe PHOTO] Analyst, senior
========================================== the company is likely to aggressively portfolio manager, is
pursue new oil reserves in Malaysia, as it lead manager of AIM
S&P 500 INDEX PERFORMANCE has been doing over the past few years, to Multi-Sector Fund with respect to the
raise its production levels. Fund's investments in the leisure sector.
By sector Weighting 1 Year He has been associated with AIM and/or its
(as of 8/31/06) Return Despite our underperformance in the affiliates since 1996. Mr. Greenberg
Consumer Discretionary energy and financial services sectors attended City University in London,
("Leisure") 9.79% -0.73% relative to the index, SCHLUMBERGER and England, and received his B.S.B.A. in
JPMORGAN CHASE were among the top economics from Marquette University.
Consumer Staples 9.88 12.61 contributors to overall Fund performance.
Schlumberger, an oil and gas equipment and John S. Segner
Energy 9.87 12.87 service company, reported financial [SEGNER Senior portfolio
results that exceeded analysts' estimates. PHOTO] manager, is lead
Financials 21.76 16.76 JPMorgan Chase, one of the top three bank manager of AIM
holding companies in the U.S., has been Multi-Sector Fund with
Health Care 12.92 5.38 focused on improving financial performance respect to the Fund's investments in the
since merging with Bank One in mid-2004. energy sector. He has been associated with
Industrials 10.78 9.46 We sold our Schlumberger holdings by the AIM and/or its affiliates since 1997. Mr.
end of the reporting period. Segner earned his bachelor's degree in
Information Technology 15.08 -0.44 civil engineering from the University of
IN CLOSING Alabama and holds an M.B.A. with a
Materials 2.95 19.24 concentration in finance from The
We thank you for your continued University of Texas at Austin.
Telecommunication Services 3.43 19.02 participation in AIM Multi-Sector Fund.
Michael J. Simon
Utilities 3.53 10.79 THE VIEWS AND OPINIONS EXPRESSED IN [SIMON Chartered Financial
MANAGEMENT'S DISCUSSION OF FUND PHOTO] Analyst, senior
SOURCE: LIPPER INC. PERFORMANCE ARE THOSE OF A I M ADVISORS, portfolio manager, is
========================================== INC. THESE VIEWS AND OPINIONS ARE SUBJECT lead manager of AIM
TO CHANGE AT ANY TIME BASED ON FACTORS Multi-Sector Fund with respect to the
were among the top contributors in these SUCH AS MARKET AND ECONOMIC CONDITIONS. Fund's investments in the financial
two sectors. Akamai benefited after it THESE VIEWS AND OPINIONS MAY NOT BE RELIED services sector. He started his
reported favorable financial results as UPON AS INVESTMENT ADVICE OR investments career in 1989 and joined AIM
both sales and profits beat analysts' RECOMMENDATIONS, OR AS AN OFFER FOR A in 2001. Mr. Simon earned his Bachelor of
forecasts in the second quarter. Growth PARTICULAR SECURITY. THE INFORMATION IS Business Administration degree in finance
has been fueled by companies buying NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF from Texas Christian University and an
Akamai's software to handle music, video ANY MARKET, COUNTRY, INDUSTRY, SECURITY OR M.B.A. with high honors from the Graduate
and game downloads. InterContinental THE FUND. STATEMENTS OF FACT ARE FROM School of Business at the University of
Hotels reported that its second quarter SOURCES CONSIDERED RELIABLE, BUT A I M Chicago.
profit more than doubled after the company ADVISORS, INC. MAKES NO REPRESENTATION OR
boosted the prices of its rooms, added new WARRANTY AS TO THEIR COMPLETENESS OR Derek M. Taner
hotels and sold underperforming assets. ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE [TANER Chartered Financial
IS NO GUARANTEE OF FUTURE RESULTS, THESE PHOTO] Analyst, portfolio
Within health care, our life sciences INSIGHTS MAY HELP YOU UNDERSTAND OUR manager, is lead
tools and services and pharmaceutical INVESTMENT MANAGEMENT PHILOSOPHY. manager of AIM
stocks generally posted strong returns. Multi-Sector Fund with respect to the
ROCHE HOLDING, a Swiss pharmaceutical See important Fund and index Fund's investments in the health care
company, was a strong contributor to our disclosures on the inside front cover. sector. He has been associated with AIM
performance for the fiscal year. The and/or its affiliates since 2005. Mr.
company, which has very few expiring Taner earned a B.S. in business
patents, reported strong sales of its FOR A PRESENTATION OF YOUR FUND'S administration and an M.B.A. from the Haas
cancer drug, Avastin --Registered LONG-TERM PERFORMANCE, PLEASE SEE PAGES 8 School of Business at the University of
Trademark--. On the other hand, detracting AND 9. California (Berkley).
from Fund performance was PDL BIOPHARMA.
PDL BioPharma slumped after reporting Assisted by the Basic Value, Diversified
disappointing first quarter results. Dividend, Energy/Gold/Utilities, Global
Consequently, we sold the stock. Health Care, Leisure and Technology Teams.
Although energy and financial services
stocks generally performed well during the
fiscal year, our stock selections within
these sectors under-performed the S&P 500
Index. Detractors from Fund performance
included MARSH & MCLENNAN and MURPHY OIL.
Marsh &
6
AIM Multi-Sector Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE the expenses that you paid over the THE HYPOTHETICAL ACCOUNT VALUES AND
period. Simply divide your account value EXPENSES MAY NOT BE USED TO ESTIMATE THE
As a shareholder of the Fund, you incur by $1,000 (for example, an $8,600 account ACTUAL ENDING ACCOUNT BALANCE OR EXPENSES
two types of costs: (1) transaction costs, value divided by $1,000 = 8.6), then YOU PAID FOR THE PERIOD. YOU MAY USE THIS
which may include sales charges (loads) on multiply the result by the number in the INFORMATION TO COMPARE THE ONGOING COSTS
purchase payments or contingent deferred table under the heading entitled "Actual OF INVESTING IN THE FUND AND OTHER FUNDS.
sales charges on redemptions; and Expenses Paid During Period" to estimate TO DO SO, COMPARE THIS 5% HYPOTHETICAL
redemption fees, if any; and (2) ongoing the expenses you paid on your account EXAMPLE WITH THE 5% HYPOTHETICAL EXAMPLES
costs, including management fees; during this period. THAT APPEAR IN THE SHAREHOLDER REPORTS OF
distribution and/or service fees (12b-1); THE OTHER FUNDS.
and other Fund expenses. This example is HYPOTHETICAL EXAMPLE FOR COMPARISON
intended to help you understand your PURPOSES Please note that the expenses shown in
ongoing costs (in dollars) of investing in the table are meant to highlight your
the Fund and to compare these costs with The table below also provides information ongoing costs only and do not reflect any
ongoing costs of investing in other mutual about hypothetical account values and transactional costs, such as sales charges
funds. The example is based on an hypothetical expenses based on the Fund's (loads) on purchase payments, contingent
investment of $1,000 invested at the actual expense ratio and an assumed rate deferred sales charges on redemptions, and
beginning of the period and held for the of return of 5% per year before expenses, redemption fees, if any. Therefore, the
entire period March 1, 2006, through which is not the Fund's actual return. The hypothetical information is useful in
August 31, 2006. Fund's actual cumulative total returns at comparing ongoing costs only, and will not
net asset value after expenses for the six help you determine the relative total
ACTUAL EXPENSES months ended August 31, 2006, appear in costs of owning different funds. In
the table "Cumulative Total Returns" on addition, if these transactional costs
The table below provides information about page 9. were included, your costs would have been
actual account values and actual expenses. higher.
You may use the information in this table,
together with the amount you invested, to
estimate
====================================================================================================================================
ACTUAL HYPOTHETICAL
(5% ANNUAL RETURN BEFORE EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (3/1/06) (8/31/06)(1) PERIOD(2) (8/31/06) PERIOD(2) RATIO
A $1,000.00 $1,002.00 $ 6.61 $1,018.60 $ 6.67 1.31%
B 1,000.00 998.00 10.37 1,014.82 10.46 2.06
C 1,000.00 998.00 10.37 1,014.82 10.46 2.06
(1) The actual ending account value is based on the actual total return of the Fund for the period March 1, 2006, through August 31,
2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense
ratio and a hypothetical annual return of 5% before expenses. The Fund's actual cumulative total returns at net asset value
after expenses for the six months ended August 31, 2006, appear in the table "Cumulative Total Returns" on page 9.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the
period, multiplied by 184/365 to reflect the most recent fiscal half year.
====================================================================================================================================
7
AIM Multi-Sector Fund
YOUR FUND'S LONG-TERM PERFORMANCE
====================================================================================================================================
RESULTS OF A $10,000 INVESTMENT
Index data from 8/31/02, Fund data from 9/3/02
[MOUNTAIN CHART]
DATE AIM MULTI-SECTOR FUND AIM MULTI-SECTOR FUND AIM MULTI-SECTOR FUND S&P 500 LIPPER MULTI-CAP CORE
CLASS A SHARES CLASS B SHARES CLASS C SHARES INDEX FUNDS INDEX
8/31/02 $10000 $10000
9/02 $ 9160 $ 9687 $ 9687 8914 9080
10/02 9727 10281 10281 9698 9655
11/02 10155 10728 10728 10268 10243
12/02 9701 10247 10247 9665 9655
1/03 9657 10194 10194 9413 9492
2/03 9563 10087 10087 9271 9328
3/03 9638 10167 10167 9361 9358
4/03 10274 10827 10827 10132 10086
5/03 11093 11686 11673 10665 10768
6/03 11143 11733 11727 10801 10929
7/03 11281 11867 11854 10992 11140
8/03 11533 12127 12113 11206 11482
9/03 11300 11867 11860 11087 11330
10/03 11917 12507 12500 11714 12004
11/03 12087 12681 12674 11817 12192
12/03 12665 13279 13272 12436 12678
1/04 12998 13618 13611 12664 12976
2/04 13246 13867 13867 12840 13177
3/04 13128 13742 13735 12647 13028
4/04 12828 13418 13411 12448 12753
5/04 12887 13473 13473 12619 12906
6/04 13245 13839 13832 12864 13192
7/04 12691 13253 13246 12438 12651
8/04 12633 13184 13184 12488 12642
9/04 13167 13736 13729 12624 12912
10/04 13422 13991 13992 12816 13107
11/04 14106 14695 14688 13335 13765
12/04 14511 15110 15104 13788 14249
1/05 14229 14812 14806 13452 13924
2/05 14898 15499 15495 13735 14206
3/05 14536 15116 15112 13492 13983
4/05 14202 14755 14757 13237 13602
5/05 14891 15471 15467 13657 14159
6/05 15226 15805 15801 13677 14315
7/05 15922 16521 16517 14185 14922
8/05 16168 16762 16758 14056 14854
9/05 16262 16854 16850 14170 14987
10/05 15895 16457 16461 13933 14677
11/05 16530 17108 17106 14460 15242
12/05 16787 17365 17363 14465 15420
1/06 17708 18304 18304 14848 15993
2/06 17388 17964 17963 14888 15929
3/06 17640 18210 18209 15073 16284
4/06 18090 18665 18665 15276 16486
5/06 17400 17943 17941 14837 15915
6/06 17393 17928 17926 14856 15868
7/06 17230 17740 17738 14948 15678
8/06 17430 17629 17922 15303 16049
====================================================================================================================================
SOURCE: LIPPER INC.
Past performance cannot guarantee
comparable future results.
The data shown in the chart include
reinvested distributions, applicable sales
charges, Fund expenses and management
fees. Results for Class B shares are
calculated as if a hypothetical
shareholder had liquidated his entire
investment in the Fund at the close of the
reporting period and paid the applicable
contingent deferred sales charges. Index
results include reinvested dividends, but
they do not reflect sales charges.
Performance of an index of funds reflects
fund expenses and management fees;
performance of a market index does not.
Performance shown in the chart and
table(s) 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.
8
AIM Multi-Sector Fund
========================================== ========================================== ==========================================
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
As of 8/31/06, including applicable sales As of 6/30/06, the most recent calendar 6 months ended 8/31/06, excluding
charges quarter-end, including applicable sales applicable sales charges
charges
CLASS A SHARES Class A Shares 0.20%
Inception (9/3/02) 14.93% CLASS A SHARES Class B Shares -0.20
1 Year 1.80 Inception (9/3/02) 15.60% Class C Shares -0.20
1 Year 7.98
CLASS B SHARES ==========================================
Inception (9/3/02) 15.26% CLASS B SHARES
1 Year 1.97 Inception (9/3/02) 15.99%
1 Year 8.45
CLASS C SHARES
Inception (9/3/02) 15.74% CLASS C SHARES
1 Year 5.97 Inception (9/3/02) 16.49%
1 Year 12.46
========================================== ==========================================
THE PERFORMANCE DATA QUOTED REPRESENT PAST CLASS A SHARE PERFORMANCE REFLECTS THE HAD THE ADVISOR NOT WAIVED FEES AND/OR
PERFORMANCE AND CANNOT GUARANTEE MAXIMUM 5.50% SALES CHARGE, AND CLASS B REIMBURSED EXPENSES, PERFORMANCE WOULD
COMPARABLE FUTURE RESULTS; CURRENT AND CLASS C SHARE PERFORMANCE REFLECTS THE HAVE BEEN LOWER.
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE APPLICABLE CONTINGENT DEFERRED SALES
VISIT AIMINVESTMENTS.COM FOR THE MOST CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
RECENT MONTH-END PERFORMANCE. PERFORMANCE CDSC ON CLASS B SHARES DECLINES FROM 5%
FIGURES REFLECT REINVESTED BEGINNING AT THE TIME OF PURCHASE TO 0% AT
DISTRIBUTIONS, CHANGES IN NET ASSET VALUE THE BEGINNING OF THE SEVENTH YEAR. THE
AND THE EFFECT OF THE MAXIMUM SALES CHARGE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
UNLESS OTHERWISE STATED. INVESTMENT RETURN YEAR AFTER PURCHASE.
AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL THE PERFORMANCE OF THE FUND'S SHARE
SHARES. CLASSES WILL DIFFER PRIMARILY DUE TO
DIFFERENT SALES CHARGE STRUCTURES AND
CLASS EXPENSES.
Continued from inside front cover
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, from our Client
Services department at 800-959-4246 or on
the AIM Web site, AIMinvestments.com. On
the home page, scroll down and click on AIM
Funds Proxy Policy. The information is
also available on the SEC Web
site, sec.gov.
Information regarding how the Fund voted
proxies related to its portfolio
securities during the 12 months ended June
30, 2006, is available at our Web site. Go
to AIMinvestments.com, access the About Us
tab, click on Required Notices and then
click on Proxy Voting Activity.
Next, select the Fund from the drop-down
menu. The information is also available on
the SEC Web site, sec.gov.
9
AIM Multi-Sector Fund
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
The Board of Trustees of AIM Counselor o The quality of services to be provided o Overall performance of AIM. The Board
Series Trust (the "Board") oversees the by AIM. The Board reviewed the credentials considered the overall performance of AIM
management of AIM Multi-Sector Fund (the and experience of the officers and in providing investment advisory and
"Fund") and, as required by law, employees of AIM who will provide portfolio administrative services to the
determines annually whether to approve the investment advisory services to the Fund. Fund and concluded that such performance
continuance of the Fund's advisory In reviewing the qualifications of AIM to was satisfactory.
agreement with A I M Advisors, Inc. provide investment advisory services, the
("AIM"). Based upon the recommendation of Board considered such issues as AIM's o Fees relative to those of clients of AIM
the Investments Committee of the Board, at portfolio and product review process, with comparable investment strategies. The
a meeting held on June 27, 2006, the various back office support functions Board reviewed the effective advisory fee
Board, including all of the independent provided by AIM and AIM's equity and fixed rate (before waivers) for the Fund under
trustees, approved the continuance of the income trading operations. Based on the the Advisory Agreement. The Board noted
advisory agreement (the "Advisory review of these and other factors, the that this rate was (i) above the effective
Agreement") between the Fund and AIM for Board concluded that the quality of advisory fee rate (before waivers) for one
another year, effective July 1, 2006. services to be provided by AIM was mutual fund advised by AIM with investment
appropriate and that AIM currently is strategies comparable to those of the
The Board considered the factors providing satisfactory services in Fund; and (ii) comparable to the effective
discussed below in evaluating the fairness accordance with the terms of the Advisory advisory fee rate (before waivers) for one
and reasonableness of the Advisory Agreement. variable insurance fund advised by AIM and
Agreement at the meeting on June 27, 2006 offered to insurance company separate
and as part of the Board's ongoing o The performance of the Fund relative to accounts with investment strategies
oversight of the Fund. In their comparable funds. The Board reviewed the comparable to those of the Fund. The Board
deliberations, the Board and the performance of the Fund during the past noted that AIM has agreed to waive
independent trustees did not identify any one and three calendar years against the advisory fees of the Fund and to limit the
particular factor that was controlling, performance of funds advised by other Fund's total operating expenses, as
and each trustee attributed different advisors with investment strategies discussed below. Based on this review, the
weights to the various factors. comparable to those of the Fund. The Board Board concluded that the advisory fee rate
noted that the Fund's performance in such for the Fund under the Advisory Agreement
One responsibility of the independent periods was above the median performance was fair and reasonable.
Senior Officer of the Fund is to manage of such comparable funds. The Board also
the process by which the Fund's proposed noted that AIM began serving as investment o Fees relative to those of comparable
management fees are negotiated to ensure advisor to the Fund in November 2003. funds with other advisors. The Board
that they are negotiated in a manner which Based on this review and after taking reviewed the advisory fee rate for the
is at arms' length and reasonable. To that account of all of the other factors that Fund under the Advisory Agreement. The
end, the Senior Officer must either the Board considered in determining Board compared effective contractual
supervise a competitive bidding process or whether to continue the Advisory Agreement advisory fee rates at a common asset level
prepare an independent written evaluation. for the Fund, the Board concluded that no at the end of the past calendar year and
The Senior Officer has recommended an changes should be made to the Fund and noted that the Fund's rate was below the
independent written evaluation in lieu of that it was not necessary to change the median rate of the funds advised by other
a competitive bidding process and, upon Fund's portfolio management team at this advisors with investment strategies
the direction of the Board, has prepared time. Although the independent written comparable to those of the Fund that the
such an independent written evaluation. evaluation of the Fund's Senior Officer Board reviewed. The Board noted that AIM
Such written evaluation also considered (discussed below) only considered Fund has agreed to waive advisory fees of the
certain of the factors discussed below. In performance through the most recent Fund and to limit the Fund's total
addition, as discussed below, the Senior calendar year, the Board also reviewed operating expenses, as discussed below.
Officer made a recommendation to the Board more recent Fund performance, which did Based on this review, the Board concluded
in connection with such written not change their conclusions. that the advisory fee rate for the Fund
evaluation. under the Advisory Agreement was fair and
o The performance of the Fund relative to reasonable.
The discussion below serves as a indices. The Board reviewed the
summary of the Senior Officer's performance of the Fund during the past o Expense limitations and fee waivers. The
independent written evaluation and one and three calendar years against the Board noted that AIM has contractually
recommendation to the Board in connection performance of the Lipper Multi-Cap Core agreed to waive advisory fees of the Fund
therewith, as well as a discussion of the Funds Index. The Board noted that the through December 31, 2009 to the extent
material factors and the conclusions with Fund's performance in such periods was necessary so that the advisory fees
respect thereto that formed the basis for above the performance of such Index. The payable by the Fund do not exceed a
the Board's approval of the Advisory Board also noted that AIM began serving as specified maximum advisory fee rate, which
Agreement. After consideration of all of investment advisor to the Fund in November maximum rate includes breakpoints and is
the factors below and based on its 2003. Based on this review and after based on net asset levels. The Board
informed business judgment, the Board taking account of all of the other factors considered the contractual nature of this
determined that the Advisory Agreement is that the Board considered in determining fee waiver and noted that it remains in
in the best interests of the Fund and its whether to continue the Advisory Agreement effect until December 31, 2009. The Board
shareholders and that the compensation to for the Fund, the Board concluded that no noted that AIM has contractually agreed to
AIM under the Advisory Agreement is fair changes should be made to the Fund and waive fees and/or limit expenses of the
and reasonable and would have been that it was not necessary to change the Fund through August 31, 2006 in an amount
obtained through arm's length Fund's portfolio management team at this necessary to limit total annual operating
negotiations. time. Although the independent written expenses to a specified percentage of
evaluation of the Fund's Senior Officer average daily net assets for each class of
Unless otherwise stated, information (discussed below) only considered Fund the Fund. The Board considered the
presented below is as of June 27, 2006 and performance through the most recent contractual nature of this fee
does not reflect any changes that may have calendar year, the Board also reviewed waiver/expense limitation and noted that
occurred since June 27, 2006, including more recent Fund performance, which did it remains in effect until August 31,
but not limited to changes to the Fund's not change their conclusions. 2006. The Board considered the effect
performance, advisory fees, expense these fee waivers/expense limitations
limitations and/or fee waivers. o Meetings with the Fund's portfolio would have on the Fund's estimated
managers and investment personnel. With expenses and concluded that the levels of
o The nature and extent of the advisory respect to the Fund, the Board is meeting fee waivers/expense limitations for the
services to be provided by AIM. The Board periodically with such Fund's portfolio Fund were fair and reasonable.
reviewed the services to be provided by managers and/or other investment personnel
AIM under the Advisory Agreement. Based on and believes that such individuals are o Breakpoints and economies of scale. The
such review, the Board concluded that the competent and able to continue to carry Board reviewed the structure of the Fund's
range of services to be provided by AIM out their responsibilities under the advisory fee under the Advisory Agreement,
under the Advisory Agreement was Advisory Agreement. noting that it does not include any
appropriate and that AIM currently is breakpoints. The Board considered whether
providing services in accordance with the it
terms of the Advisory Agreement.
(continued)
10
AIM Multi-Sector Fund
would be appropriate to add advisory fee the Board that the Board consider whether o Other factors and current trends. The
breakpoints for the Fund or whether, due the advisory fee waivers for certain Board considered the steps that AIM and
to the nature of the Fund and the advisory equity AIM Funds, including the Fund, its affiliates have taken over the last
fee structures of comparable funds, it was should be simplified. The Board concluded several years, and continue to take, in
reasonable to structure the advisory fee that it would be advisable to consider order to improve the quality and
without breakpoints. Based on this review, this issue and reach a decision prior to efficiency of the services they provide to
the Board concluded that it was not the expiration date of such advisory fee the Funds in the areas of investment
necessary to add advisory fee breakpoints waivers. performance, product line diversification,
to the Fund's advisory fee schedule. The distribution, fund operations, shareholder
Board reviewed the level of the Fund's o Profitability of AIM and its affiliates. services and compliance. The Board
advisory fees, and noted that such fees, The Board reviewed information concerning concluded that these steps taken by AIM
as a percentage of the Fund's net assets, the profitability of AIM's (and its have improved, and are likely to continue
would remain constant under the Advisory affiliates') investment advisory and other to improve, the quality and efficiency of
Agreement because the Advisory Agreement activities and its financial condition. the services AIM and its affiliates
does not include any breakpoints. The The Board considered the overall provide to the Fund in each of these
Board noted that AIM has contractually profitability of AIM, as well as the areas, and support the Board's approval of
agreed to waive advisory fees of the Fund profitability of AIM in connection with the continuance of the Advisory Agreement
through December 31, 2009 to the extent managing the Fund. The Board noted that for the Fund.
necessary so that the advisory fees AIM's operations remain profitable,
payable by the Fund do not exceed a although increased expenses in recent
specified maximum advisory fee rate, which years have reduced AIM's profitability.
maximum rate includes breakpoints and is Based on the review of the profitability
based on net asset levels. The Board of AIM's and its affiliates' investment
concluded that the Fund's fee levels under advisory and other activities and its
the Advisory Agreement therefore would not financial condition, the Board concluded
reflect economies of scale, although the that the compensation to be paid by the
advisory fee waiver reflects economies of Fund to AIM under its Advisory Agreement
scale. was not excessive.
o Investments in affiliated money market o Benefits of soft dollars to AIM. The
funds. The Board also took into account Board considered the benefits realized by
the fact that uninvested cash and cash AIM as a result of brokerage transactions
collateral from securities lending executed through "soft dollar"
arrangements, if any (collectively, "cash arrangements. Under these arrangements,
balances") of the Fund may be invested in brokerage commissions paid by the Fund
money market funds advised by AIM pursuant and/or other funds advised by AIM are used
to the terms of an SEC exemptive order. to pay for research and execution
The Board found that the Fund may realize services. This research may be used by AIM
certain benefits upon investing cash in making investment decisions for the
balances in AIM advised money market Fund. The Board concluded that such
funds, including a higher net return, arrangements were appropriate.
increased liquidity, increased
diversification or decreased transaction o AIM's financial soundness in light of
costs. The Board also found that the Fund the Fund's needs. The Board considered
will not receive reduced services if it whether AIM is financially sound and has
invests its cash balances in such money the resources necessary to perform its
market funds. The Board noted that, to the obligations under the Advisory Agreement,
extent the Fund invests uninvested cash in and concluded that AIM has the financial
affiliated money market funds, AIM has resources necessary to fulfill its
voluntarily agreed to waive a portion of obligations under the Advisory Agreement.
the advisory fees it receives from the
Fund attributable to such investment. The o Historical relationship between the Fund
Board further determined that the proposed and AIM. In determining whether to
securities lending program and related continue the Advisory Agreement for the
procedures with respect to the lending Fund, the Board also considered the prior
Fund is in the best interests of the relationship between AIM and the Fund, as
lending Fund and its respective well as the Board's knowledge of AIM's
shareholders. The Board therefore operations, and concluded that it was
concluded that the investment of cash beneficial to maintain the current
collateral received in connection with the relationship, in part, because of such
securities lending program in the money knowledge. The Board also reviewed the
market funds according to the procedures general nature of the non-investment
is in the best interests of the lending advisory services currently performed by
Fund and its respective shareholders. AIM and its affiliates, such as
administrative, transfer agency and
o Independent written evaluation and distribution services, and the fees
recommendations of the Fund's Senior received by AIM and its affiliates for
Officer. The Board noted that, upon their performing such services. In addition to
direction, the Senior Officer of the Fund, reviewing such services, the trustees also
who is independent of AIM and AIM's considered the organizational structure
affiliates, had prepared an independent employed by AIM and its affiliates to
written evaluation in order to assist the provide those services. Based on the
Board in determining the reasonableness of review of these and other factors, the
the proposed management fees of the AIM Board concluded that AIM and its
Funds, including the Fund. The Board noted affiliates were qualified to continue to
that the Senior Officer's written provide non-investment advisory services
evaluation had been relied upon by the to the Fund, including administrative,
Board in this regard in lieu of a transfer agency and distribution services,
competitive bidding process. In and that AIM and its affiliates currently
determining whether to continue the are providing satisfactory non-investment
Advisory Agreement for the Fund, the Board advisory services.
considered the Senior Officer's written
evaluation and the recommendation made by
the Senior Officer to
11
Supplement to Annual Report dated 8/31/06
AIM MULTI-SECTOR FUND
==========================================
Institutional Class Shares PLEASE NOTE THAT PAST PERFORMANCE IS
AVERAGE ANNUAL TOTAL RETURNS NOT INDICATIVE OF FUTURE RESULTS. MORE
The following information has been For periods ended 8/31/06 RECENT RETURNS MAY BE MORE OR LESS THAN
prepared to provide Institutional Class THOSE SHOWN. ALL RETURNS ASSUME
shareholders with a performance overview Inception (5/3/04) 13.96% REINVESTMENT OF DISTRIBUTIONS AT NAV.
specific to their holdings. Institutional 1 Year 8.27 INVESTMENT RETURN AND PRINCIPAL VALUE WILL
Class shares are offered exclusively to 6 Months* 0.47 FLUCTUATE SO YOUR SHARES, WHEN REDEEMED,
institutional investors, including defined MAY BE WORTH MORE OR LESS THAN THEIR
contribution plans that meet certain ========================================== ORIGINAL COST. SEE FULL REPORT FOR
criteria. INFORMATION ON COMPARATIVE BENCHMARKS.
AVERAGE ANNUAL TOTAL RETURNS PLEASE CONSULT YOUR FUND PROSPECTUS FOR
For periods ended 6/30/06, most recent MORE INFORMATION. FOR THE MOST CURRENT
calendar quarter-end MONTH-END PERFORMANCE, PLEASE CALL
800-451-4246 OR VISIT AIMINVESTMENTS.COM.
Inception (5/3/04) 15.00%
1 Year 14.77 HAD THE ADVISOR NOT WAIVED FEES AND/OR
6 Months* 3.83 REIMBURSED EXPENSES, PERFORMANCE WOULD
HAVE BEEN LOWER.
*Cumulative total return that has not been
annualized
==========================================
INSTITUTIONAL CLASS SHARES HAVE NO SALES
CHARGE; THEREFORE, PERFORMANCE IS AT NET
ASSET VALUE (NAV). PERFORMANCE OF
INSTITUTIONAL CLASS SHARES WILL DIFFER
FROM PERFORMANCE OF OTHER SHARE CLASSES
PRIMARILY DUE TO DIFFERING SALES CHARGES
AND CLASS EXPENSES.
==========================================
NASDAQ SYMBOL IIMSX
==========================================
Over for information on your Fund's expenses.
================================================================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND
PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION,INCLUDING SALES CHARGES AND
EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING.
================================================================================
FOR INSTITUTIONAL INVESTOR USE ONLY
This material is for institutional investor use only and may not be quoted,
reproduced or shown to the public, nor used in written form as sales literature
for public use.
YOUR GOALS. OUR SOLUTIONS. [AIM INVESTMENTS LOGO APPEARS HERE]
--Registered Trademark-- --Registered Trademark--
AIMinvestments.com I-MSE-INS-1 A I M Distributors,Inc.
Information about your Fund's expenses
CALCULATING YOUR ONGOING FUND EXPENSES
Example divide your account value by $1,000 (for The hypothetical account values and
example, an $8,600 account value divided expenses may not be used to estimate the
As a shareholder of the Fund, you incur by $1,000 = 8.6), then multiply the result actual ending account balance or expenses
ongoing costs, including management fees by the number in the table under the you paid for the period. You may use this
and other Fund expenses. This example is heading entitled "Actual Expenses Paid information to compare the ongoing costs
intended to help you understand your During Period" to estimate the expenses of investing in the Fund and other funds.
ongoing costs (in dollars) of investing in you paid on your account during this To do so, compare this 5% hypothetical
the Fund and to compare these costs with period. example with the 5% hypothetical examples
ongoing costs of investing in other mutual that appear in the shareholder reports of
funds. The example is based on an Hypothetical example for the other funds.
investment of $1,000 invested at the comparison purposes
beginning of the period and held for the Please note that the expenses shown in
entire period March 1, 2006, through The table below also provides information the table are meant to highlight your
August 31, 2006. about hypothetical account values and ongoing costs only. Therefore, the
hypothetical expenses based on the Fund's hypothetical information is useful in
Actual expenses actual expense ratio and an assumed rate comparing ongoing costs only, and will not
of return of 5% per year before expenses, help you determine the relative total
The table below provides information about which is not the Fund's actual return. The costs of owning different funds.
actual account values and actual expenses. Fund's actual cumulative total return
You may use the information in this table, after expenses for the six months ended
together with the amount you invested, to August 31, 2006, appears in the table on
estimate the expenses that you paid over the front of this supplement.
the period. Simply
====================================================================================================================================
ACTUAL HYPOTHETICAL
(5% ANNUAL RETURN BEFORE EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (3/1/06) (8/31/06)(1) PERIOD(2) (8/31/06) PERIOD(2) RATIO
Institutional $1,000.00 $1,004.70 $4.14 $1,021.07 $4.18 0.82%
(1) The actual ending account value is based on the actual total return of the Fund for the period March 1, 2006, through August 31,
2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense
ratio and a hypothetical annual return of 5% before expenses. The Fund's actual cumulative total return after expenses for the
six months ended August 31, 2006, appears in the table on the front of this supplement.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the
period, multiplied by 184/365 to reflect the one-half year period.
====================================================================================================================================
AIMinvestments.com I-MSE-INS-1 A I M Distributors,Inc.
AIM Multi-Sector Fund
SCHEDULE OF INVESTMENTS
August 31, 2006
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-95.22%
ADVERTISING-2.65%
Omnicom Group Inc. 123,565 $ 10,802,052
- ------------------------------------------------------------------------
WPP Group PLC (United Kingdom) 294,452 3,588,357
========================================================================
14,390,409
========================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-0.84%
Polo Ralph Lauren Corp. 77,670 4,581,753
========================================================================
APPLICATION SOFTWARE-3.00%
Adobe Systems Inc.(a) 170,656 5,536,081
- ------------------------------------------------------------------------
Amdocs Ltd.(a) 146,032 5,541,914
- ------------------------------------------------------------------------
Citrix Systems, Inc.(a) 168,989 5,184,582
========================================================================
16,262,577
========================================================================
ASSET MANAGEMENT & CUSTODY BANKS-2.13%
Bank of New York Co., Inc. (The) 135,400 4,569,750
- ------------------------------------------------------------------------
Federated Investors, Inc.-Class B 153,047 5,124,013
- ------------------------------------------------------------------------
State Street Corp. 30,400 1,878,720
========================================================================
11,572,483
========================================================================
BIOTECHNOLOGY-3.03%
Amgen Inc.(a) 68,676 4,665,161
- ------------------------------------------------------------------------
Genzyme Corp.(a) 76,185 5,045,732
- ------------------------------------------------------------------------
Gilead Sciences, Inc.(a) 81,692 5,179,273
- ------------------------------------------------------------------------
United Therapeutics Corp.(a) 28,569 1,559,582
========================================================================
16,449,748
========================================================================
BROADCASTING & CABLE TV-1.53%
Cablevision Systems Corp.-Class A 182,073 4,238,659
- ------------------------------------------------------------------------
Comcast Corp.-Class A(a) 116,369 4,072,915
========================================================================
8,311,574
========================================================================
CASINOS & GAMING-2.28%
Harrah's Entertainment, Inc. 159,430 9,942,055
- ------------------------------------------------------------------------
International Game Technology 62,596 2,421,213
========================================================================
12,363,268
========================================================================
COMMUNICATIONS EQUIPMENT-1.97%
Motorola, Inc. 254,500 5,950,210
- ------------------------------------------------------------------------
Nokia Oyj-ADR (Finland) 226,165 4,722,325
========================================================================
10,672,535
========================================================================
COMPUTER HARDWARE-2.17%
Apple Computer, Inc.(a) 77,992 5,291,757
- ------------------------------------------------------------------------
Hewlett-Packard Co. 176,923 6,468,305
========================================================================
11,760,062
========================================================================
</Table>
<Table>
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
CONSUMER FINANCE-0.46%
Capital One Financial Corp. 34,300 $ 2,507,330
========================================================================
DATA PROCESSING & OUTSOURCED SERVICES-1.93%
First Data Corp. 116,223 4,994,102
- ------------------------------------------------------------------------
VeriFone Holdings, Inc.(a) 235,816 5,459,141
========================================================================
10,453,243
========================================================================
DISTILLERS & VINTNERS-0.69%
Diageo PLC (United Kingdom) 209,100 3,722,775
========================================================================
DIVERSIFIED BANKS-1.14%
U.S. Bancorp 44,300 1,420,701
- ------------------------------------------------------------------------
Wachovia Corp. 39,400 2,152,422
- ------------------------------------------------------------------------
Wells Fargo & Co. 75,600 2,627,100
========================================================================
6,200,223
========================================================================
GAS UTILITIES-1.20%
Questar Corp. 75,000 6,490,500
========================================================================
HEALTH CARE EQUIPMENT-2.51%
Mentor Corp. 111,752 5,424,442
- ------------------------------------------------------------------------
Respironics, Inc.(a) 117,805 4,348,183
- ------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 61,495 2,239,033
- ------------------------------------------------------------------------
Wright Medical Group, Inc.(a) 70,683 1,616,520
========================================================================
13,628,178
========================================================================
HEALTH CARE SERVICES-3.74%
DaVita, Inc.(a) 96,403 5,626,079
- ------------------------------------------------------------------------
Express Scripts, Inc.(a) 69,137 5,813,039
- ------------------------------------------------------------------------
Medco Health Solutions, Inc.(a) 88,682 5,619,778
- ------------------------------------------------------------------------
Omnicare, Inc. 71,316 3,231,328
========================================================================
20,290,224
========================================================================
HOME IMPROVEMENT RETAIL-0.54%
Home Depot, Inc. (The) 85,728 2,939,613
========================================================================
HOTELS, RESORTS & CRUISE LINES-4.81%
Accor S.A. (France) 48,277 3,089,411
- ------------------------------------------------------------------------
Carnival Corp.(b) 98,206 4,114,831
- ------------------------------------------------------------------------
Hilton Hotels Corp. 225,719 5,749,063
- ------------------------------------------------------------------------
InterContinental Hotels Group PLC (United
Kingdom)(c) 218,367 3,823,707
- ------------------------------------------------------------------------
</Table>
F-1
AIM Multi-Sector Fund
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------
HOTELS, RESORTS & CRUISE LINES-(CONTINUED)
Marriott International, Inc.-Class A 102,065 $ 3,843,768
- ------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. 102,156 5,440,829
========================================================================
26,061,609
========================================================================
INSURANCE BROKERS-0.95%
Marsh & McLennan Cos., Inc. 197,400 5,163,984
========================================================================
INTEGRATED OIL & GAS-4.25%
Chevron Corp. 74,000 4,765,600
- ------------------------------------------------------------------------
Exxon Mobil Corp. 35,000 2,368,450
- ------------------------------------------------------------------------
Marathon Oil Corp. 70,000 5,845,000
- ------------------------------------------------------------------------
Murphy Oil Corp. 102,000 4,988,820
- ------------------------------------------------------------------------
Occidental Petroleum Corp. 100,000 5,099,000
========================================================================
23,066,870
========================================================================
INTERNET SOFTWARE & SERVICES-3.16%
Akamai Technologies, Inc.(a) 93,028 3,646,698
- ------------------------------------------------------------------------
Digital River, Inc.(a) 89,357 4,337,389
- ------------------------------------------------------------------------
Google Inc.-Class A(a) 13,992 5,296,392
- ------------------------------------------------------------------------
Yahoo! Inc.(a) 133,164 3,837,786
========================================================================
17,118,265
========================================================================
INVESTMENT BANKING & BROKERAGE-1.57%
Merrill Lynch & Co., Inc. 61,000 4,485,330
- ------------------------------------------------------------------------
Morgan Stanley 61,200 4,026,348
========================================================================
8,511,678
========================================================================
IT CONSULTING & OTHER SERVICES-1.65%
Accenture Ltd.-Class A 186,642 5,535,802
- ------------------------------------------------------------------------
Cognizant Technology Solutions Corp.-Class
A(a) 48,533 3,392,942
========================================================================
8,928,744
========================================================================
LIFE SCIENCES TOOLS & SERVICES-1.36%
Invitrogen Corp.(a) 30,108 1,832,072
- ------------------------------------------------------------------------
Pharmaceutical Product Development, Inc. 68,200 2,599,784
- ------------------------------------------------------------------------
Thermo Electron Corp.(a) 74,904 2,936,237
========================================================================
7,368,093
========================================================================
MANAGED HEALTH CARE-1.67%
Aetna Inc. 118,206 4,405,538
- ------------------------------------------------------------------------
UnitedHealth Group Inc. 89,221 4,635,031
========================================================================
9,040,569
========================================================================
MOVIES & ENTERTAINMENT-3.41%
News Corp.-Class A 503,261 9,577,057
- ------------------------------------------------------------------------
Time Warner Inc. 243,670 4,049,795
- ------------------------------------------------------------------------
Walt Disney Co. (The) 163,850 4,858,153
========================================================================
18,485,005
========================================================================
</Table>
<Table>
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
MULTI-LINE INSURANCE-0.55%
Hartford Financial Services Group, Inc. (The) 34,600 $ 2,970,756
========================================================================
MULTI-SECTOR HOLDINGS-1.17%
Groupe Bruxelles Lambert S.A. (Belgium)(c) 60,472 6,352,824
========================================================================
OIL & GAS DRILLING-1.94%
Hercules Offshore, Inc.(a) 170,000 5,426,400
- ------------------------------------------------------------------------
Transocean Inc.(a) 76,000 5,073,000
========================================================================
10,499,400
========================================================================
OIL & GAS EQUIPMENT & SERVICES-3.15%
Cameron International Corp.(a) 120,000 5,749,200
- ------------------------------------------------------------------------
National-Oilwell Varco Inc.(a) 90,000 5,877,000
- ------------------------------------------------------------------------
Weatherford International Ltd.(a) 127,000 5,461,000
========================================================================
17,087,200
========================================================================
OIL & GAS EXPLORATION & PRODUCTION-5.76%
Apache Corp. 70,000 4,569,600
- ------------------------------------------------------------------------
Bill Barrett Corp.(a) 190,000 5,494,800
- ------------------------------------------------------------------------
Cheniere Energy, Inc.(a) 130,000 4,277,000
- ------------------------------------------------------------------------
Plains Exploration & Production Co.(a) 140,000 6,161,400
- ------------------------------------------------------------------------
Southwestern Energy Co.(a) 148,000 5,083,800
- ------------------------------------------------------------------------
Talisman Energy Inc. (Canada) 320,000 5,625,600
========================================================================
31,212,200
========================================================================
OIL & GAS REFINING & MARKETING-0.85%
Valero Energy Corp. 80,000 4,592,000
========================================================================
OIL & GAS STORAGE & TRANSPORTATION-2.84%
Kinder Morgan, Inc. 91,000 9,496,760
- ------------------------------------------------------------------------
Williams Cos., Inc. (The) 240,000 5,911,200
========================================================================
15,407,960
========================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-3.29%
Bank of America Corp. 106,282 5,470,335
- ------------------------------------------------------------------------
Citigroup Inc. 131,700 6,499,395
- ------------------------------------------------------------------------
JPMorgan Chase & Co. 128,376 5,861,648
========================================================================
17,831,378
========================================================================
PHARMACEUTICALS-5.63%
Allergan, Inc. 44,895 5,143,171
- ------------------------------------------------------------------------
Johnson & Johnson 70,308 4,546,115
- ------------------------------------------------------------------------
Novartis A.G.-ADR (Switzerland) 88,831 5,074,027
- ------------------------------------------------------------------------
Pfizer Inc. 196,276 5,409,366
- ------------------------------------------------------------------------
Roche Holding A.G. (Switzerland) 29,552 5,448,004
- ------------------------------------------------------------------------
</Table>
F-2
AIM Multi-Sector Fund
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------
PHARMACEUTICALS-(CONTINUED)
Sanofi-Aventis-ADR (France) 66,100 $ 2,971,195
- ------------------------------------------------------------------------
Sepracor Inc.(a) 40,879 1,921,722
========================================================================
30,513,600
========================================================================
PROPERTY & CASUALTY INSURANCE-2.52%
ACE Ltd. 92,600 4,987,436
- ------------------------------------------------------------------------
MBIA Inc. 86,400 5,324,832
- ------------------------------------------------------------------------
St. Paul Travelers Cos., Inc. (The) 75,800 3,327,620
========================================================================
13,639,888
========================================================================
REGIONAL BANKS-2.59%
Cullen/Frost Bankers, Inc. 31,300 1,845,448
- ------------------------------------------------------------------------
Fifth Third Bancorp 141,200 5,554,808
- ------------------------------------------------------------------------
North Fork Bancorp., Inc. 89,700 2,461,368
- ------------------------------------------------------------------------
SunTrust Banks, Inc. 39,200 2,994,880
- ------------------------------------------------------------------------
Zions Bancorp 14,700 1,161,153
========================================================================
14,017,657
========================================================================
SEMICONDUCTORS-3.24%
Freescale Semiconductor Inc.-Class B(a) 173,162 5,352,438
- ------------------------------------------------------------------------
Intel Corp. 284,130 5,551,900
- ------------------------------------------------------------------------
Microchip Technology Inc. 95,540 3,263,646
- ------------------------------------------------------------------------
Silicon-On-Insulator Technologies (France)(a) 111,368 3,397,190
========================================================================
17,565,174
========================================================================
SPECIALIZED CONSUMER SERVICES-0.75%
H&R Block, Inc. 193,800 4,075,614
========================================================================
</Table>
<Table>
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
SPECIALTY STORES-0.54%
PetSmart, Inc. 117,440 $ 2,947,744
========================================================================
SYSTEMS SOFTWARE-1.90%
Oracle Corp.(a) 326,821 5,114,749
- ------------------------------------------------------------------------
Red Hat, Inc.(a) 224,129 5,208,758
========================================================================
10,323,507
========================================================================
THRIFTS & MORTGAGE FINANCE-2.84%
Fannie Mae 124,300 6,544,395
- ------------------------------------------------------------------------
Freddie Mac 54,000 3,434,400
- ------------------------------------------------------------------------
Hudson City Bancorp, Inc. 221,100 2,887,566
- ------------------------------------------------------------------------
PMI Group, Inc. (The) 58,800 2,542,512
========================================================================
15,408,873
========================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.02%
America Movil S.A. de C.V.-Series L-ADR
(Mexico) 148,001 5,521,917
========================================================================
Total Common Stocks & Other Equity
Interests (Cost $477,008,531) 516,309,004
========================================================================
MONEY MARKET FUNDS-4.95%
Liquid Assets Portfolio-Institutional
Class(d) 13,412,206 13,412,206
- ------------------------------------------------------------------------
Premier Portfolio-Institutional Class(d) 13,412,206 13,412,206
========================================================================
Total Money Market Funds (Cost
$26,824,412) 26,824,412
========================================================================
TOTAL INVESTMENTS-100.17%
(Cost $503,832,943) 543,133,416
========================================================================
OTHER ASSETS LESS LIABILITIES-(0.17)% (892,427)
========================================================================
NET ASSETS-100.00% $542,240,989
________________________________________________________________________
========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Each unit represents one common share and one trust share.
(c) In accordance with the procedures established by the Board of Trustees, the
foreign security is fair valued using adjusted closing market prices. The
aggregate value of these securities at August 31, 2006 was $10,176,531,
which represented 1.88% of the Fund's Net Assets. See Note 1A.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-3
AIM Multi-Sector Fund
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2006
<Table>
ASSETS:
Investments, at value (cost $477,008,531) $516,309,004
- -----------------------------------------------------------
Investments in affiliated money market funds
(cost $26,824,412) 26,824,412
===========================================================
Total investments (cost $503,832,943) 543,133,416
===========================================================
Foreign currencies, at value (cost $209,967) 208,030
- -----------------------------------------------------------
Receivables for:
Investments sold 237,264
- -----------------------------------------------------------
Fund shares sold 2,760,562
- -----------------------------------------------------------
Dividends 626,490
- -----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 11,386
- -----------------------------------------------------------
Other assets 83,648
===========================================================
Total assets 547,060,796
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 3,913,133
- -----------------------------------------------------------
Fund shares reacquired 464,357
- -----------------------------------------------------------
Trustee deferred compensation and
retirement plans 16,317
- -----------------------------------------------------------
Accrued distribution fees 181,034
- -----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 2,881
- -----------------------------------------------------------
Accrued transfer agent fees 141,109
- -----------------------------------------------------------
Accrued operating expenses 100,976
===========================================================
Total liabilities 4,819,807
===========================================================
Net assets applicable to shares outstanding $542,240,989
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $496,758,169
- -----------------------------------------------------------
Undistributed net investment income 1,509,552
- -----------------------------------------------------------
Undistributed net realized gain from
investment securities, foreign currencies
and option contracts 4,671,466
- -----------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 39,301,802
===========================================================
$542,240,989
___________________________________________________________
===========================================================
NET ASSETS:
Class A $311,492,055
___________________________________________________________
===========================================================
Class B $ 73,997,279
___________________________________________________________
===========================================================
Class C $ 69,604,283
___________________________________________________________
===========================================================
Institutional Class $ 87,147,372
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 12,201,584
___________________________________________________________
===========================================================
Class B 2,984,968
___________________________________________________________
===========================================================
Class C 2,808,997
___________________________________________________________
===========================================================
Institutional Class 3,373,454
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 25.53
- -----------------------------------------------------------
Offering price per share
(Net asset value of $25.53 divided by
94.50%) $ 27.02
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 24.79
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 24.78
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per
share $ 25.83
___________________________________________________________
===========================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-4
AIM Multi-Sector Fund
STATEMENT OF OPERATIONS
For the year ended August 31, 2006
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $118,291) $ 6,573,689
- -------------------------------------------------------------------------
Dividends from affiliated money market funds 1,103,850
=========================================================================
Total investment income 7,677,539
=========================================================================
EXPENSES:
Advisory fees 2,935,448
- -------------------------------------------------------------------------
Administrative services fees 120,020
- -------------------------------------------------------------------------
Custodian fees 70,482
- -------------------------------------------------------------------------
Distribution fees:
Class A 547,465
- -------------------------------------------------------------------------
Class B 527,194
- -------------------------------------------------------------------------
Class C 522,184
- -------------------------------------------------------------------------
Transfer agent fees -- A, B and C 719,750
- -------------------------------------------------------------------------
Transfer agent fees -- Institutional 2,989
- -------------------------------------------------------------------------
Trustees' and officer's fees and benefits 24,247
- -------------------------------------------------------------------------
Other 340,498
=========================================================================
Total expenses 5,810,277
=========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (278,194)
=========================================================================
Net expenses 5,532,083
=========================================================================
Net investment income 2,145,456
=========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES, AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (includes net gains from securities
sold to affiliates of $168,841) 7,677,105
- -------------------------------------------------------------------------
Foreign currencies (35,024)
- -------------------------------------------------------------------------
Option contracts written 1,081
=========================================================================
7,643,162
=========================================================================
Change in net unrealized appreciation of:
Investment securities 10,826,060
- -------------------------------------------------------------------------
Foreign currencies 741
=========================================================================
10,826,801
=========================================================================
Net gain from investment securities, foreign currencies, and
option contracts 18,469,963
=========================================================================
Net increase in net assets resulting from operations $20,615,419
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-5
AIM Multi-Sector Fund
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 2006 and 2005
<Table>
<Caption>
2006 2005
- -----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 2,145,456 $ (405,862)
- -----------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and option contracts 7,643,162 5,142,329
- -----------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 10,826,801 23,064,154
=========================================================================================
Net increase in net assets resulting from operations 20,615,419 27,800,621
=========================================================================================
Distributions to shareholders from net realized gains:
Class A (3,186,127) (1,155,863)
- -----------------------------------------------------------------------------------------
Class B (821,953) (349,728)
- -----------------------------------------------------------------------------------------
Class C (845,546) (503,792)
- -----------------------------------------------------------------------------------------
Institutional Class (1,117,667) (427,762)
=========================================================================================
Decrease in net assets resulting from distributions (5,971,293) (2,437,145)
=========================================================================================
Share transactions-net:
Class A 203,974,385 49,177,390
- -----------------------------------------------------------------------------------------
Class B 47,352,800 10,356,674
- -----------------------------------------------------------------------------------------
Class C 37,876,401 9,037,080
- -----------------------------------------------------------------------------------------
Institutional Class 38,110,541 33,090,929
=========================================================================================
Net increase in net assets resulting from share
transactions 327,314,127 101,662,073
=========================================================================================
Net increase in net assets 341,958,253 127,025,549
=========================================================================================
NET ASSETS:
Beginning of year 200,282,736 73,257,187
=========================================================================================
End of year (including undistributed net investment income
(loss) of $1,509,552 and $(600,879), respectively) $542,240,989 $200,282,736
_________________________________________________________________________________________
=========================================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
August 31, 2006
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Multi-Sector Fund (the "Fund") is a series portfolio of AIM Counselor Series
Trust (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 six separate portfolios, each
authorized to issue an unlimited number of shares of beneficial interest. The
Fund currently offers multiple classes of shares. Matters affecting each
portfolio or class will be voted on exclusively by the shareholders of such
portfolio or class. The assets, liabilities and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the Fund.
The Fund's investment objective is to seek capital growth.
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. Securities traded in the over-the-counter
market (but not securities reported on the NASDAQ Stock Exchange) are
valued based on the prices furnished by independent pricing services, in
which case the securities may be considered fair valued, or by market
makers. Each security reported on the NASDAQ Stock Exchange is valued at
the NASDAQ Official Closing Price ("NOCP") as of the close of the customary
trading session on the valuation date or absent a NOCP, at the closing bid
price.
Futures contracts are valued at the final settlement price set by an
exchange on which they are principally traded. Listed options are valued at
the mean between the last bid and the ask prices from the exchange on which
they are principally traded. Options not listed on an exchange are valued
by an independent source at the mean between the last bid and ask prices.
For purposes of determining net asset value per share, futures and option
contracts generally are valued 15 minutes after the close of the customary
trading session of the New York Stock Exchange ("NYSE").
F-6
AIM Multi-Sector Fund
Investments in open-end registered investment companies and closed-end
registered investment companies that do not trade on an exchange are valued
at the end of day net asset value per share. Investments in closed-end
registered investment companies that trade on an exchange are valued at the
last sales price as of the close of the customary trading session on the
exchange where the security is principally traded.
Debt obligations (including convertible bonds) are fair valued using an
evaluated quote provided by an independent pricing service. Evaluated
quotes provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
institution-size trading in similar groups of securities, developments
related to specific securities, dividend rate, yield, quality, type of
issue, coupon rate, maturity, individual trading characteristics and other
market data. Short-term obligations having 60 days or less to maturity and
commercial paper are recorded at amortized cost which approximates value.
Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and
are valued at the last bid price in the case of equity securities and in
the case of debt obligations, the mean between the last bid and asked
prices.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable exchange rates as of the
close of the NYSE. Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in computing the net asset value
of the Fund's shares are determined as of the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes and the
close of the customary trading session of the NYSE which would not
ordinarily be reflected in the computation of the Fund's net asset value.
If the event is likely to have affected the closing price of the security,
the security will be valued at fair value in good faith using procedures
approved by the Board of Trustees. Adjustments to closing prices to reflect
fair value may also be based on a screening process of an independent
pricing service to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign
security trades is not the current value as of the close of the NYSE.
Foreign securities meeting the approved degree of certainty that the price
is not reflective of current value will be priced at the indication of fair
value from the independent pricing service. Multiple factors may be
considered by the independent pricing service in determining adjustments to
reflect fair value and may include information relating to sector indices,
ADRs and domestic and foreign index futures.
Securities for which market quotations are not readily available or are
unreliable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers following procedures approved by
the Board of Trustees. Issuer specific events, market trends, bid/ask
quotes of brokers and information providers and other market data may be
reviewed in the course of making a good faith determination of a security's
fair value.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, AIM may
determine the country in which an issuer is located and/or credit risk
exposure based on various factors. These factors include the laws of the
country under which the issuer is organized, where the issuer maintains a
principal office, the country in which the issuer derives 50% or more of
its total revenues and the country that has the primary market for the
issuer's securities, as well as other criteria. Among the other criteria
that may be evaluated for making this determination are the country in
which the issuer maintains 50% or more of its assets, the type of security,
financial guarantees and enhancements, the nature of the collateral and the
sponsor organization. Country of issuer and/or credit risk exposure has
been determined to be the United States of America unless otherwise noted.
D. 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 treat a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of
Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial statements.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund are charged to the operations of such class. Transfer
agency fees and expenses and other shareholder recordkeeping fees and
expenses attributable to the Institutional Class are charged to such class.
Transfer agency fees and expenses and other shareholder recordkeeping fees
and expenses relating to all other classes are allocated among those
classes based on relative net assets. All other expenses are allocated
among the classes based on relative net assets.
F-7
AIM Multi-Sector Fund
G. ACCOUNTING ESTIMATES -- 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 including estimates and assumptions related to
taxation. Actual results could differ from those estimates.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust (including the
Trust's investment manager) is indemnified against certain liabilities that
may arise out of performance of their duties to the Fund. Additionally, in
the normal course of business, the Fund enters into contracts that contain
a variety of indemnification clauses. The Fund's maximum exposure under
these arrangements is unknown as this would involve future claims that may
be made against the Fund that have not yet occurred. The risk of material
loss as a result of such indemnification claims is considered remote.
I. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of
the NYSE based on quotations posted by banks and major currency dealers.
Portfolio securities and other assets and liabilities denominated in
foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
Reported net realized foreign currency gains or losses arise from (i) sales
of foreign currencies, (ii) currency gains or losses realized between the
trade and settlement dates on securities transactions, and (iii) the
difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
currency gains and losses arise from changes in the fair values of assets
and liabilities, other than investments in securities at fiscal period end,
resulting from changes in exchange rates.
J. 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.
Realized and unrealized gains and losses on these contracts are included in
the Statement of Operations. The Fund could be exposed to risk, which may
be in excess of the amount reflected in the Statement of Assets and
Liabilities, if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
K. COVERED CALL OPTIONS -- The Fund may write call options, including options
on futures. A call option gives the purchaser of such option the right to
buy, and the writer (the Fund) the obligation to sell, the underlying
security at the stated exercise price during the option period. Written
call options are recorded as a liability in the Statement of Assets and
Liabilities. The amount of the liability is subsequently "marked-to-market"
to reflect the current market value of the option written. If a written
call option expires on the stipulated expiration date, or if the Fund
enters into a closing purchase transaction, the Fund realizes a gain (or a
loss if the closing purchase transaction exceeds the premium received when
the option was written) without regard to any unrealized gain or loss on
the underlying security, and the liability related to such option is
extinguished. If a written option is exercised, the Fund realizes a gain or
a loss from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received. Realized gains and
losses on these contracts are included in the Statement of Operations. A
risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases and the option is
exercised.
An option on a futures contract gives the holder the right to receive a
cash "exercise settlement amount" equal to the difference between the
exercise price of the option and the value of the underlying futures
contract on the exercise date. The value of a futures contract fluctuates
with changes in the market values of the securities underlying the futures
contract. In writing futures contract options, the principal risk is that
the Fund could bear a loss on the options that would be only partially
offset (or not offset at all) by the increased value or reduced cost of
underlying portfolio securities. Risks may exceed amounts recognized in the
Statement of Assets and Liabilities.
L. PUT OPTIONS PURCHASED -- The Fund may purchase put options including
options on securities indexes and/or futures contracts. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, the Fund pays an option premium. The option's underlying instrument
may be a security, securities index, or a futures contract. Put options may
be used by the Fund to hedge securities it owns by locking in a minimum
price at which the Fund can sell. If security prices fall, the put option
could be exercised to offset all or a portion of the Fund's resulting
losses. At the same time, because the maximum the Fund has at risk is the
cost of the option, purchasing put options does not eliminate the potential
for the Fund to profit from an increase in the value of the securities
hedged. Realized and unrealized gains and losses on these contracts are
included in the Statement of Operations. A risk in buying an option is that
the Fund pays a premium whether or not the option is exercised. In
addition, there can be no assurance that a liquid secondary market will
exist for any option purchased or sold.
M. COLLATERAL -- To the extent the Fund has pledged or segregated a security
as collateral and that security is subsequently sold, it is the Fund's
practice to replace such collateral no later than the next business day.
F-8
AIM Multi-Sector Fund
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee at the annual rate of 0.75% of the Fund's average
daily net assets. Through December 31, 2009, AIM has contractually agreed to
waive advisory fees to the extent necessary so that the advisory fees payable by
the Fund (based on the Fund's average daily net assets) do not exceed the annual
rate of:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- --------------------------------------------------------------------
First $250 million 0.695%
- --------------------------------------------------------------------
Next $250 million 0.67%
- --------------------------------------------------------------------
Next $500 million 0.645%
- --------------------------------------------------------------------
Next $1.5 billion 0.62%
- --------------------------------------------------------------------
Next $2.5 billion 0.595%
- --------------------------------------------------------------------
Next $2.5 billion 0.57%
- --------------------------------------------------------------------
Next $2.5 billion 0.545%
- --------------------------------------------------------------------
Over $10 billion 0.52%
___________________________________________________________________
====================================================================
</Table>
AIM has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Class A, Class B, Class C and
Institutional Class shares to 1.90%, 2.65%, 2.65% and 1.65% of average daily net
assets, respectively, through August 31, 2006. In determining the advisor's
obligation to waive advisory fees and/or reimburse expenses, the following
expenses are not taken into account, and could cause the net annual operating
expenses to exceed the numbers reflected above: (i) interest; (ii) taxes; (iii)
dividend expense on short sales; (iv) extraordinary items; (v) expenses related
to a merger or reorganization, as approved by the Fund's Board of Trustees; and
(vi) expenses that the Fund has incurred but did not actually pay because of an
expense offset arrangement. Currently, in addition to the expense reimbursement
arrangement with AMVESCAP PLC ("AMVESCAP") described more fully below, the
expense offset arrangements from which the Fund may benefit are in the form of
credits that the Fund receives from banks where the Fund or its transfer agent
has deposit accounts in which it holds uninvested cash. Those credits are used
to pay certain expenses incurred by the Fund. AIM did not waive fees and/or
reimburse expenses during the period under this expense limitation.
Further, AIM has voluntarily agreed to waive advisory fees of the Fund in
the amount of 25% of the advisory fee AIM receives from the affiliated money
market funds on investments by the Fund in such affiliated money market funds.
AIM is also voluntarily waiving a portion of the advisory fee payable by the
Fund equal to the difference between the income earned from investing in the
affiliated money market fund and the hypothetical income earned from investing
in an appropriate comparative benchmark. Voluntary fee waivers or reimbursements
may be modified or discontinued at any time upon consultation with the Board of
Trustees without further notice to investors.
For the year ended August 31, 2006, AIM waived advisory fees of $255,636.
At the request of the Trustees of the Trust, AMVESCAP agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. These expenses along with the related expense
reimbursement are included in the Statement of Operations. For the year ended
August 31, 2006, AMVESCAP reimbursed expenses of the Fund in the amount of
$1,917.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. Pursuant to such agreement, for the year ended
August 31, 2006, AIM was paid $120,020.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay AIM Investment Services, Inc. ("AIS") a fee for providing transfer agency
and shareholder services to the Fund and reimburse AIS for certain expenses
incurred by AIS in the course of providing such services. AIS may make payments
to intermediaries that provide omnibus account services, sub-accounting services
and/or networking services. All fees payable by AIS to intermediaries that
provide omnibus account services or sub-accounting are charged back to the Fund,
subject to certain limitations approved by the Trust's Board of Trustees. For
the year ended August 31, 2006, the Fund paid AIS $719,750 for Class A, Class B
and Class C share classes and $2,989 for Institutional Class shares.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class B
and Class C shares of the Fund. The Trust has adopted plans pursuant to Rule
12b-1 under the 1940 Act with respect to the Fund's Class A, Class B and Class C
shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays ADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Class A shares and 1.00% of the average daily net assets of Class B and Class
C shares. Of the Rule 12b-1 payments, up to 0.25% of the average daily net
assets of the Class A, Class B or Class C shares may be paid to furnish
continuing personal shareholder services to customers who purchase and own
shares of such classes. Any amounts not paid as a service fee under the Plans
would constitute an asset-based sales charge. National Association of Securities
Dealers ("NASD") Rules impose a cap on the total sales charges, including
asset-based sales charges that may be paid by any class of shares of the Fund.
Pursuant to the Plans, for the year ended August 31, 2006, the Class A, Class B
and Class C shares paid $547,465, $527,194 and $522,184, 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
F-9
AIM Multi-Sector Fund
deducted from redemption proceeds prior to remittance to the shareholder. During
the year ended August 31, 2006, ADI advised the Fund that it retained $293,781
in front-end sales commissions from the sale of Class A shares and $2,943,
$32,106 and $14,996 from Class A, Class B and Class C shares, respectively, for
CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AIS and/or ADI.
NOTE 3--INVESTMENTS IN AFFILIATES
The Fund is permitted, pursuant to an exemptive order from the Securities and
Exchange Commission ("SEC") and procedures approved by the Board of Trustees, to
invest daily available cash balances in affiliated money market funds. The Fund
and the money market funds below have the same investment advisor and therefore,
are considered to be affiliated. The table below shows the transactions in and
earnings from investments in affiliated money market funds for the year ended
August 31, 2006.
<Table>
<Caption>
CHANGE IN
UNREALIZED
VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED
FUND 08/31/05 AT COST FROM SALES (DEPRECIATION) 08/31/06 INCOME GAIN (LOSS)
- ---------------------------------------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-
Institutional
Class $ -- $ 49,968,401 $ (36,556,195) $ -- $13,412,206 $ 105,428 $ --
- ---------------------------------------------------------------------------------------------------------------------------------
Premier
Portfolio-
Institutional
Class 11,751,781 342,791,639 (341,131,214) -- 13,412,206 998,422 --
=================================================================================================================================
Total $11,751,781 $392,760,040 $(377,687,409) $ -- $26,824,412 $1,103,850 $ --
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
NOTE 4--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
The Fund is permitted to purchase or sell securities from or to certain other
AIM Funds under specified conditions outlined in procedures adopted by the Board
of Trustees of the Trust. The procedures have been designed to ensure that any
purchase or sale of securities by the Fund from or to another fund or portfolio
that is or could be considered an affiliate by virtue of having a common
investment advisor (or affiliated investment advisors), common Trustees and/or
common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined
under the procedures, each transaction is effected at the current market price.
Pursuant to these procedures, for the year ended August 31, 2006, the Fund
engaged in securities sales of $6,867,348, which resulted in net realized gains
of $168,841 and securities purchases of $9,395,975.
NOTE 5--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions and (ii) custodian credits which
result from periodic overnight cash balances at the custodian. For the year
ended August 31, 2006, the Fund received credits from these arrangements, which
resulted in the reduction of the Fund's total expenses of $20,641.
NOTE 6--TRUSTEES' AND OFFICER'S FEES AND BENEFITS
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to each Trustee and Officer of the Fund who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also
include amounts accrued by the Fund to fund such deferred compensation amounts.
Those Trustees who defer compensation have the option to select various AIM
Funds in which their deferral accounts shall be deemed to be invested. Finally,
current Trustees are eligible to participate in a retirement plan that provides
for benefits to be paid upon retirement to Trustees over a period of time based
on the number of years of service. The Fund may have certain former Trustees who
also participate in a retirement plan and receive benefits under such plan.
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund
to fund such retirement benefits. Obligations under the deferred compensation
and retirement plans represent unsecured claims against the general assets of
the Fund.
During the year ended August 31, 2006, the Fund paid legal fees of $4,683
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 7--BORROWINGS
Pursuant to an exemptive order from the SEC, the Fund may participate in an
interfund lending facility that AIM has established for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund. A loan will be secured by collateral if the
Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total
assets. To the extent that the loan is required to be secured by collateral, the
collateral is marked to market daily to ensure that the market value is at least
102% of the outstanding principal value of the loan.
The Fund is a participant in an uncommitted unsecured revolving credit
facility with State Street Bank and Trust Company ("SSB"). The Fund may borrow
up to the lesser of (i) $125,000,000, or (ii) the limits set by its prospectus
for borrowings. The Fund and other funds advised by AIM which are
F-10
AIM Multi-Sector Fund
parties to the credit facility can borrow on a first come, first served basis.
Principal on each loan outstanding shall bear interest at the bid rate quoted by
SSB at the time of the request for the loan.
During the year ended August 31, 2006, the Fund did not borrow or lend under
the interfund lending facility or borrow under the uncommitted unsecured
revolving credit facility.
Additionally, the Fund is permitted to temporarily carry a negative or
overdrawn balance in its account with SSB, the custodian bank. To compensate the
custodian bank for such overdrafts, the overdrawn Fund may either (i) leave
funds as a compensating balance in the account so the custodian bank can be
compensated by earning the additional interest; or (ii) compensate by paying the
custodian bank at a rate agreed upon by the custodian bank and AIM, not to
exceed the rate contractually agreed upon.
NOTE 8--OPTION CONTRACTS WRITTEN
<Table>
<Caption>
TRANSACTIONS DURING THE PERIOD
- -----------------------------------------------------------------------------------
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- -----------------------------------------------------------------------------------
Beginning of period -- $ --
- -----------------------------------------------------------------------------------
Written 699 89,738
- -----------------------------------------------------------------------------------
Closed (142) (33,829)
- -----------------------------------------------------------------------------------
Exercised (521) (51,635)
- -----------------------------------------------------------------------------------
Expired (36) (4,274)
===================================================================================
End of period -- $ --
___________________________________________________________________________________
===================================================================================
</Table>
NOTE 9--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years August 31, 2006 and
2005 was as follows:
<Table>
<Caption>
2006 2005
- --------------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $4,352,572 $1,993,816
- --------------------------------------------------------------------------------------
Long-term capital gain 1,618,721 443,329
======================================================================================
Total distributions $5,971,293 $2,437,145
______________________________________________________________________________________
======================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2006, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2006
- ----------------------------------------------------------------------------
Undistributed ordinary income $ 2,605,978
- ----------------------------------------------------------------------------
Undistributed long-term gain 5,073,328
- ----------------------------------------------------------------------------
Unrealized appreciation-investments 37,850,503
- ----------------------------------------------------------------------------
Temporary book/tax differences (10,944)
- ----------------------------------------------------------------------------
Post-October currency loss deferral (36,045)
- ----------------------------------------------------------------------------
Shares of beneficial interest 496,758,169
============================================================================
Total net assets $542,240,989
____________________________________________________________________________
============================================================================
</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 deferral of losses on wash sales and
the recognition for tax purposes of unrealized gains on passive foreign
investment companies. The tax-basis unrealized appreciation on investments
amount includes appreciation on foreign currencies of $1,329.
The temporary book/tax differences are a result of timing differences
between book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the trustee deferral of compensation and
retirement plan expenses.
The Fund did not have a capital loss carryforward as of August 31, 2006.
F-11
AIM Multi-Sector Fund
NOTE 10--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the year ended
August 31, 2006 was $548,389,288 and $240,326,700, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- -------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $48,955,804
- -------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (11,106,630)
===============================================================================
Net unrealized appreciation of investment securities $37,849,174
_______________________________________________________________________________
===============================================================================
Cost of investments for tax purposes is $505,284,242.
</Table>
NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of foreign currency
transactions and equalization payments, on August 31, 2006, undistributed net
investment income was decreased by $35,025, undistributed net realized gain was
decreased by $1,594,975 and shares of beneficial interest increased by
$1,630,000. This reclassification had no effect on the net assets of the Fund.
NOTE 12--SHARE INFORMATION
The Fund currently offers four different classes of shares: Class A, Class B,
Class C and Institutional Class. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with CDSC. Institutional
Class shares are sold at net asset value. Under certain circumstances, Class A
shares are sold without a sales charge. In addition, under certain
circumstances, Class A shares are subject to CDSC. Generally, Class B shares
will automatically convert to Class A shares on or about the month-end which is
at least eight years after the date of purchase.
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ---------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
-------------------------------------------------------
2006(A) 2005
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------
Sold:
Class A 10,296,828 $259,682,290 2,568,857 $ 58,603,180
- ---------------------------------------------------------------------------------------------------------------------
Class B 2,363,470 58,008,950 583,081 12,866,193
- ---------------------------------------------------------------------------------------------------------------------
Class C 1,874,620 46,076,992 557,857 12,237,487
- ---------------------------------------------------------------------------------------------------------------------
Institutional Class 1,550,202 39,426,481 1,592,889 34,906,396
=====================================================================================================================
Issued as reinvestment of dividends:
Class A 121,050 3,010,501 52,557 1,122,610
- ---------------------------------------------------------------------------------------------------------------------
Class B 31,284 759,565 15,617 327,956
- ---------------------------------------------------------------------------------------------------------------------
Class C 32,770 795,338 22,735 477,202
- ---------------------------------------------------------------------------------------------------------------------
Institutional Class 44,564 1,117,667 19,961 427,762
=====================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 106,333 2,692,879 7,277 161,392
- ---------------------------------------------------------------------------------------------------------------------
Class B (109,249) (2,692,879) (7,415) (161,392)
=====================================================================================================================
Reacquired:
Class A (2,450,588) (61,411,285) (492,281) (10,709,792)
- ---------------------------------------------------------------------------------------------------------------------
Class B (355,856) (8,722,836) (124,322) (2,676,083)
- ---------------------------------------------------------------------------------------------------------------------
Class C (366,892) (8,995,929) (172,554) (3,677,609)
- ---------------------------------------------------------------------------------------------------------------------
Institutional Class (96,663) (2,433,607) (99,260) (2,243,229)
=====================================================================================================================
13,041,873 $327,314,127 4,524,999 $101,662,073
_____________________________________________________________________________________________________________________
=====================================================================================================================
</Table>
(a) There are two entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate they own 33% of the
outstanding shares of the Fund. ADI has an agreement with these entities
to sell Fund shares. The Fund, AIM and/or AIM affiliates may make
payments to these entities, which are considered to be related to the
Fund, for providing services to the Fund, AIM and/or AIM affiliates
including but not limited to services such as, securities brokerage,
distribution, third party record keeping and account servicing. The
Trust has no knowledge as to whether all or any portion of the shares
() owned of record by these shareholders are also owned beneficially.
In addition, 15% of the outstanding shares of the Fund are owned by
affiliated mutual funds. Affiliated mutual funds are other mutual funds
that are also advised by AIM.
F-12
AIM Multi-Sector Fund
NOTE 13--NEW ACCOUNTING STANDARD
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48").
FIN 48 prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement for a tax position taken or
expected to be taken in a tax return. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. The provisions for FIN 48 are effective for
fiscal years beginning after December 15, 2006. Management is currently
assessing the impact of FIN 48, if any, on the Fund's financial statements and
intends for the Fund to adopt the FIN 48 provisions during 2007.
NOTE 14--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
------------------------------------------------------
SEPTEMBER 3, 2002
(DATE OPERATIONS
YEAR ENDED AUGUST 31, COMMENCED) TO
--------------------------------- AUGUST 31,
2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 24.16 $ 19.37 $ 18.32 $ 15.00
- --------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.17(a) (0.05)(a)(b) (0.12) (0.13)(a)
- --------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.69 5.40 1.84 3.45
====================================================================================================================
Total from investment operations 1.86 5.35 1.72 3.32
====================================================================================================================
Less distributions from net realized gains (0.49) (0.56) (0.67) --
====================================================================================================================
Net asset value, end of period $ 25.53 $ 24.16 $ 19.37 $ 18.32
____________________________________________________________________________________________________________________
====================================================================================================================
Total return(c) 7.74% 28.01% 9.47% 22.13%
____________________________________________________________________________________________________________________
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $311,492 $99,721 $38,578 $25,935
____________________________________________________________________________________________________________________
====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.30%(d) 1.53% 1.85% 1.97%(e)
- --------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.37%(d) 1.59% 1.88% 1.97%(e)
====================================================================================================================
Ratio of net investment income (loss) to average net assets 0.67%(d) (0.25)%(b) (0.73)% (0.85)%(e)
____________________________________________________________________________________________________________________
====================================================================================================================
Portfolio turnover rate(f) 66% 63% 161% 115%
____________________________________________________________________________________________________________________
====================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Net investment income (loss) per share and the ratio of net investment
income (loss) to average net assets include a special cash dividend
received of $3.00 per share owned of Microsoft Corp. on December 2,
2004. Net investment income (loss) per share and the ratio of net
investment income (loss) to average net assets excluding the special
dividend are $(0.06) and (0.30)%, respectively.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for periods less than one year.
(d) Ratios are based on average daily net assets of $218,985,922.
(e) Annualized.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
F-13
AIM Multi-Sector Fund
NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS B
-----------------------------------------------------
SEPTEMBER 3, 2002
YEAR ENDED AUGUST 31, (DATE OPERATIONS
-------------------------------- COMMENCED) TO
2006 2005 2004 AUGUST 31, 2003
- -------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 23.64 $ 19.09 $ 18.19 $15.00
- -------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a) (0.20)(a)(b) (0.24) (0.07)(a)
- -------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.66 5.31 1.81 3.26
===================================================================================================================
Total from investment operations 1.64 5.11 1.57 3.19
===================================================================================================================
Less distributions from net realized gains (0.49) (0.56) (0.67) --
===================================================================================================================
Net asset value, end of period $ 24.79 $ 23.64 $ 19.09 $18.19
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(c) 6.97% 27.15% 8.70% 21.27%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $73,997 $24,953 $11,233 $8,278
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.05%(d) 2.20% 2.56% 2.76%(e)
- -------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.12%(d) 2.26% 2.59% 2.85%(e)
===================================================================================================================
Ratio of net investment income (loss) to average net assets (0.08)%(d) (0.92)%(b) (1.44)% (1.63)%(e)
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate(f) 66% 63% 161% 115%
___________________________________________________________________________________________________________________
===================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Net investment income (loss) per share and the ratio of net investment
income (loss) to average net assets include a special cash dividend
received of $3.00 per share owned of Microsoft Corp. on December 2,
2004. Net investment income (loss) per share and the ratio of net
investment income (loss) to average net assets excluding the special
dividend are $(0.21) and (0.97)%, respectively.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for periods less than one year.
(d) Ratios are based on average daily net assets of $52,719,397.
(e) Annualized.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
<Table>
<Caption>
CLASS C
-----------------------------------------------------
SEPTEMBER 3, 2002
YEAR ENDED AUGUST 31, (DATE OPERATIONS
-------------------------------- COMMENCED) TO
2006 2005 2004 AUGUST 31, 2003
- -------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 23.63 $ 19.09 $ 18.17 $ 15.00
- -------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a) (0.20)(a)(b) (0.22) (0.04)(a)
- -------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.66 5.30 1.81 3.21
===================================================================================================================
Total from investment operations 1.64 5.10 1.59 3.17
===================================================================================================================
Less distributions from net realized gains (0.49) (0.56) (0.67) --
===================================================================================================================
Net asset value, end of period $ 24.78 $ 23.63 $ 19.09 $ 18.17
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(c) 6.97% 27.10% 8.82% 21.13%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $69,604 $29,981 $16,424 $10,302
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.05%(d) 2.20% 2.52% 2.76%(e)
- -------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.12%(d) 2.26% 2.56% 2.84%(e)
===================================================================================================================
Ratio of net investment income (loss) to average net assets (0.08)%(d) (0.92)%(b) (1.40)% (1.64)%(e)
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate(f) 66% 63% 161% 115%
___________________________________________________________________________________________________________________
===================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Net investment income (loss) per share and the ratio of net investment
income (loss) to average net assets include a special cash dividend
received of $3.00 per share owned of Microsoft Corp. on December 2,
2004. Net investment income (loss) per share and the ratio of net
investment income (loss) to average net assets excluding the special
dividend are $(0.21) and (0.97)%, respectively.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for periods less than one year.
(d) Ratios are based on average daily net assets of $52,218,431.
(e) Annualized.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
F-14
AIM Multi-Sector Fund
NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
-----------------------------------------
MAY 3, 2004
YEAR ENDED (DATE SALES
AUGUST 31, COMMENCED) TO
------------------------ AUGUST 31,
2006 2005 2004
- -------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 24.33 $ 19.41 $19.94
- -------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.29(a) 0.06(a)(b) (0.01)
- -------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.70 5.42 (0.52)
=======================================================================================================
Total from investment operations 1.99 5.48 (0.53)
=======================================================================================================
Less distributions from net realized gains (0.49) (0.56) --
=======================================================================================================
Net asset value, end of period $ 25.83 $ 24.33 $19.41
_______________________________________________________________________________________________________
=======================================================================================================
Total return(c) 8.23% 28.64% (2.66)%
_______________________________________________________________________________________________________
=======================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $87,147 $45,628 $7,023
_______________________________________________________________________________________________________
=======================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.83%(d) 1.02% 1.28%(e)
- -------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.90%(d) 1.08% 1.28%(e)
=======================================================================================================
Ratio of net investment income (loss) to average net assets 1.14%(d) 0.26%(b) (0.16)%(e)
_______________________________________________________________________________________________________
=======================================================================================================
Portfolio turnover rate(f) 66% 63% 161%
_______________________________________________________________________________________________________
=======================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Net investment income (loss) per share and the ratio of net investment
income (loss) to average net assets include a special cash dividend
received of $3.00 per share owned of Microsoft Corp. on December 2,
2004. Net investment income (loss) per share and the ratio of net
investment income (loss) to average net assets excluding the special
dividend are $0.05 and 0.21%, respectively.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Not annualized for periods less than one year.
(d) Ratios are based on average daily net assets of $67,469,367.
(e) Annualized.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
NOTE 15--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING
On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment
advisor to certain AIM Funds), AIM and A I M Distributors, Inc. ("ADI") (the
distributor of the retail AIM Funds) reached final settlements with certain
regulators, including the Securities and Exchange Commission ("SEC"), the New
York Attorney General and the Colorado Attorney General, to resolve civil
enforcement actions and/or investigations related to market timing and related
activity in the AIM Funds, including those formerly advised by IFG. As part of
the settlements, a $325 million fair fund ($110 million of which is civil
penalties) has been created to compensate shareholders harmed by market timing
and related activity in funds formerly advised by IFG. Additionally, AIM and ADI
created a $50 million fair fund ($30 million of which is civil penalties) to
compensate shareholders harmed by market timing and related activity in funds
advised by AIM, which was done pursuant to the terms of the settlement. These
two fair funds may increase as a result of contributions from third parties who
reach final settlements with the SEC or other regulators to resolve allegations
of market timing and/or late trading that also may have harmed applicable AIM
Funds. These two fair funds will be distributed in accordance with a methodology
to be determined by AIM's independent distribution consultant, in consultation
with AIM and the independent trustees of the AIM Funds and acceptable to the
staff of the SEC. Management of AIM and the Fund are unable to estimate the
impact, if any, that the distribution of these two fair funds may have on the
Fund or whether such distribution will have an impact on the Fund's financial
statements in the future.
At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"),
the parent company of IFG and AIM, has agreed to reimburse expenses incurred by
the AIM Funds related to market timing matters.
PENDING LITIGATION AND REGULATORY INQUIRIES
On August 30, 2005, the West Virginia Office of the State Auditor
- -Securities Commission ("WVASC") issued a Summary Order to Cease and Desist and
Notice of Right to Hearing to AIM and ADI (Order No. 05-1318). The WVASC makes
findings of fact that AIM and ADI entered into certain arrangements permitting
market timing of the AIM Funds and failed to disclose these arrangements in the
prospectuses for such Funds, and conclusions of law to the effect that AIM and
ADI violated the West Virginia securities laws. The WVASC orders AIM and ADI to
cease any further violations and seeks to impose monetary sanctions, including
restitution to affected investors, disgorgement of fees, reimbursement of
investigatory, administrative and legal costs and an "administrative
assessment," to be determined by the Commissioner. Initial research indicates
that these damages could be limited or capped by statute.
F-15
AIM Multi-Sector Fund
NOTE 15--LEGAL PROCEEDINGS--(CONTINUED)
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or
related entities and individuals, depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related activity
in the AIM Funds;
- that certain AIM Funds inadequately employed fair value pricing;
- that the defendants charged excessive advisory and/or distribution fees
and failed to pass on to shareholders the perceived savings generated by
economies of scale and that the defendants adopted unlawful distribution
plans; and
- that the defendants improperly used the assets of the AIM Funds to pay
brokers to aggressively promote the sale of the AIM Funds over other
mutual funds and that the defendants concealed such payments from
investors by disguising them as brokerage commissions (all the claims in
this category of lawsuits were dismissed with prejudice by the court on
September 29, 2006, except for the Section 36(b) claim which was dismissed
with leave to amend to plead it properly as a derivative claim).
These lawsuits allege as theories of recovery, depending on the lawsuit,
violations of various provisions of the Federal and state securities laws and
ERISA, negligence, breach of fiduciary duty and/or breach of contract. These
lawsuits seek remedies that include, depending on the lawsuit, damages,
restitution, injunctive relief, imposition of a constructive trust, removal of
certain directors and/or employees, various corrective measures under ERISA,
rescission of certain AIM Funds' advisory agreements and/or distribution plans
and recovery of all fees paid, an accounting of all fund-related fees,
commissions and soft dollar payments, restitution of all commissions and fees
paid, and prospective relief in the form of reduced fees.
All lawsuits based on allegations of market timing, late trading and related
issues have been transferred to the United States District Court for the
District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court,
plaintiffs in these lawsuits consolidated their claims for pre-trial purposes
into three amended complaints against various AIM- and IFG-related parties: (i)
a Consolidated Amended Class Action Complaint purportedly brought on behalf of
shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative
Complaint purportedly brought on behalf of the AIM Funds and fund registrants;
and (iii) an Amended Class Action Complaint for Violations of the Employee
Retirement Income Securities Act ("ERISA") purportedly brought on behalf of
participants in AMVESCAP's 401(k) plan. Based on orders issued by the MDL Court,
all claims asserted against the AIM Funds that have been transferred to the MDL
Court have been dismissed, although certain Funds remain nominal defendants in
the Consolidated Amended Fund Derivative Complaint. On September 15, 2006, the
MDL Court granted the AMVESCAP defendants' motion to dismiss the Amended Class
Action Complaint for Violations of ERISA and dismissed such Complaint. The
plaintiff has commenced an appeal from that decision.
IFG, AIM, ADI and/or related entities and individuals have received
inquiries from numerous regulators in the form of subpoenas or other oral or
written requests for information and/or documents related to one or more of the
following issues, among others, some of which concern one or more AIM Funds:
market timing activity, late trading, fair value pricing, excessive or improper
advisory and/or distribution fees, mutual fund sales practices, including
revenue sharing and directed-brokerage arrangements, investments in securities
of other registered investment companies, contractual plans, issues related to
Section 529 college savings plans and procedures for locating lost security
holders. IFG, AIM and ADI have advised the Fund that they are providing full
cooperation with respect to these inquiries. Regulatory actions and/or
additional civil lawsuits related to these or other issues may be filed against
the AIM Funds, IFG, AIM and/or related entities and individuals in the future.
At the present time, management of AIM and the Fund are unable to estimate
the impact, if any, that the outcome of the Pending Litigation and Regulatory
Inquiries described above may have on AIM, ADI or the Fund.
F-16
AIM Multi-Sector Fund
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Counselor Series Trust
and Shareholders of AIM Multi-Sector Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations, of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of AIM Multi-Sector Fund (one of the
funds constituting AIM Counselor Series Trust, hereafter referred to as the
"Fund") at August 31, 2006, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the periods indicated, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 2006 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
October 26, 2006
Houston, Texas
F-17
AIM Multi-Sector Fund
TAX DISCLOSURES
REQUIRED FEDERAL INCOME TAX INFORMATION
Of ordinary dividends paid to shareholders during the Fund's tax year ended
August 31, 2006, 33.49% is eligible for the dividends received deduction for
corporations. The Fund distributed long-term capital gains of $3,248,721 for the
Fund's tax year ended August 31, 2006.
For its tax year ended August 31, 2006, the Fund designates 38.82%, or the
maximum amount allowable of its dividend distributions as qualified dividend
income. Your actual amount of qualified dividend income for the calendar year
will be reported in your Form 1099-DIV. You should consult your tax advisor
regarding treatment of the amounts.
TAX INFORMATION FOR NON-RESIDENT ALIEN SHAREHOLDERS
The percentage of qualifying assets not subject to the U.S. estate tax for the
fiscal quarters ended November 30, 2006, February 28, 2006, May 31, 2006 and
August 31, 2006 are 20.87%, 18.91%, 16.84% and 14.78%, respectively.
F-18
AIM Multi-Sector Fund
TRUSTEES AND OFFICERS
The address of each trustee and officer of AIM Counselor Series Trust (the
"Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee
oversees 109 portfolios in the AIM Funds complex. The trustees serve for the
life of the Trust, subject to their earlier death, incapacitation, resignation,
retirement or removal as more specifically provided in the Trust's
organizational documents. Column two below includes length of time served with
predecessor entities, if any.
<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 2003 Director and Chairman, A I M Management None
Trustee and Vice Chair Group Inc. (financial services holding
company); Director and Vice Chairman,
AMVESCAP PLC; Chairman, AMVESCAP
PLC -- AIM Division (parent of AIM and a
global investment management firm) and
Trustee and Vice Chair of The AIM Family
of Funds--Registered Trademark--
Formerly: President and Chief Executive
Officer, A I M Management Group Inc.;
Director, Chairman and President, A I M
Advisors, Inc. (registered investment
advisor); Director and Chairman, A I M
Capital Management, Inc. (registered
investment advisor), A I M Distributors,
Inc. (registered broker dealer), AIM
Investment Services, Inc., (registered
transfer agent), and Fund Management
Company (registered broker dealer); and
Chief Executive Officer, AMVESCAP
PLC -- Managed Products; and President
and Principal Executive Officer of The
AIM Family of Funds--Registered
Trademark--
- -------------------------------------------------------------------------------------------------------------------------------
Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None
Trustee, President and President, A I M Management Group Inc.,
Principal AIM Mutual Fund Dealer Inc., AIM Funds
Executive Officer Management Inc. and 1371 Preferred Inc.;
Director and President, A I M Advisors,
Inc., INVESCO Funds Group, Inc. and AIM
GP Canada Inc.; Director, A I M Capital
Management, Inc. and A I M Distributors,
Inc.; Director and Chairman, AIM
Investment Services, Inc., Fund
Management Company and INVESCO
Distributors, Inc.; Director, President
and Chairman, AVZ Callco Inc.; AMVESCAP
Inc. and AIM Canada Holdings Inc.;
Director and Chief Executive Officer,
AIM Trimark Global Fund Inc. and AIM
Trimark Canada Fund Inc.; Trustee,
President and Principal Executive
Officer of The AIM Family of
Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust); and Trustee
and Executive Vice President, The AIM
Family of Funds--Registered Trademark--
(AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust only)
Formerly: President and Principal
Executive Officer, The AIM Family of
Funds--Registered Trademark-- (AIM
Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free
Investments Trust only); Chairman, AIM
Canada Holdings, Inc.; Executive Vice
President and Chief Operations Officer,
AIM Funds Management Inc.; President,
AIM Trimark Global Fund Inc. and AIM
Trimark Canada Fund Inc.; and Director,
Trimark Trust
- -------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 2003 Chairman, Crockett Technology Associates ACE Limited (insurance company);
Trustee and Chair (technology consulting company) and Captaris, Inc. (unified
messaging provider)
- -------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 1983 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2003 Retired Badgley Funds, Inc. (registered
Trustee investment company (2 portfolios))
Formerly: Partner, law firm of Baker &
McKenzie
- -------------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2000 Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm); and Director,
Policy Studies, Inc. and Van Gilder
Insurance Corporation
- -------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2003 Director of a number of public and None
Trustee private business corporations, including
the Boss Group Ltd. (private investment
and management); Cortland Trust, Inc.
(Chairman) (registered investment
company (3 portfolios)); Annuity and
Life Re (Holdings), Ltd. (insurance
company); CompuDyne Corporation
(provider of products and services to
the public security market); and
Homeowners of America Holding
Corporation
Formerly: Director, President and Chief
Executive Officer, Volvo Group North
America, Inc.; Senior Vice President, AB
Volvo; and Director of various
affiliated Volvo companies; and
Director, Magellan Insurance Company
- -------------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 2003 Chief Executive Officer, Twenty First Administaff, and Discovery Global
Trustee Century Group, Inc. (government affairs Education Fund (non-profit)
company); and Owner, Dos Angelos Ranch,
L.P.
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company)
- -------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Cortland Trust, Inc. (registered
Trustee Naftalis and Frankel LLP investment company (3 portfolios))
- -------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2003 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- -------------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 2003 Partner, law firm of Pennock & Cooper None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Larry Soll -- 1942 1997 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Raymond Stickel, Jr. -- 1944 2005 Retired Director, Mainstay VP Series
Trustee Funds, Inc. (21 portfolios)
Formerly: Partner, Deloitte & Touche
- -------------------------------------------------------------------------------------------------------------------------------
</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. Taylor 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.
F-19
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Multi-Sector Fund
The address of each trustee and officer of AIM Counselor Series Trust (the
"Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee
oversees 109 portfolios in the AIM Funds complex. The trustees serve for the
life of the Trust, subject to their earlier death, incapacitation, resignation,
retirement or removal as more specifically provided in the Trust's
organizational documents. Column two below includes length of time served with
predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/
POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------
Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer N/A
Senior Vice President and of The AIM Family of Funds--Registered
Senior Officer Trademark--
Formerly: Director of Compliance and
Assistant General Counsel, ICON
Advisers, Inc.; Financial Consultant,
Merrill Lynch; General Counsel and
Director of Compliance, ALPS Mutual
Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
John M. Zerr -- 1962 2006 Director, Senior Vice President, N/A
Senior Vice President, Chief Secretary and General Counsel, A I M
Legal Officer and Secretary Management Group Inc. (financial
services holding company) and A I M
Advisors, Inc.; Director, Vice President
and Secretary, INVESCO Distributors,
Inc.; Vice President and Secretary,
A I M Capital Management, Inc., AIM
Investment Services, Inc., and Fund
Management Company; Senior Vice
President and Secretary, A I M
Distributors, Inc.; Director, INVESCO
Funds Group Inc.; and Senior Vice
President, Chief Legal Officer and
Secretary of The AIM Family of
Funds--Registered Trademark--
Formerly: Chief Operating Officer,
Senior Vice President, General Counsel,
and Secretary, Liberty Ridge Capital,
Inc. (an investment adviser); Vice
President and Secretary, PBHG Funds (an
investment company); Vice President and
Secretary, PBHG Insurance Series Fund
(an investment company); General Counsel
and Secretary, Pilgrim Baxter Value
Investors (an investment adviser); Chief
Operating Officer, General Counsel and
Secretary, Old Mutual Investment
Partners (a broker-dealer); General
Counsel and Secretary, Old Mutual Fund
Services (an administrator); General
Counsel and Secretary, Old Mutual
Shareholder Services (a shareholder
servicing center); Executive Vice
President, General Counsel and
Secretary, Old Mutual Capital, Inc. (an
investment adviser); and Vice President
and Secretary, Old Mutual Advisors Funds
(an investment company)
- ------------------------------------------------------------------------------------------------------------------------------
Lisa O. Brinkley -- 1959 2004 Global Compliance Director, AMVESCAP N/A
Vice President PLC; and Vice President of The AIM
Family of Funds--Registered Trademark--
Formerly: Senior Vice President, A I M
Management Group Inc. (financial
services holding company); Senior Vice
President and Chief Compliance Officer,
A I M Advisors, Inc. and The AIM Family
of Funds--Registered Trademark--; Vice
President and Chief Compliance Officer,
A I M Capital Management, Inc. and A I M
Distributors, Inc.; Vice President, AIM
Investment Services, Inc. and Fund
Management Company; Senior Vice
President and Chief Compliance Officer
of The AIM Family of Funds--Registered
Trademark--; and Senior Vice President
and Compliance Director, Delaware
Investments Family of Funds
- ------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome -- 1956 2003 Senior Vice President and General
Vice President Counsel, AMVESCAP PLC; Director, INVESCO
Funds Group, Inc.; and Vice President of
The AIM Family of Funds--Registered
Trademark--
Formerly: Director, General Counsel, and N/A
Vice President Fund Management Company;
Director, Senior Vice President,
Secretary and General Counsel, A I M
Management Group Inc. (financial
services holding company) and A I M
Advisors, Inc.; Director and Vice
President, INVESCO Distributors, Inc.;
Senior Vice President, A I M
Distributors, Inc.; Vice President,
A I M Capital Management, Inc. and AIM
Investment Services, Inc.; Senior Vice
President, Chief Legal Officer and
Secretary of The AIM Family of
Funds--Registered Trademark--; Chief
Executive Officer and President, INVESCO
Funds Group, Inc.; and Senior Vice
President, Chief Legal Officer and
General Counsel, Liberty Financial
Companies, Inc. and Liberty Funds Group,
LLC
- ------------------------------------------------------------------------------------------------------------------------------
Sidney M. Dilgren -- 1961 2004 Vice President and Fund Treasurer, A I M N/A
Vice President, Principal Advisors, Inc.; and Vice President,
Financial Officer and Treasurer and Principal Officer of The
Treasurer AIM Family of Funds--Registered
Trademark--
Formerly: Senior Vice President, AIM
Investment Services, Inc.; and Vice
President, A I M Distributors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
J. Philip Ferguson -- 1945 2005 Senior Vice President and Chief N/A
Vice President Investment Officer, A I M Advisors Inc.;
Director, Chairman, Chief Executive
Officer, President and Chief Investment
Officer, A I M Capital Management, Inc.;
Executive Vice President, A I M
Management Group Inc. and Vice President
of The AIM Family of Funds--Registered
Trademark--
Formerly: Senior Vice President, AIM
Private Asset Management, Inc.; and
Chief Equity Officer, Senior Vice
President and Senior Investment Officer,
A I M Capital Management, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2003 Director of Cash Management, Managing N/A
Vice President Director and Chief Cash Management
Officer, A I M Capital Management, Inc;
Director and President, Fund Management
Company; and Vice President, A I M
Advisors, Inc. and The AIM Family of
Funds--Registered Trademark--
- ------------------------------------------------------------------------------------------------------------------------------
Todd L. Spillane -- 1958 2006 Senior Vice President, A I M Management N/A
Chief Compliance Officer Group Inc.; Senior Vice President and
Chief Compliance Officer, A I M
Advisors, Inc.; Chief Compliance Officer
of The AIM Family of Funds--Registered
Trademark--; Vice President and Chief
Compliance Officer, A I M Capital
Management, Inc.; and Vice President,
A I M Distributors, Inc., AIM Investment
Services, Inc. and Fund Management
Company
Formerly: Global Head of Product
Development, AIG-Global Investment
Group, Inc.; Chief Compliance Officer
and Deputy General Counsel,
AIG-SunAmerica Asset Management; and
Chief Compliance Officer, Chief
Operating Officer and Deputy General
Counsel, American General Investment
Management
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
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 1.800.959.4246.
<Table>
OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS
11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, PricewaterhouseCoopers
Suite 100 11 Greenway Plaza Inc. LLP
Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana Street
Houston, TX 77046-1173 Suite 100 Suite 2900
Houston, TX 77046-1173 Houston, TX 77002-5678
COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN
Ballard Spahr INDEPENDENT TRUSTEES AIM Investment State Street Bank and
Andrews & Ingersoll, LLP Kramer, Levin, Naftalis Services, Inc. Trust Company
1735 Market Street, 51st & Frankel LLP P.O. Box 4739 225 Franklin Street
Floor 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801
Philadelphia, PA 19103-7599 Americas
New York, NY 10036-2714
</Table>
F-20
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Basic Balanced Fund* AIM Asia Pacific Growth Fund TAXABLE
AIM Basic Value Fund AIM China Fund
AIM Capital Development Fund AIM Developing Markets Fund AIM Enhanced Short Bond Fund
AIM Charter Fund AIM European Growth Fund AIM Floating Rate Fund
AIM Constellation Fund AIM European Small Company Fund(1) AIM High Yield Fund
AIM Diversified Dividend Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Dynamics Fund AIM Global Equity Fund AIM Intermediate Government Fund
AIM Large Cap Basic Value Fund AIM Global Growth Fund AIM International Bond Fund
AIM Large Cap Growth Fund AIM Global Value Fund AIM Limited Maturity Treasury Fund
AIM Mid Cap Basic Value Fund AIM Japan Fund AIM Money Market Fund
AIM Mid Cap Core Equity Fund(1) AIM International Core Equity Fund AIM Short Term Bond Fund
AIM Opportunities I Fund AIM International Growth Fund AIM Total Return Bond Fund
AIM Opportunities II Fund AIM International Small Company Fund(1) Premier Portfolio
AIM Opportunities III Fund AIM Trimark Fund Premier U.S. Government Money Portfolio
AIM S&P 500 Index Fund
AIM Select Equity Fund SECTOR EQUITY TAX-FREE
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund AIM Advantage Health Sciences Fund AIM High Income Municipal Fund(1)
AIM Structured Core Fund AIM Energy Fund AIM Municipal Bond Fund
AIM Structured Growth Fund AIM Financial Services Fund AIM Tax-Exempt Cash Fund
AIM Structured Value Fund AIM Global Health Care Fund AIM Tax-Free Intermediate Fund
AIM Summit Fund AIM Global Real Estate Fund Premier Tax-Exempt Portfolio
AIM Trimark Endeavor Fund AIM Gold & Precious Metals Fund
AIM Trimark Small Companies Fund AIM Leisure Fund ALLOCATION SOLUTIONS
AIM Multi-Sector Fund
AIM Real Estate Fund(1) AIM Conservative Allocation Fund
AIM Technology Fund AIM Growth Allocation Fund
AIM Utilities Fund AIM Moderate Allocation Fund
AIM Moderate Growth Allocation Fund
AIM Moderately Conservative Allocation Fund
DIVERSIFIED PORTFOLIOS
AIM Income Allocation Fund
AIM International Allocation Fund
========================================================================================
CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES CAREFULLY. FOR
THIS AND OTHER INFORMATION ABOUT AIM FUNDS, OBTAIN A PROSPECTUS FROM YOUR FINANCIAL
ADVISOR AND READ IT CAREFULLY BEFORE INVESTING.
========================================================================================
*Domestic equity and income fund
(1) This Fund has limited public sales of its shares to certain investors. For
more information on who may continue to invest in the Fund, please see the
appropriate prospectus.
If used after January 20, 2007, this report 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. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $429 billion in assets
under management. Data as of August 31, 2006.
AIMinvestments.com I-MSE-AR-1 A I M Distributors, Inc.
YOUR GOALS. OUR SOLUTIONS. --Registered Trademark--
- --------------------------------------------------------------------------------------
Mutual Retirement Annuities College Separately Offshore Cash [AIM INVESTMENTS LOGO APPEARS HERE]
Funds Products Savings Managed Products Management --Registered Trademark--
Plans Accounts
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AIM STRUCTURED CORE FUND
Annual Report to Shareholders o August 31, 2006
[COVER GLOBE IMAGE]
DOMESTIC EQUITY
Large-Cap Blend
Table of Contents
Supplemental Information 2
Letters to Shareholders 3
Performance Summary 5
Management Discussion 5
Fund Expenses 7
Fund Performance 8
Approval of Advisory Agreement 9
Schedule of Investments F-1
Financial Statements F-4
Notes to Financial Statements F-6
Financial Highlights F-11
Auditor's Report F-14
Tax Disclosures F-15
Trustees and Officers F-16
[AIM INVESTMENT SOLUTIONS]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[DOMESTIC [INTERNATIONAL/ [SECTOR
EQUITY] GLOBAL EQUITY] EQUITY]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[FIXED [ALLOCATION [DIVERSIFIED
INCOME] SOLUTIONS] PORTFOLIOS]
[AIM INVESTMENTS LOGO APPEARS HERE]
--Registered Trademark--
AIM Structured Core Fund
AIM STRUCTURED CORE FUND seeks to provide long-term growth of capital.
o Unless otherwise stated, information presented in this report is as of
August 31, 2006, and is based on total net assets.
ABOUT SHARE CLASSES
o Class B shares are not available as an o There is no guarantee that the mark of Morgan Stanley Capital
investment for retirement plans investment techniques and risk analyses International Inc. and Standard &
maintained pursuant to Section 401 of used by the Fund's managers will produce Poor's.
the Internal Revenue Code, including the desired results.
401(k) plans, money purchase pension o The returns shown in management's
plans and profit sharing plans, except o The prices of and the income generated discussion of Fund performance are based
for plans that have existing accounts by securities held by the Fund may on net asset values calculated for
invested in Class B shares. decline in response to certain factors, shareholder transactions. Generally
including some directly involving the accepted accounting principles require
o Class R shares are available only to companies and governments whose adjustments to be made to the net assets
certain retirement plans. Please see the securities are owned by the Fund. These of the Fund at period end for financial
prospectus for more information. factors include general economic and reporting purposes, and as such, the net
market conditions, regional or global asset values for shareholder
PRINCIPAL RISKS OF INVESTING IN economic instability and currency and transactions and the returns based on
THE FUND interest rate fluctuations. those net asset values may differ from
the net asset values and returns
o Foreign securities have additional ABOUT INDEXES USED IN THIS REPORT reported in the Financial Highlights.
risks, including exchange rate changes,
political and economic upheaval, the o The unmanaged STANDARD & POOR'S The Fund provides a complete list of its
relative lack of information about these COMPOSITE INDEX OF 500 STOCKS (the S&P holdings four times in each fiscal year,
companies, relatively low market 500--Registered Trademark-- Index) is at the quarter-ends. For the second and
liquidity and the potential lack of an index of common stocks frequently fourth quarters, the lists appear in the
strict financial and accounting controls used as a general measure of U.S. stock Fund's semiannual and annual reports to
and standards. market performance. shareholders. For the first and third
quarters, the Fund files the lists with
o Prices of equity securities change o The unmanaged LIPPER LARGE-CAP CORE the Securities and Exchange Commission
in response to many factors including FUNDS INDEX represents an average of the (SEC) on Form N-Q. The most recent list
the historical and prospective earnings performance of the 30 largest of portfolio holdings is available at
of the issuer, the value of its assets, large-capitalization core equity funds AIMinvestments.com. From our home page,
general economic conditions, interest tracked by Lipper Inc., an independent click on Products & Performance, then
rates, investor perceptions and market mutual fund performance monitor. Mutual Funds, then Fund Overview. Select
liquidity. your Fund from the drop-down menu and
o The Fund is not managed to track the click on Complete Quarterly Holdings.
o The value of convertible securities performance of any particular index, Shareholders can also look up the Fund's
in which the Fund invests may be including the indexes defined here, and Forms N-Q on the SEC Web site at
affected by market interest rates, the consequently, the performance of the sec.gov. Copies of the Fund's Forms N-Q
risk that the issuer may default on Fund may deviate significantly from the may be reviewed and copied at the SEC
interest or principal payments and the performance of the indexes. Public Reference Room in Washington,
value of the underlying common stock D.C. You can obtain information on the
into which these securities may be o A direct investment cannot be made operation of the Public Reference Room,
converted. in an index. Unless otherwise indicated, including information about duplicating
index results include reinvested fee charges, by calling 202-942-8090 or
o The Fund may invest in debt dividends, and they do not reflect sales 800-732-0330, or by electronic request
securities such as notes and bonds that charges. Performance of an index of at the following e-mail address:
carry interest rate risk and credit funds reflects fund expenses; publicinfo@sec.gov. The SEC file numbers
risk. performance of a market index does not. for the Fund are 811-09913 and
333-36074.
o The Fund may use enhanced investment OTHER INFORMATION
techniques such as leveraging and A description of the policies and
derivatives. Leveraging entails special o Industry classifications used in procedures that the Fund uses to
risks such as magnifying changes in the this report are generally according to determine how to vote proxies relating
value of the portfolio's securities. the Global Industry Classification to portfolio securities is available
Derivatives are subject to counter party Standard, which was developed by and is without charge, upon request, from our
risk--the risk that the other party will the exclusive property and a service Client Services department at
not complete the transaction with the 800-959-4246 or on the AIM Web site,
Fund. AIMinvestments.com. On the home page,
scroll down and click on AIM Funds Proxy
Policy. The information is also
available on the SEC Web site, sec.gov.
Information regarding how the Fund voted
proxies related to its portfolio
securities during the 12 months ended
June 30, 2006, is available at our Web
site. Go to AIMinvestments.com, access
the About Us tab, click on Required
Notices and then click on Proxy Voting
Activity. Next, select the Fund from the
drop-down menu. The information is also
available on the SEC Web site, sec.gov.
================================================================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND ========================================
PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES FUND NASDAQ SYMBOLS
AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING.
================================================================================ Class A Shares SCAUX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class B Shares SBCUX
Class C Shares SCCUX
AIMinvestments.com Class R Shares SCRUX
========================================
2
AIM Structured Core Fund
Dear Shareholders of The AIM Family of Funds--Registered
Trademark--:
We're pleased to provide you with this report, which
includes a discussion of how your Fund was managed during
the period under review in this report, and what factors
affected its performance. That discussion begins on page 5.
It's been said nothing is certain but death and taxes.
We would venture to add that one other thing is certain:
[TAYLOR Markets change--and change often--in the short term, in
PHOTO] response to constantly changing economic, geopolitical and
other factors. For example, domestic and global markets were
generally strong from November 2005 through April 2006, as
economic growth appeared robust and inflation seemed
contained. But as new economic data suggested inflation
PHILIP TAYLOR might be higher than previously estimated in the U.S. and
elsewhere, those same markets often demonstrated weakness
and volatility in the May-August period.
While we can't do anything about the ambiguity and
uncertainty surrounding death and taxes, we can suggest an
alternative to reacting to fluctuating short-term market
conditions: Maintain a diversified portfolio. AIM
Investments--Registered Trademark-- can help by offering a
broad product line that gives your financial advisor the
necessary tools to build a portfolio that's right for you
regardless of market conditions. AIM offers a comprehensive
range of retail mutual funds, including domestic, global and
international equity funds, taxable and tax-exempt
fixed-income funds, and a variety of allocation
portfolios--with varied risk and return characteristics to
match your needs. We maintain this extensive set of product
solutions for one reason: We believe in the value of
comprehensive, diversified investment portfolios.
We've changed the look of our annual reports to reflect
that belief. In our marketing and now our shareholder
literature, we represent a fully diversified portfolio
graphically as an allocation pie chart and assign each asset
class a color--green for domestic equity, blue for
international, orange for sector and purple for fixed
income. A legend in the left column illustrates the
methodology. Your report cover now shows your Fund's asset
class color, plus the asset class and sub-asset class name
are shown in the upper-left corner. The reason for these
changes is to help you better understand where your Fund
fits into your overall portfolio.
AIM has a variety of investment solutions, and knowing
which ones are right for your portfolio is complex. That's
why we also believe in the value of a trusted financial
advisor who will work with you to create an investment plan
you can stick with for the long term. Your financial advisor
can help allocate your portfolio appropriately and review
your investments regularly to ensure they remain suitable as
your financial situation changes. While there are no
guarantees with any investment program, a long-term plan
that's based on your financial goals, risk tolerance and
time horizon is more likely to keep you and your investments
on track.
At a recent meeting of the AIM Funds board, Robert H.
Graham relinquished his position as president of AIM Funds,
a post customarily held by the chief executive officer of
AIM Investments. Bob--one of three founders of AIM
Investments in 1976--has a well-earned reputation for being
one of the most knowledgeable leaders in the mutual fund
industry. As I assume Bob's previous responsibilities, I'm
pleased that he'll remain actively involved as the vice
chair of AIM Funds.
OUR COMMITMENT TO YOU
In the short term, the one sure thing about markets is their
unpredictability. While past performance cannot guarantee
comparable future results, we believe that staying invested
for the long term with a thoughtful plan offers the best
opportunity for weathering that unpredictability. We at AIM
Investments remain committed to building enduring solutions
to help you achieve your investment goals, and we're pleased
you've placed your trust in us.
Information about investing, the markets and your Fund is
always available on our Web site, AIMinvestments.com. If you
have questions about your individual account, we invite you
to contact one of our highly trained client services
representatives at 800-959-4246.
Sincerely,
/s/ PHILIP TAYLOR
Philip Taylor
President -- AIM Funds
CEO, AIM Investments
October 18, 2006
AIM Investments is a registered service mark of A I M
Management Group Inc. A I M Advisors, Inc. and A I M Capital
Management, Inc. are the investment advisors. A I M
Distributors, Inc. is the distributor for the retail funds
represented by AIM Investments.
3
AIM Structured Core Fund
Dear Fellow AIM Fund Shareholders:
At our meeting at the end of June, your Board completed its
comprehensive review* of each fund's advisory agreement with
A I M Advisors, Inc. (AIM) to make certain your interests
are being served in terms of fees, performance and
operations.
Looking ahead, your Board finds many reasons to be
positive about AIM's management and strategic direction.
[CROCKETT Most importantly, AIM management's investment management
PHOTO] discipline is paying off in terms of improved overall
performance. While work remains to be done, AIM's
complex-wide, asset-weighted mutual fund performance for the
trailing one-, three- and five-year periods is at its
highest since 2000 for the periods ended August 31, 2006. We
BRUCE L. CROCKETT are also pleased with AIM management's efforts to seek more
cost-effective ways of delivering superior service.
In addition, AIM is realizing the benefits of belonging
to a leading independent global investment management
organization in its parent company, AMVESCAP PLC, which is
dedicated to helping people worldwide build their financial
security. AMVESCAP managed approximately $429 billion
globally as of August 31, 2006, operating under the AIM,
INVESCO, AIM Trimark, INVESCO PERPETUAL and Atlantic Trust
brands. These companies are home to an abundance of
investment talent that is gradually being integrated and
leveraged into centers of excellence, each focusing on a
given market segment or asset class. Over the next few
years, your Board will be meeting at these various centers
of excellence to learn about their progress and how they can
serve you by enhancing performance and reducing costs.
The seven new AIM funds--which include Asian funds,
structured U.S. equity funds and specialized bond funds--are
an early example of the kind of opportunities the AMVESCAP
organization can provide AIM clients. More information on
these funds can be found on AIM's Web site.
Your Board is very pleased with the overall direction and
progress of the AIM Funds. We're working closely and
effectively with AIM's management to continue this momentum.
As always, your Board is eager to hear your views on how we
might better serve you. Please send your comments in a
letter addressed to me at AIM Investments, AIM Investments
Tower, 11 Greenway Plaza, Suite 100, Houston TX 77046.
Sincerely,
/s/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board
October 18, 2006
*To learn more about all the factors we considered before
approving each fund's advisory agreement, go to the
"Products & Performance" tab at the AIM Web site
(AIMinvestments.com) and click on "Investment Advisory
Agreement Renewals." The approval of advisory agreement
information for your Fund is also included in this annual
report on pages 10-11.
4
AIM Structured Core Fund
MANAGEMENT'S DISCUSSION factors: earnings momentum, price and
OF FUND PERFORMANCE volume, management action and relative
===================================================================================== valuation. The sum of the scores for
each concept represents the expected
PERFORMANCE SUMMARY alpha (excess return) for the near term
for the average stock in the universe.
For the five months ended August 31, 2006, AIM Structured Core Fund, excluding Each stock is also evaluated on a
applicable sales charges, outperformed its style-specific benchmark, the S&P 500 multitude of other factors to develop a
Index. Overall, positive performance was primarily driven by investments in stock-specific risk forecast. Finally, we
utilities and consumer staples. Sectors that did not perform well during the develop a transaction cost forecast for
period included consumer discretionary and industrials. each stock.
FUND VS. INDEXES We then incorporate these previously
mentioned variables--alpha forecast,
Cumulative total returns, 3/31/06--8/31/06, excluding applicable sales charges. risk forecast and transaction cost
If sales charges were included, returns would be lower. forecast--using an optimizer to build a
portfolio that we believe is an optimal
Class A Shares 1.90% balance of the stocks' potential return
and risk. This portfolio is constructed
Class B Shares 1.60 according to certain constraints to help
ensure that the Fund's relative
Class C Shares 1.60 performance and volatility remain within
the strategy's guidelines. The portfolio
Class R Shares 1.80 is continually monitored by the team and
the overall investment process is
S&P 500 Index (Broad Market and Style-Specific Index) 1.52 repeated on a monthly basis to determine
which companies should be bought or sold
Lipper Large-Cap Core Funds Index (Peer Group Index) 0.15 within the portfolio.
Source: Lipper Inc. MARKET CONDITIONS AND YOUR FUND
=====================================================================================
Equity market performance has been mixed
HOW WE INVEST The investment process integrates the since the launch of the Fund on March
following key steps: 31, 2006. The economy remained strong as
We manage your Fund to provide exposure U.S. gross domestic product and earnings
to large-cap core equity stocks. The o Universe Development growth continued at a healthy pace.
portfolio is designed to outperform the Market participants continued to be
S&P 500 Index while minimizing the o Stock Rankings concerned about further U.S. Federal
amount of additional risk relative to Reserve Board (the Fed) interest rate
the benchmark. The Fund can be used as a o Risk Assessment increases and their inability to
long-term allocation to large-cap stocks
that compliments other style-specific o Portfolio Construction (continued)
strategies within a diversified asset
allocation strategy. o Trading
While the companies included within
the S&P 500 Index are used as a general
guide for developing the investable
universe, nonbenchmark names may also be
considered. Each stock in the universe
is evaluated on four
======================================== ======================================== ========================================
PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES TOP 10 EQUITY HOLDINGS
By sector 1. Investment Banking & Brokerage 7.4% 1. Exxon Mobil Corp. 5.5%
Financials 21.3% 2. Integrated Oil & Gas 5.7 2. Citigroup Inc. 3.6
Information Technology 17.6 3. Pharmaceuticals 5.4 3. Pfizer Inc. 3.5
Industrials 14.7 4. Other Diversified Financial 4. American International Group,
Services 5.2 Inc. 2.8
Consumer Staples 10.5
5. Aerospace & Defense 5.0 5. Altria Group, Inc. 2.8
Health Care 9.2
6. Microsoft Corp. 2.6
Energy 8.4 Total Net Assets $3.5 million
7. Hewlett-Packard Co. 2.6
Utilities 6.9 Total Number of Holdings 98
8. PepsiCo, Inc. 2.3
Consumer Discretionary 5.3
9. TXU Corp. 2.3
Materials 2.8
10. Morgan Stanley 2.2
Telecommunication Services 2.4
Other Assets Less Liabilities 0.9
The Fund's holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
======================================== ======================================== ========================================
5
AIM Structured Core Fund
appropriately interpret new Fed chairman detractors from relative performance Jeremy S. Lefkowitz
Ben Bernanke's comments. Further adding during the period included AETNA, CA,
to market discomfort were geopolitical INC., NATIONAL SEMICONDUCTOR, LEHMAN Portfolio manager, is lead manager of
issues such as Iran's resistance to U.S. BROTHERS HOLDINGS and BANK OF AMERICA AIM Structured Core Fund. He began his
demands that it halt its nuclear CORP. Ca, Inc. and National investments career in 1968 and has been
program. As a result, investors' Semiconductor were sold by the end of associated with INVESCO Institutional
appetite for risk declined and market the reporting period. and/or its affiliates since 1982. Mr.
volatility increased, particularly among Lefkowitz earned a Bachelor of Science
smallcap stocks. In this environment, IN CLOSING degree in industrial engineering and an
value stocks generally continued to M.B.A. in finance from Columbia
outperform growth stocks and large-cap Our strategy emphasized stocks we University.
stocks generally outperformed small-cap believed possessed strong earnings
stocks. growth, positive price trends and Maureen Donnellan
reasonable valuations. We appreciate
The Fund outperformed the S&P 500 your confidence in us. We thank you for Portfolio manager, is manager of AIM
Index for the five-month period ended your continued investment in AIM Structured Core Fund. She has been
August 31, 2006. We used our alpha Structured Core Fund. associated with INVESCO Institutional
forecast, risk forecast, and transaction and/or its affiliates since 1974.
cost forecast to build what we The views and opinions expressed in
considered an optimal portfolio that management's discussion of Fund W. Lawson McWhorter
provided excess return given the risk performance are those of A I M Advisors,
level targets of the strategy. The alpha Inc. These views and opinions are Portfolio manager, is manager of AIM
model incorporates four factors: subject to change at any time based on Structured Core Fund. He has been
earnings momentum, price and volume, factors such as market and economic associated with INVESCO Institutional
management action and relative value. conditions. These views and opinions may and/or its affiliates since 2005. Mr.
For the period, all four factors not be relied upon as investment advice McWhorter earned a Bachelor of Arts
benefited the Fund, with relative value or recommendations, or as an offer for a degree with cum laude honors from
contributing the most to performance and particular security. The information is Davidson College. He is a Chartered
price and volume contributing the least. not a complete analysis of every aspect Market Technician.
The strong performance from our alpha of any market, country, industry,
model was a primary contributor to security or the Fund. Statements of fact William E. Merson
positive Fund performance relative to are from sources considered reliable,
the Fund's benchmark. but A I M Advisors, Inc. makes no Portfolio manager, is manager of AIM
representation or warranty as to their Structured Core Fund. He has been
Active managers typically add value completeness or accuracy. Although associated with INVESCO Institutional
in one or a combination of four areas: historical performance is no guarantee and/or its affiliates since 1982. Mr.
beta (relative volatility), style, of future results, these insights may Merson earned a B.B.A. from Manhattan
sector/industry over/under weight and help you understand our investment College and an M.B.A. from New York
stock selection. We attempt to add value management philosophy. University.
through our stock selection decisions.
Consequently, we minimized our exposure See important Fund and index Daniel Tsai
relative to the benchmark with regard to disclosures on the inside front cover.
beta, style and sector/industry Portfolio manager, is manager of AIM
exposures. We traded only once per month Structured Core Fund. He has been
so these exposures varied slightly associated with INVESCO Institutional
during the month and consequently and/or its affiliates since 2000. Mr.
contributed or detracted slightly from Tsai earned a Bachelor of Science degree
performance. in mechanical engineering from National
Taiwan University and a Master of
For the period under review, our beta Science degree in mechanical engineering
was slightly above market and detracted from the University of Michigan. He also
from performance. Our sector/industry earned a Master of Science degree in
over/underweight decisions contributed computer science at Wayne State
slightly while our style exposure University.
(defined by Barra, Inc.) was a slight
detractor. Anne M. Unflat
Stock selection, as expected, was the Portfolio manager, is manager of AIM
primary contributor to performance. Fund Structured Core Fund. She has been
holdings that contributed the most to associated with INVESCO Institutional
relative performance included TXU CORP., and/or its affiliates since 1988. Ms.
QWEST COMMUNICATIONS, ALTRIA GROUP, Unflat graduated magna cum laude from
KROGER and MICRON TECHNOLOGY. Among the Queens College with a Bachelor of Arts
largest degree in economics. She earned her
M.B.A. degree in finance from St. John's
University.
Assisted by U.S. Structured Products
Group Research Team.
FOR A PRESENTATION OF YOUR FUND'S
PERFORMANCE, PLEASE SEE PAGE 8.
6
AIM Structured Core Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ACTUAL EXPENSES ratio and an assumed rate of return of
two types of costs: (1) transaction 5% per year before expenses, which is
costs, which may include sales charges The table below provides information not the Fund's actual return. The Fund's
(loads) on purchase payments or about actual account values and actual actual cumulative total returns at net
contingent deferred sales charges on expenses. You may use the information in asset value after expenses for the
redemptions; and redemption fees, if this table, together with the amount you period ended August 31, 2006, appear in
any; and (2) ongoing costs, including invested, to estimate the expenses that the table "Fund vs. Indexes" on page 5.
distribution and/or service fees you paid over the period. Simply divide
(12b-1); and other Fund expenses. This your account value by $1,000 (for The hypothetical account values and
example is intended to help you example, an $8,600 account value divided expenses may not be used to estimate the
understand your ongoing costs (in by $1,000 = 8.6), then multiply the actual ending account balance or
dollars) of investing in the Fund and to result by the number in the table under expenses you paid for the period. You
compare these costs with ongoing costs the heading entitled "Actual Expenses may use this information to compare the
of investing in other mutual funds. The Paid During Period" to estimate the ongoing costs of investing in the Fund
actual ending account value and expenses expenses you paid on your account during and other funds. To do so, compare this
of the Class A, B, C, and R shares in this period (March 31, 2006, through 5% hypothetical example with the 5%
the below example are based on an August 31, 2006 for the Class A, B, C, hypothetical examples that appear in the
investment of $1,000 invested on March and R shares). Because the actual ending shareholder reports of the other funds.
31, 2006, (the date the share classes account value and expense information in
commenced operations) and held through the example is not based upon a six Please note that the expenses shown in
August 31, 2006. The hypothetical ending month period, the ending account value the table are meant to highlight your
account value and expenses of the Class and expense information may not provide ongoing costs only and do not reflect
A, B, C, and R shares in the below a meaningful comparison to mutual funds any transactional costs, such as sales
example are based on an investment of that provide such information for a full charges (loads) on purchase payments,
$1,000 invested at the beginning of the six month period. contingent deferred sales charges on
period and held for the entire six month redemptions, and redemption fees, if
period March 1, 2006, through August 31, HYPOTHETICAL EXAMPLE FOR any. Therefore, the hypothetical
2006. COMPARISON PURPOSES information is useful in comparing
ongoing costs only, and will not help
The table below also provides you determine the relative total costs
information about hypothetical account of owning different funds. In addition,
values and hypothetical expenses based if these transactional costs were
on the Fund's actual expense included, your costs would have been
higher.
====================================================================================================================================
ACTUAL HYPOTHETICAL
(5% ANNUAL RETURN BEFORE EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (03/01/06)(1) (8/31/06)(1) PERIOD(2) (8/31/06) PERIOD(3) RATIO
A $1,000.00 $1,019.00 $4.51 $1,019.86 $5.40 1.06%
B 1,000.00 1,016.00 7.70 1,016.08 9.20 1.81
C 1,000.00 1,016.00 7.70 1,016.08 9.20 1.81
R 1,000.00 1,018.00 5.58 1,018.60 6.67 1.31
====================================================================================================================================
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period March 31, 2006, through August 31, 2006, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses. The Fund's actual cumulative total returns at net asset
value after expenses for the period ended August 31, 2006, appear in the
table "Fund vs. Indexes" on page 5.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by 154
(March 31, 2006 through August 31, 2006)/365. Because the Class A, B, C, and
R shares have not been in existence for a full six month period, the actual
ending account value and expense information shown may not provide a
meaningful comparison to fund expense information of classes that show such
data for a full six month period and, because the actual ending account
value and expense information in the expense example covers a short time
period, return and expense data may not be indicative of return and expense
data for longer time periods.
(3) Hypothetical expenses are equal to the annualized expense ratio indicated
above multiplied by the average account value over the period, multiplied by
184/365 to reflect a one-half year period. The hypothetical ending account
value and expenses may be used to compare ongoing costs of investing in the
Class A, B, C, and R shares of the Fund and other funds because such data is
based on a full six month period.
7
AIM Structured Core Fund
FUND PERFORMANCE
======================================== ========================================
CUMULATIVE TOTAL RETURNS CUMULATIVE TOTAL RETURNS
As of 8/31/06, including applicable As of 6/30/06, the most recent calendar
sales charges quarter-end, including applicable sales
charges
CLASS A SHARES
Inception (3/31/06) -3.69% CLASS A SHARES
Inception (3/31/06) -6.62%
CLASS B SHARES
Inception (3/31/06) -3.40% CLASS B SHARES
Inception (3/31/06) -6.33%
CLASS C SHARES
Inception (3/31/06) 0.60% CLASS C SHARES
Inception (3/31/06) -2.39%
CLASS R SHARES
Inception (3/31/06) 1.80% CLASS R SHARES
Inception (3/31/06) -1.30%
========================================
========================================
THE PERFORMANCE DATA QUOTED REPRESENT
PAST PERFORMANCE AND CANNOT GUARANTEE CLASS A SHARE PERFORMANCE REFLECTS THE THE PERFORMANCE OF THE FUND'S SHARE
COMPARABLE FUTURE RESULTS; CURRENT MAXIMUM 5.50% SALES CHARGE, AND CLASS B CLASSES WILL DIFFER PRIMARILY DUE TO
PERFORMANCE MAY BE LOWER OR HIGHER. AND CLASS C SHARE PERFORMANCE REFLECTS DIFFERENT SALES CHARGE STRUCTURES AND
PLEASE VISIT AIMinvestments.com FOR THE THE APPLICABLE CONTINGENT DEFERRED SALES CLASS EXPENSES.
MOST RECENT MONTH-END PERFORMANCE. CHARGE (CDSC) FOR THE PERIOD INVOLVED.
PERFORMANCE FIGURES REFLECT REINVESTED THE CDSC ON CLASS B SHARES DECLINES FROM HAD THE ADVISOR NOT WAIVED FEES AND/OR
DISTRIBUTIONS, CHANGES IN NET ASSET 5% BEGINNING AT THE TIME OF PURCHASE TO REIMBURSED EXPENSES, PERFORMANCE WOULD
VALUE AND THE EFFECT OF THE MAXIMUM 0% AT THE BEGINNING OF THE SEVENTH YEAR. HAVE BEEN LOWER.
SALES CHARGE UNLESS OTHERWISE STATED. THE CDSC ON CLASS C SHARES IS 1% FOR THE
PERFORMANCE FIGURES DO NOT REFLECT FIRST YEAR AFTER PURCHASE. CLASS R
DEDUCTION OF TAXES A SHAREHOLDER WOULD SHARES DO NOT HAVE A FRONT-END SALES
PAY ON FUND DISTRIBUTIONS OR SALE OF CHARGE; RETURNS SHOWN ARE AT NET ASSET
FUND SHARES. INVESTMENT RETURN AND VALUE AND DO NOT REFLECT A 0.75% CDSC
PRINCIPAL VALUE WILL FLUCTUATE SO THAT THAT MAY BE IMPOSED ON A TOTAL
YOU MAY HAVE A GAIN OR LOSS WHEN YOU REDEMPTION OF RETIREMENT PLAN ASSETS
SELL SHARES. WITHIN THE FIRST YEAR.
8
AIM Structured Core Fund
Approval of Investment Advisory Agreement
The Board of Trustees of AIM Counselor ment advisory services to the Fund. In Board compared effective contractual
Series Trust (the "Board") oversees the reviewing the qualifications of AIM to advisory fee rates at a common asset
management of AIM Structured Core Fund provide investment advisory services, level at the end of the past calendar
(the "Fund") and, as required by law, the Board considered such issues as year and noted that the Fund's rate was
determines annually whether to approve AIM's portfolio and product review below the median rate of the funds
the continuance of the Fund's advisory process, various back office support advised by other advisors with
agreement with A I M Advisors, Inc. functions provided by AIM and AIM's investment strategies comparable to
("AIM"). Based upon the recommendation equity and fixed income trading those of the Fund that the Board
of the Investments Committee of the operations. Based on the review of these reviewed. The Board noted that AIM has
Board, at a meeting held on June 27, and other factors, the Board concluded agreed to limit the Fund's total annual
2006, the Board, including all of the that the quality of services to be operating expenses, as discussed below.
independent trustees, approved the provided by AIM was appropriate and that The Board also considered the fact that
continuance of the advisory agreement AIM currently is providing satisfactory AIM set the proposed advisory fees for
(the "Advisory Agreement") between the services in accordance with the terms of the Fund based upon the median effective
Fund and AIM for another year, effective the Advisory Agreement. management fee rate (comprised of
July 1, 2006. advisory fees plus, in some cases,
o The performance of the Fund relative administrative fees) at various asset
The Board considered the factors to comparable funds. Not applicable levels of competitor mutual funds with
discussed below in evaluating the because the Fund has not been in investment strategies comparable to
fairness and reasonableness of the operation for a full calendar year. those of the Fund. In addition, the
Advisory Agreement at the meeting on Board noted that the proposed advisory
June 27, 2006 and as part of the Board's o The performance of the Fund relative fees for the Fund are slightly less than
ongoing oversight of the Fund. In their to indices. Not applicable because the the uniform fee schedule that applies to
deliberations, the Board and the Fund has not been in operation for a other mutual funds advised by AIM with
independent trustees did not identify full calendar year. investment strategies comparable to
any particular factor that was those of the Fund, which uniform fee
controlling, and each trustee attributed o Meetings with the Fund's portfolio schedule includes breakpoints and is
different weights to the various managers and investment personnel. With based on net asset levels. Based on this
factors. respect to the Fund, the Board is review, the Board concluded that the
meeting periodically with such Fund's advisory fee rate for the Fund under the
One responsibility of the independent portfolio managers and/or other Advisory Agreement was fair and
Senior Officer of the Fund is to manage investment personnel and believes that reasonable.
the process by which the Fund's proposed such individuals are competent and able
management fees are negotiated to ensure to continue to carry out their o Expense limitations and fee waivers.
that they are negotiated in a manner responsibilities under the Advisory The Board noted that AIM has
which is at arms' length and reasonable. Agreement. contractually agreed to waive fees
To that end, the Senior Officer must and/or limit expenses of the Fund
either supervise a competitive bidding o Overall performance of AIM. Not through June 30, 2007 in an amount
process or prepare an independent applicable because the Fund has not been necessary to limit total annual
written evaluation. The Senior Officer in operation for a full calendar year. operating expenses to a specified
has recommended an independent written percentage of average daily net assets
evaluation in lieu of a competitive o Fees relative to those of clients of for each class of the Fund. The Board
bidding process and, upon the direction AIM with comparable investment considered the contractual nature of
of the Board, has prepared such an strategies. The Board reviewed the this fee waiver/expense limitation and
independent written evaluation. Such effective advisory fee rate (before noted that it remains in effect until
written evaluation also considered waivers) for the Fund under the Advisory June 30, 2007. The Board considered the
certain of the factors discussed below. Agreement. The Board noted that this effect this fee waiver/expense
In addition, as discussed below, the rate was (i) above the effective limitation would have on the Fund's
Senior Officer made a recommendation to advisory fee rate (before waivers) for a estimated expenses and concluded that
the Board in connection with such mutual fund advised by AIM with the levels of fee waivers/expense
written evaluation. investment strategies comparable to limitations for the Fund were fair and
those of the Fund, below the effective reasonable.
The discussion below serves as a summary advisory fee rate (before waivers) for a
of the Senior Officer's independent second mutual fund advised by AIM with o Breakpoints and economies of scale.
written evaluation and recommendation to investment strategies comparable to The Board reviewed the structure of the
the Board in connection therewith, as those of the Fund, and comparable to the Fund's advisory fee under the Advisory
well as a discussion of the material effective advisory fee rate (before Agreement, noting that it contains seven
factors and the conclusions with respect waivers) for a third mutual fund advised breakpoints. The Board reviewed the
thereto that formed the basis for the by AIM with investment strategies level of the Fund's advisory fees, and
Board's approval of the Advisory comparable to those of the Fund; (ii) noted that such fees, as a percentage of
Agreement. After consideration of all of comparable to the effective advisory fee the Fund's net assets, would decrease as
the factors below and based on its rate (before waivers) for a variable net assets increase because the Advisory
informed business judgment, the Board insurance fund advised by AIM and Agreement includes breakpoints. The
determined that the Advisory Agreement offered to insurance company separate Board noted that, due to the Fund's
is in the best interests of the Fund and accounts with investment strategies current asset levels and the way in
its shareholders and that the comparable to those of the Fund; (iii) which the advisory fee breakpoints have
compensation to AIM under the Advisory comparable to the effective sub-advisory been structured, the Fund has yet to
Agreement is fair and reasonable and fee rate for one variable insurance fund benefit from the breakpoints. The Board
would have been obtained through arm's sub-advised by an AIM affiliate and concluded that the Fund's fee levels
length negotiations. offered to insurance company separate under the Advisory Agreement therefore
accounts with investment strategies would reflect economies of scale at
Unless otherwise stated, information comparable to those of the Fund, higher asset levels and that it was not
presented below is as of June 27, 2006 although the total advisory fees for necessary to change the advisory fee
and does not reflect any changes that such variable insurance fund were above breakpoints in the Fund's advisory fee
may have occurred since June 27, 2006, those for the Fund; and (iv) above the schedule.
including but not limited to changes to total advisory fee rates for 78
the Fund's performance, advisory fees, separately managed accounts/wrap o Investments in affiliated money
expense limitations and/or fee waivers. accounts managed by an AIM affiliate market funds. The Board also took into
with investment strategies comparable to account the fact that uninvested cash
o The nature and extent of the those of the Fund and comparable to or and cash collateral from securities
advisory services to be provided by AIM. below the total advisory fee rates for lending arrangements, if any
The Board reviewed the services to be 10 separately managed accounts/wrap (collectively, "cash balances") of the
provided by AIM under the Advisory accounts managed by an AIM affiliate Fund may be invested in money market
Agreement. Based on such review, the with investment strategies comparable to funds advised by AIM pursuant to the
Board concluded that the range of those of the Fund. The Board noted that terms of an SEC exemptive order. The
services to be provided by AIM under the AIM has agreed to limit the Fund's total Board found that the Fund may realize
Advisory Agreement was appropriate and annual operating expenses, as discussed certain benefits upon investing cash
that AIM currently is providing services below. Based on this review, the Board balances in AIM advised money market
in accordance with the terms of the concluded that the advisory fee rate funds, including a higher net return,
Advisory Agreement. under the Advisory Agreement was fair increased liquidity, increased
and reasonable. diversification or decreased transaction
o The quality of services to be costs. The Board also found that the
provided by AIM. The Board reviewed the o Fees relative to those of comparable Fund will not receive reduced services
credentials and experience of the funds with other advisors. The Board if it invests its cash balances in such
officers and employees of AIM who will reviewed the advisory fee rate for the money mar-
provide invest- Fund under the Advisory Agreement. The
(continued)
9
AIM Structured Core Fund
ket funds. The Board noted that, to the employed by AIM and its affiliates to Fund. Based on the review of these and
extent the Fund invests uninvested cash provide those services. Based on the other factors, the Board concluded that
in affiliated money market funds, AIM review of these and other factors, the the quality of services to be provided
has voluntarily agreed to waive a Board concluded that AIM and its by the Sub-Advisor was appropriate and
portion of the advisory fees it receives affiliates were qualified to continue to that the Sub-Advisor currently is
from the Fund attributable to such provide non-investment advisory services providing satisfactory services in
investment. The Board further determined to the Fund, including administrative, accordance with the terms of the Sub-
that the proposed securities lending transfer agency and distribution Advisory Agreement.
program and related procedures with services, and that AIM and its
respect to the lending Fund is in the affiliates currently are providing o The performance of the Fund relative
best interests of the lending Fund and satisfactory non-investment advisory to comparable funds. Not applicable
its respective shareholders. The Board services. because the Fund has not been in
therefore concluded that the investment operation for a full calendar year.
of cash collateral received in o Other factors and current trends.
connection with the securities lending The Board considered the steps that AIM o The performance of the Fund relative
program in the money market funds and its affiliates have taken over the to indices. Not applicable because the
according to the procedures is in the last several years, and continue to Fund has not been in operation for a
best interests of the lending Fund and take, in order to improve the quality full calendar year.
its respective shareholders. and efficiency of the services they
provide to the Funds in the areas of o Meetings with the Fund's portfolio
o Independent written evaluation and investment performance, product line managers and investment personnel. With
recommendations of the Fund's Senior diversification, distribution, fund respect to the Fund, the Board is
Officer. The Board noted that, upon operations, shareholder services and meeting periodically with such Fund's
their direction, the Senior Officer of compliance. The Board concluded that portfolio managers and/or other
the Fund, who is independent of AIM and these steps taken by AIM have improved, investment personnel and believes that
AIM's affiliates, had prepared an and are likely to continue to improve, such individuals are competent and able
independent written evaluation in order the quality and efficiency of the to continue to carry out their
to assist the Board in determining the services AIM and its affiliates provide responsibilities under the Sub-Advisory
reasonableness of the proposed to the Fund in each of these areas, and Agreement.
management fees of the AIM Funds, support the Board's approval of the
including the Fund. The Board noted that continuance of the Advisory Agreement o Overall performance of the
the Senior Officer's written evaluation for the Fund. Sub-Advisor. Not applicable because the
had been relied upon by the Board in Fund has not been in operation for a
this regard in lieu of a competitive APPROVAL OF SUB-ADVISORY AGREEMENT full calendar year.
bidding process. In determining whether
to continue the Advisory Agreement for The Board oversees the management of the o Fees relative to those of clients of
the Fund, the Board considered the Fund and, as required by law, determines the Sub-Advisor with comparable
Senior Officer's written evaluation. annually whether to approve the investment strategies. The Board
continuance of the Fund's sub-advisory reviewed the sub-advisory fee rate for
o Profitability of AIM and its agreement. Based upon the recommendation the Fund under the Sub-Advisory
affiliates. The Board reviewed of the Investments Committee of the Agreement and the sub-advisory fees paid
information concerning the profitability Board, at a meeting held on June 27, thereunder. The Board noted that this
of AIM's (and its affiliates') 2006, the Board, including all of the rate was comparable to or above the
investment advisory and other activities independent trustees, approved the total advisory fee rates for seven
and its financial condition. The Board continuance of the sub-advisory agreement separately managed accounts/wrap
considered the overall profitability of (the "Sub-Advisory Agreement") between accounts managed by the Sub-Advisor with
AIM. The Board noted that AIM's INVESCO Institutional (N.A.), Inc. (the investment strategies comparable to
operations remain profitable, although "Sub-Advisor") and AIM with respect to those of the Fund and below the total
increased expenses in recent years have the Fund for another year, effective advisory fee rates for 81 separately
reduced AIM's profitability. Based on July 1, 2006. managed accounts/wrap accounts managed
the review of the profitability of AIM's by the Sub-Advisor with investment
and its affiliates' investment advisory The Board considered the factors strategies comparable to those of the
and other activities and its financial discussed below in evaluating the Fund. The Board noted that AIM has
condition, the Board concluded that the fairness and reasonableness of the agreed to limit the Fund's total annual
compensation to be paid by the Fund to Sub-Advisory Agreement at the meeting on operating expenses. The Board also
AIM under its Advisory Agreement was not June 27, 2006 and as part of the Board's considered the services to be provided
excessive. ongoing oversight of the Fund. In their by the Sub-Advisor pursuant to the
deliberations, the Board and the Sub-Advisory Agreement and the services
o Benefits of soft dollars to AIM. The independent trustees did not identify to be provided by AIM pursuant to the
Board considered the benefits realized any particular factor that was Advisory Agreement, as well as the
by AIM as a result of brokerage controlling, and each trustee attributed allocation of fees between AIM and the
transactions executed through "soft different weights to the various Sub-Advisor pursuant to the Sub-Advisory
dollar" arrangements. Under these factors. Agreement. The Board noted that the
arrangements, brokerage commissions paid sub-advisory fees have no direct effect
by the Fund and/or other funds advised The discussion below serves as a on the Fund or its shareholders, as they
by AIM are used to pay for research and discussion of the material factors and are paid by AIM to the Sub-Advisor, and
execution services. This research may be the conclusions with respect thereto that AIM and the Sub-Advisor are
used by AIM in making investment that formed the basis for the Board's affiliates. Based on this review, the
decisions for the Fund. The Board approval of the Sub-Advisory Agreement. Board concluded that the sub-advisory
concluded that such arrangements were After consideration of all of the fee rate under the Sub-Advisory
appropriate. factors below and based on its informed Agreement was fair and reasonable.
business judgment, the Board determined
o AIM's financial soundness in light that the Sub-Advisory Agreement is in o Profitability of AIM and its
of the Fund's needs. The Board the best interests of the Fund and its affiliates. The Board reviewed
considered whether AIM is financially shareholders and that the compensation information concerning the profitability
sound and has the resources necessary to to the Sub-Advisor under the of AIM's (and its affiliates')
perform its obligations under the Sub-Advisory Agreement is fair and investment advisory and other activities
Advisory Agreement, and concluded that reasonable. and its financial condition. The Board
AIM has the financial resources considered the overall profitability of
necessary to fulfill its obligations Unless otherwise stated, information AIM. The Board noted that AIM's
under the Advisory Agreement. presented below is as of June 27, 2006 operations remain profitable, although
and does not reflect any changes that increased expenses in recent years have
o Historical relationship between the may have occurred since June 27, 2006, reduced AIM's profitability. Based on
Fund and AIM. In determining whether to including but not limited to changes to the review of the profitability of AIM's
approve the Advisory Agreement for the the Fund's performance. and its affiliates' investment advisory
Fund, the Board also considered the and other activities and its financial
prior relationship between AIM and the o The nature and extent of the condition, the Board concluded that the
Fund, as well as the Board's knowledge advisory services to be provided by the compensation to be paid by the Fund to
of AIM's operations, and concluded that Sub-Advisor. The Board reviewed the AIM under its Advisory Agreement was not
it was beneficial to maintain the services to be provided by the excessive.
current relationship, in part, because Sub-Advisor under the Sub-Advisory
of such knowledge. The Board also Agreement. Based on such review, the o The Sub-Advisor's financial
reviewed the general nature of the Board concluded that the range of soundness in light of the Fund's needs.
non-investment advisory services services to be provided by the The Board considered whether the
currently performed by AIM and its Sub-Advisor under the Sub-Advisory Sub-Advisor is financially sound and has
affiliates, such as administrative, Agreement was appropriate and that the the resources necessary to perform its
transfer agency and distribution Sub-Advisor currently is providing obligations under the Sub-Advisory
services, and the fees received by AIM services in accordance with the terms of Agreement, and concluded that the Sub-
and its affiliates for performing such the Sub-Advisory Agreement. Advisor has the financial resources
services. In addition to reviewing such necessary to fulfill its obligations
services, the trustees also considered o The quality of services to be under the Sub-Advisory Agreement.
the organizational structure provided by the Sub-Advisor. The Board
reviewed the credentials and experience
of the officers and employees of the
Sub-Advisor who will provide investment
advisory services to the
10
SUPPLEMENT TO ANNUAL REPORT DATED 8/31/06
AIM STRUCTURED CORE FUND
======================================= ========================================== PLEASE NOTE THAT PAST PERFORMANCE
INSTITUTIONAL CLASS SHARES CUMULATIVE TOTAL RETURNS IS NOT INDICATIVE OF FUTURE RESULTS.
For periods ended 8/31/06 MORE RECENT RETURNS MAY BE MORE OR LESS
The following information has been THAN THOSE SHOWN. ALL RETURNS ASSUME
prepared to provide Institutional Class Inception (3/31/06) 2.00% REINVESTMENT OF DISTRIBUTIONS AT NAV.
overview shareholders with a ========================================== INVESTMENT RETURN AND PRINCIPAL VALUE
performance specific to their holdings. CUMULATIVE TOTAL RETURNS WILL FLUCTUATE SO YOUR SHARES, WHEN
Institutional Class shares are offered For periods ended 6/30/06, most recent REDEEMED, MAY BE WORTH MORE OR LESS THAN
exclusively to institutional investors, calendar quarter-end THEIR ORIGINAL COST. SEE FULL REPORT FOR
including defined contribution plans INFORMATION ON COMPARATIVE BENCHMARKS.
that meet certain criteria. Inception (3/31/06) --1.10% PLEASE CONSULT YOUR FUND PROSPECTUS FOR
========================================== MORE INFORMATION. FOR THE MOST CURRENT
INSTITUTIONAL CLASS SHARES HAVE NO SALES MONTH-END PERFORMANCE, PLEASE CALL
CHARGE; THEREFORE, PERFORMANCE IS AT NET 800-451-4246 OR VISIT
ASSET VALUE (NAV). PERFORMANCE OF AIMINVESTMENTS.COM.
INSTITUTIONAL CLASS SHARES WILL DIFFER
FROM PERFORMANCE OF OTHER SHARE CLASSES HAD THE ADVISOR NOT WAIVED FEES
PRIMARILY DUE TO DIFFERING SALES CHARGES AND/OR REIMBURSED EXPENSES, PERFORMANCE
AND CLASS EXPENSES. WOULD HAVE BEEN LOWER.
======================================
NASDAQ SYMBOL SCIUX
======================================
Over for information on your Fund's expenses.
======================================================================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND
PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES
AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING.
======================================================================================
FOR INSTITUTIONAL INVESTOR USE ONLY
This material is for institutional investor use only and may not be quoted,
reproduced or shown to the public, nor used in written form as sales literature
for public use.
[YOUR GOALS.OUR SOLUTIONS.] [AIM INVESTMENTS LOGO APPEARS HERE]
--Registered Trademark-- --Registered Trademark--
AIMinvestments.com SCOR-INS-1 A I M Distributors, Inc.
INFORMATION ABOUT YOUR FUND'S EXPENSES
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE may use the information in this table, about hypothetical account values and
together with the amount you invested, hypothetical expenses based on the
As a shareholder of the Fund, you incur to estimate the expenses that you paid Fund's actual expense ratio and an
ongoing costs. This example is intended over the period. Simply divide your assumed rate of return of 5% per year
to help you understand your ongoing account value by $1,000 (for example, an before expenses, which is not the Fund's
costs (in dollars) of investing in the $8,600 account value divided by $1,000 = actual return.
Fund and to compare these costs with 8.6), then multiply the result by the
ongoing costs of investing in other number in the table under the heading The hypothetical account values and
mutual funds. The actual ending account entitled "Actual Expenses Paid During expenses may not be used to estimate the
value and expenses in the below example Period" to estimate the expenses you actual ending account balance or
are based on an investment of $1,000 paid on your account during the period, expenses you paid for the period. You
invested on March 31, 2006 (the date the March 31, 2006, through August 31, 2006. may use this information to compare the
share class commenced operations) and Because the actual ending account value ongoing costs of investing in the Fund
held through August 31, 2006. The and expense information in the example and other funds. To do so, compare this
hypothetical ending account value and is not based upon a six month period, 5% hypothetical example with the 5%
expenses in the below example are based the ending account value and expense hypothetical examples that appear in the
on an investment of $1,000 invested at information may not provide a meaningful shareholder reports of the other funds.
the beginning of the period and held for comparison to mutual funds that provide
the entire six month period March 1, such information for a full six month Please note that the expenses shown in
2006, through August 31, 2006. period. the table are meant to highlight your
ongoing costs only. Therefore, the
ACTUAL EXPENSES HYPOTHETICAL EXAMPLE FOR hypothetical information is useful in
COMPARISON PURPOSES comparing ongoing costs only, and will
The table below provides information not help you determine the relative
about actual account values and actual The table below also provides total costs of owning different funds.
expenses. You information
====================================================================================================================================
ACTUAL HYPOTHETICAL
(5% ANNUAL RETURN BEFORE EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (3/1/06)(1) (8/31/06)(1) PERIOD(2) (8/31/06) PERIOD(3) RATIO
Institutional $1,000.00 $1,020.00 $3.41 $1,021.17 $4.08 0.80%
(1) The actual ending account value is based on the actual total return of the Fund for the period March 31, 2006, through August
31, 2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's
expense ratio and a hypothetical annual return of 5% before expenses over the six month period March 1, 2006, through August
31, 2006.
(2) Actual expenses are equal to the annualized expense ratio as indicated above multiplied by the average account value over the
period, multiplied by 154 (March 31, 2006, through August 31, 2006)/365. Because the share class has not been in existence
for a full six month period, the actual ending account value and expense information shown may not provide a meaningful
comparison to fund expense information of classes that show such data for a full six month period and, because the actual
ending account value and expense information in the expense example covers a short time period, return and expense data may
not be indicative of return and expense data for longer time periods.
(3) Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over
the period, multiplied by 184/365 to reflect a one-half year period. The hypothetical ending account value and expenses may
be used to compare ongoing costs of investing in the Institutional class shares of the Fund and other funds because such data
is based on a full six month period.
====================================================================================================================================
AIMinvestments.com SCOR-INS-1 A I M Distributors, Inc.
AIM Structured Core Fund
SCHEDULE OF INVESTMENTS
August 31, 2006
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-99.07%
AEROSPACE & DEFENSE-5.04%
Boeing Co. (The) 850 $ 63,665
- ------------------------------------------------------------------
Lockheed Martin Corp. 800 66,080
- ------------------------------------------------------------------
Raytheon Co. 100 4,721
- ------------------------------------------------------------------
United Technologies Corp. 650 40,761
==================================================================
175,227
==================================================================
AIR FREIGHT & LOGISTICS-1.92%
United Parcel Service, Inc.-Class B 950 66,547
==================================================================
AIRLINES-0.57%
Southwest Airlines Co. 1,150 19,918
==================================================================
APPAREL RETAIL-0.33%
American Eagle Outfitters, Inc. 300 11,589
==================================================================
APPLICATION SOFTWARE-2.04%
BEA Systems, Inc.(a) 1,850 25,400
- ------------------------------------------------------------------
Intuit Inc.(a) 1,500 45,330
==================================================================
70,730
==================================================================
BIOTECHNOLOGY-0.90%
Biogen Idec Inc.(a) 200 8,828
- ------------------------------------------------------------------
Celgene Corp.(a) 550 22,380
==================================================================
31,208
==================================================================
BROADCASTING & CABLE TV-0.21%
CBS Corp.-Class B 250 7,138
==================================================================
BUILDING PRODUCTS-0.12%
Masco Corp. 150 4,112
==================================================================
COMMUNICATIONS EQUIPMENT-2.29%
Cisco Systems, Inc.(a) 800 17,592
- ------------------------------------------------------------------
Motorola, Inc. 2,650 61,957
==================================================================
79,549
==================================================================
COMPUTER & ELECTRONICS RETAIL-1.26%
Best Buy Co., Inc. 300 14,100
- ------------------------------------------------------------------
Circuit City Stores, Inc. 1,250 29,513
==================================================================
43,613
==================================================================
COMPUTER HARDWARE-3.74%
Hewlett-Packard Co. 2,450 89,572
- ------------------------------------------------------------------
International Business Machines Corp. 500 40,485
==================================================================
130,057
==================================================================
COMPUTER STORAGE & PERIPHERALS-0.74%
QLogic Corp.(a) 1,400 25,732
==================================================================
</Table>
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------
CONSTRUCTION & FARM MACHINERY & HEAVY
TRUCKS-0.33%
Cummins Inc. 100 $ 11,482
==================================================================
CONSUMER FINANCE-0.54%
AmeriCredit Corp.(a) 800 18,792
==================================================================
DATA PROCESSING & OUTSOURCED SERVICES-0.58%
Electronic Data Systems Corp. 750 17,873
- ------------------------------------------------------------------
Sabre Holdings Corp.-Class A 100 2,192
==================================================================
20,065
==================================================================
DEPARTMENT STORES-1.77%
Dillard's, Inc.-Class A 150 4,677
- ------------------------------------------------------------------
J.C. Penney Co., Inc. 900 56,736
==================================================================
61,413
==================================================================
ELECTRIC UTILITIES-0.21%
American Electric Power Co., Inc. 200 7,296
==================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-1.77%
Emerson Electric Co. 750 61,613
==================================================================
FOOD RETAIL-1.82%
Kroger Co. (The) 2,650 63,096
==================================================================
GENERAL MERCHANDISE STORES-0.32%
Big Lots, Inc.(a) 600 11,010
==================================================================
HEALTH CARE DISTRIBUTORS-1.83%
AmerisourceBergen Corp. 1,150 50,784
- ------------------------------------------------------------------
McKesson Corp. 250 12,700
==================================================================
63,484
==================================================================
HOME IMPROVEMENT RETAIL-0.30%
Home Depot, Inc. (The) 300 10,287
==================================================================
HOUSEHOLD PRODUCTS-0.18%
Procter & Gamble Co. (The) 100 6,190
==================================================================
HOUSEWARES & SPECIALTIES-0.27%
Newell Rubbermaid Inc. 350 9,447
==================================================================
HYPERMARKETS & SUPER CENTERS-1.48%
Wal-Mart Stores, Inc. 1,150 51,428
==================================================================
INDEPENDENT POWER PRODUCERS & ENERGY
TRADERS-2.62%
AES Corp. (The)(a) 550 11,682
- ------------------------------------------------------------------
TXU Corp. 1,200 79,452
==================================================================
91,134
==================================================================
</Table>
F-1
AIM Structured Core Fund
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES-3.34%
3M Co. 550 $ 39,435
- ------------------------------------------------------------------
General Electric Co. 1,900 64,714
- ------------------------------------------------------------------
Tyco International Ltd. 450 11,767
==================================================================
115,916
==================================================================
INDUSTRIAL MACHINERY-1.52%
Illinois Tool Works Inc. 1,200 52,680
==================================================================
INSURANCE BROKERS-0.40%
Aon Corp. 400 13,828
==================================================================
INTEGRATED OIL & GAS-5.69%
Exxon Mobil Corp. 2,800 189,476
- ------------------------------------------------------------------
Marathon Oil Corp. 100 8,350
==================================================================
197,826
==================================================================
INTEGRATED TELECOMMUNICATION SERVICES-2.34%
BellSouth Corp. 300 12,216
- ------------------------------------------------------------------
Qwest Communications International Inc.(a) 7,850 69,158
==================================================================
81,374
==================================================================
INTERNET RETAIL-0.16%
IAC/InterActiveCorp.(a) 200 5,696
==================================================================
INTERNET SOFTWARE & SERVICES-1.96%
Google Inc.-Class A(a) 180 68,135
==================================================================
INVESTMENT BANKING & BROKERAGE-7.44%
Goldman Sachs Group, Inc. (The) 450 66,892
- ------------------------------------------------------------------
Lehman Brothers Holdings Inc. 950 60,620
- ------------------------------------------------------------------
Merrill Lynch & Co., Inc. 750 55,148
- ------------------------------------------------------------------
Morgan Stanley 1,150 75,658
==================================================================
258,318
==================================================================
LIFE & HEALTH INSURANCE-0.05%
UnumProvident Corp. 100 1,895
==================================================================
LIFE SCIENCES TOOLS & SERVICES-0.40%
Applera Corp.-Applied Biosystems Group 450 13,793
==================================================================
MANAGED HEALTH CARE-0.75%
Aetna Inc. 700 26,089
==================================================================
MOTORCYCLE MANUFACTURERS-0.08%
Harley-Davidson, Inc. 50 2,926
==================================================================
MULTI-LINE INSURANCE-3.96%
American International Group, Inc. 1,550 98,921
- ------------------------------------------------------------------
Loews Corp. 1,000 38,480
==================================================================
137,401
==================================================================
</Table>
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------
MULTI-UTILITIES-4.10%
CenterPoint Energy, Inc. 950 $ 13,727
- ------------------------------------------------------------------
Duke Energy Corp. 1,600 48,000
- ------------------------------------------------------------------
PG&E Corp. 1,400 58,702
- ------------------------------------------------------------------
Xcel Energy, Inc. 1,050 21,840
==================================================================
142,269
==================================================================
OIL & GAS EQUIPMENT & SERVICES-0.32%
BJ Services Co. 250 8,577
- ------------------------------------------------------------------
Cameron International Corp.(a) 50 2,396
==================================================================
10,973
==================================================================
OIL & GAS REFINING & MARKETING-2.41%
Sunoco, Inc. 50 3,596
- ------------------------------------------------------------------
Tesoro Corp. 350 22,613
- ------------------------------------------------------------------
Valero Energy Corp. 1,000 57,400
==================================================================
83,609
==================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-5.15%
Bank of America Corp. 900 46,323
- ------------------------------------------------------------------
Citigroup Inc. 2,550 125,842
- ------------------------------------------------------------------
JPMorgan Chase & Co. 150 6,849
==================================================================
179,014
==================================================================
PAPER PACKAGING-0.83%
Temple-Inland Inc. 650 28,938
==================================================================
PHARMACEUTICALS-5.37%
Johnson & Johnson 50 3,233
- ------------------------------------------------------------------
King Pharmaceuticals, Inc.(a) 1,400 22,708
- ------------------------------------------------------------------
Merck & Co. Inc. 1,000 40,550
- ------------------------------------------------------------------
Pfizer Inc. 4,350 119,886
==================================================================
186,377
==================================================================
RAILROADS-0.06%
Norfolk Southern Corp. 50 2,137
==================================================================
RESIDENTIAL REIT'S-0.87%
AvalonBay Communities, Inc. 250 30,250
==================================================================
RETAIL REIT'S-1.39%
Kimco Realty Corp. 550 22,853
- ------------------------------------------------------------------
Simon Property Group, Inc. 300 25,437
==================================================================
48,290
==================================================================
SEMICONDUCTOR EQUIPMENT-0.94%
Lam Research Corp.(a) 450 19,256
- ------------------------------------------------------------------
MEMC Electronic Materials, Inc.(a) 350 13,538
==================================================================
32,794
==================================================================
</Table>
F-2
AIM Structured Core Fund
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------
SEMICONDUCTORS-2.55%
LSI Logic Corp.(a) 600 $ 4,830
- ------------------------------------------------------------------
Micron Technology, Inc.(a) 1,400 24,192
- ------------------------------------------------------------------
NVIDIA Corp.(a) 2,050 59,675
==================================================================
88,697
==================================================================
SOFT DRINKS-4.22%
Coca-Cola Co. (The) 1,450 64,974
- ------------------------------------------------------------------
PepsiCo, Inc. 1,250 81,600
==================================================================
146,574
==================================================================
SPECIALIZED REIT'S-0.60%
Host Hotels & Resorts Inc. 150 3,381
- ------------------------------------------------------------------
Public Storage, Inc. 200 17,330
==================================================================
20,711
==================================================================
SPECIALTY STORES-0.58%
Office Depot, Inc.(a) 550 20,262
==================================================================
STEEL-1.97%
Nucor Corp. 1,100 53,757
- ------------------------------------------------------------------
United States Steel Corp. 250 14,542
==================================================================
68,299
==================================================================
</Table>
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------
SYSTEMS SOFTWARE-2.78%
BMC Software, Inc.(a) 250 $ 6,655
- ------------------------------------------------------------------
Microsoft Corp. 3,500 89,915
==================================================================
96,570
==================================================================
THRIFTS & MORTGAGE FINANCE-0.90%
Fannie Mae 300 15,795
- ------------------------------------------------------------------
Freddie Mac 200 12,720
- ------------------------------------------------------------------
MGIC Investment Corp. 50 2,894
==================================================================
31,409
==================================================================
TOBACCO-2.76%
Altria Group, Inc. 1,150 96,059
==================================================================
TOTAL INVESTMENTS-99.07% (Cost $3,337,861) 3,441,266
==================================================================
OTHER ASSETS LESS LIABILITIES-0.93% 32,204
==================================================================
NET ASSETS-100.00% $3,473,470
__________________________________________________________________
==================================================================
</Table>
Investment Abbreviations:
<Table>
REIT - Real Estate Investment Trust
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-3
AIM Structured Core Fund
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2006
<Table>
ASSETS:
Investments, at value (cost $3,337,861) $3,441,266
- -----------------------------------------------------------
Cash 33,480
- -----------------------------------------------------------
Dividends receivable 7,515
- -----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 74
- -----------------------------------------------------------
Other assets 74,390
===========================================================
Total assets 3,556,725
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Trustee deferred compensation and retirement
plans 74
- -----------------------------------------------------------
Fund expenses advanced 37,228
- -----------------------------------------------------------
Accrued distribution fees 4,450
- -----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 2,265
- -----------------------------------------------------------
Accrued operating expenses 39,238
===========================================================
Total liabilities 83,255
===========================================================
Net assets applicable to shares outstanding $3,473,470
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $3,365,713
- -----------------------------------------------------------
Undistributed net investment income 50,421
- -----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (46,069)
- -----------------------------------------------------------
Unrealized appreciation of investment
securities 103,405
===========================================================
$3,473,470
___________________________________________________________
===========================================================
NET ASSETS:
Class A $ 985,267
___________________________________________________________
===========================================================
Class B $ 640,268
___________________________________________________________
===========================================================
Class C $ 625,023
___________________________________________________________
===========================================================
Class R $ 610,811
___________________________________________________________
===========================================================
Institutional Class $ 612,101
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 96,676
___________________________________________________________
===========================================================
Class B 63,030
___________________________________________________________
===========================================================
Class C 61,527
___________________________________________________________
===========================================================
Class R 60,001
___________________________________________________________
===========================================================
Institutional Class 60,001
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 10.19
- -----------------------------------------------------------
Offering price per share
(Net asset value of $10.19 divided by
94.50%) $ 10.78
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per share $ 10.16
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per share $ 10.16
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per share $ 10.18
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per share $ 10.20
___________________________________________________________
===========================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-4
AIM Structured Core Fund
STATEMENT OF OPERATIONS
For the period March 31, 2006 (date operations commenced) through August 31,
2006
<Table>
INVESTMENT INCOME:
Dividends $ 24,882
- -------------------------------------------------------------------------
Interest 2,001
=========================================================================
Total investment income 26,883
=========================================================================
EXPENSES:
Advisory fees 8,256
- -------------------------------------------------------------------------
Administrative services fees 21,096
- -------------------------------------------------------------------------
Custodian fees 3,049
- -------------------------------------------------------------------------
Distribution fees:
Class A 890
- -------------------------------------------------------------------------
Class B 2,612
- -------------------------------------------------------------------------
Class C 2,560
- -------------------------------------------------------------------------
Class R 1,256
- -------------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 560
- -------------------------------------------------------------------------
Transfer agent fees -- Institutional 10
- -------------------------------------------------------------------------
Trustees' and officer's fees and benefits 6,115
- -------------------------------------------------------------------------
Registration and filing fees 41,072
- -------------------------------------------------------------------------
Professional services fees 47,608
- -------------------------------------------------------------------------
Other 12,332
=========================================================================
Total expenses 147,416
=========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (129,773)
=========================================================================
Net expenses 17,643
=========================================================================
Net investment income 9,240
=========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES:
Net realized gain (loss) from investment securities (46,069)
=========================================================================
Change in net unrealized appreciation of investment
securities 103,405
=========================================================================
Net gain from investment securities 57,336
=========================================================================
Net increase in net assets resulting from operations $ 66,576
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-5
AIM Structured Core Fund
STATEMENT OF CHANGES IN NET ASSETS
For the period March 31, 2006 (date operations commenced) through August 31,
2006
<Table>
<Caption>
2006
- ------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 9,240
- ------------------------------------------------------------------------
Net realized gain (loss) from investment securities (46,069)
- ------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 103,405
========================================================================
Net increase in net assets resulting from operations 66,576
========================================================================
Share transactions-net:
Class A 960,946
- ------------------------------------------------------------------------
Class B 630,331
- ------------------------------------------------------------------------
Class C 615,597
- ------------------------------------------------------------------------
Class R 600,010
- ------------------------------------------------------------------------
Institutional Class 600,010
========================================================================
Net increase in net assets resulting from share
transactions 3,406,894
========================================================================
Net increase in net assets 3,473,470
========================================================================
NET ASSETS:
Beginning of year --
========================================================================
End of year (including undistributed net investment income
of $50,421) $3,473,470
________________________________________________________________________
========================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
August 31, 2006
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Structured Core Fund (the "Fund") is a series portfolio of AIM Counselor
Series Trust (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 six separate
portfolios, each authorized to issue an unlimited number of shares of beneficial
interest. The Fund currently offers multiple classes of shares. Matters
affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The Fund commenced operations on
March 31, 2006.
The Fund's investment objective is to provide long-term growth of capital.
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. Securities traded in the over-the-counter
market (but not securities reported on the NASDAQ Stock Exchange) are
valued based on the prices furnished by independent pricing services, in
which case the securities may be considered fair valued, or by market
makers. Each security reported on the NASDAQ Stock Exchange is valued at
the NASDAQ Official Closing Price ("NOCP") as of the close of the customary
trading session on the valuation date or absent a NOCP, at the closing bid
price.
Futures contracts are valued at the final settlement price set by an
exchange on which they are principally traded. Listed options are valued at
the mean between the last bid and the ask prices from the exchange on which
they are principally traded. Options not listed on an exchange are valued
by an independent source at the mean between the last bid and ask prices.
For purposes of determining net asset value per share, futures and option
contracts generally are valued 15 minutes after the close of the customary
trading session of the New York Stock Exchange ("NYSE").
Investments in open-end registered investment companies and closed-end
registered investment companies that do not trade on an exchange are valued
at the end of day net asset value per share. Investments in closed-end
registered investment companies that trade on an exchange are valued at the
last sales price as of the close of the customary trading session on the
exchange where the security is principally traded.
Debt obligations (including convertible bonds) are fair valued using an
evaluated quote provided by an independent pricing service. Evaluated
quotes provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
institution-size trading in similar groups of securities, developments
related to specific securities, dividend rate, yield, quality, type of
issue, coupon
F-6
AIM Structured Core Fund
rate, maturity, individual trading characteristics and other market data.
Short-term obligations having 60 days or less to maturity and commercial
paper are recorded at amortized cost which approximates value.
Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and
are valued at the last bid price in the case of equity securities and in
the case of debt obligations, the mean between the last bid and asked
prices.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable exchange rates as of the
close of the NYSE. Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in computing the net asset value
of the Fund's shares are determined as of the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes and the
close of the customary trading session of the NYSE which would not
ordinarily be reflected in the computation of the Fund's net asset value.
If the event is likely to have affected the closing price of the security,
the security will be valued at fair value in good faith using procedures
approved by the Board of Trustees. Adjustments to closing prices to reflect
fair value may also be based on a screening process of an independent
pricing service to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign
security trades is not the current value as of the close of the NYSE.
Foreign securities meeting the approved degree of certainty that the price
is not reflective of current value will be priced at the indication of fair
value from the independent pricing service. Multiple factors may be
considered by the independent pricing service in determining adjustments to
reflect fair value and may include information relating to sector indices,
ADRs and domestic and foreign index futures.
Securities for which market quotations are not readily available or are
unreliable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers following procedures approved by
the Board of Trustees. Issuer specific events, market trends, bid/ask
quotes of brokers and information providers and other market data may be
reviewed in the course of making a good faith determination of a security's
fair value.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date. Bond premiums
and discounts are amortized and/or accreted for financial reporting
purposes.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, AIM may
determine the country in which an issuer is located and/or credit risk
exposure based on various factors. These factors include the laws of the
country under which the issuer is organized, where the issuer maintains a
principal office, the country in which the issuer derives 50% or more of
its total revenues and the country that has the primary market for the
issuer's securities, as well as other criteria. Among the other criteria
that may be evaluated for making this determination are the country in
which the issuer maintains 50% or more of its assets, the type of security,
financial guarantees and enhancements, the nature of the collateral and the
sponsor organization. Country of issuer and/or credit risk exposure has
been determined to be the United States of America unless otherwise noted.
D. 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 treat a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of
Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial statements.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund are charged to the operations of such class. Transfer
agency fees and expenses and other shareholder recordkeeping fees and
expenses attributable to the Institutional Class are charged to such class.
Transfer agency fees and expenses and other shareholder recordkeeping fees
and expenses relating to all other classes are allocated among those
classes based on relative net assets. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- 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 including estimates and assumptions related to
taxation. Actual results could differ from those estimates.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust (including the
Trust's investment manager) is indemnified against certain liabilities that
may arise out of performance of their duties to the Fund. Additionally, in
F-7
AIM Structured Core Fund
the normal course of business, the Fund enters into contracts that contain
a variety of indemnification clauses. The Fund's maximum exposure under
these arrangements is unknown as this would involve future claims that may
be made against the Fund that have not yet occurred. The risk of material
loss as a result of such indemnification claims is considered remote.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM based on the annual rate of the Fund's
average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- --------------------------------------------------------------------
First $250 million 0.60%
- --------------------------------------------------------------------
Next $250 million 0.575%
- --------------------------------------------------------------------
Next $500 million 0.55%
- --------------------------------------------------------------------
Next $1.5 billion 0.525%
- --------------------------------------------------------------------
Next $2.5 billion 0.50%
- --------------------------------------------------------------------
Next $2.5 billion 0.475%
- --------------------------------------------------------------------
Next $2.5 billion 0.45%
- --------------------------------------------------------------------
Over $10 billion 0.425%
___________________________________________________________________
====================================================================
</Table>
Under the terms of a master sub-advisory agreement between AIM and INVESCO
Institutional (N.A.), Inc. ("INVESCO"), AIM pays INVESCO 40% of the amount of
AIM's compensation on the sub-advised assets.
AIM has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Class A, Class B, Class C, Class R
and Institutional Class shares to 1.00%, 1.75%, 1.75%, 1.25% and 0.75% of
average daily net assets, respectively, through June 30, 2007. In determining
the advisor's obligation to waive advisory fees and/or reimburse expenses, the
following expenses are not taken into account, and could cause the net annual
operating expenses to exceed the numbers reflected above: (i) interest; (ii)
taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v)
expenses related to a merger or reorganization, as approved by the Fund's Board
of Trustees; and (vi) expenses that the Fund has incurred but did not actually
pay because of an expense offset arrangement. Currently, in addition to the
expense reimbursement arrangement with AMVESCAP PLC ("AMVESCAP") described more
fully below, the expense offset arrangements from which the Fund may benefit are
in the form of credits that the Fund receives from banks where the Fund or its
transfer agent has deposit accounts in which it holds uninvested cash. Those
credits are used to pay certain expenses incurred by the Fund.
For the period March 31, 2006 (date operations commenced) through August 31,
2006, AIM waived advisory fees and reimbursed expenses of $128,499 and
reimbursed class level expenses of $157, $115, $112, $110 and $10 for Class A,
Class B, Class C, Class R and Institutional Class shares, respectively.
At August 31, 2006, the advisor advanced to the Fund $37,228 for the
payments of Fund expenses.
At the request of the Trustees of the Trust, AMVESCAP agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. These expenses along with the related expense
reimbursement are included in the Statement of Operations. For the period March
31, 2006 (date operations commenced) through August 31, 2006, AMVESCAP did not
reimburse any expenses.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. Pursuant to such agreement, for the period
March 31, 2006 (date operations commenced) through August 31, 2006, AIM was paid
$21,096.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay AIM Investment Services, Inc. ("AIS") a fee for providing transfer agency
and shareholder services to the Fund and reimburse AIS for certain expenses
incurred by AIS in the course of providing such services. AIS may make payments
to intermediaries that provide omnibus account services, sub-accounting services
and/or networking services. All fees payable by AIS to intermediaries that
provide omnibus account services or sub-accounting are charged back to the Fund,
subject to certain limitations approved by the Trust's Board of Trustees. For
the period March 31, 2006 (date operations commenced) through August 31, 2006,
the Fund paid AIS $560 for Class A, Class B, Class C and Class R share classes
and $10 for Institutional Class shares.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class B,
Class C, Class R and Institutional Class shares of the Fund. The Trust has
adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A, Class B, Class C and Class R shares (collectively the "Plans").
The Fund, pursuant to the Plans, pays ADI compensation at the annual rate of
0.25% of the Fund's average daily net assets of Class A shares, 1.00% of the
average daily net assets of Class B and Class C shares and 0.50% of the average
daily net assets of Class R shares. Of the Rule 12b-1 payments, up to 0.25% of
the average daily net assets of the Class A, Class B, Class C or Class R shares
may be paid to furnish continuing personal shareholder services to customers who
purchase and own shares of such classes. Any amounts not paid as a service fee
under the Plans would constitute an asset-based sales charge. National
Association of Securities Dealers ("NASD") Rules impose a cap on the total sales
charges, including asset-based sales charges that may be paid by any class of
shares of the Fund. Pursuant to the Plans, for the period March 31, 2006 (date
operations commenced) through August 31, 2006, the Class A, Class B, Class C and
Class R shares paid $890, $2,612, $2,560 and $1,256, respectively.
F-8
AIM Structured Core Fund
Front-end sales commissions and contingent deferred sales charges ("CDSC")
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. CDSC are deducted from
redemption proceeds prior to remittance to the shareholder. During the period
March 31, 2006 (date operations commenced) through August 31, 2006, ADI advised
the Fund that it retained $421 in front-end sales commissions from the sale of
Class A shares and $0 from Class A, Class B, Class C and Class R shares, for
CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AIS and/or ADI.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions and (ii) custodian credits which
result from periodic overnight cash balances at the custodian. For the period
March 31, 2006 (date operations commenced) through August 31, 2006, the Fund
received credits from these arrangements, which resulted in the reduction of the
Fund's total expenses of $770.
NOTE 4--TRUSTEES' AND OFFICER'S FEES AND BENEFITS
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to each Trustee and Officer of the Fund who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also
include amounts accrued by the Fund to fund such deferred compensation amounts.
Those Trustees who defer compensation have the option to select various AIM
Funds in which their deferral accounts shall be deemed to be invested. Finally,
current Trustees are eligible to participate in a retirement plan that provides
for benefits to be paid upon retirement to Trustees over a period of time based
on the number of years of service. The Fund may have certain former Trustees who
also participate in a retirement plan and receive benefits under such plan.
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund
to fund such retirement benefits. Obligations under the deferred compensation
and retirement plans represent unsecured claims against the general assets of
the Fund.
During the period March 31, 2006 (date operations commenced) through August
31, 2006, the Fund paid legal fees of $571 for services rendered by Kramer,
Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member
of that firm is a Trustee of the Trust.
NOTE 5--BORROWINGS
Pursuant to an exemptive order from the Securities and Exchange Commission, the
Fund may participate in an interfund lending facility that AIM has established
for temporary borrowings by the AIM Funds. An interfund loan will be made under
this facility only if the loan rate (an average of the rate available on bank
loans and the rate available on investments in overnight repurchase agreements)
is favorable to both the lending fund and the borrowing fund. A loan will be
secured by collateral if the Fund's aggregate borrowings from all sources exceed
10% of the Fund's total assets. To the extent that the loan is required to be
secured by collateral, the collateral is marked to market daily to ensure that
the market value is at least 102% of the outstanding principal value of the
loan.
The Fund is a participant in an uncommitted unsecured revolving credit
facility with State Street Bank and Trust Company ("SSB"). The Fund may borrow
up to the lesser of (i) $125,000,000, or (ii) the limits set by its prospectus
for borrowings. The Fund and other funds advised by AIM which are parties to the
credit facility can borrow on a first come, first served basis. Principal on
each loan outstanding shall bear interest at the bid rate quoted by SSB at the
time of the request for the loan.
During the period March 31, 2006 (date operations commenced) through August
31, 2006, the Fund did not borrow or lend under the interfund lending facility
or borrow under the uncommitted unsecured revolving credit facility.
Additionally, the Fund is permitted to temporarily carry a negative or
overdrawn balance in its account with SSB, the custodian bank. To compensate the
custodian bank for such overdrafts, the overdrawn Fund may either (i) leave
funds as a compensating balance in the account so the custodian bank can be
compensated by earning the additional interest; or (ii) compensate by paying the
custodian bank at a rate agreed upon by the custodian bank and AIM, not to
exceed the rate contractually agreed upon.
F-9
AIM Structured Core Fund
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
There were no ordinary income or long-term capital gain distributions paid
during the period March 31, 2006 (date operations commenced) through August 31,
2006.
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2006, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2006
- --------------------------------------------------------------------------
Undistributed ordinary income $ 50,486
- --------------------------------------------------------------------------
Unrealized appreciation -- investments 101,090
- --------------------------------------------------------------------------
Temporary book/tax differences (65)
- --------------------------------------------------------------------------
Capital loss carryforward (43,754)
- --------------------------------------------------------------------------
Shares of beneficial interest 3,365,713
==========================================================================
Total net assets $3,473,470
__________________________________________________________________________
==========================================================================
</Table>
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is due to differences in the timing of recognition of gains and
losses on investments for tax and book purposes. The Fund's unrealized
appreciation (depreciation) difference is attributable primarily to losses on
wash sales.
The temporary book/tax differences are a result of timing differences
between book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the trustee deferral of compensation and
retirement plan expenses.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund has a capital loss carryforward as of August 31, 2006 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------
August 31, 2014 $43,754
_____________________________________________________________________________
=============================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the period March
31, 2006 (date operations commenced) through August 31, 2006 was $4,193,336 and
$809,406, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $195,405
- ------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (94,315)
==============================================================================
Net unrealized appreciation of investment securities $101,090
______________________________________________________________________________
==============================================================================
Cost of investments for tax purposes is $3,340,176.
</Table>
NOTE 8--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of costs incurred during
the startup period of the Fund, on August 31, 2006, undistributed net investment
income (loss) was increased by $41,181 and shares of beneficial interest
decreased by $41,181. This reclassification had no effect on the net assets of
the Fund.
F-10
AIM Structured Core Fund
NOTE 9--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A, Class B,
Class C, Class R and Institutional Class. Class A shares are sold with a
front-end sales charge. Class B shares and Class C shares are sold with CDSC.
Class R shares and Institutional Class shares are sold at net asset value. Under
certain circumstances, Class A shares are sold without a sales charge. In
addition, under certain circumstances, Class A shares and Class R shares are
subject to CDSC. Generally, Class B shares will automatically convert to Class A
shares on or about the month-end which is at least eight years after the date of
purchase.
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ------------------------------------------------------------------------------------
MARCH 31, 2006
(DATE OPERATIONS
COMMENCED)
THROUGH AUGUST 31,
2006(a)
----------------------
SHARES AMOUNT
- ------------------------------------------------------------------------------------
Sold:
Class A 98,774 $ 981,684
- ------------------------------------------------------------------------------------
Class B 66,127 660,015
- ------------------------------------------------------------------------------------
Class C 61,527 615,597
- ------------------------------------------------------------------------------------
Class R 60,001 600,010
- ------------------------------------------------------------------------------------
Institutional Class 60,001 600,010
====================================================================================
Reacquired:
Class A (2,098) (20,738)
- ------------------------------------------------------------------------------------
Class B (3,097) (29,684)
====================================================================================
341,235 $3,406,894
____________________________________________________________________________________
====================================================================================
</Table>
(a) 88% of the outstanding shares of the Fund are owned by AIM.
NOTE 10--NEW ACCOUNTING STANDARD
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48").
FIN 48 prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement for a tax position taken or
expected to be taken in a tax return. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. The provisions for FIN 48 are effective for
fiscal years beginning after December 15, 2006. Management is currently
assessing the impact of FIN 48, if any, on the Fund's financial statements and
intends for the Fund to adopt the FIN 48 provisions during 2007.
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 CLASS B CLASS C CLASS R
------------------- ------------------- ------------------- -------------------
MARCH 31, 2006 MARCH 31, 2006 MARCH 31, 2006 MARCH 31, 2006
(DATE OPERATIONS (DATE OPERATIONS (DATE OPERATIONS (DATE OPERATIONS
COMMENCED) COMMENCED) COMMENCED) COMMENCED)
THROUGH AUGUST 31, THROUGH AUGUST 31, THROUGH AUGUST 31, THROUGH AUGUST 31,
2006 2006 2006 2006
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.04 0.01 0.01 0.03
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both
realized and unrealized) 0.15 0.15 0.15 0.15
=================================================================================================================================
Total from investment operations 0.19 0.16 0.16 0.18
=================================================================================================================================
Net asset value, end of period $10.19 $10.16 $10.16 $10.18
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(a) 1.90% 1.60% 1.60% 1.80%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $ 985 $ 640 $ 625 $ 611
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets:
With fee waivers and/or expense
reimbursements 1.06%(b) 1.81%(b) 1.81%(b) 1.31%(b)
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense
reimbursements 10.44%(b) 11.19%(b) 11.19%(b) 10.69%(b)
=================================================================================================================================
Ratio of net investment income to
average net assets 0.95%(b) 0.20%(b) 0.20%(b) 0.70%(b)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(c) 25% 25% 25% 25%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges, if any, and is
not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $844,458,
$619,008, $606,705 and $595,292 for Class A, Class B, Class C and Class
R, respectively.
(c) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
F-11
AIM Structured Core Fund
NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
-------------------
MARCH 31, 2006
(DATE OPERATIONS
COMMENCED)
THROUGH
AUGUST 31,
2006
- -----------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
- -----------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.05
- -----------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.15
===================================================================================
Total from investment operations 0.20
===================================================================================
Net asset value, end of period $10.20
___________________________________________________________________________________
===================================================================================
Total return(a) 2.00%
___________________________________________________________________________________
===================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 612
___________________________________________________________________________________
===================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.80%(b)
- -----------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 10.14%(b)
===================================================================================
Ratio of net investment income to average net assets 1.21%(b)
___________________________________________________________________________________
===================================================================================
Portfolio turnover rate(c) 25%
___________________________________________________________________________________
===================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $595,921.
(c) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
NOTE 12--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING
On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment
advisor to certain AIM Funds), AIM and A I M Distributors, Inc. ("ADI") (the
distributor of the retail AIM Funds) reached final settlements with certain
regulators, including the Securities and Exchange Commission ("SEC"), the New
York Attorney General and the Colorado Attorney General, to resolve civil
enforcement actions and/or investigations related to market timing and related
activity in the AIM Funds, including those formerly advised by IFG. As part of
the settlements, a $325 million fair fund ($110 million of which is civil
penalties) has been created to compensate shareholders harmed by market timing
and related activity in funds formerly advised by IFG. Additionally, AIM and ADI
created a $50 million fair fund ($30 million of which is civil penalties) to
compensate shareholders harmed by market timing and related activity in funds
advised by AIM, which was done pursuant to the terms of the settlement. These
two fair funds may increase as a result of contributions from third parties who
reach final settlements with the SEC or other regulators to resolve allegations
of market timing and/or late trading that also may have harmed applicable AIM
Funds. These two fair funds will be distributed in accordance with a methodology
to be determined by AIM's independent distribution consultant, in consultation
with AIM and the independent trustees of the AIM Funds and acceptable to the
staff of the SEC. Management of AIM and the Fund are unable to estimate the
impact, if any, that the distribution of these two fair funds may have on the
Fund or whether such distribution will have an impact on the Fund's financial
statements in the future.
At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"),
the parent company of IFG and AIM, has agreed to reimburse expenses incurred by
the AIM Funds related to market timing matters.
PENDING LITIGATION AND REGULATORY INQUIRIES
On August 30, 2005, the West Virginia Office of the State
Auditor -- Securities Commission ("WVASC") issued a Summary Order to Cease and
Desist and Notice of Right to Hearing to AIM and ADI (Order No. 05-1318). The
WVASC makes findings of fact that AIM and ADI entered into certain arrangements
permitting market timing of the AIM Funds and failed to disclose these
arrangements in the prospectuses for such Funds, and conclusions of law to the
effect that AIM and ADI violated the West Virginia securities laws. The WVASC
orders AIM and ADI to cease any further violations and seeks to impose monetary
sanctions, including restitution to affected investors, disgorgement of fees,
reimbursement of investigatory, administrative and legal costs and an
"administrative assessment," to be determined by the Commissioner. Initial
research indicates that these damages could be limited or capped by statute.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or
related entities and individuals, depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related activity in
the AIM Funds;
F-12
AIM Structured Core Fund
NOTE 12--LEGAL PROCEEDINGS--(CONTINUED)
- that certain AIM Funds inadequately employed fair value pricing;
- that the defendants charged excessive advisory and/or distribution fees and
failed to pass on to shareholders the perceived savings generated by
economies of scale and that the defendants adopted unlawful distribution
plans; and
- that the defendants improperly used the assets of the AIM Funds to pay
brokers to aggressively promote the sale of the AIM Funds over other mutual
funds and that the defendants concealed such payments from investors by
disguising them as brokerage commissions (all the claims in this category of
lawsuits were dismissed with prejudice by the court on September 29, 2006,
except for the Section 36(b) claim which was dismissed with leave to amend
to plead it properly as a derivative claim).
These lawsuits allege as theories of recovery, depending on the lawsuit,
violations of various provisions of the Federal and state securities laws,
negligence, breach of fiduciary duty and/or breach of contract. These lawsuits
seek remedies that include, depending on the lawsuit, damages, restitution,
injunctive relief, imposition of a constructive trust, removal of certain
directors and/or employees, rescission of certain AIM Funds' advisory agreements
and/or distribution plans and recovery of all fees paid, an accounting of all
fund-related fees, commissions and soft dollar payments, restitution of all
commissions and fees paid, and prospective relief in the form of reduced fees.
All lawsuits based on allegations of market timing, late trading and related
issues have been transferred to the United States District Court for the
District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court,
plaintiffs in these lawsuits consolidated their claims for pre-trial purposes
into three amended complaints against various AIM- and IFG-related parties: (i)
a Consolidated Amended Class Action Complaint purportedly brought on behalf of
shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative
Complaint purportedly brought on behalf of the AIM Funds and fund registrants;
and (iii) an Amended Class Action Complaint for Violations of the Employee
Retirement Income Securities Act ("ERISA") purportedly brought on behalf of
participants in AMVESCAP's 401(k) plan. Based on orders issued by the MDL Court,
all claims asserted against the AIM Funds that have been transferred to the MDL
Court have been dismissed, although certain Funds remain nominal defendants in
the Consolidated Amended Fund Derivative Complaint. On September 15, 2006, the
MDL Court granted the AMVESCAP defendants' motion to dismiss the Amended Class
Action Complaint for Violations of ERISA and dismissed such Complaint. The
plaintiff has commenced an appeal from that decision.
IFG, AIM, ADI and/or related entities and individuals have received inquiries
from numerous regulators in the form of subpoenas or other oral or written
requests for information and/or documents related to one or more of the
following issues, among others, some of which concern one or more AIM Funds:
market timing activity, late trading, fair value pricing, excessive or improper
advisory and/or distribution fees, mutual fund sales practices, including
revenue sharing and directed-brokerage arrangements, investments in securities
of other registered investment companies, contractual plans, issues related to
Section 529 college savings plans and procedures for locating lost security
holders. IFG, AIM and ADI have advised the Fund that they are providing full
cooperation with respect to these inquiries. Regulatory actions and/or
additional civil lawsuits related to these or other issues may be filed against
the AIM Funds, IFG, AIM and/or related entities and individuals in the future.
At the present time, management of AIM and the Fund are unable to estimate the
impact, if any, that the outcome of the Pending Litigation and Regulatory
Inquiries described above may have on AIM, ADI or the Fund.
F-13
AIM Structured Core Fund
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Counselor Series Trust
and Shareholders of AIM Structured Core Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of AIM Structured Core Fund (one of
the funds constituting AIM Counselor Series Trust; hereafter referred to as the
"Fund") at August 31, 2006, and the results of its operations, the changes in
its net assets and the financial highlights for the period March 31, 2006
(commencement of operations) through August 31, 2006, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at August 31, 2006 by
correspondence with the custodian and brokers, provides a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
October 26, 2006
Houston, Texas
F-14
AIM Structured Core Fund
TAX DISCLOSURES
U.S. ESTATE TAX INFORMATION FOR NON-RESIDENT ALIEN SHAREHOLDERS
The percentage of qualifying assets not subject to the U.S. estate tax for the
fiscal quarter ended August 31, 2006 is 0.96%.
F-15
AIM Structured Core Fund
TRUSTEES AND OFFICERS
The address of each trustee and officer of AIM Counselor Series Trust (the
"Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee
oversees 109 portfolios in the AIM Funds complex. The trustees serve for the
life of the Trust, subject to their earlier death, incapacitation, resignation,
retirement or removal as more specifically provided in the Trust's
organizational documents. Column two below includes length of time served with
predecessor entities, if any.
<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 2003 Director and Chairman, A I M Management None
Trustee and Vice Chair Group Inc. (financial services holding
company); Director and Vice Chairman,
AMVESCAP PLC; Chairman, AMVESCAP
PLC -- AIM Division (parent of AIM and a
global investment management firm) and
Trustee and Vice Chair of The AIM Family
of Funds--Registered Trademark--
Formerly: President and Chief Executive
Officer, A I M Management Group Inc.;
Director, Chairman and President, A I M
Advisors, Inc. (registered investment
advisor); Director and Chairman, A I M
Capital Management, Inc. (registered
investment advisor), A I M Distributors,
Inc. (registered broker dealer), AIM
Investment Services, Inc., (registered
transfer agent), and Fund Management
Company (registered broker dealer); and
Chief Executive Officer, AMVESCAP
PLC -- Managed Products; and President
and Principal Executive Officer of The
AIM Family of Funds--Registered
Trademark--
- -------------------------------------------------------------------------------------------------------------------------------
Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None
Trustee, President and President, A I M Management Group Inc.,
Principal AIM Mutual Fund Dealer Inc., AIM Funds
Executive Officer Management Inc. and 1371 Preferred Inc.;
Director and President, A I M Advisors,
Inc., INVESCO Funds Group, Inc. and AIM
GP Canada Inc.; Director, A I M Capital
Management, Inc. and A I M Distributors,
Inc.; Director and Chairman, AIM
Investment Services, Inc., Fund
Management Company and INVESCO
Distributors, Inc.; Director, President
and Chairman, AVZ Callco Inc.; AMVESCAP
Inc. and AIM Canada Holdings Inc.;
Director and Chief Executive Officer,
AIM Trimark Global Fund Inc. and AIM
Trimark Canada Fund Inc.; Trustee,
President and Principal Executive
Officer of The AIM Family of
Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust); and Trustee
and Executive Vice President, The AIM
Family of Funds--Registered Trademark--
(AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust only)
Formerly: President and Principal
Executive Officer, The AIM Family of
Funds--Registered Trademark-- (AIM
Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free
Investments Trust only); Chairman, AIM
Canada Holdings, Inc.; Executive Vice
President and Chief Operations Officer,
AIM Funds Management Inc.; President,
AIM Trimark Global Fund Inc. and AIM
Trimark Canada Fund Inc.; and Director,
Trimark Trust
- -------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 2003 Chairman, Crockett Technology Associates ACE Limited (insurance company);
Trustee and Chair (technology consulting company) and Captaris, Inc. (unified
messaging provider)
- -------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 1983 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2003 Retired Badgley Funds, Inc. (registered
Trustee investment company (2 portfolios))
Formerly: Partner, law firm of Baker &
McKenzie
- -------------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2000 Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm); and Director,
Policy Studies, Inc. and Van Gilder
Insurance Corporation
- -------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2003 Director of a number of public and None
Trustee private business corporations, including
the Boss Group Ltd. (private investment
and management); Cortland Trust, Inc.
(Chairman) (registered investment
company (3 portfolios)); Annuity and
Life Re (Holdings), Ltd. (insurance
company); CompuDyne Corporation
(provider of products and services to
the public security market); and
Homeowners of America Holding
Corporation
Formerly: Director, President and Chief
Executive Officer, Volvo Group North
America, Inc.; Senior Vice President, AB
Volvo; and Director of various
affiliated Volvo companies; and
Director, Magellan Insurance Company
- -------------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 2003 Chief Executive Officer, Twenty First Administaff, and Discovery Global
Trustee Century Group, Inc. (government affairs Education Fund (non-profit)
company); and Owner, Dos Angelos Ranch,
L.P.
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company)
- -------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Cortland Trust, Inc. (registered
Trustee Naftalis and Frankel LLP investment company (3 portfolios))
- -------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2003 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- -------------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 2003 Partner, law firm of Pennock & Cooper None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Larry Soll -- 1942 1997 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Raymond Stickel, Jr. -- 1944 2005 Retired Director, Mainstay VP Series
Trustee Funds, Inc. (21 portfolios)
Formerly: Partner, Deloitte & Touche
- -------------------------------------------------------------------------------------------------------------------------------
</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. Taylor 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.
F-16
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Structured Core Fund
The address of each trustee and officer of AIM Counselor Series Trust (the
"Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee
oversees 109 portfolios in the AIM Funds complex. The trustees serve for the
life of the Trust, subject to their earlier death, incapacitation, resignation,
retirement or removal as more specifically provided in the Trust's
organizational documents. Column two below includes length of time served with
predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/
POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------
Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer N/A
Senior Vice President and of The AIM Family of Funds--Registered
Senior Officer Trademark--
Formerly: Director of Compliance and
Assistant General Counsel, ICON
Advisers, Inc.; Financial Consultant,
Merrill Lynch; General Counsel and
Director of Compliance, ALPS Mutual
Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
John M. Zerr -- 1962 2006 Director, Senior Vice President, N/A
Senior Vice President, Chief Secretary and General Counsel, A I M
Legal Officer and Secretary Management Group Inc. (financial
services holding company) and A I M
Advisors, Inc.; Director, Vice President
and Secretary, INVESCO Distributors,
Inc.; Vice President and Secretary,
A I M Capital Management, Inc., AIM
Investment Services, Inc., and Fund
Management Company; Senior Vice
President and Secretary, A I M
Distributors, Inc.; Director, INVESCO
Funds Group Inc.; and Senior Vice
President, Chief Legal Officer and
Secretary of The AIM Family of
Funds--Registered Trademark--
Formerly: Chief Operating Officer,
Senior Vice President, General Counsel,
and Secretary, Liberty Ridge Capital,
Inc. (an investment adviser); Vice
President and Secretary, PBHG Funds (an
investment company); Vice President and
Secretary, PBHG Insurance Series Fund
(an investment company); General Counsel
and Secretary, Pilgrim Baxter Value
Investors (an investment adviser); Chief
Operating Officer, General Counsel and
Secretary, Old Mutual Investment
Partners (a broker-dealer); General
Counsel and Secretary, Old Mutual Fund
Services (an administrator); General
Counsel and Secretary, Old Mutual
Shareholder Services (a shareholder
servicing center); Executive Vice
President, General Counsel and
Secretary, Old Mutual Capital, Inc. (an
investment adviser); and Vice President
and Secretary, Old Mutual Advisors Funds
(an investment company)
- ------------------------------------------------------------------------------------------------------------------------------
Lisa O. Brinkley -- 1959 2004 Global Compliance Director, AMVESCAP N/A
Vice President PLC; and Vice President of The AIM
Family of Funds--Registered Trademark--
Formerly: Senior Vice President, A I M
Management Group Inc. (financial
services holding company); Senior Vice
President and Chief Compliance Officer,
A I M Advisors, Inc. and The AIM Family
of Funds--Registered Trademark--; Vice
President and Chief Compliance Officer,
A I M Capital Management, Inc. and A I M
Distributors, Inc.; Vice President, AIM
Investment Services, Inc. and Fund
Management Company; Senior Vice
President and Chief Compliance Officer
of The AIM Family of Funds--Registered
Trademark--; and Senior Vice President
and Compliance Director, Delaware
Investments Family of Funds
- ------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome -- 1956 2003 Senior Vice President and General
Vice President Counsel, AMVESCAP PLC; Director, INVESCO
Funds Group, Inc.; and Vice President of
The AIM Family of Funds--Registered
Trademark--
Formerly: Director, General Counsel, and N/A
Vice President Fund Management Company;
Director, Senior Vice President,
Secretary and General Counsel, A I M
Management Group Inc. (financial
services holding company) and A I M
Advisors, Inc.; Director and Vice
President, INVESCO Distributors, Inc.;
Senior Vice President, A I M
Distributors, Inc.; Vice President,
A I M Capital Management, Inc. and AIM
Investment Services, Inc.; Senior Vice
President, Chief Legal Officer and
Secretary of The AIM Family of
Funds--Registered Trademark--; Chief
Executive Officer and President, INVESCO
Funds Group, Inc.; and Senior Vice
President, Chief Legal Officer and
General Counsel, Liberty Financial
Companies, Inc. and Liberty Funds Group,
LLC
- ------------------------------------------------------------------------------------------------------------------------------
Sidney M. Dilgren -- 1961 2004 Vice President and Fund Treasurer, A I M N/A
Vice President, Principal Advisors, Inc.; and Vice President,
Financial Officer and Treasurer and Principal Officer of The
Treasurer AIM Family of Funds--Registered
Trademark--
Formerly: Senior Vice President, AIM
Investment Services, Inc.; and Vice
President, A I M Distributors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
J. Philip Ferguson -- 1945 2005 Senior Vice President and Chief N/A
Vice President Investment Officer, A I M Advisors Inc.;
Director, Chairman, Chief Executive
Officer, President and Chief Investment
Officer, A I M Capital Management, Inc.;
Executive Vice President, A I M
Management Group Inc. and Vice President
of The AIM Family of Funds--Registered
Trademark--
Formerly: Senior Vice President, AIM
Private Asset Management, Inc.; and
Chief Equity Officer, Senior Vice
President and Senior Investment Officer,
A I M Capital Management, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2005 Director of Cash Management, Managing N/A
Vice President Director and Chief Cash Management
Officer, A I M Capital Management, Inc;
Director and President, Fund Management
Company; and Vice President, A I M
Advisors, Inc. and The AIM Family of
Funds--Registered Trademark--
- ------------------------------------------------------------------------------------------------------------------------------
Todd L. Spillane -- 1958 2006 Senior Vice President, A I M Management N/A
Chief Compliance Officer Group Inc.; Senior Vice President and
Chief Compliance Officer, A I M
Advisors, Inc.; Chief Compliance Officer
of The AIM Family of Funds--Registered
Trademark--; Vice President and Chief
Compliance Officer, A I M Capital
Management, Inc.; and Vice President,
A I M Distributors, Inc., AIM Investment
Services, Inc. and Fund Management
Company
Formerly: Global Head of Product
Development, AIG-Global Investment
Group, Inc.; Chief Compliance Officer
and Deputy General Counsel,
AIG-SunAmerica Asset Management; and
Chief Compliance Officer, Chief
Operating Officer and Deputy General
Counsel, American General Investment
Management
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
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 1.800.959.4246.
<Table>
OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS SUB-ADVISOR
11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, PricewaterhouseCoopers INVESCO Institutional (N.A.)
Suite 100 11 Greenway Plaza Inc. LLP One Midtown Plaza
Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana Street 1360 Peachtree Street, N.E.
Houston, TX 77046-1173 Suite 100 Suite 2900 Suite 100
Houston, TX 77046-1173 Houston, TX 77002-5678 Atlanta, GA 30309-3262
COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN
Ballard Spahr INDEPENDENT TRUSTEES AIM Investment State Street Bank and
Andrews & Ingersoll, LLP Kramer, Levin, Naftalis Services, Inc. Trust Company
1735 Market Street, 51st & Frankel LLP P.O. Box 4739 225 Franklin Street
Floor 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801
Philadelphia, PA 19103-7599 Americas
New York, NY 10036-2714
</Table>
F-17
DOMESTIC EQUITY SECTOR EQUITY ALLOCATION SOLUTIONS
AIM Basic Balanced Fund* AIM Advantage Health Sciences Fund AIM Conservative Allocation Fund
AIM Basic Value Fund AIM Energy Fund AIM Growth Allocation Fund
AIM Capital Development Fund AIM Financial Services Fund AIM Moderate Allocation Fund
AIM Charter Fund AIM Global Health Care Fund AIM Moderate Growth Allocation Fund
AIM Constellation Fund AIM Global Real Estate Fund AIM Moderately Conservative Allocation Fund
AIM Diversified Dividend Fund AIM Gold & Precious Metals Fund
AIM Dynamics Fund AIM Leisure Fund DIVERSIFIED PORTFOLIOS
AIM Large Cap Basic Value Fund AIM Multi-Sector Fund
AIM Large Cap Growth Fund AIM Real Estate Fund(1) AIM Income Allocation Fund
AIM Mid Cap Basic Value Fund AIM Technology Fund AIM International Allocation Fund
AIM Mid Cap Core Equity Fund(1) AIM Utilities Fund
AIM Opportunities I Fund
AIM Opportunities II Fund FIXED INCOME
AIM Opportunities III Fund
AIM S&P 500 Index Fund TAXABLE
AIM Select Equity Fund
AIM Small Cap Equity Fund AIM Enhanced Short Bond Fund
AIM Small Cap Growth Fund AIM Floating Rate Fund
AIM Structured Core Fund AIM High Yield Fund
AIM Structured Growth Fund AIM Income Fund
AIM Structured Value Fund AIM Intermediate Government Fund
AIM Summit Fund AIM International Bond Fund
AIM Trimark Endeavor Fund AIM Limited Maturity Treasury Fund
AIM Trimark Small Companies Fund AIM Money Market Fund
AIM Short Term Bond Fund
INTERNATIONAL/GLOBAL EQUITY AIM Total Return Bond Fund
Premier Portfolio
AIM Asia Pacific Growth Fund Premier U.S. Government Money Portfolio
AIM China Fund
AIM Developing Markets Fund TAX-FREE
AIM European Growth Fund
AIM European Small Company Fund(1) AIM High Income Municipal Fund(1)
AIM Global Aggressive Growth Fund AIM Municipal Bond Fund
AIM Global Equity Fund AIM Tax-Exempt Cash Fund
AIM Global Growth Fund AIM Tax-Free Intermediate Fund
AIM Global Value Fund Premier Tax-Exempt Portfolio
AIM Japan Fund
AIM International Core Equity Fund =======================================================================================
AIM International Growth Fund CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES CAREFULLY.
AIM International Small Company Fund(1) FOR THIS AND OTHER INFORMATION ABOUT AIM FUNDS, OBTAIN A PROSPECTUS FROM YOUR
AIM Trimark Fund FINANCIAL ADVISOR AND READ IT CAREFULLY BEFORE INVESTING.
=======================================================================================
* Domestic equity and income fund
(1) This Fund has limited public sales of its shares to certain investors. For
more information on who may continue to invest in the Fund, please see the
appropriate prospectus.
If used after January 20, 2007, this report 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. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $429 billion in assets
under management. Data as of August 31, 2006.
AIMinvestments.com SCOR-AR-1 A I M Distributors, Inc.
YOUR GOALS. OUR SOLUTIONS.--Registered Trademark--
- ---------------------------------------------------------------------------------------
Mutual Retirement Annuities College Separately Offshore Cash [AIM INVESTMENTS LOGO APPEARS HERE]
Funds Products Savings Managed Products Management --Registered Trademark--
Plans Accounts
- ---------------------------------------------------------------------------------------
AIM STRUCTURED GROWTH FUND
Annual Report to Shareholders o August 31, 2006
[COVER GLOBE IMAGE]
DOMESTIC EQUITY
Large-Cap Growth
Table of Contents
Supplemental Information 2
Letters to Shareholders 3
Performance Summary 5
Management Discussion 5
Fund Expenses 7
Fund Performance 8
Approval of Advisory Agreement 9
Schedule of Investments F-1
Financial Statements F-4
Notes to Financial Statements F-6
Financial Highlights F-12
Auditor's Report F-14
Tax Disclosures F-15
Trustees and Officers F-16
</Table>
[AIM INVESTMENT SOLUTIONS]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[DOMESTIC [INTERNATIONAL/ [SECTOR
EQUITY] GLOBAL EQUITY] EQUITY]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[FIXED [ALLOCATION [DIVERSIFIED
INCOME] SOLUTIONS] PORTFOLIOS]
[AIM INVESTMENTS LOGO APPEARS HERE]
- --Registered Trademark--
AIM STRUCTURED GROWTH FUND
AIM STRUCTURED GROWTH FUND SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL.
o Unless otherwise stated, information
presented in this report is as of August
31, 2006, and is based on total net
assets.
About share classes o There is no guarantee that the o A direct investment cannot be made in
investment techniques and risk analyses an index. Unless otherwise indicated,
o Class B shares are not available as an used by the Fund's managers will produce index results include reinvested
investment for retirement plans the desired results. dividends, and they do not reflect sales
maintained pursuant to Section 401 of charges. Performance of an index of
the Internal Revenue Code, including o The Fund invests in "growth stocks" funds reflects fund expenses;
401(k) plans, money purchase pension which may be more volatile than other performance of a market index does not.
plans and profit sharing plans, except investments because growth stocks are
for plans that have existing accounts more sensitive to investor perceptions Other information
invested in Class B shares. of an issuing company's growth
potential. o Industry classifications used in this
o Class R shares are available only to report are generally according to the
certain retirement plans. Please see the o The prices of and the income generated Global Industry Classification Standard,
prospectus for more information. by securities held by the Fund may which was developed by and is the
decline in response to certain factors, exclusive property and a service mark of
Principal risks of investing in the Fund including some directly involving the Morgan Stanley Capital International
companies and governments whose Inc. and Standard & Poor's.
o Foreign securities have additional securities are owned by the Fund. These
risks, including exchange rate changes, factors include general economic and o The returns shown in management's
political and economic upheaval, the market conditions, regional or global discussion of Fund performance are based
relative lack of information about these economic instability and currency and on net asset values calculated for
companies, relatively low market interest rate fluctuations. shareholder transactions. Generally
liquidity and the potential lack of accepted accounting principles require
strict financial and accounting controls About indexes used in this report adjustments to be made to the net assets
and standards. of the Fund at period end for financial
o The unmanaged STANDARD & POOR'S reporting purposes, and as such, the net
o Prices of equity securities change in COMPOSITE INDEX OF 500 STOCKS (the S&P asset values for shareholder
response to many factors including the 500--Registered Trademark-- Index) is transactions and the returns based on
historical and prospective earnings of an index of common stocks frequently those net asset values may differ from
the issuer, the value of its assets, used as a general measure of U.S. stock the net asset values and returns
general economic conditions, interest market performance. reported in the Financial Highlights.
rates, investor perceptions and market
liquidity. The Fund provides a complete list of its
o The unmanaged LIPPER LARGE-CAP GROWTH holdings four times in each fiscal
o The value of convertible securities in FUNDS INDEX represents an average of the year, at the quarter-ends. For the second
which the Fund invests may be affected performance of the 30 largest and fourth quarters, the lists appear in
by market interest rates, the risk that large-capitalization growth funds the Fund's semiannual and annual reports
the issuer may default on interest or tracked by Lipper Inc., an independent to shareholders. For the first and third
principal payments and the value of the mutual fund performance monitor. quarters, the Fund files the lists with
underlying common stock into which these the Securities and Exchange Commission
securities may be converted. o The unmanaged RUSSELL 1000 (SEC) on Form N-Q. The most recent list
--Registered Trademark-- GROWTH INDEX is of portfolio holdings is available at
o The Fund may invest in debt securities a subset of the unmanaged Russell 1000 AIMinvestments.com. From our home
such as notes and bonds that carry Index, which represents the performance page, click on Products &
interest rate risk and credit risk. of the stocks of large-capitalization Performance, then Mutual Funds, then Fund
companies; the Growth subset measures Overview. Select your Fund from the
o The Fund may use enhanced investment the performance of Russell 1000 drop-down menu and click on Complete
techniques such as leveraging and companies with higher price/book ratios Quarterly Holdings. Shareholders can
derivatives. Leveraging entails special and higher forecasted growth values. also look up the Fund's Forms N-Q on the
risks such as magnifying changes in the SEC Web site at sec.gov. Copies of the
value of the portfolio's securities. o The Fund is not managed to track the Fund's Forms N-Q may be reviewed and
Derivatives are subject to counter party performance of any particular index, copied at the SEC Public Reference Room
risk--the risk that the other party will including the indexes defined here, and in Washington, D.C. You can
not complete the transaction with the consequently, the performance of the obtain information on the operation of
Fund. Fund may deviate significantly from the the Public Reference Room, including
performance of the indexes. information about duplicating fee
charges, by calling
Continued on page 8
===================================================================================== ==========================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND FUND NASDAQ SYMBOLS
PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES
AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Class A Shares AASGX
===================================================================================== Class B Shares BASGX
Class C Shares CASGX
Class R Shares RASGX
==========================================
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
AIMinvestments.com
2
AIM STRUCTURED GROWTH FUND
Dear Shareholders of The AIM Family of
Funds--Registered Trademark-- :
We're pleased to provide you with this report, which
includes a discussion of how your Fund was managed during
the period under review in this report, and what factors
affected its performance. That discussion begins on page 5.
[TAYLOR It's been said nothing is certain but death and taxes.
PHOTO] We would venture to add that one other thing is certain:
Markets change--and change often--in the short term, in
response to constantly changing economic, geopolitical and
other factors. For example, domestic and global markets were
generally strong from November 2005 through April 2006, as
Philip Taylor economic growth appeared robust and inflation seemed
contained. But as new economic data suggested inflation
might be higher than previously estimated in the
U.S. and elsewhere, those same markets
often demonstrated weakness and volatility in the
May-August period.
While we can't do anything about the ambiguity and
uncertainty surrounding death and taxes, we can suggest an
alternative to reacting to fluctuating short-term market
conditions: Maintain a diversified portfolio. AIM
Investments--Registered Trademark-- can help by offering a
broad product line that gives your financial advisor the
necessary tools to build a portfolio that's right for you
regardless of market conditions. AIM offers a comprehensive
range of retail mutual funds, including domestic, global and
international equity funds, taxable and tax-exempt
fixed-income funds, and a variety of allocation
portfolios--with varied risk and return characteristics to
match your needs. We maintain this extensive set of product
solutions for one reason: We believe in the value of
comprehensive, diversified investment portfolios.
We've changed the look of our annual reports to reflect
that belief. In our marketing and now our shareholder
literature, we represent a fully diversified portfolio
graphically as an allocation pie chart and assign each asset
class a color--green for domestic equity, blue for
international, orange for sector and purple for fixed
income. A legend in the left column illustrates the
methodology. Your report cover now shows your Fund's asset
class color, plus the asset class and sub-asset class name
are shown in the upper-left corner. The reason for these
changes is to help you better understand where your Fund
fits into your overall portfolio.
AIM has a variety of investment solutions, and knowing
which ones are right for your portfolio is complex. That's
why we also believe in the value of a trusted financial
advisor who will work with you to create an investment plan
you can stick with for the long term. Your financial advisor
can help allocate your portfolio appropriately and review
your investments regularly to ensure they remain suitable as
your financial situation changes. While there are no
guarantees with any investment program, a long-term plan
that's based on your financial goals, risk tolerance and
time horizon is more likely to keep you and your investments
on track.
At a recent meeting of the AIM Funds board, Robert H.
Graham relinquished his position as president of AIM Funds,
a post customarily held by the chief executive officer of
AIM Investments. Bob--one of three founders of AIM
Investments in 1976--has a well-earned reputation for being
one of the most knowledgeable leaders in the mutual fund
industry. As I assume Bob's previous responsibilities, I'm
pleased that he'll remain actively involved as the vice
chair of AIM Funds.
OUR COMMITMENT TO YOU
In the short term, the one sure thing about markets is their
unpredictability. While past performance cannot guarantee
comparable future results, we believe that staying invested
for the long term with a thoughtful plan offers the best
opportunity for weathering that unpredictability. We at AIM
Investments remain committed to building enduring solutions
to help you achieve your investment goals, and we're pleased
you've placed your trust in us.
Information about investing, the markets and your Fund
is always available on our Web site, AIMinvestments.com. If
you have questions about your individual account, we invite
you to contact one of our highly trained client services
representatives at 800-959-4246.
Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
President - AIM Funds
CEO, AIM Investments
October 18, 2006
AIM Investments is a registered service mark of A I M
Management Group Inc. A I M Advisors, Inc. and A I M Capital
Management, Inc. are the investment advisors. A I M
Distributors, Inc. is the distributor for the retail funds
represented by AIM Investments.
3
AIM STRUCTURED GROWTH FUND
Dear Fellow AIM Fund Shareholders:
At our meeting at the end of June, your Board completed its
comprehensive review* of each fund's advisory agreement with
A I M Advisors, Inc. (AIM) to make certain your interests
are being served in terms of fees, performance and
operations.
[CROCKETT Looking ahead, your Board finds many reasons to be
PHOTO] positive about AIM's management and strategic direction.
Most importantly, AIM management's investment management
discipline is paying off in terms of improved overall
performance. While work remains to be done, AIM's
complex-wide, asset-weighted mutual fund performance for the
BRUCE L. CROCKETT trailing one-, three- and five-year periods is at its
highest since 2000 for the periods ended August 31, 2006. We
are also pleased with AIM management's efforts to seek more
cost-effective ways of delivering superior service.
In addition, AIM is realizing the benefits of belonging
to a leading independent global investment management
organization in its parent company, AMVESCAP PLC, which is
dedicated to helping people worldwide build their financial
security. AMVESCAP managed approximately $429 billion
globally as of August 31, 2006, operating under the AIM,
INVESCO, AIM Trimark, INVESCO PERPETUAL and Atlantic Trust
brands. These companies are home to an abundance of
investment talent that is gradually being integrated and
leveraged into centers of excellence, each focusing on a
given market segment or asset class. Over the next few
years, your Board will be meeting at these various centers
of excellence to learn about their progress and how they can
serve you by enhancing performance and reducing costs.
The seven new AIM funds--which include Asian funds,
structured U.S. equity funds and specialized bond funds--are
an early example of the kind of opportunities the AMVESCAP
organization can provide AIM clients. More information on
these funds can be found on AIM's Web site.
Your Board is very pleased with the overall direction
and progress of the AIM Funds. We're working closely and
effectively with AIM's management to continue this momentum.
As always, your Board is eager to hear your views on how we
might better serve you. Please send your comments in a
letter addressed to me at AIM Investments, AIM Investments
Tower, 11 Greenway Plaza, Suite 100, Houston TX Code 77046.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board
October 18, 2006
*To learn more about all the factors we considered
before approving each fund's advisory agreement, go to
the "Products & Performance" tab at the AIM Web site
(AIMinvestments.com) and click on "Investment Advisory
Agreement Renewals." The approval of advisory agreement
information for your Fund is also included in this
annual report on pages 10-11.
4
AIM STRUCTURED GROWTH FUND
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
universe, non-benchmark names may also
be considered. Each stock in the
===================================================================================== universe is evaluated on four factors:
PERFORMANCE SUMMARY earnings momentum, price and volume,
management action and relative
For the five months ended August 31, 2006, AIM Structured Growth Fund, excluding valuation. The sum of the scores for
applicable sales charges, held up better than its style-specific benchmark, the each concept represents the expected
Russell 1000 Growth Index in a difficult market. The Fund underperformed the alpha (excess return) for the near term
broad market, as measured by the S&P 500 Index, which had a positive return over for the average stock in the universe.
the period. Fund performance was primarily driven by investments in utilities Each stock is also evaluated on a
and consumer staples. Sectors that did not perform well during the period under multitude of other factors to develop a
review included health care and industrials. stock-specific risk forecast. Finally,
we develop a transaction cost forecast
FUND VS. INDEXES for each stock.
Cumulative total returns, 3/31/06-8/31/06, excluding applicable sales charges. We then incorporate these
If sales charges were included, returns would be lower. previously mentioned variables--alpha
forecast, risk forecast and transaction
Class A Shares -0.70% cost forecast--using an optimizer to
build a portfolio that we believe is an
Class B Shares -1.00 optimal balance of the stocks' potential
return and risk. This portfolio is
Class C Shares -1.00 constructed according to certain
constraints to help ensure that the
Class R Shares -0.80 Fund's relative performance and
volatility remain within the strategy's
S&P 500 Index (Broad Market Index) 1.52 guidelines. The portfolio is continually
monitored by the team and the overall
Russell 1000 Growth Index (Style-Specific Index) -2.79 investment process is repeated on a
monthly basis to determine which
Lipper Large-Cap Growth Funds Index (Peer Group Index) -5.42 companies should be bought or sold
within the portfolio.
SOURCE: LIPPER INC.
===================================================================================== Market conditions and your Fund
How we invest The investment process integrates Equity market performance has been mixed
the following key steps: since the launch of the Fund on March
We manage your Fund to provide exposure 31, 2006. The economy remained strong as
to large-cap growth equity stocks. The o Universe Development U.S. gross domestic product and earnings
portfolio is designed to outperform the growth remained healthy. Market
Russell 1000 Growth Index while o Stock Rankings participants continued to be concerned
minimizing the amount of additional risk about further U.S. Federal Reserve Board
relative to the benchmark. The Fund can o Risk Assessment (the Fed) interest
be used as a long-term allocation to
large-cap stocks that compliments other o Portfolio Construction
style-specific strategies within a
diversified asset allocation strategy. o Trading
While the companies included within
the Russell 1000 Growth Index are used
as a general guide for developing the
investable (continued)
========================================= ======================================== ==========================================
PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS*
By sector 1. Aerospace & Defense 8.2% 1. Google Inc.-Class A 4.2%
Information Technology 30.9% 2. Soft Drinks 6.4 2. PepsiCo, Inc. 4.2
Industrials 20.8 3. Semiconductors 5.6 3. Lockheed Martin Corp. 3.7
Consumer Staples 13.6 4. Systems Software 5.1 4. United Parcel Service,
Inc.-Class B 3.6
Financials 9.3 5. Investment Banking &
Brokerage 5.0 5. Boeing Co. (The) 3.5
Health Care 7.3
6. Hewlett-Packard Co. 3.4
Consumer Discretionary 6.9 Total Net Assets $89.6 million
7. Motorola, Inc. 3.3
Energy 4.0 Total Number of Holdings* 74
8. J.C. Penney Co., Inc. 3.1
Utilities 3.1
9. TXU Corp. 3.1
Materials 1.5
10. Microsoft Corp. 3.0
Telecommunication Services 0.8
U.S. Government
Agency Securities,
U.S. Treasury Bills plus Other
Assets Less Liabilities 1.8
The Fund's holdings are subject to change, and there is no assurance that the Fund will continue to
hold any particular security.
*Excluding U.S. Government Agency securities and U.S. Treasury securities.
========================================= ======================================== ==========================================
5
AIM STRUCTURED GROWTH FUND
rate increases and their inability to INTUIT. Among our holdings, the largest JEREMY S. LEFKOWITZ
appropriately interpret new Fed chairman detractors from relative performance
Ben Bernanke's comments. Further adding were AMR, CELGENE, AETNA, F5 NETWORKS Portfolio manager, lead manager of AIM
to market discomfort were geopolitical and PALM. Aetna and F5 Networks were Structured Growth Fund. He began his
issues such as Iran's resistance to U.S. sold by the end of the reporting period. investments career in 1968 and has been
demands that it halt its nuclear associated with INVESCO Institutional
program. As a result, investors' IN CLOSING and/or its affiliates since 1982. Mr.
appetite for risk declined and market Lefkowitz earned a Bachelor of Science
volatility increased, particularly among Our strategy emphasized stocks we degree in industrial engineering and an
small-cap stocks. In this environment, believed possessed strong earnings M.B.A. in finance from Columbia
value stocks generally continued to growth, positive price trends and University.
outperform growth stocks and large-cap reasonable valuations. We appreciate
stocks generally outperformed small-cap your confidence in us. Thank you for DANIEL A. KOSTYK
stocks. your investment in AIM Structured Growth
Fund. Chartered Financial Analyst, portfolio
Excluding applicable sales charges, manager, manager of AIM Structured Growth
the Fund outperformed the Russell 1000 THE VIEWS AND OPINIONS EXPRESSED IN Fund. He has been associated with
Growth Index for the five-month period MANAGEMENT'S DISCUSSION OF FUND INVESCO Institutional and/or its
ended August 31, 2006. We used the alpha PERFORMANCE ARE THOSE OF A I M ADVISORS, affiliates since 1995. Mr. Kostyk earned
forecast, risk forecast and transaction INC. THESE VIEWS AND OPINIONS ARE a B.S. in mechanical engineering from
cost forecast to build what we SUBJECT TO CHANGE AT ANY TIME BASED ON Northwestern University and an M.B.A.
considered an optimal portfolio that FACTORS SUCH AS MARKET AND ECONOMIC from the University of Chicago.
provided excess return given the risk CONDITIONS. THESE VIEWS AND OPINIONS MAY
level targets of the strategy. The alpha NOT BE RELIED UPON AS INVESTMENT ADVICE ANTHONY J. MUNCHAK
model incorporates four factors: OR RECOMMENDATIONS, OR AS AN OFFER FOR A
earnings momentum, price and volume, PARTICULAR SECURITY. THE INFORMATION IS Chartered Financial Analyst, portfolio
management action and relative value. NOT A COMPLETE ANALYSIS OF EVERY ASPECT manager, manager of AIM Structured
For the period, all four factors OF ANY MARKET, COUNTRY, INDUSTRY, Growth Fund. He has been associated with
benefited the Fund, with relative value SECURITY OR THE FUND. STATEMENTS OF FACT INVESCO Institutional and/or its
contributing the most to performance and ARE FROM SOURCES CONSIDERED RELIABLE, affiliates since 2000. Mr. Munchak
price and volume contributing the least. BUT A I M ADVISORS, INC. MAKES NO earned Bachelor of Science and Master of
The strong performance from our alpha REPRESENTATION OR WARRANTY AS TO THEIR Science degrees from Boston College.
model was a primary reason the Fund held COMPLETENESS OR ACCURACY. ALTHOUGH He also earned a Master of Business
up better than its benchmark index in a HISTORICAL PERFORMANCE IS NO GUARANTEE Administration degree from Bentley
difficult market. OF FUTURE RESULTS, THESE INSIGHTS MAY College.
HELP YOU UNDERSTAND OUR INVESTMENT
Active managers typically add value MANAGEMENT PHILOSOPHY. GLEN E. MURPHY
in one or a combination of four areas:
beta (relative volatility), style, See important Fund and index Chartered Financial Analyst, portfolio
sector/industry over/under weight and manager, manager of AIM Structured
through our stock selection decisions. INVESCO Institutional and/or its
Consequently, we minimized our exposure affiliates since 1995. Mr. Murphy earned
relative to the benchmark with regard to a business administration degree from
beta, style and sector/industry the University of Massachusetts and a
exposures. We traded only once per month Master of Science degree in finance from
so that these exposures varied slightly Boston College.
during the month and consequently
contributed or detracted slightly from FRANCIS M. ORLANDO
performance.
Chartered Financial Analyst, portfolio
For the period under review, our manager, manager of AIM Structured
beta was slightly above market and Growth Fund. He has been associated with
detracted from performance. Our INVESCO Institutional and/or its
sector/industry over/underweight affiliates since 1987. Mr. Orlando
decisions contributed slightly to Fund earned a business administration degree
performance while our style exposure from Merrimack College and an M.B.A. from
(defined by Barra, Inc.) was a slight Boston University.
detractor.
ANNE M. UNFLAT
Stock selection, as expected, was
the primary contributor to performance. Portfolio manager, manager of AIM
Stocks that contributed the most during Structured Growth Fund. She has been
the period included TXU, PEPSICO, associated with INVESCO Institutional
LOCKHEED MARTIN, ALTRIA and and/or its affiliates since 1988. Ms.
Unflat graduated magna cum laude from
Queens College with a Bachelor of Arts
degree in economics. She earned her
M.B.A. degree in finance from St. John's
University.
Assisted by U.S. Structured Products Group
Research Team
FOR A PRESENTATION OF YOUR FUND'S
PERFORMANCE, PLEASE SEE PAGE 8.
6
AIM STRUCTURED GROWTH FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur You may use the information in this cumulative total returns at net asset
two types of costs: (1) transaction table, together with the amount you value after expenses for the period
costs, which may include sales charges invested, to estimate the expenses that ended August 31, 2006, appear in the
(loads) on purchase payments or you paid over the period. Simply divide table "Fund vs. Indexes" on page 5.
contingent deferred sales charges on your account value by $1,000 (for
redemptions; and redemption fees, if example, an $8,600 account value divided THE HYPOTHETICAL ACCOUNT VALUES AND
any; and (2) ongoing costs, including by $1,000 = 8.6), then multiply the EXPENSES MAY NOT BE USED TO ESTIMATE THE
distribution and/or service fees result by the number in the table under ACTUAL ENDING ACCOUNT BALANCE OR
(12b-1); and other Fund expenses. This the heading entitled "Actual Expenses EXPENSES YOU PAID FOR THE PERIOD. YOU
example is intended to help you Paid During Period" to estimate the MAY USE THIS INFORMATION TO COMPARE THE
understand your ongoing costs (in expenses you paid on your account during ONGOING COSTS OF INVESTING IN THE FUND
dollars) of investing in the Fund and to this period (March 31, 2006, through AND OTHER FUNDS. TO DO SO, COMPARE THIS
compare these costs with ongoing costs August 31, 2006, for the Class A, B, C, 5% HYPOTHETICAL EXAMPLE WITH THE 5%
of investing in other mutual funds. The and R shares). Because the actual ending HYPOTHETICAL EXAMPLES THAT APPEAR IN THE
actual ending account value and expenses account value and expense information in SHAREHOLDER REPORTS OF THE OTHER FUNDS.
of the Class A, B, C, and R shares in the example is not based upon a six
the below example are based on an month period, the ending account value Please note that the expenses shown
investment of $1,000 invested on March and expense information may not provide in the table are meant to highlight your
31, 2006, (the date the share classes a meaningful comparison to mutual funds ongoing costs only and do not reflect
commenced operations) and held through that provide such information for a full any transactional costs, such as sales
August 31, 2006. The hypothetical ending six month period. charges (loads) on purchase payments,
account value and expenses of the Class contingent deferred sales charges on
A, B, C, and R shares in the below HYPOTHETICAL EXAMPLE FOR COMPARISON redemptions, and redemption fees, if
example are based on an investment of PURPOSES any. Therefore, the hypothetical
$1,000 invested at the beginning of the information is useful in comparing
period and held for the entire six month The table below also provides ongoing costs only, and will not help
period March 1, 2006, through August 31, information about hypothetical account you determine the relative total costs
2006. values and hypothetical expenses based of owning different funds. In addition,
on the Fund's actual expense ratio and if these transactional costs were
ACTUAL EXPENSES an assumed rate of return of 5% per year included, your costs would have been
before expenses, which is not the Fund's higher.
The table below provides information actual return. The Fund's actual
about actual account values and actual
expenses.
====================================================================================================================================
ACTUAL HYPOTHETICAL
(5% ANNUAL RETURN BEFORE EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (03/01/06)(1) (8/31/06)(1) PERIOD(2) (8/31/06) PERIOD(3) RATIO
A $1,000.00 $993.00 $4.33 $1,020.01 $5.24 1.03%
B 1,000.00 990.00 7.47 1,016.23 9.05 1.78
C 1,000.00 990.00 7.47 1,016.23 9.05 1.78
R 1,000.00 992.00 5.38 1,018.75 6.51 1.28
(1) The actual ending account value is based on the actual total return of the Fund for the period March 31, 2006, through August
31, 2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's
expense ratio and a hypothetical annual return of 5% before expenses. The Fund's actual cumulative total returns at net asset
value after expenses for the period ended August 31, 2006, appear in the table "Fund vs. Indexes" on page 5.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the
period, multiplied by 154 (March 31, 2006 through August 31, 2006)/365. Because the Class A, B, C, and R shares have not been
in existence for a full six month period, the actual ending account value and expense information shown may not provide a
meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the
actual ending account value and expense information in the expense example covers a short time period, return and expense
data may not be indicative of return and expense data for longer time periods.
(3) Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over
the period, multiplied by 184/365 to reflect a one-half year period. The hypothetical ending account value and expenses may
be used to compare ongoing costs of investing in the Class A, B, C, and R shares of the Fund and other funds because such
data is based on a full six month period.
====================================================================================================================================
7
AIM STRUCTURED GROWTH FUND
FUND PERFORMANCE
========================================= ========================================
CUMULATIVE TOTAL RETURNS CUMULATIVE TOTAL RETURNS
As of 8/31/06, including applicable sales As of 6/30/06, the most recent calendar
charges quarter-end, including applicable sales
charges
CLASS A SHARES
Inception (3/31/06) -6.14% CLASS A SHARES
Inception (3/31/06) -6.99%
CLASS B SHARES
Inception (3/31/06) -5.95% CLASS B SHARES
Inception (3/31/06) -6.71%
CLASS C SHARES
Inception (3/31/06) -1.99% CLASS C SHARES
Inception (3/31/06) -2.78%
CLASS R SHARES
Inception (3/31/06) -0.80% CLASS R SHARES
Inception (3/31/06) -1.70%
========================================= ========================================
THE PERFORMANCE DATA QUOTED REPRESENT CLASS A SHARE PERFORMANCE REFLECTS THE PERFORMANCE OF THE FUND'S SHARE
PAST PERFORMANCE AND CANNOT GUARANTEE THE MAXIMUM 5.50% SALES CHARGE, AND CLASSES WILL DIFFER PRIMARILY DUE TO
COMPARABLE FUTURE RESULTS; CURRENT CLASS B AND CLASS C SHARE PERFORMANCE DIFFERENT SALES CHARGE STRUCTURES AND
PERFORMANCE MAY BE LOWER OR HIGHER. REFLECTS THE APPLICABLE CONTINGENT CLASS EXPENSES.
PLEASE VISIT AIMINVESTMENTS.COM FOR THE DEFERRED SALES CHARGE (CDSC) FOR THE
MOST RECENT MONTH-END PERFORMANCE. PERIOD INVOLVED. THE CDSC ON CLASS B HAD THE ADVISOR NOT WAIVED FEES
PERFORMANCE FIGURES REFLECT REINVESTED SHARES DECLINES FROM 5% BEGINNING AT THE AND/OR REIMBURSED EXPENSES, PERFORMANCE
DISTRIBUTIONS, CHANGES IN NET ASSET VALUE TIME OF PURCHASE TO 0% AT THE BEGINNING WOULD HAVE BEEN LOWER.
AND THE EFFECT OF THE MAXIMUM SALES OF THE SEVENTH YEAR. THE CDSC ON CLASS C
CHARGE UNLESS OTHERWISE STATED. SHARES IS 1% FOR THE FIRST YEAR AFTER
PERFORMANCE FIGURES DO NOT REFLECT PURCHASE. CLASS R SHARES DO NOT HAVE A
DEDUCTION OF TAXES A SHAREHOLDER WOULD FRONT-END SALES CHARGE; RETURNS SHOWN
PAY ON FUND DISTRIBUTIONS OR SALE OF ARE AT NET ASSET VALUE AND DO NOT
FUND SHARES. INVESTMENT RETURN AND REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
PRINCIPAL VALUE WILL FLUCTUATE SO THAT ON A TOTAL REDEMPTION OF RETIREMENT PLAN
YOU MAY HAVE A GAIN OR LOSS WHEN YOU ASSETS WITHIN THE FIRST YEAR.
SELL SHARES.
Continued from inside front cover
202-942-8090 or 800-732-0330, or by
electronic request at the following
e-mail address: publicinfo@sec.gov. The
SEC file numbers for the Fund are
811-09913 and 333-36074.
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, from our
Client Services department at
800-959-4246 or on the AIM Web site,
AIMinvestments.com. On the home page,
scroll down and click on AIM Funds Proxy
Policy. The information is also
available on the SEC Web site, sec.gov.
Information regarding how the Fund voted
proxies related to its portfolio
securities during the 12 months ended
June 30, 2006, is available at our Web
site. Go to AIMinvestments.com, access
the About Us tab, click on Required
Notices and then click on Proxy Voting
Activity. Next, select the Fund from the
drop-down menu. The information is also
available on the SEC Web site, sec.gov.
8
AIM STRUCTURED GROWTH FUND
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
The Board of Trustees of AIM Counselor ment advisory services to the Fund. In calendar year and noted that the Fund's
Series Trust (the "Board") oversees the reviewing the qualifications of AIM to rate was below the median rate of the
management of AIM Structured Growth Fund provide investment advisory services, funds advised by other advisors with
(the "Fund") and, as required by law, the Board considered such issues as investment strategies comparable to
determines annually whether to approve AIM's portfolio and product review those of the Fund that the Board
the continuance of the Fund's advisory process, various back office support reviewed. The Board noted that AIM has
agreement with A I M Advisors, Inc. functions provided by AIM and AIM's agreed to limit the Fund's total annual
("AIM"). Based upon the recommendation equity and fixed income trading operating expenses, as discussed below.
of the Investments Committee of the operations. Based on the review of these The Board also considered the fact that
Board, at a meeting held on June 27, and other factors, the Board concluded AIM set the proposed advisory fees for
2006, the Board, including all of the that the quality of services to be the Fund based upon the median effective
independent trustees, approved the provided by AIM was appropriate and that management fee rate (comprised of
continuance of the advisory agreement AIM currently is providing satisfactory advisory fees plus, in some cases,
(the "Advisory Agreement") between the services in accordance with the terms of administrative fees) at various asset
Fund and AIM for another year, effective the Advisory Agreement. levels of competitor mutual funds with
July 1, 2006. investment strategies comparable to
o The performance of the Fund relative those of the Fund. In addition, the
The Board considered the factors to comparable funds. Not applicable Board noted that the proposed advisory
discussed below in evaluating the because the Fund has not been in fees for the Fund are slightly less than
fairness and reasonableness of the operation for a full calendar year. the uniform fee schedule that applies to
Advisory Agreement at the meeting on other mutual funds advised by AIM with
June 27, 2006 and as part of the Board's o The performance of the Fund relative investment strategies comparable to
ongoing oversight of the Fund. In their to indices. Not applicable because the those of the Fund, which uniform fee
deliberations, the Board and the Fund has not been in operation for a schedule includes breakpoints and is
independent trustees did not identify full calendar year. based on net asset levels. Based on this
any particular factor that was review, the Board concluded that the
controlling, and each trustee attributed o Meetings with the Fund's portfolio advisory fee rate for the Fund under the
different weights to the various managers and investment personnel. With Advisory Agreement was fair and
factors. respect to the Fund, the Board is reasonable.
meeting periodically with such Fund's
One responsibility of the portfolio managers and/or other o Expense limitations and fee waivers.
independent Senior Officer of the Fund investment personnel and believes that The Board noted that AIM has
is to manage the process by which the such individuals are competent and able contractually agreed to waive fees
Fund's proposed management fees are to continue to carry out their and/or limit expenses of the Fund
negotiated to ensure that they are responsibilities under the Advisory through June 30, 2007 in an amount
negotiated in a manner which is at arms' Agreement. necessary to limit total annual
length and reasonable. To that end, the operating expenses to a specified
Senior Officer must either supervise a o Overall performance of AIM. Not percentage of average daily net assets
competitive bidding process or prepare applicable because the Fund has not been for each class of the Fund. The Board
an independent written evaluation. The in operation for a full calendar year. considered the contractual nature of
Senior Officer has recommended an this fee waiver/expense limitation and
independent written evaluation in lieu o Fees relative to those of clients of noted that it remains in effect until
of a competitive bidding process and, AIM with comparable investment June 30, 2007. The Board considered the
upon the direction of the Board, has strategies. The Board reviewed the effect this fee waiver/expense
prepared such an independent written effective advisory fee rate (before limitation would have on the Fund's
evaluation. Such written evaluation also waivers) for the Fund under the Advisory estimated expenses and concluded that
considered certain of the factors Agreement. The Board noted that this the levels of fee waivers/expense
discussed below. In addition, as rate was (i) comparable to the effective limitations for the Fund were fair and
discussed below, the Senior Officer made advisory fee rate (before waivers) for a reasonable.
a recommendation to the Board in mutual fund advised by AIM with
connection with such written evaluation. investment strategies comparable to o Breakpoints and economies of scale.
those of the Fund; (ii) below the The Board reviewed the structure of the
The discussion below serves as a effective advisory fee rate (before Fund's advisory fee under the Advisory
summary of the Senior Officer's waivers) for a variable insurance fund Agreement, noting that it contains seven
independent written evaluation and advised by AIM and offered to insurance breakpoints. The Board reviewed the
recommendation to the Board in company separate accounts with level of the Fund's advisory fees, and
connection therewith, as well as a investment strategies comparable to noted that such fees, as a percentage of
discussion of the material factors and those of the Fund; (iii) above the the Fund's net assets, would decrease as
the conclusions with respect thereto effective advisory and sub-advisory fee net assets increase because the Advisory
that formed the basis for the Board's rates for one offshore fund advised by Agreement includes breakpoints. The
approval of the Advisory Agreement. an AIM affiliate and sub-advised by AIM Board noted that, due to the Fund's
After consideration of all of the with investment strategies comparable to current asset levels and the way in
factors below and based on its informed those of the Fund; (iv) above the which the advisory fee breakpoints have
business judgment, the Board determined effective sub-advisory fee rates for two been structured, the Fund has yet to
that the Advisory Agreement is in the variable insurance funds sub-advised by benefit from the breakpoints. The Board
best interests of the Fund and its an AIM affiliate and offered to concluded that the Fund's fee levels
shareholders and that the compensation insurance company separate accounts with under the Advisory Agreement therefore
to AIM under the Advisory Agreement is investment strategies comparable to would reflect economies of scale at
fair and reasonable and would have been those of the Fund, although the total higher asset levels and that it was not
obtained through arm's length advisory fees for such variable necessary to change the advisory fee
negotiations. insurance funds were above those for the breakpoints in the Fund's advisory fee
Fund; and (v) comparable to or below the schedule.
Unless otherwise stated, total advisory fee rates for two
information presented below is as of separately managed accounts/wrap o Investments in affiliated money market
June 27, 2006 and does not reflect any accounts managed by an AIM affiliate funds. The Board also took into account
changes that may have occurred since with investment strategies comparable to the fact that uninvested cash and cash
June 27, 2006, including but not limited those of the Fund and above the total collateral from securities lending
to changes to the Fund's performance, advisory fee rates for 17 separately arrangements, if any (collectively,
advisory fees, expense limitations managed accounts/wrap accounts managed "cash balances") of the Fund may be
and/or fee waivers. by an AIM affiliate with investment invested in money market funds advised
strategies comparable to those of the by AIM pursuant to the terms of an SEC
o The nature and extent of the advisory Fund. The Board noted that AIM has exemptive order. The Board found that
services to be provided by AIM. The agreed to limit the Fund's total annual the Fund may realize certain benefits
Board reviewed the services to be operating expenses, as discussed below. upon investing cash balances in AIM
provided by AIM under the Advisory Based on this review, the Board advised money market funds, including a
Agreement. Based on such review, the concluded that the advisory fee rate higher net return, increased liquidity,
Board concluded that the range of under the Advisory Agreement was fair increased diversification or decreased
services to be provided by AIM under the and reasonable. transaction costs. The Board also found
Advisory Agreement was appropriate and that the Fund will not receive reduced
that AIM currently is providing services o Fees relative to those of comparable services if it invests its cash balances
in accordance with the terms of the funds with other advisors. The Board in such money market funds. The Board
Advisory Agreement. reviewed the advisory fee rate for the noted that, to the extent the Fund
Fund under the Advisory Agreement. The invests uninvested cash in affiliated
o The quality of services to be provided Board compared effective contractual money mar-
by AIM. The Board reviewed the advisory fee rates at a common asset
credentials and experience of the level at the end of the past
officers and employees of AIM who will
provide invest-
(continued)
9
AIM STRUCTURED GROWTH FUND
ket funds, AIM has voluntarily agreed to employed by AIM and its affiliates to Fund. Based on the review of these and
waive a portion of the advisory fees it provide those services. Based on the other factors, the Board concluded that
receives from the Fund attributable to review of these and other factors, the the quality of services to be provided
such investment. The Board further Board concluded that AIM and its by the Sub-Advisor was appropriate and
determined that the proposed securities affiliates were qualified to continue to that the Sub-Advisor currently is
lending program and related procedures provide non-investment advisory services providing satisfactory services in
with respect to the lending Fund is in to the Fund, including administrative, accordance with the terms of the
the best interests of the lending Fund transfer agency and distribution Sub-Advisory Agreement.
and its respective shareholders. The services, and that AIM and its
Board therefore concluded that the affiliates currently are providing o The performance of the Fund relative
investment of cash collateral received satisfactory non-investment advisory to comparable funds. Not applicable
in connection with the securities services. because the Fund has not been in
lending program in the money market operation for a full calendar year.
funds according to the procedures is in o Other factors and current trends. The
the best interests of the lending Fund Board considered the steps that AIM and o The performance of the Fund relative
and its respective shareholders. its affiliates have taken over the last to indices. Not applicable because the
several years, and continue to take, in Fund has not been in operation for a
o Independent written evaluation and order to improve the quality and full calendar year.
recommendations of the Fund's Senior efficiency of the services they provide
Officer. The Board noted that, upon to the Funds in the areas of investment o Meetings with the Fund's portfolio
their direction, the Senior Officer of performance, product line managers and investment personnel. With
the Fund, who is independent of AIM and diversification, distribution, fund respect to the Fund, the Board is
AIM's affiliates, had prepared an operations, shareholder services and meeting periodically with such Fund's
independent written evaluation in order compliance. The Board concluded that portfolio managers and/or other
to assist the Board in determining the these steps taken by AIM have improved, investment personnel and believes that
reasonableness of the proposed and are likely to continue to improve, such individuals are competent and able
management fees of the AIM Funds, the quality and efficiency of the to continue to carry out their
including the Fund. The Board noted that services AIM and its affiliates provide responsibilities under the Sub-Advisory
the Senior Officer's written evaluation to the Fund in each of these areas, and Agreement.
had been relied upon by the Board in support the Board's approval of the
this regard in lieu of a competitive continuance of the Advisory Agreement o Overall performance of the
bidding process. In determining whether for the Fund. Sub-Advisor. Not applicable because the
to continue the Advisory Agreement for Fund has not been in operation for a
the Fund, the Board considered the APPROVAL OF SUB-ADVISORY AGREEMENT full calendar year.
Senior Officer's written evaluation.
The Board oversees the management of the o Fees relative to those of clients of
o Profitability of AIM and its Fund and, as required by law, determines the Sub-Advisor with comparable
affiliates. The Board reviewed annually whether to approve the investment strategies. The Board
information concerning the profitability continuance of the Fund's sub-advisory reviewed the sub-advisory fee rate for
of AIM's (and its affiliates') agreement. Based upon the recommendation the Fund under the Sub-Advisory
investment advisory and other activities of the Investments Committee of the Agreement and the sub-advisory fees paid
and its financial condition. The Board Board, at a meeting held on June 27, thereunder. The Board noted that this
considered the overall profitability of 2006, the Board, including all of the rate was comparable to the total
AIM. The Board noted that AIM's independent trustees, approved the advisory fee rate for one separately
operations remain profitable, although continuance of the sub-advisory managed account/wrap account managed by
increased expenses in recent years have agreement (the "Sub-Advisory Agreement") the Sub-Advisor with investment
reduced AIM's profitability. Based on between INVESCO Institutional (N.A.), strategies comparable to those of the
the review of the profitability of AIM's Inc. (the "Sub-Advisor") and AIM with Fund and below the total advisory fee
and its affiliates' investment advisory respect to the Fund for another year, rates for 14 separately managed
and other activities and its financial effective July 1, 2006. accounts/wrap accounts managed by the
condition, the Board concluded that the Sub-Advisor with investment strategies
compensation to be paid by the Fund to The Board considered the factors comparable to those of the Fund. The
AIM under its Advisory Agreement was not discussed below in evaluating the Board noted that AIM has agreed to limit
excessive. fairness and reasonableness of the the Fund's total annual operating
Sub-Advisory Agreement at the meeting on expenses. The Board also considered the
o Benefits of soft dollars to AIM. The June 27, 2006 and as part of the Board's services to be provided by the
Board considered the benefits realized ongoing oversight of the Fund. In their Sub-Advisor pursuant to the Sub-Advisory
by AIM as a result of brokerage deliberations, the Board and the Agreement and the services to be
transactions executed through "soft independent trustees did not identify provided by AIM pursuant to the Advisory
dollar" arrangements. Under these any particular factor that was Agreement, as well as the allocation of
arrangements, brokerage commissions paid controlling, and each trustee attributed fees between AIM and the Sub-Advisor
by the Fund and/or other funds advised different weights to the various pursuant to the Sub-Advisory Agreement.
by AIM are used to pay for research and factors. The Board noted that the sub-advisory
execution services. This research may be fees have no direct effect on the Fund
used by AIM in making investment The discussion below serves as a or its shareholders, as they are paid by
decisions for the Fund. The Board discussion of the material factors and AIM to the Sub-Advisor, and that AIM and
concluded that such arrangements were the conclusions with respect thereto the Sub-Advisor are affiliates. Based on
appropriate. that formed the basis for the Board's this review, the Board concluded that
approval of the Sub-Advisory Agreement. the sub-advisory fee rate under the
o AIM's financial soundness in light of After consideration of all of the Sub-Advisory Agreement was fair and
the Fund's needs. The Board considered factors below and based on its informed reasonable.
whether AIM is financially sound and has business judgment, the Board determined
the resources necessary to perform its that the Sub-Advisory Agreement is in o Profitability of AIM and its
obligations under the Advisory the best interests of the Fund and its affiliates. The Board reviewed
Agreement, and concluded that AIM has shareholders and that the compensation information concerning the profitability
the financial resources necessary to to the Sub-Advisor under the of AIM's (and its affiliates')
fulfill its obligations under the Sub-Advisory Agreement is fair and investment advisory and other activities
Advisory Agreement. reasonable. and its financial condition. The Board
considered the overall profitability of
o Historical relationship between the Unless otherwise stated, AIM. The Board noted that AIM's
Fund and AIM. In determining whether to information presented below is as of operations remain profitable, although
approve the Advisory Agreement for the June 27, 2006 and does not reflect any increased expenses in recent years have
Fund, the Board also considered the changes that may have occurred since reduced AIM's profitability. Based on
prior relationship between AIM and the June 27, 2006, including but not limited the review of the profitability of AIM's
Fund, as well as the Board's knowledge to changes to the Fund's performance. and its affiliates' investment advisory
of AIM's operations, and concluded that and other activities and its financial
it was beneficial to maintain the o The nature and extent of the advisory condition, the Board concluded that the
current relationship, in part, because services to be provided by the compensation to be paid by the Fund to
of such knowledge. The Board also Sub-Advisor. The Board reviewed the AIM under its Advisory Agreement was not
reviewed the general nature of the services to be provided by the excessive.
non-investment advisory services Sub-Advisor under the Sub-Advisory
currently performed by AIM and its Agreement. Based on such review, the o The Sub-Advisor's financial soundness
affiliates, such as administrative, Board concluded that the range of in light of the Fund's needs. The Board
transfer agency and distribution services to be provided by the considered whether the Sub-Advisor is
services, and the fees received by AIM Sub-Advisor under the Sub-Advisory financially sound and has the resources
and its affiliates for performing such Agreement was appropriate and that the necessary to perform its obligations
services. In addition to reviewing such Sub-Advisor currently is providing under the Sub-Advisory Agreement, and
services, the trustees also considered services in accordance with the terms of concluded that the Sub-Advisor has the
the organizational structure the Sub-Advisory Agreement. financial resources necessary to fulfill
its obligations under the Sub-Advisory
o The quality of services to be provided Agreement.
by the Sub-Advisor. The Board reviewed
the credentials and experience of the
officers and employees of the
Sub-Advisor who will provide investment
advisory services to the
10
Supplement to Annual Report dated 8/31/06
AIM STRUCTURED GROWTH FUND
INSTITUTIONAL CLASS SHARES ======================================== PLEASE NOTE THAT PAST PERFORMANCE
CUMULATIVE TOTAL RETURNS IS NOT INDICATIVE OF FUTURE RESULTS.
The following information has been For periods ended 8/31/06 MORE RECENT RETURNS MAY BE MORE OR LESS
prepared to provide Institutional Class THAN THOSE SHOWN. ALL RETURNS ASSUME
shareholders with a performance overview Inception (3/31/06) -0.60% REINVESTMENT OF DISTRIBUTIONS AT NAV.
specific to their holdings. ======================================== INVESTMENT RETURN AND PRINCIPAL VALUE
Institutional Class shares are offered CUMULATIVE TOTAL RETURNS WILL FLUCTUATE SO YOUR SHARES, WHEN
exclusively to institutional investors, For periods ended 6/30/06,most recent REDEEMED, MAY BE WORTH MORE OR LESS THAN
including defined contribution plans calendar quarter-end THEIR ORIGINAL COST. SEE FULL REPORT FOR
that meet certain criteria. INFORMATION ON COMPARATIVE BENCHMARKS.
Inception (3/31/06) -1.60% PLEASE CONSULT YOUR FUND PROSPECTUS FOR
======================================== MORE INFORMATION. FOR THE MOST CURRENT
INSTITUTIONAL CLASS SHARES HAVE NO SALES MONTH-END PERFORMANCE, PLEASE CALL
CHARGE; THEREFORE, PERFORMANCE IS AT NET 800-451-4246 OR VISIT
ASSET VALUE (NAV). PERFORMANCE OF AIMinvestments.com.
INSTITUTIONAL CLASS SHARES WILL DIFFER
FROM PERFORMANCE OF OTHER SHARE CLASSES HAD THE ADVISOR NOT WAIVED FEES
PRIMARILY DUE TO DIFFERING SALES CHARGES AND/OR REIMBURSED EXPENSES, PERFORMANCE
AND CLASS EXPENSES. WOULD HAVE BEEN LOWER.
=======================================
NASDAQ SYMBOL IASGX
=======================================
Over for information on your Fund's
expenses.
=====================================================================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND
PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND
EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING.
=====================================================================================
[YOUR GOALS. OUR SOLUTIONS.]
FOR INSTITUTIONAL INVESTOR USE ONLY -- Registered Trademark --
This material is for institutional investor use only and may not be quoted,
reproduced or shown to the public, nor used in written form as sales literature
for public use.
[AIM INVESTMENTS LOGO APPEARS HERE]
--Registered Trademark--
AIMinvestments.com SGRO-INS-1 A I M Distributors, Inc.
INFORMATION ABOUT YOUR FUND'S EXPENSES
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur together with the amount you invested, thetical expenses based on the Fund's
ongoing costs. This example is intended to estimate the expenses that you paid actual expense ratio and an assumed rate
to help you understand your ongoing over the period. Simply divide your of return of 5% per year before
costs (in dollars) of investing in the account value by $1,000 (for example, an expenses, which is not the Fund's actual
Fund and to compare these costs with $8,600 account value divided by $1,000 = return.
ongoing costs of investing in other 8.6), then multiply the result by the
mutual funds. The actual ending account number in the table under the heading The hypothetical account values and
value and expenses in the below example entitled "Actual Expenses Paid During expenses may not be used to estimate the
are based on an investment of $1,000 Period" to estimate the expenses you actual ending account balance or
invested on March 31, 2006 (the date the paid on your account during the period, expenses you paid for the period. You
share class commenced operations) and March 31, 2006, through August 31, 2006. may use this information to compare the
held through August 31, 2006. The Because the actual ending account value ongoing costs of investing in the Fund
hypothetical ending account value and and expense information in the example and other funds. To do so, compare this
expenses in the below example are based is not based upon a six month period, 5% hypothetical example with the 5%
on an investment of $1,000 invested at the ending account value and expense hypothetical examples that appear in the
the beginning of the period and held for information may not provide a meaningful shareholder reports of the other funds.
the entire six month period March 1, comparison to mutual funds that provide
2006, through August 31, 2006. such information for a full six month Please note that the expenses shown
period. in the table are meant to highlight your
ACTUAL EXPENSES ongoing costs only. Therefore, the
HYPOTHETICAL EXAMPLE FOR hypothetical information is useful in
The table below provides information COMPARISON PURPOSES comparing ongoing costs only, and will
about actual account values and actual not help you determine the relative
expenses. You may use the information in The table below also provides total costs of owning different funds.
this table, information about hypothetical account
values and hypo-
====================================================================================================================================
ACTUAL HYPOTHETICAL
(5% ANNUAL RETURN BEFORE EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (3/1/06)(1) (8/31/06)(1) PERIOD(2) (8/31/06) PERIOD(3) RATIO
Institutional $1,000.00 $994.00 $3.24 $1,021.32 $3.92 0.77%
(1) The actual ending account value is based on the actual total return of the Fund for the period March 31, 2006, through August
31, 2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's
expense ratio and a hypothetical annual return of 5% before expenses over the six month period March 1, 2006, through August
31, 2006.
(2) Actual expenses are equal to the annualized expense ratio as indicated above multiplied by the average account value over the
period, multiplied by 154 (March 31, 2006, through August 31, 2006)/365. Because the share class has not been in existence
for a full six month period, the actual ending account value and expense information shown may not provide a meaningful
comparison to fund expense information of classes that show such data for a full six month period and, because the actual
ending account value and expense information in the expense example covers a short time period, return and expense data may
not be indicative of return and expense data for longer time periods.
(3) Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over
the period, multiplied by 184/365 to reflect a one-half year period. The hypothetical ending account value and expenses may
be used to compare ongoing costs of investing in the Institutional class shares of the Fund and other funds because such data
is based on a full six month period.
====================================================================================================================================
AIMinvestments.com SGRO-INS-1 A I M Distributors, Inc.
AIM Structured Growth Fund
SCHEDULE OF INVESTMENTS
August 31, 2006
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------
DOMESTIC COMMON STOCKS & OTHER EQUITY
INTERESTS-98.17%
AEROSPACE & DEFENSE-8.24%
Boeing Co. (The) 41,700 $ 3,123,330
- --------------------------------------------------------------------------
Honeywell International Inc. 9,200 356,224
- --------------------------------------------------------------------------
Lockheed Martin Corp. 40,300 3,328,780
- --------------------------------------------------------------------------
United Technologies Corp. 9,200 576,932
==========================================================================
7,385,266
==========================================================================
AGRICULTURAL PRODUCTS-0.42%
Archer-Daniels-Midland Co. 9,200 378,764
==========================================================================
AIR FREIGHT & LOGISTICS-3.59%
United Parcel Service, Inc.-Class B 45,900 3,215,295
==========================================================================
AIRLINES-1.89%
AMR Corp.(a) 82,000 1,693,300
==========================================================================
APPAREL RETAIL-1.08%
American Eagle Outfitters, Inc. 25,100 969,613
==========================================================================
APPLICATION SOFTWARE-3.07%
BEA Systems, Inc.(a) 65,900 904,807
- --------------------------------------------------------------------------
Intuit Inc.(a) 61,200 1,849,464
==========================================================================
2,754,271
==========================================================================
BIOTECHNOLOGY-2.54%
Celgene Corp.(a) 50,100 2,038,569
- --------------------------------------------------------------------------
ImClone Systems Inc.(a) 7,900 236,210
==========================================================================
2,274,779
==========================================================================
COMMUNICATIONS EQUIPMENT-4.79%
Cisco Systems, Inc.(a) 59,300 1,304,007
- --------------------------------------------------------------------------
Motorola, Inc. 127,700 2,985,626
==========================================================================
4,289,633
==========================================================================
COMPUTER & ELECTRONICS RETAIL-1.32%
Circuit City Stores, Inc. 50,100 1,182,861
==========================================================================
COMPUTER HARDWARE-4.71%
Hewlett-Packard Co. 83,400 3,049,104
- --------------------------------------------------------------------------
International Business Machines Corp. 10,500 850,185
- --------------------------------------------------------------------------
Palm, Inc.(a) 22,400 326,144
==========================================================================
4,225,433
==========================================================================
COMPUTER STORAGE & PERIPHERALS-1.00%
QLogic Corp.(a) 48,800 896,944
==========================================================================
</Table>
<Table>
SHARES VALUE
- --------------------------------------------------------------------------
<Caption>
CONSTRUCTION & FARM MACHINERY & HEAVY
TRUCKS-0.85%
Cummins Inc. 6,600 $ 757,812
==========================================================================
CONSUMER FINANCE-1.80%
AmeriCredit Corp.(a) 30,300 711,747
- --------------------------------------------------------------------------
First Marblehead Corp. (The) 17,100 897,750
==========================================================================
1,609,497
==========================================================================
DATA PROCESSING & OUTSOURCED SERVICES-0.76%
CSG Systems International, Inc.(a) 6,600 177,672
- --------------------------------------------------------------------------
Electronic Data Systems Corp. 21,100 502,813
==========================================================================
680,485
==========================================================================
DEPARTMENT STORES-3.12%
J.C. Penney Co., Inc. 44,400 2,798,976
==========================================================================
DRUG RETAIL-0.27%
Longs Drug Stores Corp. 5,300 240,779
==========================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-2.68%
Emerson Electric Co. 29,200 2,398,780
==========================================================================
FOOD RETAIL-0.84%
Kroger Co. (The) 31,600 752,396
==========================================================================
GENERAL MERCHANDISE STORES-0.19%
Big Lots, Inc.(a) 9,200 168,820
==========================================================================
HEALTH CARE DISTRIBUTORS-2.10%
AmerisourceBergen Corp. 29,000 1,280,640
- --------------------------------------------------------------------------
McKesson Corp. 11,900 604,520
==========================================================================
1,885,160
==========================================================================
HEALTH CARE TECHNOLOGY-0.38%
Emdeon Corp.(a) 29,000 343,650
==========================================================================
HOME FURNISHINGS-0.17%
Furniture Brands International, Inc. 7,900 151,285
==========================================================================
HYPERMARKETS & SUPER CENTERS-2.91%
Wal-Mart Stores, Inc. 58,400 2,611,648
==========================================================================
INDEPENDENT POWER PRODUCERS & ENERGY
TRADERS-3.08%
TXU Corp. 41,700 2,760,957
==========================================================================
</Table>
F-1
AIM Structured Growth Fund
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES-2.62%
3M Co. 17,100 $ 1,226,070
- --------------------------------------------------------------------------
General Electric Co. 33,000 1,123,980
==========================================================================
2,350,050
==========================================================================
INDUSTRIAL MACHINERY-0.91%
Illinois Tool Works Inc. 18,500 812,150
==========================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.85%
Qwest Communications International Inc.(a) 86,900 765,589
==========================================================================
INTERNET SOFTWARE & SERVICES-4.23%
Google Inc.-Class A(a) 10,020 3,792,871
==========================================================================
INVESTMENT BANKING & BROKERAGE-5.02%
Goldman Sachs Group, Inc. (The) 9,750 1,449,337
- --------------------------------------------------------------------------
Lehman Brothers Holdings Inc. 10,500 670,005
- --------------------------------------------------------------------------
Morgan Stanley 36,200 2,381,598
==========================================================================
4,500,940
==========================================================================
MOTORCYCLE MANUFACTURERS-0.35%
Harley-Davidson, Inc. 5,300 310,103
==========================================================================
MULTI-LINE INSURANCE-1.13%
American International Group, Inc. 15,800 1,008,356
==========================================================================
OIL & GAS EQUIPMENT & SERVICES-0.57%
BJ Services Co. 9,200 315,652
- --------------------------------------------------------------------------
Cameron International Corp.(a) 4,000 191,640
==========================================================================
507,292
==========================================================================
OIL & GAS REFINING & MARKETING-3.44%
Frontier Oil Corp. 61,200 2,001,240
- --------------------------------------------------------------------------
Tesoro Corp. 13,200 852,852
- --------------------------------------------------------------------------
Valero Energy Corp. 4,000 229,600
==========================================================================
3,083,692
==========================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-0.36%
Citigroup Inc. 6,600 325,710
==========================================================================
PAPER PACKAGING-0.20%
Temple-Inland Inc. 4,000 178,080
==========================================================================
PHARMACEUTICALS-2.26%
King Pharmaceuticals, Inc.(a) 38,200 619,604
- --------------------------------------------------------------------------
Merck & Co. Inc. 18,500 750,175
- --------------------------------------------------------------------------
Pfizer Inc. 23,700 653,172
==========================================================================
2,022,951
==========================================================================
</Table>
<Table>
SHARES VALUE
- --------------------------------------------------------------------------
<Caption>
RESIDENTIAL REIT'S-0.72%
AvalonBay Communities, Inc. 5,300 $ 641,300
==========================================================================
SEMICONDUCTOR EQUIPMENT-1.66%
Lam Research Corp.(a) 15,800 676,082
- --------------------------------------------------------------------------
MEMC Electronic Materials, Inc.(a) 21,100 816,148
==========================================================================
1,492,230
==========================================================================
SEMICONDUCTORS-5.55%
Atmel Corp.(a) 131,800 760,486
- --------------------------------------------------------------------------
Integrated Device Technology, Inc.(a) 21,100 363,553
- --------------------------------------------------------------------------
Intersil Corp.-Class A 29,000 735,150
- --------------------------------------------------------------------------
Micron Technology, Inc.(a) 30,300 523,584
- --------------------------------------------------------------------------
NVIDIA Corp.(a) 88,900 2,587,879
==========================================================================
4,970,652
==========================================================================
SOFT DRINKS-6.37%
Coca-Cola Co. (The) 44,400 1,989,564
- --------------------------------------------------------------------------
PepsiCo, Inc. 57,000 3,720,960
==========================================================================
5,710,524
==========================================================================
SPECIALTY STORES-0.65%
Office Depot, Inc.(a) 15,800 582,072
==========================================================================
STEEL-1.27%
Nucor Corp. 11,900 581,553
- --------------------------------------------------------------------------
Steel Dynamics, Inc. 10,500 554,295
==========================================================================
1,135,848
==========================================================================
SYSTEMS SOFTWARE-5.10%
CA Inc. 9,200 216,844
- --------------------------------------------------------------------------
Microsoft Corp. 104,200 2,676,898
- --------------------------------------------------------------------------
Red Hat, Inc.(a) 72,300 1,680,252
==========================================================================
4,573,994
==========================================================================
THRIFTS & MORTGAGE FINANCE-0.28%
Freddie Mac 4,000 254,400
==========================================================================
TOBACCO-2.83%
Altria Group, Inc. 22,200 1,854,366
- --------------------------------------------------------------------------
Loews Corp.-Carolina Group 11,900 681,394
==========================================================================
2,535,760
==========================================================================
Total Domestic Common Stocks & Other
Equity Interests (Cost $87,555,513) 87,980,968
==========================================================================
<Caption>
PRINCIPAL
AMOUNT
==========================================================================
U.S. GOVERNMENT AGENCY SECURITIES-1.34%
</Table>
F-2
AIM Structured Growth Fund
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------
FEDERAL HOME LOAN BANK (FHLB)-1.34%
Unsec. Disc. Notes,
4.98%, 09/01/06 (Cost $1,200,000)(b) $1,200,000 1,200,000
==========================================================================
U.S. TREASURY BILLS-0.22%
4.91%, 12/14/06 (Cost $197,163)(b)(c) 200,000(d) 197,205
==========================================================================
TOTAL INVESTMENTS-99.73% (Cost $88,952,676) 89,378,173
==========================================================================
OTHER ASSETS LESS LIABILITIES-0.27% 237,926
==========================================================================
NET ASSETS-100.00% $89,616,099
__________________________________________________________________________
==========================================================================
</Table>
Investment Abbreviations:
<Table>
Disc. - Discount
REIT - Real Estate Investment Trust
Unsec. - Unsecured
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security traded on a discount basis. The interest rate shown represents the
discount rate at the time of purchase by the Fund.
(c) In accordance with the procedures established by the Board of Trustees,
security fair valued based on an evaluated quote provided by an independent
pricing service. The value of this security at August 31, 2006 represented
0.22% of the Fund's Net Assets. See Note 1A.
(d) Principal balance was pledged as collateral to cover margin requirements for
open future contracts. See Note 1I and Note 6.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-3
AIM Structured Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2006
<Table>
ASSETS:
Investments, at value (cost $88,952,676) $89,378,173
- -----------------------------------------------------------
Cash 6,006
- -----------------------------------------------------------
Receivables for:
Variation margin 950
- -----------------------------------------------------------
Fund shares sold 203,377
- -----------------------------------------------------------
Dividends 51,442
- -----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 74
- -----------------------------------------------------------
Other assets 371,267
===========================================================
Total assets 90,011,289
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Fund shares reacquired 1,393
- -----------------------------------------------------------
Trustee deferred compensation and retirement
plans 74
- -----------------------------------------------------------
Fund expenses advanced 343,523
- -----------------------------------------------------------
Accrued distribution fees 4,296
- -----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 2,274
- -----------------------------------------------------------
Accrued transfer agent fees 237
- -----------------------------------------------------------
Accrued operating expenses 43,393
===========================================================
Total liabilities 395,190
===========================================================
Net assets applicable to shares outstanding $89,616,099
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $89,135,099
- -----------------------------------------------------------
Undistributed net investment income 124,412
- -----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (73,391)
- -----------------------------------------------------------
Unrealized appreciation of investment
securities and futures contracts 429,979
===========================================================
$89,616,099
___________________________________________________________
===========================================================
NET ASSETS:
Class A $ 862,173
___________________________________________________________
===========================================================
Class B $ 661,580
___________________________________________________________
===========================================================
Class C $ 599,434
___________________________________________________________
===========================================================
Class R $ 595,196
___________________________________________________________
===========================================================
Institutional Class $86,897,716
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 86,820
___________________________________________________________
===========================================================
Class B 66,835
___________________________________________________________
===========================================================
Class C 60,554
___________________________________________________________
===========================================================
Class R 60,001
___________________________________________________________
===========================================================
Institutional Class 8,739,207
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 9.93
- -----------------------------------------------------------
Offering price per share
(Net asset value of $9.93 divided by 94.50%) $ 10.51
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per share $ 9.90
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per share $ 9.90
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per share $ 9.92
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per share $ 9.94
___________________________________________________________
===========================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-4
AIM Structured Growth Fund
STATEMENT OF OPERATIONS
For the period March 31, 2006 (Date operations commenced) through August 31,
2006
<Table>
INVESTMENT INCOME:
Dividends $ 62,404
- -----------------------------------------------------------------------
Interest 51,970
=======================================================================
Total investment income 114,374
=======================================================================
EXPENSES:
Advisory fees 19,191
- -----------------------------------------------------------------------
Administrative services fees 21,096
- -----------------------------------------------------------------------
Custodian fees 3,339
- -----------------------------------------------------------------------
Distribution fees:
Class A 775
- -----------------------------------------------------------------------
Class B 2,644
- -----------------------------------------------------------------------
Class C 2,494
- -----------------------------------------------------------------------
Class R 1,243
- -----------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 807
- -----------------------------------------------------------------------
Transfer agent fees -- Institutional 30
- -----------------------------------------------------------------------
Trustees' and officer's fees and benefits 6,124
- -----------------------------------------------------------------------
Registration and filing fees 54,241
- -----------------------------------------------------------------------
Professional services fees 47,947
- -----------------------------------------------------------------------
Other 14,226
=======================================================================
Total expenses 174,157
=======================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (143,014)
=======================================================================
Net expenses 31,143
=======================================================================
Net investment income 83,231
=======================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FUTURES CONTRACTS:
Net realized gain (loss) from Investment securities (73,391)
=======================================================================
Change in net unrealized appreciation of:
Investment securities 425,497
- -----------------------------------------------------------------------
Futures contracts 4,482
=======================================================================
429,979
=======================================================================
Net gain from investment securities and future contracts 356,588
=======================================================================
Net increase in net assets resulting from operations $ 439,819
_______________________________________________________________________
=======================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-5
AIM Structured Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
For the period March 31, 2006 (Date operations commenced) through August 31,
2006
<Table>
<Caption>
2006
- ---------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 83,231
- ---------------------------------------------------------------------------
Net realized gain (loss) from investment securities (73,391)
- ---------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and futures contracts 429,979
===========================================================================
Net increase in net assets resulting from operations 439,819
===========================================================================
Share transactions-net:
Class A 865,449
- ---------------------------------------------------------------------------
Class B 666,910
- ---------------------------------------------------------------------------
Class C 605,418
- ---------------------------------------------------------------------------
Class R 600,010
- ---------------------------------------------------------------------------
Institutional Class 86,438,493
===========================================================================
Net increase in net assets resulting from share
transactions 89,176,280
===========================================================================
Net increase in net assets 89,616,099
===========================================================================
NET ASSETS:
Beginning of period --
===========================================================================
End of period (including undistributed net investment
income of $124,412) $89,616,099
___________________________________________________________________________
===========================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
August 31, 2006
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Structured Growth Fund (the "Fund") is a series portfolio of AIM Counselor
Series Trust (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 six separate
portfolios, each authorized to issue an unlimited number of shares of beneficial
interest. The Fund currently offers multiple classes of shares. Matters
affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The Fund commenced operations on
March 31, 2006.
The Fund's investment objective is to provide long-term growth of capital.
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. Securities traded in the over-the-counter
market (but not securities reported on the NASDAQ Stock Exchange) are
valued based on the prices furnished by independent pricing services, in
which case the securities may be considered fair valued, or by market
makers. Each security reported on the NASDAQ Stock Exchange is valued at
the NASDAQ Official Closing Price ("NOCP") as of the close of the customary
trading session on the valuation date or absent a NOCP, at the closing bid
price.
Futures contracts are valued at the final settlement price set by an
exchange on which they are principally traded. Listed options are valued at
the mean between the last bid and the ask prices from the exchange on which
they are principally traded. Options not listed on an exchange are valued
by an independent source at the mean between the last bid and ask prices.
For purposes of determining net asset value per share, futures and option
contracts generally are valued 15 minutes after the close of the customary
trading session of the New York Stock Exchange ("NYSE").
Investments in open-end registered investment companies and closed-end
registered investment companies that do not trade on an exchange are valued
at the end of day net asset value per share. Investments in closed-end
registered investment companies that trade on an exchange are valued at the
last sales price as of the close of the customary trading session on the
exchange where the security is principally traded.
Debt obligations (including convertible bonds) are fair valued using an
evaluated quote provided by an independent pricing service. Evaluated
quotes provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
institution-size trading in similar groups of securities, developments
related to specific securities, dividend rate, yield, quality, type of
issue, coupon
F-6
AIM Structured Growth Fund
rate, maturity, individual trading characteristics and other market data.
Short-term obligations having 60 days or less to maturity and commercial
paper are recorded at amortized cost which approximates value.
Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and
are valued at the last bid price in the case of equity securities and in
the case of debt obligations, the mean between the last bid and asked
prices. Foreign securities (including foreign exchange contracts) are
converted into U.S. dollar amounts using the applicable exchange rates as
of the close of the NYSE. Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in computing the net asset value
of the Fund's shares are determined as of the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes and the
close of the customary trading session of the NYSE which would not
ordinarily be reflected in the computation of the Fund's net asset value.
If the event is likely to have affected the closing price of the security,
the security will be valued at fair value in good faith using procedures
approved by the Board of Trustees. Adjustments to closing prices to reflect
fair value may also be based on a screening process of an independent
pricing service to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign
security trades is not the current value as of the close of the NYSE.
Foreign securities meeting the approved degree of certainty that the price
is not reflective of current value will be priced at the indication of fair
value from the independent pricing service. Multiple factors may be
considered by the independent pricing service in determining adjustments to
reflect fair value and may include information relating to sector indices,
ADRs and domestic and foreign index futures.
Securities for which market quotations are not readily available or are
unreliable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers following procedures approved by
the Board of Trustees. Issuer specific events, market trends, bid/ask
quotes of brokers and information providers and other market data may be
reviewed in the course of making a good faith determination of a security's
fair value.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date. Bond premiums
and discounts are amortized and/or accreted for financial reporting
purposes.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, AIM may
determine the country in which an issuer is located and/or credit risk
exposure based on various factors. These factors include the laws of the
country under which the issuer is organized, where the issuer maintains a
principal office, the country in which the issuer derives 50% or more of
its total revenues and the country that has the primary market for the
issuer's securities, as well as other criteria. Among the other criteria
that may be evaluated for making this determination are the country in
which the issuer maintains 50% or more of its assets, the type of security,
financial guarantees and enhancements, the nature of the collateral and the
sponsor organization. Country of issuer and/or credit risk exposure has
been determined to be the United States of America unless otherwise noted.
D. 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 treat a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of
Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial statements.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund are charged to the operations of such class. Transfer
agency fees and expenses and other shareholder recordkeeping fees and
expenses attributable to the Institutional Class are charged to such class.
Transfer agency fees and expenses and other shareholder recordkeeping fees
and expenses relating to all other classes are allocated among those
classes based on relative net assets. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- 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 including estimates and assumptions related to
taxation. Actual results could differ from those estimates.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust (including the
Trust's investment manager) is indemnified against certain liabilities that
may arise out of performance of their duties to the Fund. Additionally, in
the normal course of business, the Fund enters into contracts that contain
a variety of indemnification clauses. The Fund's maximum exposure under
F-7
AIM Structured Growth Fund
these arrangements is unknown as this would involve future claims that may
be made against the Fund that have not yet occurred. The risk of material
loss as a result of such indemnification claims is considered remote.
I. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts.
Initial margin deposits required upon entering into futures contracts are
satisfied by the segregation of specific securities as collateral for the
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contracts are open, changes in the value of
the contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are received or
made depending upon whether unrealized gains or losses are incurred. When
the contracts are closed, the Fund recognizes a realized gain or loss equal
to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. If the Fund were unable
to liquidate a futures contract and/or enter into an offsetting closing
transaction, the Fund would continue to be subject to market risk with
respect to the value of the contracts and continue to be required to
maintain the margin deposits on the futures contracts. Risks may exceed
amounts recognized in the Statement of Assets and Liabilities.
J. COLLATERAL -- To the extent the Fund has pledged or segregated a security
as collateral and that security is subsequently sold, it is the Fund's
practice to replace such collateral no later than the next business day.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM based on the annual rate of the Fund's
average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- --------------------------------------------------------------------
First $250 million 0.60%
- --------------------------------------------------------------------
Next $250 million 0.575%
- --------------------------------------------------------------------
Next $500 million 0.55%
- --------------------------------------------------------------------
Next $1.5 billion 0.525%
- --------------------------------------------------------------------
Next $2.5 billion 0.50%
- --------------------------------------------------------------------
Next $2.5 billion 0.475%
- --------------------------------------------------------------------
Next $2.5 billion 0.45%
- --------------------------------------------------------------------
Over $10 billion 0.425%
___________________________________________________________________
====================================================================
</Table>
Under the terms of a master sub-advisory agreement between AIM and INVESCO
Institutional (N.A.), Inc. ("INVESCO"), AIM pays INVESCO 40% of the amount of
AIM's compensation on the sub-advised assets.
AIM has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Class A, Class B, Class C, Class R
and Institutional Class shares to 1.00%, 1.75%, 1.75%, 1.25% and 0.75% of
average daily net assets, respectively, through June 30, 2007. In determining
the advisor's obligation to waive advisory fees and/or reimburse expenses, the
following expenses are not taken into account, and could cause the net annual
operating expenses to exceed the numbers reflected above: (i) interest; (ii)
taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v)
expenses related to a merger or reorganization, as approved by the Fund's Board
of Trustees; and (vi) expenses that the Fund has incurred but did not actually
pay because of an expense offset arrangement. Currently, in addition to the
expense reimbursement arrangement with AMVESCAP PLC ("AMVESCAP") described more
fully below, the expense offset arrangements from which the Fund may benefit are
in the form of credits that the Fund receives from banks where the Fund or its
transfer agent has deposit accounts in which it holds uninvested cash. Those
credits are used to pay certain expenses incurred by the Fund.
For the period March 31, 2006 (date operations commenced) to August 31,
2006, AIM waived advisory fees of $19,191 and reimbursed fund level expenses of
$122,351 and reimbursed class level expenses of $215, $183, $173, $172, and $30
for Class A, Class B, Class C, Class R and Institutional Class shares,
respectively. At August 31, 2006 the advisor advanced to the Fund $343,523 for
the payment of fund expenses.
At the request of the Trustees of the Trust, AMVESCAP agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. These expenses along with the related expense
reimbursement are included in the Statement of Operations. For the period March
31, 2006 (date operations commenced) to August 31, 2006, AMVESCAP did not
reimburse any expenses.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. Pursuant to such agreement, for the period
March 31, 2006 (date operations commenced) to August 31, 2006, AIM was paid
$21,096.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay AIM Investment Services, Inc. ("AIS") a fee for providing transfer agency
and shareholder services to the Fund and reimburse AIS for certain expenses
incurred by AIS in the course of providing such services. AIS may make payments
to intermediaries that provide omnibus account services, sub-accounting services
and/or networking services. All fees payable by AIS to intermediaries that
provide omnibus account services or sub-accounting are charged back to the Fund,
subject to certain limitations approved by the Trust's Board of Trustees. For
the period March 31, 2006 (date operations commenced) to August 31, 2006, the
Fund paid AIS $807 for Class A, Class B, Class C and Class R share classes and
$30 for Institutional Class shares.
F-8
AIM Structured Growth Fund
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class B,
Class C, Class R and Institutional Class shares of the Fund. The Trust has
adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A, Class B, Class C and Class R shares (collectively the "Plans").
The Fund, pursuant to the Plans, pays ADI compensation at the annual rate of
0.25% of the Fund's average daily net assets of Class A shares, 1.00% of the
average daily net assets of Class B and Class C shares and 0.50% of the average
daily net assets of Class R shares. Of the Rule 12b-1 payments, up to 0.25% of
the average daily net assets of the Class A, Class B, Class C or Class R shares
may be paid to furnish continuing personal shareholder services to customers who
purchase and own shares of such classes. Any amounts not paid as a service fee
under the Plans would constitute an asset-based sales charge. National
Association of Securities Dealers ("NASD") Rules impose a cap on the total sales
charges, including asset-based sales charges that may be paid by any class of
shares of the Fund. Pursuant to the Plans, for the period March 31, 2006 (date
operations commenced) to August 31, 2006, the Class A, Class B, Class C and
Class R shares paid $775, $2,644, $2,494 and $1,243, respectively.
Front-end sales commissions and contingent deferred sales charges ("CDSC")
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. CDSC are deducted from
redemption proceeds prior to remittance to the shareholder. During the period
March 31, 2006 (date operations commenced) to August 31, 2006, ADI advised the
Fund that it retained $566 in front-end sales commissions from the sale of Class
A shares and $0, $0, $0 and $0 from Class A, Class B, Class C and Class R
shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AIS and/or ADI.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions and (ii) custodian credits which
result from periodic overnight cash balances at the custodian. For the period
March 31, 2006 (date operations commenced) to August 31, 2006, the Fund received
credits from these arrangements, which resulted in the reduction of the Fund's
total expenses of $699.
NOTE 4--TRUSTEES' AND OFFICER'S FEES AND BENEFITS
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to each Trustee and Officer of the Fund who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also
include amounts accrued by the Fund to fund such deferred compensation amounts.
Those Trustees who defer compensation have the option to select various AIM
Funds in which their deferral accounts shall be deemed to be invested. Finally,
current Trustees are eligible to participate in a retirement plan that provides
for benefits to be paid upon retirement to Trustees over a period of time based
on the number of years of service. The Fund may have certain former Trustees who
also participate in a retirement plan and receive benefits under such plan.
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund
to fund such retirement benefits. Obligations under the deferred compensation
and retirement plans represent unsecured claims against the general assets of
the Fund.
During the period March 31, 2006 (date operations commenced) to August 31,
2006, the Fund paid legal fees of $571 for services rendered by Kramer, Levin,
Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that
firm is a Trustee of the Trust.
NOTE 5--BORROWINGS
Pursuant to an exemptive order from the Securities and Exchange Commission
("SEC"), the Fund may participate in an interfund lending facility that AIM has
established for temporary borrowings by the AIM Funds. An interfund loan will be
made under this facility only if the loan rate (an average of the rate available
on bank loans and the rate available on investments in overnight repurchase
agreements) is favorable to both the lending fund and the borrowing fund. A loan
will be secured by collateral if the Fund's aggregate borrowings from all
sources exceeds 10% of the Fund's total assets. To the extent that the loan is
required to be secured by collateral, the collateral is marked to market daily
to ensure that the market value is at least 102% of the outstanding principal
value of the loan.
The Fund is a participant in an uncommitted unsecured revolving credit
facility with State Street Bank and Trust Company ("SSB"). The Fund may borrow
up to the lesser of (i) $125,000,000, or (ii) the limits set by its prospectus
for borrowings. The Fund and other funds advised by AIM which are parties to the
credit facility can borrow on a first come, first served basis. Principal on
each loan outstanding shall bear interest at the bid rate quoted by SSB at the
time of the request for the loan.
During the period March 31, 2006 (date operations commenced) to August 31,
2006, the Fund did not borrow or lend under the interfund lending facility or
borrow under the uncommitted unsecured revolving credit facility.
Additionally, the Fund is permitted to temporarily carry a negative or
overdrawn balance in its account with SSB, the custodian bank. To compensate the
custodian bank for such overdrafts, the overdrawn Fund may either (i) leave
funds as a compensating balance in the account so the custodian bank can be
compensated by earning the additional interest; or (ii) compensate by paying the
custodian bank at a rate agreed upon by the custodian bank and AIM, not to
exceed the rate contractually agreed upon.
F-9
AIM Structured Growth Fund
NOTE 6--FUTURES CONTRACTS
On August 31, 2006, $200,000 principal amount of U.S. Treasury obligations were
pledged as collateral to cover margin requirements for open futures contracts.
<Table>
<Caption>
OPEN FUTURES CONTRACTS AT PERIOD END
- -------------------------------------------------------------------------------------------------------------------
NUMBER OF MONTH/ VALUE UNREALIZED
CONTRACT CONTRACTS COMMITMENT 08/31/06 APPRECIATION
- -------------------------------------------------------------------------------------------------------------------
Russell E-Mini 1000 Index 13 Sep.-06/Long $921,050 $4,482
___________________________________________________________________________________________________________________
===================================================================================================================
</Table>
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
There were no ordinary income or long term capital gain distributions paid
during the period March 31, 2006 (date operations commenced) to August 31, 2006.
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2006, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2006
- ---------------------------------------------------------------------------
Undistributed ordinary income $ 124,477
- ---------------------------------------------------------------------------
Unrealized appreciation -- investments 400,653
- ---------------------------------------------------------------------------
Capital loss carryover (44,065)
- ---------------------------------------------------------------------------
Temporary book/tax differences (65)
- ---------------------------------------------------------------------------
Shares of beneficial interest 89,135,099
===========================================================================
Total net assets $89,616,099
___________________________________________________________________________
===========================================================================
</Table>
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is due to differences in the timing of recognition of gains and
losses on investments for tax and book purposes. The Fund's unrealized
appreciation (depreciation) difference is attributable primarily to losses on
wash sales.
The temporary book/tax differences are a result of timing differences
between book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the trustee deferral of compensation and
retirement plan expenses.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund has a capital loss carryforward as of August 31, 2006 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------
August 31, 2014 $44,065
_____________________________________________________________________________
=============================================================================
</Table>
* Capital loss carryforward as of the date listed above is reduced for
limitations, if any, to the extent required by the Internal Revenue Code.
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the period March
31, 2006 (date operations commenced) to August 31, 2006 was $88,849,257 and
$1,220,353, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $1,379,524
- ------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (978,871)
==============================================================================
Net unrealized appreciation of investment securities $ 400,653
______________________________________________________________________________
==============================================================================
Cost of investments for tax purposes is $88,977,520.
</Table>
F-10
AIM Structured Growth Fund
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of costs incurred during
the start up period of the Fund, on August 31, 2006, undistributed net
investment income was increased by $41,181 and shares of beneficial interest
decreased by $41,181. This reclassification had no effect on the net assets of
the Fund.
NOTE 10--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A, Class B,
Class C, Class R and Institutional Class. Class A shares are sold with a
front-end sales charge. Class B shares and Class C shares are sold with CDSC.
Class R shares and Institutional Class shares are sold at net asset value. Under
certain circumstances, Class A shares are sold without a sales charge. In
addition, under certain circumstances, Class A shares and Class R shares are
subject to CDSC. Generally, Class B shares will automatically convert to Class A
shares on or about the month-end which is at least eight years after the date of
purchase.
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ----------------------------------------------------------------------------------------
MARCH 31, 2006 (DATE
OPERATIONS COMMENCED)
THROUGH
AUGUST 31, 2006(a)
--------------------------
SHARES AMOUNT
- ----------------------------------------------------------------------------------------
Sold:
Class A 89,400 $ 891,029
- ----------------------------------------------------------------------------------------
Class B 66,886 667,410
- ----------------------------------------------------------------------------------------
Class C 60,554 605,418
- ----------------------------------------------------------------------------------------
Class R 60,001 600,010
- ----------------------------------------------------------------------------------------
Institutional Class 8,742,481 86,471,025
========================================================================================
Reacquired:
Class A (2,580) (25,580)
- ----------------------------------------------------------------------------------------
Class B (51) (500)
- ----------------------------------------------------------------------------------------
Class C -- --
- ----------------------------------------------------------------------------------------
Class R -- --
- ----------------------------------------------------------------------------------------
Institutional Class (3,274) (32,532)
========================================================================================
9,013,417 $ 89,176,280
________________________________________________________________________________________
========================================================================================
</Table>
(a) 92% of the outstanding shares of the Fund are owned by affiliated mutual
funds. Affiliated mutual funds are other mutual funds that are also
advised by AIM.
NOTE 11--NEW ACCOUNTING STANDARD
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48").
FIN 48 prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement for a tax position taken or
expected to be taken in a tax return. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. The provisions for FIN 48 are effective for
fiscal years beginning after December 15, 2006. Management is currently
assessing the impact of FIN 48, if any, on the Fund's financial statements and
intends for the Fund to adopt the FIN 48 provisions during 2007.
F-11
AIM Structured Growth Fund
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
-------------- -------------- -------------- -------------- --------------
MARCH 31, 2006 MARCH 31, 2006 MARCH 31, 2006 MARCH 31, 2006 MARCH 31, 2006
(DATE (DATE (DATE (DATE (DATE
OPERATIONS OPERATIONS OPERATIONS OPERATIONS OPERATIONS
COMMENCED) TO COMMENCED) TO COMMENCED) TO COMMENCED) TO COMMENCED) TO
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
2006 2006 2006 2006 2006
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $10.00 $10.00 $10.00 $10.00 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income(a) 0.11 0.08 0.08 0.10 0.12
- ---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized
and unrealized) (0.18) (0.18) (0.18) (0.18) (0.18)
===========================================================================================================================
Total from investment
operations (0.07) (0.10) (0.10) (0.08) (0.06)
===========================================================================================================================
Net asset value, end of period $ 9.93 $ 9.90 $ 9.90 $ 9.92 $ 9.94
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(b) (0.70)% (1.00)% (1.00)% (0.80)% (0.60)%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $ 862 $ 662 $ 599 $ 595 $ 86,898
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net
assets:
With fee waivers and/or
expense reimbursements(c) 1.03% 1.78% 1.78% 1.28% 0.77%
- ---------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or
expense reimbursements(c) 5.52% 6.27% 6.27% 5.77% 5.20%
===========================================================================================================================
Ratio of net investment income
to average net assets(c) 2.57% 1.82% 1.82% 2.32% 2.83%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate(d) 7% 7% 7% 7% 7%
___________________________________________________________________________________________________________________________
===========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges, if any, and is
not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $734,531,
$626,644, $591,054, $589,073 and $5,039,630 for Class A, Class B, Class
C, Class R and Institutional Class shares, respectively.
(d) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
NOTE 13--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING
On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment
advisor to certain AIM Funds), AIM and A I M Distributors, Inc. ("ADI") (the
distributor of the retail AIM Funds) reached final settlements with certain
regulators, including the Securities and Exchange Commission ("SEC"), the New
York Attorney General and the Colorado Attorney General, to resolve civil
enforcement actions and/or investigations related to market timing and related
activity in the AIM Funds, including those formerly advised by IFG. As part of
the settlements, a $325 million fair fund ($110 million of which is civil
penalties) has been created to compensate shareholders harmed by market timing
and related activity in funds formerly advised by IFG. Additionally, AIM and ADI
created a $50 million fair fund ($30 million of which is civil penalties) to
compensate shareholders harmed by market timing and related activity in funds
advised by AIM, which was done pursuant to the terms of the settlement. These
two fair funds may increase as a result of contributions from third parties who
reach final settlements with the SEC or other regulators to resolve allegations
of market timing and/or late trading that also may have harmed applicable AIM
Funds. These two fair funds will be distributed in accordance with a methodology
to be determined by AIM's independent distribution consultant, in consultation
with AIM and the independent trustees of the AIM Funds and acceptable to the
staff of the SEC. Management of AIM and the Fund are unable to estimate the
impact, if any, that the distribution of these two fair funds may have on the
Fund or whether such distribution will have an impact on the Fund's financial
statements in the future.
At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"),
the parent company of IFG and AIM, has agreed to reimburse expenses incurred by
the AIM Funds related to market timing matters.
PENDING LITIGATION AND REGULATORY INQUIRIES
On August 30, 2005, the West Virginia Office of the State
Auditor -- Securities Commission ("WVASC") issued a Summary Order to Cease and
Desist and Notice of Right to Hearing to AIM and ADI (Order No. 05-1318). The
WVASC makes findings of fact that AIM and ADI entered into certain arrangements
permitting market timing of the AIM Funds and failed to disclose these
arrangements in the prospectuses for such Funds, and conclusions of
F-12
AIM Structured Growth Fund
NOTE 13--LEGAL PROCEEDINGS--(CONTINUED)
law to the effect that AIM and ADI violated the West Virginia securities laws.
The WVASC orders AIM and ADI to cease any further violations and seeks to impose
monetary sanctions, including restitution to affected investors, disgorgement of
fees, reimbursement of investigatory, administrative and legal costs and an
"administrative assessment," to be determined by the Commissioner. Initial
research indicates that these damages could be limited or capped by statute.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or
related entities and individuals, depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related activity in
the AIM Funds;
- that certain AIM Funds inadequately employed fair value pricing;
- that the defendants charged excessive advisory and/or distribution fees and
failed to pass on to shareholders the perceived savings generated by
economies of scale and that the defendants adopted unlawful distribution
plans; and
- that the defendants improperly used the assets of the AIM Funds to pay
brokers to aggressively promote the sale of the AIM Funds over other mutual
funds and that the defendants concealed such payments from investors by
disguising them as brokerage commissions. (all the claims in this category
of lawsuits were dismissed with prejudice by the court on September 29,
2006, except for the Section 36(b) claim which was dismissed with leave to
amend to plead it properly as a derivative claim).
These lawsuits allege as theories of recovery, depending on the lawsuit,
violations of various provisions of the Federal and state securities laws,
negligence, breach of fiduciary duty and/or breach of contract. These lawsuits
seek remedies that include, depending on the lawsuit, damages, restitution,
injunctive relief, imposition of a constructive trust, removal of certain
directors and/or employees, rescission of certain AIM Funds' advisory agreements
and/or distribution plans and recovery of all fees paid, an accounting of all
fund-related fees, commissions and soft dollar payments, restitution of all
commissions and fees paid, and prospective relief in the form of reduced fees.
All lawsuits based on allegations of market timing, late trading and related
issues have been transferred to the United States District Court for the
District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court,
plaintiffs in these lawsuits consolidated their claims for pre-trial purposes
into three amended complaints against various AIM- and IFG-related parties: (i)
a Consolidated Amended Class Action Complaint purportedly brought on behalf of
shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative
Complaint purportedly brought on behalf of the AIM Funds and fund registrants;
and (iii) an Amended Class Action Complaint for Violations of the Employee
Retirement Income Securities Act ("ERISA") purportedly brought on behalf of
participants in AMVESCAP's 401(k) plan. Based on orders issued by the MDL Court,
all claims asserted against the AIM Funds that have been transferred to the MDL
Court have been dismissed, although certain Funds remain nominal defendants in
the Consolidated Amended Fund Derivative Complaint. On September 15, 2006, the
MDL Court granted the AMVESCAP defendants' motion to dismiss the Amended Class
Action Complaint for Violations of ERISA and dismissed such Complaint. The
plaintiff has commenced an appeal from that decision.
IFG, AIM, ADI and/or related entities and individuals have received inquiries
from numerous regulators in the form of subpoenas or other oral or written
requests for information and/or documents related to one or more of the
following issues, among others, some of which concern one or more AIM Funds:
market timing activity, late trading, fair value pricing, excessive or improper
advisory and/or distribution fees, mutual fund sales practices, including
revenue sharing and directed-brokerage arrangements, investments in securities
of other registered investment companies, contractual plans, issues related to
Section 529 college savings plans and procedures for locating lost security
holders. IFG, AIM and ADI have advised the Fund that they are providing full
cooperation with respect to these inquiries. Regulatory actions and/or
additional civil lawsuits related to these or other issues may be filed against
the AIM Funds, IFG, AIM and/or related entities and individuals in the future.
At the present time, management of AIM and the Fund are unable to estimate the
impact, if any, that the outcome of the Pending Litigation and Regulatory
Inquiries described above may have on AIM, ADI or the Fund.
F-13
AIM Structured Growth Fund
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Counselor Series Trust
and Shareholders of AIM Structured Growth Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of AIM Structured Growth Fund (one of
the funds constituting AIM Counselor Series Trust, hereafter referred to as the
"Fund") at August 31, 2006, and the results of its operations, the changes in
its net assets and the financial highlights for the period March 31, 2006 (date
operations commenced) through August 31, 2006, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at August 31, 2006 by
correspondence with the custodian and brokers, provides a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
October 26, 2006
Houston, Texas
F-14
AIM Structured Growth Fund
TAX DISCLOSURE
TAX INFORMATION FOR NON-RESIDENT ALIEN SHAREHOLDER
The percentage of qualifying assets not subject to the U.S. estate tax for the
fiscal quarters ended May 31, 2006 and August 31, 2006, are 1.79% and 1.57%,
respectively.
F-15
AIM Structured Growth Fund
TRUSTEES AND OFFICERS
The address of each trustee and officer of AIM Counselor Series Trust (the
"Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee
oversees 109 portfolios in the AIM Funds complex. The trustees serve for the
life of the Trust, subject to their earlier death, incapacitation, resignation,
retirement or removal as more specifically provided in the Trust's
organizational documents. Column two below includes length of time served with
predecessor entities, if any.
<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 2003 Director and Chairman, A I M Management None
Trustee and Vice Chair Group Inc. (financial services holding
company); Director and Vice Chairman,
AMVESCAP PLC; Chairman, AMVESCAP
PLC -- AIM Division (parent of AIM and a
global investment management firm) and
Trustee and Vice Chair of The AIM Family
of Funds--Registered Trademark--
Formerly: President and Chief Executive
Officer, A I M Management Group Inc.;
Director, Chairman and President, A I M
Advisors, Inc. (registered investment
advisor); Director and Chairman, A I M
Capital Management, Inc. (registered
investment advisor), A I M Distributors,
Inc. (registered broker dealer), AIM
Investment Services, Inc., (registered
transfer agent), and Fund Management
Company (registered broker dealer); and
Chief Executive Officer, AMVESCAP
PLC -- Managed Products; and President
and Principal Executive Officer of The
AIM Family of Funds--Registered
Trademark--
- -------------------------------------------------------------------------------------------------------------------------------
Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and
Trustee, President and President, A I M Management Group Inc.,
Principal AIM Mutual Fund Dealer Inc., AIM Funds
Executive Officer Management Inc. and 1371 Preferred Inc.;
Director and President, A I M Advisors,
Inc., INVESCO Funds Group, Inc. and AIM
GP Canada Inc.; Director, A I M Capital
Management, Inc. and A I M Distributors,
Inc.; Director and Chairman, AIM
Investment Services, Inc., Fund
Management Company and INVESCO
Distributors, Inc.; Director, President
and Chairman, AVZ Callco Inc.; AMVESCAP
Inc. and AIM Canada Holdings Inc.;
Director and Chief Executive Officer,
AIM Trimark Global Fund Inc. and AIM
Trimark Canada Fund Inc.; Trustee,
President and Principal Executive
Officer of The AIM Family of
Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust); and Trustee
and Executive Vice President, The AIM
Family of Funds--Registered Trademark--
(AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust only)
Formerly: President and Principal None
Executive Officer, The AIM Family of
Funds--Registered Trademark-- (AIM
Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free
Investments Trust only); Chairman, AIM
Canada Holdings, Inc.; Executive Vice
President and Chief Operations Officer,
AIM Funds Management Inc.; President,
AIM Trimark Global Fund Inc. and AIM
Trimark Canada Fund Inc.; and Director,
Trimark Trust
- -------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 2003 Chairman, Crockett Technology Associates ACE Limited (insurance company);
Trustee and Chair (technology consulting company) and Captaris, Inc. (unified
messaging provider)
- -------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 1983 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2003 Retired Badgley Funds, Inc. (registered
Trustee investment company (2 portfolios))
Formerly: Partner, law firm of Baker &
McKenzie
- -------------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2000 Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm); and Director,
Policy Studies, Inc. and Van Gilder
Insurance Corporation
- -------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2003 Director of a number of public and None
Trustee private business corporations, including
the Boss Group Ltd. (private investment
and management); Cortland Trust, Inc.
(Chairman) (registered investment
company (3 portfolios)); Annuity and
Life Re (Holdings), Ltd. (insurance
company); CompuDyne Corporation
(provider of products and services to
the public security market); and
Homeowners of America Holding
Corporation
Formerly: Director, President and Chief
Executive Officer, Volvo Group North
America, Inc.; Senior Vice President, AB
Volvo; and Director of various
affiliated Volvo companies; and
Director, Magellan Insurance Company
- -------------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 2003 Chief Executive Officer, Twenty First Administaff, and Discovery Global
Trustee Century Group, Inc. (government affairs Education Fund (non-profit)
company); and Owner, Dos Angelos Ranch,
L.P.
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company)
- -------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Cortland Trust, Inc. (registered
Trustee Naftalis and Frankel LLP investment company (3 portfolios))
- -------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2003 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- -------------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 2003 Partner, law firm of Pennock & Cooper None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Larry Soll -- 1942 1997 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Raymond Stickel, Jr. -- 1944 2005 Retired Director, Mainstay VP Series
Trustee Funds, Inc. (21 portfolios)
Formerly: Partner, Deloitte & Touche
- -------------------------------------------------------------------------------------------------------------------------------
</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. Taylor 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.
F-16
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Structured Growth Fund
The address of each trustee and officer of AIM Counselor Series Trust (the
"Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee
oversees 109 portfolios in the AIM Funds complex. The trustees serve for the
life of the Trust, subject to their earlier death, incapacitation, resignation,
retirement or removal as more specifically provided in the Trust's
organizational documents. Column two below includes length of time served with
predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/
POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------
Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer N/A
Senior Vice President and of The AIM Family of Funds--Registered
Senior Officer Trademark--
Formerly: Director of Compliance and
Assistant General Counsel, ICON
Advisers, Inc.; Financial Consultant,
Merrill Lynch; General Counsel and
Director of Compliance, ALPS Mutual
Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
John M. Zerr -- 1962 2006 Director, Senior Vice President, N/A
Senior Vice President, Chief Secretary and General Counsel, A I M
Legal Officer and Secretary Management Group Inc. (financial
services holding company) and A I M
Advisors, Inc.; Director, Vice President
and Secretary, INVESCO Distributors,
Inc.; Vice President and Secretary,
A I M Capital Management, Inc., AIM
Investment Services, Inc., and Fund
Management Company; Senior Vice
President and Secretary, A I M
Distributors, Inc.; Director, INVESCO
Funds Group Inc.; and Senior Vice
President, Chief Legal Officer and
Secretary of The AIM Family of
Funds--Registered Trademark--
Formerly: Chief Operating Officer,
Senior Vice President, General Counsel,
and Secretary, Liberty Ridge Capital,
Inc. (an investment adviser); Vice
President and Secretary, PBHG Funds (an
investment company); Vice President and
Secretary, PBHG Insurance Series Fund
(an investment company); General Counsel
and Secretary, Pilgrim Baxter Value
Investors (an investment adviser); Chief
Operating Officer, General Counsel and
Secretary, Old Mutual Investment
Partners (a broker-dealer); General
Counsel and Secretary, Old Mutual Fund
Services (an administrator); General
Counsel and Secretary, Old Mutual
Shareholder Services (a shareholder
servicing center); Executive Vice
President, General Counsel and
Secretary, Old Mutual Capital, Inc. (an
investment adviser); and Vice President
and Secretary, Old Mutual Advisors Funds
(an investment company)
- ------------------------------------------------------------------------------------------------------------------------------
Lisa O. Brinkley -- 1959 2004 Global Compliance Director, AMVESCAP N/A
Vice President PLC; and Vice President of The AIM
Family of Funds--Registered Trademark--
Formerly: Senior Vice President, A I M
Management Group Inc. (financial
services holding company); Senior Vice
President and Chief Compliance Officer,
A I M Advisors, Inc. and The AIM Family
of Funds--Registered Trademark--; Vice
President and Chief Compliance Officer,
A I M Capital Management, Inc. and A I M
Distributors, Inc.; Vice President, AIM
Investment Services, Inc. and Fund
Management Company; Senior Vice
President and Chief Compliance Officer
of The AIM Family of Funds--Registered
Trademark--; and Senior Vice President
and Compliance Director, Delaware
Investments Family of Funds
- ------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome -- 1956 2003 Senior Vice President and General
Vice President Counsel, AMVESCAP PLC; Director, INVESCO
Funds Group, Inc.; and Vice President of
The AIM Family of Funds--Registered
Trademark--
Formerly: Director, General Counsel, and N/A
Vice President Fund Management Company;
Director, Senior Vice President,
Secretary and General Counsel, A I M
Management Group Inc. (financial
services holding company) and A I M
Advisors, Inc.; Director and Vice
President, INVESCO Distributors, Inc.;
Senior Vice President, A I M
Distributors, Inc.; Vice President,
A I M Capital Management, Inc. and AIM
Investment Services, Inc.; Senior Vice
President, Chief Legal Officer and
Secretary of The AIM Family of
Funds--Registered Trademark--; Chief
Executive Officer and President, INVESCO
Funds Group, Inc.; and Senior Vice
President, Chief Legal Officer and
General Counsel, Liberty Financial
Companies, Inc. and Liberty Funds Group,
LLC
- ------------------------------------------------------------------------------------------------------------------------------
Sidney M. Dilgren -- 1961 2004 Vice President and Fund Treasurer, A I M N/A
Vice President, Principal Advisors, Inc.; and Vice President,
Financial Officer and Treasurer and Principal Officer of The
Treasurer AIM Family of Funds--Registered
Trademark--
Formerly: Senior Vice President, AIM
Investment Services, Inc.; and Vice
President, A I M Distributors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
J. Philip Ferguson -- 1945 2005 Senior Vice President and Chief N/A
Vice President Investment Officer, A I M Advisors Inc.;
Director, Chairman, Chief Executive
Officer, President and Chief Investment
Officer, A I M Capital Management, Inc.;
Executive Vice President, A I M
Management Group Inc. and Vice President
of The AIM Family of Funds--Registered
Trademark--
Formerly: Senior Vice President, AIM
Private Asset Management, Inc.; and
Chief Equity Officer, Senior Vice
President and Senior Investment Officer,
A I M Capital Management, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2005 Director of Cash Management, Managing N/A
Vice President Director and Chief Cash Management
Officer, A I M Capital Management, Inc;
Director and President, Fund Management
Company; and Vice President, A I M
Advisors, Inc. and The AIM Family of
Funds--Registered Trademark--
- ------------------------------------------------------------------------------------------------------------------------------
Todd L. Spillane -- 1958 2006 Senior Vice President, A I M Management N/A
Chief Compliance Officer Group Inc.; Senior Vice President and
Chief Compliance Officer, A I M
Advisors, Inc.; Chief Compliance Officer
of The AIM Family of Funds--Registered
Trademark--; Vice President and Chief
Compliance Officer, A I M Capital
Management, Inc.; and Vice President,
A I M Distributors, Inc., AIM Investment
Services, Inc. and Fund Management
Company
Formerly: Global Head of Product
Development, AIG-Global Investment
Group, Inc.; Chief Compliance Officer
and Deputy General Counsel,
AIG-SunAmerica Asset Management; and
Chief Compliance Officer, Chief
Operating Officer and Deputy General
Counsel, American General Investment
Management
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
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 1.800.959.4246.
<Table>
OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS SUB-ADVISOR
11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, PricewaterhouseCoopers INVESCO Institutional (N.A.)
Suite 100 11 Greenway Plaza Inc. LLP One Midtown Plaza
Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana Street 1360 Peachtree Street, N.E.
Houston, TX 77046-1173 Suite 100 Suite 2900 Suite 100
Houston, TX 77046-1173 Houston, TX 77002-5678 Atlanta, GA 30309-3262
COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN
Ballard Spahr INDEPENDENT TRUSTEES AIM Investment State Street Bank and
Andrews & Ingersoll, LLP Kramer, Levin, Naftalis Services, Inc. Trust Company
1735 Market Street, 51st & Frankel LLP P.O. Box 4739 225 Franklin Street
Floor 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801
Philadelphia, PA 19103-7599 Americas
New York, NY 10036-2714
</Table>
F-17
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Basic Balanced Fund* AIM Asia Pacific Growth Fund TAXABLE
AIM Basic Value Fund AIM China Fund
AIM Capital Development Fund AIM Developing Markets Fund AIM Enhanced Short Bond Fund
AIM Charter Fund AIM European Growth Fund AIM Floating Rate Fund
AIM Constellation Fund AIM European Small Company Fund(1) AIM High Yield Fund
AIM Diversified Dividend Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Dynamics Fund AIM Global Equity Fund AIM Intermediate Government Fund
AIM Large Cap Basic Value Fund AIM Global Growth Fund AIM International Bond Fund
AIM Large Cap Growth Fund AIM Global Value Fund AIM Limited Maturity Treasury Fund
AIM Mid Cap Basic Value Fund AIM Japan Fund AIM Money Market Fund
AIM Mid Cap Core Equity Fund(1) AIM International Core Equity Fund AIM Short Term Bond Fund
AIM Opportunities I Fund AIM International Growth Fund AIM Total Return Bond Fund
AIM Opportunities II Fund AIM International Small Company Fund(1) Premier Portfolio
AIM Opportunities III Fund AIM Trimark Fund Premier U.S. Government Money Portfolio
AIM S&P 500 Index Fund
AIM Select Equity Fund SECTOR EQUITY TAX-FREE
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund AIM Advantage Health Sciences Fund AIM High Income Municipal Fund(1)
AIM Structured Core Fund AIM Energy Fund AIM Municipal Bond Fund
AIM Structured Growth Fund AIM Financial Services Fund AIM Tax-Exempt Cash Fund
AIM Structured Value Fund AIM Global Health Care Fund AIM Tax-Free Intermediate Fund
AIM Summit Fund AIM Global Real Estate Fund Premier Tax-Exempt Portfolio
AIM Trimark Endeavor Fund AIM Gold & Precious Metals Fund
AIM Trimark Small Companies Fund AIM Leisure Fund ALLOCATION SOLUTIONS
AIM Multi-Sector Fund
AIM Real Estate Fund(1) AIM Conservative Allocation Fund
AIM Technology Fund AIM Growth Allocation Fund
AIM Utilities Fund AIM Moderate Allocation Fund
AIM Moderate Growth Allocation Fund
AIM Moderately Conservative Allocation Fund
DIVERSIFIED PORTFOLIOS
AIM Income Allocation Fund
AIM International Allocation Fund
=======================================================================================
CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES CAREFULLY. FOR
THIS AND OTHER INFORMATION ABOUT AIM FUNDS,OBTAIN A PROSPECTUS FROM YOUR
FINANCIAL ADVISOR AND READ IT CAREFULLY BEFORE INVESTING.
=======================================================================================
* Domestic equity and income fund
(1) This Fund has limited public sales of its shares to certain investors. For
more information on who may continue to invest in the Fund, please see the
appropriate prospectus.
If used after January 20, 2007, this report 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. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $429 billion in assets
under management. Data as of August 31, 2006.
AIMinvestments.com SGRO-AR-1 A I M Distributors, Inc.
YOUR GOALS. OUR SOLUTIONS.--Registered Trademark--
- -------------------------------------------------------------------------------------
Mutual Retirement Annuities College Separately Offshore Cash [AIM INVESTMENTS LOGO APPEARS HERE]
Funds Products Savings Managed Products Management --Registered Trademark--
Plans Accounts
- -------------------------------------------------------------------------------------
AIM Structured
Value Fund
Annual Report to Shareholders o August 31, 2006
[COVER GLOBE IMAGE]
DOMESTIC EQUITY
Large-Cap Value
Table of Contents
Supplemental Information 2
Letters to Shareholders 3
Performance Summary 5
Management Discussion 5
Fund Expenses 7
Fund Performance 8
Approval of Advisory Agreement 9
Schedule of Investments F-1
Financial Statements F-4
Notes to Financial Statements F-6
Financial Highlights F-12
Auditor's Report F-14
Tax Disclosures F-15
Trustees and Officers F-16
[AIM INVESTMENT SOLUTIONS]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[DOMESTIC [INTERNATIONAL/ [SECTOR
EQUITY] GLOBAL EQUITY] EQUITY]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[FIXED [ALLOCATION [DIVERSIFIED
INCOME] SOLUTIONS] PORTFOLIOS]
[AIM INVESTMENTS LOGO APPEARS HERE]
- --Registered Trademark--
AIM Structured Value Fund
AIM STRUCTURED VALUE FUND SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL
o Unless otherwise stated, information presented in this report is as of August 31, 2006, and is based on total net assets.
ABOUT SHARE CLASSES securities. Derivatives are subject to index. Unless otherwise indicated, index
counter party risk--the risk that the results include reinvested dividends,
o Class B shares are not available as an other party will not complete the and they do not reflect sales charges.
investment for retirement plans transaction with the Fund. Performance of an index of funds
maintained pursuant to Section 401 of reflects fund expenses; performance of a
the Internal Revenue Code, including o There is no guarantee that the market index does not.
401(k) plans, money purchase pension investment techniques and risk analyses
plans and profit sharing plans, except used by the Fund's managers will produce OTHER INFORMATION
for plans that have existing accounts the desired results.
invested in Class B shares. o Industry classifications used in this
o The prices of and the income generated report are generally according to the
o Class R shares are available only to by securities held by the Fund may Global Industry Classification Standard,
certain retirement plans. Please see the decline in response to certain factors, which was developed by and is the
prospectus for more information. including some directly involving the exclusive property and a service mark of
companies and governments whose Morgan Stanley Capital International
PRINCIPAL RISKS OF INVESTING IN securities are owned by the Fund. These Inc. and Standard & Poor's.
THE FUND factors include general economic and
market conditions, regional or global o The returns shown in management's
o Foreign securities have additional economic instability and currency and discussion of Fund performance are based
risks, including exchange rate changes, interest rate fluctuations. on net asset values calculated for
political and economic upheaval, the shareholder transactions. Generally
relative lack of information about these ABOUT INDEXES USED IN THIS REPORT accepted accounting principles require
companies, relatively low market adjustments to be made to the net assets
liquidity and the potential lack of o The unmanaged STANDARD & POOR'S of the Fund at period end for financial
strict financial and accounting controls COMPOSITE INDEX OF 500 STOCKS (the S&P reporting purposes, and as such, the net
and standards. 500--Registered Trademark-- Index) is an asset values for shareholder
index of common stocks frequently used transactions and the returns based on
o Prices of equity securities change in as a general measure of U.S. stock those net asset values may differ from
response to many factors including the market performance. the net asset values and returns
historical and prospective earnings of reported in the Financial Highlights.
the issuer, the value of its assets, o The unmanaged LIPPER LARGE-CAP VALUE
general economic conditions, interest FUNDS INDEX represents an average of the The Fund provides a complete list of its
rates, investor perceptions and market performance of the 30 largest holdings four times in each fiscal year,
liquidity. large-capitalization value funds tracked at the quarter-ends. For the second and
by Lipper Inc., an independent mutual fourth quarters, the lists appear in the
o The value of convertible securities in fund performance monitor. Fund's semiannual and annual reports to
which the Fund invests may be affected shareholders. For the first and third
by market interest rates, the risk that o The unmanaged RUSSELL 1000--Registered quarters, the Fund files the lists with
the issuer may default on interest or Trademark-- VALUE INDEX is a subset of the Securities and Exchange Commission
principal payments and the value of the the unmanaged RUSSELL 1000--Registered (SEC) on Form N-Q. The most recent list
underlying common stock into which these Trademark-- INDEX, which represents the of portfolio holdings is available at
securities may be converted. performance of the stocks of AIMinvestments.com. From our home page,
large-capitalization companies; the click on Products & Performance, then
o The Fund may invest in debt securities Value subset measures the performance of Mutual Funds, then Fund Overview. Select
such as notes and bonds that carry Russell 1000 companies with lower your Fund from the drop-down menu and
interest rate risk and credit risk. price/book ratios and lower forecasted click on Complete Quarterly Holdings.
growth values. Shareholders can also look up the Fund's
o The Fund invests in "value" stocks Forms N-Q on the SEC Web site at
which can continue to be inexpensive for o The Fund is not managed to track the sec.gov. Copies of the Fund's Forms N-Q
long periods of time and may never performance of any particular index, may be reviewed and copied at the SEC
realize their full value. including the indexes defined here, and Public Reference Room in Washington,
consequently, the performance of the D.C. You can obtain information on the
o The Fund may use enhanced investment Fund may deviate significantly from the operation of the Public Reference Room,
techniques such as leveraging and performance of the indexes. including information about duplicating
derivatives. Leveraging entails special fee charges, by calling 202-942-8090 or
risks such as magnifying changes in the o A direct investment cannot be made in 800-732-0330,or by electronic request at
value of the portfolio's an the following e-mail address:
publicinfo@sec.gov. The SEC file numbers
for the Fund are 811-09913 and
333-36074.
Continued on page 8
============================================================================= ========================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND FUND NASDAQ SYMBOLS
PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES
AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Class A Shares ASAVX
============================================================================= Class B Shares ASBVX
Class C Shares SBCVX
===================================================== Class R Shares ASRVX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE ========================================
=====================================================
AIMinvestments.com
2
AIM Structured Value Fund
Dear Shareholders of The AIM Family of Funds--Registered
Trademark--:
We're pleased to provide you with this report, which includes
a discussion of how your Fund was managed during the period
under review in this report, and what factors affected its
performance. That discussion begins on page 5.
It's been said nothing is certain but death and taxes. We
[TAYLOR would venture to add that one other thing is certain: Markets
PHOTO] change--and change often--in the short term, in response to
constantly changing economic, geopolitical and other factors.
For example, domestic and global markets were generally strong
from November 2005 through April 2006, as economic growth
appeared robust and inflation seemed contained. But as new
economic data suggested inflation might be higher than
previously estimated in the U.S. and elsewhere, those same
markets often demonstrated weakness and volatility in the
May-August period.
PHILLIP TAYLOR While we can't do anything about the ambiguity and
uncertainty surrounding death and taxes, we can suggest an
alternative to reacting to fluctuating short-term market
conditions: Maintain a diversified portfolio. AIM Investments
--Registered Trademark-- can help by offering a broad product
line that gives your financial advisor the necessary tools to
build a portfolio that's right for you regardless of market
conditions. AIM offers a comprehensive range of retail mutual
funds, including domestic, global and international equity
funds, taxable and tax-exempt fixed-income funds, and a
variety of allocation portfolios--with varied risk and return
characteristics to match your needs. We maintain this
extensive set of product solutions for one reason: We believe
in the value of comprehensive, diversified investment
portfolios.
We've changed the look of our annual reports to reflect
that belief. In our marketing and now our shareholder
literature, we represent a fully diversified portfolio
graphically as an allocation pie chart and assign each asset
class a color--green for domestic equity, blue for
international, orange for sector and purple for fixed income.
A legend in the left column illustrates the methodology. Your
report cover now shows your Fund's asset class color, plus the
asset class and sub-asset class name are shown in the
upper-left corner. The reason for these changes is to help you
better understand where your Fund fits into your overall
portfolio.
AIM has a variety of investment solutions, and knowing
which ones are right for your portfolio is complex. That's why
we also believe in the value of a trusted financial advisor
who will work with you to create an investment plan you can
stick with for the long term. Your financial advisor can help
allocate your portfolio appropriately and review your
investments regularly to ensure they remain suitable as your
financial situation changes. While there are no guarantees
with any investment program, a long-term plan that's based on
your financial goals, risk tolerance and time horizon is more
likely to keep you and your investments on track.
At a recent meeting of the AIM Funds board, Robert H.
Graham relinquished his position as president of AIM Funds, a
post customarily held by the chief executive officer of AIM
Investments. Bob--one of three founders of AIM Investments in
1976--has a well-earned reputation for being one of the most
knowledgeable leaders in the mutual fund industry. As I assume
Bob's previous responsibilities, I'm pleased that he'll remain
actively involved as the vice chair of AIM Funds.
OUR COMMITMENT TO YOU
In the short term, the one sure thing about markets is their
unpredictability. While past performance cannot guarantee
comparable future results, we believe that staying invested
for the long term with a thoughtful plan offers the best
opportunity for weathering that unpredictability. We at AIM
Investments remain committed to building enduring solutions to
help you achieve your investment goals, and we're pleased
you've placed your trust in us.
Information about investing, the markets and your Fund is
always available on our Web site, AIMinvestments.com. If you
have questions about your individual account, we invite you to
contact one of our highly trained client services
representatives at 800-959-4246.
Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
President - AIM Funds
CEO, AIM Investments
October 18, 2006
AIM Investments is a registered service mark of A I M
Management Group Inc. A I M Advisors, Inc. and A I M Capital
Management, Inc. are the investment advisors. A I M
Distributors, Inc. is the distributor for the retail funds
represented by AIM Investments.
3
AIM Structured Value Fund
Dear Fellow AIM Fund Shareholders:
At our meeting at the end of June, your Board completed
its comprehensive review* of each fund's advisory
agreement with A I M Advisors, Inc. (AIM) to make certain
your interests are being served in terms of fees,
performance and operations.
[CROCKETT
PHOTO] Looking ahead, your Board finds many reasons to be
positive about AIM's management and strategic direction.
Most importantly, AIM management's investment management
discipline is paying off in terms of improved overall
performance. While work remains to be done, AIM's
complex-wide, asset-weighted mutual fund performance for
the trailing one-, three- and five-year periods is at its
highest since 2000 for the periods ended August 31, 2006.
We are also pleased with AIM management's efforts to seek
BRUCE L. CROCKETT more cost-effective ways of delivering superior service.
In addition, AIM is realizing the benefits of belonging
to a leading independent global investment management
organization in its parent company, AMVESCAP PLC, which is
dedicated to helping people worldwide build their
financial security. AMVESCAP managed approximately $429
billion globally as of August 31, 2006, operating under
the AIM, INVESCO, AIM Trimark, INVESCO PERPETUAL and
Atlantic Trust brands. These companies are home to an
abundance of investment talent that is gradually being
integrated and leveraged into centers of excellence, each
focusing on a given market segment or asset class. Over
the next few years, your Board will be meeting at these
various centers of excellence to learn about their
progress and how they can serve you by enhancing
performance and reducing costs.
The seven new AIM funds--which include Asian funds,
structured U.S. equity funds and specialized bond
funds-are an early example of the kind of opportunities
the AMVESCAP organization can provide AIM clients. More
information on these funds can be found on AIM's Web site.
Your Board is very pleased with the overall direction
and progress of the AIM Funds. We're working closely and
effectively with AIM's management to continue this
momentum. As always, your Board is eager to hear your
views on how we might better serve you. Please send your
comments in a letter addressed to me at AIM Investments,
AIM Investments Tower, 11 Greenway Plaza, Suite 100,
Houston TX 77046.
Sincerely,
/s/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board
October 18, 2006
*To learn more about all the factors we considered before
approving each fund's advisory agreement, go to the
"Products & Performance" tab at the AIM Web site
(AIMinvestments.com) and click on "Investment Advisory
Agreement Renewals." The approval of advisory agreement
information for your Fund is also included in this annual
report on pages 10-11.
4
AIM Structured Value Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
==================================================================================== however, non-benchmark names may also be
considered. Each stock in the universe
PERFORMANCE SUMMARY is evaluated on four concepts: earnings
momentum, price and volume, management
For the five months ended August 31, 2006, AIM Structured Value Fund, excluding action and relative valuation. The sum
applicable sales charges, underperformed its style-specific benchmark, the Russell of the scores for each concept
1000 Value Index. The Fund outperformed the broad market as measured by the S&P 500 represents the expected alpha (excess
Index. Overall, detractors from performance included holdings within the industrials return) for the near term for the
and materials sectors. Positive performance was primarily driven by investments in average stock in the universe. Each
financials and consumer staples. stock is also evaluated on a multitude
of other factors to develop a
FUND VS. INDEXES stock-specific risk forecast. Finally,
we develop a transaction cost forecast
Cumulative total returns, 3/31/06-8/31/06, excluding applicable sales charges. If for each stock.
sales charges were included, returns would be lower.
We then incorporate these previously
Class A Shares 4.40% mentioned variables--alpha forecast, risk
Class B Shares 4.00 forecast and transaction cost
Class C Shares 4.00 forecast--using an optimizer to build a
Class R Shares 4.20 portfolio that we believe is an optimal
S&P 500 Index (Broad Market Index) 1.52 balance of the stocks' potential return
Russell 1000 Value Index (Style-Specific Index) 4.76 and risk. This portfolio is constructed
Lipper Large-Cap Value Funds Index (Peer Group Index) 3.46 according to certain constraints to help
SOURCE: LIPPER INC. ensure that the Fund's relative
performance and volatility remain within
==================================================================================== the strategy's guidelines. The portfolio
is continually monitored by the team and
HOW WE INVEST The investment process integrates the overall investment process is
the following key steps: repeated on a monthly basis to determine
We manage your Fund to provide exposure which companies should be bought or sold
to large-cap value stocks. The portfolio o Universe Development within the portfolio.
is designed to outperform the Russell
1000 Value Index while minimizing the o Stock Rankings MARKET CONDITIONS AND YOUR FUND
amount of additional risk relative to
the benchmark. The Fund can be used as a o Risk Assessment Equity market performance has been mixed
long-term allocation to large-cap stocks since the launch of the Fund on March
that compliments other style-specific o Portfolio Construction 31, 2006. The economy remained strong as
strategies within a diversified asset U.S. gross domestic product and earnings
allocation strategy. o Trading growth continued at a healthy pace.
Market participants continued to be
The companies included within the concerned about further U.S. Federal
Russell 1000 Value Index are used as a Reserve Board interest rate increase-
general guide for developing the Fund's
investable universe, (continued)
======================================== ======================================== ========================================
PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS*
By sector 1. Other Diversified Financial 1. Exxon Mobil Corp. 7.6%
Services 10.5%
Financials 40.5% 2. Bank of America Corp. 4.2
2. Integrated Oil & Gas 10.4
Energy 14.3 3. Citigroup Inc. 4.2
3. Investment Banking &
Health Care 9.1 Brokerage 7.3 4. Pfizer Inc. 3.9
Consumer Staples 6.9 4. Pharmaceuticals 6.1 5. American International Group,
Inc. 3.2
Utilities 6.2 5. Multi-Line Insurance 4.7
6. Wells Fargo & Co. 2.6
Information Technology 5.4 Total Net Assets $76.4 million
7. Morgan Stanley 2.4
Industrials 5.3 Total Number of Holdings* 121
8. Allstate Corp. (The) 2.1
Consumer Discretionary 4.6
9. Hewlett-Packard Co. 2.1
Telecommunication Services 3.3
10. JPMorgan Chase & Co. 2.0
Materials 2.5
U.S. Government Agency Securities,
U.S. Treasury Bills plus
Other Assets Less Liabilities 1.9
The Fund's holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
*Excluding U.S. Government Agency securities and U.S. Treasury securities
======================================== ======================================== ========================================
5
AIM Structured Value Fund
es and their inability to appropriately For the period under review, our JEREMY S. LEFKOWITZ
interpret new Fed Chairman Ben beta was slightly above market and
Bernanke's comments. Further adding to detracted from performance. Our Portfolio manager, lead manager of AIM
market discomfort were geopolitical sector/industry over/underweight Structured Value Fund. He began his
issues such as Iran's resistance to U.S. decisions contributed slightly to investments career in 1968 and has been
demands that it halt its nuclear performance while our style exposure associated with INVESCO Institutional
program. As a result, investors' (defined by Barra, Inc.) was a slight and/or its affiliates since 1982. Mr.
appetite for risk declined and market detractor. Lefkowitz earned a Bachelor of Science
volatility increased, particularly among degree in industrial engineering and an
small-cap stocks. In this environment, Stock selection was a principal M.B.A. in finance from Columbia
value generally continued to outperform contributor to performance for the University.
growth and large-cap stocks generally reporting period. Fund holdings that
outperformed small-cap stocks. contributed the most to relative DANIEL A. KOSTYK
performance included QWEST
The Fund underperformed the Russell COMMUNICATIONS, KROGER, TXU, EXXON MOBIL Chartered Financial Analyst, portfolio
1000 Value Index for the five-month and CAROLINA GROUP. Among the largest manager, manager of AIM Structured Value
period ended August 31, 2006. We used detractors from relative performance Fund. He has been associated with
the alpha forecast, risk forecast and during the period were AETNA, LEHMAN INVESCO Institutional and/or its
transaction cost forecast to build what BROTHERS HOLDINGS, AMERISOURCEBERGEN, affiliates since 1995. Mr. Kostyk earned
we considered an optimal portfolio that AMERICREDIT and GOLDMAN SACHS. a B.S. in mechanical engineering from
provided excess return given the risk Northwestern University and an M.B.A.
level targets of the strategy. The alpha IN CLOSING from the University of Chicago.
model incorporates four factors:
earnings momentum, price and volume, Our strategy, as always, emphasized ANTHONY J. MUNCHAK
management action and relative value. stocks we believed possessed strong
For the period, all four factors earnings growth, positive price trends Chartered Financial Analyst, portfolio
benefited the Fund, with relative value and reasonable valuations. We appreciate manager, manager of AIM Structured Value
contributing the most to performance and your confidence in us. Thank you for Fund. He has been associated with
price and volume contributing the least. your continued investment in AIM INVESCO Institutional and/or its
The strong performance from our alpha Structured Value Fund. affiliates since 2000. Mr. Munchak
model was a primary positive contributor earned Bachelor of Science and Master of
to our Fund performance but was more THE VIEWS AND OPINIONS EXPRESSED IN Science degrees from Boston College. He
than offset by our exposures to several MANAGEMENT'S DISCUSSION OF FUND also earned a Master of Business
other market factors. PERFORMANCE ARE THOSE OF A I M ADVISORS, Administration degree from Bentley
INC. THESE VIEWS AND OPINIONS ARE College.
Positive exposures to volatility, SUBJECT TO CHANGE AT ANY TIME BASED ON
momentum and trading activity all FACTORS SUCH AS MARKET AND ECONOMIC GLEN E. MURPHY
detracted from performance. Market CONDITIONS. THESE VIEWS AND OPINIONS MAY
participants favored lower volatility NOT BE RELIED UPON AS INVESTMENT ADVICE Chartered Financial Analyst, portfolio
and lower liquidity stocks and avoided OR RECOMMENDATIONS, OR AS AN OFFER FOR A manager, manager of AIM Structured Value
stocks that demonstrated positive PARTICULAR SECURITY. THE INFORMATION IS Fund. He has been associated with
momentum at the start of the period. NOT A COMPLETE ANALYSIS OF EVERY ASPECT INVESCO Institutional and/or its
Also detracting from returns was a lack OF ANY MARKET, COUNTRY, INDUSTRY, affiliates since 1995. Mr. Murphy earned
of exposure to price-to-book sensitive SECURITY OR THE FUND. STATEMENTS OF FACT a business administration degree from
companies; a valuation factor not used ARE FROM SOURCES CONSIDERED RELIABLE, the University of Massachusetts and a
in our model. BUT A I M ADVISORS, INC. MAKES NO Master of Science degree in finance from
REPRESENTATION OR WARRANTY AS TO THEIR Boston College.
Active managers typically add value COMPLETENESS OR ACCURACY. ALTHOUGH
in one or a combination of four areas: HISTORICAL PERFORMANCE IS NO GUARANTEE FRANCIS M. ORLANDO
beta (relative volatility), style, OF FUTURE RESULTS, THESE INSIGHTS MAY
sector/industry over/under weight and HELP YOU UNDERSTAND OUR INVESTMENT Chartered Financial Analyst, portfolio
stock selection. We attempt to add value MANAGEMENT PHILOSOPHY. manager, manager of AIM Structured Value
through our stock selection decisions. Fund. He has been associated with
Consequently, we minimized our exposure See important Fund and index INVESCO Institutional and/or its
relative to the benchmark with regard to disclosures on the inside front cover. affiliates since 1987. Mr. Orlando
beta, style and sector/industry earned business administration degree
exposures. We traded only once per month from Merrimack College and an M.B.A.
so that these exposures varied slightly from Boston University.
during the month and consequently
contributed or detracted slightly from ANNE M. UNFLAT
performance.
Portfolio manager, manager of AIM
Structured Value Fund. She has been
associated with INVESCO Institutional
and/or its affiliates since 1988. Ms.
Unflat graduated magna cum laude from
Queens College with a Bachelor of Arts
degree in economics. She earned her
M.B.A. degree in finance from St. John's
University.
Assisted by U.S. Structured Products
Group Research Team
FOR A PRESENTATION OF YOUR FUND'S
PERFORMANCE, PLEASE SEE PAGE 8.
6
AIM STRUCTURED VALUE FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE You may use the information in this cumulative total returns at net asset
table, together with the amount you value after expenses for the period
As a shareholder of the Fund, you incur invested, to estimate the expenses that ended August 31, 2006, appear in the
two types of costs: (1) transaction you paid over the period. Simply divide table "Fund vs. Indexes" on page 5.
costs, which may include sales charges your account value by $1,000 (for
(loads) on purchase payments or example, an $8,600 account value divided The hypothetical account values and
contingent deferred sales charges on by $1,000 = 8.6), then multiply the expenses may not be used to estimate the
redemptions; and redemption fees, if result by the number in the table under actual ending account balance or
any; and (2) ongoing costs, including the heading entitled "Actual Expenses expenses you paid for the period. You
distribution and/or service fees Paid During Period" to estimate the may use this information to compare the
(12b-1); and other Fund expenses. This expenses you paid on your account during ongoing costs of investing in the Fund
example is intended to help you this period (March 31, 2006, through and other funds. To do so, compare this
understand your ongoing costs (in August 31, 2006 for the Class A, B, C 5% hypothetical example with the 5%
dollars) of investing in the Fund and to and R shares). Because the actual ending hypothetical examples that appear in the
compare these costs with ongoing costs account value and expense information in shareholder reports of the other funds.
of investing in other mutual funds. The the example is not based upon a six
actual ending account value and expenses month period, the ending account value Please note that the expenses shown
of the Class A, B, C, and R shares in and expense information may not provide in the table are meant to highlight your
the below example are based on an a meaningful comparison to mutual funds ongoing costs only and do not reflect
investment of $1,000 invested on March that provide such information for a full any transactional costs, such as sales
31, 2006, (the date the share classes six month period. charges (loads) on purchase payments,
commenced operations) and held through contingent deferred sales charges on
August 31, 2006. The hypothetical ending HYPOTHETICAL EXAMPLE FOR redemptions, and redemption fees, if
account value and expenses of the Class COMPARISON PURPOSES any. Therefore, the hypothetical
A, B, C, and R shares in the below information is useful in comparing
example are based on an investment of The table below also provides ongoing costs only, and will not help
$1,000 invested at the beginning of the information about hypothetical account you determine the relative total costs
period and held for the entire six month values and hypothetical expenses based of owning different funds. In addition,
period March 1, 2006, through August 31, on the Fund's actual expense ratio and if these transactional costs were
2006. an assumed rate of return of 5% per year included, your costs would have been
before expenses, which is not the Fund's higher.
ACTUAL EXPENSES actual return. The Fund's actual
The table below provides information
about actual account values and actual
expenses.
====================================================================================================================================
ACTUAL HYPOTHETICAL
(5% ANNUAL RETURN BEFORE EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (03/01/06)(1) (8/31/06)(1) PERIOD(2) (8/31/06) PERIOD(3) RATIO
A $1,000.00 $1,044.00 $4.44 $1,020.01 $5.24 1.03%
B 1,000.00 1,040.00 7.66 1,016.23 9.05 1.78
C 1,000.00 1,040.00 7.66 1,016.23 9.05 1.78
R 1,000.00 1,042.00 5.51 1,018.75 6.51 1.28
(1) The actual ending account value is based on the actual total return of the Fund for the period March 31, 2006, through August
31, 2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense
ratio and a hypothetical annual return of 5% before expenses. The Fund's actual cumulative total returns at net asset value after
expenses for the period ended August 31, 2006, appear in the table "Fund vs. Indexes" on page 5.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the
period, multiplied by 154 (March 31, 2006 through August 31, 2006)/365. Because the Class A, B, C and R shares have not been in
existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful
comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending
account value and expense information in the expense example covers a short time period, return and expense data may not be
indicative of return and expense data for longer time periods.
(3) Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the
period, multiplied by 184/365 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to
compare ongoing costs of investing in the Class A, B, C and R shares of the Fund and other funds because such data is based on a
full six month period.
====================================================================================================================================
7
AIM Structured Value Fund
FUND PERFORMANCE
======================================== ========================================
CUMULATIVE TOTAL RETURNS CUMULATIVE TOTAL RETURNS
As of 8/31/06, including applicable As of 6/30/06,the most recent calendar
sales charges quarter-end, including applicable sales
Charges
CLASS A SHARES
Inception (3/31/06) -1.32% CLASS A SHARES
Inception (3/31/06) -5.58%
CLASS B SHARES
Inception (3/31/06) -1.00% CLASS B SHARES
Inception (3/31/06) -5.29%
CLASS C SHARES
Inception (3/31/06) 3.00% CLASS C SHARES
Inception (3/31/06) -1.30%
CLASS R SHARES
Inception (3/31/06) 4.20% CLASS R SHARES
Inception (3/31/06) -0.20%
======================================== ========================================
THE PERFORMANCE DATA QUOTED REPRESENT CLASS A SHARE PERFORMANCE REFLECTS THE PERFORMANCE OF THE FUND'S SHARE
PAST PERFORMANCE AND CANNOT GUARANTEE THE MAXIMUM 5.50% SALES CHARGE, AND CLASSES WILL DIFFER PRIMARILY DUE TO
COMPARABLE FUTURE RESULTS; CURRENT CLASS B AND CLASS C SHARE PERFORMANCE DIFFERENT SALES CHARGE STRUCTURES AND
PERFORMANCE MAY BE LOWER OR HIGHER. REFLECTS THE APPLICABLE CONTINGENT CLASS EXPENSES.
PLEASE VISIT AIMINVESTMENTS.COM FOR THE DEFERRED SALES CHARGE (CDSC) FOR THE
MOST RECENT MONTH-END PERFORMANCE. PERIOD INVOLVED. THE CDSC ON CLASS B HAD THE ADVISOR NOT WAIVED FEES
PERFORMANCE FIGURES REFLECT REINVESTED SHARES DECLINES FROM 5% BEGINNING AT THE AND/OR REIMBURSED EXPENSES, PERFORMANCE
DISTRIBUTIONS, CHANGES IN NET ASSET TIME OF PURCHASE TO 0% AT THE BEGINNING WOULD HAVE BEEN LOWER.
VALUE AND THE EFFECT OF THE MAXIMUM OF THE SEVENTH YEAR. THE CDSC ON CLASS C
SALES CHARGE UNLESS OTHERWISE STATED. SHARES IS 1% FOR THE FIRST YEAR AFTER
INVESTMENT RETURN AND PRINCIPAL VALUE PURCHASE. CLASS R SHARES DO NOT HAVE A
WILL FLUCTUATE SO THAT YOU MAY HAVE A FRONT-END SALES CHARGE; RETURNS SHOWN
GAIN OR LOSS WHEN YOU SELL SHARES. ARE AT NET ASSET VALUE AND DO NOT
REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
ON A TOTAL REDEMPTION OF RETIREMENT PLAN
ASSETS WITHIN THE FIRST YEAR.
Continued from inside front cover
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, from our
Client Services department at
800-959-4246 or on the AIM Web site,
AIMinvestments.com. On the home page,
scroll down and click on AIM Funds Proxy
Policy. The information is also
available on the SEC Web site, sec.gov.
Information regarding how the Fund voted
proxies related to its portfolio
securities during the 12 months ended
June 30, 2006, is available at our Web
site. Go to AIMinvestments.com, access
the About Us tab, click on Required
Notices and then click on Proxy Voting
Activity. Next, select the Fund from the
drop-down menu. The information is also
available on the SEC Web site, sec.gov.
8
AIM Structured Value Fund
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
The Board of Trustees of AIM Counselor qualifications of AIM to provide Board compared effective contractual
Series Trust (the "Board") oversees the investment advisory services, the Board advisory fee rates at a common asset
management of AIM Structured Value Fund considered such issues as AIM's level at the end of the past calendar
(the "Fund") and, as required by law, portfolio and product review process, year and noted that the Fund's rate was
determines annually whether to approve various back office support functions below the median rate of the funds
the continuance of the Fund's advisory provided by AIM and AIM's equity and advised by other advisors with
agreement with A I M Advisors, Inc. fixed income trading operations. Based investment strategies comparable to
("AIM"). Based upon the recommendation on the review of these and other those of the Fund that the Board
of the Investments Committee of the factors, the Board concluded that the reviewed. The Board noted that AIM has
Board, at a meeting held on June 27, quality of services to be provided by agreed to limit the Fund's total annual
2006, the Board, including all of the AIM was appropriate and that AIM operating expenses, as discussed below.
independent trustees, approved the currently is providing satisfactory The Board also considered the fact that
continuance of the advisory agreement services in accordance with the terms of AIM set the proposed advisory fees for
(the "Advisory Agreement") between the the Advisory Agreement. the Fund based upon the median effective
Fund and AIM for another year, effective management fee rate (comprised of
July 1, 2006. o The performance of the Fund relative advisory fees plus, in some cases,
to comparable funds. Not applicable administrative fees) at various asset
The Board considered the factors because the Fund has not been in levels of competitor mutual funds with
discussed below in evaluating the operation for a full calendar year. investment strategies comparable to
fairness and reasonableness of the those of the Fund. In addition, the
Advisory Agreement at the meeting on o The performance of the Fund relative Board noted that the proposed advisory
June 27, 2006 and as part of the Board's to indices. Not applicable because the fees for the Fund are slightly less than
ongoing oversight of the Fund. In their Fund has not been in operation for a the uniform fee schedule that applies to
deliberations, the Board and the full calendar year. other mutual funds advised by AIM with
independent trustees did not identify investment strategies comparable to
any particular factor that was o Meetings with the Fund's portfolio those of the Fund, which uniform fee
controlling, and each trustee attributed managers and investment personnel. With schedule includes breakpoints and is
different weights to the various respect to the Fund, the Board is based on net asset levels. Based on this
factors. meeting periodically with such Fund's review, the Board concluded that the
portfolio managers and/or other advisory fee rate for the Fund under the
One responsibility of the investment personnel and believes that Advisory Agreement was fair and
independent Senior Officer of the Fund such individuals are competent and able reasonable.
is to manage the process by which the to continue to carry out their
Fund's proposed management fees are responsibilities under the Advisory o Expense limitations and fee waivers.
negotiated to ensure that they are Agreement. The Board noted that AIM has
negotiated in a manner which is at arms' contractually agreed to waive fees
length and reasonable. To that end, the o Overall performance of AIM. Not and/or limit expenses of the Fund
Senior Officer must either supervise a applicable because the Fund has not been through June 30, 2007 in an amount
competitive bidding process or prepare in operation for a full calendar year. necessary to limit total annual
an independent written evaluation. The operating expenses to a specified
Senior Officer has recommended an o Fees relative to those of clients of percentage of average daily net assets
independent written evaluation in lieu AIM with comparable investment for each class of the Fund. The Board
of a competitive bidding process and, strategies. The Board reviewed the considered the contractual nature of
upon the direction of the Board, has effective advisory fee rate (before this fee waiver/expense limitation and
prepared such an independent written waivers) for the Fund under the Advisory noted that it remains in effect until
evaluation. Such written evaluation also Agreement. The Board noted that this June 30, 2007. The Board considered the
considered certain of the factors rate was (i) below the effective effect this fee waiver/expense
discussed below. In addition, as advisory fee rate (before waivers) for a limitation would have on the Fund's
discussed below, the Senior Officer made mutual fund advised by AIM with estimated expenses and concluded that
a recommendation to the Board in investment strategies comparable to the levels of fee waivers/expense
connection with such written evaluation. those of the Fund and the same as the limitations for the Fund were fair and
effective advisory fee rate (before reasonable.
The discussion below serves as a waivers) for a second mutual fund
summary of the Senior Officer's advised by AIM with investment o Breakpoints and economies of scale.
independent written evaluation and strategies comparable to those of the The Board reviewed the structure of the
recommendation to the Board in Fund; (ii) below the effective advisory Fund's advisory fee under the Advisory
connection therewith, as well as a fee rate (before waivers) for a variable Agreement, noting that it contains seven
discussion of the material factors and insurance fund advised by AIM and breakpoints. The Board reviewed the
the conclusions with respect thereto offered to insurance company separate level of the Fund's advisory fees, and
that formed the basis for the Board's accounts with investment strategies noted that such fees, as a percentage of
approval of the Advisory Agreement. comparable to those of the Fund; (iii) the Fund's net assets, would decrease as
After consideration of all of the above the effective sub-advisory fee net assets increase because the Advisory
factors below and based on its informed rate for one offshore fund advised and Agreement includes breakpoints. The
business judgment, the Board determined sub-advised by AIM affiliates with Board noted that, due to the Fund's
that the Advisory Agreement is in the investment strategies comparable to current asset levels and the way in
best interests of the Fund and its those of the Fund, although the total which the advisory fee breakpoints have
shareholders and that the compensation advisory fees for such offshore fund been structured, the Fund has yet to
to AIM under the Advisory Agreement is were above those for the Fund; (iv) benefit from the breakpoints. The Board
fair and reasonable and would have been above the effective sub-advisory fee concluded that the Fund's fee levels
obtained through arm's length rate for one variable insurance fund under the Advisory Agreement therefore
negotiations. sub-advised by an AIM affiliate and would reflect economies of scale at
offered to insurance company separate higher asset levels and that it was not
Unless otherwise stated, information accounts with investment strategies necessary to change the advisory fee
presented below is as of June 27, 2006 comparable to those of the Fund, breakpoints in the Fund's advisory fee
and does not reflect any changes that although the total advisory fees for schedule.
may have occurred since June 27, 2006, such variable insurance fund were above
including but not limited to changes to those for the Fund; and (v) below the o Investments in affiliated money market
the Fund's performance, advisory fees, total advisory fee rates for three funds. The Board also took into account
expense limitations and/or fee waivers. separately managed accounts/wrap the fact that uninvested cash and cash
accounts managed by an AIM affiliate collateral from securities lending
o The nature and extent of the advisory with investment strategies comparable to arrangements, if any (collectively,
services to be provided by AIM. The those of the Fund and above the total "cash balances") of the Fund may be
Board reviewed the services to be advisory fee rates for 39 separately invested in money market funds advised
provided by AIM under the Advisory managed accounts/wrap accounts managed by AIM pursuant to the terms of an SEC
Agreement. Based on such review, the by an AIM affiliate with investment exemptive order. The Board found that
Board concluded that the range of strategies comparable to those of the the Fund may realize certain benefits
services to be provided by AIM under the Fund. The Board noted that AIM has upon investing cash balances in AIM
Advisory Agreement was appropriate and agreed to limit the Fund's total annual advised money market funds, including a
that AIM currently is providing services operating expenses, as discussed below. higher net return, increased liquidity,
in accordance with the terms of the Based on this review, the Board increased diversification or decreased
Advisory Agreement. concluded that the advisory fee rate transaction costs. The Board also found
under the Advisory Agreement was fair that the Fund will not receive reduced
o The quality of services to be provided and reasonable. services if it invests its cash balances
by AIM. The Board reviewed the in such money market funds. The Board
credentials and experience of the o Fees relative to those of comparable noted that, to the extent the
officers and employees of AIM who will funds with other advisors. The Board
provide investment advisory services to reviewed the advisory fee rate for the (continued)
the Fund. In reviewing the Fund under the Advisory Agreement. The
9
AIM Structured Value Fund
Fund invests uninvested cash in services. Based on the review of these Fund. Based on the review of these and
affiliated money market funds, AIM has and other factors, the Board concluded other factors, the Board concluded that
voluntarily agreed to waive a portion of that AIM and its affiliates were the quality of services to be provided
the advisory fees it receives from the qualified to continue to provide by the Sub-Advisor was appropriate and
Fund attributable to such investment. non-investment advisory services to the that the Sub-Advisor currently is
The Board further determined that the Fund, including administrative, transfer providing satisfactory services in
proposed securities lending program and agency and distribution services, and accordance with the terms of the Sub-
related procedures with respect to the that AIM and its affiliates currently Advisory Agreement.
lending Fund is in the best interests of are providing satisfactory
the lending Fund and its respective non-investment advisory services. o The performance of the Fund relative
shareholders. The Board therefore to comparable funds. Not applicable
concluded that the investment of cash o Other factors and current trends. The because the Fund has not been in
collateral received in connection with Board considered the steps that AIM and operation for a full calendar year.
the securities lending program in the its affiliates have taken over the last
money market funds according to the several years, and continue to take, in o The performance of the Fund relative
procedures is in the best interests of order to improve the quality and to indices. Not applicable because the
the lending Fund and its respective efficiency of the services they provide Fund has not been in operation for a
shareholders. to the Funds in the areas of investment full calendar year.
performance, product line
o Independent written evaluation and diversification, distribution, fund o Meetings with the Fund's portfolio
recommendations of the Fund's Senior operations, shareholder services and managers and investment personnel. With
Officer. The Board noted that, upon compliance. The Board concluded that respect to the Fund, the Board is
their direction, the Senior Officer of these steps taken by AIM have improved, meeting periodically with such Fund's
the Fund, who is independent of AIM and and are likely to continue to improve, portfolio managers and/or other
AIM's affiliates, had prepared an the quality and efficiency of the investment personnel and believes that
independent written evaluation in order services AIM and its affiliates provide such individuals are competent and able
to assist the Board in determining the to the Fund in each of these areas, and to continue to carry out their
reasonableness of the proposed support the Board's approval of the responsibilities under the Sub-Advisory
management fees of the AIM Funds, continuance of the Advisory Agreement Agreement.
including the Fund. The Board noted that for the Fund. APPROVAL OF SUB-ADVISORY
the Senior Officer's written evaluation AGREEMENT The Board oversees the o Overall performance of the
had been relied upon by the Board in management of the Fund and, as required Sub-Advisor. Not applicable because the
this regard in lieu of a competitive by law, determines annually whether to Fund has not been in operation for a
bidding process. In determining whether approve the continuance of the Fund's full calendar year.
to continue the Advisory Agreement for sub-advisory agreement. Based upon the
the Fund, the Board considered the recommendation of the Investments o Fees relative to those of clients of
Senior Officer's written evaluation. Committee of the Board, at a meeting the Sub-Advisor with comparable
held on June 27, 2006, the Board, investment strategies. The Board
o Profitability of AIM and its including all of the independent reviewed the sub-advisory fee rate for
affiliates. The Board reviewed trustees, approved the continuance of the Fund under the Sub-Advisory
information concerning the profitability the sub-advisory agreement (the Agreement and the sub-advisory fees paid
of AIM's (and its affiliates') "Sub-Advisory Agreement") between thereunder. The Board noted that this
investment advisory and other activities INVESCO Institutional (N.A.), Inc. (the rate was comparable to or above the
and its financial condition. The Board "Sub-Advisor") and AIM with respect to total advisory fee rates for eight
considered the overall profitability of the Fund for another year, effective separately managed accounts/wrap
AIM. The Board noted that AIM's July 1, 2006. accounts managed by the Sub-Advisor with
operations remain profitable, although investment strategies comparable to
increased expenses in recent years have The Board considered the factors those of the Fund and below the total
reduced AIM's profitability. Based on discussed below in evaluating the advisory fee rates for 34 separately
the review of the profitability of AIM's fairness and reasonableness of the managed accounts/wrap accounts managed
and its affiliates' investment advisory Sub-Advisory Agreement at the meeting on by the Sub-Advisor with investment
and other activities and its financial June 27, 2006 and as part of the Board's strategies comparable to those of the
condition, the Board concluded that the ongoing oversight of the Fund. In their Fund. The Board noted that AIM has
compensation to be paid by the Fund to deliberations, the Board and the agreed to limit the Fund's total annual
AIM under its Advisory Agreement was not independent trustees did not identify operating expenses. The Board also
excessive. any particular factor that was considered the services to be provided
controlling, and each trustee attributed by the Sub-Advisor pursuant to the
o Benefits of soft dollars to AIM. The different weights to the various Sub-Advisory Agreement and the services
Board considered the benefits realized factors. to be provided by AIM pursuant to the
by AIM as a result of brokerage Advisory Agreement, as well as the
transactions executed through "soft The discussion below serves as a allocation of fees between AIM and the
dollar" arrangements. Under these discussion of the material factors and Sub-Advisor pursuant to the Sub-Advisory
arrangements, brokerage commissions paid the conclusions with respect thereto Agreement. The Board noted that the
by the Fund and/or other funds advised that formed the basis for the Board's sub-advisory fees have no direct effect
by AIM are used to pay for research and approval of the Sub-Advisory Agreement. on the Fund or its shareholders, as they
execution services. This research may be After consideration of all of the are paid by AIM to the Sub-Advisor, and
used by AIM in making investment factors below and based on its informed that AIM and the Sub-Advisor are
decisions for the Fund. The Board business judgment, the Board determined affiliates. Based on this review, the
concluded that such arrangements were that the Sub-Advisory Agreement is in Board concluded that the sub-advisory
appropriate. the best interests of the Fund and its fee rate under the Sub-Advisory
shareholders and that the compensation Agreement was fair and reasonable.
o AIM's financial soundness in light of to the Sub-Advisor under the
the Fund's needs. The Board considered Sub-Advisory Agreement is fair and o Profitability of AIM and its
whether AIM is financially sound and has reasonable. affiliates. The Board reviewed
the resources necessary to perform its information concerning the profitability
obligations under the Advisory Unless otherwise stated, information of AIM's (and its affiliates')
Agreement, and concluded that AIM has presented below is as of June 27, 2006 investment advisory and other activities
the financial resources necessary to and does not reflect any changes that and its financial condition. The Board
fulfill its obligations under the may have occurred since June 27, 2006, considered the overall profitability of
Advisory Agreement. including but not limited to changes to AIM. The Board noted that AIM's
the Fund's performance. operations remain profitable, although
o Historical relationship between the increased expenses in recent years have
Fund and AIM. In determining whether to o The nature and extent of the advisory reduced AIM's profitability. Based on
approve the Advisory Agreement for the services to be provided by the the review of the profitability of AIM's
Fund, the Board also considered the Sub-Advisor. The Board reviewed the and its affiliates' investment advisory
prior relationship between AIM and the services to be provided by the and other activities and its financial
Fund, as well as the Board's knowledge Sub-Advisor under the Sub-Advisory condition, the Board concluded that the
of AIM's operations, and concluded that Agreement. Based on such review, the compensation to be paid by the Fund to
it was beneficial to maintain the Board concluded that the range of AIM under its Advisory Agreement was not
current relationship, in part, because services to be provided by the excessive.
of such knowledge. The Board also Sub-Advisor under the Sub-Advisory
reviewed the general nature of the Agreement was appropriate and that the o The Sub-Advisor's financial soundness
non-investment advisory services Sub-Advisor currently is providing in light of the Fund's needs. The Board
currently performed by AIM and its services in accordance with the terms of considered whether the Sub-Advisor is
affiliates, such as administrative, the Sub-Advisory Agreement. financially sound and has the resources
transfer agency and distribution necessary to perform its obligations
services, and the fees received by AIM o The quality of services to be provided under the Sub-Advisory Agreement, and
and its affiliates for performing such by the Sub-Advisor. The Board reviewed concluded that the Sub-Advisor has the
services. In addition to reviewing such the credentials and experience of the financial resources necessary to fulfill
services, the trustees also considered officers and employees of the its obligations under the Sub-Advisory
the organizational structure employed by Sub-Advisor who will provide investment Agreement.
AIM and its affiliates to provide those advisory services to the
10
Supplement to Annual Report dated 8/31/06
AIM STRUCTURED VALUE FUND
INSTITUTIONAL CLASS SHARES ======================================== PLEASE NOTE THAT PAST PERFORMANCE IS
CUMULATIVE TOTAL RETURNS NOT INDICATIVE OF FUTURE RESULTS. MORE
The following information has been For periods ended 8/31/06 RECENT RETURNS MAY BE MORE OR LESS THAN
prepared to provide Institutional Class THOSE SHOWN. ALL RETURNS ASSUME
shareholders with a performance overview Inception (3/31/06) 4.50% REINVESTMENT OF DISTRIBUTIONS AT NAV.
specific to their holdings. ======================================== INVESTMENT RETURN AND PRINCIPAL VALUE
Institutional Class shares are offered CUMULATIVE TOTAL RETURNS WILL FLUCTUATE SO YOUR SHARES, WHEN
exclusively to institutional investors, For periods ended 6/30/06, most recent REDEEMED, MAY BE WORTH MORE OR LESS THAN
including defined contribution plans calendar quarter-end THEIR ORIGINAL COST. SEE FULL REPORT FOR
that meet certain criteria. INFORMATION ON COMPARATIVE BENCHMARKS.
Inception (3/31/06) 0.00% PLEASE CONSULT YOUR FUND PROSPECTUS FOR
======================================== MORE INFORMATION. FOR THE MOST CURRENT
MONTH-END PERFORMANCE, PLEASE CALL
INSTITUTIONAL CLASS SHARES HAVE NO SALES 800-451-4246 OR VISIT
CHARGE; THEREFORE, PERFORMANCE IS AT NET AIMINVESTMENTS.COM.
ASSET VALUE (NAV). PERFORMANCE OF
INSTITUTIONAL CLASS SHARES WILL DIFFER HAD THE ADVISOR NOT WAIVED FEES
FROM PERFORMANCE OF OTHER SHARE CLASSES AND/OR REIMBURSED EXPENSES, PERFORMANCE
PRIMARILY DUE TO DIFFERING SALES CHARGES WOULD HAVE BEEN LOWER.
AND CLASS EXPENSES.
========================================
NASDAQ SYMBOL ASIVX
========================================
Over for information on your Fund's expenses.
=============================================================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND
PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES
AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING.
=============================================================================
FOR INSTITUTIONAL INVESTOR USE ONLY
This material is for institutional investor use only and may not be quoted,
reproduced or shown to the public, nor used in written form as sales literature
for public use.
AIMinvestments.com SVAL-INS-1 A I M Distributors, Inc.
[YOUR GOALS. OUR SOLUTIONS.] [AIM INVESTMENTS LOGO APPEARS HERE]
--Registered Trademark-- --Registered Trademark--
INFORMATION ABOUT YOUR FUND'S EXPENSES
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE together with the amount you invested, expenses based on the Fund's actual
to estimate the expenses that you paid expense ratio and an assumed rate
As a shareholder of the Fund, you incur over the period. Simply divide your of return of 5% per year before
ongoing costs. This example is intended account value by $1,000 (for example, an expenses, which is not the Fund's actual
to help you understand your ongoing $8,600 account value divided by $1,000 = return.
costs (in dollars) of investing in the 8.6), then multiply the result by the
Fund and to compare these costs with number in the table under the heading THE HYPOTHETICAL ACCOUNT VALUES AND
ongoing costs of investing in other entitled "Actual Expenses Paid During EXPENSES MAY NOT BE USED TO ESTIMATE THE
mutual funds. The actual ending account Period" to estimate the expenses you ACTUAL ENDING ACCOUNT BALANCE OR
value and expenses in the below example paid on your account during the period, EXPENSES YOU PAID FOR THE PERIOD. YOU
are based on an investment of $1,000 March 31, 2006, through August 31, 2006. MAY USE THIS INFORMATION TO COMPARE THE
invested on March 31, 2006 (the date the Because the actual ending account value ONGOING COSTS OF INVESTING IN THE FUND
share class commenced operations) and and expense information in the example AND OTHER FUNDS. TO DO SO, COMPARE THIS
held through August 31, 2006. The is not based upon a six month period, 5% HYPOTHETICAL EXAMPLE WITH THE 5%
hypothetical ending account value and the ending account value and expense HYPOTHETICAL EXAMPLES THAT APPEAR IN THE
expenses in the below example are based information may not provide a meaningful SHAREHOLDER REPORTS OF THE OTHER FUNDS.
on an investment of $1,000 invested at comparison to mutual funds that provide
the beginning of the period and held for such information for a full six month Please note that the expenses shown
the entire six month period March 1, period. in the table are meant to highlight your
2006, through August 31, 2006. ongoing costs only. Therefore, the
HYPOTHETICAL EXAMPLE FOR hypothetical information is useful in
ACTUAL EXPENSES COMPARISON PURPOSES comparing ongoing costs only, and will
not help you determine the relative
The table below provides information The table below also provides total costs of owning different funds.
about actual account values and actual information about hypothetical account
expenses. You may use the information in values and hypothetical
this table,
====================================================================================================================================
ACTUAL HYPOTHETICAL
(5% ANNUAL RETURN BEFORE EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (3/1/06)(1) (8/31/06)(1) PERIOD(2) (8/31/06) PERIOD(3) RATIO
Institutional $1,000.00 $1,045.00 $3.32 $1,021.32 $3.92 0.77%
(1) The actual ending account value is based on the actual total return of the Fund for the period March 31, 2006, through August
31, 2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense
ratio and a hypothetical annual return of 5% before expenses over the six month period March 1, 2006, through August 31, 2006.
(2) Actual expenses are equal to the annualized expense ratio as indicated above multiplied by the average account value over the
period, multiplied by 154 (March 31, 2006, through August 31, 2006)/365. Because the share class has not been in existence for a
full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to
fund expense information of classes that show such data for a full six month period and, because the actual ending account value
and expense information in the expense example covers a short time period, return and expense data may not be indicative of
return and expense data for longer time periods.
(3) Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the
period, multiplied by 184/365 to reflect a one-half year period. The hypothetical ending account value and expenses may be used
to compare ongoing costs of investing in the Institutional class shares of the Fund and other funds because such data is based
on a full six month period.
====================================================================================================================================
AIMinvestments.com SVAL-INS-1 A I M Distributors, Inc.
AIM Structured Value Fund
SCHEDULE OF INVESTMENTS
August 31, 2006
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------
DOMESTIC COMMON STOCKS & OTHER EQUITY
INTERESTS-98.02%
AEROSPACE & DEFENSE-0.91%
Boeing Co. (The) 3,400 $ 254,660
- -----------------------------------------------------------------------
Lockheed Martin Corp. 3,400 280,840
- -----------------------------------------------------------------------
Raytheon Co. 3,300 155,793
=======================================================================
691,293
=======================================================================
AGRICULTURAL PRODUCTS-0.23%
Archer-Daniels-Midland Co. 4,300 177,031
=======================================================================
AIR FREIGHT & LOGISTICS-0.40%
United Parcel Service, Inc.-Class B 4,400 308,220
=======================================================================
AIRLINES-0.65%
AMR Corp.(a) 2,200 45,430
- -----------------------------------------------------------------------
Southwest Airlines Co. 25,900 448,588
=======================================================================
494,018
=======================================================================
APPAREL RETAIL-0.45%
American Eagle Outfitters, Inc. 5,600 216,328
- -----------------------------------------------------------------------
Payless ShoeSource, Inc.(a) 5,400 126,684
=======================================================================
343,012
=======================================================================
APPLICATION SOFTWARE-0.47%
BEA Systems, Inc.(a) 6,500 89,245
- -----------------------------------------------------------------------
Intuit Inc.(a) 9,000 271,980
=======================================================================
361,225
=======================================================================
BIOTECHNOLOGY-0.06%
Biogen Idec Inc.(a) 1,100 48,554
=======================================================================
BROADCASTING & CABLE TV-0.28%
CBS Corp.-Class B 7,600 216,980
=======================================================================
BUILDING PRODUCTS-0.15%
Masco Corp. 4,300 117,863
=======================================================================
COMMUNICATIONS EQUIPMENT-0.54%
Motorola, Inc. 13,400 313,292
- -----------------------------------------------------------------------
Polycom, Inc.(a) 4,300 102,297
=======================================================================
415,589
=======================================================================
COMPUTER & ELECTRONICS RETAIL-0.28%
Circuit City Stores, Inc. 9,000 212,490
=======================================================================
COMPUTER HARDWARE-2.10%
Hewlett-Packard Co. 43,800 1,601,328
=======================================================================
CONSTRUCTION & FARM MACHINERY & HEAVY
TRUCKS-0.35%
Cummins Inc. 2,300 264,086
=======================================================================
CONSUMER FINANCE-0.62%
AmeriCredit Corp.(a) 20,300 476,847
=======================================================================
</Table>
<Table>
SHARES VALUE
- -----------------------------------------------------------------------
<Caption>
DATA PROCESSING & OUTSOURCED SERVICES-0.65%
CSG Systems International, Inc.(a) 7,600 $ 204,592
- -----------------------------------------------------------------------
Electronic Data Systems Corp. 12,300 293,109
=======================================================================
497,701
=======================================================================
DEPARTMENT STORES-0.97%
Dillard's, Inc.-Class A 1,100 34,298
- -----------------------------------------------------------------------
J.C. Penney Co., Inc. 11,200 706,048
=======================================================================
740,346
=======================================================================
DIVERSIFIED BANKS-3.11%
Wachovia Corp. 7,800 426,114
- -----------------------------------------------------------------------
Wells Fargo & Co. 56,100 1,949,475
=======================================================================
2,375,589
=======================================================================
DRUG RETAIL-0.26%
Longs Drug Stores Corp. 4,300 195,349
=======================================================================
ELECTRIC UTILITIES-1.10%
American Electric Power Co., Inc. 21,400 780,672
- -----------------------------------------------------------------------
FirstEnergy Corp. 1,100 62,766
=======================================================================
843,438
=======================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-0.47%
Emerson Electric Co. 4,400 361,460
=======================================================================
ENVIRONMENTAL & FACILITIES SERVICES-0.22%
Republic Services, Inc. 4,300 166,754
=======================================================================
FOOD RETAIL-1.75%
Kroger Co. (The) 50,600 1,204,786
- -----------------------------------------------------------------------
Safeway Inc. 4,300 132,999
=======================================================================
1,337,785
=======================================================================
FOOTWEAR-0.12%
NIKE, Inc.-Class B 1,100 88,836
=======================================================================
GENERAL MERCHANDISE STORES-0.16%
Big Lots, Inc.(a) 6,500 119,275
=======================================================================
HEALTH CARE DISTRIBUTORS-2.50%
AmerisourceBergen Corp. 27,000 1,192,320
- -----------------------------------------------------------------------
Cardinal Health, Inc. 2,200 148,324
- -----------------------------------------------------------------------
McKesson Corp. 11,200 568,960
=======================================================================
1,909,604
=======================================================================
HEALTH CARE TECHNOLOGY-0.12%
Emdeon Corp.(a) 7,600 90,060
=======================================================================
HOME FURNISHINGS-0.27%
Furniture Brands International, Inc. 10,900 208,735
=======================================================================
</Table>
F-1
AIM Structured Value Fund
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------
HOMEFURNISHING RETAIL-0.04%
Rent-A-Center Inc.(a) 1,100 $ 29,810
=======================================================================
HOUSEHOLD APPLIANCES-0.11%
Black & Decker Corp. (The) 1,100 81,004
=======================================================================
HOUSEHOLD PRODUCTS-0.91%
Procter & Gamble Co. (The) 11,200 693,280
=======================================================================
HOUSEWARES & SPECIALTIES-1.11%
Newell Rubbermaid Inc. 31,500 850,185
=======================================================================
INDEPENDENT POWER PRODUCERS & ENERGY
TRADERS-0.53%
Mirant Corp.(a) 1,100 31,867
- -----------------------------------------------------------------------
TXU Corp. 5,600 370,776
=======================================================================
402,643
=======================================================================
INDUSTRIAL CONGLOMERATES-1.56%
General Electric Co. 34,900 1,188,694
=======================================================================
INDUSTRIAL MACHINERY-0.52%
Illinois Tool Works Inc. 9,000 395,100
=======================================================================
INDUSTRIAL REIT'S-0.74%
AMB Property Corp. 10,100 563,883
=======================================================================
INSURANCE BROKERS-0.92%
Aon Corp. 20,300 701,771
=======================================================================
INTEGRATED OIL & GAS-10.35%
Chevron Corp. 15,700 1,011,080
- -----------------------------------------------------------------------
ConocoPhillips 2,200 139,546
- -----------------------------------------------------------------------
Exxon Mobil Corp. 85,200 5,765,484
- -----------------------------------------------------------------------
Marathon Oil Corp. 2,300 192,050
- -----------------------------------------------------------------------
Occidental Petroleum Corp. 15,700 800,543
=======================================================================
7,908,703
=======================================================================
INTEGRATED TELECOMMUNICATION SERVICES-3.28%
AT&T Inc. 31,500 980,595
- -----------------------------------------------------------------------
BellSouth Corp. 5,600 228,032
- -----------------------------------------------------------------------
Qwest Communications International Inc.(a) 106,700 940,027
- -----------------------------------------------------------------------
Verizon Communications Inc. 10,100 355,318
=======================================================================
2,503,972
=======================================================================
INTERNET RETAIL-0.04%
IAC/InterActiveCorp.(a) 1,100 31,328
=======================================================================
INVESTMENT BANKING & BROKERAGE-7.34%
Bear Stearns Cos. Inc. (The) 2,300 299,805
- -----------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 10,150 1,508,797
- -----------------------------------------------------------------------
Lehman Brothers Holdings Inc. 21,400 1,365,534
- -----------------------------------------------------------------------
Merrill Lynch & Co., Inc. 7,800 573,534
- -----------------------------------------------------------------------
Morgan Stanley 28,200 1,855,278
=======================================================================
5,602,948
=======================================================================
IT CONSULTING & OTHER SERVICES-0.17%
Acxiom Corp. 5,400 131,166
=======================================================================
</Table>
<Table>
SHARES VALUE
- -----------------------------------------------------------------------
<Caption>
LEISURE PRODUCTS-0.09%
Marvel Entertainment, Inc.(a) 3,300 $ 70,752
=======================================================================
LIFE & HEALTH INSURANCE-0.22%
UnumProvident Corp. 8,700 164,865
=======================================================================
MANAGED HEALTH CARE-0.38%
Aetna Inc. 7,800 290,706
=======================================================================
MULTI-LINE INSURANCE-4.66%
American International Group, Inc. 38,200 2,437,924
- -----------------------------------------------------------------------
Loews Corp. 29,200 1,123,616
=======================================================================
3,561,540
=======================================================================
MULTI-UTILITIES-4.52%
CenterPoint Energy, Inc. 22,500 325,125
- -----------------------------------------------------------------------
Duke Energy Corp. 39,300 1,179,000
- -----------------------------------------------------------------------
PG&E Corp. 30,300 1,270,479
- -----------------------------------------------------------------------
Xcel Energy, Inc. 32,600 678,080
=======================================================================
3,452,684
=======================================================================
OIL & GAS REFINING & MARKETING-3.92%
Frontier Oil Corp. 30,300 990,810
- -----------------------------------------------------------------------
Tesoro Corp. 9,000 581,490
- -----------------------------------------------------------------------
Valero Energy Corp. 24,800 1,423,520
=======================================================================
2,995,820
=======================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-10.46%
Bank of America Corp. 62,900 3,237,463
- -----------------------------------------------------------------------
Citigroup Inc. 65,200 3,217,620
- -----------------------------------------------------------------------
JPMorgan Chase & Co. 33,700 1,538,742
=======================================================================
7,993,825
=======================================================================
PACKAGED FOODS & MEATS-0.08%
General Mills, Inc. 1,100 59,653
=======================================================================
PAPER PACKAGING-1.11%
Temple-Inland Inc. 19,100 850,332
=======================================================================
PHARMACEUTICALS-6.07%
King Pharmaceuticals, Inc.(a) 42,700 692,594
- -----------------------------------------------------------------------
Merck & Co. Inc. 23,600 956,980
- -----------------------------------------------------------------------
Mylan Laboratories Inc. 2,200 44,704
- -----------------------------------------------------------------------
Pfizer Inc. 106,700 2,940,652
=======================================================================
4,634,930
=======================================================================
PROPERTY & CASUALTY INSURANCE-3.01%
Allstate Corp. (The) 28,200 1,633,908
- -----------------------------------------------------------------------
Chubb Corp. (The) 4,300 215,688
- -----------------------------------------------------------------------
CNA Financial Corp.(a) 2,200 76,274
- -----------------------------------------------------------------------
Hanover Insurance Group Inc. (The) 1,100 48,950
- -----------------------------------------------------------------------
SAFECO Corp. 5,600 323,176
=======================================================================
2,297,996
=======================================================================
REGIONAL BANKS-0.26%
Regions Financial Corp. 5,600 201,544
=======================================================================
</Table>
F-2
AIM Structured Value Fund
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------
RESIDENTIAL REIT'S-3.24%
Archstone-Smith Trust 21,400 $ 1,138,052
- -----------------------------------------------------------------------
AvalonBay Communities, Inc. 7,800 943,800
- -----------------------------------------------------------------------
BRE Properties, Inc.-Class A 6,700 395,903
=======================================================================
2,477,755
=======================================================================
RETAIL REIT'S-2.46%
Federal Realty Investment Trust 4,400 325,908
- -----------------------------------------------------------------------
Kimco Realty Corp. 19,100 793,605
- -----------------------------------------------------------------------
Simon Property Group, Inc. 9,000 763,110
=======================================================================
1,882,623
=======================================================================
SEMICONDUCTORS-1.38%
Atmel Corp.(a) 93,200 537,764
- -----------------------------------------------------------------------
Integrated Device Technology, Inc.(a) 8,700 149,901
- -----------------------------------------------------------------------
Intersil Corp.-Class A 14,500 367,575
=======================================================================
1,055,240
=======================================================================
SOFT DRINKS-0.76%
Coca-Cola Co. (The) 6,700 300,227
- -----------------------------------------------------------------------
PepsiCo, Inc. 4,300 280,704
=======================================================================
580,931
=======================================================================
SPECIALIZED REIT'S-1.92%
Hospitality Properties Trust 5,600 259,392
- -----------------------------------------------------------------------
Plum Creek Timber Co., Inc. 12,300 428,409
- -----------------------------------------------------------------------
Public Storage, Inc. 9,000 779,850
=======================================================================
1,467,651
=======================================================================
SPECIALTY CHEMICALS-0.04%
Valspar Corp. (The) 1,100 29,260
=======================================================================
SPECIALTY STORES-0.71%
Barnes & Noble, Inc. 5,600 203,616
- -----------------------------------------------------------------------
Office Depot, Inc.(a) 6,700 246,828
- -----------------------------------------------------------------------
OfficeMax Inc. 2,200 91,366
=======================================================================
541,810
=======================================================================
</Table>
<Table>
SHARES VALUE
- -----------------------------------------------------------------------
<Caption>
STEEL-1.30%
Nucor Corp. 20,300 $ 992,061
=======================================================================
SYSTEMS SOFTWARE-0.04%
BMC Software, Inc.(a) 1,100 29,282
=======================================================================
THRIFTS & MORTGAGE FINANCE-1.55%
Countrywide Financial Corp. 7,600 256,880
- -----------------------------------------------------------------------
Fannie Mae 11,200 589,680
- -----------------------------------------------------------------------
Freddie Mac 4,300 273,480
- -----------------------------------------------------------------------
Radian Group Inc. 1,100 65,868
=======================================================================
1,185,908
=======================================================================
TOBACCO-2.95%
Altria Group, Inc. 16,800 1,403,304
- -----------------------------------------------------------------------
Loews Corp - Carolina Group 12,300 704,298
- -----------------------------------------------------------------------
Reynolds American Inc. 2,200 143,154
=======================================================================
2,250,756
=======================================================================
TRADING COMPANIES & DISTRIBUTORS-0.08%
WESCO International, Inc.(a) 1,100 64,350
=======================================================================
Total Domestic Common Stocks & Other
Equity Interests (Cost $74,814,884) 74,880,229
=======================================================================
<Caption>
PRINCIPAL
AMOUNT
U.S. GOVERNMENT AGENCY SECURITIES-1.31%
FEDERAL HOME LOAN BANK (FHLB)-1.31%
Unsec. Disc. Notes, 4.98%, 09/01/06(b)
(Cost $1,000,000) $1,000,000 1,000,000
=======================================================================
U.S. TREASURY BILLS-0.23%
4.91%, 12/14/06(b)(c) (Cost $172,518) 175,000(d) 172,555
=======================================================================
Total Investments-99.56% (Cost
$75,987,402) 76,052,784
=======================================================================
OTHER ASSETS LESS LIABILITIES-0.44% 339,390
=======================================================================
NET ASSETS-100.00% $76,392,174
_______________________________________________________________________
=======================================================================
</Table>
Investment Abbreviations:
<Table>
Disc. - Discounted
REIT - Real Estate Investment Trust
Unsec. - Unsecured
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security traded on a discount basis. The interest rate shown represents
the discount rate at the time of purchase by the Fund.
(c) In accordance with the procedures established by the Board of Trustees,
security fair valued based on an evaluated quote provided by an
independent pricing service. The value of this security at August 31,
2006 represented 0.23% of the Fund's Net Assets. See Note 1A.
(d) The principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 1I and Note 6.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-3
AIM Structured Value Fund
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2006
<Table>
ASSETS:
Investments, at value (cost $75,987,402) $76,052,784
- -----------------------------------------------------------
Cash 88,078
- -----------------------------------------------------------
Receivables for:
Variation margin 870
- -----------------------------------------------------------
Fund shares sold 176,680
- -----------------------------------------------------------
Dividends 95,752
- -----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 74
- -----------------------------------------------------------
Other assets 326,317
===========================================================
Total assets 76,740,555
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Fund shares reacquired 1,383
- -----------------------------------------------------------
Trustee deferred compensation and retirement
plans 74
- -----------------------------------------------------------
Fund expenses advanced 297,066
- -----------------------------------------------------------
Accrued distribution fees 4,441
- -----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 2,265
- -----------------------------------------------------------
Accrued transfer agent fees 151
- -----------------------------------------------------------
Accrued operating expenses 43,001
===========================================================
Total liabilities 348,381
===========================================================
Net assets applicable to shares outstanding $76,392,174
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $76,157,829
- -----------------------------------------------------------
Undistributed net investment income 175,989
- -----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (11,024)
- -----------------------------------------------------------
Unrealized appreciation of investment
securities and futures contracts 69,380
===========================================================
$76,392,174
___________________________________________________________
===========================================================
NET ASSETS:
Class A $ 855,836
___________________________________________________________
===========================================================
Class B $ 790,149
___________________________________________________________
===========================================================
Class C $ 632,299
___________________________________________________________
===========================================================
Class R $ 625,444
___________________________________________________________
===========================================================
Institutional Class $73,488,446
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 82,011
___________________________________________________________
===========================================================
Class B 75,961
___________________________________________________________
===========================================================
Class C 60,787
___________________________________________________________
===========================================================
Class R 60,001
___________________________________________________________
===========================================================
Institutional Class 7,033,675
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 10.44
- -----------------------------------------------------------
Offering price per share
(Net asset value of $10.44 divided by
94.50%) $ 11.05
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per share $ 10.40
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per share $ 10.40
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per share $ 10.42
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per share $ 10.45
___________________________________________________________
===========================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-4
AIM Structured Value Fund
STATEMENT OF OPERATIONS
For the period March 31, 2006 (Date operations commenced) through August 31,
2006
<Table>
INVESTMENT INCOME:
Dividends $119,348
- ----------------------------------------------------------------------
Interest 44,344
======================================================================
Total investment income 163,692
======================================================================
EXPENSES:
Advisory fees 17,557
- ----------------------------------------------------------------------
Administrative services fees 21,096
- ----------------------------------------------------------------------
Custodian fees 3,824
- ----------------------------------------------------------------------
Distribution fees:
Class A 739
- ----------------------------------------------------------------------
Class B 2,711
- ----------------------------------------------------------------------
Class C 2,572
- ----------------------------------------------------------------------
Class R 1,272
- ----------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 497
- ----------------------------------------------------------------------
Transfer agent fees -- Institutional 30
- ----------------------------------------------------------------------
Trustees' and officer's fees and benefits 6,116
- ----------------------------------------------------------------------
Registration and filing fees 52,704
- ----------------------------------------------------------------------
Professional services fees 47,947
- ----------------------------------------------------------------------
Other 11,654
======================================================================
Total expenses 168,719
======================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (139,482)
======================================================================
Net expenses 29,237
======================================================================
Net investment income 134,455
======================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FUTURES CONTRACTS
Net realized gain (loss) from investment securities (11,024)
======================================================================
Change in net unrealized appreciation of:
Investment securities 65,382
- ----------------------------------------------------------------------
Futures contracts 3,998
======================================================================
69,380
======================================================================
Net gain from investment securities and futures contracts 58,356
======================================================================
Net increase in net assets resulting from operations $192,811
______________________________________________________________________
======================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
F-5
AIM Structured Value Fund
STATEMENT OF CHANGES IN NET ASSETS
For the period March 31, 2006 (Date operations commenced) through August 31,
2006
<Table>
<Caption>
2006
- ---------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 134,455
- ---------------------------------------------------------------------------
Net realized gain (loss) from investment securities (11,024)
- ---------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and futures contracts 69,380
===========================================================================
Net increase in net assets resulting from operations 192,811
===========================================================================
Share transactions-net:
Class A 823,210
- ---------------------------------------------------------------------------
Class B 762,235
- ---------------------------------------------------------------------------
Class C 607,944
- ---------------------------------------------------------------------------
Class R 600,010
- ---------------------------------------------------------------------------
Institutional Class 73,405,964
===========================================================================
Net increase in net assets resulting from share
transactions 76,199,363
===========================================================================
Net increase in net assets 76,392,174
===========================================================================
NET ASSETS:
Beginning of period --
===========================================================================
End of period (including undistributed net investment
income of $175,989) $76,392,174
___________________________________________________________________________
===========================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
August 31, 2006
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Structured Value Fund (the "Fund") is a series portfolio of AIM Counselor
Series Trust (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 six separate
portfolios, each authorized to issue an unlimited number of shares of beneficial
interest. The Fund currently offers multiple classes of shares. Matters
affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The Fund commenced operations on
March 31, 2006.
The Fund's investment objective is to provide long-term growth of capital.
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. Securities traded in the over-the-counter
market (but not securities reported on the NASDAQ Stock Exchange) are
valued based on the prices furnished by independent pricing services, in
which case the securities may be considered fair valued, or by market
makers. Each security reported on the NASDAQ Stock Exchange is valued at
the NASDAQ Official Closing Price ("NOCP") as of the close of the customary
trading session on the valuation date or absent a NOCP, at the closing bid
price.
Futures contracts are valued at the final settlement price set by an
exchange on which they are principally traded. Listed options are valued at
the mean between the last bid and the ask prices from the exchange on which
they are principally traded. Options not listed on an exchange are valued
by an independent source at the mean between the last bid and ask prices.
For purposes of determining net asset value per share, futures and option
contracts generally are valued 15 minutes after the close of the customary
trading session of the New York Stock Exchange ("NYSE").
Investments in open-end registered investment companies and closed-end
registered investment companies that do not trade on an exchange are valued
at the end of day net asset value per share. Investments in closed-end
registered investment companies that trade on an exchange are valued at the
last sales price as of the close of the customary trading session on the
exchange where the security is principally traded.
Debt obligations (including convertible bonds) are fair valued using an
evaluated quote provided by an independent pricing service. Evaluated
quotes provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
F-6
AIM Structured Value Fund
institution-size trading in similar groups of securities, developments
related to specific securities, dividend rate, yield, quality, type of
issue, coupon rate, maturity, individual trading characteristics and other
market data. Short-term obligations having 60 days or less to maturity and
commercial paper are recorded at amortized cost which approximates value.
Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and
are valued at the last bid price in the case of equity securities and in
the case of debt obligations, the mean between the last bid and asked
prices.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable exchange rates as of the
close of the NYSE. Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in computing the net asset value
of the Fund's shares are determined as of the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes and the
close of the customary trading session of the NYSE which would not
ordinarily be reflected in the computation of the Fund's net asset value.
If the event is likely to have affected the closing price of the security,
the security will be valued at fair value in good faith using procedures
approved by the Board of Trustees. Adjustments to closing prices to reflect
fair value may also be based on a screening process of an independent
pricing service to indicate the degree of certainty, based on historical
data, that the closing price in the principal market where a foreign
security trades is not the current value as of the close of the NYSE.
Foreign securities meeting the approved degree of certainty that the price
is not reflective of current value will be priced at the indication of fair
value from the independent pricing service. Multiple factors may be
considered by the independent pricing service in determining adjustments to
reflect fair value and may include information relating to sector indices,
ADRs and domestic and foreign index futures.
Securities for which market quotations are not readily available or are
unreliable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers following procedures approved by
the Board of Trustees. Issuer specific events, market trends, bid/ask
quotes of brokers and information providers and other market data may be
reviewed in the course of making a good faith determination of a security's
fair value.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date. Bond premiums
and discounts are amortized and/or accreted for financial reporting
purposes.
Brokerage commissions and mark ups are considered transaction costs and
are recorded as an increase to the cost basis of securities purchased
and/or a reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net gains (losses) on securities per share in the Financial Highlights.
Transaction costs are included in the calculation of the Fund's net asset
value and, accordingly, they reduce the Fund's total returns. These
transaction costs are not considered operating expenses and are not
reflected in net investment income reported in the Statement of Operations
and Statement of Changes in Net Assets, or the net investment income per
share and ratios of expenses and net investment income reported in the
Financial Highlights, nor are they limited by any expense limitation
arrangements between the Fund and the advisor.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, AIM may
determine the country in which an issuer is located and/or credit risk
exposure based on various factors. These factors include the laws of the
country under which the issuer is organized, where the issuer maintains a
principal office, the country in which the issuer derives 50% or more of
its total revenues and the country that has the primary market for the
issuer's securities, as well as other criteria. Among the other criteria
that may be evaluated for making this determination are the country in
which the issuer maintains 50% or more of its assets, the type of security,
financial guarantees and enhancements, the nature of the collateral and the
sponsor organization. Country of issuer and/or credit risk exposure has
been determined to be the United States of America unless otherwise noted.
D. 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 treat a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of
Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial statements.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund are charged to the operations of such class. Transfer
agency fees and expenses and other shareholder recordkeeping fees and
expenses attributable to the Institutional Class are charged to such class.
Transfer agency fees and expenses and other shareholder recordkeeping fees
and expenses relating to all other classes are allocated among those
classes based on relative net assets. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- 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 including estimates and assumptions related to
taxation. Actual results could differ from those estimates.
F-7
AIM Structured Value Fund
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust (including the
Trust's investment manager) is indemnified against certain liabilities that
may arise out of performance of their duties to the Fund. Additionally, in
the normal course of business, the Fund enters into contracts that contain
a variety of indemnification clauses. The Fund's maximum exposure under
these arrangements is unknown as this would involve future claims that may
be made against the Fund that have not yet occurred. The risk of material
loss as a result of such indemnification claims is considered remote.
I. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts.
Initial margin deposits required upon entering into futures contracts are
satisfied by the segregation of specific securities as collateral for the
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contracts are open, changes in the value of
the contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are received or
made depending upon whether unrealized gains or losses are incurred. When
the contracts are closed, the Fund recognizes a realized gain or loss equal
to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. If the Fund were unable
to liquidate a futures contract and/or enter into an offsetting closing
transaction, the Fund would continue to be subject to market risk with
respect to the value of the contracts and continue to be required to
maintain the margin deposits on the futures contracts. Risks may exceed
amounts recognized in the Statement of Assets and Liabilities.
J. COLLATERAL -- To the extent the Fund has pledged or segregated a security
as collateral and that security is subsequently sold, it is the Fund's
practice to replace such collateral no later than the next business day.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM based on the annual rate of the Fund's
average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- --------------------------------------------------------------------
First $250 million 0.60%
- --------------------------------------------------------------------
Next $250 million 0.575%
- --------------------------------------------------------------------
Next $500 million 0.55%
- --------------------------------------------------------------------
Next $1.5 billion 0.525%
- --------------------------------------------------------------------
Next $2.5 billion 0.50%
- --------------------------------------------------------------------
Next $2.5 billion 0.475%
- --------------------------------------------------------------------
Next $2.5 billion 0.45%
- --------------------------------------------------------------------
Over $10 billion 0.425%
___________________________________________________________________
====================================================================
</Table>
Under the terms of a master sub-advisory agreement between AIM and INVESCO
Institutional (N.A.), Inc. ("INVESCO"), AIM pays INVESCO 40% of the amount of
AIM's compensation on the sub-advised assets.
AIM has contractually agreed to waive advisory fees and/or reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below) of Class A, Class B, Class C, Class R
and Institutional Class shares to 1.00%, 1.75%, 1.75%, 1.25% and 0.75% of
average daily net assets, respectively, through June 30, 2007. In determining
the advisor's obligation to waive advisory fees and/or reimburse expenses, the
following expenses are not taken into account, and could cause the net annual
operating expenses to exceed the numbers reflected above: (i) interest; (ii)
taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v)
expenses related to a merger or reorganization, as approved by the Fund's Board
of Trustees; and (vi) expenses that the Fund has incurred but did not actually
pay because of an expense offset arrangement. Currently, in addition to the
expense reimbursement arrangement with AMVESCAP PLC ("AMVESCAP") described more
fully below, the expense offset arrangements from which the Fund may benefit are
in the form of credits that the Fund receives from banks where the Fund or its
transfer agent has deposit accounts in which it holds uninvested cash. Those
credits are used to pay certain expenses incurred by the Fund. AIM did not waive
fees and/or reimburse expenses during the period under this expense limitation.
For the period March 31, 2006 (date operations commenced) to August 31,
2006, AIM waived advisory fees of $17,557 and reimbursed fund level expenses of
$120,748 and reimbursed class level expenses of $119, $109, $103, $102 and $30
for Class A, Class B, Class C, Class R and Institutional Class shares,
respectively. At August 31, 2006, the adviser advanced to the fund 297,066 for
payment of Fund expenses.
At the request of the Trustees of the Trust, AMVESCAP agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. These expenses along with the related expense
reimbursement are included in the Statement of Operations. For the period March
31, 2006 (date operations commenced) to August 31, 2006, AMVESCAP did not
reimburse any expenses.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. Pursuant to such agreement, for the period
March 31, 2006 (date operations commenced) to August 31, 2006, AIM was paid
$21,096.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay AIM Investment Services, Inc. ("AIS") a fee for providing transfer agency
and shareholder services to the Fund and reimburse AIS for certain expenses
incurred by AIS in the course of providing such services. AIS may
F-8
AIM Structured Value Fund
make payments to intermediaries that provide omnibus account services,
sub-accounting services and/or networking services. All fees payable by AIS to
intermediaries that provide omnibus account services or sub-accounting are
charged back to the Fund, subject to certain limitations approved by the Trust's
Board of Trustees. For the period March 31, 2006 (date operations commenced) to
August 31, 2006, the Fund paid AIS $497 for Class A, Class B, Class C and Class
R share classes and $30 for Institutional Class shares.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class B,
Class C, Class R and Institutional Class shares of the Fund. The Trust has
adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A, Class B, Class C and Class R shares (collectively the "Plans").
The Fund, pursuant to the Plans, pays ADI compensation at the annual rate of
0.25% of the Fund's average daily net assets of Class A shares, 1.00% of the
average daily net assets of Class B and Class C shares and 0.50% of the average
daily net assets of Class R shares. Of the Rule 12b-1 payments, up to 0.25% of
the average daily net assets of the Class A, Class B, Class C or Class R shares
may be paid to furnish continuing personal shareholder services to customers who
purchase and own shares of such classes. Any amounts not paid as a service fee
under the Plans would constitute an asset-based sales charge. National
Association of Securities Dealers ("NASD") Rules impose a cap on the total sales
charges, including asset-based sales charges that may be paid by any class of
shares of the Fund. Pursuant to the Plans, for the period March 31, 2006 (date
operations commenced) to August 31, 2006, the Class A, Class B, Class C and
Class R shares paid $739, $2,711, $2,572 and $1,272, respectively.
Front-end sales commissions and contingent deferred sales charges ("CDSC")
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. CDSC are deducted from
redemption proceeds prior to remittance to the shareholder. During the period
March 31, 2006 (date operations commenced) to August 31, 2006, ADI advised the
Fund that it retained $381 in front-end sales commissions from the sale of Class
A shares and $0 from Class A, Class B, Class C and Class R shares, for CDSC
imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AIS and/or ADI.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions and (ii) custodian credits which
result from periodic overnight cash balances at the custodian. For the period
March 31, 2006 (date operations commenced) to August 31, 2006, the Fund received
credits from these arrangements, which resulted in the reduction of the Fund's
total expenses of $714.
NOTE 4--TRUSTEES' AND OFFICER'S FEES AND BENEFITS
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to each Trustee and Officer of the Fund who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also
include amounts accrued by the Fund to fund such deferred compensation amounts.
Those Trustees who defer compensation have the option to select various AIM
Funds in which their deferral accounts shall be deemed to be invested. Finally,
current Trustees are eligible to participate in a retirement plan that provides
for benefits to be paid upon retirement to Trustees over a period of time based
on the number of years of service. The Fund may have certain former Trustees who
also participate in a retirement plan and receive benefits under such plan.
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund
to fund such retirement benefits. Obligations under the deferred compensation
and retirement plans represent unsecured claims against the general assets of
the Fund.
During the period March 31, 2006 (date operations commenced) to August 31,
2006, the Fund paid legal fees of $571 for services rendered by Kramer, Levin,
Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that
firm is a Trustee of the Trust.
NOTE 5--BORROWINGS
Pursuant to an exemptive order from the Securities and Exchange Commission
("SEC"), the Fund may participate in an interfund lending facility that AIM has
established for temporary borrowings by the AIM Funds. An interfund loan will be
made under this facility only if the loan rate (an average of the rate available
on bank loans and the rate available on investments in overnight repurchase
agreements) is favorable to both the lending fund and the borrowing fund. A loan
will be secured by collateral if the Fund's aggregate borrowings from all
sources exceeds 10% of the Fund's total assets. To the extent that the loan is
required to be secured by collateral, the collateral is marked to market daily
to ensure that the market value is at least 102% of the outstanding principal
value of the loan.
The Fund is a participant in an uncommitted unsecured revolving credit
facility with State Street Bank and Trust Company ("SSB"). The Fund may borrow
up to the lesser of (i) $125,000,000, or (ii) the limits set by its prospectus
for borrowings. The Fund and other funds advised by AIM which are parties to the
credit facility can borrow on a first come, first served basis. Principal on
each loan outstanding shall bear interest at the bid rate quoted by SSB at the
time of the request for the loan.
During the period March 31, 2006 (date operations commenced) to August 31,
2006, the Fund did not borrow or lend under the interfund lending facility or
borrow under the uncommitted unsecured revolving credit facility.
Additionally, the Fund is permitted to temporarily carry a negative or
overdrawn balance in its account with SSB, the custodian bank. To compensate the
custodian bank for such overdrafts, the overdrawn Fund may either (i) leave
funds as a compensating balance in the account so the custodian bank
F-9
AIM Structured Value Fund
can be compensated by earning the additional interest; or (ii) compensate by
paying the custodian bank at a rate agreed upon by the custodian bank and AIM,
not to exceed the rate contractually agreed upon.
NOTE 6--FUTURES CONTRACTS
On August 31, 2006, $175,000 principal amount of U.S. Treasury obligations were
pledged as collateral to cover margin requirements for open futures contracts.
<Table>
<Caption>
OPEN FUTURES CONTRACTS AT PERIOD END
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
NUMBER OF MONTH/ VALUE UNREALIZED
CONTRACT CONTRACTS COMMITMENT 08/31/06 APPRECIATION
- ------------------------------------------------------------------------------------------------------------------
Russell E-Mini 1000 Index Future 12 Sep-06/Long $846,202 $3,998
__________________________________________________________________________________________________________________
==================================================================================================================
</Table>
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
There were on ordinary income or long-term gain distributions paid during the
period March 31, 2006 (date operations commenced) to August 31, 2006.
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2006, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2006
- ---------------------------------------------------------------------------
Undistributed ordinary income $ 176,054
- ---------------------------------------------------------------------------
Undistributed long-term gain 635
- ---------------------------------------------------------------------------
Unrealized appreciation -- investments 57,721
- ---------------------------------------------------------------------------
Temporary book/tax differences (65)
- ---------------------------------------------------------------------------
Shares of beneficial interest 76,157,829
===========================================================================
Total net assets $76,392,174
___________________________________________________________________________
===========================================================================
</Table>
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is due to differences in the timing of recognition of gains and
losses on investments for tax and book purposes. The Fund's unrealized
appreciation (depreciation) difference is attributable primarily to losses on
wash sales.
The temporary book/tax differences are a result of timing differences
between book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the trustee deferral of compensation and
retirement plan expenses.
The Fund did not have a capital loss carryforward as of August 31, 2006.
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the period March
31, 2006 (date operations commenced) to August 31, 2006 was $75,588,373 and
$762,465, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $854,046
- ------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (796,325)
==============================================================================
Net unrealized appreciation of investment securities $ 57,721
______________________________________________________________________________
==============================================================================
Cost of investments for tax purposes is $75,995,063.
</Table>
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of costs incurred during
the startup period of the Funds on August 31, 2006, undistributed net investment
income was increased by $41,534 and shares of beneficial interest decreased by
$41,534. This reclassification had no effect on the net assets of the Fund.
F-10
AIM Structured Value Fund
NOTE 10--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A, Class B,
Class C, Class R and Institutional Class. Class A shares are sold with a
front-end sales charge. Class B shares and Class C shares are sold with CDSC.
Class R shares and Institutional Class shares are sold at net asset value. Under
certain circumstances, Class A shares are sold without a sales charge. In
addition, under certain circumstances, Class A shares and Class R shares are
subject to CDSC. Generally, Class B shares will automatically convert to Class A
shares on or about the month-end which is at least eight years after the date of
purchase.
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- --------------------------------------------------------------------------------------
MARCH 31, 2006 (DATE
OPERATIONS COMMENCED) TO
AUGUST 31, 2006(a)
------------------------
SHARES AMOUNT
- --------------------------------------------------------------------------------------
Sold:
Class A 83,321 $ 836,451
- --------------------------------------------------------------------------------------
Class B 76,011 762,735
- --------------------------------------------------------------------------------------
Class C 60,787 607,944
- --------------------------------------------------------------------------------------
Class R 60,001 600,010
- --------------------------------------------------------------------------------------
Institutional Class 7,036,482 73,435,376
======================================================================================
Reacquired:
Class A (1,310) (13,241)
- --------------------------------------------------------------------------------------
Class B (50) (500)
- --------------------------------------------------------------------------------------
Institutional Class (2,807) (29,412)
======================================================================================
7,312,435 $76,199,363
______________________________________________________________________________________
======================================================================================
</Table>
(a) 90% of the outstanding shares of the Fund are owned by affiliated mutual
funds. Affiliated mutual funds are other funds that are also advised by
AIM.
NOTE 11--NEW ACCOUNTING STANDARD
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48").
FIN 48 prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement for a tax position taken or
expected to be taken in a tax return. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. The provisions for FIN 48 are effective for
fiscal years beginning after December 15, 2006. Management is currently
assessing the impact of FIN 48, if any, on the Fund's financial statements and
intends for the Fund to adopt the FIN 48 provisions during 2007.
F-11
AIM Structured Value Fund
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights of the Fund outstanding
throughout the periods indicated.
<Table>
<Caption>
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
---------------- ---------------- ---------------- ---------------- ----------------
MARCH 31, 2006 MARCH 31, 2006 MARCH 31, 2006 MARCH 31, 2006 MARCH 31, 2006
(DATE OPERATIONS (DATE OPERATIONS (DATE OPERATIONS (DATE OPERATIONS (DATE OPERATIONS
COMMENCED) TO COMMENCED) TO COMMENCED) TO COMMENCED) TO COMMENCED) TO
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
2006 2006 2006 2006 2006
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning
of period $10.00 $10.00 $10.00 $10.00 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income(a) 0.20 0.16 0.16 0.18 0.21
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains on securities
(both realized and
unrealized) 0.24 0.24 0.24 0.24 0.24
=================================================================================================================================
Total from investment
operations 0.44 0.40 0.40 0.42 0.45
=================================================================================================================================
Net asset value, end of
period $10.44 $10.40 $10.40 $10.42 $ 10.45
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 4.40% 4.00% 4.00% 4.20% 4.50%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $ 856 $ 790 $ 632 $ 625 $73,488
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average
net assets:
With fee waivers and/or
expense
reimbursements(c) 1.03% 1.78% 1.78% 1.28% 0.77%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or
expense
reimbursements(c) 5.80% 6.55% 6.55% 6.05% 5.50%
=================================================================================================================================
Ratio of net investment
income to average net
assets(c) 4.59% 3.84% 3.84% 4.34% 4.85%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(d) 5% 5% 5% 5% 5%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges, where
applicable, and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $700,609,
$642,499, $609,523, $603,053 and $4,379,570 for Class A, Class B, Class
C, Class R and Institutional Class shares, respectively.
(d) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
NOTE 13--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING
On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment
advisor to certain AIM Funds), AIM and A I M Distributors, Inc. ("ADI") (the
distributor of the retail AIM Funds) reached final settlements with certain
regulators, including the Securities and Exchange Commission ("SEC"), the New
York Attorney General and the Colorado Attorney General, to resolve civil
enforcement actions and/or investigations related to market timing and related
activity in the AIM Funds, including those formerly advised by IFG. As part of
the settlements, a $325 million fair fund ($110 million of which is civil
penalties) has been created to compensate shareholders harmed by market timing
and related activity in funds formerly advised by IFG. Additionally, AIM and ADI
created a $50 million fair fund ($30 million of which is civil penalties) to
compensate shareholders harmed by market timing and related activity in funds
advised by AIM, which was done pursuant to the terms of the settlement. These
two fair funds may increase as a result of contributions from third parties who
reach final settlements with the SEC or other regulators to resolve allegations
of market timing and/or late trading that also may have harmed applicable AIM
Funds. These two fair funds will be distributed in accordance with a methodology
to be determined by AIM's independent distribution consultant, in consultation
with AIM and the independent trustees of the AIM Funds and acceptable to the
staff of the SEC. Management of AIM and the Fund are unable to estimate the
impact, if any, that the distribution of these two fair funds may have on the
Fund or whether such distribution will have an impact on the Fund's financial
statements in the future.
At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"),
the parent company of IFG and AIM, has agreed to reimburse expenses incurred by
the AIM Funds related to market timing matters.
PENDING LITIGATION AND REGULATORY INQUIRIES
On August 30, 2005, the West Virginia Office of the State Auditor
- -Securities Commission ("WVASC") issued a Summary Order to Cease and Desist and
Notice of Right to Hearing to AIM and ADI (Order No. 05-1318). The WVASC makes
findings of fact that AIM and ADI entered into certain arrangements permitting
market timing of the AIM Funds and failed to disclose these arrangements in the
prospectuses for such Funds, and conclusions of law to the effect that AIM and
ADI violated the West Virginia securities laws. The WVASC orders AIM and ADI to
cease any further violations and seeks to impose
F-12
AIM Structured Value Fund
NOTE 13--LEGAL PROCEEDINGS--(CONTINUED)
monetary sanctions, including restitution to affected investors, disgorgement of
fees, reimbursement of investigatory, administrative and legal costs and an
"administrative assessment," to be determined by the Commissioner. Initial
research indicates that these damages could be limited or capped by statute.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or
related entities and individuals, depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related activity
in the AIM Funds;
- that certain AIM Funds inadequately employed fair value pricing;
- that the defendants charged excessive advisory and/or distribution fees
and failed to pass on to shareholders the perceived savings generated by
economies of scale and that the defendants adopted unlawful distribution
plans; and
- that the defendants improperly used the assets of the AIM Funds to pay
brokers to aggressively promote the sale of the AIM Funds over other
mutual funds and that the defendants concealed such payments from
investors by disguising them as brokerage commissions (all the claims in
this category of lawsuits were dismissed with prejudice by the court on
September 29, 2006, except for the Section 36(b) claim which was dismissed
with leave to amend to plead it properly as a derivative claim).
These lawsuits allege as theories of recovery, depending on the lawsuit,
violations of various provisions of the Federal and state securities laws and
ERISA, negligence, breach of fiduciary duty and/or breach of contract. These
lawsuits seek remedies that include, depending on the lawsuit, damages,
restitution, injunctive relief, imposition of a constructive trust, removal of
certain directors and/or employees, various corrective measures under ERISA,
rescission of certain AIM Funds' advisory agreements and/or distribution plans
and recovery of all fees paid, an accounting of all fund-related fees,
commissions and soft dollar payments, restitution of all commissions and fees
paid, and prospective relief in the form of reduced fees.
All lawsuits based on allegations of market timing, late trading and related
issues have been transferred to the United States District Court for the
District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court,
plaintiffs in these lawsuits consolidated their claims for pre-trial purposes
into three amended complaints against various AIM- and IFG-related parties: (i)
a Consolidated Amended Class Action Complaint purportedly brought on behalf of
shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative
Complaint purportedly brought on behalf of the AIM Funds and fund registrants;
and (iii) an Amended Class Action Complaint for Violations of the Employee
Retirement Income Securities Act ("ERISA") purportedly brought on behalf of
participants in AMVESCAP's 401(k) plan. Based on orders issued by the MDL Court,
all claims asserted against the AIM Funds that have been transferred to the MDL
Court have been dismissed, although certain Funds remain nominal defendants in
the Consolidated Amended Fund Derivative Complaint. On September 15, 2006, the
MDL Court granted the AMVESCAP defendants' motion to dismiss the Amended Class
Action Complaint for Violations of ERISA and dismissed such Complaint. The
plaintiff has commenced an appeal from that decision.
IFG, AIM, ADI and/or related entities and individuals have received
inquiries from numerous regulators in the form of subpoenas or other oral or
written requests for information and/or documents related to one or more of the
following issues, among others, some of which concern one or more AIM Funds:
market timing activity, late trading, fair value pricing, excessive or improper
advisory and/or distribution fees, mutual fund sales practices, including
revenue sharing and directed-brokerage arrangements, investments in securities
of other registered investment companies, contractual plans, issues related to
Section 529 college savings plans and procedures for locating lost security
holders. IFG, AIM and ADI have advised the Fund that they are providing full
cooperation with respect to these inquiries. Regulatory actions and/or
additional civil lawsuits related to these or other issues may be filed against
the AIM Funds, IFG, AIM and/or related entities and individuals in the future.
At the present time, management of AIM and the Fund are unable to estimate
the impact, if any, that the outcome of the Pending Litigation and Regulatory
Inquiries described above may have on AIM, ADI or the Fund.
F-13
AIM Structured Value Fund
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Counselor Series Trust
and Shareholders of AIM Structured Value Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of AIM Structured Value Fund (one of
the funds constituting AIM Counselor Series Trust, hereafter referred to as the
"Fund") at August 31, 2006, and the results of its operations, the changes in
its net assets and the financial highlights for the period March 31, 2006 (date
operations commenced) through August 31, 2006, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at August 31, 2006 by
correspondence with the custodian and brokers, provides a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
October 26, 2006
Houston, Texas
F-14
AIM Structured Value Fund
TAX DISCLOSURES
TAX INFORMATION FOR NON-RESIDENT ALIEN SHAREHOLDERS
The percentage of qualifying assets not subject to the U.S. estate tax for the
fiscal quarters ended May 31, 2006, and August 31, 2006 are 1.34% and 1.65%,
respectively.
F-15
AIM Structured Value Fund
TRUSTEES AND OFFICERS
The address of each trustee and officer of AIM Counselor Series Trust (the
"Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee
oversees 109 portfolios in the AIM Funds complex. The trustees serve for the
life of the Trust, subject to their earlier death, incapacitation, resignation,
retirement or removal as more specifically provided in the Trust's
organizational documents. Column two below includes length of time served with
predecessor entities, if any.
<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 2003 Director and Chairman, A I M Management None
Trustee and Vice Chair Group Inc. (financial services holding
company); Director and Vice Chairman,
AMVESCAP PLC; Chairman, AMVESCAP
PLC -- AIM Division (parent of AIM and a
global investment management firm) and
Trustee and Vice Chair of The AIM Family
of Funds--Registered Trademark--
Formerly: President and Chief Executive
Officer, A I M Management Group Inc.;
Director, Chairman and President, A I M
Advisors, Inc. (registered investment
advisor); Director and Chairman, A I M
Capital Management, Inc. (registered
investment advisor), A I M Distributors,
Inc. (registered broker dealer), AIM
Investment Services, Inc., (registered
transfer agent), and Fund Management
Company (registered broker dealer); and
Chief Executive Officer, AMVESCAP
PLC -- Managed Products; and President
and Principal Executive Officer of The
AIM Family of Funds--Registered
Trademark--
- -------------------------------------------------------------------------------------------------------------------------------
Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None
Trustee, President and President, A I M Management Group Inc.,
Principal AIM Mutual Fund Dealer Inc., AIM Funds
Executive Officer Management Inc. and 1371 Preferred Inc.;
Director and President, A I M Advisors,
Inc., INVESCO Funds Group, Inc. and AIM
GP Canada Inc.; Director, A I M Capital
Management, Inc. and A I M Distributors,
Inc.; Director and Chairman, AIM
Investment Services, Inc., Fund
Management Company and INVESCO
Distributors, Inc.; Director, President
and Chairman, AVZ Callco Inc.; AMVESCAP
Inc. and AIM Canada Holdings Inc.;
Director and Chief Executive Officer,
AIM Trimark Global Fund Inc. and AIM
Trimark Canada Fund Inc.; Trustee,
President and Principal Executive
Officer of The AIM Family of
Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust); and Trustee
and Executive Vice President, The AIM
Family of Funds--Registered Trademark--
(AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust only)
Formerly: President and Principal
Executive Officer, The AIM Family of
Funds--Registered Trademark-- (AIM
Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free
Investments Trust only); Chairman, AIM
Canada Holdings, Inc.; Executive Vice
President and Chief Operations Officer,
AIM Funds Management Inc.; President,
AIM Trimark Global Fund Inc. and AIM
Trimark Canada Fund Inc.; and Director,
Trimark Trust
- -------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 2003 Chairman, Crockett Technology Associates ACE Limited (insurance company);
Trustee and Chair (technology consulting company) and Captaris, Inc. (unified
messaging provider)
- -------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 1983 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2003 Retired Badgley Funds, Inc. (registered
Trustee investment company (2 portfolios))
Formerly: Partner, law firm of Baker &
McKenzie
- -------------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2000 Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm); and Director,
Policy Studies, Inc. and Van Gilder
Insurance Corporation
- -------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2003 Director of a number of public and None
Trustee private business corporations, including
the Boss Group Ltd. (private investment
and management); Cortland Trust, Inc.
(Chairman) (registered investment
company (3 portfolios)); Annuity and
Life Re (Holdings), Ltd. (insurance
company); CompuDyne Corporation
(provider of products and services to
the public security market); and
Homeowners of America Holding
Corporation
Formerly: Director, President and Chief
Executive Officer, Volvo Group North
America, Inc.; Senior Vice President, AB
Volvo; and Director of various
affiliated Volvo companies; and
Director, Magellan Insurance Company
- -------------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 2003 Chief Executive Officer, Twenty First Administaff, and Discovery Global
Trustee Century Group, Inc. (government affairs Education Fund (non-profit)
company); and Owner, Dos Angelos Ranch,
L.P.
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company)
- -------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Cortland Trust, Inc. (registered
Trustee Naftalis and Frankel LLP investment company (3 portfolios))
- -------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2003 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- -------------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 2003 Partner, law firm of Pennock & Cooper None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Larry Soll -- 1942 1997 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Raymond Stickel, Jr. -- 1944 2005 Retired Director, Mainstay VP Series
Trustee Funds, Inc. (21 portfolios)
Formerly: Partner, Deloitte & Touche
- -------------------------------------------------------------------------------------------------------------------------------
</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. Taylor 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.
F-16
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Structured Value Fund
The address of each trustee and officer of AIM Counselor Series Trust (the
"Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee
oversees 109 portfolios in the AIM Funds complex. The trustees serve for the
life of the Trust, subject to their earlier death, incapacitation, resignation,
retirement or removal as more specifically provided in the Trust's
organizational documents. Column two below includes length of time served with
predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/
POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------
Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer N/A
Senior Vice President and of The AIM Family of Funds--Registered
Senior Officer Trademark--
Formerly: Director of Compliance and
Assistant General Counsel, ICON
Advisers, Inc.; Financial Consultant,
Merrill Lynch; General Counsel and
Director of Compliance, ALPS Mutual
Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
John M. Zerr -- 1962 2006 Director, Senior Vice President, N/A
Senior Vice President, Chief Secretary and General Counsel, A I M
Legal Officer and Secretary Management Group Inc. (financial
services holding company) and A I M
Advisors, Inc.; Director, Vice President
and Secretary, INVESCO Distributors,
Inc.; Vice President and Secretary,
A I M Capital Management, Inc., AIM
Investment Services, Inc., and Fund
Management Company; Senior Vice
President and Secretary, A I M
Distributors, Inc.; Director, INVESCO
Funds Group Inc.; and Senior Vice
President, Chief Legal Officer and
Secretary of The AIM Family of
Funds--Registered Trademark--
Formerly: Chief Operating Officer,
Senior Vice President, General Counsel,
and Secretary, Liberty Ridge Capital,
Inc. (an investment adviser); Vice
President and Secretary, PBHG Funds (an
investment company); Vice President and
Secretary, PBHG Insurance Series Fund
(an investment company); General Counsel
and Secretary, Pilgrim Baxter Value
Investors (an investment adviser); Chief
Operating Officer, General Counsel and
Secretary, Old Mutual Investment
Partners (a broker-dealer); General
Counsel and Secretary, Old Mutual Fund
Services (an administrator); General
Counsel and Secretary, Old Mutual
Shareholder Services (a shareholder
servicing center); Executive Vice
President, General Counsel and
Secretary, Old Mutual Capital, Inc. (an
investment adviser); and Vice President
and Secretary, Old Mutual Advisors Funds
(an investment company)
- ------------------------------------------------------------------------------------------------------------------------------
Lisa O. Brinkley -- 1959 2004 Global Compliance Director, AMVESCAP N/A
Vice President PLC; and Vice President of The AIM
Family of Funds--Registered Trademark--
Formerly: Senior Vice President, A I M
Management Group Inc. (financial
services holding company); Senior Vice
President and Chief Compliance Officer,
A I M Advisors, Inc. and The AIM Family
of Funds--Registered Trademark--; Vice
President and Chief Compliance Officer,
A I M Capital Management, Inc. and A I M
Distributors, Inc.; Vice President, AIM
Investment Services, Inc. and Fund
Management Company; Senior Vice
President and Chief Compliance Officer
of The AIM Family of Funds--Registered
Trademark--; and Senior Vice President
and Compliance Director, Delaware
Investments Family of Funds
- ------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome -- 1956 2003 Senior Vice President and General
Vice President Counsel, AMVESCAP PLC; Director, INVESCO
Funds Group, Inc.; and Vice President of
The AIM Family of Funds--Registered
Trademark--
Formerly: Director, General Counsel, and N/A
Vice President Fund Management Company;
Director, Senior Vice President,
Secretary and General Counsel, A I M
Management Group Inc. (financial
services holding company) and A I M
Advisors, Inc.; Director and Vice
President, INVESCO Distributors, Inc.;
Senior Vice President, A I M
Distributors, Inc.; Vice President,
A I M Capital Management, Inc. and AIM
Investment Services, Inc.; Senior Vice
President, Chief Legal Officer and
Secretary of The AIM Family of
Funds--Registered Trademark--; Chief
Executive Officer and President, INVESCO
Funds Group, Inc.; and Senior Vice
President, Chief Legal Officer and
General Counsel, Liberty Financial
Companies, Inc. and Liberty Funds Group,
LLC
- ------------------------------------------------------------------------------------------------------------------------------
Sidney M. Dilgren -- 1961 2004 Vice President and Fund Treasurer, A I M N/A
Vice President, Principal Advisors, Inc.; and Vice President,
Financial Officer and Treasurer and Principal Officer of The
Treasurer AIM Family of Funds--Registered
Trademark--
Formerly: Senior Vice President, AIM
Investment Services, Inc.; and Vice
President, A I M Distributors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
J. Philip Ferguson -- 1945 2005 Senior Vice President and Chief N/A
Vice President Investment Officer, A I M Advisors Inc.;
Director, Chairman, Chief Executive
Officer, President and Chief Investment
Officer, A I M Capital Management, Inc.;
Executive Vice President, A I M
Management Group Inc. and Vice President
of The AIM Family of Funds--Registered
Trademark--
Formerly: Senior Vice President, AIM
Private Asset Management, Inc.; and
Chief Equity Officer, Senior Vice
President and Senior Investment Officer,
A I M Capital Management, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2005 Director of Cash Management, Managing N/A
Vice President Director and Chief Cash Management
Officer, A I M Capital Management, Inc;
Director and President, Fund Management
Company; and Vice President, A I M
Advisors, Inc. and The AIM Family of
Funds--Registered Trademark--
- ------------------------------------------------------------------------------------------------------------------------------
Todd L. Spillane -- 1958 2006 Senior Vice President, A I M Management N/A
Chief Compliance Officer Group Inc.; Senior Vice President and
Chief Compliance Officer, A I M
Advisors, Inc.; Chief Compliance Officer
of The AIM Family of Funds--Registered
Trademark--; Vice President and Chief
Compliance Officer, A I M Capital
Management, Inc.; and Vice President,
A I M Distributors, Inc., AIM Investment
Services, Inc. and Fund Management
Company
Formerly: Global Head of Product
Development, AIG-Global Investment
Group, Inc.; Chief Compliance Officer
and Deputy General Counsel,
AIG-SunAmerica Asset Management; and
Chief Compliance Officer, Chief
Operating Officer and Deputy General
Counsel, American General Investment
Management
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
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 1.800.959.4246.
<Table>
OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS SUB-ADVISOR
11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, PricewaterhouseCoopers INVESCO Institutional (N.A.)
Suite 100 11 Greenway Plaza Inc. LLP One Midtown Plaza
Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana Street 1360 Peachtree Street, N.E.
Houston, TX 77046-1173 Suite 100 Suite 2900 Suite 100
Houston, TX 77046-1173 Houston, TX 77002-5678 Atlanta, GA 30309-3262
COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN
Ballard Spahr INDEPENDENT TRUSTEES AIM Investment State Street Bank and
Andrews & Ingersoll, LLP Kramer, Levin, Naftalis Services, Inc. Trust Company
1735 Market Street, 51st & Frankel LLP P.O. Box 4739 225 Franklin Street
Floor 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801
Philadelphia, PA 19103-7599 Americas
New York, NY 10036-2714
</Table>
F-17
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Basic Balanced Fund* AIM Asia Pacific Growth Fund TAXABLE
AIM Basic Value Fund AIM China Fund
AIM Capital Development Fund AIM Developing Markets Fund AIM Enhanced Short Bond Fund
AIM Charter Fund AIM European Growth Fund AIM Floating Rate Fund
AIM Constellation Fund AIM European Small Company Fund(1) AIM High Yield Fund
AIM Diversified Dividend Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Dynamics Fund AIM Global Equity Fund AIM Intermediate Government Fund
AIM Large Cap Basic Value Fund AIM Global Growth Fund AIM International Bond Fund
AIM Large Cap Growth Fund AIM Global Value Fund AIM Limited Maturity Treasury Fund
AIM Mid Cap Basic Value Fund AIM Japan Fund AIM Money Market Fund
AIM Mid Cap Core Equity Fund(1) AIM International Core Equity Fund AIM Short Term Bond Fund
AIM Opportunities I Fund AIM International Growth Fund AIM Total Return Bond Fund
AIM Opportunities II Fund AIM International Small Company Fund(1) Premier Portfolio
AIM Opportunities III Fund AIM Trimark Fund Premier U.S. Government Money Portfolio
AIM S&P 500 Index Fund
AIM Select Equity Fund TAX-FREE
AIM Small Cap Equity Fund SECTOR EQUITY
AIM Small Cap Growth Fund AIM High Income Municipal Fund(1)
AIM Structured Core Fund AIM Advantage Health Sciences Fund AIM Municipal Bond Fund
AIM Structured Growth Fund AIM Energy Fund AIM Tax-Exempt Cash Fund
AIM Structured Value Fund AIM Financial Services Fund AIM Tax-Free Intermediate Fund
AIM Summit Fund AIM Global Health Care Fund Premier Tax-Exempt Portfolio
AIM Trimark Endeavor Fund AIM Global Real Estate Fund
AIM Trimark Small Companies Fund AIM Gold & Precious Metals Fund ALLOCATION SOLUTIONS
AIM Leisure Fund
AIM Multi-Sector Fund AIM Conservative Allocation Fund
AIM Real Estate Fund(1) AIM Growth Allocation Fund
AIM Technology Fund AIM Moderate Allocation Fund
AIM Utilities Fund AIM Moderate Growth Allocation Fund
AIM Moderately Conservative Allocation
Fund
DIVERSIFIED PORTFOLIOS
AIM Income Allocation Fund
AIM International Allocation Fund
==============================================================================
CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES CAREFULLY.
FOR THIS AND OTHER INFORMATION ABOUT AIM FUNDS, OBTAIN A PROSPECTUS FROM YOUR
FINANCIAL ADVISOR AND READ IT CAREFULLY BEFORE INVESTING.
==============================================================================
*Domestic equity and income fund
(1) This Fund has limited public sales of its shares to certain investors. For
more information on who may continue to invest in the Fund, please see the
appropriate prospectus.
If used after January 20, 2007, this report 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. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $429 billion in assets
under management. Data as of August 31, 2006.
AIMinvestments.com SVAL-AR-1 A I M Distributors, Inc.
<Table>
YOUR GOALS. OUR SOLUTIONS.--Registered Trademark--
- ------------------------------------------------------------------------
Mutual Retirement Annuities College Separately Offshore Cash [AIM INVESTMENTS LOGO APPEARS HERE]
Funds Products Savings Managed Products Management --Registered Trademark--
Plans Accounts
- ------------------------------------------------------------------------
</Table>
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the Registrant had
adopted a code of ethics (the "Code") that applies to the Registrant's
principal executive officer ("PEO") and principal financial officer
("PFO"). The Code was amended in September, 2006, to (i) remove individuals
listed in Exhibit A and any references to Exhibit A thus allowing for
future flexibility and (ii) remove ambiguities found in the second
paragraph of Section III. The Registrant did not grant any waivers,
including implicit waivers, from any provisions of the Code to the PEO or
PFO during the period covered by this report.
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. Dr. Mathai-Davis is
"independent" within the meaning of that term as used in Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
FEES BILLED BY PWC RELATED TO THE REGISTRANT
PWC billed the Registrant aggregate fees for services rendered to the
Registrant for the last two fiscal years as follows:
Percentage of Fees
Billed Applicable Percentage of Fees
to Non-Audit Billed Applicable to
Services Provided Non-Audit Services
Fees Billed for for fiscal year end Provided for fiscal
Services Rendered 2006 Pursuant to Fees Billed for year end 2005
to the Registrant Waiver of Services Rendered to Pursuant to Waiver
for fiscal year end Pre-Approval the Registrant for of Pre-Approval
2006 Requirement(1) fiscal year end 2005 Requirement(1)
------------------- ------------------- -------------------- --------------------
Audit Fees $220,075 N/A $71,609 N/A
Audit-Related Fees $ 0 0% $ 0 0%
Tax Fees(2) $ 41,929 0% $15,082 0%
All Other Fees $ 0 0% $ 0 0%
-------- -------
Total Fees $262,004 0% $86,691 0%
PWC billed the Registrant aggregate non-audit fees of $41,929 for the fiscal
year ended 2006, and $15,082 for the fiscal year ended 2005, for non-audit
services rendered to the Registrant.
- ----------
(1) With respect to the provision of non-audit services, the pre-approval
requirement is waived pursuant to a de minimis exception if (i) such
services were not recognized as non-audit services by the Registrant at the
time of engagement, (ii) the aggregate amount of all such services provided
is no more than 5% of the aggregate audit and non-audit fees paid by the
Registrant to PWC during a fiscal year; and (iii) such services are
promptly approved by the Registrant's Audit Committee prior to the
completion of the audit by the Audit Committee.
(2) Tax fees for the fiscal year end August 31, 2006 includes fees billed for
reviewing tax returns and consultation services. Tax fees for fiscal year
end August 31, 2005 includes fees billed for reviewing tax returns.
FEES BILLED BY PWC RELATED TO AIM AND AIM AFFILIATES
PWC billed AIM Advisors, Inc. ("AIM"), the Registrant's adviser, and any
entity controlling, controlled by or under common control with AIM that provide
ongoing services to the Registrant ("AIM Affiliates") aggregate fees for
pre-approved non-audit services rendered to AIM and AIM Affiliates for the last
two fiscal years as follows:
Fees Billed for Fees Billed for
Non-Audit Services Percentage of Fees Non-Audit Services Percentage of Fees
Rendered to AIM and Billed Applicable to Rendered to AIM and Billed Applicable to
AIM Affiliates for Non-Audit Services AIM Affiliates for Non-Audit Services
fiscal year end 2006 Provided for fiscal fiscal year end 2005 Provided for fiscal
That Were Required year end 2006 That Were Required year end 2005
to be Pre-Approved Pursuant to Waiver to be Pre-Approved Pursuant to Waiver of
by the Registrant's of Pre-Approval by the Registrant's Pre-Approval
Audit Committee Requirement(1) Audit Committee Requirement(1)
-------------------- -------------------- -------------------- ---------------------
Audit-Related Fees $0 0% $0 0%
Tax Fees $0 0% $0 0%
All Other Fees $0 0% $0 0%
--- ---
Total Fees(2) $0 0% $0 0%
- ----------
(1) With respect to the provision of non-audit services, the pre-approval
requirement is waived pursuant to a de minimis exception if (i) such
services were not recognized as non-audit services by the Registrant at the
time of engagement, (ii) the aggregate amount of all such services provide
is no more than 5% of the aggregate audit and non-audit fees paid by the
Registrant, AIM and AIM Affiliates to PWC during a fiscal year; and (iii)
such services are promptly approved by the Registrant's Audit Committee
prior to the completion of the audit by the Audit Committee.
(2) Including the fees for services not required to be pre-approved by the
registrant's audit committee, PWC billed AIM and AIM Affiliates aggregate
non-audit fees of $0 for the fiscal year ended 2006, and $0 for the fiscal
year ended 2005, for non-audit services rendered to AIM and AIM Affiliates.
The Audit Committee also has considered whether the provision of non-audit
services that were rendered to AIM and AIM Affiliates that were not
required to be pre-approved pursuant to SEC regulations, if any, is
compatible with maintaining PWC's independence.
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
POLICIES AND PROCEDURES
As adopted by the Audit Committees of
the AIM Funds (the "Funds")
Last Amended September 18, 2006
STATEMENT OF PRINCIPLES
Under the Sarbanes-Oxley Act of 2002 and rules adopted by the Securities and
Exchange Commission ("SEC") ("Rules"), the Audit Committees of the Funds' (the
"Audit Committee") Board of Trustees (the "Board") are responsible for the
appointment, compensation and oversight of the work of independent accountants
(an "Auditor"). As part of this responsibility and to assure that the Auditor's
independence is not impaired, the Audit Committees pre-approve the audit and
non-audit services provided to the Funds by each Auditor, as well as all
non-audit services provided by the Auditor to the Funds' investment adviser and
to affiliates of the adviser that provide ongoing services to the Funds
("Service Affiliates") if the services directly impact the Funds' operations or
financial reporting. The SEC Rules also specify the types of services that an
Auditor may not provide to its audit client. The following policies and
procedures comply with the requirements for pre-approval and provide a mechanism
by which management of the Funds may request and secure pre-approval of audit
and non-audit services in an orderly manner with minimal disruption to normal
business operations.
Proposed services either may be pre-approved without consideration of specific
case-by-case services by the Audit Committees ("general pre-approval") or
require the specific pre-approval of the Audit Committees ("specific
pre-approval"). As set forth in these policies and procedures, unless a type of
service has received general pre-approval, it will require specific pre-approval
by the Audit Committees. Additionally, any fees exceeding 110% of estimated
pre-approved fee levels provided at the time the service was pre-approved will
also require specific approval by the Audit Committees before payment is made.
The Audit Committees will also consider the impact of additional fees on the
Auditor's independence when determining whether to approve any additional fees
for previously pre-approved services.
The Audit Committees will annually review and generally pre-approve the services
that may be provided by each Auditor without obtaining specific pre-approval
from the Audit Committee. The term of any general pre-approval runs from the
date of such pre-approval through September 30th of the following year, unless
the Audit Committees consider a different period and state otherwise. The Audit
Committees will add to or subtract from the list of general pre-approved
services from time to time, based on subsequent determinations.
The purpose of these policies and procedures is to set forth the guidelines to
assist the Audit Committees in fulfilling their responsibilities.
DELEGATION
The Audit Committees may from time to time delegate pre-approval authority to
one or more of its members who are Independent Trustees. All decisions to
pre-approve a service by a delegated member shall be reported to the Audit
Committee at its next quarterly meeting.
AUDIT SERVICES
The annual audit services engagement terms will be subject to specific
pre-approval of the Audit Committees. Audit services include the annual
financial statement audit and other procedures such as tax provision work that
is required to be performed by the independent auditor to be able to form an
opinion on the Funds' financial statements. The Audit Committee will obtain,
review and consider sufficient information concerning the proposed Auditor to
make a reasonable evaluation of the Auditor's qualifications and independence.
In addition to the annual Audit services engagement, the Audit Committees may
grant either general or specific pre-approval of other audit services, which are
those services that only the independent auditor reasonably can provide. Other
Audit services may include services such as issuing consents for the
inclusion of audited financial statements with SEC registration statements,
periodic reports and other documents filed with the SEC or other documents
issued in connection with securities offerings.
NON-AUDIT SERVICES
The Audit Committees may provide either general or specific pre-approval of any
non-audit services to the Funds and its Service Affiliates if the Audit
Committees believe that the provision of the service will not impair the
independence of the Auditor, is consistent with the SEC's Rules on auditor
independence, and otherwise conforms to the Audit Committee's general principles
and policies as set forth herein.
AUDIT-RELATED SERVICES
"Audit-related services" are assurance and related services that are reasonably
related to the performance of the audit or review of the Fund's financial
statements or that are traditionally performed by the independent auditor.
Audit-related services include, among others, accounting consultations related
to accounting, financial reporting or disclosure matters not classified as
"Audit services"; assistance with understanding and implementing new accounting
and financial reporting guidance from rulemaking authorities; and agreed-upon
procedures related to mergers, compliance with ratings agency requirements and
interfund lending activities.
TAX SERVICES
"Tax services" include, but are not limited to, the review and signing of the
Funds' federal tax returns, the review of required distributions by the Funds
and consultations regarding tax matters such as the tax treatment of new
investments or the impact of new regulations. The Audit Committee will
scrutinize carefully the retention of the Auditor in connection with a
transaction initially recommended by the Auditor, the major business purpose of
which may be tax avoidance or the tax treatment of which may not be supported in
the Internal Revenue Code and related regulations. The Audit Committee will
consult with the Funds' Treasurer (or his or her designee) and may consult with
outside counsel or advisors as necessary to ensure the consistency of Tax
services rendered by the Auditor with the foregoing policy.
No Auditor shall represent any Fund or any Service Affiliate before a tax court,
district court or federal court of claims.
Under rules adopted by the Public Company Accounting Oversight Board and
approved by the SEC, in connection with seeking Audit Committee pre-approval of
permissible Tax services, the Auditor shall:
1. Describe in writing to the Audit Committees, which writing may be in
the form of the proposed engagement letter:
a. The scope of the service, the fee structure for the
engagement, and any side letter or amendment to the
engagement letter, or any other agreement between the
Auditor and the Fund, relating to the service; and
b. Any compensation arrangement or other agreement, such as a
referral agreement, a referral fee or fee-sharing
arrangement, between the Auditor and any person (other than
the Fund) with respect to the promoting, marketing, or
recommending of a transaction covered by the service;
2. Discuss with the Audit Committees the potential effects of the
services on the independence of the Auditor; and
3. Document the substance of its discussion with the Audit Committees.
ALL OTHER AUDITOR SERVICES
The Audit Committees may pre-approve non-audit services classified as "All other
services" that are not categorically prohibited by the SEC, as listed in Exhibit
1 to this policy.
PRE-APPROVAL FEE LEVELS OR ESTABLISHED AMOUNTS
Pre-approval of estimated fees or established amounts for services to be
provided by the Auditor under general or specific pre-approval policies will be
set periodically by the Audit Committees. Any proposed fees exceeding 110% of
the maximum estimated pre-approved fees or established amounts for pre-approved
audit and non-audit services will be reported to the Audit Committees at the
quarterly Audit Committees meeting and will require specific approval by the
Audit Committees before payment is made. The Audit Committee will always factor
in the overall relationship of fees for audit and non-audit services in
determining whether to pre-approve any such services and in determining whether
to approve any additional fees exceeding 110% of the maximum pre-approved fees
or established amounts for previously pre-approved services.
PROCEDURES
On an annual basis, A I M Advisors, Inc. ("AIM") will submit to the Audit
Committees for general pre-approval, a list of non-audit services that the Funds
or Service Affiliates of the Funds may request from the Auditor. The list will
describe the non-audit services in reasonable detail and will include an
estimated range of fees and such other information as the Audit Committee may
request.
Each request for services to be provided by the Auditor under the general
pre-approval of the Audit Committees will be submitted to the Funds' Treasurer
(or his or her designee) and must include a detailed description of the services
to be rendered. The Treasurer or his or her designee will ensure that such
services are included within the list of services that have received the general
pre-approval of the Audit Committees. The Audit Committees will be informed at
the next quarterly scheduled Audit Committees meeting of any such services for
which the Auditor rendered an invoice and whether such services and fees had
been pre-approved and if so, by what means.
Each request to provide services that require specific approval by the Audit
Committees shall be submitted to the Audit Committees jointly by the Fund's
Treasurer or his or her designee and the Auditor, and must include a joint
statement that, in their view, such request is consistent with the policies and
procedures and the SEC Rules.
Each request to provide tax services under either the general or specific
pre-approval of the Audit Committees will describe in writing: (i) the scope of
the service, the fee structure for the engagement, and any side letter or
amendment to the engagement letter, or any other agreement between the Auditor
and the audit client, relating to the service; and (ii) any compensation
arrangement or other agreement between the Auditor and any person (other than
the audit client) with respect to the promoting, marketing, or recommending of a
transaction covered by the service. The Auditor will discuss with the Audit
Committees the potential effects of the services on the Auditor's independence
and will document the substance of the discussion.
Non-audit services pursuant to the de minimis exception provided by the SEC
Rules will be promptly brought to the attention of the Audit Committees for
approval, including documentation that each of the conditions for this
exception, as set forth in the SEC Rules, has been satisfied.
On at least an annual basis, the Auditor will prepare a summary of all the
services provided to any entity in the investment company complex as defined in
section 2-01(f)(14) of Regulation S-X in sufficient detail as to the nature of
the engagement and the fees associated with those services.
The Audit Committees have designated the Funds' Treasurer to monitor the
performance of all services provided by the Auditor and to ensure such services
are in compliance with these policies and procedures. The Funds' Treasurer will
report to the Audit Committee on a periodic basis as to the results of such
monitoring. Both the Funds' Treasurer and management of AIM will immediately
report to the chairman of the Audit Committee any breach of these policies and
procedures that comes to the attention of the Funds' Treasurer or senior
management of AIM.
EXHIBIT 1 TO PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES POLICIES AND
PROCEDURES
CONDITIONALLY PROHIBITED NON-AUDIT SERVICES (NOT PROHIBITED IF THE FUND CAN
REASONABLY CONCLUDE THAT THE RESULTS OF THE SERVICE WOULD NOT BE SUBJECT TO
AUDIT PROCEDURES IN CONNECTION WITH THE AUDIT OF THE FUND'S FINANCIAL
STATEMENTS)
- Bookkeeping or other services related to the accounting records or
financial statements of the audit client
- Financial information systems design and implementation
- Appraisal or valuation services, fairness opinions, or
contribution-in-kind reports
- Actuarial services
- Internal audit outsourcing services
CATEGORICALLY PROHIBITED NON-AUDIT SERVICES
- Management functions
- Human resources
- Broker-dealer, investment adviser, or investment banking services
- Legal services
- Expert services unrelated to the audit
- Any service or product provided for a contingent fee or a commission
- Services related to marketing, planning, or opining in favor of the
tax treatment of confidential transactions or aggressive tax position
transactions, a significant purpose of which is tax avoidance
- Tax services for persons in financial reporting oversight roles at the
Fund
- Any other service that the Public Company Oversight Board determines
by regulation is impermissible.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Investments in securities of unaffiliated issuers is included as part
of the reports to stockholders filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 11. CONTROLS AND PROCEDURES.
(a) As of September 15, 2006, an evaluation was performed under the supervision
and with the participation of the officers of the Registrant, including the
PEO and 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 September 15,
2006, the Registrant's disclosure controls and procedures were reasonably
designed 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 second fiscal quarter of the period covered by this
report that have materially affected, or are reasonably likely to
materially affect, the Registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
12(a)(1) Code of Ethics.
12(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.
12(a)(3) Not applicable.
12(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 Counselor Series Trust
By: /s/ PHILIP A. TAYLOR
---------------------------------
Philip A. Taylor
Principal Executive Officer
Date: November 8, 2006
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the
Investment 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/ PHILIP A. TAYLOR
---------------------------------
Philip A. Taylor
Principal Executive Officer
Date: November 8, 2006
By: /s/ SIDNEY M. DILGREN
---------------------------------
Sidney M. Dilgren
Principal Financial Officer
Date: November 8, 2006
EXHIBIT INDEX
12(a)(1) Code of Ethics.
12(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.
12(a)(3) Not applicable.
12(b) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(b) under the Investment Company Act
of 1940.