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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: 8/31/07
Item 1. Reports to Stockholders.
AIM FLOATING RATE FUND
Annual Report to Shareholders o August 31, 2007
[COVER GLOBE IMAGE]
FIXED INCOME
Taxable Noninvestment
Grade
Table of Contents
Letters to Shareholders................... 2
Performance Summary....................... 4
Management Discussion..................... 4
Long-term Fund Performance................ 6
Supplemental Information.................. 8
Schedule of Investments................... 9
Financial Statements...................... 24
Notes to Financial Statements............. 28
Financial Highlights...................... 35
Auditor's Report.......................... 40
Fund Expenses............................. 41
Approval of Advisory Agreement............ 42
Tax Information........................... 44
Trustees and Officers..................... 45
[AIM INVESTMENT SOLUTIONS]
[GRAPHIC] [GRAPHIC]
[DOMESTIC [FIXED
EQUITY] INCOME]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[TARGET [TARGET [DIVERSIFIED
RISK] MATURITY] PORTFOLIOS]
[GRAPHIC] [GRAPHIC]
[SECTOR [INTERNATIONAL/
EQUITY] GLOBAL EQUITY]
[AIM INVESTMENTS LOGO]
- --REGISTERED TRADEMARK--
AIM Floating Rate Fund
Dear Shareholders of the AIM Family of Funds:
I'm pleased to provide you with this report, which includes a discussion of how your
Fund was managed during the period under review, and what factors affected its
[TAYLOR performance. The following pages contain important information that answers questions
PHOTO] you may have about your investment.
Despite a significant, albeit short-lived, stock market sell-off in late February
and early March--and a more severe stock market decline that began in July--major stock
Philip Taylor market indexes in the United States and abroad generally performed well for the 12
months ended August 31, 2007. Reasons for their favorable performance included positive
economic growth, particularly overseas; strong corporate profits; and strong
merger-and-acquisition activity, among other factors.
In July, institutional investors on Wall Street as well as individual investors on
Main Street became concerned about growing delinquencies in the subprime mortgage
market. They worried that such delinquencies, together with higher interest rates,
might lead to a "credit crunch" that could reduce the availability of credit or
increase borrowing costs for individuals and corporations, thereby slowing the economy.
In an effort to ensure that the weak housing market and tight credit markets did not
affect the U.S. economy more generally, the U.S. Federal Reserve Board in September cut
its key federal funds target rate for the first time in more than four years.
At AIM Investments --REGISTERED TRADEMARK--, we know that market conditions
change--often suddenly and sometimes dramatically. We can help you deal with market
volatility by offering a broad range of mutual funds, including:
o Domestic, global and international equity funds
o Taxable and tax-exempt fixed-income funds
o Allocation portfolios, with risk/return characteristics to match your needs
o AIM Independence Funds--target-maturity funds that combine retail mutual funds and
PowerShares --REGISTERED TRADEMARK-- exchange-traded funds--with risk/return
characteristics that change as your target retirement date nears
We believe in the value of working with a trusted financial advisor. Your financial
advisor can recommend various AIM funds that, together, can create a portfolio that's
appropriate for your long-term investment goals and risk tolerance regardless of
prevailing short-term market conditions.
IN CONCLUSION
Bob Graham, my friend and colleague, recently announced his decision to step down as
vice chair of the AIM Funds board of directors. In 1976, Bob was one of three men who
co-founded AIM. In the three decades since, he has been instrumental in transforming
AIM from a small investment management firm into one of America's most respected mutual
fund companies--and, in 1997, into a global independent retail and institutional
investment manager.
In May, with shareholder approval, AIM Investments' parent company changed its name
from AMVESCAP PLC to INVESCO PLC, uniting our worldwide operations and global expertise
under one new name. While the name of our parent company may be new to you, I can
assure you that our commitment to excellent customer service remains unchanged. Our
highly trained, courteous client service representatives are eager to answer your
questions, provide you with product information or assist you with account
transactions. I encourage you to give us an opportunity to serve you by calling us at
800-959-4246.
All of us at AIM are committed to helping you achieve your financial goals. We work
every day to earn your trust, and we're grateful for the confidence you've placed in
us.
Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
President -- AIM Funds
CEO, AIM Investments
October 17, 2007
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 mutual funds represented by AIM
Investments and the PowerShares Exchange-Traded Fund Trust.
2
AIM Floating Rate Fund
Dear Fellow Shareholders:
In overseeing the management of the AIM family of funds on your behalf, your Board of
Trustees of the AIM Funds continues to focus on improved investment performance,
[CROCKETT reduced shareholder costs, and high ethical standards.
PHOTO]
Your Board welcomes two new members: Marty Flanagan, President and CEO of INVESCO,
AIM's parent company, and Phil Taylor, who was named CEO of AIM Investments
Bruce L. Crockett --REGISTERED TRADEMARK-- in April 2006. Robert Graham, who has given more than 30 years
of leadership to the company and the mutual fund industry since founding AIM in 1976,
has retired, stepping down in the process from his most recent role as vice chairman of
the Board. We thank Bob for his many contributions and wish him a long and happy
future.
Our review of fund performance has shown healthy progress, but the process is
necessarily one of continuous improvement. In general, as of June 30, 2007, we have
seen persistent investment discipline and more consistently good results. While this
statement may not apply to every AIM Fund all the time, as I write this letter, the
overall trend in fund management and performance has been positive.
The investment management talent at AIM has recently been enhanced by the promotion
of Karen Dunn Kelley to Head of INVESCO's Worldwide Fixed Income as well as Director of
AIM Global and Cash Management, with responsibility for all fixed income and money
market funds that serve both institutional and individual investors. Under Karen's
direction, AIM's cash management organization grew to one of the world's largest and
most respected, with top-tier performance. The operations now combined under her charge
represent more than $160 billion in assets, 120 investment professionals, and products
that span the entire yield curve (as of August 31, 2007).
In other news, your Board took a more active role in preparing for "proxy season,"
the period when fund managers must vote the shares held by their funds "for" or
"against" various proposals on the ballots of the issuing companies. Beginning in the
2007 proxy season, AIM implemented new proxy voting policies, developed by management
in conjunction with an ad hoc Board committee, which provided a solid framework for
properly evaluating and executing the many decisions the AIM Funds are required to make
to vote shares.
In general, the AIM Funds voted for proposals that would allow shareholders a
greater role in election of directors, proxy access and "say for pay." The AIM Funds
voted against directors who AIM believed failed to govern well in cases of corporate
mismanagement, such as the backdating of options grants, and against "poison pill" and
"take under" proposals that would favor the financial interests of managers at the
expense of investors in the case of a merger or acquisition. You can view the proxy
votes cast for your fund by going to AIMinvestments.com. Click the "About Us" tab, then
go to "Required Notices" and "Proxy Voting Activity."
Additionally, your Board raised the amount its members are recommended to invest in
the AIM Funds within three years of joining the Board, with the goal of aligning our
interests even more closely with yours.
Furthermore, at our June meeting we renewed the investment advisory contracts
between the AIM Funds and AIM for another year, applying the same rigorous evaluation
process that was enhanced and formalized in 2005. For more information on this process,
please visit AIMinvestments.com. Click on the "Products and Performance" tab and go to
"Investment Advisory Agreement Renewals."
Your Board's ability to best represent your interests depends on our knowledge of
your opinions and concerns. Please send me an email (bruce@brucecrockett.com) with your
thoughts on the following:
1) How important is it to you to hear about your Board's decisions and activities in
these letters?
2) What other information (on overall performance, specific funds, managers, etc.)
would make the letters more meaningful to you?
3) Would you prefer that communication from your Board continue to be delivered in
paper form by regular mail or be sent electronically by email?
If you would prefer to communicate through a quick online survey, please go to
AIMinvestments.com and provide your responses there.
We need to hear from you to do our best job, and I look forward to your responses.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board of Directors
October 17, 2007
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 mutual funds represented by AIM
Investments and the PowerShares Exchange-Traded Fund Trust.
3
AIM Floating Rate Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
======================================================================================= holdings based on our risk/return and
PERFORMANCE SUMMARY relative value analysis, conducting an
in-depth credit analysis on all available
For the fiscal year ended August 31, 2007, Class A Shares of AIM Floating Rate loans in both the primary (new issue) and
Fund, excluding applicable sales charges, underperformed the Fund's broad market secondary (or trading) markets. Some of
and style-specific indexes. The Fund invests in lower-rated fixed-income the major factors we examine include each
instruments, primarily senior secured corporate loans, and these underperformed company's:
investment-grade corporate bonds, represented by the Lehman Brothers U.S.
Aggregate Bond Index. The Fund slightly underperformed its style-specific index - Management-experience, depth and track
due to its exposure to the lower-rated sectors (B and CCC) of the bank loan record.
market, as these sectors underperformed relative to higher-rated bank loans,
such as BB issues. - Industry position and dynamics-company
niche, size, vulnerabilities and
Your Fund's long-term performance appears later in this report. suppliers, as well as industry
challenges and potential.
FUND VS. INDEXES
- Assets-their quality (valuation and
Total returns, 8/31/06-8/31/07, excluding applicable sales charges. If sales convertibility to cash) and
charges were included, returns would be lower. divisibility.
Class A Shares 2.16% - Cash flow-sales and earnings
Class C Shares 1.76 breakdown, current and planned cash
Class R Shares 1.91 requirements and earnings
Lehman Brothers U.S. Aggregate Bond Index@ (Broad Market Index) 5.26 predictability.
S&P/LSTA Leveraged Loan Index- (Style-Specific Index) 2.66
CSFB Leveraged Loan Index# (Former Style-Specific Index) 2.99 - Financial flexibility-access to
Lipper Loan Participation Funds Category Average@ (Peer Group Index) 2.41 additional capital.
Lipper Closed-End Loan Participation Funds Index@ (Former Peer Group Index) 2.21
SOURCES: @LIPPER INC.; A I M MANAGEMENT GROUP INC., STANDARD & POOR'S; We manage risk by holding daily
#A I M MANAGEMENT GROUP INC., BLOOMBERG L.P. credit and trading discussions, combined
with frequent comprehensive credit reviews
======================================================================================= of all holdings in the portfolio to
determine whether each company has the
HOW WE INVEST ability to meet its objectives.
We believe a conservatively designed In our process of constructing the Our sell discipline is designed to
portfolio of senior secured loans, chosen portfolio we seek to take advantage of the avoid loss of principal. Some conditions
from a broad source of issuers and market dislocation resulting from that may cause us to reduce or sell a
carefully selected based on credit quality technical factors. But also we maintain position include:
considerations, may provide a steady our focus on investing in higher credit
stream of income with some capital quality, high yield issues that we believe - Unfavorable industry trends, poor
appreciation. exhibit lower volatility. We choose performance or lack of access to
capital that may cause the company to
fail to meet its planned objectives.
- An unfavorable change in earnings,
cash flow and/or valuation.
- More attractive investment
opportunities.
(continued)
========================================== ========================================== ==========================================
PORTFOLIO COMPOSITION TOP 10 ISSUERS* TOTAL NET ASSETS
By sector 1. Alpha III 3.0 Total Number of Holdings* 689
Consumer Discretionary 30.5% 2. Charter Communications, Inc. 2.3
Industrials 11.7 3. Biomet Inc. 2.1
Telecommunication Services 10.4 4. Univision Communications Inc. 1.6
Consumer Staples 10.1 5. Level 3 Communications, Inc. 1.6
Health Care 9.9 6. Asurion Corp. 1.6
Materials 9.2 7. HCA, Inc. 1.5
Utilities 4.9 8. Cellular South Inc. 1.5
Energy 4.6 9. Pinnacle Foods Group,Inc.
Information Technology 4.3 (Aurora Foods) 1.4
Financials 4.0 10. Georgia-Pacific Corp. 1.4
Money Market Funds Plus
Other Assets Less Liabilities 0.4 Total Net Assets $330.34 million
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.
========================================== ========================================== ==========================================
4
AIM Floating Rate Fund
MARKET CONDITIONS AND YOUR FUND
The U.S. economy strengthened in the and the first part of August 2007. strategy in this industry had a neutral
second quarter of 2007 with gross domestic However, U.S. credit markets had recovered impact on performance.
product (GDP) expanding at a 3.8% annual some of their losses by the end of
rate, the highest level in the last five August.(5) Thank you for sharing our long-term
quarters.(1) Growth was driven by exports, investment horizon and for your continued
government spending, business investment Throughout the fiscal year, the Fund investment in AIM Floating Rate Fund.
and commercial construction. By the end of continued to maintain its investment focus
August, core inflation, as measured by the on higher credit quality loans, as we Sources: (1)Bureau of Economic Analysis;
Consumer Price Index (CPI) and excluding viewed them as more defensive during more (2)Bureau of Labor Statistics; (3)U.S.
food and energy, had declined to a 2.1% turbulent market cycles. By the end of the Federal Reserve; (4)Fitch; (5)Lehman
annualized rate for the fiscal year, period, the Fund had about 48% of its Brothers Inc.
raising hopes that overall inflation could assets in BB-rated issues. The remaining
ease in the next few months.(2) of the Fund's assets was invested The views and opinions expressed in
primarily in B-rated bank loans. In management's discussion of Fund
Wrapping up a two-day meeting on June addition, we maintained a small weight in performance are those of A I M Advisors,
28, 2007, the U.S. Federal Reserve Board loans rated CCC or lower. Despite weaker Inc. These views and opinions are subject
(the Fed) reiterated its belief that performance of higher-rated loans during to change at any time based on factors
inflation still remained a threat to the the first part of the fiscal year, they such as market and economic conditions.
economy. As a result, the Fed unanimously outperformed lower-rated issues over the These views and opinions may not be relied
decided to hold the federal funds target entire period.(5) As a result, our exposure upon as investment advice or
rate at 5.25%, where it has been since to the lower-rated sectors (B and CCC) of recommendations, or as an offer for a
June 2006.(3) However, growing concerns the bank loan market detracted from particular security. The information is
that turmoil in the subprime mortgage and relative performance. not a complete analysis of every aspect of
low-rated corporate debt markets might any market, country, industry, security or
have an adverse effect on economic growth We favored investments in industries the Fund. Statements of fact are from
caused the Fed to cut the discount rate by where companies exhibited steady cash sources considered reliable, but A I M
one-half percent on August 17 to add flows, high visibility and defensible Advisors, Inc. makes no representation or
liquidity to the market.(3) market positions. Two industries that warranty as to their completeness or
generally demonstrated these attributes accuracy. Although historical performance
During the first half of 2007, were broadcasting and cable TV and is no guarantee of future results, these
long-term trends in the leveraged loan casinos. We considered the broadcasting insights may help you understand our
market continued, with credit spreads and cable TV industry to be attractive for investment management philosophy.
declining and loan terms for new issues a couple reasons. First, this industry
weakening. Bank loan issuance volume over represented a significant portion of the See important Fund and index disclosures
this period reached a record $427 billion, high yield loan market. Second, earnings later in this report.
nearly 70% of 2006's record volume of $612 potential of companies in this industry
billion due to strong leveraged buyout and tended to be more predictable, according [EWALD PHOTO]
M&A (merger and acquisition) activity.(4) to our credit research. The Fund
While new issuance reached record levels maintained a relatively larger weight in Tom Ewald Portfolio manager, is lead
during the fiscal year, risk premiums in this industry, which enhanced performance. manager of AIM Floating Rate Fund. Mr.
the U.S. leveraged loan market began to Ewald joined INVESCO in 2000 as a credit
rise in early June as investors became We viewed the casinos industry analyst and was promoted to portfolio
more concerned about riskier debt favorably for many reasons. One reason is manager of certain other funds in 2001.
structures, including covenant-lite loans, that casinos are highly regulated Prior to joining INVESCO, Mr. Ewald was a
second-lien loans and bonds, or any type enterprises, which results in less portfolio manager at another firm. Mr.
of deferred interest debt.(5) uncertainty about earnings projections and Ewald earned an A.B. from Harvard College
reports. Moreover, casinos generally and an M.B.A. from the Darden School of
Moreover, subprime loan-related appeared to have had tremendous cash Business at the University of Virginia.
problems began to impact the flows, one of the key factors in
credit-sensitive segments of the market, determining whether a company has the [STOECKLE PHOTO]
including the high yield and bank loan ability to repay its loans. Casinos have
markets. The magnitude of the problem was spread across the country, as the drive-up Greg Stoeckle Portfolio manager, is
enhanced by a lack of liquidity, as market has grown at a faster pace than the manager of AIM Floating Rate Fund. Mr.
lenders began demanding more stringent traditional Las Vegas and Atlantic City Stoeckle joined INVESCO in 1999 and has
terms and enhanced covenant protection sites. We preferred loans issued to held several senior management positions
from bond issuers. Questionable lending support the corporations running the within the bank loan group. He began his
standards caused U.S. credit markets to casinos rather than loans backing a single investment career in 1987 as a credit
sustain losses during July property. However, during the second part analyst for another firm. Mr. Stoeckle
of the fiscal year, earnings in the earned a B.S. from Ursinus College and an
casinos industry showed signs of leveling M.B.A from Saint Joseph's University.
off. Consequently, our investment
5
AIM Floating Rate Fund
YOUR FUND'S LONG-TERM PERFORMANCE
====================================================================================================================================
Past performance cannot guarantee of taxes a shareholder would pay on Fund the dollar value of an investment, is
comparable future results. distributions or sale of Fund shares. constructed with each segment representing
Performance of the indexes does not a percent change in the value of the
The data shown in the chart include reflect the effects of taxes. investment. In this chart, each segment
invested distributions, applicable sales represents a doubling, or 100% change, in
charges, Fund expenses and management This chart, which is a logarithmic the value of the investment. In other
fees. Index results include reinvested chart, presents the fluctuations in the words, the space between $5,000 and
dividends, but they do not reflect sales value of the Fund and its indexes. We $10,000 is the same size as the space
charges. Performance of an index of funds believe that a logarithmic chart is more between $10,000 and $20,000, and so on.
reflects fund expenses and management effective than other types of charts in
fees; performance of a market index does illustrating changes in value during the
not. Performance shown in the chart and early years shown in the chart. The
table(s) does not reflect deduction vertical axis, the one that indicates
====================================================================================================================================
CONTINUED FROM PAGE 8
Funds category. These funds invest OTHER INFORMATION
primarily in participation interests in
collateralized senior corporate loans - The returns shown in the management's - Industry classifications used in this
which have floating or variable rates. discussion of Fund performance are report are generally according to the
based on net asset values calculated Global Industry Classification
- - The Fund is not managed to track the for shareholder transactions. Standard, which was developed by and
performance of any particular index, Generally accepted accounting is the exclusive property and a
including the indexes defined here, principles require adjustments to be service mark of Morgan Stanley Capital
and consequently, the performance of made to the net assets of the Fund at International Inc. and Standard &
the Fund may deviate significantly period end for financial reporting Poor's.
from the performance of the index. purposes, and as such, the net asset
values for shareholder transactions
- - A direct investment cannot be made in and the returns based on those net
an index. Unless otherwise indicated, asset values may differ from the net
index results include reinvested asset values and returns reported in
dividends, and they do not reflect the Financial Highlights.
sales charges. Performance of an index
of funds reflects fund expenses;
performance of a market index does
not.
6
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND DATA FROM 4/30/97, FUND DATA FROM 5/1/97
LIPPER LOAN
AIM FLOATING RATE FUND- S&P/LSTA LEVERAGED LEHMAN BROTHERS U.S. PARTICIPATION FUNDS CSFB LEVERAGED
DATE CLASS A SHARES LOAN INDEX(3) AGGREGATE BOND INDEX(1) CATEGORY AVERAGE(1) LOAN INDEX(2)
------- ----------------------- ------------------ ----------------------- ------------------- --------------
4/30/97 $10000 $10000 $10000 $10000
5/97 $ 9812 10060 10095 10064 10075
6/97 9872 10142 10214 10125 10164
7/97 9935 10195 10490 10190 10236
8/97 10009 10258 10400 10265 10309
9/97 10070 10298 10554 10327 10373
10/97 10143 10333 10707 10401 10412
11/97 10202 10377 10756 10463 10453
12/97 10266 10456 10864 10528 10514
1/98 10330 10524 11004 10594 10575
2/98 10386 10596 10996 10651 10632
3/98 10437 10682 11033 10703 10715
4/98 10495 10759 11091 10763 10799
5/98 10545 10827 11196 10814 10876
6/98 10605 10879 11291 10876 10949
7/98 10672 10891 11315 10944 11009
8/98 10737 10850 11499 11011 11029
9/98 10680 10769 11769 11024 10979
10/98 10699 10844 11706 11059 10887
11/98 10725 10950 11773 11089 10964
12/98 10806 11005 11808 11170 11073
1/99 10878 11043 11892 11248 11101
2/99 10909 11026 11685 11298 11053
3/99 10969 10954 11750 11368 11120
4/99 11018 11022 11787 11434 11201
5/99 11083 11159 11684 11502 11345
6/99 11146 11247 11646 11573 11448
7/99 11215 11317 11597 11634 11524
8/99 11238 11320 11591 11675 11482
9/99 11270 11231 11725 11723 11455
10/99 11315 11248 11769 11776 11439
11/99 11346 11319 11768 11840 11513
12/99 11401 11407 11711 11904 11591
1/00 11474 11505 11673 11980 11704
2/00 11531 11558 11814 12037 11743
3/00 11557 11496 11970 12015 11650
4/00 11605 11533 11935 12058 11693
5/00 11652 11627 11930 12118 11791
6/00 11732 11712 12178 12194 11863
7/00 11781 11806 12289 12245 11947
8/00 11852 11842 12467 12317 12009
9/00 11883 11874 12545 12378 12048
10/00 11903 11871 12628 12417 12053
11/00 11934 11914 12835 12454 12080
12/00 11973 11976 13073 12533 12164
1/01 12000 12105 13286 12642 12238
2/01 12112 12225 13402 12718 12343
3/01 12075 12229 13469 12738 12358
4/01 12031 12211 13414 12757 12307
5/01 12022 12350 13494 12835 12454
6/01 12059 12363 13545 12850 12469
7/01 12045 12458 13848 12896 12500
8/01 12069 12550 14007 12942 12601
9/01 12022 12342 14170 12829 12360
10/01 11834 12221 14467 12795 12167
11/01 11802 12371 14267 12882 12358
12/01 11794 12476 14177 12945 12487
1/02 11904 12539 14291 13003 12555
2/02 11927 12502 14430 12987 12507
3/02 12067 12651 14190 13080 12652
4/02 12166 12798 14465 13143 12787
5/02 12213 12811 14588 13179 12779
6/02 12245 12685 14714 13116 12586
7/02 12151 12571 14891 13011 12395
8/02 12098 12530 15143 12984 12359
9/02 12115 12538 15388 13002 12386
10/02 12005 12390 15318 12907 12220
11/02 12003 12564 15314 13023 12430
====================================================================================================================================
SOURCE: (1)LIPPER INC.; (2)A I M MANAGEMENT GROUP, INC., BLOOMBERG L.P.; (3)A I M MANAGEMENT GROUP, INC., STANDARD & POOR'S
====================================================================================================================================
[MOUNTAIN CHART]
12/02 12118 12714 15630 13138 12625
1/03 12220 12869 15644 13217 12796
2/03 12256 12925 15860 13260 12863
3/03 12258 12976 15848 13330 12905
4/03 12404 13129 15979 13477 13086
5/03 12524 13272 16277 13579 13262
6/03 12640 13433 16244 13713 13449
7/03 12715 13523 15698 13768 13541
8/03 12725 13553 15802 13804 13570
9/03 12805 13682 16221 13891 13707
10/03 12858 13807 16069 13971 13830
11/03 12939 13896 16108 14025 13930
12/03 12974 13982 16272 14091 14016
1/04 13090 14103 16403 14185 14162
2/04 13159 14147 16580 14209 14206
3/04 13181 14198 16704 14239 14265
4/04 13260 14267 16270 14290 14330
5/04 13279 14284 16205 14292 14362
6/04 13349 14372 16296 14362 14454
7/04 13396 14419 16458 14405 14504
8/04 13434 14445 16772 14429 14527
9/04 13596 14505 16817 14480 14582
10/04 13668 14578 16958 14548 14654
11/04 13754 14643 16823 14613 14734
12/04 13799 14704 16978 14672 14801
1/05 13861 14764 17084 14714 14878
2/05 13967 14843 16984 14795 14965
3/05 14002 14905 16896 14817 15041
4/05 14006 14894 17125 14813 15054
5/05 13983 14903 17310 14825 15066
6/05 14069 14999 17405 14918 15167
7/05 14173 15113 17246 15019 15285
8/05 14275 15204 17467 15095 15392
9/05 14315 15265 17287 15145 15464
10/05 14361 15312 17151 15167 15514
11/05 14407 15370 17226 15225 15565
12/05 14489 15451 17390 15295 15643
1/06 14573 15558 17391 15384 15746
2/06 14682 15656 17449 15478 15856
3/06 14786 15751 17278 15563 15973
4/06 14876 15828 17246 15642 16049
5/06 14936 15868 17228 15660 16111
6/06 14946 15912 17264 15696 16178
7/06 15032 16002 17498 15778 16262
8/06 15116 16101 17766 15879 16371
9/06 15179 16187 17922 15954 16461
10/06 15298 16295 18040 16067 16573
11/06 15399 16381 18250 16153 16663
12/06 15505 16497 18144 16267 16791
1/07 15629 16641 18136 16396 16932
2/07 15741 16756 18416 16499 17057
3/07 15792 16823 18417 16566 17139
4/07 15877 16922 18516 16657 17233
5/07 15987 17025 18376 16757 17342
6/07 16001 17063 18321 16768 17397
7/07 15419 16491 18474 16227 16818
8/07 15436 16529 18700 16254 16861
====================================================================================================================================
AIM Floating Rate Fund
========================================== ========================================== A REDEMPTION FEE OF 2% WILL BE IMPOSED
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS ON CERTAIN REDEMPTIONS OR EXCHANGES OUT OF
THE FUND WITHIN 30 DAYS OF PURCHASE.
As of 8/31/07, including applicable sales As of 6/30/07, the most recent calendar EXCEPTIONS TO THE REDEMPTION FEE ARE
charges quarter-end, including applicable sales LISTED IN THE FUND'S PROSPECTUS.
charges
CLASS A SHARES HAD FEES NOT BEEN WAIVED AND/OR
Inception (5/1/97) 4.29% CLASS A SHARES EXPENSES REIMBURSED IN THE PAST, RETURNS
10 Years 4.16 Inception (5/1/97) 4.73% WOULD HAVE BEEN LOWER.
5 Years 4.47 10 Years 4.68
1 Year -0.37 5 Years 4.96
1 Year 4.42
CLASS C SHARES
Inception (3/31/00) 3.67% CLASS C SHARES
5 Years 4.72 Inception (3/31/00) 4.25%
1 Year 0.80 5 Years 5.15
1 Year 5.42
CLASS R SHARES
10 Years 4.40% CLASS R SHARES
5 Years 4.93 10 Years 4.91%
1 Year 1.91 5 Years 5.41
1 Year 6.68
========================================== ==========================================
AS OF THE CLOSE OF BUSINESS ON APRIL 13,
2006, THE FUND REORGANIZED FROM A ASSET VALUE. INVESTMENT RETURN AND
CLOSED-END FUND TO AN OPEN-END FUND. PRINCIPAL WILL FLUCTUATE SO THAT YOU MAY
HAVE A GAIN OR LOSS WHEN YOU SELL SHARES.
CLASS A AND C SHARE RETURNS PRIOR TO
APRIL 13, 2006, ARE THE HISTORICAL THE TOTAL ANNUAL FUND OPERATING EXPENSE
PERFORMANCE OF THE CLOSED-END FUND'S CLASS RATIO SET FORTH IN THE MOST RECENT FUND
B AND C SHARES, RESPECTIVELY. PROSPECTUS AS OF THE DATE OF THIS REPORT
FOR CLASS A, CLASS C AND CLASS R SHARES
THE INCEPTION DATE FOR CLASS R SHARES WAS 1.82%, 2.32% AND 2.07%. THE EXPENSE
IS APRIL 13, 2006; RETURNS SINCE THAT DATE RATIOS PRESENTED ABOVE MAY VARY FROM THE
ARE HISTORICAL RETURNS. ALL OTHER RETURNS EXPENSE RATIOS PRESENTED IN OTHER SECTIONS
ARE BLENDED RETURNS OF HISTORICAL CLASS R OF THIS REPORT THAT ARE BASED ON EXPENSES
SHARES AND RESTATED PERFORMANCE OF THE INCURRED DURING THE PERIOD COVERED BY THIS
CLOSED-END FUND'S CLASS B SHARES (FOR THE REPORT.
PERIODS PRIOR TO THE INCEPTION DATE OF THE
OPEN-END FUND'S CLASS R SHARES) AT NAV AND CLASS A SHARE PERFORMANCE REFLECTS THE
REFLECT THE HIGHER ANNUAL MANAGEMENT FEES MAXIMUM 2.50% SALES CHARGE AND CLASS C
AND 0.25% ANNUAL 12B-1 FEES APPLICABLE TO SHARE PERFORMANCE REFLECTS THE APPLICABLE
THE CLOSED-END FUND'S CLASS B SHARES. THE CONTINGENT DEFERRED SALES CHARGE (CDSC)
CLOSED-END FUND'S CLASS B SHARE INCEPTION FOR THE PERIOD INVOLVED. THE CDSC ON CLASS
DATE IS MAY 1, 1997. C SHARES IS 1% FOR THE FIRST YEAR AFTER
PURCHASE. CLASS R SHARES DO NOT HAVE A
THE PERFORMANCE DATA QUOTED REPRESENT FRONT-END SALES CHARGE; RETURNS ARE SHOWN
PAST PERFORMANCE AND CANNOT GUARANTEE AT NET ASSET VALUE AND DO NOT REFLECT A
COMPARABLE FUTURE RESULTS; CURRENT 0.75% CDSC WHICH MAY BE IMPOSED ON A TOTAL
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE REDEMPTION OF RETIREMENT PLAN ASSETS
VISIT AIMINVESTMENTS.COM FOR THE MOST WITHIN THE FIRST YEAR.
RECENT MONTH-END PERFORMANCE. PERFORMANCE ==========================================
FIGURES REFLECT FUND EXPENSES, THE THE PERFORMANCE OF THE FUND'S SHARE FOR A DISCUSSION OF THE RISKS OF INVESTING
REINVESTMENT OF DISTRIBUTIONS, AND CHANGES CLASSES WILL DIFFER PRIMARILY DUE TO IN YOUR FUND AND INDEXES USED IN THIS
IN NET DIFFERENT SALES CHARGE STRUCTURES AND REPORT, PLEASE TURN THE PAGE.
CLASS EXPENSES. ==========================================
7
AIM Floating Rate Fund
AIM FLOATING RATE FUND'S INVESTMENT OBJECTIVES ARE TO PROVIDE A HIGH LEVEL OF CURRENT INCOME AND, SECONDARILY, PRESERVATION OF
CAPITAL.
- - Unless otherwise stated, information presented in this report is as of August 31, 2007, and is based on total net assets.
- - Unless otherwise noted, all data in this report are from A I M Management Group Inc.
ABOUT SHARE CLASSES versely, bond prices generally rise as economic downturns in the United States
interest rates fall. and abroad.
- - As of the close of business on April
13, 2006, AIM Floating Rate Fund - The Fund may use enhanced investment - The Fund may invest in senior-secured,
reorganized from a Closed-End Fund to techniques such as leveraging and floating rate loans and debt securities
an Open-End Fund. Information presented derivatives. Leveraging entails risks that require collateral. There is a
for Class A shares prior to the such as magnifying changes in the value risk that the value of the collateral
reorganization includes financial data of the portfolio's securities. may not be sufficient to cover the
for Class B shares of the Closed-End Derivatives are subject to amount owed, collateral securing a loan
Fund. Information presented for Class C counter-party risk--the risk that the may be found invalid, and collateral
shares prior to the reorganization other party will not complete the may be used to pay other outstanding
includes financial data for Class C transaction with the Fund. obligations of the borrower under
shares of the Closed-End Fund. applicable law or may be difficult to
- A majority of the Fund's assets are sell. There is also the risk that the
- - On July 27, 2006, all Class B1 shares likely to be invested in loans and collateral may be difficult to
converted into Class A shares. securities that are less liquid than liquidate or that a majority of the
those rated on national exchanges. collateral may be illiquid
- - Class R shares are available only to
certain retirement plans. Please see - The value of lower quality debt ABOUT INDEXES USED IN THIS REPORT
the prospectus for more information. securities and floating rate loans can
BE VOLATILE DUE to increased - The LEHMAN BROTHERS U.S. AGGREGATE BOND
PRINCIPAL RISKS OF INVESTING IN THE FUND sensitivity to adverse issuer, INDEX covers U.S. investment-grade
political, regulatory, market or fixed-rate bonds with components for
- - Portfolio turnover is greater than most economic developments. government and corporate securities,
funds, which may affect the Fund's mortgage pass-throughs, and
performance due to higher brokerage - There is no guarantee that the asset-backed securities.
commissions. Active trading may also investment techniques and risk analyses
increase short-term gains and losses, used by the Fund's portfolio managers - The S&P/LSTA LEVERAGED LOAN INDEX
which may also result in taxable gain will produce the desired results. tracks the current outstanding balance
distributions to the Fund's and spread over the London Interbank
shareholders. - The prices of securities held by the Offered Rate (LIBOR) for fully funded
Fund may decline in response to market term loans.
- - Credit risk is the risk of loss on an risks.
investment due to the deterioration of - The LIPPER LOAN PARTICIPATION FUNDS
an issuer's financial health. Such a - Nondiversification increases the risk CATEGORY AVERAGE represents an average
deterioration of financial health may that the value of the Fund's shares may of all of the funds in the Lipper Loan
result in a reduction of the credit vary more widely, and the Fund may be Participation Funds category. These
rating of the issuer's securities and subject to greater investment and funds invest primarily in participation
may lead to the issuer's inability to credit risk than if the Fund invested interests in collateralized senior
honor its contractual obligations, more broadly. corporate loans that have floating or
including making timely payment of variable rates.
interest and principal. - The ability of an issuer of a floating
rate loan or debt security to repay - The CSFB LEVERAGED LOAN INDEX is
- - Foreign securities have additional principal prior to maturity can limit designed to mirror the investible
risks, including exchange rate changes, the potential for gains by the Fund. universe of the US dollar denominated
political and economic upheaval, the leveraged loan market. The loans must
relative lack of information, - To the extent that the Fund is be funded term loans, rated "5B" or
relatively low market liquidity, and concentrated in securities of issuers lower, with a tenure of at least one
the potential lack of strict financial in the banking and financial services year to be included in the index.
and accounting controls and standards. industries, the Fund's performance will
depend on the overall condition of - The LIPPER CLOSED-END LOAN
- - Interest rate risk refers to the risk those industries. The value of these PARTICIPATION FUNDS INDEX is an equally
that bond prices generally fall as securities can be sensitive to changes weighted representation of the largest
interest rates rise; con- in government regulation and interest funds in the Lipper Closed-End Loan
rates and Participation
======================================================================================= Continued on page 6
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. FUND NASDAQ SYMBOLS
=======================================================================================
Class A Shares AFRAX
Class C Shares AFRCX
Class R Shares AFRRX
=========================================
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
AIMINVESTMENTS.COM
8
AIM Floating Rate Fund
SCHEDULE OF INVESTMENTS*
August 31, 2007
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
SENIOR SECURED FLOATING RATE
INTERESTS-97.49%(B)(C)
ADVERTISING-0.49%
Valassis Communications, Inc.
Delay Draw Term Loan
0.00%, 03/02/14(d)(e) Ba2 $ 398,222 $ 367,028
- ---------------------------------------------------------------------------------
Term Loan B
7.11%, 03/02/14(d) Ba2 1,340,328 1,206,296
=================================================================================
1,573,324
=================================================================================
AEROSPACE & DEFENSE-1.85%
Alion Science & Technology Corp. Term Loan
7.82-7.86%, 02/06/13(d) Ba2 1,775,177 1,686,419
- ---------------------------------------------------------------------------------
Hawker Beechcraft Corp.
Syn LOC
5.26%, 03/26/14(d) Ba3 216,330 205,513
- ---------------------------------------------------------------------------------
Term Loan
7.36-7.51%, 03/26/14(d) Ba3 2,482,403 2,358,282
- ---------------------------------------------------------------------------------
McKechnie Aerospace
Second Lien Term Loan
10.36%, 05/11/15(d) B1 141,300 131,409
- ---------------------------------------------------------------------------------
First Lien Term Loan
7.36%, 05/11/14(d) B1 207,667 195,207
- ---------------------------------------------------------------------------------
TransDigm Group Inc.
Term Loan
7.36%, 06/23/13(d) Ba3 1,000,000 955,000
- ---------------------------------------------------------------------------------
Wesco Aircraft Hardware Corp.
Term Loan
7.61%, 09/29/13(d) B1 577,451 557,240
=================================================================================
6,089,070
=================================================================================
AIRPORT SERVICES-0.07%
Dollar Thrifty
Term Loan
7.34%, 06/15/14(d) B1 209,300 203,021
=================================================================================
ALTERNATIVE CARRIERS-1.66%
Iridium LLC/Capital Corp.
First Lien Term Loan A
9.61%, 06/30/10(d) B2 149,177 148,431
- ---------------------------------------------------------------------------------
Second Lien Term Loan
13.61%, 07/27/12(d) Caa2 149,800 149,800
- ---------------------------------------------------------------------------------
Level 3 Communications, Inc.
Term Loan
7.61%, 03/13/14(d) B1 5,403,225 5,149,274
=================================================================================
5,447,505
=================================================================================
ALUMINUM-0.22%
Noranda Aluminum
Term Loan B
7.51%, 05/18/14(d) Ba2 720,120 698,516
=================================================================================
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
<Caption>
APPAREL RETAIL-0.07%
Mothers Work Inc.
Term Loan B
7.86%, 03/13/13(d) B2 $ 235,410 $ 216,577
=================================================================================
APPLICATION SOFTWARE-0.89%
Dealer Comp-rey
First Lien Term Loan
7.36%, 10/26/12(d) Ba2 1,763,663 1,746,026
- ---------------------------------------------------------------------------------
Second Lien Term Loan
10.86%, 10/26/13(d) Ba3 1,260,000 1,204,875
=================================================================================
2,950,901
=================================================================================
AUTO PARTS & EQUIPMENT-1.20%
Dayco Products LLC
Second Lien
11.07-11.13%, 12/31/11(d) Ba3 1,284,407 1,203,062
- ---------------------------------------------------------------------------------
Term Loan B
7.85%, 06/21/11(d) B1 103,727 100,442
- ---------------------------------------------------------------------------------
Term Loan B
7.82-7.88%, 06/21/11(d)(h) B1 176,883 171,282
- ---------------------------------------------------------------------------------
Term Loan B
7.87-7.89%, 06/21/11(d) Ba3 51,864 50,222
- ---------------------------------------------------------------------------------
Delphi Corp.
Second Lien DIP Term Loan C
8.13%, 12/31/07(d) Ba3 1,059,361 1,038,173
- ---------------------------------------------------------------------------------
Federal-Mogul Corp.
DIP Term Loan
7.25%, 12/31/07(d) Ba1 110,000 108,579
- ---------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. (The)
Delay Draw Term Loan
0%, 07/31/14(d)(e) Ba3 109,601 104,669
- ---------------------------------------------------------------------------------
Term Loan B
7.86%, 07/31/14(d) Ba3 729,167 696,354
- ---------------------------------------------------------------------------------
Second Lien
6.85%, 04/30/10(d) Ba1 400,000 377,500
- ---------------------------------------------------------------------------------
Pep Boys-Manny, Moe & Jack (The)
Term Loan B
7.54%, 01/27/11(d) Ba3 121,014 118,291
=================================================================================
3,968,574
=================================================================================
BROADCASTING & CABLE TV-10.41%
Cequel Communication
First Lien Term Loan
7.36-9.25%, 11/05/13(d) B1 2,972,550 2,803,281
- ---------------------------------------------------------------------------------
Second Lien Term Loan A
9.86%, 03/31/15(d) Caa1 1,578,000 1,522,770
- ---------------------------------------------------------------------------------
</Table>
9
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
BROADCASTING & CABLE TV-(CONTINUED)
Charter Communications, Inc.
Add on Term Loan
7.36%, 03/06/14(d) B1 $5,500,000 $ 5,195,047
- ---------------------------------------------------------------------------------
Term Loan Refinance
7.36%, 03/06/14(d) B1 2,660,049 2,512,560
- ---------------------------------------------------------------------------------
Citadel Communication Corp.
Term Loan B
6.99%, 06/12/14(d) Ba3 1,865,366 1,716,137
- ---------------------------------------------------------------------------------
CSC Holdings
Incremental Term Loan B
7.07%, 03/29/13(d) Ba2 2,000,000 1,915,358
- ---------------------------------------------------------------------------------
Discovery Channel (The)
Term Loan B
7.36%, 05/14/14(d) Ba2 2,036,000 1,976,616
- ---------------------------------------------------------------------------------
Emmis Communications
Term Loan B
7.36%, 11/02/13(d) B1 370,352 355,908
- ---------------------------------------------------------------------------------
Gray Television Inc.
Term Loan B
6.86%, 12/31/14(d) Ba3 445,313 417,202
- ---------------------------------------------------------------------------------
Hargray Communications Group, Inc.
Term Loan B
7.60%, 06/27/14(d) B1 125,132 122,004
- ---------------------------------------------------------------------------------
Hargray Communications Group, Inc. (DPC
Acquisition Inc.)
Term Loan B
7.60%, 06/27/14(d) B1 40,180 39,176
- ---------------------------------------------------------------------------------
Hargray Communications Group, Inc. (HPC
Acquisition Inc.)
Term Loan B
7.60%, 06/27/14(d) B1 6,888 6,716
- ---------------------------------------------------------------------------------
Insight Communications Co., Inc.
Term Loan B
7.11%, 04/06/14(d) Ba3 1,929,029 1,874,475
- ---------------------------------------------------------------------------------
Ion Media Network (Paxson)
Term Loan
8.61%, 01/15/12(d) B1 1,801,171 1,742,633
- ---------------------------------------------------------------------------------
Local TV LLC
Term Loan B
7.31%, 05/07/13(d) Ba3 122,400 115,056
- ---------------------------------------------------------------------------------
Mediacom Communications Corp.
Term Loan D-1
7.32%, 01/31/15(d) Ba3 1,980,050 1,862,661
- ---------------------------------------------------------------------------------
NextMedia Operating, Inc.
Delay Draw Term Loan
7.33%, 11/15/12(d) B1 68,125 64,037
- ---------------------------------------------------------------------------------
Second Lien Term Loan
10.01%, 11/15/13(d) Caa1 221,093 211,144
- ---------------------------------------------------------------------------------
Term Loan A
7.57%, 11/15/12(d) B1 153,281 144,084
- ---------------------------------------------------------------------------------
NTL Investment Holding Ltd.
Term Loan B-4
7.36%, 09/03/12(d) Ba3 337,440 325,238
- ---------------------------------------------------------------------------------
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
<Caption>
BROADCASTING & CABLE TV-(CONTINUED)
PanAmSat Holding Corp.
Term Loan B-2
7.36%, 01/03/14(d) Ba2 $1,576,443 $ 1,523,632
- ---------------------------------------------------------------------------------
RCN Corp.
Term Loan
7.62%, 05/25/14(d) B1 1,210,789 1,142,177
- ---------------------------------------------------------------------------------
Univision Communications Inc.
Delay Draw Term Loan
0.00%, 09/29/14(d)(e) Ba3 350,271 323,417
- ---------------------------------------------------------------------------------
Term Loan B
7.61%, 09/29/14(d) Ba3 2,562,896 2,366,406
- ---------------------------------------------------------------------------------
Term Loan B
7.61%, 09/29/14(d)(h) Ba3 2,885,760 2,664,517
- ---------------------------------------------------------------------------------
WaveDivision Holdings, LLC
Term Loan B
7.84-7.87%, 06/30/14(d) B1 386,220 376,564
- ---------------------------------------------------------------------------------
WideOpenWest Finance, LLC
Term Loan
8.01%, 06/22/14(d) B2 1,171,000 1,081,222
=================================================================================
34,400,038
=================================================================================
BUILDING PRODUCTS-2.97%
Atrium Companies, Inc.
Term Loan B
8.59-8.61%, 05/31/12(d) B1 1,393,235 1,253,912
- ---------------------------------------------------------------------------------
Building Materials Corp. of America
Term Loan B
8.13%, 02/22/14(d) B2 2,051,628 1,797,226
- ---------------------------------------------------------------------------------
Champian Window Manufacturing Inc.
Term Loan
8.04%, 05/13/13(d)(h) B1 1,283,555 1,232,212
- ---------------------------------------------------------------------------------
Custom Building Products Inc.
Second Lien Term Loan
10.51%, 04/29/12(d) B3 1,540,000 1,455,300
- ---------------------------------------------------------------------------------
Term Loan
7.76%, 10/29/11(d) B1 102,659 95,986
- ---------------------------------------------------------------------------------
Masonite/Prem/Stile
Canada Term Loan
7.36%, 04/05/13(d) Ba3 1,464,791 1,347,608
- ---------------------------------------------------------------------------------
U.S. Term Loan
7.36%, 04/05/13(d) Ba3 1,467,286 1,349,904
- ---------------------------------------------------------------------------------
United Subcontractors, Inc.
Term Loan B
8.36%, 12/27/12(d) Ba1 1,406,314 1,293,808
=================================================================================
9,825,956
=================================================================================
CASINOS & GAMING-4.89%
Bally Tech Alliance
Term Loan
0%, 09/04/08(d)(e) NR 2,250,000 2,199,375
- ---------------------------------------------------------------------------------
Term Loan
8.64%, 09/04/09(d) NR 1,634,434 1,607,874
- ---------------------------------------------------------------------------------
</Table>
10
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
CASINOS & GAMING-(CONTINUED)
BLB Investors, LLC
First Lien Term Loan
7.86-8.07%, 07/18/11(d) Ba3 $ 889,440 $ 853,862
- ---------------------------------------------------------------------------------
Second Lien Term Loan
9.63%, 07/18/12(d) B3 510,000 494,700
- ---------------------------------------------------------------------------------
Cannery Casino
Delay Draw Term Loan
0%, 05/18/13(d)(e) B2 827,828 778,159
- ---------------------------------------------------------------------------------
7.61%, 05/18/13(d) B2 79,599 74,823
- ---------------------------------------------------------------------------------
Second Lien Term Loan
9.76%, 05/18/14(d) B2 84,000 79,590
- ---------------------------------------------------------------------------------
Term Loan B
7.76%, 05/18/13(d) B2 360,823 339,174
- ---------------------------------------------------------------------------------
Golden Nugget
Second Lien Term Loan
9.01%, 12/08/14(d) B1 214,000 200,090
- ---------------------------------------------------------------------------------
Term Loan B
7.13%, 06/08/14(d) B1 369,600 350,196
- ---------------------------------------------------------------------------------
Greektown Casino LLC
Delay Draw Term Loan
0%, 12/03/12(d)(e) Ba3 27,887 27,050
- ---------------------------------------------------------------------------------
Term Loan B
8.13%, 12/03/12(d) Ba3 176,734 171,432
- ---------------------------------------------------------------------------------
Green Valley Ranch
First Lien Term Loan B
7.36-7.57%, 02/16/14(d) B1 223,225 212,064
- ---------------------------------------------------------------------------------
Second Lien Term Loan
8.79%, 08/16/14(d) Caa1 369,000 346,860
- ---------------------------------------------------------------------------------
Herbst Gaming, Inc.
Delay Draw Term Loan B
8.36%, 12/02/11(d) Ba3 2,207,167 2,148,310
- ---------------------------------------------------------------------------------
Term Loan B
8.36%, 12/02/11(d) Ba3 423,273 411,986
- ---------------------------------------------------------------------------------
Las Vegas Sands Venetian
Term Loan
05/23/14(d)(g)(h) Ba3 111,111 107,302
- ---------------------------------------------------------------------------------
Term Loan
0%, 05/23/14(d)(e) Ba3 532,632 514,370
- ---------------------------------------------------------------------------------
Term Loan B
05/23/14(d)(g)(h) Ba3 555,556 527,153
- ---------------------------------------------------------------------------------
7.11%, 05/23/14(d) Ba3 2,183,157 2,071,544
- ---------------------------------------------------------------------------------
Wimar Columbia OPCO
Term Loan
7.61%, 01/03/12(d) Ba3 1,501,744 1,426,121
- ---------------------------------------------------------------------------------
Wimar Columbia LANDCO
Term Loan
7.61%, 07/03/08(d) B2 374,000 364,962
- ---------------------------------------------------------------------------------
Yonkers Racing Corp.
Term Loan
9.06%, 08/12/11(d) B3 930,558 874,725
=================================================================================
16,181,722
=================================================================================
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
<Caption>
COAL & CONSUMABLE FUELS-0.29%
Oxbow Carbon
Delay Draw Term Loan
7.51%, 05/08/14(d) B1 $ 150,694 $ 138,136
- ---------------------------------------------------------------------------------
Term Loan B
7.36-7.55%, 05/08/14(d) B1 905,786 830,304
=================================================================================
968,440
=================================================================================
COMMERCIAL PRINTING-0.60%
Cenveo, Inc.
Delay Draw Term Loan
7.11%, 06/21/13(d)(h) Ba3 16,748 15,952
- ---------------------------------------------------------------------------------
Term Loan C
7.11%, 06/21/13(d)(h) Ba3 473,188 450,711
- ---------------------------------------------------------------------------------
Xsys (BASF Inks)
Term Loan B5
7.57%, 12/31/12(d) NR 795,787 754,207
- ---------------------------------------------------------------------------------
Term Loan C1
7.57%, 12/31/13(d) NR 813,772 771,813
=================================================================================
1,992,683
=================================================================================
COMMODITY CHEMICALS-1.38%
Georgia Gulf Corp.
Term Loan
7.83%, 10/03/13(d)(h) Ba2 270,633 262,041
- ---------------------------------------------------------------------------------
Lyondell Petrochemical
Credit Linked Notes
8.06%, 12/20/09(f)(h) Ba2 2,200,000 2,254,150
- ---------------------------------------------------------------------------------
Term Loan
6.84-6.86%, 08/16/13(d) Ba2 2,066,934 2,038,514
=================================================================================
4,554,705
=================================================================================
COMMUNICATIONS EQUIPMENT-0.22%
Trilogy Choice One
Term Loan C
8.88%, 06/30/12(d) Ba3 759,490 732,908
=================================================================================
COMPUTER HARDWARE-0.12%
Quantum Corp.
Term Loan B
8.86%, 07/12/14(d) B1 400,000 392,000
=================================================================================
CONSTRUCTION MATERIALS-0.07%
Hillman Group (The)
Term Loan B
8.56%, 03/31/11(d) B2 241,320 234,081
- ---------------------------------------------------------------------------------
8.56%, 03/31/11(d) B2 611 593
=================================================================================
234,674
=================================================================================
DATA PROCESSING & OUTSOURCED SERVICES-0.07%
Affiliated Computer Services, Inc.
Delay Draw Term Loan
7.35-7.57%, 03/20/13(d) Ba2 249,337 243,104
=================================================================================
</Table>
11
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
DISTILLERS & VINTNERS-0.02%
Constellation Brands, Inc.
Term Loan B
6.88-7.13%, 06/05/13(d) Ba3 $ 65,410 $ 63,424
=================================================================================
DIVERSIFIED CHEMICALS-0.65%
Celanese US Holdings LLC
Prefunded LOC
5.32%, 04/02/14(d) Ba3 365,939 352,445
- ---------------------------------------------------------------------------------
Term Loan
7.11%, 04/02/14(d) Ba3 561,915 541,194
- ---------------------------------------------------------------------------------
N.E.W. Customer Service
Term Loan B
7.86-8.01%, 05/22/14(d) B1 1,135,925 1,042,214
- ---------------------------------------------------------------------------------
Texas Petrochemicals L.P.
Prefunded LOC
5.33%, 06/27/13(d) Ba3 56,250 54,070
- ---------------------------------------------------------------------------------
Term Loan B
7.94%, 06/27/13(d) Ba3 167,069 160,595
=================================================================================
2,150,518
=================================================================================
DIVERSIFIED COMMERCIAL & PROFESSIONAL
SERVICES- 1.17%
Aspect Software, Inc.
First Lien Term Loan
8.36%, 07/11/11(d) B2 330,413 310,588
- ---------------------------------------------------------------------------------
Audio Software Services, Corp.
Term Loan
7.61%, 02/28/14(d) Ba3 273,600 257,184
- ---------------------------------------------------------------------------------
Bankruptcy Management Solutions, Inc.
First Lien Term Loan
8.32%, 07/28/12(d) Ba3 63,520 60,979
- ---------------------------------------------------------------------------------
Second Lien Term Loan
11.76%, 07/28/13(d) Caa1 36,392 35,300
- ---------------------------------------------------------------------------------
Billing Services Group, LLC
Second Lien Term Loan
11.44%, 05/06/13(d) B3 38,667 39,005
- ---------------------------------------------------------------------------------
Brock Holdings III, Inc.
Term Loan B
7.36%, 02/26/14(d) B1 462,840 443,169
- ---------------------------------------------------------------------------------
Central Parking Corp.
Syn LOC
7.63%, 05/22/14(d) Ba2 40,344 37,923
- ---------------------------------------------------------------------------------
Second Lien Term Loan
9.88%, 11/22/14(d) B2 25,522 24,756
- ---------------------------------------------------------------------------------
Term Loan B
7.79-9.50%, 05/22/14(d) Ba2 165,715 155,772
- ---------------------------------------------------------------------------------
Coinmach Corp.
Term Loan B-1
7.88-8.06%, 12/19/12(d) B2 1,162,413 1,136,259
- ---------------------------------------------------------------------------------
Merrill Corp.
Term Loan
7.59-7.82%, 05/15/11(d) Ba3 939,644 916,153
- ---------------------------------------------------------------------------------
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
<Caption>
DIVERSIFIED COMMERCIAL & PROFESSIONAL
SERVICES-(CONTINUED)
Nuance Communications, Inc.
Revolver Loan
0.00%, 04/01/12(d)(e) Ba3 $ 121,000 $ 114,043
- ---------------------------------------------------------------------------------
Term Loan B
7.57%, 04/01/13(d) Ba3 359,450 338,482
=================================================================================
3,869,613
=================================================================================
DIVERSIFIED METALS & MINING-0.32%
Magnum Coal Co.
Loan C
8.76%, 03/21/13(d) B3 226,755 215,417
- ---------------------------------------------------------------------------------
Term Loan
8.60%, 03/21/13(d) B3 895,682 850,898
=================================================================================
1,066,315
=================================================================================
DIVERSIFIED REIT'S-0.08%
Capital Automotive REIT
Term Loan B
7.07%, 12/15/10(d) Ba1 288,382 279,730
=================================================================================
DRUG RETAIL-0.95%
General Nutrition Centers, Inc.
Term Loan B
09/16/13(d)(g) B1 280,034 260,432
- ---------------------------------------------------------------------------------
9.79%, 09/16/13(d) B1 2,949,209 2,742,764
- ---------------------------------------------------------------------------------
MAPCO Express, Inc.
Term Loan
8.09-8.11%, 04/28/11(d) B2 133,275 127,943
=================================================================================
3,131,139
=================================================================================
ELECTRIC UTILITIES-3.81%
AES Corp.
Syn LOC
8.67%, 03/29/10(d) Ba1 3,121,212 3,063,991
- ---------------------------------------------------------------------------------
Bicent Power
Term Loan B
7.36%, 07/10/14(d) Ba3 875,000 844,375
- ---------------------------------------------------------------------------------
Dynegy Holdings Inc.
Term Loan B
6.82%, 04/02/13(d) Ba1 297,872 282,681
- ---------------------------------------------------------------------------------
Loan C
7.01%, 04/02/13(d) Ba1 1,702,128 1,582,979
- ---------------------------------------------------------------------------------
USPF Holdings, LLC
Term Loan
7.08-7.09%, 04/11/14(d) Ba2 609,600 579,120
- ---------------------------------------------------------------------------------
FirstLight Power Resources
Second Term Loan
9.88%, 05/01/14(d) B1 315,000 303,975
- ---------------------------------------------------------------------------------
Kelson Holdings, LLC
Term Loan
8.61%, 03/08/13(d) Caa1 1,494,000 1,366,477
- ---------------------------------------------------------------------------------
NE Energy, Inc.
Syn LOC
7.86%, 11/01/13(d) B1 92,351 89,503
- ---------------------------------------------------------------------------------
Term Loan B
7.86%, 11/01/13(d) B1 724,480 702,142
- ---------------------------------------------------------------------------------
</Table>
12
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
ELECTRIC UTILITIES-(CONTINUED)
NRG Energy Inc.
Syn LOC
7.11%, 02/01/13(d) Ba1 $ 271,790 $ 261,113
- ---------------------------------------------------------------------------------
7.11%, 02/01/13(d)(h) Ba1 420,871 404,337
- ---------------------------------------------------------------------------------
Term Loan
0%, 05/23/14(d)(e) Ba1 343,787 331,325
- ---------------------------------------------------------------------------------
Term Loan B
7.11%, 02/01/13(d) Ba1 654,680 628,960
- ---------------------------------------------------------------------------------
7.11%, 02/01/13(d)(h) Ba1 1,008,024 968,423
- ---------------------------------------------------------------------------------
NSG Holdings II, LLC
Syn LOC
6.86%, 06/15/14(d) Ba2 38,265 36,735
- ---------------------------------------------------------------------------------
Term Loan
6.86%, 06/15/14(d) Ba2 265,419 254,803
- ---------------------------------------------------------------------------------
TPF Generation Holdings, LLC
Syn LOC D
5.26%, 12/15/13(d) Ba3 97,672 93,179
- ---------------------------------------------------------------------------------
Syn Revolving Deposit
5.26%, 12/15/11(d) Ba3 30,618 29,210
- ---------------------------------------------------------------------------------
Second Lien Term Loan
9.61%, 12/15/14(d) Ba3 267,000 254,718
- ---------------------------------------------------------------------------------
Term Loan
7.36%, 12/15/13(d) Ba3 516,103 492,362
=================================================================================
12,570,408
=================================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-0.36%
Cellnet Technology, Inc.
First Lien Term Loan B
7.36%, 07/22/11(d) Ba2 198,607 192,649
- ---------------------------------------------------------------------------------
Second Lien Term Loan
9.62%, 10/22/11(d) B2 444,444 430,000
- ---------------------------------------------------------------------------------
Crown Castle International Corp.
Term Loan B
6.82-6.84%, 03/06/14(d) Ba3 288,477 274,053
- ---------------------------------------------------------------------------------
VeriFone, Inc.
Term Loan B
7.09%, 10/31/13(d) B1 1,665 1,598
- ---------------------------------------------------------------------------------
7.11%, 10/31/13(d) Ba3 314,685 302,098
=================================================================================
1,200,398
=================================================================================
ELECTRONIC MANUFACTURING SERVICES-0.23%
Aeroflex
Term Loan B1
07/31/14(d)(g)(h) Ba3 290,323 277,258
- ---------------------------------------------------------------------------------
Revere Industries LLC
Term Loan
9.85-10.07%, 12/14/10(d) B1 167,517 150,765
- ---------------------------------------------------------------------------------
Sorenson Communications, Inc.
First Lien Term Loan
8.00%, 08/16/13(d) Ba3 342,030 326,638
=================================================================================
754,661
=================================================================================
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
<Caption>
ENVIRONMENTAL & FACILITIES SERVICES-0.35%
Covanta Holding Corp.
Syn LOC
5.26%, 02/09/14(d) Ba2 $ 415,658 $ 397,473
- ---------------------------------------------------------------------------------
Term Loan B
6.88%, 02/09/14(d) Ba2 803,005 767,873
=================================================================================
1,165,346
=================================================================================
FOOD DISTRIBUTORS-3.17%
Advanced Food
Second Lien Term Loan
9.61%, 03/15/14(d) B1 1,233,357 1,222,565
- ---------------------------------------------------------------------------------
Delay Draw Term Loan
0.00%, 03/15/14(d)(e) B1 333,333 313,333
- ---------------------------------------------------------------------------------
Term Loan B
7.11%, 03/15/14(d) B1 1,163,750 1,093,925
- ---------------------------------------------------------------------------------
ARAMARK Corp.
Syn LOC
5.36%, 01/26/14(d) Ba3 194,824 187,469
- ---------------------------------------------------------------------------------
Term Loan B
7.36%, 01/26/14(d) Ba3 2,769,206 2,664,669
- ---------------------------------------------------------------------------------
Bolthouse Farms Inc.
Term Loan
7.63%, 12/17/12(d) B2 157,600 150,902
- ---------------------------------------------------------------------------------
Bumble Bee Seafoods, LLC
Term Loan B
7.11%, 05/02/12(d) B1 76,502 72,675
- ---------------------------------------------------------------------------------
Pinnacle Foods Group, Inc. (Aurora Foods)
Revolving Loan
0.00%, 04/02/13(d)(e) B2 1,000,000 960,000
- ---------------------------------------------------------------------------------
Term Loan B
8.11%, 04/02/14(d) B2 3,986,408 3,800,374
=================================================================================
10,465,912
=================================================================================
FOOD RETAIL-0.91%
Krispy Kreme Doughnuts, Inc.
Term Loan
8.11%, 02/16/14(d) B3 1,946,475 1,849,151
- ---------------------------------------------------------------------------------
Outback Steaks
Revolving Credit Loan
5.18%, 06/14/13(d) B1 79,304 75,067
- ---------------------------------------------------------------------------------
Term Loan
7.63%, 06/14/14(d) B1 988,747 935,911
- ---------------------------------------------------------------------------------
Quizno's Corp. (The)
First Lien Term Loan B
7.61%, 05/05/13(d) B2 107,184 102,093
- ---------------------------------------------------------------------------------
Second Lien Term Loan
11.11%, 11/05/13(d) Caa1 57,000 54,948
=================================================================================
3,017,170
=================================================================================
FOREST PRODUCTS-1.63%
Boise Cascade Holdings, LLC
Delay Draw Term Loan
0.00%, 04/30/14(d)(e) Ba2 929,038 892,457
- ---------------------------------------------------------------------------------
</Table>
13
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
FOREST PRODUCTS-(CONTINUED)
Georgia-Pacific Corp.
Term Loan B
7.11-7.26%, 12/21/12(d) Ba2 $4,014,010 $ 3,835,310
- ---------------------------------------------------------------------------------
Add Term Loan B
7.11%, 12/29/12(d) Ba2 677,196 647,048
=================================================================================
5,374,815
=================================================================================
GAS UTILITIES-0.49%
Energy Transfer Equity, LP
Term Loan B
7.11%, 02/08/12(d) Ba2 1,654,750 1,603,039
=================================================================================
HEALTH CARE DISTRIBUTORS-0.40%
CompBenefits Corp.
Term Loan B
8.57%, 04/12/12(d) B1 68,096 67,074
- ---------------------------------------------------------------------------------
MultiPlan, Inc.
Add Term Loan C
8.07%, 04/12/13(d) B1 329,502 317,558
- ---------------------------------------------------------------------------------
Term Loan B
8.07%, 04/12/13(d) B1 507,019 488,639
- ---------------------------------------------------------------------------------
Warner Chilcott PLC
Term Loan B
7.36%, 01/18/12(d) B1 361,152 346,706
- ---------------------------------------------------------------------------------
Term Loan C
7.36%, 01/18/12(d) B1 99,494 95,515
=================================================================================
1,315,492
=================================================================================
HEALTH CARE EQUIPMENT-0.61%
Advanced Medical Optics, Inc.
Term Loan B
7.09-7.26%, 04/02/14(d) Ba1 231,420 216,378
- ---------------------------------------------------------------------------------
CONMED Corp.
Term Loan
6.63%, 04/13/13(d) Ba2 59,647 57,708
- ---------------------------------------------------------------------------------
7.01%, 04/13/13(d) Ba2 162,415 157,136
- ---------------------------------------------------------------------------------
Orthofix International N.V.
Term Loan B
7.11%, 09/22/13(d) Ba3 653,051 628,561
- ---------------------------------------------------------------------------------
ReAble Therapeutic Finance Corp.
Term Loan B
7.82-7.86%, 11/03/13(d) Ba3 879,362 857,378
- ---------------------------------------------------------------------------------
Sunrise Medical Inc.
Term Loan B1
9.38-9.56%, 05/13/10(d) B1 101,423 91,280
=================================================================================
2,008,441
=================================================================================
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
<Caption>
HEALTH CARE FACILITIES-3.40%
Community Health System
Delay Draw Term Loan
0%, 07/25/14(d)(e) Ba3 $ 224,076 $ 214,895
- ---------------------------------------------------------------------------------
Term Loan B
7.76%, 07/25/14(d)(h) Ba3 1,835,690 1,760,479
- ---------------------------------------------------------------------------------
Term Loan B
7.76%, 07/25/14(d) Ba3 1,561,858 1,497,865
- ---------------------------------------------------------------------------------
HCA, Inc.
Term Loan A
7.36%, 11/19/12(d) Ba3 2,575,976 2,456,343
- ---------------------------------------------------------------------------------
Term Loan B
02/28/14(d)(g)(h) Ba2 88,304 82,813
- ---------------------------------------------------------------------------------
7.11%, 02/28/14(d) Ba2 2,593,500 2,432,218
- ---------------------------------------------------------------------------------
IASIS Healthcare Corp.
Delay Draw Term Loan
0%, 03/14/14(d)(e) Ba2 186,010 173,570
- ---------------------------------------------------------------------------------
7.34-7.36%, 03/14/14(d) Ba2 529,412 494,008
- ---------------------------------------------------------------------------------
Loan C
5.62%, 03/14/14(d) Ba2 190,779 178,021
- ---------------------------------------------------------------------------------
Term Loan B
7.36%, 03/14/14(d) Ba2 2,088,565 1,948,892
=================================================================================
11,239,104
=================================================================================
HEALTH CARE SERVICES-3.94%
AGA Medical Corp.
Term Loan B
7.36%, 04/29/13(d) B1 119,216 115,639
- ---------------------------------------------------------------------------------
Biomet Inc.,
Term Loan
8.20%, 12/25/14(d) B1 7,385,194 7,075,939
- ---------------------------------------------------------------------------------
CRC Health Corp.
Add Term Loan B
7.61%, 02/06/13(d) Ba3 404,345 393,225
- ---------------------------------------------------------------------------------
Genoa Healthcare LLC
Second Lien Term Loan
13.09%, 02/10/13(d) Caa1 132,000 128,040
- ---------------------------------------------------------------------------------
Term Loan B
8.34-10.25%, 08/10/12(d) Ba3 90,486 88,450
- ---------------------------------------------------------------------------------
HealthSouth Corp.
Term Loan B
7.86%, 03/10/13(d) B2 1,514,085 1,453,522
- ---------------------------------------------------------------------------------
Radiation Therapy Services, Inc.
Term Loan B
7.11-8.75%, 12/16/12(d) B1 62,752 60,399
- ---------------------------------------------------------------------------------
Royalty Pharma
Term Loan B
6.84%, 04/16/13(d) Baa2 1,204,949 1,185,369
- ---------------------------------------------------------------------------------
Skilled Healthcare LLC
Term Loan
7.57%, 06/15/12(d) B1 367,500 363,825
- ---------------------------------------------------------------------------------
</Table>
14
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
HEALTH CARE SERVICES-(CONTINUED)
Sun Healthcare Group, Inc.
Delay Draw Term Loan
0.00%, 01/15/08(d)(e) Ba2 $ 31,796 $ 30,524
- ---------------------------------------------------------------------------------
7.36%, 01/15/08(d) Ba2 55,643 53,418
- ---------------------------------------------------------------------------------
Syn LOC
5.26%, 04/19/14(d) Ba2 89,827 86,234
- ---------------------------------------------------------------------------------
Term Loan B
7.36-7.38%, 04/19/14(d) Ba2 417,929 401,212
- ---------------------------------------------------------------------------------
US Oncology, Inc.
Term Loan B
7.61%, 08/20/11(d) Ba1 692,024 667,803
- ---------------------------------------------------------------------------------
Viant
Term Loan B
7.61%, 06/25/14(d) Ba3 1,000,000 927,500
=================================================================================
13,031,099
=================================================================================
HEALTH CARE SUPPLIES-1.05%
Accellent Corp.
Term Loan B
8.01%, 11/22/12(d) B1 3,066,119 2,897,482
- ---------------------------------------------------------------------------------
Fresenius Medical Care AG & Co. KGaA
Term Loan B
6.74-6.89%, 03/31/13(d) Ba1 596,080 575,996
=================================================================================
3,473,478
=================================================================================
HOMEBUILDING-0.14%
Headwaters, Inc.
First Lien Term Loan B1
7.36%, 04/30/11(d) Ba2 464,844 453,223
=================================================================================
HOTELS, RESORTS & CRUISE LINES-0.29%
American Gaming Systems
Delay Draw Term Loan
0%, 05/14/13(d)(e) B3 158,129 145,874
- ---------------------------------------------------------------------------------
Term Loan B
8.57%, 05/14/13(d) B3 657,224 606,289
- ---------------------------------------------------------------------------------
Ginn Co. (The)
First Lien Term Loan B
8.86%, 06/08/11(d) B3 106,093 90,577
- ---------------------------------------------------------------------------------
Second Lien Term Loan
13.36%, 06/08/12(d) Caa3 127,556 89,034
- ---------------------------------------------------------------------------------
Revolving Credit Loan
5.26%, 06/08/11(d) B3 49,078 41,900
=================================================================================
973,674
=================================================================================
HOUSEHOLD APPLIANCES-0.08%
Hamilton Beach/Proctor-Silex, Inc.
Term Loan B
7.64-9.5%, 05/31/13(d) B1 269,525 247,963
=================================================================================
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
<Caption>
HOUSEHOLD PRODUCTS-2.76%
AMSCAN Holdings
Term Loan B
7.59-7.74%, 05/25/13(d) B1 $ 372,400 $ 344,470
- ---------------------------------------------------------------------------------
Jarden Corp.
Add on Term Loan
7.84%, 01/24/12(d) Ba3 1,800,000 1,761,750
- ---------------------------------------------------------------------------------
Term Loan B-1
7.11%, 01/24/12(d) Ba3 530,311 507,962
- ---------------------------------------------------------------------------------
Nice-Pak Products Inc.
Term Loan
8.36%, 06/18/14(d) B2 411,000 394,560
- ---------------------------------------------------------------------------------
Prestige Brands International, Inc.
Term Loan B
7.76%, 04/06/11(d) Ba3 35,310 34,604
- ---------------------------------------------------------------------------------
Term Loan B
7.76%, 04/06/11(d)(h) Ba3 680,198 666,594
- ---------------------------------------------------------------------------------
Rent-A-Center
Term Loan B
7.11-7.27%, 06/30/12(d) Ba2 1,048,114 1,004,443
- ---------------------------------------------------------------------------------
Sally Beauty Holdings, Inc.
Term Loan B
8.00%, 11/16/13(d) B2 794,000 767,326
- ---------------------------------------------------------------------------------
Spectrum Brands, Inc.
Loan C
5.17%, 03/30/13(d) B2 169,116 163,901
- ---------------------------------------------------------------------------------
Term Loan B
9.34-9.53%, 03/30/13(d) B2 3,331,483 3,248,196
- ---------------------------------------------------------------------------------
Term Loan B-2
9.55%, 03/30/13(d) B2 169,150 163,935
- ---------------------------------------------------------------------------------
Waterpik Technologies, Inc.
First Lien Term Loan
7.62%, 06/28/13(d) B1 74,441 72,208
=================================================================================
9,129,949
=================================================================================
HOUSEWARES & SPECIALTIES-0.67%
Cinemark USA, Inc.
Term Loan
7.04-7.25%, 10/05/13(d) Ba3 1,951,567 1,863,746
- ---------------------------------------------------------------------------------
Yankee Candle Co., Inc. (The)
Term Loan
7.36%, 02/06/14(d) Ba3 374,422 358,977
=================================================================================
2,222,723
=================================================================================
HUMAN RESOURCE & EMPLOYMENT SERVICES-0.53%
AMN Healthcare Services, Inc.
Term Loan B
7.11%, 11/02/11(d) Ba2 130,443 125,877
- ---------------------------------------------------------------------------------
Kronos Inc.
First Lien Term Loan
7.61%, 06/11/14(d) Ba3 825,625 755,447
- ---------------------------------------------------------------------------------
</Table>
15
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
HUMAN RESOURCE & EMPLOYMENT SERVICES-(CONTINUED)
Koosharem Corp.
Term Loan
8.57%, 07/12/14(d) B1 $ 610,000 $ 588,650
- ---------------------------------------------------------------------------------
Second Term Loan
12.79%, 12/31/14(d) B1 298,800 291,330
=================================================================================
1,761,304
=================================================================================
INDEPENDENT POWER PRODUCERS & ENERGY-0.23%
Calpine Corp.
First Priority Term Loan
7.61%, 03/29/09(d) B1 793,000 766,661
=================================================================================
INDUSTRIAL CONGLOMERATES-0.51%
Aearo Corp.
First Lien Term Loan
7.61%, 05/30/14(d) B1 156,934 149,087
- ---------------------------------------------------------------------------------
Second Lien Term Loan
10.86%, 12/01/14(d) Caa1 103,240 97,304
- ---------------------------------------------------------------------------------
Dresser Inc.
Term Loan B
8.01-8.04%, 05/04/14(d) B3 904,514 868,899
- ---------------------------------------------------------------------------------
Norcross Safety Products LLC
Term Loan
7.31-9.25%, 06/30/12(d) Ba1 588,083 570,441
=================================================================================
1,685,731
=================================================================================
INDUSTRIAL MACHINERY-1.35%
Bucyrus International, Inc.
Term Loan
6.86-6.88%, 05/04/14(d) Ba3 212,750 207,431
- ---------------------------------------------------------------------------------
CLFX Corp.
Term Loan B
7.63%, 12/19/11(d) Ba3 510,331 501,783
- ---------------------------------------------------------------------------------
EnerSys Capital Inc.
Term Loan
7.03-7.25%, 03/17/11(d) Ba2 460,984 448,307
- ---------------------------------------------------------------------------------
Gleason Corp.
First Lien Term Loan
7.38%, 06/30/13(d) Ba3 126,933 123,284
- ---------------------------------------------------------------------------------
Itron Inc.
Term Loan
7.36%, 04/18/14(d) Ba3 231,420 226,213
- ---------------------------------------------------------------------------------
Pro Mach, Inc.
Term Loan
7.61%, 12/14/11(d) B1 592,500 580,650
- ---------------------------------------------------------------------------------
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
<Caption>
INDUSTRIAL MACHINERY-(CONTINUED)
Rexnord Corp.
Add on Term Loan
7.64%, 07/19/13(d) Ba2 $ 96,077 $ 92,835
- ---------------------------------------------------------------------------------
Sr. Term Loan
11.61-12.36%, 03/02/13(d) B3 2,062,425 1,992,819
- ---------------------------------------------------------------------------------
Term Loan B
7.84-7.86%, 07/19/13(d) Ba2 312,098 301,565
=================================================================================
4,474,887
=================================================================================
INSURANCE BROKERS-0.53%
Concord Re Ltd.
Term Loan
9.61%, 02/29/12(d) Ba2 1,000,000 970,000
- ---------------------------------------------------------------------------------
Swett & Crawford Group, Inc. (The)
First Lien Term Loan
7.61%, 04/03/14(d) B2 390,023 362,721
- ---------------------------------------------------------------------------------
Second Lien Term Loan
10.86%, 10/03/14(d) B2 105,200 97,836
- ---------------------------------------------------------------------------------
USI Holdings
Term Loan B
8.11%, 05/05/14(d) B2 325,867 304,685
=================================================================================
1,735,242
=================================================================================
INTEGRATED OIL & GAS-0.32%
Western Refining
Term Loan B
7.07%, 05/30/14(d) B1 1,124,738 1,068,501
=================================================================================
INTEGRATED TELECOMMUNICATION SERVICES-1.45%
Cavalier Telephone Inc.
Term Loan B
10.11%, 12/31/12(d) B2 1,067,247 1,040,566
- ---------------------------------------------------------------------------------
Country Road Communications, Inc.
First Lien Term Loan
8.33-8.36%, 07/15/12(d) B2 792,215 776,371
- ---------------------------------------------------------------------------------
Second Lien Term Loan
13.11%, 07/15/13(d) B2 571,429 560,000
- ---------------------------------------------------------------------------------
Integrated Telecom
Term Loan B
9.38%, 08/31/13(d) B1 539,000 528,220
- ---------------------------------------------------------------------------------
PAETEC Communications, Inc.
Term Loan
8.07%, 02/28/13(d) Ba3 1,336,061 1,312,680
- ---------------------------------------------------------------------------------
Time Warner Telecommunication Holdings Inc.
Term Loan B
7.36%, 01/07/13(d) B1 572,751 557,895
=================================================================================
4,775,732
=================================================================================
INTERNET SOFTWARE & SERVICES-0.25%
Language Line LLC
Term Loan B1
8.61%, 06/10/11(d) Ba3 857,651 830,491
=================================================================================
</Table>
16
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
INVESTMENT BANKING & BROKERAGE-0.22%
E.A. Viner International Co.
First Lien Term Loan B
7.86%, 07/31/13(d) B1 $ 63,746 $ 62,471
- ---------------------------------------------------------------------------------
JG Wentworth LLC
Term Loan
7.61%, 04/04/14(d) B2 714,000 662,235
=================================================================================
724,706
=================================================================================
INVESTMENT COMPANIES-0.27%
Gartmore Investment, Ltd.
U.S. Term Loan
7.11%, 05/11/14(d) Ba3 957,000 889,053
=================================================================================
IT CONSULTING & OTHER SERVICES-0.23%
SunGuard Data Systems Inc.
U.S. Term Loan
7.36%, 02/11/13(d) Ba3 796,804 769,912
=================================================================================
LEISURE FACILITIES-0.63%
AMF Group
First Lien Term Loan B
7.85%, 06/08/13(d) B1 436,800 414,960
- ---------------------------------------------------------------------------------
Second Lien Term Loan
11.60%, 12/08/13(d) B1 177,143 173,600
- ---------------------------------------------------------------------------------
24 Hour Fitness Worldwide Inc.
Term Loan B
7.86-7.88%, 06/08/12(d) Ba3 1,283,750 1,261,284
- ---------------------------------------------------------------------------------
Universal City Development Partners
Term Loan B
7.36-7.51%, 06/09/11(d) Ba1 231,364 224,423
=================================================================================
2,074,267
=================================================================================
LEISURE PRODUCTS-2.22%
Deluxe Corp.
Second Lien Term Loan
11.36%, 11/11/13(d) B3 418,333 397,417
- ---------------------------------------------------------------------------------
Syn LOC
5.26%, 05/11/13(d) B1 44,616 42,385
- ---------------------------------------------------------------------------------
Term Loan B
7.61%, 05/11/13(d) B1 958,523 910,597
- ---------------------------------------------------------------------------------
Term Loan C
7.61%, 05/11/13(d) B1 85,582 81,303
- ---------------------------------------------------------------------------------
Jacuzzi
Syn LOC
5.36%, 02/07/14(d) B1 150,273 134,682
- ---------------------------------------------------------------------------------
Term Loan B
7.61-7.82%, 02/07/14(d) B1 1,681,165 1,506,744
- ---------------------------------------------------------------------------------
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
<Caption>
LEISURE PRODUCTS-(CONTINUED)
Panavision Inc.
First Lien Term Loan
8.86-9.07%, 03/30/11(d) B2 $ 37,114 $ 35,815
- ---------------------------------------------------------------------------------
Second Lien Term Loan
12.86%, 03/30/12(d) B2 9,500 9,025
- ---------------------------------------------------------------------------------
Premier Parks Inc.
Term Loan
7.75%, 04/30/15(d) Ba3 646,756 601,945
- ---------------------------------------------------------------------------------
Sabre Holdings
Term Loan
7.36%, 09/30/14(d) Ba3 122,934 113,668
- ---------------------------------------------------------------------------------
Term Loan
7.35%, 09/30/14(d) Ba3 3,289,898 3,041,922
- ---------------------------------------------------------------------------------
True Temper Sports, Inc.
Delay Draw Term Loan
8.54-8.75%, 03/15/11(d) B1 372,328 353,711
- ---------------------------------------------------------------------------------
Second Lien Term Loan
10.85-10.86%, 06/30/11(d) B1 104,000 98,800
=================================================================================
7,328,014
=================================================================================
MANAGED HEALTH CARE-0.08%
Amerigroup
Syn LOC
7.38%, 03/23/12(d) Ba3 263,267 250,762
=================================================================================
MARINE-0.13%
US Shipping LLC
Delay Draw Term Loan
8.84-8.86%, 08/06/11(d) B1 89,404 86,722
- ---------------------------------------------------------------------------------
Term Loan
8.86%, 08/06/12(d) B1 369,733 358,641
=================================================================================
445,363
=================================================================================
METAL & GLASS CONTAINERS-0.97%
Berry Plastics Corp.
Term Loan C
7.34-7.36%, 04/03/15(d) Ba3 2,361,520 2,256,938
- ---------------------------------------------------------------------------------
Mauser
Term Loan B2
7.88%, 06/13/15(d) Ba3 500,000 470,000
- ---------------------------------------------------------------------------------
Term Loan C2
8.13%, 06/13/16(d) NR 500,000 472,500
=================================================================================
3,199,438
=================================================================================
</Table>
17
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
MOVIES & ENTERTAINMENT-4.21%
Alpha III
Second Lien Term Loan D
9.04%, 06/30/14(d) B2 $2,500,000 $ 2,383,333
- ---------------------------------------------------------------------------------
Term Loan B1
7.92%, 12/31/13(d) B2 4,571,429 4,337,143
- ---------------------------------------------------------------------------------
Term Loan B2
7.92%, 12/31/13(d) B2 3,428,571 3,252,857
- ---------------------------------------------------------------------------------
LodgeNet Entertainment Corp.
Term Loan
7.36%, 04/04/14(d) Ba3 1,270,000 1,208,617
- ---------------------------------------------------------------------------------
NEP II, Inc.
Term Loan B
7.61%, 02/16/14(d) B1 416,555 396,422
- ---------------------------------------------------------------------------------
Zuffa LLC
Term Loan
7.56%, 06/19/15(d) Ba3 536,402 477,398
- ---------------------------------------------------------------------------------
Warner Music Group
Term Loan
7.36-7.54%, 02/28/11(d) Ba2 1,904,216 1,861,371
=================================================================================
13,917,141
=================================================================================
OFFICE SERVICES & SUPPLIES-0.29%
Buhrmann US Inc.
Term Loan D1
7.33-7.36%, 12/23/10(d) Ba2 992,593 966,538
=================================================================================
OIL & GAS DRILLING-0.43%
Newpark Resources, Inc.
Term Loan
8.36%, 08/18/11(d) B2 1,031,627 1,010,995
- ---------------------------------------------------------------------------------
Niska/CR Gas & Storage
Canada Term Loan
7.11%, 05/13/13(d) Ba3 285,899 277,799
- ---------------------------------------------------------------------------------
Delay Draw Term Loan
7.33%, 05/13/13(d) Ba3 31,503 30,610
- ---------------------------------------------------------------------------------
Term Loan
7.28%, 05/13/11(d) Ba3 51,809 50,342
- ---------------------------------------------------------------------------------
U.S. Term Loan
7.11%, 05/13/13(d) Ba3 46,506 45,189
=================================================================================
1,414,935
=================================================================================
OIL & GAS EQUIPMENT & SERVICES-1.92%
Key Energy Services, Inc.
Line of Credit
5.36%, 07/29/10(d) NR 250,000 244,375
- ---------------------------------------------------------------------------------
Term Loan C
7.86-8.07%, 06/30/12(d) NR 2,313,561 2,261,507
- ---------------------------------------------------------------------------------
Kinder Morgan Inc.
Term Loan B
7.07-7.12%, 05/30/14(d) Ba2 1,733,333 1,643,959
- ---------------------------------------------------------------------------------
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
<Caption>
OIL & GAS EQUIPMENT & SERVICES-(CONTINUED)
Petroleum Geo-Services A.S.A.
Term Loan
7.11%, 06/29/15(d) Ba2 $ 223,499 $ 215,863
- ---------------------------------------------------------------------------------
Resolute Natural Resources Corp.
Second Lien Term Loan
9.86%, 06/27/13(d) NR 541,176 522,235
- ---------------------------------------------------------------------------------
Sem Group L.P.
U.S. Term Loan B2
7.11%, 03/16/11(d) Ba2 472,303 459,315
- ---------------------------------------------------------------------------------
Targa Resources, Inc.
Syn LOC
5.24%, 10/31/12(d) Ba3 115,851 111,603
- ---------------------------------------------------------------------------------
Term Loan
7.36-7.54%, 10/31/12(d) Ba3 453,970 437,325
- ---------------------------------------------------------------------------------
Volnay S.A.
Term Loan
7.36%, 01/12/14(d) Ba2 457,345 436,193
=================================================================================
6,332,375
=================================================================================
OIL & GAS EXPLORATION & PRODUCTION-0.49%
Helix Energy Solutions Group, Inc.
Term Loan B
7.33-7.54%, 07/01/13(d) B1 439,973 425,537
- ---------------------------------------------------------------------------------
Venoco, Inc.
Second Lien Term Loan
9.36%, 05/07/14(d) NR 1,204,000 1,184,435
=================================================================================
1,609,972
=================================================================================
OIL & GAS REFINING & MARKETING-0.86%
Big West Oil LLC
Delay Draw Term Loan
0%, 05/15/14(d)(e) B1 1,650,000 1,559,250
- ---------------------------------------------------------------------------------
Term Loan B
7.61%, 05/15/14(d) B1 1,350,000 1,275,750
=================================================================================
2,835,000
=================================================================================
OIL & GAS STORAGE & TRANSPORTATION-0.33%
Atlas Pipeline Partners, L.P.
Term Loan B
8.09-8.26%, 07/27/14(d) Ba3 1,100,000 1,075,250
=================================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-0.36%
Conseco, Inc.
Term Loan
7.51%, 10/10/13(d) Ba3 1,288,000 1,197,840
=================================================================================
</Table>
18
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
PACKAGED FOODS & MEATS-0.52%
Birds Eye Foods Inc.
Term Loan B
7.11%, 03/22/13(d) B1 $ 175,714 $ 171,101
- ---------------------------------------------------------------------------------
Dole Foods Co., Inc.
Term Loan B
7.44-9.25%, 04/12/13(d) Ba3 208,578 196,063
- ---------------------------------------------------------------------------------
Term Loan C
7.44-9.25%, 04/12/13(d) Ba3 695,259 653,544
- ---------------------------------------------------------------------------------
Prefunded LOC
5.23%, 04/12/13(d) Ba3 93,875 88,242
- ---------------------------------------------------------------------------------
Michael Foods Inc.
Term Loan B
7.36%, 11/21/10(d) Ba3 635,232 609,822
=================================================================================
1,718,772
=================================================================================
PAPER PACKAGING-0.27%
Altivity Packaging
Delay Draw First Lien Term Loan
7.58-7.61%, 06/30/13(d) Ba3 41,040 40,465
- ---------------------------------------------------------------------------------
First Lien Term Loan
7.58-7.61%, 07/31/13(d) Ba3 114,264 112,664
- ---------------------------------------------------------------------------------
Bluegrass Container Co.
First Lien Term Loan
7.58%, 07/31/13(d) Ba3 22,896 22,575
- ---------------------------------------------------------------------------------
Smurfit-Stone Container Corp.
Syn LOC
5.27%, 11/01/10(d) Ba2 90,569 88,602
- ---------------------------------------------------------------------------------
Term Loan B
7.38%, 11/01/11(d) Ba2 295,089 288,680
- ---------------------------------------------------------------------------------
Term Loan C
7.38%, 11/01/11(d) Ba2 168,574 164,913
- ---------------------------------------------------------------------------------
Term Loan C-1
7.38%, 11/01/11(d) Ba2 55,100 53,904
- ---------------------------------------------------------------------------------
Verso Papers Holding, LLC
Term Loan
7.13%, 08/01/13(d) Ba2 129,474 128,827
=================================================================================
900,630
=================================================================================
PAPER PRODUCTS-0.08%
Xerium S.A.
U.S. Term Loan
8.11%, 05/18/12(d) B1 296,139 276,335
=================================================================================
PERSONAL PRODUCTS-1.72%
American Safety Razor Co.
Second Lien Term Loan
11.69%, 01/31/14(d) B3 183,000 181,170
- ---------------------------------------------------------------------------------
Term Loan
7.83-7.86%, 07/31/13(d) B1 204,930 198,782
- ---------------------------------------------------------------------------------
Hanesbrands Inc.
Second Lien Term Loan
9.11%, 03/05/14(d) Ba2 167,033 165,446
- ---------------------------------------------------------------------------------
9.11%, 03/05/14(d) B1 2,036,160 2,016,816
- ---------------------------------------------------------------------------------
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
<Caption>
PERSONAL PRODUCTS-(CONTINUED)
Huish Detergents, Inc.
Second Lien Term Loan
9.76%, 10/26/14(d) Caa1 $ 226,400 $ 207,156
- ---------------------------------------------------------------------------------
Term Loan
7.51%, 04/26/14(d) B1 649,133 595,580
- ---------------------------------------------------------------------------------
HVHC, Inc.
Term Loan B
7.58-9.50%, 08/01/13(d) Ba2 1,422,186 1,379,522
- ---------------------------------------------------------------------------------
Network Solutions
Term Loan B
7.86%, 03/07/14(d) B1 989,438 930,072
=================================================================================
5,674,544
=================================================================================
PHARMACEUTICALS-0.38%
Quintiles Transnational Corp.
Second Lien Term Loan
9.36%, 03/31/14(d) B2 1,059,400 1,030,267
- ---------------------------------------------------------------------------------
Term Loan B
7.36%, 03/31/13(d) B1 235,223 223,461
=================================================================================
1,253,728
=================================================================================
PROPERTY & CASUALTY INSURANCE-0.78%
Starbound II
Term Loan A
10.05%, 08/20/09(f)(h) Ba3 1,400,000 1,393,000
- ---------------------------------------------------------------------------------
Term Loan B
8.55%, 08/20/09(f)(h) Baa3 1,200,000 1,194,000
=================================================================================
2,587,000
=================================================================================
PUBLISHING-3.34%
American Media, Inc.
Term Loan B
8.80%, 01/30/13(d) B1 2,029,412 1,938,088
- ---------------------------------------------------------------------------------
Black Press U.S. Partnership
U.S. Term Loan B-1
7.54%, 08/02/13(d) Ba3 61,417 59,881
- ---------------------------------------------------------------------------------
Canada Term Loan B-2
7.54%, 08/02/13(d) Ba3 37,289 36,357
- ---------------------------------------------------------------------------------
Caribe Information Investment Inc.
Term Loan
7.61-7.76%, 03/31/13(d) B1 82,411 79,115
- ---------------------------------------------------------------------------------
Dex Media East LLC
Term Loan B
6.86-7.07%, 05/08/09(d) Ba1 455,003 445,618
- ---------------------------------------------------------------------------------
Dex Media West LLC
Term Loan B2
6.82-6.86%, 03/09/10(d) Ba1 897,576 875,457
- ---------------------------------------------------------------------------------
7.01%, 03/09/10(d) Ba1 43,752 42,673
- ---------------------------------------------------------------------------------
Endurance Business Media, Inc.
Second Lien Term Loan
12.82%, 01/26/14(d) Caa1 59,090 57,908
- ---------------------------------------------------------------------------------
Term Loan
8.32%, 07/26/13(d) B1 118,080 112,471
- ---------------------------------------------------------------------------------
</Table>
19
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
PUBLISHING-(CONTINUED)
Gatehouse Media, Inc.
Delay Draw Term Loan
7.36-7.51%, 08/28/14(d) B1 $ 642,869 $ 581,797
- ---------------------------------------------------------------------------------
Term Loan B
7.51%, 03/06/14(d) B1 189,438 171,441
- ---------------------------------------------------------------------------------
Term Loan B
7.51%, 08/28/14(d) B1 1,549,212 1,402,037
- ---------------------------------------------------------------------------------
Hanley Wood LLC
Term Loan
7.59-7.61%, 03/08/14(d) B2 330,000 295,900
- ---------------------------------------------------------------------------------
MediaNews Group
Term Loan B
6.59%, 12/30/10(d) Ba2 1,171,332 1,106,909
- ---------------------------------------------------------------------------------
Reader's Digest Association Inc.
Term Loan B
7.33-7.38%, 03/02/14(d) B1 323,988 299,689
- ---------------------------------------------------------------------------------
Riverdeep Interactive Learning Ltd.
Sr. Term Loan
8.11%, 12/20/13(d) B1 2,020,761 1,977,315
- ---------------------------------------------------------------------------------
Star Tribune
Term Loan
7.61%, 03/05/14(d) B1 409,484 351,644
- ---------------------------------------------------------------------------------
Sun Media Corp.
Term Loan B
7.11%, 02/07/09(d) Baa3 585,815 563,847
- ---------------------------------------------------------------------------------
Yell Group Ltd.
Term Loan B1
7.57%, 10/27/12(d) Ba3 640,444 619,430
=================================================================================
11,017,577
=================================================================================
RAILROADS-0.51%
Helm Holding Corp.
Term Loan B
7.58-7.82%, 07/08/11(d) B2 498,020 483,079
- ---------------------------------------------------------------------------------
RailAmerica Inc.
Term Loan B
7.81%, 08/14/08(d) B2 1,245,000 1,204,538
=================================================================================
1,687,617
=================================================================================
REAL ESTATE MANAGEMENT & DEVELOPMENT-1.55%
Kyle Acquisition Group, LLC
Three Year Term Loan
9.13%, 07/20/09(d) Ba3 888,170 821,557
- ---------------------------------------------------------------------------------
Lake Las Vegas Resort
First Lien Term Loan
5.26-15.46%, 12/22/10(d) Caa1 2,229,256 2,006,330
- ---------------------------------------------------------------------------------
Realogy
Credit Linked Notes
5.32%, 10/10/13(d) Ba3 344,824 312,640
- ---------------------------------------------------------------------------------
Term Loan B
8.36%, 04/13/13(d) Ba3 551,515 500,041
- ---------------------------------------------------------------------------------
8.36%, 10/10/13(d) Ba3 729,261 661,197
- ---------------------------------------------------------------------------------
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
<Caption>
REAL ESTATE MANAGEMENT & DEVELOPMENT-(CONTINUED)
Rhodes Homes
First Lien Term Loan
8.86%, 11/21/10(d) B2 $ 715,111 $ 629,297
- ---------------------------------------------------------------------------------
Yellowstone Mountain Club, LLC
Term Loan
7.88%, 09/30/10(d) B1 207,867 199,205
=================================================================================
5,130,267
=================================================================================
RESTAURANTS-0.61%
Buffets Holdings, Inc.
Prefunded LOC
5.26%, 05/01/13(d) Ba3 233,934 219,898
- ---------------------------------------------------------------------------------
Term Loan
8.29-8.32%, 11/01/13(d) Ba3 1,687,722 1,586,458
- ---------------------------------------------------------------------------------
Sbarro Inc.
Term Loan B
7.88-8.07%, 01/31/14(d) Ba3 236,408 225,178
=================================================================================
2,031,534
=================================================================================
SEMICONDUCTORS-1.52%
AMI Semiconductors, Inc.
Term Loan
7.36%, 04/01/12(d) Ba3 855,762 830,089
- ---------------------------------------------------------------------------------
Freescale Semiconductor, Inc.
Term Loan B
7.11%, 12/01/13(d)(h) Baa3 4,240,443 3,956,622
- ---------------------------------------------------------------------------------
7.33%, 12/01/13(d) Baa3 256,429 239,266
=================================================================================
5,025,977
=================================================================================
SPECIALIZED CONSUMER SERVICES-0.34%
Jacobson Corp.
Second Lien Term Loan
11.00%, 12/19/14(d) Caa1 212,400 189,036
- ---------------------------------------------------------------------------------
Term Loan B
7.86%, 06/19/14(d) Ba3 329,000 305,148
- ---------------------------------------------------------------------------------
LPL Holdings Inc.
Term Loan D
7.36%, 06/28/13(d) B1 266,429 253,108
- ---------------------------------------------------------------------------------
7.36%, 06/28/13(d) B 391,482 371,908
=================================================================================
1,119,200
=================================================================================
SPECIALIZED FINANCE-0.17%
Citco Group Ltd. (The)
Term Loan B
7.63%, 06/30/14(d) B1 145,861 139,297
- ---------------------------------------------------------------------------------
Clayton Holdings, Inc.
Term Loan
7.08%, 12/08/11(d) Ba3 65,532 58,978
- ---------------------------------------------------------------------------------
</Table>
20
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
SPECIALIZED FINANCE-(CONTINUED)
NASDAQ Stock Market, Inc. (The)
Term Loan B
7.32%, 04/18/12(d) Ba3 $ 242,694 $ 239,155
- ---------------------------------------------------------------------------------
Term Loan C
7.32%, 04/18/12(d) Ba3 140,684 138,632
=================================================================================
576,062
=================================================================================
SPECIALTY CHEMICALS-3.09%
Cognis Deutscheland
Term Loan
7.36%, 09/15/13(d) B1 799,515 742,883
- ---------------------------------------------------------------------------------
Hexion Specialty Chemicals, Inc.
Add on Term Loan
7.63%, 06/18/13(d) Ba3 1,364,082 1,327,057
- ---------------------------------------------------------------------------------
Syn LOC
5.22%, 05/05/13(d) Ba3 91,710 89,220
- ---------------------------------------------------------------------------------
Term Loan C1
7.63%, 05/05/13(d) Ba3 1,869,626 1,818,878
- ---------------------------------------------------------------------------------
Term Loan C2
7.63%, 05/05/13(d) Ba3 406,136 395,112
- ---------------------------------------------------------------------------------
Term Loan C4
7.63%, 05/05/13(d) Ba3 641,645 624,229
- ---------------------------------------------------------------------------------
Huntsman ICI Chemicals LLC
Term Loan B
7.25%, 04/19/14(d) Ba1 2,487,773 2,434,390
- ---------------------------------------------------------------------------------
Ineos Group Ltd.
Term Loan A4
7.58-7.59%, 12/16/12(d) Ba3 130,278 126,109
- ---------------------------------------------------------------------------------
Term Loan B2
7.58%, 12/16/13(d)(h) Ba2 1,040,661 1,010,742
- ---------------------------------------------------------------------------------
Term Loan C2
8.08%, 12/16/14(d)(h) Ba2 1,040,661 1,010,742
- ---------------------------------------------------------------------------------
KRATON Polymers LLC
Term Loan
7.38%, 05/12/13(d) Ba3 431,196 407,481
- ---------------------------------------------------------------------------------
MacDermid Incorp.
Term Loan B
7.36%, 04/12/14(d) B1 250,203 237,068
=================================================================================
10,223,911
=================================================================================
SPECIALTY STORES-0.75%
Eye Care Centers of America, Inc.
Term Loan
7.86-8.07%, 03/01/12(d) Ba2 333,024 323,033
- ---------------------------------------------------------------------------------
Mattress Firm
Term Loan B
7.61%, 01/18/14(d) B1 313,880 295,047
- ---------------------------------------------------------------------------------
Michaels Stores, Inc.
Term Loan
7.63-7.69%, 10/31/13(d) B2 43,018 40,451
- ---------------------------------------------------------------------------------
Term Loan
7.63%, 10/31/13(d)(h) B2 1,267,107 1,191,533
- ---------------------------------------------------------------------------------
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
<Caption>
SPECIALTY STORES-(CONTINUED)
Petco
Term Loan B
7.61%, 10/26/13(d) Ba3 $ 552,492 $ 533,154
- ---------------------------------------------------------------------------------
Savers, Inc.
Canada Term Loan
8.09%, 08/11/12(d) Ba3 37,823 36,688
- ---------------------------------------------------------------------------------
U.S. Term Loan
8.09%, 08/11/12(d) Ba3 43,076 41,784
=================================================================================
2,461,690
=================================================================================
STEEL-0.04%
Algoma Steel
Term Loan
7.86%, 06/20/13(d) B3 129,333 123,190
=================================================================================
SYSTEMS SOFTWARE-0.59%
Skillsoft
Term Loan B
8.11%, 05/14/13(d) B2 298,200 292,236
- ---------------------------------------------------------------------------------
Verint Systems, Inc.
Term Loan
8.11%, 05/25/14(d) B1 1,741,542 1,667,526
=================================================================================
1,959,762
=================================================================================
TEXTILES-0.15%
GTM Holdings Inc.
First Lien Term Loan
8.09%, 10/30/13(d) B2 1,279 1,240
- ---------------------------------------------------------------------------------
8.11%, 10/30/13(d) B1 507,664 492,434
=================================================================================
493,674
=================================================================================
THRIFTS & MORTGAGE FINANCE-0.08%
CharterMac
Term Loan B
8.06%, 08/15/12(d) Ba3 297,750 264,998
=================================================================================
TRADING COMPANIES/ DISTRIBUTORS-0.08%
Brenntag A.G.
Sr. Facilities Term Loan B2
7.39%, 01/18/14(d) B1 210,041 201,640
- ---------------------------------------------------------------------------------
USD Acquisition Term Loan
7.39%, 01/18/14(d) B1 51,322 49,270
=================================================================================
250,910
=================================================================================
TRUCKING-0.28%
Greatwide Logistics Services, Inc.
First Lien Term Loan
8.86%, 12/19/13(d) B1 1,017,142 884,913
- ---------------------------------------------------------------------------------
Second Lien Term Loan
11.86%, 06/19/14(d) Caa1 57,500 48,875
=================================================================================
933,788
=================================================================================
</Table>
21
AIM Floating Rate Fund
<Table>
<Caption>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
WATER UTILITIES-0.33%
Thermal North America, Inc.
Loan C
8.07%, 10/24/08(d) B1 $ 115,711 $ 114,554
- ---------------------------------------------------------------------------------
Term Loan
8.11%, 10/24/08(d) B1 982,800 972,972
=================================================================================
1,087,526
=================================================================================
WIRELESS TELECOMMUNICATION SERVICES-6.55%
American Cellular, Inc.
Delay Draw Term Loan
0.00%, 03/15/14(d)(e) B1 128,500 127,054
- ---------------------------------------------------------------------------------
Asurion Corp.
Term Loan B
8.36%, 07/03/14(d) B2 5,466,667 5,106,780
- ---------------------------------------------------------------------------------
Bicent Power
Second Lien Term Loan
9.36%, 07/10/14(d) Ba3 250,400 232,872
- ---------------------------------------------------------------------------------
Canwest Mediaworks
Term Loan B
7.54%, 07/13/14(d) B1 412,823 398,374
- ---------------------------------------------------------------------------------
Cellular South Inc.
Delay Draw Term Loan
0%, 05/29/14(d)(e) Ba3 1,250,000 1,212,500
- ---------------------------------------------------------------------------------
Term Loan B
7.11-9.00%, 05/29/14(d) Ba3 3,750,000 3,637,500
- ---------------------------------------------------------------------------------
FairPoint Communications, Inc.
Term Loan B
7.13%, 02/08/12(d) B1 1,000,000 968,750
- ---------------------------------------------------------------------------------
Global Tel*Link
Syn LOC
5.26%, 02/14/13(d) B1 28,670 27,667
- ---------------------------------------------------------------------------------
Acquisition Syn Deposit Commitment
5.26%, 02/14/13(d) B1 114,682 110,669
- ---------------------------------------------------------------------------------
Term Loan
8.86%, 02/14/13(d) B1 441,889 426,422
- ---------------------------------------------------------------------------------
Term Loan
8.70%, 02/14/13(d) B1 69,131 66,711
- ---------------------------------------------------------------------------------
Idearc, Inc.
Term Loan B
7.36%, 11/17/14(d) Ba2 3,820,800 3,692,284
- ---------------------------------------------------------------------------------
MetroPCS Communications, Inc.
Term Loan B
7.63%, 11/03/13(d) Ba3 779,961 758,078
- ---------------------------------------------------------------------------------
Term Loan B
7.63%, 11/03/13(d)(h) B1 1,124,805 1,093,248
- ---------------------------------------------------------------------------------
NuVox, Inc.
Term Loan
8.61-8.66%, 05/31/14(d) B2 1,735,725 1,677,144
- ---------------------------------------------------------------------------------
</Table>
<Table>
MOODY'S PRINCIPAL
RATING(A) AMOUNT VALUE
- ---------------------------------------------------------------------------------
<Caption>
WIRELESS TELECOMMUNICATION SERVICES-(CONTINUED)
US TelePacific Communications
First Lien Term Loan
9.36-9.51%, 08/04/11(d) B1 $ 619,378 $ 621,700
- ---------------------------------------------------------------------------------
Second Lien Term Loan
13.61%, 08/04/12(d) B1 58,651 58,944
- ---------------------------------------------------------------------------------
Virgin Mobile USA
Term Loan
10.31%, 11/30/11(d) NR 1,469,252 1,425,174
=================================================================================
21,641,871
=================================================================================
Total Senior Secured Floating Rate
Interests (Cost $337,482,071) 322,051,030
=================================================================================
FLOATING RATE NOTES-1.46%
DRUG RETAIL-0.04%
General Nutrition Center
Sr. Floating Rate Notes
9.85%, 03/15/14
(Acquired 03/07/07; Cost $128,700)(d)(i)(j) Caa1 130,000 123,662
=================================================================================
ELECTRIC MANUFACTURING SERVICES-0.22%
Sanmina-SCI Corp.
Sr. Unsec. Gtd. Notes
8.11%, 06/15/10
(Acquired 06/07/07; Cost $730,000)(d)(i)(j) Ba3 730,000 719,050
=================================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.71%
Qwest Corp.
Sr. Unsec. Floating Rate Global Notes
8.61%, 06/15/13(d)(i) Ba1 2,250,000 2,387,700
=================================================================================
METAL & GLASS CONTAINERS-0.39%
Berry Plastics Holding Corp.
Sr. Sec. Gtd. Sub. Floating Rate Notes
9.24%, 09/15/14(d)(i) B2 1,251,000 1,241,618
=================================================================================
PAPER PACKAGING-0.10%
Verso Paper Holdings, LLC
Series B, Sr. Sec. Gtd. Floating Rate Notes
9.11%, 08/01/14(d)(i) Ba2 325,000 324,188
=================================================================================
Total Floating Rate Notes (Cost
$4,694,531) 4,796,218
=================================================================================
<Caption>
SHARES
DOMESTIC COMMON STOCKS-0.68%
ENVIRONMENTAL & FACILITIES SERVICES-0.68%
Safety-Kleen Holdco, Inc.
(Acquired 12/24/03; Cost
$2,062,077)(h)(j)(k)(l) B1 102,803 2,261,666
=================================================================================
</Table>
22
AIM Floating Rate Fund
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------------
MONEY MARKET FUNDS-1.37%
Liquid Assets Portfolio-Institutional
Class(m) 2,270,293 $ 2,270,293
- ---------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(m) 2,270,293 2,270,293
=================================================================================
Total Money Market Funds (Cost
$4,540,586) 4,540,586
=================================================================================
TOTAL INVESTMENTS-101.00%
(Cost $348,779,265) 333,649,500
=================================================================================
OTHER ASSETS LESS LIABILITIES-(1.00)% (3,305,335)
=================================================================================
NET ASSETS-100.00% $330,344,165
_________________________________________________________________________________
=================================================================================
</Table>
Abbreviations:
<Table>
DIP - Debtor-in-possession
Gtd. - Guaranteed
LOC - Letter of Credit
NR - Security is not rated
REIT - Real Estate Investment Trust
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Syn - Synthetic
Unsec. - Unsecured
</Table>
Notes to Schedule of Investments:
* Industry classifications used in this report are generally according to the
Global Industry Classification Standard, which was developed by and is the
exclusive property and a service mark of Morgan Stanley Capital
International Inc. and Standard & Poor's.
(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, 2007
was $322,056,529, which represented 97.49% of the Fund's Net Assets. See
Note 1A.
(e) All or a portion of this holding is subject to unfunded loan commitments.
See Note 7.
(f) Securities 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, 2007 was $4,841,150, which represented 1.47% of the
Fund's Net Assets. See Note 1A.
(g) This floating rate interest will settle after August 31, 2007, at which time
the interest rate will be determined.
(h) 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, 2007 was
$24,956,777, which represented 7.55% of the Fund's Net Assets.
(i) Interest rate is redetermined periodically. Rate shown is the rate in effect
on August 31, 2007.
(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, 2007 was $3,104,378,
which represented 0.94% of the Fund's Net Assets. Unless otherwise
indicated, these securities are not considered to be illiquid.
(k) Acquired as a part of a bankruptcy restructuring.
(l) Non-income producing security.
(m) 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.
23
AIM Floating Rate Fund
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2007
<Table>
ASSETS:
Investments, at value (Cost $344,238,679) $329,108,914
- -----------------------------------------------------------
Investments in affiliated money market funds
(Cost $4,540,586) 4,540,586
===========================================================
Total investments (Cost $348,779,265) 333,649,500
===========================================================
Receivables for:
Investments sold 21,552,323
- -----------------------------------------------------------
Fund shares sold 1,330,611
- -----------------------------------------------------------
Dividends and Interest 3,446,832
- -----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 21,619
- -----------------------------------------------------------
Other assets 91,039
===========================================================
Total assets 360,091,924
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 27,714,590
- -----------------------------------------------------------
Fund shares reacquired 1,141,556
- -----------------------------------------------------------
Amount due custodian 38,655
- -----------------------------------------------------------
Dividends 539,195
- -----------------------------------------------------------
Trustee deferred compensation and
retirement plans 38,266
- -----------------------------------------------------------
Accrued interest expense and line of credit
fees 23,560
- -----------------------------------------------------------
Accrued distribution fees 96,293
- -----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 3,258
- -----------------------------------------------------------
Accrued transfer agent fees 32,301
- -----------------------------------------------------------
Accrued operating expenses 120,085
===========================================================
Total liabilities 29,747,759
===========================================================
Net assets applicable to shares outstanding $330,344,165
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $399,303,613
- -----------------------------------------------------------
Undistributed net investment income 277,510
- -----------------------------------------------------------
Undistributed net realized gain (loss) (54,107,193)
- -----------------------------------------------------------
Unrealized appreciation (depreciation) (15,129,765)
===========================================================
$330,344,165
___________________________________________________________
===========================================================
NET ASSETS:
Class A $200,449,014
___________________________________________________________
===========================================================
Class C $ 81,478,973
___________________________________________________________
===========================================================
Class R $ 277,902
___________________________________________________________
===========================================================
Institutional Class $ 48,138,276
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 23,132,618
___________________________________________________________
===========================================================
Class C 9,423,179
___________________________________________________________
===========================================================
Class R 32,087
___________________________________________________________
===========================================================
Institutional Class 5,554,296
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 8.67
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $8.67 divided by
97.50%) $ 8.89
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 8.65
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per
share $ 8.66
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per
share $ 8.67
___________________________________________________________
===========================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
24
AIM Floating Rate Fund
STATEMENT OF OPERATIONS
For the year ended August 31, 2007
<Table>
INVESTMENT INCOME:
Interest $ 21,097,554
- --------------------------------------------------------------------------
Dividends from affiliated money market funds 1,002,028
==========================================================================
Total investment income 22,099,582
==========================================================================
EXPENSES:
Advisory fees 1,807,602
- --------------------------------------------------------------------------
Administrative services fees 93,961
- --------------------------------------------------------------------------
Custodian fees 76,332
- --------------------------------------------------------------------------
Distribution fees:
Class A 452,983
- --------------------------------------------------------------------------
Class C 473,362
- --------------------------------------------------------------------------
Class R 919
- --------------------------------------------------------------------------
Interest and line of credit fees 51,831
- --------------------------------------------------------------------------
Transfer agent fees -- A, C and R 237,613
- --------------------------------------------------------------------------
Transfer agent fees -- Institutional 2,273
- --------------------------------------------------------------------------
Trustees' and officer's fees and benefits 23,940
- --------------------------------------------------------------------------
Professional services fees 289,203
- --------------------------------------------------------------------------
Other 318,120
==========================================================================
Total expenses 3,828,139
==========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangement(s) (61,200)
==========================================================================
Net expenses 3,766,939
==========================================================================
Net investment income 18,332,643
==========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from Investment securities (1,576,830)
- --------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (15,183,532)
==========================================================================
Net realized and unrealized gain (loss) (16,760,362)
==========================================================================
Net increase in net assets resulting from operations $ 1,572,281
__________________________________________________________________________
==========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
25
AIM Floating Rate Fund
STATEMENT OF CHANGES IN NET ASSETS
For the year ended August 31, 2007, the period January 1, 2006 through August
31, 2006 and the year ended December 31, 2005
<Table>
<Caption>
AUGUST 31, AUGUST 31, DECEMBER 31,
2007 2006 2005
- ---------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 18,332,643 $ 7,982,199 $ 10,041,089
- ---------------------------------------------------------------------------------------------------------------
Net realized gain (loss) (1,576,830) (2,670,820) (432,027)
- ---------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (15,183,532) 3,108,144 803,050
===============================================================================================================
Net increase in net assets resulting from operations 1,572,281 8,419,523 10,412,112
===============================================================================================================
Distributions to shareholders from net investment income:
Class A (12,010,921) (5,810,039) (8,127,666)
- ---------------------------------------------------------------------------------------------------------------
Class B1 -- (386,936) --
- ---------------------------------------------------------------------------------------------------------------
Class C (3,853,550) (1,705,327) (1,834,764)
- ---------------------------------------------------------------------------------------------------------------
Class R (11,741) (1,139) --
- ---------------------------------------------------------------------------------------------------------------
Institutional Class (2,348,810) (36,471) --
===============================================================================================================
Decrease in net assets resulting from distributions (18,225,022) (7,939,912) (9,962,430)
===============================================================================================================
Share transactions-net:
Class A 54,828,863 (3,625,306) (31,980,239)
- ---------------------------------------------------------------------------------------------------------------
Class C 40,663,685 (2,878,806) 13,028,465
- ---------------------------------------------------------------------------------------------------------------
Class R 212,514 78,252 --
- ---------------------------------------------------------------------------------------------------------------
Institutional Class 26,073,209 24,334,860 --
===============================================================================================================
Net increase (decrease) in net assets resulting from
share transactions 121,778,271 17,909,000 (18,951,774)
===============================================================================================================
Net increase (decrease) in net assets 105,125,530 18,388,611 (18,502,092)
===============================================================================================================
NET ASSETS:
Beginning of year 225,218,635 206,830,024 225,332,116
===============================================================================================================
End of year (including undistributed net investment income
of $277,510, $166,144 and $124,223, respectively) $330,344,165 $225,218,635 $206,830,024
_______________________________________________________________________________________________________________
===============================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
26
AIM Floating Rate Fund
STATEMENT OF CASH FLOWS
For the year ended August 31, 2007
<Table>
CASH PROVIDED BY OPERATING ACTIVITIES:
Net increase in net assets resulting from operations $ 1,572,281
=============================================================================
ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS TO NET
CASH PROVIDED BY (USED IN) OPERATIONS:
Purchases of investments (470,268,249)
- -----------------------------------------------------------------------------
Proceeds from disposition of investments and principal
payments 319,372,297
- -----------------------------------------------------------------------------
Increase in dividends and interest receivable (1,458,533)
- -----------------------------------------------------------------------------
Decrease in other assets 150,998
- -----------------------------------------------------------------------------
Amortization of premiums and accretion of discounts on
investment securities 26,608
- -----------------------------------------------------------------------------
Decrease in accrued expenses and other payables (65,808)
- -----------------------------------------------------------------------------
Unrealized appreciation (depreciation) on investment
securities 15,183,532
- -----------------------------------------------------------------------------
Net realized gain (loss) on investment securities 1,576,830
=============================================================================
Net cash provided by (used in) operating activities (133,910,044)
=============================================================================
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Dividends paid to shareholders (5,280,516)
- -----------------------------------------------------------------------------
Proceeds from shares of beneficial interest sold 228,763,139
- -----------------------------------------------------------------------------
Increase in payable to custodian 38,655
- -----------------------------------------------------------------------------
Disbursements from shares of beneficial interest
reacquired (119,631,161)
=============================================================================
Net cash provided by financing activities 103,890,117
=============================================================================
Net increase (decrease) in cash and cash equivalents (30,019,927)
=============================================================================
Cash and cash equivalents at beginning of period 34,560,513
=============================================================================
Cash and cash equivalents at end of period $ 4,540,586
=============================================================================
NON-CASH FINANCING ACTIVITIES:
Value of shares of beneficial interest issued in
reinvestment of dividends paid to shareholders $ 12,792,721
_____________________________________________________________________________
=============================================================================
Supplemental disclosure of cash flow information:
Cash paid during the year for interest and line of credit
fees was $28,271.
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
27
AIM Floating Rate Fund
NOTES TO FINANCIAL STATEMENTS
August 31, 2007
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, at
which time the Fund became a new series portfolio of the Trust and changed its
fiscal year-end to August 31 (the "Reorganization").
The Fund's investment objectives are 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 may be
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 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 open-end and closed-end registered
investment companies that trade on an exchange are valued at the last sales
price or official closing price as of the close of the customary trading
session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) and unlisted equities 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, including commercial paper,
having 60 days or less to maturity are recorded at amortized cost which
approximates value. Debt securities are subject to interest rate and credit
risks. In addition, all debt securities involve some risk of default with
respect to interest and/or principal payments.
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. If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at
the market quotations. Because trading hours for certain foreign securities
end before the close of the NYSE, closing market quotations may become
unreliable. If between the time trading ends on a particular security and
the close of the customary trading session on the NYSE, events occur that
are significant and may make the closing price unreliable, the Fund may
fair value the security. If 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. Foreign securities may have additional risks including exchange
rate changes, potential for sharply devalued currencies and high inflation,
political and economical upheaval, the relative lack of issuer information,
relatively low market liquidity and the potential lack of strict financial
and accounting controls and standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources
and are valued at the last bid price in the case of equity securities and
in the case of debt obligations, the mean between the last bid and asked
prices.
Securities for which market quotations are not readily available or are
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
28
AIM Floating Rate Fund
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity.
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.
The Fund may receive proceeds from litigation settlements involving Fund
investments. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
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. RISKS INVOLVED IN INVESTING IN THE FUND -- The Fund may invest all or
substantially all of its assets in senior secured floating rate loans,
senior secured debt securities or other securities rated below investment
grade. These securities are generally considered to have speculative
characteristics and are subject to greater risk of loss of principal and
interest than higher rated securities. The value of lower quality debt
securities and floating rate loans can be more volatile due to increased
sensitivity to adverse issuer, political, regulatory, market or economic
developments.
J. 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 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.
29
AIM Floating Rate Fund
K. CASH AND CASH EQUIVALENTS -- For the purposes 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.
L. 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.
M. 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>
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.
Effective July 1, 2007, the advisor has contractually agreed to waive
advisory fees and/or reimburse expenses to the extent necessary to limit total
annual operating expenses (excluding certain items discussed below) of Class A,
Class C, Class R and Institutional Class shares to 1.50%, 2.00%, 1.75% and 1.25%
of average daily net assets, respectively, through at least June 30, 2008. Prior
to July 1, 2007, AIM had 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 C, Class R
and Institutional Class shares to the same expense limitation above. 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 INVESCO PLC ("INVESCO") (formerly "AMVESCAP PLC")
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. In addition, the Fund may also benefit from a one time credit to be used
to offset custodian expenses. These 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, effective July 1, 2007, AIM has contractually agreed, through at
least June 30, 2008, to waive 100% of the advisory fee AIM receives from the
affiliated money market funds on investments by the Fund in such affiliated
money market funds. Prior to July 1, 2007, AIM had voluntarily agreed to waive
25% of the advisory fee AIM receives from the affiliated money market funds on
investments by the Fund in such affiliated money market funds.
For the year ended August 31, 2007, AIM waived advisory fees of $9,864 and
reimbursed Reorganization expenses of $21,050.
At the request of the Trustees of the Trust, INVESCO 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, 2007, INVESCO reimbursed expenses of the Fund in the amount of
$2,011.
The Trust has entered into a master administrative services agreement with
AIM pursuant to which the Fund has agreed to pay AIM for certain administrative
costs incurred in providing accounting services, to the Fund. For the year ended
August 31, 2007, expenses incurred under the agreement are shown in the
Statement of Operations as administrative services fees.
The Trust has entered into a transfer agency and service agreement with AIM
Investment Services, Inc. ("AIS") pursuant to which the Fund has agreed to pay
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
30
AIM Floating Rate Fund
limitations approved by the Trust's Board of Trustees. For the year ended August
31, 2007, expenses incurred under the agreement are shown in the Statement of
Operations as transfer agent fees.
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 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 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, 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. Of
the Plan payments, up to 0.25% of the average daily net assets of each class of
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.
Financial Industry Regulatory Authority ("FINRA"), formerly known as National
Association of Securities Dealers, 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. For the year ended August 31, 2007, expenses incurred under
the Plans are shown in the Statement of Operations as distribution fees.
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, 2007, ADI advised the Fund that it retained $34,423 in
front-end sales commissions from the sale of Class A shares and $10,370, $66,483
and $0 from Class A, Class C and Class R shares, respectively, for CDSC imposed
upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AIS and/or ADI.
NOTE 3--INVESTMENTS IN AFFILIATES
The Fund is permitted, pursuant to 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, 2007. During the period each investment maintained
a $1.00 net asset value, as such there is no realized gain/(loss) and no change
in unrealized appreciation/(depreciation).
<Table>
<Caption>
VALUE PURCHASES PROCEEDS VALUE DIVIDEND
FUND 08/31/06 AT COST FROM SALES 08/31/07 INCOME
- --------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $17,084,220 $103,497,592 $(118,311,519) $2,270,293 $ 501,855
- --------------------------------------------------------------------------------------------------
Premier
Portfolio-Institutional
Class 17,084,220 103,497,592 (118,311,519) 2,270,293 500,173
==================================================================================================
Total
Investments
in
Affiliates $34,168,440 $206,995,184 $(236,623,038) $4,540,586 $1,002,028
__________________________________________________________________________________________________
==================================================================================================
</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, (ii) custodian credits which result
from periodic overnight cash balances at the custodian and (iii) a one time
custodian fee credit used to offset custodian fees. For the year ended August
31, 2007, the Fund received credits from these arrangements, which resulted in
the reduction of the Fund's total expenses of $28,275.
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 certain Trustees and Officers of the Fund. 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, certain 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, 2007, the Fund paid legal fees of $5,647
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 party to a committed line of credit facility administered by
JPMorgan Chase Bank. The Fund may borrow up to the lesser of (i) $50,000,000, 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 0.05% on the unused balance of the committed line.
Prior to October 30, 2006, the commitment fee was 0.06%. For the period March
12, 2007 to April 19, 2007, the maximum amount available under the line of
credit facility was $200,000,000. Prior to March 12, 2007, the maximum amount
available was $250,000,000.
31
AIM Floating Rate Fund
During the year ended August 31, 2007, the Fund had average borrowings for
the 21 days the borrowings were outstanding of $8,695,238, with a weighted
average interest rate of 5.58% and interest expense of $27,902.
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 exceeds 10% of the Fund's total assets. To the extent that the loan is
required to be secured by collateral, the collateral is marked to market daily
to ensure that the market value is at least 102% of the outstanding principal
value of the loan. During the year ended August 31, 2007, 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 contractually agreed upon rate.
NOTE 7--UNFUNDED LOAN COMMITMENTS
As of August 31, 2007, the Fund had unfunded loan commitments of $10,388,893,
which could be extended at the option of the borrower, pursuant to the following
loan agreements with the following borrowers:
<Table>
<Caption>
UNFUNDED
BORROWER COMMITMENTS
- ------------------------------------------------------------------------------------------------------
Advanced Food Delay Draw Term Loan $ 313,333
- ------------------------------------------------------------------------------------------------------
American Cellular, Inc. Delay Draw Term Loan 127,054
- ------------------------------------------------------------------------------------------------------
American Gaming Systems Delay Draw Term Loan 145,874
- ------------------------------------------------------------------------------------------------------
Bally Tech Alliance Term Loan 2,199,375
- ------------------------------------------------------------------------------------------------------
Big West Oil LLC Delay Draw Term Loan 1,559,250
- ------------------------------------------------------------------------------------------------------
Boise Cascade Holdings, LLC Delay Draw Term Loan 892,457
- ------------------------------------------------------------------------------------------------------
Cannery Casino Delay Draw Term Loan 778,159
- ------------------------------------------------------------------------------------------------------
Cellular South Inc. Delay Draw Term Loan 1,212,500
- ------------------------------------------------------------------------------------------------------
Community Health System Delay Draw Term Loan 214,895
- ------------------------------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. (The) Delay Draw Term Loan 104,669
- ------------------------------------------------------------------------------------------------------
Greektown Casino LLC Delay Draw Term Loan 27,050
- ------------------------------------------------------------------------------------------------------
IASIS Healthcare Corp. Delay Draw Term Loan 173,570
- ------------------------------------------------------------------------------------------------------
Las Vegas Sands Venetian Term Loan 514,370
- ------------------------------------------------------------------------------------------------------
NRG Energy Inc. Term Loan 331,325
- ------------------------------------------------------------------------------------------------------
Nuance Communications, Inc. Revolver Loan 114,043
- ------------------------------------------------------------------------------------------------------
Pinnacle Foods Group, Inc. (Aurora Foods) Revolving Loan 960,000
- ------------------------------------------------------------------------------------------------------
Sun Healthcare Group, Inc. Delay Draw Term Loan 30,524
- ------------------------------------------------------------------------------------------------------
Univision Communications Inc. Delay Draw Term Loan 323,417
- ------------------------------------------------------------------------------------------------------
Valassis Communications, Inc. Delay Draw Term Loan 367,028
======================================================================================================
$10,388,893
______________________________________________________________________________________________________
======================================================================================================
</Table>
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the year ended August 31, 2007,
the period January 1, 2006 to August 31, 2006 and the year ended December 31,
2005 was as follows:
<Table>
<Caption>
2007 2006 2005
- -----------------------------------------------------------------------------------------------------
Distributions paid from ordinary income $18,225,022 $7,939,912 $9,962,430
_____________________________________________________________________________________________________
=====================================================================================================
</Table>
32
AIM Floating Rate Fund
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2007, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2007
- ----------------------------------------------------------------------------
Undistributed ordinary income $ 310,663
- ----------------------------------------------------------------------------
Net unrealized appreciation (depreciation) -- investments (15,189,191)
- ----------------------------------------------------------------------------
Temporary book/tax differences (33,153)
- ----------------------------------------------------------------------------
Capital loss carryover (52,486,988)
- ----------------------------------------------------------------------------
Post-October Capital loss deferral (1,560,779)
- ----------------------------------------------------------------------------
Shares of beneficial interest 399,303,613
============================================================================
Total net assets $330,344,165
____________________________________________________________________________
============================================================================
</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 net 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 benefits.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund utilized $43,377 of capital loss carryforward in the current period
to offset net realized capital gain for federal income tax purposes. The Fund
has a capital loss carryforward as of August 31, 2007 which expires as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------
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 $52,486,988
_____________________________________________________________________________
=============================================================================
</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 9--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the year ended August 31, 2007 was $479,995,925 and
$333,295,716, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 416,086
- ------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (15,605,277)
==============================================================================
Net unrealized appreciation (depreciation) of investment
securities $(15,189,191)
______________________________________________________________________________
==============================================================================
Cost of investments for tax purposes is $348,838,691.
</Table>
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of capital loss
carryforward limitations and organizational expenses, on August 31, 2007,
undistributed net investment income was increased by $3,745, undistributed net
realized gain (loss) was increased by $410,053 and shares of beneficial interest
decreased by $413,798. This reclassification had no effect on the net assets of
the Fund.
33
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. Class A shares are sold with a front-end sales charge unless
certain waiver criteria are met. Class C shares are sold with a CDSC. Class R
shares and Institutional Class shares are sold at net asset value. Under certain
circumstances, Class A and Class R shares are subject to a CDSC.
Information presented below for Class A and Class C shares prior to the
Reorganization includes financial data for Closed-End Fund Class B and Class C
shares, respectively.
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED EIGHT MONTHS ENDED YEAR ENDED
AUGUST 31, 2007(A) AUGUST 31, 2006(F) DECEMBER 31, 2005
--------------------------- -------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 15,632,471 $141,742,534 2,829,517 $ 25,667,525 697,277 $ 6,298,550
- ---------------------------------------------------------------------------------------------------------------------------------
Class B1(b)(c) -- -- 153 1,341 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 6,756,210 61,144,110 1,970,507 17,847,704 2,511,732 22,638,124
- ---------------------------------------------------------------------------------------------------------------------------------
Class R(b) 29,874 269,881 8,489 77,109 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class(b) 2,833,402 25,745,014 2,683,496 24,312,527 -- --
=================================================================================================================================
Issued as reinvestment of dividends:
Class A 837,317 7,536,389 382,801 3,406,979 537,184 4,853,113
- ---------------------------------------------------------------------------------------------------------------------------------
Class B1(b)(c) -- -- 27,645 318,656 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 330,246 2,963,539 146,924 1,330,027 162,391 1,462,776
- ---------------------------------------------------------------------------------------------------------------------------------
Class R(b) 1,291 11,601 126 1,139 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class(b) 253,496 2,281,192 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) (10,549,550) (94,450,060) (3,041,753) (27,605,025) (4,782,363) (43,131,902)
- ---------------------------------------------------------------------------------------------------------------------------------
Class B1(b)(c) -- -- (594,690) (5,414,782) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Class C(e) (2,625,854) (23,443,964) (2,436,846) (22,056,537) (1,230,185) (11,072,435)
- ---------------------------------------------------------------------------------------------------------------------------------
Class R(b) (7,693) (68,968) -- 4 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class(b) (218,519) (1,952,997) (1,604) (14,138) -- --
=================================================================================================================================
13,272,691 $121,778,271 1,978,790 $ 17,909,000 (2,103,964) $(18,951,774)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) There is one entity that is record owner of more than 5% of the
outstanding shares of the Fund and owns 13% of the outstanding shares of
the Fund. AIM Distributors has an agreement with this entity to sell
Fund shares. The Fund, AIM and/or AIM affiliates may make payments to
this entity, which are 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 is also beneficially owned.
In addition, 13% of the outstanding shares of the Fund are owned by
affiliated mutual funds. Affiliated mutual funds are mutual funds that
are also advised by AIM.
(b) Class B1, Class R and Institutional Class shares commenced 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 $24,268, $8,877, $25 and $4,611 for
Class A, Class C, Class R and Institutional Class, respectively, for the
year ended August 31, 2007, and $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 from January 1, 2006 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) 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>
34
AIM Floating Rate Fund
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 has assessed the
application of FIN 48 to the Fund and has determined that the adopting of FIN 48
is not expected to have a material impact on the Fund. Management intends for
the Fund to adopt FIN 48 provisions during the fiscal year ending August 31,
2008 as required.
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
YEAR ENDED TO YEAR ENDED DECEMBER 31,
AUGUST 31, AUGUST 31, --------------------------------------------
2007 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.06 $ 9.04 $ 9.02 $ 8.77 $ 8.51 $ 8.64
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.60(a) 0.37(a) 0.43 0.30 0.33 0.38
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (0.39) 0.02 0.01 0.25 0.25 (0.13)
=================================================================================================================================
Total from investment operations 0.21 0.39 0.44 0.55 0.58 0.25
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.60) (0.37) (0.42) (0.29) (0.32) (0.38)
- ---------------------------------------------------------------------------------------------------------------------------------
Return of capital -- -- -- (0.01) -- --
=================================================================================================================================
Total distributions (0.60) (0.37) (0.42) (0.30) (0.32) (0.38)
=================================================================================================================================
Redemption fees added to shares of beneficial
interest 0.00 0.00 -- -- -- --
=================================================================================================================================
Net asset value, end of period $ 8.67 $ 9.06 $ 9.04 $ 9.02 $ 8.77 $ 8.51
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 2.28% 4.32% 5.00% 6.36% 6.94% 2.88%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $200,449 $155,953 $159,206 $190,814 $221,964 $266,260
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets(including
interest expense):
With fee waivers and/or expense reimbursements 1.29%(c) 1.58%(d) 2.04% 1.65% 1.48% 1.49%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.30%(c) 1.86%(d) 2.17% 1.69% 1.48% 1.49%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets (excluding
interest expense):
With fee waivers and/or expense reimbursements 1.27%(c) 1.37%(d) 1.50% 1.50% 1.48% 1.49%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.28%(c) 1.65%(d) 1.63% 1.54% 1.48% 1.49%
=================================================================================================================================
Ratio of net investment income to average net assets 6.65%(c) 6.06%(d) 4.69% 3.31% 3.80% 4.40%
=================================================================================================================================
Ratio of interest expense to average net assets(e) 0.02%(c) 0.21%(d) 0.54% 0.15% --% --%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(f) 117% 54% 56% 82% 72% 56%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</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 based on average daily net assets of $181,193,051.
(d) Annualized.
(e) Ratio includes interest expense and fees on the committed line of
credit.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
35
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 financial
data for Class C shares of the Closed-End Fund.
<Table>
<Caption>
CLASS C
-----------------------------------------------------------------------
JANUARY 1,
2006
YEAR ENDED TO YEAR ENDED DECEMBER 31,
AUGUST 31, AUGUST 31, ----------------------------------------
2007 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.04 $ 9.02 $ 8.99 $ 8.75 $ 8.49 $ 8.62
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.56(a) 0.34(a) 0.40 0.27 0.31 0.36
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.39) 0.02 0.03 0.25 0.25 (0.14)
=================================================================================================================================
Total from investment operations 0.17 0.36 0.43 0.52 0.56 0.22
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.56) (0.34) (0.40) (0.27) (0.30) (0.35)
- ---------------------------------------------------------------------------------------------------------------------------------
Return of capital -- -- -- (0.01) -- --
=================================================================================================================================
Total distributions (0.56) (0.34) (0.40) (0.28) (0.30) (0.35)
=================================================================================================================================
Redemption fees added to shares of beneficial interest 0.00 0.00 -- -- -- --
=================================================================================================================================
Net asset value, end of period $ 8.65 $ 9.04 $ 9.02 $ 8.99 $ 8.75 $ 8.49
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 1.76% 4.05% 4.85% 5.98% 6.68% 2.62%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $81,479 $44,853 $47,624 $34,518 $20,793 $20,421
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets (including
interest expense):
With fee waivers and/or expense reimbursements 1.79%(c) 1.97%(d) 2.29% 1.89% 1.73% 1.74%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.80%(c) 2.36%(d) 2.67% 2.19% 1.98% 1.99%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets (excluding
interest expense):
With fee waivers and/or expense reimbursements 1.77%(c) 1.76%(d) 1.75% 1.74% 1.73% 1.74%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.78%(c) 2.15%(d) 2.13% 2.04% 1.98% 1.99%
=================================================================================================================================
Ratio of net investment income to average net assets 6.15%(c) 5.67%(d) 4.44% 3.07% 3.55% 4.15%
=================================================================================================================================
Ratio of interest expense to average net assets(e) 0.02%(c) 0.21%(d) 0.54% 0.15% --% --%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(f) 117% 54% 56% 82% 72% 56%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</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 based on average daily net assets of $63,115,007.
(d) Annualized.
(e) Ratio includes interest expense and fees on the committed line of
credit.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
36
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 R
-------------------------------
APRIL 13, 2006
(COMMENCEMENT
YEAR ENDED DATE) TO
AUGUST 31, AUGUST 31,
2007 2006
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.06 $ 9.11
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.58 0.21
- ---------------------------------------------------------------------------------------------
Net gains (loss) on securities (both realized and
unrealized) (0.40) (0.05)
=============================================================================================
Total from investment operations 0.18 0.16
=============================================================================================
Less dividends from net investment income (0.58) (0.21)
=============================================================================================
Redemption fees added to shares of beneficial interest 0.00 0.00
=============================================================================================
Net asset value, end of period $ 8.66 $ 9.06
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 1.91% 1.80%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 278 $ 78
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers and/or expense reimbursements 1.54%(c) 1.53%(d)
- ---------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.55%(c) 1.53%(d)
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets (excluding interest
expense):
With fee waivers and/or expense reimbursements 1.52%(c) 1.52%(d)
- ---------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.53%(c) 1.52%(d)
=============================================================================================
Ratio of net investment income to average net assets 6.40%(c) 6.11%(d)
=============================================================================================
Ratio of interest expense to average net assets(e) 0.02%(c) 0.01%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate(f) 117% 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 based on average daily net assets of $183,819.
(d) Annualized.
(e) Ratio includes interest expense and fees on the committed line of
credit.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
37
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>
INSTITUTIONAL CLASS
-------------------------------
APRIL 13, 2006
(COMMENCEMENT
YEAR ENDED DATE) TO
AUGUST 31, AUGUST 31,
2007 2006
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.06 $ 9.11
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.63 0.23
- ---------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.39) (0.05)
=============================================================================================
Total from investment operations 0.24 0.18
=============================================================================================
Less dividends from net investment income (0.63) (0.23)
=============================================================================================
Redemption fees added to shares of beneficial interest 0.00 0.00
=============================================================================================
Net asset value, end of period $ 8.67 $ 9.06
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 2.62% 2.00%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $48,138 $24,335
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers and/or expense reimbursements 0.95%(c) 0.98%(d)
- ---------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.96%(c) 0.98%(d)
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets (excluding interest
expense):
With fee waivers and/or expense reimbursements 0.93%(c) 0.97%(d)
- ---------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.94%(c) 0.97%(d)
=============================================================================================
Ratio of net investment income to average net assets 6.99%(c) 6.66%(d)
=============================================================================================
Ratio of interest expense to average net assets(e) 0.02%(c) 0.01%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate(f) 117% 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 based on average daily net assets of $33,600,739.
(d) Annualized.
(e) Ratio includes interest expense and fees on the committed line of
credit.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
NOTE 14--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
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 A I M Advisors, Inc. ("AIM") and A I M Distributors, Inc.
("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. By agreement with the Commissioner of Securities, AIM's time
to respond to that Order has been indefinitely suspended.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, INVESCO Funds Group,
Inc. ("IFG") (the former investment advisor to certain AIM Funds), 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; 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.
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,
38
AIM Floating Rate Fund
NOTE 14--LEGAL PROCEEDINGS--(CONTINUED)
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 INVESCO PLC'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 INVESCO 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.
39
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, hereafter
referred to as the "Fund") at August 31, 2007, the results of its operations and
cash flows for the year then ended and the changes in its net assets and the
financial highlights for each of the periods indicated, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with 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, 2007 by
correspondence with the custodian and intermediate participants, provide a
reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
October 19, 2007
Houston, Texas
40
AIM Floating Rate Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE together with the amount you invested, to information to compare the ongoing costs
estimate the expenses that you paid over of investing in the Fund and other funds.
As a shareholder of the Fund, you incur the period. Simply divide your account To do so, compare this 5% hypothetical
two types of costs: (1) transaction costs, value by $1,000 (for example, an $8,600 example with the 5% hypothetical examples
which may include sales charges (loads) on account value divided by $1,000 = 8.6), that appear in the shareholder reports of
purchase payments or contingent deferred then multiply the result by the number in the other funds.
sales charges on redemptions, and the table under the heading entitled
redemption fees, if any; and (2) ongoing "Actual Expenses Paid During Period" to Please note that the expenses shown
costs, including management fees; estimate the expenses you paid on your in the table are meant to highlight your
distribution and/or service (12b-1) fees; account during this period. ongoing costs only and do not reflect any
and other Fund expenses. This example is transaction costs, such as sales charges
intended to help you understand your HYPOTHETICAL EXAMPLE FOR COMPARISON (loads) on purchase payments, contingent
ongoing costs (in dollars) of investing in PURPOSES deferred sales charges on redemptions, and
the Fund and to compare these costs with redemption fees, if any. Therefore, the
ongoing costs of investing in other mutual The table below also provides information hypothetical information is useful in
funds. The example is based on an about hypothetical account values and comparing ongoing costs only, and will not
investment of $1,000 invested at the hypothetical expenses based on the Fund's help you determine the relative total
beginning of the period and held for the actual expense ratio and an assumed rate costs of owning different funds. In
entire period March 1, 2007, through of return of 5% per year before expenses, addition, if these transaction costs were
August 31, 2007. which is not the Fund's actual return. included, your costs would have been
higher.
ACTUAL EXPENSES The hypothetical account values and
expenses may not be used to estimate the
The table below provides information about actual ending account balance or expenses
actual account values and actual expenses. you paid for the period. You may use this
You may use the information in 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 (3/1/07) (8/31/07)(1) PERIOD(2) (8/31/07) PERIOD(2) RATIO
A $1,000.00 $981.00 $6.44 $1,018.70 $6.56 1.29%
C 1,000.00 980.60 8.94 1,016.18 9.10 1.79
R 1,000.00 980.80 7.69 1,017.44 7.83 1.54
(1) The actual ending account value is based on the actual total return of the Fund for the period March 1, 2007, through August
31, 2007, 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.
====================================================================================================================================
41
Supplement to Annual Report dated 8/31/07
AIM FLOATING RATE FUND
==========================================
INSTITUTIONAL CLASS SHARES AVERAGE ANNUAL TOTAL RETURNS A REDEMPTION FEE OF 2% WILL BE
For periods ended 8/31/07 IMPOSED ON CERTAIN REDEMPTIONS OR
The following information has been EXCHANGES OUT OF THE FUND WITHIN 30 DAYS
prepared to provide Institutional Class 10 Years 4.49% OF PURCHASE. EXCEPTIONS TO THE REDEMPTION
shareholders with a performance overview 5 Years 5.12 FEE ARE LISTED IN THE FUND'S PROSPECTUS.
specific to their holdings. Institutional 1 Year 2.62
Class shares are offered exclusively to HAD THE ADVISOR NOT WAIVED FEES
institutional investors, including defined AVERAGE ANNUAL TOTAL RETURNS AND/OR REIMBURSED EXPENSES IN THE PAST,
contribution plans that meet certain For periods ended 6/30/07, most recent PERFORMANCE WOULD HAVE BEEN LOWER.
criteria. calendar quarter-end
PLEASE NOTE THAT PAST PERFORMANCE IS
10 Years 4.99% NOT INDICATIVE OF FUTURE RESULTS. MORE
5 Years 5.58 RECENT RETURNS MAY BE MORE OR LESS THAN
1 Year 7.41 THOSE SHOWN. ALL RETURNS ASSUME
========================================== REINVESTMENT OF DISTRIBUTIONS AT NAV.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL
AS OF THE CLOSE OF BUSINESS ON APRIL 13, FLUCTUATE SO YOUR SHARES, WHEN REDEEMED,
2006, THE FUND REORGANIZED FROM A MAY BE WORTH MORE OR LESS THAN THEIR
CLOSED-END FUND TO AN OPEN-END FUND. THE ORIGINAL COST. SEE FULL REPORT FOR
INCEPTION DATE FOR THE OPEN-END FUND'S INFORMATION ON COMPARATIVE BENCHMARKS.
INSTITUTIONAL CLASS SHARES IS APRIL 13, PLEASE CONSULT YOUR FUND PROSPECTUS FOR
2006; RETURNS SINCE THAT DATE ARE MORE INFORMATION. FOR THE MOST CURRENT
HISTORICAL RETURNS. ALL OTHER RETURNS ARE MONTH-END PERFORMANCE, PLEASE CALL
BLENDED RETURNS OF HISTORICAL 800-451-4246 OR VISIT AIMINVESTMENTS.COM.
INSTITUTIONAL CLASS SHARES AND RESTATED
PERFORMANCE OF THE CLOSED-END FUND'S CLASS
B SHARES (FOR THE 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 SHARE
INCEPTION DATE IS MAY 1, 1997.
INSTITUTIONAL CLASS SHARES HAVE NO
SALES CHARGE; THEREFORE, PERFORMANCE IS AT
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 AFRIX
==========================================
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.
[AIM INVESTMENTS LOGO]
AIMINVESTMENTS.COM FLR-INS-1 A I M Distributors, Inc. --REGISTERED TRADEMARK--
Information about your Fund's expenses
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE mate 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
ongoing costs, including management fees value divided by $1,000 = 8.6), then you paid for the period. You may use this
and other Fund expenses. This example is multiply the result by the number in the information to compare the ongoing costs
intended to help you understand your table under the heading entitled "Actual of investing in the Fund and other funds.
ongoing costs (in dollars) of investing in Expenses Paid During Period" to estimate To do so, compare this 5% hypothetical
the Fund and to compare these costs with the expenses you paid on your account example with the 5% hypothetical examples
ongoing costs of investing in other mutual during this period. that appear in the shareholder reports of
funds. The example is based on an the other funds.
investment of $1,000 invested at the HYPOTHETICAL EXAMPLE FOR COMPARISON
beginning of the period and held for the PURPOSES Please note that the expenses shown
entire period March 1, 2007, through in the table are meant to highlight your
August 31, 2007. The table below also provides information ongoing costs only. Therefore, the
about hypothetical account values and hypothetical information is useful in
ACTUAL EXPENSES hypothetical expenses based on the Fund's comparing ongoing costs only, and will not
actual expense ratio and an assumed rate help you determine the relative total
The table below provides information about of return of 5% per year before expenses, costs of owning different funds.
actual account values and actual expenses. which is not the Fund's actual return.
You may use the information in this table,
together with the amount you invested, to
esti-
====================================================================================================================================
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 (3/1/07) (8/31/07)(1) PERIOD(2) (8/31/07) PERIOD(2) RATIO
Institutional $1,000.00 $983.80 $4.80 $1,020.37 $4.89 0.96%
(1) The actual ending account value is based on the actual total return of the Fund for the period March 1, 2007, through August
31, 2007, 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.
====================================================================================================================================
AIMINVESTMENTS.COM FLR-INS-1 A I M Distributors, Inc.
AIM Floating Rate Fund
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
The Board of Trustees (the Board) of AIM The independent Trustees, as factory advisory services in accordance
Counselor Series Trust is required under mentioned above, are assisted in their with the terms of the Fund's advisory
the Investment Company Act of 1940 to annual evaluation of the advisory agreement. In addition, based on their
approve annually the renewal of the AIM agreements by the independent Senior ongoing meetings throughout the year with
Floating Rate Fund (the Fund) investment Officer. One responsibility of the Senior the Fund's portfolio managers, the Board
advisory agreement with A I M Advisors, Officer is to manage the process by which concluded that these individuals are
Inc. (AIM). During contract renewal the AIM Funds' proposed management fees competent and able to continue to carry
meetings held on June 25-27, 2007, the are negotiated during the annual contract out their responsibilities under the
Board as a whole and the disinterested or renewal process to ensure that they are Fund's advisory agreement.
"independent" Trustees, voting separately, negotiated in a manner which is at arms'
approved the continuance of the Fund's length and reasonable. Accordingly, the In determining whether to continue
investment advisory agreement for another Senior Officer must either supervise a the Fund's advisory agreement, the Board
year, effective July 1, 2007. In doing so, competitive bidding process or prepare an considered the prior relationship between
the Board determined that the Fund's independent written evaluation. The Senior AIM and the Fund, as well as the Board's
advisory agreement is in the best Officer has recommended that an knowledge of AIM's operations, and
interests of the Fund and its shareholders independent written evaluation be provided concluded that it was beneficial to
and that the compensation to AIM under the and, upon the direction of the Board, has maintain the current relationship, in
Fund's advisory agreement is fair and prepared an independent written part, because of such knowledge. The Board
reasonable. evaluation. also considered the steps that AIM and its
affiliates have taken over the last
The independent Trustees met During the annual contract renewal several years to improve the quality and
separately during their evaluation of the process, the Board considered the factors efficiency of the services they provide to
Fund's investment advisory agreement with discussed below under the heading "Factors the Funds in the areas of investment
independent legal counsel from whom they and Conclusions and Summary of Independent performance, product line diversification,
received independent legal advice, and the Written Fee Evaluation" in evaluating the distribution, fund operations, shareholder
independent Trustees also received fairness and reasonableness of the Fund's services and compliance. The Board
assistance during their deliberations from advisory agreement at the contract renewal concluded that the quality and efficiency
the independent Senior Officer, a meetings and at their meetings throughout of the services AIM and its affiliates
full-time officer of the AIM Funds who the year as part of their ongoing provide to the AIM Funds in each of these
reports directly to the independent oversight of the Fund. The Fund's advisory areas generally have improved, and support
Trustees. The following discussion more agreement was considered separately, the Board's approval of the continuance of
fully describes the process employed by although the Board also considered the the Fund's advisory agreement.
the Board to evaluate the performance of common interests of all of the AIM Funds
the AIM Funds (including the Fund) in their deliberations. The Board B. FUND PERFORMANCE
throughout the year and, more comprehensively considered all of the
specifically, during the annual contract information provided to them and did not The Board compared the Fund's
renewal meetings. identify any particular factor that was performance during the past one, three and
controlling. Furthermore, each Trustee may five calendar years to the performance of
THE BOARD'S FUND EVALUATION PROCESS have evaluated the information provided funds in the Fund's Lipper peer group that
The Board's Investments Committee has differently from one another and are not managed by AIM, and against the
established three Sub-Committees which are attributed different weight to the various performance of all funds in the S&P/LSTA
responsible for overseeing the management factors. The Trustees recognized that the Leveraged Loan Index. The Board also
of a number of the series portfolios of advisory arrangements and resulting reviewed the methodology used by Lipper to
the AIM Funds. This Sub-Committee advisory fees for the Fund and the other identify the Fund's peers. The Board noted
structure permits the Trustees to focus on AIM Funds are the result of years of that the Fund's performance was above the
the performance of the AIM Funds that have review and negotiation between the median performance of its peers for the
been assigned to them. The Sub-Committees Trustees and AIM, that the Trustees may one, three and five years periods. The
meet throughout the year to review the focus to a greater extent on certain Board noted that the Fund's performance
performance of their assigned funds, and aspects of these arrangements in some was comparable to the performance of the
the Sub-Committees review monthly and years than others, and that the Trustees' Index for the one, three and five year
quarterly comparative performance deliberations and conclusions in a periods. The Board also considered the
information and periodic asset flow data particular year may be based in part on steps AIM has taken over the last several
for their assigned funds. These materials their deliberations and conclusions of years to improve the quality and
are prepared under the direction and these same arrangements throughout the efficiency of the services that AIM
supervision of the independent Senior year and in prior years. provides to the AIM Funds. The Board
Officer. Over the course of each year, the concluded that AIM continues to be
Sub-Committees meet with portfolio FACTORS AND CONCLUSIONS AND SUMMARY OF responsive to the Board's focus on fund
managers for their assigned funds and INDEPENDENT WRITTEN FEE EVALUATION performance. Although the independent
other members of management and review The discussion below serves as a summary written evaluation of the Fund's Senior
with these individuals the performance, of the Senior Officer's independent Officer (discussed below) only considered
investment objective(s), policies, written evaluation, as well as a Fund performance through the most recent
strategies and limitations of these funds. discussion of the material factors and calendar year, the Board also reviewed
related conclusions that formed the basis more recent Fund performance and this
In addition to their meetings for the Board's approval of the Fund's review did not change their conclusions.
throughout the year, the Sub-Committees advisory agreement and sub-advisory
meet at designated contract renewal agreement. Unless otherwise stated, C. ADVISORY FEES AND FEE WAIVERS
meetings each year to conduct an in-depth information set forth below is as of June
review of the performance, fees and 27, 2007 and does not reflect any changes The Board compared the Fund's
expenses of their assigned funds. During that may have occurred since that date, contractual advisory fee rate to the
the contract renewal process, the Trustees including but not limited to changes to contractual advisory fee rates of funds in
receive comparative performance and fee the Fund's performance, advisory fees, the Fund's Lipper peer group that are not
data regarding all the AIM Funds prepared expense limitations and/or fee waivers. managed by AIM, at a common asset level
by an independent company, Lipper, Inc., and as of the end of the past calendar
under the direction and supervision of the I INVESTMENT ADVISORY AGREEMENT year. The Board noted that the Fund's
independent Senior Officer who also advisory fee rate was comparable to the
prepares a separate analysis of this A. NATURE, EXTENT AND QUALITY OF SERVICES median advisory fee rate of its peers. The
information for the Trustees. Each PROVIDED BY AIM Board also reviewed the methodology used
Sub-Committee then makes recommendations by Lipper and noted that the contractual
to the Investments Committee regarding the The Board reviewed the advisory services fee rates shown by Lipper include any
performance, fees and expenses of their provided to the Fund by AIM under the applicable long-term contractual fee
assigned funds. The Investments Committee Fund's advisory agreement, the performance waivers. The Board also compared the
considers each Sub-Committee's of AIM in providing these services, and Fund's contractual advisory fee rate to
recommendations and makes its own the credentials and experience of the the total advisory fees paid by numerous
recommendations regarding the performance, officers and employees of AIM who provide separately managed accounts/-wrap accounts
fees and expenses of the AIM Funds to the these services. The Board's review of the advised by an AIM affiliate. The Board
full Board. Moreover, the Investments qualifications of AIM to provide these noted that the Fund's rate was generally
Committee considers each Sub-Committee's services included the Board's comparable to the rates for the separately
recommendations in making its annual consideration of AIM's portfolio and managed accounts/wrap accounts. The Board
recommendation to the Board whether to product review process, various back considered that management of the
approve the continuance of each AIM Fund's office support functions provided by AIM, separately managed accounts/wrap accounts
investment advisory agreement and and AIM's equity and fixed income trading by the AIM affiliate involves different
sub-advisory agreement, if applicable operations. The Board concluded that the levels of services and different
(advisory agreements), for another year. nature, extent and quality of the advisory operational and regulatory requirements
services provided to the Fund by AIM were than AIM's management of the Fund. The
appropriate and that AIM currently is Board concluded that
providing satis-
(continued)
42
AIM Floating Rate Fund
these differences are appropriately Officer of the Fund, who is independent of under the Fund's sub-advisory agreement,
reflected in the fee structure for the AIM and AIM's affiliates, had prepared an the performance of the Sub-Advisor in
Fund. independent written evaluation to assist providing these services, and the
the Board in determining the credentials and experience of the officers
The Board noted that AIM has reasonableness of the proposed management and employees of the Sub-Advisor who
contractually agreed to waive fees and/or fees of the AIM Funds, including the Fund. provide these services. The Board
limit expenses of the Fund through at The Board noted that they had relied upon concluded that the nature, extent and
least June 30, 2008 in an amount necessary the Senior Officer's written evaluation quality of the services provided by the
to limit total annual operating expenses instead of a competitive bidding process. Sub-Advisor were appropriate and that the
to a specified percentage of average daily In determining whether to continue the Sub-Advisor currently is providing
net assets for each class of the Fund. The Fund's advisory agreement, the Board satisfactory services in accordance with
Board considered the contractual nature of considered the Senior Officer's written the terms of the Fund's sub-advisory
this fee waiver and noted that it remains evaluation. agreement. In addition, based on their
in effect until at least June 30, 2008. ongoing meetings throughout the year with
The Board reviewed the Fund's effective F. COLLATERAL BENEFITS TO AIM AND ITS the Fund's portfolio managers, the Board
advisory fee rate, after taking account of AFFILIATES concluded that these individuals are
this expense limitation, and considered competent and able to continue to carry
the effect this expense limitation would The Board considered various other out their responsibilities under the
have on the Fund's estimated total benefits received by AIM and its Fund's sub-advisory agreement.
expenses. The Board concluded that the affiliates resulting from AIM's
levels of fee waivers/expense limitations relationship with the Fund, including the B. FUND PERFORMANCE
for the Fund were fair and reasonable. fees received by AIM and its affiliates
for their provision of administrative, The Board compared the Fund's performance
After taking account of the Fund's transfer agency and distribution services during the past one, three and five
contractual advisory fee rate, as well as to the Fund. The Board considered the calendar years to the performance of funds
the comparative advisory fee information performance of AIM and its affiliates in in the Fund's Lipper peer group that are
and the expense limitation discussed providing these services and the not managed by AIM, and against the
above, the Board concluded that the Fund's organizational structure employed by AIM performance of all funds in the S&P/LSTA
advisory fees were fair and reasonable. and its affiliates to provide these Leveraged Loan Index. The Board also
services. The Board also considered that reviewed the methodology used by Lipper to
D. ECONOMIES OF SCALE AND BREAKPOINTS these services are provided to the Fund identify the Fund's peers. The Board noted
pursuant to written contracts which are that the Fund's performance was above the
The Board considered the extent to which reviewed and approved on an annual basis median performance of its peers for the
there are economies of scale in AIM's by the Board. The Board concluded that AIM one, three and five years periods. The
provision of advisory services to the and its affiliates were providing these Board noted that the Fund's performance
Fund. The Board also considered whether services in a satisfactory manner and in was comparable to the performance of the
the Fund benefits from such economies of accordance with the terms of their Index for the one, three and five year
scale through contractual breakpoints in contracts, and were qualified to continue periods. The Board also considered the
the Fund's advisory fee schedule or to provide these services to the Fund. steps AIM has taken over the last several
through advisory fee waivers or expense years to improve the quality and
limitations. The Board noted that the The Board considered the benefits efficiency of the services that AIM
Fund's contractual advisory fee schedule realized by AIM as a result of portfolio provides to the AIM Funds. The Board
includes three breakpoints but that, due brokerage transactions executed through concluded that AIM continues to be
to the Fund's asset level at the end of "soft dollar" arrangements. Under these responsive to the Board's focus on fund
the past calendar year and the way in arrangements, portfolio brokerage performance. Although the independent
which the breakpoints have been commissions paid by the Fund and/or other written evaluation of the Fund's Senior
structured, the Fund has yet to benefit funds advised by AIM are used to pay for Officer (discussed below) only considered
from the breakpoints. Based on this research and execution services. The Board Fund performance through the most recent
information, the Board concluded that the noted that soft dollar arrangements shift calendar year, the Board also reviewed
Fund's advisory fees would reflect the payment obligation for the research more recent Fund performance and this
economies of scale at higher asset levels. and executions services from AIM to the review did not change their conclusions.
The Board also noted that the Fund shares funds and therefore may reduce AIM's
directly in economies of scale through expenses. The Board also noted that C. SUB-ADVISORY FEES
lower fees charged by third party service research obtained through soft dollar
providers based on the combined size of arrangements may be used by AIM in making The Board compared the Fund's contractual
all of the AIM Funds and affiliates. investment decisions for the Fund and may sub-advisory fee rate to the total
therefore benefit Fund shareholders. The advisory fees paid by numerous separately
E. PROFITABILITY AND FINANCIAL RESOURCES Board concluded that AIM's soft dollar managed accounts/wrap accounts sub-advised
OF AIM arrangements were appropriate. The Board by the Sub-Advisor with investment
also concluded that, based on their review strategies comparable to those of the
The Board reviewed information from AIM and representations made by AIM, these Fund. The Board noted that the Fund's
concerning the costs of the advisory and arrangements were consistent with sub-advisory fee rate was below the rates
other services that AIM and its affiliates regulatory requirements. for the separately managed accounts/wrap
provide to the Fund and the profitability accounts. The Board considered the
of AIM and its affiliates in providing The Board considered the fact that services to be provided by the Sub-Advisor
these services. The Board also reviewed the Fund's uninvested cash and cash pursuant to the Fund's sub-advisory
information concerning the financial collateral from any securities lending agreement and the services to be provided
condition of AIM and its affiliates. The arrangements may be invested in money by AIM pursuant to the Fund's advisory
Board also reviewed with AIM the market funds advised by AIM pursuant to agreement, as well as the allocation of
methodology used to prepare the procedures approved by the Board. The fees between AIM and the Sub-Advisor
profitability information. The Board Board noted that AIM will receive advisory pursuant to the sub-advisory agreement.
considered the overall profitability of fees from these affiliated money market The Board noted that the sub-advisory fees
AIM, as well as the profitability of AIM funds attributable to such investments, have no direct effect on the Fund or its
in connection with managing the Fund. The although AIM has contractually agreed to shareholders, as they are paid by AIM to
Board noted that AIM continues to operate waive the advisory fees payable by the the Sub-Advisor, and that AIM and the
at a net profit, although increased Fund with respect to its investment of Sub-Advisor are affiliates. After taking
expenses in recent years have reduced the uninvested cash in these affiliated money account of the Fund's contractual
profitability of AIM and its affiliates. market funds through at least June 30, sub-advisory fee rate, as well as the
The Board concluded that the Fund's 2008. The Board considered the contractual comparative fee information and the
advisory fees were fair and reasonable, nature of this fee waiver and noted that expense limitation discussed above, the
and that the level of profits realized by it remains in effect until at least June Board concluded that the Fund's
AIM and its affiliates from providing 30, 2008. The Board concluded that the sub-advisory fees were fair and
services to the Fund was not excessive in Fund's investment of uninvested cash and reasonable.
light of the nature, quality and extent of cash collateral from any securities
the services provided. The Board lending arrangements in the affiliated D. FINANCIAL RESOURCES OF THE SUB-ADVISOR
considered whether AIM is financially money market funds is in the best
sound and has the resources necessary to interests of the Fund and its The Board considered whether the
perform its obligations under the Fund's shareholders. Sub-Advisor is financially sound and has
advisory agreement, and concluded that AIM the resources necessary to perform its
has the financial resources necessary to II SUB-ADVISORY AGREEMENT obligations under the Fund's sub-advisory
fulfill these obligations. A. NATURE, EXTENT AND QUALITY OF agreement, and concluded that the
SERVICES PROVIDED BY THE SUB-ADVISOR Sub-Advisor has the financial resources
F. INDEPENDENT WRITTEN EVALUATION OF THE necessary to fulfill these obligations.
FUND'S SENIOR OFFICER The Board reviewed the services
provided by INVESCO Senior Secured
The Board noted that, upon their Management, Inc. (the Sub-Advisor)
direction, the Senior
43
AIM Floating Rate Fund
TAX INFORMATION
Form 1099-DIV, Form 1042-S and other year-end tax information provide
shareholders with actual calendar year amounts that should be included in their
tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the
Internal Revenue Code or to meet a specific state's requirement.
The Fund designates the following amounts or, if subsequently determined to be
different, the maximum amount allowable for its fiscal year ended August 31,
2007:
FEDERAL AND STATE INCOME TAX
<Table>
Qualified Dividend Income* 0%
Corporate Dividends Received Deduction* 0%
</Table>
* The above percentages are based on ordinary income dividends paid to
shareholders during the Fund's fiscal year.
NON-RESIDENT ALIEN SHAREHOLDERS
<Table>
Qualified Interest Income** 0%
</Table>
** The above percentage is based on income dividends paid to shareholders
during the Fund's fiscal year.
ADDITIONAL NON-RESIDENT ALIEN SHAREHOLDER INFORMATION
The percentages of qualifying assets not subject to the U.S. estate tax for the
fiscal quarters ended November 30, 2006, February 28, 2007, May 31, 2007 and
August 31, 2007 were 2.87%, 9.63%, 2.70%, and 1.72%, respectively.
44
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 77046-1173. Each
trustee oversees 105 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. Each officer serves for a one year term or until their
successors are elected and qualified. Column two below includes length of time
served with predecessor entities, if any.
<Table>
<Caption>
OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIP(S)
POSITION(S) HELD WITH THE OFFICER PRINCIPAL OCCUPATION(S) HELD BY
TRUST SINCE DURING PAST 5 YEARS TRUSTEE/ DIRECTOR
- -------------------------------------------------------------------------------------------------------------------------
Interested Persons
- -------------------------------------------------------------------------------------------------------------------------
Martin L. Flanagan(1) -- 1960 2007 Director, Chief Executive Officer and None
Trustee President, INVESCO PLC (parent of AIM
and a global investment management
firm); Chairman, A I M Advisors, Inc.
(registered investment advisor);
Director, Chairman, Chief Executive
Officer and President, IVZ Inc. (holding
company); INVESCO North American
Holdings, Inc. (holding company);
Chairman and President, INVESCO Group
Services, Inc. (service provider);
Trustee, The AIM Family of Funds(R);
Chairman, Investment Company Institute;
and Member of Executive Board, SMU Cox
School of Business
Formerly: President, Co-Chief Executive
Officer, Co-President, Chief Operating
Officer and Chief Financial Officer,
Franklin Resources, Inc. (global
investment management organization)
- -------------------------------------------------------------------------------------------------------------------------
Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None
Trustee, President and President, A I M Management Group Inc.
Principal (financial services holding company),
Executive Officer AIM Mutual Fund Dealer Inc. (registered
broker dealer), A I M Advisors, Inc.,
AIM Funds Management Inc. d/b/a INVESCO
Enterprise Services (registered
investment advisor and registered
transfer agent) and 1371 Preferred Inc.
(holding company); Director, Chairman,
Chief Executive Officer and President,
A I M Capital Management, Inc.
(registered investment advisor);
Director and President, INVESCO Funds
Group, Inc. (registered investment
advisor and register transfer agent) and
AIM GP Canada Inc. (general partner for
a limited partnership); Director, A I M
Distributors, Inc. (registered broker
dealer); Director and Chairman, AIM
Investment Services, Inc. (registered
transfer agent), Fund Management Company
(registered broker dealer) and INVESCO
Distributors, Inc. (registered broker
dealer); Director, President and
Chairman, IVZ Callco Inc. (holding
company); INVESCO Inc. (holding company)
and AIM Canada Holdings Inc. (holding
company); Director and Chief Executive
Officer, AIM Trimark Corporate Class
Inc. (formerly AIM Trimark Global Fund
Inc.) (corporate mutual fund company)
and AIM Trimark Canada Fund Inc.
(corporate mutual fund company);
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); 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); and Manager,
Powershares Capital Management LLC
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.; President, AIM
Trimark Global Fund Inc. and AIM Trimark
Canada Fund Inc.; and Director, Trimark
Trust (federally regulated Canadian
Trust Company)
- -------------------------------------------------------------------------------------------------------------------------
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); Reich & Tang Funds
(Chairman) (registered investment
company) (7 portfolios); Daily Income
Fund (4 portfolios), California Daily
Tax Free Income Fund, Inc., Connecticut
Daily Tax Free Income Fund, Inc. and New
Jersey Daily Municipal Fund, Inc.,
Annuity and Life Re (Holdings), Ltd.
(insurance company); and Homeowners of
America Holding Corporation (property
casualty company)
Formerly: Director, CompuDyne
Corporation (provider of product and
services to the public security market);
Director, President and Chief Executive
Officer, Volvo Group North America,
Inc.; Senior Vice President, AB Volvo;
Director of various affiliated Volvo
companies; and Director, Magellan
Insurance Company
- -------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 2003 Chief Executive Officer, Twenty First Administaff
Trustee Century Group, Inc. (government affairs
company); and Owner and Chief Executive
Officer, Dos Angelos Ranch, L.P.
(cattle, hunting, corporate
entertainment); and Discovery Global
Education Fund (non-profit)
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company)
- -------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Director, Reich & Tang Funds) (7
Trustee Naftalis and Frankel LLP 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 None
Trustee Formerly: Partner, Deloitte & Touche;
and Director, Mainstay VP Series Funds,
Inc. (25 portfolios)
- -------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Mr. Flanagan was appointed as Trustee of the Trust on February 24, 2007. Mr.
Flanagan is considered an interested person of the Trust because he is an
officer of the advisor to the Trust, and an officer and a director of
INVESCO 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.
45
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Floating Rate Fund
<Table>
<Caption>
OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIP(S)
POSITION(S) HELD WITH THE OFFICER PRINCIPAL OCCUPATION(S) HELD BY TRUSTEE/
TRUST SINCE DURING PAST 5 YEARS DIRECTOR
- -------------------------------------------------------------------------------------------------------------------------
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., A I M Advisors,
Inc. and A I M Capital Management, Inc.;
Director, Vice President and Secretary,
INVESCO Distributors, Inc.; Vice
President and Secretary, AIM Investment
Services, Inc. and Fund Management
Company; Senior Vice President and
Secretary, A I M Distributors, Inc.;
Director and Vice President, INVESCO
Funds Group Inc.; Senior Vice President,
Chief Legal Officer and Secretary of The
AIM Family of Funds--Registered
Trademark--; and Manager, Powershares
Capital Management LLC
Formerly: Vice President, A I M Capital
Management, Inc.; 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, INVESCO PLC; N/A
Vice President 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, INVESCO PLC; Director, INVESCO
Funds Group, Inc.; and Vice President of
The AIM Family of Funds--Registered
Trademark--
Formerly: Director, Senior Vice N/A
President, Secretary and General
Counsel, A I M Management Group Inc. and
A I M Advisors, Inc.; Senior Vice
President, A I M Distributors, Inc.;
Director, General Counsel and Vice
President, Fund Management Company; 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--;
Director and Vice President, INVESCO
Distributors, Inc.; Chief Executive
Officer and President, INVESCO Funds
Group, Inc.; and Senior Vice President
and General Counsel, Liberty Financial
Companies, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Sidney M. Dilgren -- 1961 2004 Vice President, A I M Advisors, Inc. and N/A
Vice President, Principal A I M Capital Management, Inc.; and Vice
Financial Officer and President, Treasurer and Principal
Treasurer Financial Officer of The AIM Family of
Funds--Registered Trademark--
Formerly: Fund Treasurer, A I M
Advisors, Inc.; Senior Vice President,
AIM Investment Services, Inc.; and Vice
President, A I M Distributors, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2003 Head of INVESCO's World Wide Fixed N/A
Vice President Income and Cash Management Group;
Director of Cash Management and Senior
Vice President, A I M Advisors, Inc. and
A I M Capital Management, Inc; Director
and President, Fund Management Company;
Vice President, The AIM Family of
Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust); and
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)
Formerly: Chief Cash Management Officer
and Managing Director, A I M Capital
Management, Inc.; Vice President, A I M
Advisors, Inc. and The AIM Family of
Funds--Registered Trademark-- (AIM
Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free
Investments Trust only)
- -------------------------------------------------------------------------------------------------------------------------
Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance N/A
Anti-Money Laundering Officer, A I M Advisors, Inc., A I M
Compliance Officer Capital Management, Inc., A I M
Distributors, Inc., AIM Investment
Services, Inc., AIM Private Asset
Management, Inc., Fund Management
Company and The AIM Family of
Funds--Registered Trademark--
Formerly: Manager of the Fraud
Prevention Department, AIM Investment
Services, Inc.
- -------------------------------------------------------------------------------------------------------------------------
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. and A I M Capital
Management, Inc.; Chief Compliance
Officer of The AIM Family of
Funds--Registered Trademark--, INVESCO
Global Asset Management (N.A.), Inc.,
(registered investment advisor), INVESCO
Institutional (N.A.), Inc., (registered
investment advisor), INVESCO Private
Capital Investments, Inc. (holding
company), INVESCO Private Capital, Inc.
(registered investment advisor) and
INVESCO Senior Secured Management, Inc.
(registered investment advisor); and
Vice President, A I M Distributors,
Inc., AIM Investment Services, Inc. and
Fund Management Company
Formerly: Vice President, A I M Capital
Management, Inc.; Global Head of Product
Development, AIG-Global Investment
Group, Inc.; and Chief Compliance
Officer and Deputy General Counsel,
AIG-SunAmerica Asset 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
Suite 100 11 Greenway Plaza Inc. LLP Senior
Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana Street Secured
Houston, TX 77046-1173 Suite 100 Suite 2900 Management,
Houston, TX 77046-1173 Houston, TX 77002-5678 Inc.
1166
Avenue
of the
Americas
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
1735 Market Street, 51st & Frankel LLP P.O. Box 4739 Company
Floor 1177 Avenue of the Houston, TX 77210-4739 225 Franklin Street
Philadelphia, PA 19103-7599 Americas Boston, MA 02110-2801
New York, NY 10036-2714
</Table>
46
[EDELIVERY GO PAPERLESS
AIMINVESTMENTS.COM/EDELIVERY
GRAPHIC]
REGISTER FOR EDELIVERY FUND HOLDINGS AND PROXY VOTING INFORMATION
eDelivery is the process of receiving your fund The Fund provides a complete list of its holdings four times in each fiscal
and account information via e-mail. Once year, at the quarter-ends. For the second and fourth quarters, the lists appear
your quarterly statements, tax forms, fund in the Fund's semiannual and annual reports to shareholders. For the first and
reports, and prospectuses are available, we will third quarters, the Fund files the lists with the Securities and Exchange
send you an e-mail notification containing Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is
links to these documents. For security purposes, available at AIMinvestments.com. From our home page, click on Products &
you will need to log in to your account to Performance, then Mutual Funds, then Fund Overview. Select your Fund from the
view your statements and tax forms. drop-down menu and click on Complete Quarterly Holdings. Shareholders can also
look up the Fund's Forms N-Q on the SEC Web site at sec.gov. Copies of the
WHY SIGN UP? Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in
Washington, D.C. You can obtain information on the operation of the Public
Register for eDelivery to: Reference Room, including information about duplicating fee charges, by calling
202-942-8090 or 800-732-0330, or by electronic request at the following e-mail
o save your Fund the cost of printing and address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-09913 and
postage. 333-36074.
o reduce the amount of paper you receive. 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,
o gain access to your documents faster by not upon request, from our Client Services department at 800-959-4246 or on the AIM
waiting for the mail. 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,
o view your documents online anytime at your sec.gov.
convenience.
Information regarding how the Fund voted proxies related to its portfolio
o save the documents to your personal computer securities during the 12 months ended June 30, 2007, is available at our Web
or print them out for your records. 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
HOW DO I SIGN UP? drop-down menu. The information is also available on the SEC Web site, sec.gov.
It's easy. Just follow these simple If used after January 20, 2008, this report must be accompanied by a Fund
steps: Performance & Commentary or by an AIM Quarterly Performance Review for the most
recent quarter-end. Mutual funds and exchange-traded funds distributed by A I M
1. Log in to your account. Distributors, Inc.
2. Click on the "Service Center" tab.
3. Select "Register for eDelivery" and complete
the consent process.
This AIM service is provided by AIM Investment
Services, Inc.
FLR-AR-1 A I M Distributors,Inc.
[AIM INVESTMENTS LOGO]
--REGISTERED TRADEMARK--
AIM MULTI-SECTOR FUND
Annual Report to Shareholders o August 31, 2007
[COVER GLOBE IMAGE]
SECTOR EQUITY
Sectors
Table of Contents
Letters to Shareholders .................. 2
Performance Summary ...................... 4
Management Discussion .................... 4
Long-term Fund Performance ............... 6
Supplemental Information ................. 8
Schedule of Investments .................. 9
Financial Statements ..................... 12
Notes to Financial Statements ............ 15
Financial Highlights ..................... 22
Auditor's Report ......................... 27
Fund Expenses ............................ 28
Approval of Advisory Agreement ........... 29
Tax Information .......................... 31
Trustees and Officers .................... 32
[AIM INVESTMENT SOLUTIONS]
[GRAPHIC] [GRAPHIC]
[DOMESTIC [FIXED
EQUITY] INCOME]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[TARGET [TARGET [DIVERSIFIED
RISK] MATURITY] PORTFOLIOS]
[GRAPHIC] [GRAPHIC]
[SECTOR [INTERNATIONAL/
EQUITY] GLOBAL EQUITY]
[AIM INVESTMENTS LOGO]
- --REGISTERED TRADEMARK--
AIM Multi-Sector Fund
Dear Shareholders of the AIM Family of Funds:
I'm pleased to provide you with this report, which includes a discussion of how your
Fund was managed during the period under review, and what factors affected its
performance. The following pages contain important information that answers questions
[TAYLOR you may have about your investment.
PHOTO]
Despite a significant, albeit short-lived, stock market sell-off in late February
and early March--and a more severe stock market decline that began in July--major stock
Philip Taylor market indexes in the United States and abroad generally performed well for the 12
months ended August 31, 2007. Reasons for their favorable performance included positive
economic growth, particularly overseas; strong corporate profits; and strong
merger-and-acquisition activity, among other factors.
In July, institutional investors on Wall Street as well as individual investors on
Main Street became concerned about growing delinquencies in the subprime mortgage
market. They worried that such delinquencies, together with higher interest rates,
might lead to a "credit crunch" that could reduce the availability of credit or
increase borrowing costs for individuals and corporations, thereby slowing the economy.
In an effort to ensure that the weak housing market and tight credit markets did not
affect the U.S. economy more generally, the U.S. Federal Reserve Board in September cut
its key federal funds target rate for the first time in more than four years.
At AIM Investments --REGISTERED TRADEMARK--, we know that market conditions
change--often suddenly and sometimes dramatically. We can help you deal with market
volatility by offering a broad range of mutual funds, including:
o Domestic, global and international equity funds
o Taxable and tax-exempt fixed-income funds
o Allocation portfolios, with risk/return characteristics to match your needs
o AIM Independence Funds--target-maturity funds that combine retail mutual funds and
PowerShares --REGISTERED TRADEMARK-- exchange-traded funds--with risk/return
characteristics that change as your target retirement date nears
We believe in the value of working with a trusted financial advisor. Your financial
advisor can recommend various AIM funds that, together, can create a portfolio that's
appropriate for your long-term investment goals and risk tolerance regardless of
prevailing short-term market conditions.
In conclusion
Bob Graham, my friend and colleague, recently announced his decision to step down as
vice chair of the AIM Funds board of directors. In 1976, Bob was one of three men who
co-founded AIM. In the three decades since, he has been instrumental in transforming
AIM from a small investment management firm into one of America's most respected mutual
fund companies--and, in 1997, into a global independent retail and institutional
investment manager.
In May, with shareholder approval, AIM Investments' parent company changed its name
from AMVESCAP PLC to INVESCO PLC, uniting our worldwide operations and global expertise
under one new name. While the name of our parent company may be new to you, I can
assure you that our commitment to excellent customer service remains unchanged. Our
highly trained, courteous client service representatives are eager to answer your
questions, provide you with product information or assist you with account
transactions. I encourage you to give us an opportunity to serve you by calling us at
800-959-4246.
All of us at AIM are committed to helping you achieve your financial goals. We work
every day to earn your trust, and we're grateful for the confidence you've placed in
us.
Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
President - AIM Funds
CEO, AIM Investments
October 17, 2007
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 mutual funds represented by AIM
Investments and the PowerShares Exchange-Traded Fund Trust.
2
AIM Multi-Sector Fund
Dear Fellow Shareholders:
In overseeing the management of the AIM family of funds on your behalf, your Board of
Trustees of the AIM Funds continues to focus on improved investment performance,
[CROCKETT reduced shareholder costs, and high ethical standards.
PHOTO]
Your Board welcomes two new members: Marty Flanagan, President and CEO of INVESCO,
AIM's parent company, and Phil Taylor, who was named CEO of AIM Investments
Bruce L. Crockett --REGISTERED TRADEMARK-- in April 2006. Robert Graham, who has given more than 30 years
of leadership to the company and the mutual fund industry since founding AIM in 1976,
has retired, stepping down in the process from his most recent role as vice chairman of
the Board. We thank Bob for his many contributions and wish him a long and happy
future.
Our review of fund performance has shown healthy progress, but the process is
necessarily one of continuous improvement. In general, as of June 30, 2007, we have
seen persistent investment discipline and more consistently good results. While this
statement may not apply to every AIM Fund all the time, as I write this letter, the
overall trend in fund management and performance has been positive.
The investment management talent at AIM has recently been enhanced by the promotion
of Karen Dunn Kelley to Head of INVESCO's Worldwide Fixed Income as well as Director of
AIM Global and Cash Management, with responsibility for all fixed income and money
market funds that serve both institutional and individual investors. Under Karen's
direction, AIM's cash management organization grew to one of the world's largest and
most respected, with top-tier performance. The operations now combined under her charge
represent more than $160 billion in assets, 120 investment professionals, and products
that span the entire yield curve (as of August 31, 2007).
In other news, your Board took a more active role in preparing for "proxy season,"
the period when fund managers must vote the shares held by their funds "for" or
"against" various proposals on the ballots of the issuing companies. Beginning in the
2007 proxy season, AIM implemented new proxy voting policies, developed by management
in conjunction with an ad hoc Board committee, which provided a solid framework for
properly evaluating and executing the many decisions the AIM Funds are required to make
to vote shares.
In general, the AIM Funds voted for proposals that would allow shareholders a
greater role in election of directors, proxy access and "say for pay." The AIM Funds
voted against directors who AIM believed failed to govern well in cases of corporate
mismanagement, such as the backdating of options grants, and against "poison pill" and
"take under" proposals that would favor the financial interests of managers at the
expense of investors in the case of a merger or acquisition. You can view the proxy
votes cast for your fund by going to AIMinvestments.com. Click the "About Us" tab, then
go to "Required Notices" and "Proxy Voting Activity."
Additionally, your Board raised the amount its members are recommended to invest in
the AIM Funds within three years of joining the Board, with the goal of aligning our
interests even more closely with yours.
Furthermore, at our June meeting we renewed the investment advisory contracts
between the AIM Funds and AIM for another year, applying the same rigorous evaluation
process that was enhanced and formalized in 2005. For more information on this process,
please visit AIMinvestments.com. Click on the "Products and Performance" tab and go to
"Investment Advisory Agreement Renewals."
Your Board's ability to best represent your interests depends on our knowledge of
your opinions and concerns.
Please send me an email (bruce@brucecrockett.com) with your thoughts on the following:
1) How important is it to you to hear about your Board's decisions and activities in
these letters?
2) What other information (on overall performance, specific funds, managers, etc.)
would make the letters more meaningful to you?
3) Would you prefer that communication from your Board continue to be delivered in
paper form by regular mail or be sent electronically by email?
If you would prefer to communicate through a quick online survey, please go to
AIMinvestments.com and provide your responses there.
We need to hear from you to do our best job, and I look forward to your responses.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board of Directors
October 17, 2007
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 mutual funds represented by AIM
Investments and the PowerShares Exchange-Traded Fund Trust.
3
AIM Multi-Sector Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
======================================================================================= rebalanced annually at fiscal year-end to
PERFORMANCE SUMMARY return the sectors to their approximate
equal weightings.
For the fiscal year ended August 31, 2007, Class A shares of AIM MultiSector Fund,
excluding applicable sales charges, matched the return of the S&P 500 Index, the Fund's Fund managers consider selling a stock
broad market and style-specific index, which consists of 10 sectors.@ The Fund when they see:
invests at least 80% of its assets approximately equally in only five of these 10
market sectors: energy, financials, health care, technology and "leisure" (represented o Fundamental deterioration in the
by the consumer discretionary sector). Each of these sectors contributed positively to company.
Fund performance over the fiscal year. However, security selection in leisure stocks
and an overweight to energy had the greatest positive impact to performance. o More attractive investment
opportunities.
Your Fund's long-term performance appears later in this report.
o Inability of the company to capitalize
FUND VS. INDEXES on market opportunity.
Total returns, 8/31/06-8/31/07, excluding applicable sales charges. If sales charges o A questionable change in management's
were included, returns would be lower. strategic direction.
Class A Shares 15.13% MARKET CONDITIONS AND YOUR FUND
Class B Shares 14.26
Class C Shares 14.27 The fiscal year was characterized by
S&P 500 Index@ (Broad Market/Style-Specific Index) 15.13 somewhat slower U.S. economic growth than
Lipper Multi-Cap Core Funds Index@ (Peer Group Index) 16.32 we have seen in the last few years.
Despite concerns over a slowing economy,
SOURCE: @LIPPER INC. U.S. equities posted solid returns during
the fiscal year, leaving several major
========================================== ========================================== market indexes near multi-year highs.(1)
Strong global economic growth, favorable
How we invest required to be invested in the five corporate earnings results, and increased
previously mentioned sectors. merger and acquisition activity drove
Your Fund invests the bulk of its assets equity markets, offsetting concerns over
in stocks from five market sectors: Managers use fundamental and slowing U.S. growth, high energy prices
energy, financials, health care, quantitative analysis to identify market and subprime loan concerns late in the
technology and "leisure" (represented by leading companies with competitive period.
the consumer discretionary sector). To positioning and strong anticipated growth Against this backdrop, financials,
provide diversification, Fund assets are relative to their peers. They focus on health care and consumer staples were
divided more or less equally among companies that exhibit strong return on among the weakest performing sectors of
securities of companies from each sector capital, cash flow, sustainable growth and the S&P 500 Index.(1) Conversely, energy,
in which the Fund invests. Fund managers superior business strategies that make telecommunication services and
act independently within sectors. At any them market leaders. materials--mostly sectors the Fund does
given time, 20% of the Fund's assets are not generally invest in--were the best
not In the resulting portfolio, each sector performing sectors.(1) Our strong stock
has approximately 20 to 25 holdings. The selection in leisure stocks and our
Fund is overweight to energy stocks were the main
drivers of Fund performance. Detractors
from Fund perform-
(continued)
========================================== ========================================== ==========================================
PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS*
By sector 1. Integrated Oil & Gas 6.6% 1. Omnicom Group Inc. 2.0%
2. Oil & Gas Equipment & Services 6.0 2. News Corp.-Class A 1.7
Consumer Discretionary 19.9% 3. Semiconductors 5.2 3. Apple Inc. 1.6
Energy 19.3 4. Oil & Gas Exploration & 4. Harrah's Entertainment, Inc. 1.5
Information Technology 18.7 Production 5.0 5. Citigroup Inc. 1.4
Health Care 17.2 5. Life Sciences Tools & Services 4.5 6. Crocs, Inc. 1.4
Financials 16.6 7. Accenture Ltd.-Class A 1.4
Telecommunication Services 1.4 Total Net Assets $855.01 million 8. National Oilwell Varco Inc. 1.3
Consumer Staples 1.3 Total Number of Holdings* 112 9. Fannie Mae 1.3
Utilities 1.1 10. Occidental Petroleum Corp. 1.3
Money Market Funds Plus
Other Assets Less Liabilities 4.5
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.
========================================== ========================================== ==========================================
4
AIM Multi-Sector Fund
ance primarily were a result of stock was among the top performing sectors of Mark D. Greenberg
selection and overweight in health care the S&P 500 Index.(1) However, our stock
and lack of holdings in industrials, selection was a relative detractor from Chartered Financial Analyst, senior port
telecommunication services and materials performance. Ultimately, the Fund's folio manager, is lead manager of AIM
relative to the S&P 500 Index. technology portion underperformed the MultiSector Fund with respect to the
technology portion of the S&P 500 Index. Fund's investments in the leisure sector.
Within consumer discretionary, our Indeed, open source software provider RED He has been associated with AIM and/or its
stock selection fared better than that of HAT was the top detractor from Fund affiliates since 1996. Mr. Greenberg
the S&P 500 Index. Among top contributors performance. Red Hat's weakness during the attended City University in London,
to Fund performance were take over fiscal year was due to increased England, and earned his B.S.B.A. in
targets HARRAH'S ENTERTAINMENT, the competition for its Linux operating system economics with a specialization in finance
nationwide casino operator, and HILTON and legal pressures from MICROSOFT. As a from Marquette University.
HOTELS, the international hotel operator. result of this shift in Red Hat's
During the fiscal year, Harrah's accepted competitive positioning, we sold the Lanny H. Sachnowitz
an offer to go private in the largest stock.
leveraged buyout for a publicly held Senior portfolio manager, is lead manager
casino company. More recently, private Although financials was the weakest of AIM Multi-Sector Fund with respect to
equity group Blackstone agreed to purchase performing sector in the S&P 500, our the Fund's investments in the technology
Hilton Hotels at a price that represented security selection and underweight to this sector. Mr. Sachnowitz joined AIM in 1987.
a 40% premium to Hilton's closing price on sector contributed positively to our He earned a B.S. in finance from the
July 2, 2007.(2) relative performance.(1) For example, we University of Southern California and an
deliberately avoided real estate M.B.A. from the University of Houston.
Increased world demand and high oil investment trusts, which fall under the
prices helped to drive energy stocks, as financials sector and experienced John S. Segner.
energy was the strongest performing sector increased volatility during the fiscal
in the S&P 500 Index during the year.(1) year. Senior portfolio manager, is lead manager
While our overweight to this sector of AIM Multi-Sector Fund with respect to
produced positive net returns, stock Our security selection and overweight the Fund's investments in the energy
selection within energy detracted from to health care negatively impacted sector. He has been associated with AIM
performance. However, NATIONAL OILWELL performance. MEDCO HEALTH SOLUTIONS, in and/or its affiliates since 1997. Mr.
VARCO, the world's largest supplier of particular, detracted from Fund Segner earned his bachelor's degree in
oilfield rigs and rig equipment, was among performance. This pharmacy benefit civil engineering from the University of
top contributors to performance. provider was down mostly due to concerns Alabama and holds an M.B.A. with a
Recently, National Oilwell experienced over health care reimbursements and concentration in finance from The
increases in backlog equipment orders and increased competition in the generic drug University of Texas at Austin.
widening profit margins, and remained arena by Wal-Mart (not a fund holding). We
relatively inexpensive relative to other sold the position in Medco Health Michael J. Simon
energy equipment and services stocks. Solutions as we were concerned over the
change in this company's competitive Chartered Financial Analyst, senior
The Fund's technology holdings also positioning. portfolio manager, is lead manager of AIM
produced mixed results. Our overweight in Multi-Sector Fund with respect to the
this sector was a relative contributor, as We thank you for your continued Fund's investments in the financial
technology investment in AIM Multi-Sector Fund. services sector. He started his Investment
career in 1989 and joined AIM in 2001. Mr.
========================================== Sources: (1) Lipper, Inc; (2) Bloomberg Simon earned a B.A. in finance from Texas
L.P. Christian University and an M.B.A. with
S&P 500 INDEX high honors from the Graduate School of
The views and opinions expressed in Business at the University of Chica go.
By sector, 8/31/06-8/31/07 management's discussion of Fund
performance are those of A I M Advisors, Derek M. Taner
SECTOR WEIGHTING RETURN Inc. These views and opinions are subject
Consumer Discretionary to change at any time based on factors Chartered Financial Analyst, portfolio
("Leisure") 9.78% 14.27% such as market and economic conditions. manager, is lead manager of AIM
Consumer Staples 9.46 8.90 These views and opinions may not be relie MultiSector Fund with respect to the
Energy 11.14 28.74 upon as investment advice or d Fund's investments in the health care
Financials 20.06 3.58 recommendations, or as an offer for a sector. He began his investment career in
Health Care 11.67 7.03 particular security. The information is 1993 and joined AIM in 2005. Mr. Taner
Industrials 11.41 23.49 not a complete analysis of every aspect o earned a B.S. in business administration
Information Technology 16.25 23.60 any market, country, industry, f with an emphasis in accounting and finance
Materials 3.08 26.54 security or the Fund. Statements of fact and an M.B.A. from the Haas School of
Telecommunication are from sources considered reliable, but Business at the University of California
Services 3.71 27.64 A I M Advisors, Inc. makes no (Berkeley).
Utilities 3.42 15.06 representation or warranty as to their
completeness or accuracy. Although Assisted by the Basic Value, Diversified
Sources: (1) AIM Management Group Inc., historical performance is no guarantee of Dividend, Energy/Gold/Utilities, Global
Standard & Poor's future results, these insights may help Health Care, Leisure and Technology Teams
you understand our investment management
(2) Lipper Inc. philosophy.
========================================== See important Fund and index
disclosures later in this report.
5
AIM Multi-Sector Fund
YOUR FUND'S LONG-TERM PERFORMANCE
Past performance cannot guarantee reflect sales charges. Performance of an
comparable future results. index of funds reflects fund expenses and
management fees; performance of a market
The data shown in the chart include index does not. Performance shown in the
reinvested distributions, applicable sales chart and table(s) does not reflect
charges, Fund expenses and management deduction of taxes a shareholder would pay
fees. Results for Class B shares are on Fund distributions or sale of Fund
calculated as if a hypothetical shares.
shareholder had liquidated his entire
investment in the Fund at the close of the Performance of the indexes does not
reporting period and paid the applicable reflect the effects of taxes
contingent deferred sales charges. Index
results include reinvested dividends, but
they do not
====================================================================================================================================
Continued from page 8
Funds category. These funds typically have do not reflect sales charges. ues may differ from the net asset
an average price-to-earnings ratio, Performance of an index of funds values and returns reported in the
price-to-book ratio, and three-year reflects fund expenses; performance of Financial Highlights.
sales-per-share growth value, compared to a market index does not.
the S&P SuperComposite 1500 Index. o Industry classifications used in this
Other information report are generally according to the
o The Fund is not managed to track the Global Industry Classification
performance of any particular index, o The returns shown in the management's Standard, which was developed by and is
including the indexes defined here, and discussion of Fund performance are the exclusive property and a service
consequently, the performance of the based on net asset values calculated mark of Morgan Stanley Capital
Fund may deviate significantly from the for shareholder transactions. Generally International Inc. and Standard &
performance of the index. accepted accounting principles require Poor's.
adjustments to be made to the net
o A direct investment cannot be made in assets of the Fund at period end for o The Chartered Financial
an index. Unless otherwise indicated, financial reporting purposes, and as Analyst--REGISTERED TRADEMARK--
index results include reinvested such, the net asset values for (CFA--REGISTERED TRADEMARK--)
dividends, and they shareholder transactions and the designation is a globally recognized
returns based on those net asset val- standard for measuring the competence
and integrity of investment
professionals.
6
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
INDEX DATA FROM 8/31/02, FUND DATA FROM 9/3/02
AIM MULTI-SECTOR FUND- AIM MULTI-SECTOR FUND- AIM MULTI-SECTOR FUND- LIPPER MULTI-CAP
DATE CLASS A SHARES CLASS B SHARES CLASS C SHARES S&P 500 INDEX(1) CORE FUNDS INDEX(1)
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 15074 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 17421 17928 17926 15303 16049
9/06 17749 18255 18252 15697 16393
10/06 18185 18696 18694 16208 17003
11/06 18778 19289 19287 16516 17406
12/06 18926 19432 19429 16748 17601
1/07 19135 19636 19633 17001 17984
2/07 18878 19357 19354 16669 17747
3/07 19107 19578 19575 16855 17934
4/07 19840 20325 20315 17602 18632
5/07 20630 21116 21113 18215 19329
6/07 20380 20846 20843 17913 19162
7/07 19950 20400 20395 17358 18549
8/07 20067 20286 20479 17618 18669
====================================================================================================================================
SOURCE: (1)LIPPER INC.
AIM Multi-Sector Fund
========================================== ==========================================
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
As of 8/31/07, including applicable As of 6/30/07, the most recent calendar
sales charges quarter-end, including applicable sales
charges
CLASS A SHARES
Inception (9/3/02) 14.97% CLASS A SHARES
1 Year 8.78 Inception (9/3/02) 15.93%
1 Year 10.75
CLASS B SHARES
Inception (9/3/02) 15.22% CLASS B SHARES
1 Year 9.26 Inception (9/3/02) 16.22%
1 Year 11.26
CLASS C SHARES
Inception (9/3/02) 15.44% CLASS C SHARES
1 Year 13.27 Inception (9/3/02) 16.45%
1 Year 15.27
==========================================
==========================================
THE PERFORMANCE DATA QUOTED REPRESENT PAST
PERFORMANCE AND CANNOT GUARANTEE THE PERFORMANCE OF THE FUND'S SHARE
COMPARABLE FUTURE RESULTS; CURRENT CLASSES WILL DIFFER PRIMARILY DUE TO
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE DIFFERENT SALES CHARGE STRUCTURES AND
VISIT AIMINVESTMENTS.COM FOR THE MOST CLASS EXPENSES.
RECENT MONTH-END PERFORMANCE. PERFORMANCE
FIGURES REFLECT REINVESTED DISTRIBUTIONS, HAD THE ADVISOR NOT WAIVED FEES AND/OR
CHANGES IN NET ASSET VALUE AND THE EFFECT REIMBURSED EXPENSES IN THE PAST,
OF THE MAXIMUM SALES CHARGE UNLESS PERFORMANCE WOULD HAVE BEEN LOWER.
OTHERWISE STATED. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU
MAY HAVE A GAIN OR LOSS WHEN YOU SELL
SHARES.
THE TOTAL ANNUAL FUND OPERATING EXPENSE
RATIO SET FORTH IN THE MOST RECENT FUND
PROSPECTUS AS OF THE DATE OF THIS REPORT
FOR CLASS A, CLASS B AND CLASS C SHARES
WAS 1.30%, 2.05% AND 2.05%, RESPECTIVELY.
THE EXPENSE RATIOS PRESENTED ABOVE MAY
VARY FROM THE EXPENSE RATIOS PRESENTED IN
OTHER SECTIONS OF THIS REPORT THAT ARE
BASED ON EXPENSES INCURRED DURING THE
PERIOD COVERED BY THIS REPORT.
CLASS A SHARE PERFORMANCE REFLECTS THE
MAXIMUM 5.50% SALES CHARGE, AND CLASS B
AND CLASS C SHARE PERFORMANCE REFLECTS THE
APPLICABLE CONTINGENT DEFERRED SALES
CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
CDSC ON CLASS B SHARES DECLINES FROM 5%
BEGINNING AT THE TIME OF PURCHASE TO 0% AT
THE BEGINNING OF THE SEVENTH YEAR. THE ==========================================
CDSC ON CLASS C SHARES IS 1% FOR THE FIRST FOR A DISCUSSION OF THE RISKS OF INVESTING
YEAR AFTER PURCHASE. IN YOUR FUND AND INDEXES USED IN THIS
REPORT, PLEASE TURN THE PAGE.
==========================================
7
AIM Multi-Sector Fund
AIM MULTI-SECTOR FUND'S INVESTMENT OBJECTIVE IS CAPITAL GROWTH.
o Unless otherwise stated, information presented in this report is as of August 31, 2007, and is based on total net assets.
o Unless otherwise noted, all data in this report are from A I M Management Group Inc.
About share classes advances and technological innovations, rapid obsolescence, which may lower the
which can cause Fund shares to rise and value of the securities of the
o Class B shares are not available as an fall more than the value of shares of a companies in this sector.
investment for retirement plans fund that invests more broadly.
maintained pursuant to Section 401 of o Start-up companies or earlier stage
the Internal Revenue Code, including o The Fund's investments in different, companies, such as venture capital
401(k) plans, money purchase pension independently managed sectors creates companies, generally have limited
plans and profit sharing plans. Plans allocation risk, which is the risk that operating histories, no present market
that had existing accounts invested in the allocation of investments among the for their technologies or products and
Class B shares prior to September 30, sectors may have a more significant no history of earnings or financial
2003, will continue to be allowed to effect on the Fund's net asset value services.
make additional purchases. when one of the sectors is performing
more poorly than the other(s). Active o The businesses in which the Fund
PRINCIPAL RISKS OF INVESTING IN THE FUND rebalancing of the Fund among the invests may be adversely affected by
sectors may result in increased foreign government, federal or state
o The businesses in which the Fund transaction costs. regulations on energy production,
invests may be adversely affected by distribution and sale. Short-term
foreign government, federal or state o The leisure sector depends on consumer fluctuations in commodity prices may
regulations on energy production, discretionary spending, which generally influence Fund returns and increase
distribution and sale. Short-term falls during economic downturns. price fluctuations of the Fund's
fluctuations in commodity prices may shares.
influence Fund returns and increase o There is no guarantee that the
price fluctuations of the Fund's investment techniques and risk analyses o The Fund's investments in different,
shares. used by the Fund's portfolio managers independently managed sectors creates
will produce the desired results. allocation risk, which is the risk that
o Prices of equity securities change in the allocation of investments among the
response to many factors including the o Small-and mid-capitalization companies sectors may have a more significant
historical and prospective earnings of tend to be more vulnerable to adverse effect on the Fund's net asset value
the issuer, the value of its assets, developments and more volatile than when one of the sectors is performing
general economic conditions, interest larger companies. Investments in these more poorly than the other(s). Active
rates, investor perceptions and market sized companies may involve special rebalancing of the Fund among the
liquidity. risks, including those associated with sectors may result in increased
dependence on a small management group, transaction costs.
o The financial services sector is little or no operating history, little
subject to extensive government or no track record of success, limited o Foreign securities have additional
regulation, which may change product lines, less publicly available risks, including exchange rate changes,
frequently. The profitability of information, illiquidity, restricted political and economic upheaval, the
businesses in this sector depends resale or less frequent trading. relative lack of information,
heavily on the availability and cost of relatively low market liquidity, and
money and may fluctuate significantly o The prices of securities held by the the potential lack of strict financial
in response to changes to interest Fund may decline in response to market and accounting controls and standards.
rates and general economic conditions. risks.
ABOUT INDEXES USED IN THIS REPORT
o The value of the Fund's shares is o The Fund's investments are concentrated
particularly vulnerable to factors in a comparatively narrow segment of o The S&P 500--REGISTERED TRADEMARK--
affecting the health care industry, the economy. Consequently, the Fund may INDEX is a market
such as substantial government tend to be more volatile than other capitalization-weighted index covering
regulation that may impact the demand mutual funds, and the value of the all major areas of the U.S. economy. It
for products and services offered by Fund's investments may tend to rise and is not the 500 largest companies, but
health care companies. Also, the fall more rapidly. rather the most widely held 500
products and services offered by health companies chosen with respect to market
care companies may be subject to rapid o Many of the products and services size, liquidity, and their industry.
obsolescence caused by scientific offered in technology-related
industries are subject to o The LIPPER MULTI-CAP CORE FUNDS INDEX
is an equally weighted representation
======================================================================================= of the largest funds in the Lipper
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, Multi-Cap Core
WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES.
INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Continued on page 6
=======================================================================================
==========================================
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE FUND NASDAQ SYMBOLS
AIMINVESTMENTS.COM Class A Shares IAMSX
Class B Shares IBMSX
Class C Shares ICMSX
==========================================
8
AIM Multi-Sector Fund
SCHEDULE OF INVESTMENTS(A)
August 31, 2007
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------
DOMESTIC COMMON STOCKS-85.34%
ADVERTISING-1.95%
Omnicom Group Inc. 327,889 $ 16,699,387
========================================================================
APPAREL RETAIL-0.95%
Abercrombie & Fitch Co.-Class A 103,757 8,165,676
========================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-0.67%
Polo Ralph Lauren Corp. 75,761 5,722,986
========================================================================
APPLICATION SOFTWARE-2.11%
Adobe Systems Inc.(b) 240,018 10,260,769
- ------------------------------------------------------------------------
Amdocs Ltd.(b) 220,025 7,766,883
========================================================================
18,027,652
========================================================================
ASSET MANAGEMENT & CUSTODY BANKS-1.84%
Bank of New York Mellon Corp. (The) 158,679 6,415,392
- ------------------------------------------------------------------------
Federated Investors, Inc.-Class B 163,547 5,742,135
- ------------------------------------------------------------------------
State Street Corp. 57,600 3,534,336
========================================================================
15,691,863
========================================================================
BIOTECHNOLOGY-4.23%
Acadia Pharmaceuticals Inc.(b)(c) 159,214 2,291,089
- ------------------------------------------------------------------------
Amgen Inc.(b) 128,440 6,436,128
- ------------------------------------------------------------------------
BioMarin Pharmaceutical Inc.(b)(c) 177,404 3,810,638
- ------------------------------------------------------------------------
Celgene Corp.(b) 109,051 7,002,165
- ------------------------------------------------------------------------
Genzyme Corp.(b) 76,185 4,754,706
- ------------------------------------------------------------------------
Gilead Sciences, Inc.(b) 163,384 5,942,276
- ------------------------------------------------------------------------
United Therapeutics Corp.(b) 86,565 5,928,837
========================================================================
36,165,839
========================================================================
BROADCASTING & CABLE TV-2.07%
Cablevision Systems Corp.-Class A(b) 237,963 7,983,659
- ------------------------------------------------------------------------
Citadel Broadcasting Corp. 1 2
- ------------------------------------------------------------------------
Comcast Corp.-Class A(b) 372,048 9,706,732
========================================================================
17,690,393
========================================================================
CASINOS & GAMING-2.25%
Harrah's Entertainment, Inc. 145,680 12,494,974
- ------------------------------------------------------------------------
MGM Mirage(b) 80,797 6,784,524
========================================================================
19,279,498
========================================================================
COMMUNICATIONS EQUIPMENT-2.06%
Cisco Systems, Inc.(b) 355,031 11,332,590
- ------------------------------------------------------------------------
F5 Networks, Inc.(b) 178,756 6,251,097
========================================================================
17,583,687
========================================================================
COMPUTER HARDWARE-2.66%
Apple Inc.(b) 101,174 14,010,575
- ------------------------------------------------------------------------
Hewlett-Packard Co. 176,868 8,728,436
========================================================================
22,739,011
========================================================================
</Table>
<Table>
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
COMPUTER STORAGE & PERIPHERALS-1.71%
EMC Corp.(b) 504,804 $ 9,924,447
- ------------------------------------------------------------------------
Network Appliance, Inc.(b) 168,321 4,689,423
========================================================================
14,613,870
========================================================================
CONSUMER FINANCE-1.07%
Capital One Financial Corp. 141,014 9,117,965
========================================================================
DATA PROCESSING & OUTSOURCED SERVICES-0.96%
VeriFone Holdings, Inc.(b)(c) 223,223 8,250,322
========================================================================
DIVERSIFIED BANKS-1.11%
U.S. Bancorp 133,893 4,331,439
- ------------------------------------------------------------------------
Wachovia Corp. 106,086 5,196,092
========================================================================
9,527,531
========================================================================
FOOTWEAR-1.38%
Crocs, Inc.(b) 199,958 11,805,520
========================================================================
GAS UTILITIES-1.11%
Questar Corp. 190,000 9,494,300
========================================================================
HEALTH CARE EQUIPMENT-1.81%
Medtronic, Inc. 149,906 7,921,033
- ------------------------------------------------------------------------
Respironics, Inc.(b) 159,119 7,547,014
========================================================================
15,468,047
========================================================================
HEALTH CARE SERVICES-1.65%
DaVita, Inc.(b) 120,160 6,911,603
- ------------------------------------------------------------------------
Express Scripts, Inc.(b) 131,190 7,182,653
========================================================================
14,094,256
========================================================================
HEALTH CARE TECHNOLOGY-0.52%
Vital Images, Inc.(b)(c) 240,571 4,460,186
========================================================================
HOME IMPROVEMENT RETAIL-0.67%
Home Depot, Inc. (The) 149,555 5,729,452
========================================================================
HOTELS, RESORTS & CRUISE LINES-3.73%
Carnival Corp.(c)(d) 139,330 6,352,055
- ------------------------------------------------------------------------
Hilton Hotels Corp. 213,331 9,802,560
- ------------------------------------------------------------------------
Marriott International, Inc.-Class A 136,220 6,050,892
- ------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. 159,002 9,718,202
========================================================================
31,923,709
========================================================================
INSURANCE BROKERS-1.93%
Aon Corp. 116,800 5,059,776
- ------------------------------------------------------------------------
Marsh & McLennan Cos., Inc. 258,087 6,878,019
- ------------------------------------------------------------------------
National Financial Partners Corp.(c) 93,708 4,581,384
========================================================================
16,519,179
========================================================================
</Table>
9
AIM Multi-Sector Fund
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------
INTEGRATED OIL & GAS-4.42%
Exxon Mobil Corp. 80,000 $ 6,858,400
- ------------------------------------------------------------------------
Hess Corp. 160,000 9,819,200
- ------------------------------------------------------------------------
Murphy Oil Corp. 160,000 9,750,400
- ------------------------------------------------------------------------
Occidental Petroleum Corp. 200,000 11,338,000
========================================================================
37,766,000
========================================================================
INTERNET SOFTWARE & SERVICES-1.87%
Digital River, Inc.(b)(c) 149,027 6,908,892
- ------------------------------------------------------------------------
Google Inc.-Class A(b) 17,544 9,039,546
========================================================================
15,948,438
========================================================================
INVESTMENT BANKING & BROKERAGE-1.26%
Merrill Lynch & Co., Inc. 79,100 5,829,670
- ------------------------------------------------------------------------
Morgan Stanley 79,600 4,964,652
========================================================================
10,794,322
========================================================================
IT CONSULTING & OTHER SERVICES-1.37%
Accenture Ltd.-Class A 284,288 11,715,508
========================================================================
LIFE & HEALTH INSURANCE-0.57%
StanCorp Financial Group, Inc. 102,584 4,831,706
========================================================================
LIFE SCIENCES TOOLS & SERVICES-3.78%
Applera Corp.-Applied Biosystems Group 210,487 6,653,494
- ------------------------------------------------------------------------
Invitrogen Corp.(b) 83,517 6,505,974
- ------------------------------------------------------------------------
Millipore Corp.(b)(c) 103,949 7,243,167
- ------------------------------------------------------------------------
Pharmaceutical Product Development, Inc. 223,541 7,830,641
- ------------------------------------------------------------------------
Thermo Fisher Scientific, Inc.(b) 74,904 4,062,044
========================================================================
32,295,320
========================================================================
MANAGED HEALTH CARE-0.71%
UnitedHealth Group Inc. 122,220 6,112,222
========================================================================
MOVIES & ENTERTAINMENT-3.36%
News Corp.-Class A 719,969 14,564,973
- ------------------------------------------------------------------------
Time Warner Inc. 342,350 6,497,803
- ------------------------------------------------------------------------
Walt Disney Co. (The) 227,377 7,639,867
========================================================================
28,702,643
========================================================================
MULTI-LINE INSURANCE-0.48%
Hartford Financial Services Group, Inc. (The) 45,900 4,080,969
========================================================================
OIL & GAS DRILLING-0.82%
Hercules Offshore, Inc.(b) 275,000 6,996,000
========================================================================
OIL & GAS EQUIPMENT & SERVICES-6.03%
Baker Hughes Inc. 123,000 10,314,780
- ------------------------------------------------------------------------
Cameron International Corp.(b)(c) 120,000 9,812,400
- ------------------------------------------------------------------------
Grant Prideco, Inc.(b) 180,000 9,954,000
- ------------------------------------------------------------------------
National-Oilwell Varco Inc.(b) 90,000 11,520,000
- ------------------------------------------------------------------------
Weatherford International Ltd.(b) 170,000 9,924,600
========================================================================
51,525,780
========================================================================
</Table>
<Table>
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
OIL & GAS EXPLORATION & PRODUCTION-4.96%
Apache Corp. 115,000 $ 8,898,700
- ------------------------------------------------------------------------
Bill Barrett Corp.(b) 275,000 9,691,000
- ------------------------------------------------------------------------
Devon Energy Corp. 85,000 6,401,350
- ------------------------------------------------------------------------
Plains Exploration & Production Co.(b) 250,000 9,382,500
- ------------------------------------------------------------------------
Southwestern Energy Co.(b) 215,000 7,995,850
========================================================================
42,369,400
========================================================================
OIL & GAS STORAGE & TRANSPORTATION-0.87%
Williams Cos., Inc. (The) 240,000 7,440,000
========================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-2.80%
Bank of America Corp. 77,482 3,926,788
- ------------------------------------------------------------------------
Citigroup Inc. 252,669 11,845,123
- ------------------------------------------------------------------------
JPMorgan Chase & Co. 183,776 8,181,707
========================================================================
23,953,618
========================================================================
PHARMACEUTICALS-1.00%
Johnson & Johnson 70,308 4,344,331
- ------------------------------------------------------------------------
Wyeth 90,812 4,204,596
========================================================================
8,548,927
========================================================================
PROPERTY & CASUALTY INSURANCE-1.40%
ACE Ltd. 99,000 5,718,240
- ------------------------------------------------------------------------
MBIA Inc. 103,832 6,229,920
========================================================================
11,948,160
========================================================================
REGIONAL BANKS-1.57%
Fifth Third Bancorp 186,466 6,654,972
- ------------------------------------------------------------------------
Popular, Inc.(c) 282,500 3,486,050
- ------------------------------------------------------------------------
SunTrust Banks, Inc. 41,900 3,299,625
========================================================================
13,440,647
========================================================================
SEMICONDUCTORS-4.23%
Broadcom Corp.-Class A(b) 193,441 6,673,715
- ------------------------------------------------------------------------
Integrated Device Technology, Inc.(b) 409,120 6,398,637
- ------------------------------------------------------------------------
Intersil Corp.-Class A 261,491 8,712,880
- ------------------------------------------------------------------------
National Semiconductor Corp. 266,015 7,001,515
- ------------------------------------------------------------------------
Texas Instruments Inc. 215,806 7,389,197
========================================================================
36,175,944
========================================================================
SPECIALIZED CONSUMER SERVICES-0.71%
H&R Block, Inc. 307,633 6,103,439
========================================================================
SPECIALTY STORES-0.67%
PetSmart, Inc. 166,354 5,772,484
========================================================================
SYSTEMS SOFTWARE-0.78%
Microsoft Corp. 231,109 6,639,762
========================================================================
</Table>
10
AIM Multi-Sector Fund
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE-2.56%
Fannie Mae 175,500 $ 11,514,555
- ------------------------------------------------------------------------
Freddie Mac 57,700 3,554,897
- ------------------------------------------------------------------------
Hudson City Bancorp, Inc. 481,275 6,843,730
========================================================================
21,913,182
========================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.68%
American Tower Corp.-Class A(b) 146,968 5,822,872
========================================================================
Total Domestic Common Stocks (Cost
$633,995,562) 729,667,672
========================================================================
FOREIGN COMMON STOCKS & OTHER EQUITY
INTERESTS-10.13%
BRAZIL-1.72%
Companhia de Bebidas das Americas-ADR
(Brewers) 71,160 4,810,416
- ------------------------------------------------------------------------
Petroleo Brasileiro S.A.-ADR (Integrated Oil
& Gas) 160,000 9,894,400
========================================================================
14,704,816
========================================================================
CANADA-0.72%
MDS Inc. (Life Sciences Tools & Services) 317,550 6,211,791
========================================================================
FRANCE-2.28%
Accor S.A. (Hotels, Resorts & Cruise
Lines)(e) 73,455 6,327,361
- ------------------------------------------------------------------------
Sanofi-Aventis-ADR (Pharmaceuticals) 101,844 4,170,512
========================================================================
Total S.A.-ADR (Integrated Oil & Gas) 120,000 9,010,800
========================================================================
19,508,673
========================================================================
MEXICO-0.71%
America Movil S.A.B. de C.V.-Series L-ADR
(Wireless Telecommunication Services) 100,147 6,054,888
========================================================================
</Table>
<Table>
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
SWITZERLAND-2.57%
Novartis A.G.-ADR (Pharmaceuticals) 131,247 $ 6,910,155
- ------------------------------------------------------------------------
Roche Holding A.G. (Pharmaceuticals)(e) 40,692 7,082,156
- ------------------------------------------------------------------------
STMicroelectronics N.V.-New York Shares
(Semiconductors) 457,733 7,969,131
========================================================================
21,961,442
========================================================================
UNITED KINGDOM-2.13%
WPP Group PLC (Advertising)(e) 433,465 6,175,453
- ------------------------------------------------------------------------
Smith & Nephew PLC (Health Care Equipment)(e) 486,392 5,741,374
- ------------------------------------------------------------------------
Diageo PLC (Distillers & Vintners) 294,327 6,285,743
========================================================================
18,202,570
========================================================================
Total Foreign Common Stocks & Other
Equity Interests (Cost $78,889,352) 86,644,180
========================================================================
MONEY MARKET FUNDS-4.07%
Liquid Assets Portfolio-Institutional
Class(f) 17,412,231 17,412,231
- ------------------------------------------------------------------------
Premier Portfolio-Institutional Class(f) 17,412,232 17,412,232
========================================================================
Total Money Market Funds (Cost
$34,824,463) 34,824,463
========================================================================
TOTAL INVESTMENTS (excluding investments
purchased with cash collateral from
securities on loan)-99.54% (Cost
$747,709,377) 851,136,315
========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES ON LOAN
MONEY MARKET FUNDS-2.41%
Liquid Assets Portfolio-Institutional
Class(f)(g)(Cost $20,497,360) 20,497,360 20,497,360
========================================================================
TOTAL INVESTMENTS-101.95% (Cost $768,206,737) 871,633,675
========================================================================
OTHER ASSETS LESS LIABILITIES-(1.95)% (16,618,901)
========================================================================
NET ASSETS-100.00% $855,014,774
________________________________________________________________________
========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
</Table>
Notes to Schedule of Investments:
(a) Industry classifications used in this report are generally according to
the Global Industry Classification Standard, which was developed by and
is the exclusive property and a service mark of Morgan Stanley Capital
International Inc. and Standard & Poor's.
(b) Non-income producing security.
(c) All or a portion of this security was out on loan at August 31, 2007.
(d) Each unit represents one common share and one trust share.
(e) 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, 2007 was
$25,326,344, which represented 2.96% of the Fund's Net Assets. See Note
1A.
(f) The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
(g) The security has been segregated to satisfy the commitment to return the
cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 8.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
11
AIM Multi-Sector Fund
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2007
<Table>
ASSETS:
Investments, at value (Cost $712,884,914)* $816,311,852
- -----------------------------------------------------------
Investments in affiliated money market funds
(Cost $55,321,823) 55,321,823
===========================================================
Total investments (Cost $768,206,737) 871,633,675
===========================================================
Foreign currencies, at value (Cost $62,265) 62,520
- -----------------------------------------------------------
Receivables for:
Investments sold 3,835,625
- -----------------------------------------------------------
Fund shares sold 1,236,714
- -----------------------------------------------------------
Dividends 766,832
- -----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 15,659
- -----------------------------------------------------------
Other assets 55,213
===========================================================
Total assets 877,606,238
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Fund shares reacquired 1,495,489
- -----------------------------------------------------------
Trustee deferred compensation and
retirement plans 30,264
- -----------------------------------------------------------
Collateral upon return of securities loaned 20,497,360
- -----------------------------------------------------------
Accrued distribution fees 258,792
- -----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 3,833
- -----------------------------------------------------------
Accrued transfer agent fees 214,184
- -----------------------------------------------------------
Accrued operating expenses 91,542
===========================================================
Total liabilities 22,591,464
===========================================================
Net assets applicable to shares outstanding $855,014,774
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $726,718,242
- -----------------------------------------------------------
Undistributed net investment income (loss) (25,370)
- -----------------------------------------------------------
Undistributed net realized gain 24,893,420
- -----------------------------------------------------------
Unrealized appreciation 103,428,482
===========================================================
$855,014,774
___________________________________________________________
===========================================================
NET ASSETS:
Class A $508,895,334
___________________________________________________________
===========================================================
Class B $ 87,468,771
___________________________________________________________
===========================================================
Class C $ 94,759,829
___________________________________________________________
===========================================================
Institutional Class $163,890,840
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 17,592,097
___________________________________________________________
===========================================================
Class B 3,126,879
___________________________________________________________
===========================================================
Class C 3,389,096
___________________________________________________________
===========================================================
Institutional Class 5,584,378
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 28.93
- -----------------------------------------------------------
Offering price per share
(Net asset value of $28.93 divided by
94.50%) $ 30.61
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 27.97
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 27.96
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per
share $ 29.35
___________________________________________________________
===========================================================
</Table>
* At August 31, 2007, securities with an aggregate value of $20,276,323 were on
loan to brokers.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12
AIM Multi-Sector Fund
STATEMENT OF OPERATIONS
For the year ended August 31, 2007
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $221,067) $ 5,935,425
- -------------------------------------------------------------------------
Dividends from affiliated money market funds (includes
securities lending income of $23,882) 1,933,356
=========================================================================
Total investment income 7,868,781
=========================================================================
EXPENSES:
Advisory fees 5,367,461
- -------------------------------------------------------------------------
Administrative services fees 198,326
- -------------------------------------------------------------------------
Custodian fees 61,556
- -------------------------------------------------------------------------
Distribution fees:
Class A 1,082,353
- -------------------------------------------------------------------------
Class B 854,138
- -------------------------------------------------------------------------
Class C 855,585
- -------------------------------------------------------------------------
Transfer agent fees -- A, B and C 1,267,619
- -------------------------------------------------------------------------
Transfer agent fees -- Institutional 3,192
- -------------------------------------------------------------------------
Trustees' and officer's fees and benefits 36,080
- -------------------------------------------------------------------------
Other 402,959
=========================================================================
Total expenses 10,129,269
=========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangement(s) (524,804)
=========================================================================
Net expenses 9,604,465
=========================================================================
Net investment income (loss) (1,735,684)
=========================================================================
REALIZED AND UNREALIZED GAIN FROM:
Net realized gain from:
Investment securities 30,436,170
- -------------------------------------------------------------------------
Foreign currencies 52,279
=========================================================================
30,488,449
=========================================================================
Change in net unrealized appreciation of:
Investment securities 64,126,464
- -------------------------------------------------------------------------
Foreign currencies 216
=========================================================================
64,126,680
=========================================================================
Net realized and unrealized gain 94,615,129
=========================================================================
Net increase in net assets resulting from operations $92,879,445
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13
AIM Multi-Sector Fund
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 2007 and 2006
<Table>
<Caption>
2007 2006
- ------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (1,735,684) $ 2,145,456
- ------------------------------------------------------------------------------------------
Net realized gain 30,488,449 7,643,162
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation 64,126,680 10,826,801
==========================================================================================
Net increase in net assets resulting from operations 92,879,445 20,615,419
==========================================================================================
Distributions to shareholders from net investment income:
Class A (1,695,277) --
- ------------------------------------------------------------------------------------------
Class B (55,140) --
- ------------------------------------------------------------------------------------------
Class C (52,629) --
- ------------------------------------------------------------------------------------------
Institutional Class (656,187) --
==========================================================================================
Total distributions from net investment income (2,459,233) --
==========================================================================================
Distributions to shareholders from net realized gains:
Class A (4,621,137) (3,186,127)
- ------------------------------------------------------------------------------------------
Class B (1,009,431) (821,953)
- ------------------------------------------------------------------------------------------
Class C (963,469) (845,546)
- ------------------------------------------------------------------------------------------
Institutional Class (1,192,461) (1,117,667)
==========================================================================================
Total distributions from net realized gains (7,786,498) (5,971,293)
==========================================================================================
Decrease in net assets resulting from distributions (10,245,731) (5,971,293)
==========================================================================================
Share transactions-net:
Class A 149,253,465 203,974,385
- ------------------------------------------------------------------------------------------
Class B 3,527,478 47,352,800
- ------------------------------------------------------------------------------------------
Class C 15,542,400 37,876,401
- ------------------------------------------------------------------------------------------
Institutional Class 61,816,728 38,110,541
==========================================================================================
Net increase in net assets resulting from share
transactions 230,140,071 327,314,127
==========================================================================================
Net increase in net assets 312,773,785 341,958,253
==========================================================================================
NET ASSETS:
Beginning of year 542,240,989 200,282,736
==========================================================================================
End of year (including undistributed net investment income
(loss) of $(25,370) and $1,509,552, respectively) $855,014,774 $542,240,989
__________________________________________________________________________________________
==========================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
14
AIM Multi-Sector Fund
NOTES TO FINANCIAL STATEMENTS
August 31, 2007
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 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 or official closing price as of the close of
the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on that
day. Securities traded in the over-the-counter market are valued based on
prices furnished by independent pricing services or market makers. When
such securities are valued by an independent pricing service they may be
considered fair valued. 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 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 open-end and closed-end registered
investment companies that trade on an exchange are valued at the last sales
price or official closing price as of the close of the customary trading
session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) and unlisted equities 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, including commercial paper,
having 60 days or less to maturity are recorded at amortized cost which
approximates value. Debt securities are subject to interest rate and credit
risks. In addition, all debt securities involve some risk of default with
respect to interest and/or principal payments.
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. If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at
the market quotations. Because trading hours for certain foreign securities
end before the close of the NYSE, closing market quotations may become
unreliable. If between the time trading ends on a particular security and
the close of the customary trading session on the NYSE, events occur that
are significant and may make the closing price unreliable, the Fund may
fair value the security. If 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. Foreign securities may have additional risks including exchange
rate changes, potential for sharply devalued currencies and high inflation,
political and economical upheaval, the relative lack of issuer information,
relatively low market liquidity and the potential lack of strict financial
and accounting controls and standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources
and are valued at the last bid price in the case of equity securities and
in the case of debt obligations, the mean between the last bid and asked
prices.
Securities for which market quotations are not readily available or are
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity.
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.
15
AIM Multi-Sector Fund
The Fund may receive proceeds from litigation settlements involving Fund
investments. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
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
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.
The Fund may invest in foreign securities which may be subject to foreign
taxes on income, gains on investments or currency repatriation, a portion
of which may be recoverable. Taxes are accrued based on the Fund's current
interpretation of tax regulations and rates that exist in the foreign
markets in which the Fund invests.
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.
Fluctuations in the value of these contracts are recorded as unrealized
16
AIM Multi-Sector Fund
appreciation (depreciation) until the contracts are closed. When these
contracts are closed, realized gains (losses) are recorded. 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. 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.
L. 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 an advisory fee at the annual rate of 0.75% of the Fund's average
daily net assets.
Effective July 1, 2007, the Trustees approved a reduced contractual advisory
fee schedule for the Fund. Prior to July 1, 2007 AIM had contractually waived
advisory fees to the same reduced advisory fee schedule. Under the terms of the
investment advisory agreement, the Fund will pay an advisory fee to AIM based on
the following annual rates of the Fund's average daily net assets:
<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>
Effective July 1, 2007, AIM has contractually agreed through at least June
30, 2008, to waive 100% of the advisory fee AIM receives from the affiliated
money market funds on investments by the Fund in such affiliated money market
funds (excluding investments made in affiliated money market funds with cash
collateral from securities loaned by the fund). Prior to July 1, 2007, AIM had
voluntarily agreed to waive 25% of the advisory fee AIM receives from the
affiliated money market funds on investments by the Fund in such affiliated
money market funds.
For the year ended August 31, 2007, AIM waived advisory fees of $477,344.
At the request of the Trustees of the Trust, INVESCO PLC ("INVESCO")
(formerly "AMVESCAP PLC") 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, 2007, INVESCO reimbursed
expenses of the Fund in the amount of $1,644.
The Trust has entered into a master administrative services agreement with
AIM pursuant to which the Fund has agreed to pay AIM for certain administrative
costs incurred in providing accounting services, to the Fund. For the year ended
August 31, 2007, expenses incurred under the agreement are shown in the
Statement of Operations as administrative services fees.
The Trust has entered into a transfer agency and service agreement with AIM
Investment Services, Inc. ("AIS") pursuant to which the Fund has agreed to pay
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, 2007,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
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 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 and Class C shares (collectively the "Plans"). The Fund, pursuant to the
Plans, pays ADI compensation at the annual rate of 0.25% of
17
AIM Multi-Sector Fund
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 Plan payments, up to
0.25% of the average daily net assets of each class of 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. Financial Industry
Regulatory Authority ("FINRA"), formerly known as National Association of
Securities Dealers, 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.
For the year ended August 31, 2007, expenses incurred under the Plans are shown
in the Statement of Operations as distribution fees.
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, 2007, ADI advised the Fund that it retained $227,761 in
front-end sales commissions from the sale of Class A shares and $9,492, $94,202
and $16,219 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 procedures approved by the Board of Trustees,
to invest daily available cash balances and cash collateral from securities
lending transactions in affiliated money market funds. The Fund and the money
market funds below have the same investment advisor and therefore, are
considered to be affiliated. The tables below show the transactions in and
earnings from investments in affiliated money market funds for the year ended
August 31, 2007. During the period each investment maintained a $1.00 net asset
value, as such there is no realized gain/(loss) and no change in unrealized
appreciation/(depreciation).
INVESTMENTS OF DAILY AVAILABLE CASH BALANCES:
<Table>
<Caption>
VALUE PURCHASES PROCEEDS VALUE DIVIDEND
FUND 08/31/06 AT COST FROM SALES 08/31/07 INCOME
- --------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $13,412,206 $184,172,236 $(180,172,211) $17,412,231 $ 958,178
- --------------------------------------------------------------------------------------------------
Premier
Portfolio-Institutional
Class 13,412,206 184,172,236 (180,172,210) 17,412,232 951,296
==================================================================================================
Subtotal $26,824,412 $368,344,472 $(360,344,421) $34,824,463 $1,909,474
==================================================================================================
</Table>
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
<Table>
<Caption>
VALUE PURCHASES PROCEEDS VALUE DIVIDEND
FUND 08/31/06 AT COST FROM SALES 08/31/07 INCOME*
- --------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $ -- $189,104,469 $(168,607,109) $20,497,360 $ 23,882
==================================================================================================
Total
Investments
in
Affiliates $26,824,412 $557,448,941 $(528,951,530) $55,321,823 $1,933,356
__________________________________________________________________________________________________
==================================================================================================
</Table>
* Net of compensation to counterparties.
NOTE 4--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
The Fund is permitted to purchase or sell securities from or to certain other
AIM Funds under specified conditions outlined in procedures adopted by the Board
of Trustees of the Trust. The procedures have been designed to ensure that any
purchase or sale of securities by the Fund from or to another fund or portfolio
that is or could be considered an affiliate by virtue of having a common
investment advisor (or affiliated investment advisors), common Trustees and/or
common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined
under the procedures, each transaction is effected at the current market price.
Pursuant to these procedures, for the year ended August 31, 2007, the Fund
engaged in securities purchases of $7,610,904.
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, (ii) custodian credits which result
from periodic overnight cash balances at the custodian and (iii) a one time
custodian fee credit used to offset custodian fees. For the year ended August
31, 2007, the Fund received credits from these arrangements, which resulted in
the reduction of the Fund's total expenses of $45,816.
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 certain Trustees and Officers of the Fund. 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, certain 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
18
AIM Multi-Sector Fund
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, 2007, the Fund paid legal fees of $7,354
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 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
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 party to an uncommitted unsecured revolving credit facility
with State Street Bank and Trust Company ("SSB"). The Fund may borrow up to the
lesser of (i) $125,000,000, or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
credit facility can borrow on a first come, first served basis. Principal on
each loan outstanding shall bear interest at the bid rate quoted by SSB at the
time of the request for the loan.
During the year ended August 31, 2007, 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 contractually agreed upon rate.
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, 2007, securities with an aggregate value of $20,276,323 were
on loan to brokers. The loans were secured by cash collateral of $20,497,360
received by the Fund and subsequently invested in an affiliated money market
fund. For the year ended August 31, 2007, the Fund received dividends on cash
collateral investments of $23,882 for securities lending transactions, which are
net of compensation to counterparties.
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, 2007 and
2006 was as follows:
<Table>
<Caption>
2007 2006
- ---------------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 4,759,869 $4,352,572
- ---------------------------------------------------------------------------------------
Long-term capital gain 5,485,862 1,618,721
=======================================================================================
Total distributions $10,245,731 $5,971,293
_______________________________________________________________________________________
=======================================================================================
</Table>
19
AIM Multi-Sector Fund
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2007, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2007
- ----------------------------------------------------------------------------
Undistributed ordinary income $ 5,463,433
- ----------------------------------------------------------------------------
Undistributed long-term gain 19,983,992
- ----------------------------------------------------------------------------
Net unrealized appreciation -- investments 102,874,477
- ----------------------------------------------------------------------------
Temporary book/tax differences (25,370)
- ----------------------------------------------------------------------------
Shares of beneficial interest 726,718,242
============================================================================
Total net assets $855,014,774
____________________________________________________________________________
============================================================================
</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 net unrealized
appreciation difference is attributable primarily to losses on wash sales. The
tax-basis net unrealized appreciation on investments amount includes
appreciation on foreign currencies of $1,543.
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 benefits.
The Fund does not have a capital loss carryforward as of August 31, 2007.
NOTE 10--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the year ended August 31, 2007 was $514,882,464 and
$307,457,920, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $121,262,874
- ------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (18,389,940)
==============================================================================
Net unrealized appreciation of investment securities $102,872,934
______________________________________________________________________________
==============================================================================
Cost of investments for tax purposes is $768,760,741.
</Table>
NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of foreign currency
transactions, net operating losses and certain passive foreign investment
companies, on August 31, 2007, undistributed net investment income (loss) was
increased by $2,659,995, undistributed net realized gain was decreased by
$2,479,997 and shares of beneficial interest decreased by $179,998. This
reclassification had no effect on the net assets of the Fund.
20
AIM Multi-Sector 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 unless certain waiver criteria are met and under certain circumstances
load waiver shares may be subject to a CDSC. Class B shares and Class C shares
are sold with a CDSC. Institutional Class shares are sold at net asset value.
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 YEAR ENDED
AUGUST 31, 2007(a) AUGUST 31, 2006
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 8,857,649 $ 246,329,341 10,296,828 $259,682,290
- -----------------------------------------------------------------------------------------------------------------------
Class B 945,270 25,228,289 2,363,470 58,008,950
- -----------------------------------------------------------------------------------------------------------------------
Class C 1,173,932 31,617,738 1,874,620 46,076,992
- -----------------------------------------------------------------------------------------------------------------------
Institutional Class 2,336,012 65,700,462 1,550,202 39,426,481
=======================================================================================================================
Issued as reinvestment of dividends:
Class A 214,975 5,918,251 121,050 3,010,501
- -----------------------------------------------------------------------------------------------------------------------
Class B 36,506 976,912 31,284 759,565
- -----------------------------------------------------------------------------------------------------------------------
Class C 35,743 956,140 32,770 795,338
- -----------------------------------------------------------------------------------------------------------------------
Institutional Class 66,387 1,848,212 44,564 1,117,667
=======================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 192,233 5,408,042 106,333 2,692,879
- -----------------------------------------------------------------------------------------------------------------------
Class B (198,289) (5,408,042) (109,249) (2,692,879)
=======================================================================================================================
Reacquired:
Class A (3,874,344) (108,402,169) (2,450,588) (61,411,285)
- -----------------------------------------------------------------------------------------------------------------------
Class B (641,576) (17,269,681) (355,856) (8,722,836)
- -----------------------------------------------------------------------------------------------------------------------
Class C (629,576) (17,031,478) (366,892) (8,995,929)
- -----------------------------------------------------------------------------------------------------------------------
Institutional Class (191,475) (5,731,946) (96,663) (2,433,607)
=======================================================================================================================
8,323,447 $ 230,140,071 13,041,873 $327,314,127
_______________________________________________________________________________________________________________________
=======================================================================================================================
</Table>
(a) There are two entities that are each record owners of more than 5% of
the outstanding shares of the Fund and in the aggregate they own 31% 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.
In addition, 18% 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 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 has assessed the
application of FIN 48 to the Fund and has determined that the adopting of FIN 48
is not expected to have a material impact on the Fund. Management intends for
the Fund to adopt FIN 48 provisions during the fiscal year ending August 31,
2008 as required.
21
AIM Multi-Sector 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
---------------------------------------------------------------------------
SEPTEMBER 3, 2002
(COMMENCEMENT
YEAR ENDED AUGUST 31, DATE) TO
------------------------------------------------------ AUGUST 31,
2007 2006 2005 2004 2003
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 25.53 $ 24.16 $ 19.37 $ 18.32 $ 15.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) 0.17(a) (0.05)(a)(b) (0.12) (0.13)(a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and
unrealized) 3.88 1.69 5.40 1.84 3.45
=================================================================================================================================
Total from investment operations 3.84 1.86 5.35 1.72 3.32
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.12) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.32) (0.49) (0.56) (0.67) --
=================================================================================================================================
Total distributions (0.44) (0.49) (0.56) (0.67) --
=================================================================================================================================
Net asset value, end of period $ 28.93 $ 25.53 $ 24.16 $ 19.37 $ 18.32
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) 15.13% 7.74% 28.01% 9.47% 22.13%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $508,895 $311,492 $99,721 $38,578 $25,935
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.23%(d) 1.30% 1.53% 1.85% 1.97%(e)
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.29%(d) 1.37% 1.59% 1.88% 1.97%(e)
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.15)%(d) 0.67% (0.25)%(b) (0.73)% (0.85)%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(f) 44% 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 $432,941,298.
(e) Annualized.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
22
AIM Multi-Sector Fund
NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS B
-------------------------------------------------------------------------
SEPTEMBER 3, 2002
(COMMENCEMENT
YEAR ENDED AUGUST 31, DATE) TO
---------------------------------------------------- AUGUST 31,
2007 2006 2005 2004 2003
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 24.79 $ 23.64 $ 19.09 $ 18.19 $15.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.24)(a) (0.02)(a) (0.20)(a)(b) (0.24) (0.07)(a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and
unrealized) 3.76 1.66 5.31 1.81 3.26
=================================================================================================================================
Total from investment operations 3.52 1.64 5.11 1.57 3.19
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.02) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.32) (0.49) (0.56) (0.67) --
=================================================================================================================================
Total distributions (0.34) (0.49) (0.56) (0.67) --
=================================================================================================================================
Net asset value, end of period $ 27.97 $ 24.79 $ 23.64 $ 19.09 $18.19
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) 14.26% 6.97% 27.15% 8.70% 21.27%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $87,469 $73,997 $24,953 $11,233 $8,278
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.98%(d) 2.05% 2.20% 2.56% 2.76(e)
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.04%(d) 2.12% 2.26% 2.59% 2.85(e)
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.90)%(d) (0.08)% (0.92)%(b) (1.44)% (1.63)(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(f) 44% 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 $85,413,797.
(e) Annualized.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
23
AIM Multi-Sector Fund
NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS C
-------------------------------------------------------------------------
SEPTEMBER 3, 2002
(COMMENCEMENT
YEAR ENDED AUGUST 31, DATE) TO
---------------------------------------------------- AUGUST 31,
2007 2006 2005 2004 2003
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 24.78 $ 23.63 $ 19.09 $ 18.17 $ 15.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.24)(a) (0.02)(a) (0.20)(a)(b) (0.22) (0.04)(a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and
unrealized) 3.76 1.66 5.30 1.81 3.21
=================================================================================================================================
Total from investment operations 3.52 1.64 5.10 1.59 3.17
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.02) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.32) (0.49) (0.56) (0.67) --
=================================================================================================================================
Total distributions (0.34) (0.49) (0.56) (0.67) --
=================================================================================================================================
Net asset value, end of period $ 27.96 $ 24.78 $ 23.63 $ 19.09 $ 18.17
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) 14.27% 6.97% 27.10% 8.82% 21.13%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $94,760 $69,604 $29,981 $16,424 $10,302
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.98%(d) 2.05% 2.20% 2.52% 2.76%(e)
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.04%(d) 2.12% 2.26% 2.56% 2.84%(e)
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.90)%(d) (0.08)% (0.92)%(b) (1.40)% (1.64)%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(f) 44% 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 $85,558,504.
(e) Annualized.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
24
AIM Multi-Sector Fund
NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
-----------------------------------------------------------
MAY 3, 2004
(COMMENCEMENT
YEAR ENDED AUGUST 31, DATE) TO
------------------------------------ AUGUST 31,
2007 2006 2005 2004
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 25.83 $ 24.33 $ 19.41 $19.94
- -------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.09(a) 0.29(a) 0.06(a)(b) (0.01)
- -------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 3.93 1.70 5.42 (0.52)
=========================================================================================================================
Total from investment operations 4.02 1.99 5.48 (0.53)
=========================================================================================================================
Less distributions:
Dividends from net investment income (0.18) -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.32) (0.49) (0.56) --
=========================================================================================================================
Total distributions (0.50) (0.49) (0.56) --
=========================================================================================================================
Net asset value, end of period $ 29.35 $ 25.83 $ 24.33 $19.41
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(c) 15.67% 8.23% 28.64% (2.66)%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $163,891 $87,147 $45,628 $7,023
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.77%(d) 0.83% 1.02% 1.28%(e)
- -------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.83%(d) 0.90% 1.08% 1.28%(e)
=========================================================================================================================
Ratio of net investment income (loss) to average net assets 0.31%(d) 1.14% 0.26%(b) (0.16)%(e)
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate(f) 44% 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 $127,939,530.
(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.
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 A I M Advisors, Inc. ("AIM") and A I M
Distributors, Inc. ("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. By agreement with the Commissioner of
Securities, AIM's time to respond to that Order has been indefinitely suspended.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, INVESCO Funds Group,
Inc. ("IFG") (the former investment advisor to certain AIM Funds), 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; and
- that certain AIM Funds inadequately employed fair value pricing.
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.
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
25
AIM Multi-Sector Fund
NOTE 15--LEGAL PROCEEDINGS--(CONTINUED)
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 INVESCO PLC'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 INVESCO 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.
26
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 and 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, 2007, 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, 2007 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
October 19, 2007
Houston, Texas
27
AIM Multi-Sector Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE together with the amount you invested, to information to compare the ongoing costs
estimate the expenses that you paid over of investing in the Fund and other funds.
As a shareholder of the Fund, you incur the period. Simply divide your account To do so, compare this 5% hypothetical
two types of costs: (1) transaction costs, value by $1,000 (for example, an $8,600 example with the 5% hypothetical examples
which may include sales charges (loads) on account value divided by $1,000 = 8.6), that appear in the shareholder reports of
purchase payments or contingent deferred then multiply the result by the number in the other funds.
sales charges on redemptions, and the table under the heading entitled
redemption fees, if any; and (2) ongoing "Actual Expenses Paid During Period" to Please note that the expenses shown in
costs, including management fees; estimate the expenses you paid on your the table are meant to highlight your
distribution and/or service (12b-1) fees; account during this period. ongoing costs only and do not reflect any
and other Fund expenses. This example is transaction costs, such as sales charges
intended to help you understand your HYPOTHETICAL EXAMPLE FOR COMPARISON (loads) on purchase payments, contingent
ongoing costs (in dollars) of investing in PURPOSES deferred sales charges on redemptions, and
the Fund and to compare these costs with redemption fees, if any. Therefore, the
ongoing costs of investing in other mutual The table below also provides information hypothetical information is useful in
funds. The example is based on an about hypothetical account values and comparing ongoing costs only, and will not
investment of $1,000 invested at the hypothetical expenses based on the Fund's help you determine the relative total
beginning of the period and held for the actual expense ratio and an assumed rate costs of owning different funds. In
entire period March 1, 2007, through of return of 5% per year before expenses, addition, if these transaction costs were
August 31, 2007. which is not the Fund's actual return. included, your costs would have been
higher.
ACTUAL EXPENSES The hypothetical account values and
expenses may not be used to estimate the
The table below provides information about actual ending account balance or expenses
actual account values and actual expenses. you paid for the period. You may use this
You may use the information in 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 (3/01/07) (8/31/07)(1) PERIOD(2) (8/31/07) PERIOD(2) RATIO
A $1,000.00 $1,062.40 $6.29 $1,019.11 $6.16 1.21%
B 1,000.00 1,058.30 10.17 1,015.32 9.96 1.96
C 1,000.00 1,058.30 10.17 1,015.32 9.96 1.96
(1) The actual ending account value is based on the actual total return of the Fund for the period March 1, 2007, through August 31,
2007, 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.
====================================================================================================================================
28
Supplement to Annual Report dated 8/31/07
AIM MULTI-SECTOR FUND
==========================================
INSTITUTIONAL CLASS SHARES AVERAGE ANNUAL TOTAL RETURNS PLEASE NOTE THAT PAST PERFORMANCE IS
For periods ended 8/31/07 NOT INDICATIVE OF FUTURE RESULTS. MORE
The following information has been RECENT RETURNS MAY BE MORE OR LESS THAN
prepared to provide Institutional Class Inception (5/3/04) 14.46% THOSE SHOWN. ALL RETURNS ASSUME
shareholders with a performance overview 1 Year 15.62 REINVESTMENT OF DISTRIBUTIONS AT NAV.
specific to their holdings. Institutional INVESTMENT RETURN AND PRINCIPAL VALUE WILL
Class shares are offered exclusively to AVERAGE ANNUAL TOTAL RETURNS FLUCTUATE SO YOUR SHARES, WHEN REDEEMED,
institutional investors, including defined For periods ended 6/30/07, most MAY BE WORTH MORE OR LESS THAN THEIR
contribution plans that meet certain recent calendar quarter-end ORIGINAL COST. SEE FULL REPORT FOR
criteria. INFORMATION ON COMPARATIVE BENCHMARKS.
Inception (5/3/04) 15.85% PLEASE CONSULT YOUR FUND PROSPECTUS FOR
1 Year 17.71 MORE INFORMATION. FOR THE MOST CURRENT
========================================== MONTH-END PERFORMANCE, PLEASE CALL
800-451-4246 OR VISIT AIMINVESTMENTS.COM.
INSTITUTIONAL CLASS SHARES HAVE NO SALES
CHARGE; THEREFORE, PERFORMANCE IS AT NET HAD THE ADVISOR NOT WAIVED FEES AND/OR
ASSET VALUE (NAV). PERFORMANCE OF REIMBURSED EXPENSES IN THE PAST,
INSTITUTIONAL CLASS SHARES WILL DIFFER PERFORMANCE WOULD HAVE BEEN LOWER.
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.
[AIM INVESTMENTS LOGO]
AIMINVESTMENTS.COM I-MSE-INS-1 A I M Distributors, Inc. --REGISTERED TRADEMARK--
Information about your Fund's expenses
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE mate 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
ongoing costs, including management fees value divided by $1,000 = 8.6), then you paid for the period. You may use this
and other Fund expenses. This example is multiply the result by the number in the information to compare the ongoing costs
intended to help you understand your table under the heading entitled "Actual of investing in the Fund and other funds.
ongoing costs (in dollars) of investing in Expenses Paid During Period" to estimate To do so, compare this 5% hypothetical
the Fund and to compare these costs with the expenses you paid on your account example with the 5% hypothetical
ongoing costs of investing in other mutual during this period. examples that appear in the shareholder
funds. The example is based on an reports of the other funds.
investment of $1,000 invested at the HYPOTHETICAL EXAMPLE FOR COMPARISON
beginning of the period and held for the PURPOSES Please note that the expenses shown in
entire period March 1, 2007, through the table are meant to highlight your
August 31, 2007. The table below also provides information ongoing costs only. Therefore, the
about hypothetical account values and hypothetical information is useful in
ACTUAL EXPENSES hypothetical expenses based on the comparing ongoing costs only, and will not
Fund's actual expense ratio and an assumed help you determine the relative total
The table below provides information about rate of return of 5% per year before costs of owning different funds.
actual account values and actual expenses. expenses, which is not the Fund's actual
You may use the information in this return.
table, together with the amount you
invested, to esti-
====================================================================================================================================
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 (3/1/07) (8/31/07)(1) PERIOD(2) (8/31/07) PERIOD(2) RATIO
Institutional $1,000.00 $1,064.90 $3.96 $1,021.37 $3.87 0.76%
(1) The actual ending account value is based on the actual total return of the Fund for the period March 1, 2007, through August
31, 2007, 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.
====================================================================================================================================
AIMINVESTMENTS.COM I-MSE-INS-1 A I M Distributors, Inc.
AIM Multi-Sector Fund
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
The Board of Trustees (the Board) of AIM Committee considers each Sub-Committee's sory fees, expense limitations and/or fee
Counselor Series Trust is required under recommendations and makes its own waivers.
the Investment Company Act of 1940 to recommendations regarding the performance,
approve annually the renewal of the AIM fees and expenses of the AIM Funds to the A. NATURE, EXTENT AND QUALITY OF SERVICES
Multi-Sector Fund (the Fund) investment full Board. Moreover, the Investments PROVIDED BY AIM
advisory agreement with A I M Advisors, Committee considers each SubCommittee's
Inc. (AIM). During contract renewal recommendations in making its annual The Board reviewed the advisory services
meetings held on June 25-27, 2007, the recommendation to the Board whether to provided to the Fund by AIM under the
Board as a whole and the disinterested or approve the continuance of each AIM Fund's Fund's advisory agreement, the
"independent" Trustees, voting separately, investment advisory agreement and performance of AIM in providing these
approved the continuance of the Fund's sub-advisory agreement, if applicable services, and the credentials and
investment advisory agreement for another (advisory agreements), for another year. experience of the officers and employees
year, effective July 1, 2007. In doing so, of AIM who provide these services. The
the Board determined that the Fund's The independent Trustees, as mentioned Board's review of the qualifications of
advisory agreement is in the best above, are assisted in their annual AIM to provide these services included the
interests of the Fund and its shareholders evaluation of the advisory agreements by Board's consideration of AIM's portfolio
and that the compensation to AIM under the the independent Senior Officer. One and product review process, various back
Fund's advisory agreement is fair and responsibility of the Senior Officer is to office support functions provided by AIM,
reasonable. manage the process by which the AIM Funds' and AIM's equity and fixed income trading
proposed management fees are negotiated operations. The Board concluded that the
The independent Trustees met separately during the annual contract renewal process nature, extent and quality of the advisory
during their evaluation of the Fund's to ensure that they are negotiated in a services provided to the Fund by AIM were
investment advisory agreement with manner which is at arms' length and appropriate and that AIM currently is
independent legal counsel from whom they reasonable. Accordingly, the Senior providing satisfactory advisory services
received independent legal advice, and the Officer must either supervise a in accordance with the terms of the
independent Trustees also received competitive bidding process or prepare an Fund's advisory agreement. In addition,
assistance during their deliberations from independent written evaluation. The based on their ongoing meetings throughout
the independent Senior Officer, a Senior Officer has recommended that an the year with the Fund's portfolio
full-time officer of the AIM Funds who independent written evaluation be provided managers, the Board concluded that these
reports directly to the independent and, upon the direction of the Board, has individuals are competent and able to
Trustees. The following discussion more prepared an independent written continue to carry out their
fully describes the process employed by evaluation. responsibilities under the Fund's advisory
the Board to evaluate the performance of agreement.
the AIM Funds (including the Fund) During the annual contract renewal
throughout the year and, more process, the Board considered the factors In determining whether to continue the
specifically, during the annual contract discussed below under the heading "Factors Fund's advisory agreement, the Board
renewal meetings. and Conclusions and Summary of Independent considered the prior relationship between
Written Fee Evaluation" in evaluating the AIM and the Fund, as well as the Board's
THE BOARD'S FUND EVALUATION PROCESS fairness and reasonableness of the Fund's knowledge of AIM's operations, and
advisory agreement at the contract renewal concluded that it was beneficial to
The Board's Investments Committee has meetings and at their meetings throughout maintain the current relationship, in
established three Sub-Committees which are the year as part of their ongoing part, because of such knowledge. The Board
responsible for overseeing the management oversight of the Fund. The Fund's advisory also considered the steps that AIM and its
of a number of the series portfolios of agreement was considered separately, affiliates have taken over the last
the AIM Funds. This SubCommittee although the Board also considered the several years to improve the quality and
structure permits the Trustees to focus on common interests of all of the AIM Funds efficiency of the services they provide to
the performance of the AIM Funds that have in their deliberations. The Board the Funds in the areas of investment
been assigned to them. The Sub-Committees comprehensively considered all of the performance, product line diversification,
meet throughout the year to review the information provided to them and did not distribution, fund operations, shareholder
performance of their assigned funds, and identify any particular factor that was services and compliance. The Board
the Sub-Committees review monthly and controlling. Furthermore, each Trustee may concluded that the quality and efficiency
quarterly comparative performance have evaluated the information provided of the services AIM and its affiliates
information and periodic asset flow data differently from one another and provide to the AIM Funds in each of these
for their assigned funds. These materials attributed different weight to the various areas have generally improved, and support
are prepared under the direction and factors. The Trustees recognized that the the Board's approval of the continuance of
supervision of the independent Senior advisory arrangements and resulting the Fund's advisory agreement.
Officer. Over the course of each year, the advisory fees for the Fund and the other
SubCommittees meet with portfolio AIM Funds are the result of years of B. FUND PERFORMANCE
managers for their assigned funds and review and negotiation between the
other members of management and review Trustees and AIM, that the Trustees may The Board compared the Fund's performance
with these individuals the performance, focus to a greater extent on certain during the past one and three calendar
investment objective(s), policies, aspects of these arrangements in some years to the performance of funds in the
strategies and limitations of these years than others, and that the Trustees' Fund's Lipper peer group that are not
funds. deliberations and conclusions in a managed by AIM, and against the
particular year may be based in part on performance of all funds in the Lipper
In addition to their meetings their deliberations and conclusions of Multi-Cap Core Funds Index. The Board also
throughout the year, the Sub-Committees these same arrangements throughout the reviewed the methodology used by Lipper to
meet at designated contract renewal year and in prior years. identify the Fund's peers. The Board noted
meetings each year to conduct an in-depth that the Fund's performance was comparable
review of the performance, fees and FACTORS AND CONCLUSIONS AND SUMMARY OF to the median performance of its peers for
expenses of their assigned funds. During INDEPENDENT WRITTEN FEE EVALUATION the one year period, and above such
the contract renewal process, the Trustees performance for the three year period. The
receive comparative performance and fee The discussion below serves as a summary Board noted that the Fund's performance
data regarding all the AIM Funds prepared of the Senior Officer's independent was comparable to the performance of the
by an independent company, Lipper, Inc., written evaluation, as well as a Index for the one year period, and above
under the direction and supervision of discussion of the material factors and such Index for the three year period. The
the independent Senior Officer who also related conclusions that formed the Board also considered the steps AIM has
prepares a separate analysis of this basis for the Board's approval of the taken over the last several years to
information for the Trustees. Each Fund's advisory agreement. Unless improve the quality and efficiency of the
Sub-Committee then makes recommendations otherwise stated, information set forth services that AIM provides to the AIM
to the Investments Committee regarding the below is as of June 27, 2007 and does not Funds. The Board concluded that AIM
performance, fees and expenses of their reflect any changes that may have occurred continues to be responsive to the Board's
assigned funds. The Investments since that date, including but not limited focus on fund performance. Although the
to changes to the Fund's performance, independent written evaluation of the
advi- Fund's Senior Officer (discussed below)
only considered Fund performance through
(continued)
29
AIM Multi-Sector Fund
the most recent calendar year, the Board approval of the amendment to the Fund's The Board considered the benefits
also reviewed more recent Fund performance contractual advisory fee schedule. The realized by AIM as a result of portfolio
and this review did not change their Board also noted that the Fund shares brokerage transactions executed through
conclusions. directly in economies of scale through "soft dollar" arrangements. Under these
lower fees charged by third party service arrangements, portfolio brokerage
C. ADVISORY FEES AND FEE WAIVERS providers based on the combined size of commissions paid by the Fund and/or other
all of the AIM Funds and affiliates. funds advised by AIM are used to pay for
The Board compared the Fund's contractual research and execution services. The Board
advisory fee rate to the contractual E. PROFITABILITY AND FINANCIAL RESOURCES noted that soft dollar arrangements shift
advisory fee rates of funds in the Fund's OF AIM the payment obligation for the research
Lipper peer group that are not managed by and executions services from AIM to the
AIM, at a common asset level and as of the The Board reviewed information from AIM funds and therefore may reduce AIM's
end of the past calendar year. The Board concerning the costs of the advisory and expenses. The Board also noted that
noted that the Fund's advisory fee rate other services that AIM and its affiliates research obtained through soft dollar
was below the median advisory fee rate of provide to the Fund and the profitability arrangements may be used by AIM in making
its peers. The Board also reviewed the of AIM and its affiliates in providing investment decisions for the Fund and may
methodology used by Lipper and noted that these services. The Board also reviewed therefore benefit Fund shareholders. The
the contractual fee rates shown by Lipper information concerning the financial Board concluded that AIM's soft dollar
include any applicable long-term condition of AIM and its affiliates. The arrangements were appropriate. The Board
contractual fee waivers. The Board also Board also reviewed with AIM the also concluded that, based on their
compared the Fund's contractual advisory methodology used to prepare the review and representations made by AIM,
fee rate to the contractual advisory fee profitability information. The Board these arrangements were consistent with
rates of other clients of AIM and its considered the overall profitability of regulatory requirements.
affiliates with investment strategies AIM, as well as the profitability of AIM
comparable to those of the Fund, including in connection with managing the Fund. The The Board considered the fact that the
two mutual funds advised by AIM. The Board Board noted that AIM continues to operate Fund's uninvested cash and cash collateral
noted that the Fund's rate was above the at a net profit, although increased from any securities lending arrangements
rate for one of the mutual funds and that expenses in recent years have reduced the may be invested in money market funds
the other mutual fund is an asset profitability of AIM and its affiliates. advised by AIM pursuant to procedures
allocation fund which is not charged any The Board concluded that the Fund's approved by the Board. The Board noted
advisory fees by AIM pursuant to that advisory fees were fair and reasonable, that AIM will receive advisory fees from
fund's advisory agreement. and that the level of profits realized these affiliated money market funds
by AIM and its affiliates from providing attributable to such investments, although
The Board noted that AIM has not services to the Fund was not excessive in AIM has contractually agreed to waive the
proposed any advisory fee waivers or light of the nature, quality and extent of advisory fees payable by the Fund with
expense limitations for the Fund. However, the services provided. The Board respect to its investment of uninvested
the Board also noted that AIM has considered whether AIM is financially cash in these affiliated money market
recommended that the Board approve an sound and has the resources necessary to funds through at least June 30, 2008. The
amendment to the Fund's contractual perform its obligations under the Fund's Board considered the contractual nature of
advisory fee schedule that would implement advisory agreement, and concluded that AIM this fee waiver and noted that it remains
the contractual advisory fee waiver that has the financial resources necessary to in effect until at least June 30, 2008.
had been formerly committed to by AIM, fulfill these obligations. The Board concluded that the Fund's
which waiver provided for lower effective investment of uninvested cash and cash
fee rates at all asset levels than the F. INDEPENDENT WRITTEN EVALUATION OF THE collateral from any securities lending
Fund's current contractual advisory fee FUND'S SENIOR OFFICER arrangements in the affiliated money
schedule. The Board noted that AIM's market funds is in the best interests of
recommendation was made in response to the The Board noted that, upon their the Fund and its shareholders.
recommendation of the independent Senior direction, the Senior Officer of the Fund,
Officer that AIM consider whether the who is independent of AIM and AIM's
advisory fee waivers for certain equity affiliates, had prepared an independent
AIM Funds, including the Fund, should be written evaluation to assist the Board in
simplified. The Board concluded that it determining the reasonableness of the
would be appropriate to approve the proposed management fees of the AIM Funds,
proposed amendment to the Fund's including the Fund. The Board noted that
contractual advisory fee schedule and that they had relied upon the Senior Officer's
it was not necessary at this time to written evaluation instead of a
discuss with AIM whether to implement any competitive bidding process. In
fee waivers or expense limitations for the determining whether to continue the Fund's
Fund. advisory agreement, the Board considered
the Senior Officer's written evaluation.
After taking account of the Fund's
contractual advisory fee rate, as well as G. COLLATERAL BENEFITS TO AIM AND ITS
the comparative advisory fee information AFFILIATES
discussed above, the Board concluded that
the Fund's advisory fees were fair and The Board considered various other
reasonable. benefits received by AIM and its
affiliates resulting from AIM's
D. ECONOMIES OF SCALE AND BREAKPOINTS relationship with the Fund, including the
fees received by AIM and its affiliates
The Board considered the extent to which for their provision of administrative,
there are economies of scale in AIM's transfer agency and distribution services
provision of advisory services to the to the Fund. The Board considered the
Fund. The Board also considered whether performance of AIM and its affiliates in
the Fund benefits from such economies of providing these services and the
scale through contractual breakpoints in organizational structure employed by AIM
the Fund's advisory fee schedule or and its affiliates to provide these
through advisory fee waivers or expense services. The Board also considered that
limitations. The Board noted that the these services are provided to the Fund
Fund's contractual advisory fee schedule pursuant to written contracts which are
currently does not include any breakpoints reviewed and approved on an annual basis
but that the amendment to the Fund's by the Board. The Board concluded that AIM
contractual advisory fee schedule and its affiliates were providing these
discussed above provides for seven break- services in a satisfactory manner and in
points. Based on this information, the accordance with the terms of their
Board concluded that the Fund's advisory contracts, and were qualified to continue
fees will appropriately reflect to provide these services to the Fund.
economies of scale upon the Board's
30
AIM Multi-Sector Fund
TAX INFORMATION
Form 1099-DIV, Form 1042-S and other year-end tax information provide
shareholders with actual calendar year amounts that should be included in their
tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the
Internal Revenue Code or to meet a specific state's requirement.
The Fund designates the following amounts or, if subsequently determined to be
different, the maximum amount allowable for its fiscal year ended August 31,
2007:
FEDERAL AND STATE INCOME TAX
<Table>
Long-Term Capital Gain Dividends $5,485,861
Qualified Dividend Income* 86.07%
Corporate Dividends Received Deduction* 70.56%
</Table>
* The above percentages are based on ordinary income dividends paid to
shareholders during the fund's fiscal year.
NON-RESIDENT ALIEN SHAREHOLDERS
<Table>
Qualified Short-Term Gains $3,146,380
Qualified Interest Income** 9.30%
</Table>
** The above percentage is based on income dividends paid to shareholders
during the fund's fiscal year.
ADDITIONAL NON-RESIDENT ALIEN SHAREHOLDER INFORMATION
The percentages of qualifying assets not subject to the U.S. estate tax for the
fiscal quarters ended November 30, 2006, February 28, 2007, May 31, 2007 and
August 31, 2007 were 18.20%, 13.77%, 15.55%, and 14.21%, respectively.
DISTRIBUTION INFORMATION
Shareholders were sent a notice from the Fund that set forth an estimate of the
source or sources from which the distribution was paid in December of 2006.
Subsequently, this estimate has been corrected in part. Listed below is a
written statement of the sources of this distribution, as corrected, on a book
basis.
<Table>
<Caption>
GAIN FROM
SALE OF RETURN OF TOTAL
NET INCOME SECURITIES PRINCIPAL DISTRIBUTION
- ---------------------------------------------------------------------------------------------------------------------------------
12/15/06 Class A $0.0648 $0.3197 $0.0559 $0.4404
12/15/06 Class B 0.000 0.3197 0.0201 0.3398
12/15/06 Class C 0.000 0.3197 0.0201 0.3398
12/15/06 Institutional Class 0.1224 0.3197 0.0574 0.4995
</Table>
Please note that the information in the preceding chart is for book purposes
only. Shareholders should be aware that the tax treatment of distributions may
differ from their book treatment. The tax treatment of distributions was set
forth in a Form 1099-DIV for the 2006 calendar year. This information is being
provided to comply with certain SEC requirements.
31
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 77046-1173. Each
trustee oversees 105 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. Each officer serves for a one year term or until their
successors are elected and qualified. Column two below includes length of time
served with predecessor entities, if any.
<Table>
<Caption>
OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIP(S)
POSITION(S) HELD WITH THE OFFICER PRINCIPAL OCCUPATION(S) HELD BY
TRUST SINCE DURING PAST 5 YEARS TRUSTEE/ DIRECTOR
- -------------------------------------------------------------------------------------------------------------------------
Interested Persons
- -------------------------------------------------------------------------------------------------------------------------
Martin L. Flanagan(1) -- 1960 2007 Director, Chief Executive Officer and None
Trustee President, INVESCO PLC (parent of AIM
and a global investment management
firm); Chairman, A I M Advisors, Inc.
(registered investment advisor);
Director, Chairman, Chief Executive
Officer and President, IVZ Inc. (holding
company); INVESCO North American
Holdings, Inc. (holding company);
Chairman and President, INVESCO Group
Services, Inc. (service provider);
Trustee, The AIM Family of Funds(R);
Chairman, Investment Company Institute;
and Member of Executive Board, SMU Cox
School of Business
Formerly: President, Co-Chief Executive
Officer, Co-President, Chief Operating
Officer and Chief Financial Officer,
Franklin Resources, Inc. (global
investment management organization)
- -------------------------------------------------------------------------------------------------------------------------
Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None
Trustee, President and President, A I M Management Group Inc.
Principal (financial services holding company),
Executive Officer AIM Mutual Fund Dealer Inc. (registered
broker dealer), A I M Advisors, Inc.,
AIM Funds Management Inc. d/b/a INVESCO
Enterprise Services (registered
investment advisor and registered
transfer agent) and 1371 Preferred Inc.
(holding company); Director, Chairman,
Chief Executive Officer and President,
A I M Capital Management, Inc.
(registered investment advisor);
Director and President, INVESCO Funds
Group, Inc. (registered investment
advisor and register transfer agent) and
AIM GP Canada Inc. (general partner for
a limited partnership); Director, A I M
Distributors, Inc. (registered broker
dealer); Director and Chairman, AIM
Investment Services, Inc. (registered
transfer agent), Fund Management Company
(registered broker dealer) and INVESCO
Distributors, Inc. (registered broker
dealer); Director, President and
Chairman, IVZ Callco Inc. (holding
company); INVESCO Inc. (holding company)
and AIM Canada Holdings Inc. (holding
company); Director and Chief Executive
Officer, AIM Trimark Corporate Class
Inc. (formerly AIM Trimark Global Fund
Inc.) (corporate mutual fund company)
and AIM Trimark Canada Fund Inc.
(corporate mutual fund company);
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); 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); and Manager,
Powershares Capital Management LLC
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.; President, AIM
Trimark Global Fund Inc. and AIM Trimark
Canada Fund Inc.; and Director, Trimark
Trust (federally regulated Canadian
Trust Company)
- -------------------------------------------------------------------------------------------------------------------------
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); Reich & Tang Funds
(Chairman) (registered investment
company) (7 portfolios); Daily Income
Fund (4 portfolios), California Daily
Tax Free Income Fund, Inc., Connecticut
Daily Tax Free Income Fund, Inc. and New
Jersey Daily Municipal Fund, Inc.,
Annuity and Life Re (Holdings), Ltd.
(insurance company); and Homeowners of
America Holding Corporation (property
casualty company)
Formerly: Director, CompuDyne
Corporation (provider of product and
services to the public security market);
Director, President and Chief Executive
Officer, Volvo Group North America,
Inc.; Senior Vice President, AB Volvo;
Director of various affiliated Volvo
companies; and Director, Magellan
Insurance Company
- -------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 2003 Chief Executive Officer, Twenty First Administaff
Trustee Century Group, Inc. (government affairs
company); and Owner and Chief Executive
Officer, Dos Angelos Ranch, L.P.
(cattle, hunting, corporate
entertainment); and Discovery Global
Education Fund (non-profit)
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company)
- -------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Director, Reich & Tang Funds) (7
Trustee Naftalis and Frankel LLP 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 None
Trustee Formerly: Partner, Deloitte & Touche;
and Director, Mainstay VP Series Funds,
Inc. (25 portfolios)
- -------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Mr. Flanagan was appointed as Trustee of the Trust on February 24, 2007. Mr.
Flanagan is considered an interested person of the Trust because he is an
officer of the advisor to the Trust, and an officer and a director of
INVESCO 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.
32
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Multi-Sector Fund
<Table>
<Caption>
OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIP(S)
POSITION(S) HELD WITH THE OFFICER PRINCIPAL OCCUPATION(S) HELD BY TRUSTEE/
TRUST SINCE DURING PAST 5 YEARS DIRECTOR
- -------------------------------------------------------------------------------------------------------------------------
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., A I M Advisors,
Inc. and A I M Capital Management, Inc.;
Director, Vice President and Secretary,
INVESCO Distributors, Inc.; Vice
President and Secretary, AIM Investment
Services, Inc. and Fund Management
Company; Senior Vice President and
Secretary, A I M Distributors, Inc.;
Director and Vice President, INVESCO
Funds Group Inc.; Senior Vice President,
Chief Legal Officer and Secretary of The
AIM Family of Funds--Registered
Trademark--; and Manager, Powershares
Capital Management LLC
Formerly: Vice President, A I M Capital
Management, Inc.; 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, INVESCO PLC; N/A
Vice President 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, INVESCO PLC; Director, INVESCO
Funds Group, Inc.; and Vice President of
The AIM Family of Funds--Registered
Trademark--
Formerly: Director, Senior Vice N/A
President, Secretary and General
Counsel, A I M Management Group Inc. and
A I M Advisors, Inc.; Senior Vice
President, A I M Distributors, Inc.;
Director, General Counsel and Vice
President, Fund Management Company; 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--;
Director and Vice President, INVESCO
Distributors, Inc.; Chief Executive
Officer and President, INVESCO Funds
Group, Inc.; and Senior Vice President
and General Counsel, Liberty Financial
Companies, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Sidney M. Dilgren -- 1961 2004 Vice President, A I M Advisors, Inc. and N/A
Vice President, Principal A I M Capital Management, Inc.; and Vice
Financial Officer and President, Treasurer and Principal
Treasurer Financial Officer of The AIM Family of
Funds--Registered Trademark--
Formerly: Fund Treasurer, A I M
Advisors, Inc.; Senior Vice President,
AIM Investment Services, Inc.; and Vice
President, A I M Distributors, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2003 Head of INVESCO's World Wide Fixed N/A
Vice President Income and Cash Management Group;
Director of Cash Management and Senior
Vice President, A I M Advisors, Inc. and
A I M Capital Management, Inc; Director
and President, Fund Management Company;
Vice President, The AIM Family of
Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust); and
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)
Formerly: Chief Cash Management Officer
and Managing Director, A I M Capital
Management, Inc.; Vice President, A I M
Advisors, Inc. and The AIM Family of
Funds--Registered Trademark-- (AIM
Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free
Investments Trust only)
- -------------------------------------------------------------------------------------------------------------------------
Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance N/A
Anti-Money Laundering Officer, A I M Advisors, Inc., A I M
Compliance Officer Capital Management, Inc., A I M
Distributors, Inc., AIM Investment
Services, Inc., AIM Private Asset
Management, Inc., Fund Management
Company and The AIM Family of
Funds--Registered Trademark--
Formerly: Manager of the Fraud
Prevention Department, AIM Investment
Services, Inc.
- -------------------------------------------------------------------------------------------------------------------------
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. and A I M Capital
Management, Inc.; Chief Compliance
Officer of The AIM Family of
Funds--Registered Trademark--, INVESCO
Global Asset Management (N.A.), Inc.,
(registered investment advisor), INVESCO
Institutional (N.A.), Inc., (registered
investment advisor), INVESCO Private
Capital Investments, Inc. (holding
company), INVESCO Private Capital, Inc.
(registered investment advisor) and
INVESCO Senior Secured Management, Inc.
(registered investment advisor); and
Vice President, A I M Distributors,
Inc., AIM Investment Services, Inc. and
Fund Management Company
Formerly: Vice President, A I M Capital
Management, Inc.; Global Head of Product
Development, AIG-Global Investment
Group, Inc.; and Chief Compliance
Officer and Deputy General Counsel,
AIG-SunAmerica Asset 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
1735 Market Street, 51st & Frankel LLP P.O. Box 4739 Company
Floor 1177 Avenue of the Houston, TX 77210-4739 225 Franklin Street
Philadelphia, PA 19103-7599 Americas Boston, MA 02110-2801
New York, NY 10036-2714
</Table>
33
[EDELIVERY
GO PAPERLESS
AIMINVESTMENTS.COM/EDELIVERY
GRAPHIC]
REGISTER FOR EDELIVERY FUND HOLDINGS AND PROXY VOTING INFORMATION
eDelivery is the process of receiving your fund The Fund provides a complete list of its holdings four times in each fiscal
and account information via e-mail. Once your year, at the quarter-ends. For the second and fourth quarters, the lists appear
quarterly statements, tax forms, fund reports, in the Fund's semiannual and annual reports to shareholders. For the first and
and prospectuses are available, we will send you third quarters, the Fund files the lists with the Securities and Exchange
an e-mail notification containing links to these Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is
documents. For security purposes, you will need available at AIMinvestments.com. From our home page, click on Products &
to log in to your account to view your statements Performance, then Mutual Funds, then Fund Overview. Select your Fund from the
and tax forms. drop-down menu and click on Complete Quarterly Holdings. Shareholders can also
look up the Fund's Forms N-Q on the SEC Web site at sec.gov. Copies of the
WHY SIGN UP? Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in
Washington, D.C. You can obtain information on the operation of the Public
Register for eDelivery to: Reference Room, including information about duplicating fee charges, by calling
202-942-8090 or 800-732-0330, or by electronic request at the following e-mail
o save your Fund the cost of printing and address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-09913 and
postage. 333-36074.
o reduce the amount of paper you receive. 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,
o gain access to your documents faster by not upon request, from our Client Services department at 800-959-4246 or on the AIM
waiting for the mail. Web site, AIM investments.com. On the home page, scroll down and click on AIM
Funds Proxy Policy. The information is also available on the SEC Web site,
o view your documents online anytime at your sec.gov.
convenience.
Information regarding how the Fund voted proxies related to its portfolio
o save the documents to your personal computer securities during the 12 months ended June 30, 2007, is available at our Web
or print them out for your records. 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
HOW DO I SIGN UP? drop-down menu. The information is also available on the SEC Web site, sec.gov.
It's easy. Just follow these simple steps: If used after January 20, 2008, this report must be accompanied by a Fund
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This AIM service is provided by AIM Investment
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[AIM INVESTMENTS LOGO]
--REGISTERED TRADEMARK--
AIM SELECT REAL ESTATE INCOME FUND
Annual Report to Shareholders - August 31, 2007
[COVER GLOBE IMAGE]
SECTOR EQUITY
Real Estate
Table of Contents
Letters to Shareholders .................. 2
Performance Summary ...................... 4
Management Discussion .................... 4
Long-term Fund Performance ............... 6
Supplemental Information ................. 8
Schedule of Investments .................. 9
Financial Statements ..................... 12
Notes to Financial Statements ............ 16
Financial Highlights ..................... 23
Auditor's Report ......................... 26
Fund Expenses ............................ 27
Approval of Advisory Agreement ........... 28
Tax Information .......................... 30
Trustees and Officers .................... 31
[AIM INVESTMENT SOLUTIONS]
[GRAPHIC] [GRAPHIC]
[DOMESTIC [FIXED
EQUITY] INCOME]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[TARGET [TARGET [DIVERSIFIED
RISK] MATURITY] PORTFOLIOS]
[GRAPHIC] [GRAPHIC]
[SECTOR [INTERNATIONAL/
EQUITY] GLOBAL EQUITY]
[AIM INVESTMENTS LOGO]
- --REGISTERED TRADEMARK--
AIM Select Real Estate Income Fund
Dear Shareholders of the AIM Family of Funds:
I'm pleased to provide you with this report, which includes a discussion of how your
Fund was managed during the period under review, and what factors affected its
[TAYLOR performance. The following pages contain important information that answers questions
PHOTO] you may have about your investment.
Despite a significant, albeit short-lived, stock market sell-off in late February
and early March--and a more severe stock market decline that began in July--major stock
market indexes in the United States and abroad generally performed well for the 12
Philip Taylor months ended August 31, 2007. Reasons for their favorable performance included positive
economic growth, particularly overseas; strong corporate profits; and strong
merger-and-acquisition activity, among other factors.
In July, institutional investors on Wall Street as well as individual investors on
Main Street became concerned about growing delinquencies in the subprime mortgage
market. They worried that such delinquencies, together with higher interest rates,
might lead to a "credit crunch" that could reduce the availability of credit or
increase borrowing costs for individuals and corporations, thereby slowing the economy.
In an effort to ensure that the weak housing market and tight credit markets did not
affect the U.S. economy more generally, the U.S. Federal Reserve Board in September cut
its key federal funds target rate for the first time in more than four years.
At AIM Investments --REGISTERED TRADEMARK--, we know that market conditions
change--often suddenly and sometimes dramatically. We can help you deal with market
volatility by offering a broad range of mutual funds, including:
- Domestic, global and international equity funds
- Taxable and tax-exempt fixed-income funds
- Allocation portfolios, with risk/return characteristics to match your needs
- AIM Independence Funds--target-maturity funds that combine retail mutual funds and
PowerShares --REGISTERED TRADEMARK-- exchange-traded funds--with risk/return
characteristics that change as your target retirement date nears
We believe in the value of working with a trusted financial advisor. Your financial
advisor can recommend various AIM funds that, together, can create a portfolio that's
appropriate for your long-term investment goals and risk tolerance regardless of
prevailing short-term market conditions.
In conclusion
Bob Graham, my friend and colleague, recently announced his decision to step down as
vice chair of the AIM Funds board of directors. In 1976, Bob was one of three men who
co-founded AIM. In the three decades since, he has been instrumental in transforming
AIM from a small investment management firm into one of America's most respected mutual
fund companies--and, in 1997, into a global independent retail and institutional
investment manager.
In May, with shareholder approval, AIM Investments' parent company changed its name
from AMVESCAP PLC to INVESCO PLC, uniting our worldwide operations and global expertise
under one new name. While the name of our parent company may be new to you, I can
assure you that our commitment to excellent customer service remains unchanged. Our
highly trained, courteous client service representatives are eager to answer your
questions, provide you with product information or assist you with account
transactions. I encourage you to give us an opportunity to serve you by calling us at
800-959-4246.
All of us at AIM are committed to helping you achieve your financial goals. We work
every day to earn your trust, and we're grateful for the confidence you've placed in
us.
Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
President - AIM Funds CEO,
AIM Investments
October 17, 2007
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 mutual funds represented by AIM
Investments and the PowerShares Exchange-Traded Fund Trust.
2
AIM Select Real Estate Income Fund
Dear Fellow Shareholders:
In overseeing the management of the AIM family of funds on your behalf, your Board of
Trustees of the AIM Funds continues to focus on improved investment performance,
[CROCKETT reduced shareholder costs, and high ethical standards.
PHOTO]
Your Board welcomes two new members: Marty Flanagan, President and CEO of INVESCO,
AIM's parent company, and Phil Taylor, who was named CEO of AIM Investments
--REGISTERED TRADEMARK-- in April 2006. Robert Graham, who has given more than 30 years
Bruce L. Crockett of leadership to the company and the mutual fund industry since founding AIM in 1976,
has retired, stepping down in the process from his most recent role as vice chairman of
the Board. We thank Bob for his many contributions and wish him a long and happy
future.
Our review of fund performance has shown healthy progress, but the process is
necessarily one of continuous improvement. In general, as of June 30, 2007, we have
seen persistent investment discipline and more consistently good results. While this
statement may not apply to every AIM Fund all the time, as I write this letter, the
overall trend in fund management and performance has been positive.
The investment management talent at AIM has recently been enhanced by the promotion
of Karen Dunn Kelley to Head of INVESCO's Worldwide Fixed Income as well as Director of
AIM Global and Cash Management, with responsibility for all fixed income and money
market funds that serve both institutional and individual investors. Under Karen's
direction, AIM's cash management organization grew to one of the world's largest and
most respected, with top-tier performance. The operations now combined under her charge
represent more than $160 billion in assets, 120 investment professionals, and products
that span the entire yield curve (as of August 31, 2007).
In other news, your Board took a more active role in preparing for "proxy season,"
the period when fund managers must vote the shares held by their funds "for" or
"against" various proposals on the ballots of the issuing companies. Beginning in the
2007 proxy season, AIM implemented new proxy voting policies, developed by management
in conjunction with an ad hoc Board committee, which provided a solid framework for
properly evaluating and executing the many decisions the AIM Funds are required to make
to vote shares.
In general, the AIM Funds voted for proposals that would allow shareholders a
greater role in election of directors, proxy access and "say for pay." The AIM Funds
voted against directors who AIM believed failed to govern well in cases of corporate
mismanagement, such as the backdating of options grants, and against "poison pill" and
"take under" proposals that would favor the financial interests of managers at the
expense of investors in the case of a merger or acquisition. You can view the proxy
votes cast for your fund by going to AIMinvestments.com. Click the "About Us" tab, then
go to "Required Notices" and "Proxy Voting Activity."
Additionally, your Board raised the amount its members are recommended to invest in
the AIM Funds within three years of joining the Board, with the goal of aligning our
interests even more closely with yours.
Furthermore, at our June meeting we renewed the investment advisory contracts
between the AIM Funds and AIM for another year, applying the same rigorous evaluation
process that was enhanced and formalized in 2005. For more information on this process,
please visit AIMinvestments.com. Click on the "Products and Performance" tab and go to
"Investment Advisory Agreement Renewals."
Your Board's ability to best represent your interests depends on our knowledge of
your opinions and concerns. Please send me an email (bruce@brucecrockett.com) with your
thoughts on the following:
1) How important is it to you to hear about your Board's decisions and activities in
these letters?
2) What other information (on overall performance, specific funds, managers, etc.)
would make the letters more meaningful to you?
3) Would you prefer that communication from your Board continue to be delivered in
paper form by regular mail or be sent electronically by email?
If you would prefer to communicate through a quick online survey, please go to
AIMinvestments.com and provide your responses there.
We need to hear from you to do our best job, and I look forward to your responses.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board of Directors
October 17, 2007
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 mutual funds represented by AIM
Investments and the PowerShares Exchange-Traded Fund Trust.
3
AIM Select Real Estate Income Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
======================================================================================= How we invest
PERFORMANCE SUMMARY
Your Fund holds primarily real
The eight months ended August 31, 2007, were volatile for AIM Select Real Estate Income estate-oriented securities. We focus on
Fund. The U.S. real estate investment trust (REIT) market, as measured by the FTSE public companies whose value is driven by
NAREIT Equity REITs Index, hit an all time high in February and then began a decline. real property assets. Our goal is to
For the period, the Fund trailed the S&P 500 Index, but fared better than its create a fund that will provide attractive
style-specific and peer group indexes@. The Fund underperformed its broad market index, current income. We use a
the S&P 500 Index, because REITs were among the weakest performing market segments fundamentals-driven investment process,
during the period. The Fund fared better than the FTSE NAREIT Equity REITs Index, its including an evaluation of factors such as
style-specific index, due primarily to the Fund's income focus, which helped protect property market cycle analysis, property
the Fund from REIT market volatility. Strong stock selection relative to the index in evaluation and management and structure
residential apartments and self storage facilities also helped relative performance. review to identify securities with
Also during the period, the Fund converted from a Closed-End to an Open-End Fund. characteristics which may include:
Your Fund's long-term performance appears later in this report. - Attractive relative dividend yields.
FUND VS. INDEXES - Favorable property market outlook.
Cumulative total returns, 12/31/2006-08/31/2007, excluding applicable sales charges. If - Reasonable valuations relative to peer
sales charges were included, returns would be lower. investment alternatives.
Class A -3.59% We attempt to control risk by
Class B* -4.26 allocating between property related common
Class C* -4.26 stocks and fixed income as well as
S&P 500 Index@ (Broad Market Index) 5.20 diversifying by property types and
FTSE NAREIT Equity REITs Index@ (Style-Specific Index) -7.53 geographic location. While we are a
Lipper Real Estate Funds Index@ (Peer Group Index)** -6.64 nondiversified fund, we are mindful of
Lipper Closed-End Real Estate Funds Index@ (Former Peer Group Index)** -11.21 individual position sizes and their impact
on overall portfolio risk.
SOURCE: @LIPPER INC. We will consider selling a holding when:
* Share classes incepted March 9, 2007. See page 7 for a detailed explanation of - Relative yields and/or relative
Fund performance. valuation deviates from desired levels.
** The Fund has elected to use the Lipper Real Estate Funds Index as its peer group - Risk/return relationships change
index instead of the Lipper Closed-End Real Estate Funds Index because it better significantly.
represents the Open-End Fund.
- Company fundamentals change (property
======================================================================================= type, geography or management changes).
PORTFOLIO COMPOSITION TOP 10 EQUITY HOLDINGS*
- A more attractive investment
By property type 1. Health Care REIT, Inc. 3.9% opportunity is identified.
2. Health Care Property Investors, 3.7
Lodging-Resorts 16.8% Inc. Market conditions and your Fund
Office Properties 16.6 3. HRPT Properties Trust-Series B 3.6
Healthcare 15.6 4. Ventas, Inc. 3.6 The eight months ended August 31, 2007,
Regional Malls 12.8 5. Hospitality Properties was characterized by somewhat slower U.S.
Diversified 8.0 Trust-Series B 3.3 economic growth than we have seen in the
Industrial/Office Mixed 5.5 6. Hospitality Properties Trust 3.1 last few years. Real gross domestic
Freestanding 4.5 7. Brandywine Realty Trust 2.6 product (GDP) was 3.8% during the second
Self Storage Facilities 4.0 8. CBL & Associates Properties, quarter of 2007.(1) However, this rate was
Shopping Centers 3.3 Inc.-Series C Pfd. 2.4 substantially higher than the 0.6% rate
Apartments 3.2 9. Corporate Office Properties for the first quarter of 2007, which was
Specialty Properties 3.2 Trust-Series G Pfd. 2.1 the lowest level of U.S. growth since the
Industrial Properties 2.9 10. CBL & Associates Properties, fourth quarter of 2002.
Money Market Funds Plus Inc. 2.1
Other Assets Less Liabilities 3.6 Total Net Assets $224.53 million Despite concerns over a slowing
Total Number of Holdings* 85 economy, U.S. equities posted positive
returns during the period, leaving several
major market indexes near multi-year
highs.(2) Strong global economic
(continued)
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.
4
AIM Select Real Estate Income Fund
growth, favorable corporate earnings stock price prior to the announcement. We [RODRIGUEZ PHOTO]
results and increased merger and subsequently sold Equity Inns.
acquisition activity drove equity markets, Joe V. Rodriguez, Jr., Director of
offsetting concerns over slowing U.S. Fund performance was also positively Securities Management, INVESCO Real
growth, high energy prices and subprime impacted by fees paid to the Fund which Estate, is lead manager of AIM Select Real
loan concerns during the period. were intended to offset costs associated Estate Income Fund. He oversees all phases
with redemptions following the Fund's of the unit including securities research
Real estate securities have enjoyed open-end conversion. This is an and administration. Mr. Rodriguez began
four calendar years of strong double-digit extraordinary event that is not expected his investment career in 1983 and joined
gains, generally surpassing those of the to impact performance once the redemption INVESCO in 1990. He has served on the
broad market as measured by the FTSE fee is removed from converted shares on editorial boards of the National
NAREIT Equity REITs Index and the S&P 500 March 13, 2008. Association of Real Estate Investment
Index, respectively.(2) At the beginning Trusts (NAREIT) as well as the
of the period, strong investor inflows and Conversely, iStar Financial and Senior Institutional Real Estate Securities
privatizations within the U.S. REIT market Housing Properties Trust detracted from Newsletter. Mr. Rodriguez earned his
helped REITs to reach all time highs in performance for the period. iStar B.B.A. in economics and finance as well as
February 2007. Following February, Financial, a finance company focused on an M.B.A. in finance from Baylor
however, the U.S. REIT market experienced commercial real estate, was negatively University.
a downturn in the wake of ongoing concerns affected by a perceived increase in credit
in the subprime lending markets, rising risk exposure following its acquisition of [BLACKBURN PHOTO]
interest rates and widening debt spreads. Fremont General's (not a Fund holding)
commercial real estate lending subsidiary. Mark D. Blackburn, Chartered Financial
On an absolute basis, almost every REIT The market reacted negatively to the sale Analyst, Director of Investments, INVESCO
sector in the Fund experienced a loss as many investors mistakenly connected the Real Estate, is manager of AIM Select Real
during the period. Strong stock selection purchase of Fremont's commercial lending Estate Income Fund. He joined INVESCO in
in residential apartments and self storage business to Fremont's subprime loan 1998 and has approximately 20 years of
facilities benefited performance relative origination division. Relative weakness in experience in institutional investing and
to the FTSE NAREIT Equity REITs Index. The Senior Housing Properties was mostly risk management. Mr. Blackburn earned a
Fund's income focus and flexibility to related to second quarter 2007 FFO growth, B.S. in accounting from Louisiana State
invest in fixed income securities helped which came in below analysts' estimates. University and an M.B.A. from Southern
the Fund hold up relatively well during We continued to hold iStar Financial, but Methodist University. He is a certified
the height of REIT market volatility. The sold Senior Housing Properties during the public accountant.
FTSE NAREIT Equity REITs Index, in period.
contrast, holds only equity securities, [CURBO PHOTO]
which were hard hit by the downturn. On We remained committed to owning quality
the other hand, stock selection and an real estate securities. Lower leveraged Paul S. Curbo, Chartered Financial
overweight in diversified REITs, as well companies with above average levels of Analyst, portfolio manager, INVESCO Real
as an overweight to the health care dividend coverage remained favored in the Estate, is manager of AIM Select Real
property sector, hampered our relative portfolio. Estate Income Fund. He joined INVESCO in
performance. 1998 and has 13 years of real estate
Sources: (1)Bureau of Economic Analysis; experience. Mr. Curbo earned a B.B.A. in
Top contributors to performance (2)Lipper Inc. finance from The University of Texas at
included NATIONAL RETAIL PROPERTIES and Austin.
EQUITY INNS. National Retail Properties is The views and opinions expressed in
a REIT focused mainly on freestanding management's discussion of Fund [TROWBRIDGE PHOTO]
triple net leased properties. These are performance are those of A I M Advisors,
properties, typically involving Inc. These views and opinions are subject James W. Trowbridge, Portfolio manager,
convenience stores or retail chains, in to change at any time based on factors INVESCO Real Estate, is manager of AIM
which the lessee pays rent in addition to such as market and economic conditions. Select Real Estate Income Fund. Mr.
expenses such as taxes, insurance and These views and opinions may not be relied Trowbridge joined INVESCO Real Estate in
maintenance. During the period, National upon as investment advice or 1989. With 32 years of real estate
Retail Properties provided a relatively recommendations, or as an offer for a investment experience for major
stable yield and experienced growth in particular security. The information is institutional investors, Mr. Trowbridge is
funds from operations (FFO). Performance not a complete analysis of every aspect of responsible for integrating his knowledge
of the hotel REIT, Equity Inns, was driven any market, country, industry, security or into INVESCO's publicly traded REIT
by privatization activity, as the company the Fund. Statements of fact are from investments. Mr. Trowbridge earned his
received a buyout offer which represented sources considered reliable, but A I M B.S. in finance from Indiana University.
a significant premium to its closing Advisors, Inc. makes no representation or
warranty as to their completeness or Assisted by the Real Estate Team
accuracy. Although historical performance
is no guarantee of future results, these
insights may help you understand our
investment management philosophy.
See important Fund and index
disclosures later in this report.
5
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND AND INDEX DATA FROM 5/31/02
AIM SELECT
REAL ESTATE
INCOME FUND- FTSE NAREIT EQUITY LIPPER REAL ESTATE
DATE CLASS A SHARES REITS INDEX(1) S&P 500 INDEX(1) FUNDS INDEX(1)
5/31/02 $ 9430 $10000 $10000 $10000
6/02 9661 10273 9288 10220
7/02 9259 9736 8564 9635
8/02 9226 9717 8620 9656
9/02 8874 9344 7684 9312
10/02 8334 8894 8360 8902
11/02 8775 9313 8851 9262
12/02 8799 9382 8332 9361
1/03 8622 9110 8114 9116
2/03 8802 9260 7992 9257
3/03 8977 9446 8069 9470
4/03 9561 9861 8734 9882
5/03 10222 10457 9193 10465
6/03 10704 10684 9311 10713
7/03 11298 11256 9475 11204
8/03 11187 11316 9660 11325
9/03 11689 11701 9557 11687
10/03 12128 11912 10098 11947
11/03 12704 12431 10186 12470
12/03 13320 12866 10720 12844
1/04 14024 13423 10917 13303
2/04 14306 13658 11069 13595
3/04 15036 14412 10902 14337
4/04 12606 12311 10731 12452
5/04 13316 13188 10878 13185
6/04 13585 13575 11089 13590
7/04 13683 13620 10722 13647
8/04 14657 14701 10765 14597
9/04 14798 14692 10882 14678
10/04 15477 15479 11048 15353
11/04 15986 16146 11495 16037
12/04 16577 16929 11886 16971
1/05 15390 15508 11596 15847
2/05 15746 15983 11840 16311
3/05 15234 15736 11631 16011
4/05 15894 16573 11410 16656
5/05 16515 17147 11773 17216
6/05 17277 18009 11790 18017
7/05 18189 19294 12228 19177
8/05 17483 18589 12117 18513
9/05 17721 18699 12215 18568
10/05 17126 18257 12011 18136
11/05 17466 19026 12465 18921
12/05 17314 18988 12469 19053
1/06 18563 20375 12799 20248
2/06 18802 20740 12834 20553
3/06 19396 21787 12994 21500
4/06 18659 20978 13168 20940
5/06 17958 20381 12790 20359
6/06 18820 21441 12806 21242
7/06 19486 22164 12885 21736
8/06 20581 23003 13192 22480
9/06 20888 23428 13531 22908
10/06 21771 24896 13972 24215
11/06 22329 26053 14237 25316
12/06 22362 25646 14437 25047
1/07 23163 27805 14655 26849
2/07 22838 27183 14369 26317
3/07 22957 26534 14530 25874
4/07 23049 26529 15173 25983
5/07 22984 26543 15702 26184
6/07 22182 24136 15441 24069
7/07 20805 22252 14963 22454
8/07 21561 23715 15187 23383
SOURCE: (1)LIPPER INC.
AIM Select Real Estate Income Fund
YOUR FUND'S LONG-TERM PERFORMANCE
Past performance cannot guarantee of taxes a shareholder would pay on Fund the dollar value of an investment, is
comparable future results. distributions or sale of Fund shares. constructed with each segment representing
Performance of the indexes does not a percent change in the value of the
The data shown in the chart include reflect the effects of taxes. investment. In this chart, each segment
reinvested distributions, applicable sales represents a doubling, or 100% change, in
charges, Fund expenses and management This chart, which is a logarithmic the value of the investment. In other
fees. Index results include reinvested chart, presents the fluctuations in the words, the space between $5,000 and
dividends, but they do not reflect sales value of the Fund and its indexes. We $10,000 is the same size as the space
charges. Performance of an index of funds believe that a logarithmic chart is more between $10,000 and $20,000.
reflects fund expenses and management effective than other types of charts in
fees; performance of a market index does illustrating changes in value during the
not. Performance shown in the chart and early years shown in the chart. The
table(s) does not reflect deduction vertical axis, the one that indicates
====================================================================================================================================
Continued from page 8
- - The LIPPER REAL ESTATE FUNDS INDEX is - A direct investment cannot be made in tions. Generally accepted accounting
an equally weighted representation of an index. Unless otherwise indicated, principles require adjustments to be made
the largest funds in the Lipper Real index results include reinvested to the net assets of the Fund at period
Estate Funds category. These funds dividends, and they do not reflect end for financial reporting purposes, and
primarily invest their equity sales charges. Performance of an index as such, the net asset values for
portfolios in securities of domestic of funds reflects fund expenses; shareholder transactions and the returns
and foreign companies engaged in the performance of a market index does not. based on those net asset values may differ
real estate industry. from the net asset values and returns
OTHER INFORMATION reported in the Financial Highlights.
- - The LIPPER CLOSED-END REAL ESTATE FUNDS
Index is an equally weighted - The Fund's fiscal year end was changed - Property type classifications used in
representation of the largest funds in to August 31, 2007. this report are generally according to
the Lipper Closed-End Real Estate Funds the FTSE National Association of Real
category. These funds primarily invest - The Chartered Financial Estate Investment Trusts (NAREIT)
their equity portfolios in securities Analyst--REGISTERED TRADEMARK-- Equity REITs Index, which is
of domestic and foreign companies (CFA--REGISTERED TRADEMARK--) exclusively owned by NAREIT.
engaged in the real estate industry designation is a globally recognized
standard for measuring the competence
- - The Fund is not managed to track the and integrity of investment
performance of any particular index, professionals.
including the indexes defined here, and
consequently, the performance of the - The returns shown in the management's
Fund may deviate significantly from the discussion of Fund performance are
performance of the indexes. based on net asset values calculated
for shareholder transac-
6
AIM SELECT REAL ESTATE INCOME FUND
========================================== ==========================================
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
As of 8/31/07, including applicable sales As of 6/30/07, the most recent calendar
charges quarter-end, including applicable sales
charges
CLASS A SHARES CLASS A SHARES
Inception (5/31/02) 15.74% Inception (5/31/02) 16.96%
5 Years 17.16 5 Years 16.76
1 Year -1.02 1 Year 11.40
CLASS B SHARES CLASS B SHARES
Inception 15.63% Inception 16.87%
5 Years 17.01 5 Years 16.57
1 Year -0.53 1 Year 11.92
CLASS C SHARES CLASS C SHARES
Inception 15.74% Inception 16.98%
5 Years 17.23 5 Years 16.80
1 Year 2.81 1 Year 15.65
========================================== ==========================================
ON MARCH 12, 2007, THE FUND REORGANIZED ANNUAL 12B-1 FEE APPLICABLE TO THE FUND'S DATE OF THIS REPORT FOR CLASS A, CLASS B
FROM A CLOSED-END FUND TO AN OPEN-END CLASS B AND CLASS C SHARES AND THE ANNUAL AND CLASS C SHARES WAS 1.30%, 2.05% AND
FUND. CLASS A SHARE RETURNS PRIOR TO MARCH OTHER EXPENSES OF SUCH CLASS B AND CLASS C 2.05%, RESPECTIVELY. THE EXPENSE RATIOS
12, 2007, ARE THE HISTORICAL PERFORMANCE SHARES, WHICH ARE ESTIMATED TO BE 0.10% PRESENTED ABOVE MAY VARY FROM THE EXPENSE
OF THE CLOSED-END FUND'S COMMON SHARES HIGHER THAN THOSE OF THE CLOSED-END FUND. RATIOS PRESENTED IN OTHER SECTIONS OF THIS
WHICH INCEPTED MAY 31, 2002 AND WHICH HAD REPORT THAT ARE BASED ON EXPENSES INCURRED
NO 12B-1 FEE. THE CLASS A SHARE RETURNS THE PERFORMANCE DATA QUOTED REPRESENT DURING THE PERIOD COVERED BY THIS REPORT.
PRIOR TO MARCH 12, 2007 DO NOT REFLECT THE PAST PERFORMANCE AND CANNOT GUARANTEE
0.25% ANNUAL 12B-1 FEE APPLICABLE TO THE COMPARABLE FUTURE RESULTS; CURRENT CLASS A SHARE PERFORMANCE REFLECTS THE
FUNDS' CLASS A SHARES OR THE ANNUAL OTHER PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE MAXIMUM 5.50% SALES CHARGE, AND CLASS B
EXPENSES OF SUCH CLASS A SHARES WHICH ARE VISIT AIMINVESTMENTS.COM FOR THE MOST AND CLASS C SHARE PERFORMANCE REFLECTS THE
ESTIMATED TO BE 0.10% HIGHER THAN THOSE OF RECENT MONTH-END PERFORMANCE. PERFORMANCE APPLICABLE CONTINGENT DEFERRED SALES
THE CLOSED-END FUND. IF THE 12B-1 FEE AND FIGURES REFLECT REINVESTED DISTRIBUTIONS CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
OTHER EXPENSES OF THE FUND'S CLASS A (REINVESTED AT NET ASSET VALUE, EXCEPT FOR CDSC ON CLASS B SHARES DECLINES FROM 5%
SHARES WERE REFLECTED, RETURNS PRIOR TO PERIODS PRIOR TO MARCH 12, 2007, WHERE BEGINNING AT THE TIME OF PURCHASE TO 0% AT
MARCH 12, 2007 MAY BE LOWER THAN THOSE REINVESTMENTS WERE MADE AT THE LOWER OF THE BEGINNING OF THE SEVENTH YEAR. THE
SHARES FOR THAT PERIOD. THE CLOSED-END FUND'S NET ASSET VALUE OR CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
MARKET PRICE), CHANGES IN NET ASSET VALUE YEAR AFTER PURCHASE. THE PERFORMANCE OF
THE INCEPTION DATE FOR THE OPEN-END AND THE EFFECT OF THE MAXIMUM SALES CHARGE THE FUND'S SHARE CLASSES WILL DIFFER
FUND'S CLASS B AND CLASS C SHARES IS MARCH UNLESS OTHERWISE STATED. INVESTMENT RETURN PRIMARILY DUE TO DIFFERENT SALES CHARGE
9, 2007; RETURNS SINCE THAT DATE ARE AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT STRUCTURES AND CLASS EXPENSES.
HISTORICAL RETURNS. ALL OTHER RETURNS ARE YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL
BLENDED RETURNS OF HISTORICAL CLASS B AND SHARES. CLASS A SHARES ISSUED IN CONNECTION WITH
CLASS C SHARES AND THE HISTORICAL THE FUND'S REORGANIZATION TO AN OPEN-END
PERFORMANCE OF THE CLOSED-END FUND'S THE TOTAL ANNUAL FUND OPERATING EXPENSE FUND WILL BE SUBJECT TO A 2% REDEMPTION
COMMON SHARES AT NET ASSET VALUE, RESTATED RATIO SET FORTH IN THE MOST RECENT FUND FEE UNTIL MARCH 11, 2008. NEW PURCHASES ON
TO REFLECT THE 1.00% PROSPECTUS AS OF THE OR AFTER MARCH 11, 2007, ARE NOT SUBJECT
TO A REDEMPTION FEE. SEE PROSPECTUS FOR
MORE INFORMATION.
HAD THE ADVISOR NOT WAIVED FEES AND/OR
REIMBURSED EXPENSES IN THE PAST, RETURNS
WOULD HAVE BEEN LOWER.
==========================================
FOR A DISCUSSION OF THE RISKS OF INVESTING
IN YOUR FUND AND INDEXES USED IN THIS
REPORT, PLEASE TURN THE PAGE.
==========================================
7
AIM Select Real Estate Income Fund
AIM SELECT REAL ESTATE INCOME FUND'S PRIMARY INVESTMENT OBJECTIVE IS HIGH CURRENT INCOME. THE FUND'S SECONDARY INVESTMENT OBJECTIVE
IS CAPITAL APPRECIATION.
- - Unless otherwise stated, information presented in this report is as of August 31, 2007, and is based on total net assets.
- - Unless otherwise noted, all data in this report are from A I M Management Group Inc.
ABOUT SHARE CLASSES
- - On March 12, 2007, AIM Select Real - Interest rate risk refers to the risk - Nondiversification increases the risk
Estate Fund was reorganized from a that bond prices generally fall as that the value of the Fund's shares may
Closed-End Fund to an Open-End Fund. interest rates rise; conversely, bond vary more widely, and the Fund may be
Information presented for Class A prices generally rise as interest rates subject to greater investment and
shares prior to the reorganization fall. credit risk than if the Fund invested
included financial data for the more broadly.
Closed-End Fund's Common Shares. - A security is considered to be illiquid
if the Fund is unable to sell such - Because the Fund concentrates its
- - Class B shares are not available as an security at a fair price within a assets in the real estate industry, an
investment for retirement plans reasonable amount of time. A security investment in the Fund will be closely
maintained pursuant to Section 401 of may be deemed illiquid due to lack of linked to the performance of the real
the Internal Revenue Code, including trading volume in the security or if estate markets.
401(k) plans, money purchase pension the security is privately placed and
plans and profit sharing plans, except not traded in any public market or is - Because the Fund focuses its
for plans that have existing accounts otherwise restricted from trading. The investments in real estate investment
invested in Class B shares. Fund may be unable to sell its illiquid trusts (REITs), real estate operating
securities at the time of or price it companies and other companies related
PRINCIPAL RISKS OF INVESTING IN THE FUND desires and could lose its entire to the real estate industry, the value
investment in such securities. of shares may rise and fall more than
- - Credit risk is the risk of loss on an the value of shares of a fund that
investment due to the deterioration of - Lower rated securities may be invests in a broader range of
an issuer's financial health. Such a susceptible to real or perceived companies.
deterioration of financial health may adverse economic and competitive
result in a reduction of the credit industry conditions. - The Fund may use enhanced investment
rating of the issuer's securities and techniques such as short sales. Short
may lead to the issuer's inability to - There is no guarantee that the sales carry the risk of buying a
honor its contractual obligations, investment techniques and risk analyses security back at a higher price at
including making timely payment of used by the Fund's portfolio managers which the Fund's exposure is unlimited.
interest and principal. will produce the desired results.
ABOUT INDEXES USED IN THIS REPORT
- - The Fund could conceivably hold real - Small- and mid-capitalization companies
estate directly if a company defaults tend to be more vulnerable to adverse - The S&P 500--REGISTERED TRADEMARK--
on debt securities. In that event, an developments and more volatile than Index is a market
investment in the Fund may have larger companies. Investments in these capitalization-weighted index covering
additional risks relating to direct sized companies may involve special all major areas of the U.S. Economy. It
ownership of real estate. risks, including those associated with is not the 500 largest companies, but
dependence on a small management group, rather the most widely held 500
- - Prices of equity securities change in little or no operating history, little companies chosen with respect to market
response to many factors including the or no track record of success, limited size, liquidity, and their industry.
historical and prospective earnings of product lines, less publicly available
the issuer, the value of its assets, information, illiquidity, restricted - The FTSE NAREIT Equity REITs Index is a
general economic conditions, interest resale or less frequent trading. market-cap weighted index of all equity
rates, investor perceptions and market REITs traded on the NYSE, NASDAQ
liquidity. - The prices of securities held by the National Market System, and the
Fund may decline in response to market American Stock Exchange. FTSE
- - Foreign securities have additional risks. --TRADEMARK-- is a trade mark of London
risks, including exchange rate changes, Stock Exchange Plc and The Financial
political and economic upheaval, the - The Fund may invest in mortgage- and Times Limited, NAREIT--REGISTERED
relative lack of information, asset-backed securities. These TRADEMARK-- is a trademark of the
relatively low market liquidity, and securities are subject to prepayment or National Association of Real Estate
the potential lack of strict financial call risk, which is the risk that Investment Trusts--REGISTERED
and accounting controls and standards. payments from the borrower may be TRADEMARK-- ("NAREIT") and both are
received earlier or later than expected used by FTSE under license. The FTSE
due to changes in the rate at which the NAREIT Equity REITs Index is calculated
underlying loans are prepaid. by FTSE. All rights in the Indices vest
in FTSE and NAREIT. Neither FTSE nor
NAREIT accept any liability for any
errors or omissions in the FTSE Indices
or underlying data.
================================================================================
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.
================================================================================
Continued on page 6
==========================================
FUND NASDAQ SYMBOLS
Class A Shares ASRAX
Class B Shares SARBX
Class C Shares ASRCX
==========================================
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
AIMINVESTMENTS.COM
8
AIM Select Real Estate Income Fund
SCHEDULE OF INVESTMENTS(A)
August 31, 2007
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS, COMMON STOCKS
& OTHER EQUITY INTERESTS-51.60%
APARTMENTS-1.26%
Essex Property Trust, Inc.(b) 24,100 $ 2,838,739
==========================================================================
DIVERSIFIED-5.13%
iStar Financial Inc. 111,700 4,088,220
- --------------------------------------------------------------------------
Lexington Realty Trust(b) 32,800 678,304
- --------------------------------------------------------------------------
Neuberger Berman Realty Income Fund Inc. 79,000 1,582,370
- --------------------------------------------------------------------------
Nuveen Real Estate Income Fund 36,100 794,200
- --------------------------------------------------------------------------
Vornado Realty Trust 11,000 1,172,490
- --------------------------------------------------------------------------
Washington Real Estate Investment Trust(b) 97,800 3,202,950
==========================================================================
11,518,534
==========================================================================
FREESTANDING-3.26%
Getty Realty Corp.(b) 73,800 2,012,526
- --------------------------------------------------------------------------
National Retail Properties Inc. 162,400 3,814,776
- --------------------------------------------------------------------------
Realty Income Corp.(b) 55,300 1,493,100
==========================================================================
7,320,402
==========================================================================
HEALTHCARE-13.55%
Health Care Property Investors, Inc. 268,800 8,176,896
- --------------------------------------------------------------------------
Health Care REIT, Inc.(b) 217,873 8,693,132
- --------------------------------------------------------------------------
Medical Properties Trust Inc.(b) 103,100 1,388,757
- --------------------------------------------------------------------------
Nationwide Health Properties, Inc. 151,200 4,195,800
- --------------------------------------------------------------------------
Ventas, Inc. 209,000 7,958,720
==========================================================================
30,413,305
==========================================================================
INDUSTRIAL PROPERTIES-1.32%
ProLogis 49,300 2,965,888
==========================================================================
INDUSTRIAL/OFFICE MIXED-0.93%
Liberty Property Trust 53,300 2,081,898
==========================================================================
LODGING-RESORTS-6.75%
Ashford Hospitality Trust 365,200 3,984,332
- --------------------------------------------------------------------------
DiamondRock Hospitality Co.(b) 88,400 1,586,780
- --------------------------------------------------------------------------
Hospitality Properties Trust(b) 177,700 7,012,042
- --------------------------------------------------------------------------
Host Hotels & Resorts Inc. 51,000 1,136,790
- --------------------------------------------------------------------------
LaSalle Hotel Properties 18,400 766,176
- --------------------------------------------------------------------------
Sunstone Hotel Investors, Inc.(b) 24,700 665,912
==========================================================================
15,152,032
==========================================================================
OFFICE PROPERTIES-7.93%
Alexandria Real Estate Equities, Inc.(b) 16,200 1,511,946
- --------------------------------------------------------------------------
BioMed Realty Trust, Inc.(b) 55,800 1,360,404
- --------------------------------------------------------------------------
</Table>
<Table>
SHARES VALUE
- --------------------------------------------------------------------------
<Caption>
OFFICE PROPERTIES-(CONTINUED)
Brandywine Realty Trust 229,501 $ 5,916,536
- --------------------------------------------------------------------------
Douglas Emmett, Inc.(b) 62,600 1,530,570
- --------------------------------------------------------------------------
Mack-Cali Realty Corp.(b) 103,500 4,322,160
- --------------------------------------------------------------------------
SL Green Realty Corp. 28,400 3,166,884
==========================================================================
17,808,500
==========================================================================
REGIONAL MALLS-5.26%
CBL & Associates Properties, Inc. 140,900 4,644,064
- --------------------------------------------------------------------------
General Growth Properties, Inc. 64,400 3,201,324
- --------------------------------------------------------------------------
Macerich Co. (The) 12,100 982,762
- --------------------------------------------------------------------------
Simon Property Group, Inc.(b) 31,500 2,989,980
==========================================================================
11,818,130
==========================================================================
SELF STORAGE FACILITIES-2.21%
Public Storage 19,900 1,508,022
- --------------------------------------------------------------------------
Public Storage-Series A Dep. Shares 135,100 3,453,156
==========================================================================
4,961,178
==========================================================================
SHOPPING CENTERS-2.43%
Developers Diversified Realty Corp. 24,100 1,288,868
- --------------------------------------------------------------------------
Inland Real Estate Corp.(b) 268,700 4,159,476
==========================================================================
5,448,344
==========================================================================
SPECIALTY PROPERTIES-1.57%
Digital Realty Trust, Inc.(b) 38,700 1,509,300
- --------------------------------------------------------------------------
Entertainment Properties Trust(b) 42,300 2,023,632
==========================================================================
3,532,932
==========================================================================
Total Real Estate Investment Trusts,
Common Stocks & Other Equity Interests
(Cost $103,297,129) 115,859,882
==========================================================================
PREFERRED STOCKS-44.83%
APARTMENTS-1.94%
Equity Residential-Series K, 8.29% Pfd.(c) 3,300 190,472
- --------------------------------------------------------------------------
Mid-America Apartment Communities, Inc.-
Series H, 8.30% Pfd. 122,900 3,073,729
- --------------------------------------------------------------------------
Post Properties, Inc.-Series A, 8.50% Pfd. 21,300 1,098,015
==========================================================================
4,362,216
==========================================================================
DIVERSIFIED-2.92%
iStar Financial Inc.,
Series E, 7.88% Pfd. 115,700 2,672,670
- --------------------------------------------------------------------------
Series I, 7.50% Pfd. 125,100 2,782,224
- --------------------------------------------------------------------------
Lexington Realty-Series B, 8.05% Pfd. 44,900 1,109,030
==========================================================================
6,563,924
==========================================================================
</Table>
9
AIM Select Real Estate Income Fund
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------
FREESTANDING-1.23%
National Retail Properties Inc.-Series C,
7.38% Pfd. 117,200 $ 2,754,200
==========================================================================
HEALTHCARE-2.05%
Health Care Property Investors, Inc. Series
F, 7.10% Pfd. 52,500 1,214,325
- --------------------------------------------------------------------------
Health Care REIT, Inc.-Series F, 7.63% Pfd. 10,200 246,636
- --------------------------------------------------------------------------
OMEGA Healthcare Investors, Inc. Series D,
8.38% Pfd. 127,900 3,136,108
==========================================================================
4,597,069
==========================================================================
INDUSTRIAL PROPERTIES-1.62%
EastGroup Properties, Inc.-Series D, 7.95%
Pfd. 142,800 3,570,000
- --------------------------------------------------------------------------
ProLogis-Series C, 8.54% Pfd.(c) 950 57,208
==========================================================================
3,627,208
==========================================================================
INDUSTRIAL/OFFICE MIXED-4.55%
LBA Realty Fund II,
Series A, 8.75% Pfd.(d) 60,000 2,700,000
- --------------------------------------------------------------------------
Series B, 7.63% Pfd.(d) 139,200 2,505,600
- --------------------------------------------------------------------------
PS Business Parks, Inc.,
Series M, 7.20% Pfd. 84,200 1,957,650
- --------------------------------------------------------------------------
Series O, 7.38% Pfd. 65,500 1,532,700
- --------------------------------------------------------------------------
Series P, 6.70% Pfd. 70,400 1,531,200
==========================================================================
10,227,150
==========================================================================
LODGING-RESORTS-10.02%
AP AIMCAP Corp.-Series A, 8.25% Pfd.(c) 195,800 3,867,050
- --------------------------------------------------------------------------
FelCor Lodging Trust Inc.-Series C, 8.00%
Pfd. 104,900 2,486,130
- --------------------------------------------------------------------------
Hersha Hospitality Trust-Series A, 8.00% Pfd. 27,900 684,945
- --------------------------------------------------------------------------
Hilton Hotels Corp., 8.00% Pfd. 30,500 744,200
- --------------------------------------------------------------------------
Hospitality Properties Trust-Series B, 8.88%
Pfd. 295,000 7,439,900
- --------------------------------------------------------------------------
Strategic Hotels & Resorts, Inc.,
Series B, 8.25% Pfd.(b) 46,600 1,137,040
- --------------------------------------------------------------------------
Series C, 8.25% Pfd. 128,800 3,098,928
- --------------------------------------------------------------------------
Sunstone Hotel Investors, Inc.-Series A,
8.00% Pfd. 125,700 3,029,370
==========================================================================
22,487,563
==========================================================================
OFFICE PROPERTIES-8.63%
Corporate Office Properties Trust,
Series G, 8.00% Pfd. 188,600 4,713,114
- --------------------------------------------------------------------------
Series J, 7.63% Pfd.(b) 125,700 3,067,080
- --------------------------------------------------------------------------
HRPT Properties Trust-Series B, 8.75% Pfd. 326,300 8,170,552
- --------------------------------------------------------------------------
Kilroy Realty Corp.,
Series E, 7.80% Pfd. 33,400 802,602
- --------------------------------------------------------------------------
Series F, 7.50% Pfd. 113,200 2,633,032
==========================================================================
19,386,380
==========================================================================
</Table>
<Table>
SHARES VALUE
- --------------------------------------------------------------------------
<Caption>
REGIONAL MALLS-7.54%
CBL & Associates Properties, Inc.,
Series C, 7.75% Pfd. 220,400 $ 5,454,900
- --------------------------------------------------------------------------
Series D, 7.38% Pfd. 110,500 2,663,050
- --------------------------------------------------------------------------
Glimcher Realty Trust,
Series F, 8.75% Pfd. 52,200 1,291,950
- --------------------------------------------------------------------------
Series G, 8.13% Pfd.(b) 92,100 2,196,585
- --------------------------------------------------------------------------
Realty Income Corp.-Series E, 6.75% Pfd. 103,800 2,402,970
- --------------------------------------------------------------------------
Taubman Centers, Inc.-Series G, 8.00% Pfd. 116,600 2,909,170
==========================================================================
16,918,625
==========================================================================
SELF STORAGE FACILITIES-1.77%
Public Storage, Inc.,
Series C, 6.60% Pfd. 10,000 229,900
- --------------------------------------------------------------------------
Series G, 7.00% Pfd. 38,100 926,592
- --------------------------------------------------------------------------
Series I, 7.25% Pfd.(b) 78,500 1,945,230
- --------------------------------------------------------------------------
Series M, 6.63% Pfd. 38,100 871,728
==========================================================================
3,973,450
==========================================================================
SHOPPING CENTERS-0.91%
Cedar Shopping Centers Inc.-Series A, 8.88%
Pfd.(b) 50,100 1,257,510
- --------------------------------------------------------------------------
Saul Centers, Inc.-Series A, 8.00% Pfd. 31,800 783,552
==========================================================================
2,041,062
==========================================================================
SPECIALTY PROPERTIES-1.65%
Digital Realty Trust, Inc.,
Series A, 8.50% Pfd. 32,400 819,396
- --------------------------------------------------------------------------
Series B, 7.88% Pfd. 50,800 1,266,444
- --------------------------------------------------------------------------
Entertainment Properties Trust-Series B,
7.75% Pfd. 70,700 1,626,807
==========================================================================
3,712,647
==========================================================================
Total Preferred Stocks (Cost
$104,620,433) 100,651,494
==========================================================================
<Caption>
PRINCIPAL
AMOUNT
ASSET-BACKED SECURITIES-0.01%
COMMERCIAL MORTGAGE BACKED SECURITY
CONDUIT-0.01%
Credit Suisse First Boston Mortgage
Securities Corp.-Series 2003-C3, Class G,
Pass Through Ctfs., 4.62%, 05/15/38
(Acquired 06/25/07; Cost $23,289)(c)(e) $ 25,000 22,353
==========================================================================
</Table>
10
AIM Select Real Estate Income Fund
<Table>
<Caption>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------
MONEY MARKET FUNDS-3.11%
Liquid Assets Portfolio-Institutional
Class(f) 3,492,846 $ 3,492,846
- --------------------------------------------------------------------------
Premier Portfolio-Institutional Class(f) 3,492,846 3,492,846
==========================================================================
Total Money Market Funds (Cost
$6,985,692) 6,985,692
==========================================================================
TOTAL INVESTMENTS (excluding investments
purchased with cash collateral from
securities on loan)-99.55% (Cost
$214,926,543) 223,519,421
==========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES ON LOAN
MONEY MARKET FUNDS-4.93%
Liquid Asset Portfolio-Institutional Class
(Cost $11,070,048)(f)(g) 11,070,048 11,070,048
==========================================================================
TOTAL INVESTMENTS-104.48% (Cost $225,996,591) 234,589,469
__________________________________________________________________________
==========================================================================
OTHER ASSETS LESS LIABILITIES-(4.48)% (10,061,984)
__________________________________________________________________________
==========================================================================
NET ASSETS-100.00% $224,527,485
__________________________________________________________________________
==========================================================================
</Table>
Investment Abbreviations:
<Table>
Ctfs. - Certificates
Dep. - Depositary
Pfd. - Preferred
REIT - Real Estate Investment Trust
</Table>
Notes to Schedule of Investments:
(a) Property type classifications used in this report are generally according to
FSTE NAREIT U.S. Equity Index.
(b) All or a portion of this security was out on loan at August 31, 2007.
(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 aggregate value of these securities at August 31, 2007
was $4,137,083, which represented 1.84% of the Fund's Net Assets. See Note
1A.
(d) 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, 2007 was
$5,205,600, which represented 2.32% of the Fund's Net Assets.
(e) 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 value of this security at August 31, 2007 represented 0.01% of the
Fund's Net Assets. Unless otherwise indicated, this security is not
considered to be illiquid.
(f) The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
(g) The security has been segregated to satisfy the commitment to return the
cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 7.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
11
AIM Select Real Estate Income Fund
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2007
<Table>
ASSETS:
Investments, at value (Cost $207,940,851)* $216,533,729
- -----------------------------------------------------------
Investments in affiliated money market funds
(Cost $18,055,740) 18,055,740
===========================================================
Total investments (Cost $225,996,591) 234,589,469
===========================================================
Receivables for:
Investments sold 1,621,019
- -----------------------------------------------------------
Fund shares sold 57,020
- -----------------------------------------------------------
Dividends and Interest 330,579
- -----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 28,159
- -----------------------------------------------------------
Other assets 156,603
===========================================================
Total assets 236,782,849
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Fund shares reacquired 643,180
- -----------------------------------------------------------
Trustee deferred compensation and
retirement plans 83,850
- -----------------------------------------------------------
Collateral upon return of securities loaned 11,070,048
- -----------------------------------------------------------
Accrued distribution fees 48,366
- -----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 3,820
- -----------------------------------------------------------
Accrued transfer agent fees 65,858
- -----------------------------------------------------------
Accrued operating expenses 340,242
===========================================================
Total liabilities 12,255,364
===========================================================
Net assets applicable to shares outstanding $224,527,485
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $141,993,739
- -----------------------------------------------------------
Undistributed net investment income 1,704,336
- -----------------------------------------------------------
Undistributed net realized gain 72,236,532
- -----------------------------------------------------------
Unrealized appreciation 8,592,878
===========================================================
$224,527,485
___________________________________________________________
===========================================================
NET ASSETS:
Class A $223,999,815
___________________________________________________________
===========================================================
Class B $ 162,269
___________________________________________________________
===========================================================
Class C $ 355,786
___________________________________________________________
===========================================================
Institutional Class $ 9,615
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.001 PAR VALUE, UNLIMITED NUMBER OF
SHARES AUTHORIZED:
Class A 13,765,068
___________________________________________________________
===========================================================
Class B 9,998
___________________________________________________________
===========================================================
Class C 21,915
___________________________________________________________
===========================================================
Institutional Class 591
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 16.27
- -----------------------------------------------------------
Offering price per share
(Net asset value of $16.27 divided by
94.50%) $ 17.22
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 16.23
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 16.23
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per
share $ 16.27
___________________________________________________________
===========================================================
</Table>
* At August 31, 2007, securities with an aggregate value of $10,917,084 were on
loan to brokers.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12
AIM Select Real Estate Income Fund
STATEMENT OF OPERATIONS
For the period January 1, 2007 through August 31, 2007 and the year ended
December 31, 2006
<Table>
<Caption>
EIGHT MONTHS
ENDED YEAR ENDED
AUGUST 31, DECEMBER 31,
2007 2006
- ------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 13,176,320 $ 39,566,245
- ------------------------------------------------------------------------------------------
Dividends from affiliated money market funds (includes
securities lending income of $2,063 and $0, respectively) 465,538 1,477,799
==========================================================================================
Total investment income 13,641,858 41,044,044
==========================================================================================
EXPENSES:
Advisory fees 2,283,096 8,195,941
- ------------------------------------------------------------------------------------------
Administrative services fees 78,213 219,452
- ------------------------------------------------------------------------------------------
Custodian fees 37,177 83,205
- ------------------------------------------------------------------------------------------
Distribution fees:
Class A 363,634 --
- ------------------------------------------------------------------------------------------
Class B 370 --
- ------------------------------------------------------------------------------------------
Class C 389 --
- ------------------------------------------------------------------------------------------
Closed-End Fund auction rate preferred shares remarketing
fees -- 428,151
- ------------------------------------------------------------------------------------------
Transfer agent fees -- A, B and C 202,286 53,752
- ------------------------------------------------------------------------------------------
Trustees' and officer's fees and benefits 22,749 42,022
- ------------------------------------------------------------------------------------------
Reports to shareholders 270,006 157,419
- ------------------------------------------------------------------------------------------
Other 157,868 659,219
==========================================================================================
Total expenses 3,415,788 9,839,161
==========================================================================================
Less: Fees waived and expense offset arrangement(s) (415,228) (2,763,281)
==========================================================================================
Net expenses 3,000,560 7,075,880
==========================================================================================
Net investment income 10,641,298 33,968,164
==========================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain from:
Investment securities 110,632,400 148,263,431
- ------------------------------------------------------------------------------------------
Swap agreements -- 3,817,415
==========================================================================================
110,632,400 152,080,846
==========================================================================================
Change in net unrealized appreciation (depreciation):
Investment securities (133,061,751) 2,657,759
- ------------------------------------------------------------------------------------------
Swap agreements -- (2,198,773)
==========================================================================================
(133,061,751) 458,986
==========================================================================================
Net realized and unrealized gain (loss) (22,429,351) 152,539,832
==========================================================================================
Distributions to auction rate preferred shareholders of
Closed-End Fund from net investment income -- (8,030,811)
==========================================================================================
Net increase (decrease) in net assets resulting from
operations $(11,788,053) $178,477,185
__________________________________________________________________________________________
==========================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13
AIM Select Real Estate Income Fund
STATEMENT OF CHANGES IN NET ASSETS
For the period January 1, 2007 through August 31, 2007, the year ended
December 31, 2006 and the year ended December 31, 2005
<Table>
<Caption>
EIGHT MONTHS
ENDED YEAR ENDED YEAR ENDED
AUGUST 31, DECEMBER 31, DECEMBER 31,
2007 2006 2005
- -------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 10,641,298 $ 33,968,164 $ 35,929,303
- -------------------------------------------------------------------------------------------------------------
Net realized gain 110,632,400 152,080,846 74,378,212
- -------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (133,061,751) 458,986 (88,702,186)
- -------------------------------------------------------------------------------------------------------------
Distributions to auction rate preferred shareholders of
Closed-End Fund from net investment income -- (8,030,811) (6,598,783)
=============================================================================================================
Net increase (decrease) in net assets resulting from
operations (11,788,053) 178,477,185 15,006,546
=============================================================================================================
Distributions to shareholders from net investment income:
Class A (9,120,720) (35,249,369) (49,480,081)
- -------------------------------------------------------------------------------------------------------------
Class B (961) -- --
- -------------------------------------------------------------------------------------------------------------
Class C (588) -- --
- -------------------------------------------------------------------------------------------------------------
Institutional Class (172) -- --
=============================================================================================================
Total distributions from net investment income (9,122,441) (35,249,369) (49,480,081)
=============================================================================================================
Distributions to shareholders from net realized
gains -- Class A (3,664,438) (150,180,311) (66,504,582)
=============================================================================================================
Decrease in net assets resulting from distributions (12,786,879) (185,429,680) (115,984,663)
=============================================================================================================
Share transactions-net:
Class A (429,827,090) (13,033,473) --
- -------------------------------------------------------------------------------------------------------------
Class B 168,134 -- --
- -------------------------------------------------------------------------------------------------------------
Class C 357,312 -- --
- -------------------------------------------------------------------------------------------------------------
Institutional Class 10,428 -- --
=============================================================================================================
Net increase (decrease) in net assets resulting from
share transactions (429,291,216) (13,033,473) --
=============================================================================================================
Net increase (decrease) in net assets (453,866,148) (19,985,968) (100,978,117)
=============================================================================================================
NET ASSETS:
Beginning of period 678,393,633 698,379,601 799,357,718
=============================================================================================================
End of period (including undistributed net investment
income of $1,704,336, $(70,787) and $(53,044),
respectively) $224,527,485 $678,393,633 $ 698,379,601
_____________________________________________________________________________________________________________
=============================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
14
AIM Select Real Estate Income Fund
STATEMENT OF CASH FLOWS
For the year ended December 31, 2006*
<Table>
CASH PROVIDED BY OPERATING ACTIVITIES:
Net increase in net assets resulting from operations $ 178,477,185
===========================================================================
ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS TO NET
CASH PROVIDED BY OPERATIONS:
Purchases of investments (201,025,669)
- ---------------------------------------------------------------------------
Proceeds from disposition of investments 580,978,632
- ---------------------------------------------------------------------------
Decrease in dividends receivable 1,499,526
- ---------------------------------------------------------------------------
Decrease in receivable for interest rate swap transactions 2,198,773
- ---------------------------------------------------------------------------
Decrease in other assets 55,907
- ---------------------------------------------------------------------------
Increase in common shares dividends payable 5,836,978
- ---------------------------------------------------------------------------
Decrease in interest payable on interest rate swap
transactions (17,346)
- ---------------------------------------------------------------------------
Decrease in dividends payable declared on auction rate
preferred shares (92,786)
- ---------------------------------------------------------------------------
Increase in accrued expenses and other payables 239,725
- ---------------------------------------------------------------------------
Unrealized appreciation of investment securities (2,657,759)
- ---------------------------------------------------------------------------
Net realized gain from investment securities (148,263,431)
===========================================================================
Net cash provided by operating activities 417,229,735
===========================================================================
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Decrease in payable to custodian (40,132)
- ---------------------------------------------------------------------------
Disbursements from common shares repurchased (13,033,473)
- ---------------------------------------------------------------------------
Disbursements from preferred shares redeemed (205,000,000)
- ---------------------------------------------------------------------------
Distributions paid to common shareholders (185,429,680)
===========================================================================
Net cash provided by (used in) financing activities (403,503,285)
===========================================================================
Net increase in cash and cash equivalents 13,726,450
===========================================================================
Cash and cash equivalents at beginning of period 0
===========================================================================
Cash and cash equivalents at end of period $ 13,726,450
___________________________________________________________________________
===========================================================================
* Statement of Cash Flows is not presented for the period
January 1, 2007 through August 31, 2007 as the Fund meets
the exemption criteria in accordance with FAS No. 102,
Statement of Cash Flows - Exemption of Certain
Enterprises.
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
15
AIM Select Real Estate Income Fund
NOTES TO FINANCIAL STATEMENTS
August 31, 2007
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Select Real Estate Income 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 March 12, 2007, the Fund operated as AIM Select Real Estate Income
Fund (the "Closed-End Fund"). The Closed-End Fund was reorganized as an open-end
fund on March 12, 2007 (the "Reorganization Date") through the transfer of all
its assets and liabilities to the Fund (the "Reorganization"). Prior to the
Reorganization, the Closed-End Fund redeemed Preferred Shares in their entirety.
As part of the reorganization, the Closed-End Fund was restructured from a sole
series of AIM Select Real Estate Income Fund to a new series portfolio of the
Trust. Upon the closing of the Reorganization, holders of the Closed-End Fund
Common Shares received Class A shares of the Fund. Information for the Common
Shares of the Closed-End Fund, prior to the Reorganization is included with
Class A shares throughout this report. Effective August 31, 2007, the fiscal
year of the Fund changed to August 31.
The Fund's primary investment objective is high current income; the Fund's
secondary investment objective is capital appreciation.
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 or official closing price as of the close of
the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on that
day. Securities traded in the over-the-counter market are valued based on
prices furnished by independent pricing services or market makers. When
such securities are valued by an independent pricing service they may be
considered fair valued. 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 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 open-end and closed-end registered
investment companies that trade on an exchange are valued at the last sales
price or official closing price as of the close of the customary trading
session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) and unlisted equities 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, including commercial paper,
having 60 days or less to maturity are recorded at amortized cost which
approximates value. Debt securities are subject to interest rate and credit
risks. In addition, all debt securities involve some risk of default with
respect to interest and/or principal payments.
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. If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at
the market quotations. Because trading hours for certain foreign securities
end before the close of the NYSE, closing market quotations may become
unreliable. If between the time trading ends on a particular security and
the close of the customary trading session on the NYSE, events occur that
are significant and may make the closing price unreliable, the Fund may
fair value the security. If 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. Foreign securities may have additional risks including exchange
rate changes, potential for sharply devalued currencies and high inflation,
political and economical upheaval, the relative lack of issuer information,
relatively low market liquidity and the potential lack of strict financial
and accounting controls and standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources
and are valued at the last bid price in the case of equity securities and
in the case of debt obligations, the mean between the last bid and asked
prices.
Securities for which market quotations are not readily available or are
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
16
AIM Select Real Estate Income Fund
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
The Fund may receive proceeds from litigation settlements involving Fund
investments. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
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 recharacterizes distributions received from REIT investments
based on information provided by the REIT into the following categories:
ordinary income, long-term and short-term capital gains, and return of
capital. If information is not available timely from the REIT, the
recharacterization will be based on available information which may include
the previous year's allocation. If new or additional information becomes
available from the REIT at a later date, a recharacterization will be made
in the following year. The Fund records as dividend income the amount
recharacterized as ordinary income and as realized gain the amount
recharacterized as capital gain in the Statement of Operations, and the
amount recharacterized as return of capital in the Statement of Changes in
Net Assets. These recharacterizations are reflected in the accompanying
financial statements.
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 -- Effective on Reorganization Date, distributions from
income are declared and paid quarterly and are recorded on ex-dividend
date. Distributions from net realized capital gain, if any, are generally
paid annually and recorded on ex-dividend date. The Fund may elect to treat
a portion of the proceeds from redemptions as distributions for federal
income tax purposes.
Prior to the Reorganization, the distribution policy for dividends from
net investment income (prior to any reclassification as a return of
capital) were declared and paid to Common Shareholders monthly. The
Closed-End Fund offered a Dividend Reinvestment Plan to allow dividends,
including any capital gain dividends, on Common Shares to be automatically
reinvested in additional Common Shares of the Closed-End Fund.
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.
17
AIM Select Real Estate Income Fund
I. RISKS INVOLVED IN INVESTING IN THE FUND -- The Fund's investments are
concentrated in a comparatively narrow segment of the economy.
Consequently, the Fund may tend to be more volatile than other mutual
funds, and the value of the Fund's investments may tend to rise and fall
more rapidly.
J. TEMPORARY REDEMPTION FEES -- The Fund has a 2% redemption fee that is to be
retained by the Fund if Class A shares issued in connection with the
Reorganization of the Closed-End Fund are redeemed within 12 months
following the Reorganization Date. 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.
K. 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 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 0.75%
- -------------------------------------------------------------------
Next $250 million 0.74%
- -------------------------------------------------------------------
Next $500 million 0.73%
- -------------------------------------------------------------------
Next $1.5 billion 0.72%
- -------------------------------------------------------------------
Next $2.5 billion 0.71%
- -------------------------------------------------------------------
Next $2.5 billion 0.70%
- -------------------------------------------------------------------
Next $2.5 billion 0.69%
- -------------------------------------------------------------------
Over $10 billion 0.68%
__________________________________________________________________
===================================================================
</Table>
Prior to the Reorganization, the Closed-End Fund paid an advisory fee to AIM
at annual rate of 0.90% of the sum of the Closed-End Fund's average daily net
assets attributable to Common Shares, plus assets attributable to any Preferred
Shares that were outstanding, plus the principal amount of any Borrowings
("Managed Assets"), payable on a monthly basis.
Prior to the Reorganization, AIM had contractually agreed to waive a portion
of its advisory fee as a percentage of average daily Managed Assets for the
first seven years of the Closed-End Fund's operations as follows:
<Table>
<Caption>
WAIVER PERIOD FEE WAIVER
- ------------------------------------------------------------------------
05/31/02-06/30/07 0.30%
========================================================================
07/01/07-06/30/08 0.20%
========================================================================
07/01/08-06/30/09 0.10%
_______________________________________________________________________
========================================================================
</Table>
Under the terms of a master sub-advisory agreement between AIM and INVESCO
Institutional (N.A.), Inc., AIM pays INVESCO Institutional (N.A.), Inc. 40% of
the amount paid by the Fund to AIM, net if any fee waivers and expense
reimbursements. Prior to March 12, 2007, AIM paid INVESCO Institutional (N.A.),
Inc. 50% of the amount payable by the Closed-End Fund to AIM.
Further, effective July 1, 2007, AIM has contractually agreed, through at
least June 30, 2008, to waive 100% of the advisory fee AIM receives from the
affiliated money market funds on investments by the Fund in such affiliated
money market funds. Prior to July 1, 2007, AIM had voluntarily agreed to waive
25% of the advisory fee AIM receives from the affiliated money market funds on
investments by the Fund in such affiliated money market funds.
For the period January 1, 2007 to August 31, 2007 and the year ended
December 31, 2006, AIM waived advisory fees of $403,690 and $2,739,842,
respectively.
At the request of the Trustees of the Trust, INVESCO PLC ("INVESCO")
(formerly "AMVESCAP PLC") 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. During the
period January 1, 2007 to August 31, 2007 and the year ended December 31, 2006,
INVESCO did not reimburse any expenses.
The Trust has entered into a master administrative services agreement with
AIM pursuant to which the Fund has agreed to pay AIM for certain administrative
costs incurred in providing accounting services, to the Fund. For the period
January 1, 2007 to August 31, 2007 and the year ended December 31, 2006,
expenses incurred under the agreement are shown in the Statement of Operations
as administrative services fees.
The Trust has entered into a transfer agency and service agreement with AIM
Investment Services, Inc. ("AIS") pursuant to which the Fund effective the
Reorganization Date has agreed to pay 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 from the Reorganization Date to August 31, 2007, the Fund paid AIS
$194,129 for Class A, Class B and Class C share classes.
18
AIM Select Real Estate Income 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 and Institutional Class shares of the Fund effective on the
Reorganization Date. 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") effective on the Reorganization Date. 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 Plan payments, up to 0.25% of
the average daily net assets of each class of 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. Financial Industry Regulatory
Authority ("FINRA"), formerly known as National Association of Securities
Dealers, 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. For the
period from the Reorganization Date to August 31, 2007, expenses incurred under
the Plans are shown in the Statement of Operations as distribution fees.
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
from the Reorganization Date to August 31, 2007, ADI advised the Fund that it
retained $4,249 in front-end sales commissions from the sale of Class A shares
and $0, $0 and $0 from Class A, Class B and Class C shares, respectively, for
CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Fund are officers and directors of AIM
and/or AIM Investments, the parent corporation of AIM.
NOTE 3--INVESTMENTS IN AFFILIATES
The Fund is permitted, pursuant to procedures approved by the Board of Trustees,
to invest daily available cash balances and cash collateral from securities
lending transactions in affiliated money market funds. The Fund and the money
market funds below have the same investment advisor and therefore, are
considered to be affiliated. The tables below show the transactions in and
earnings from investments in affiliated money market funds for the period
January 1, 2007 to August 31, 2007. During the period each investment maintained
a $1.00 net asset value, as such there is no realized gain/(loss) and no change
in unrealized appreciation/(depreciation).
INVESTMENTS OF DAILY AVAILABLE CASH BALANCES:
<Table>
<Caption>
VALUE PURCHASES PROCEEDS VALUE DIVIDEND
FUND 12/31/06 AT COST FROM SALES 08/31/07 INCOME
- -------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $ 6,619,259 $112,170,850 $(115,297,263) $3,492,846 $232,463
- -------------------------------------------------------------------------------------------------
Premier
Portfolio-Institutional
Class 6,619,259 112,170,850 (115,297,263) 3,492,846 231,012
=================================================================================================
Subtotal $13,238,518 $224,341,700 $(230,594,526) $6,985,692 $463,475
=================================================================================================
</Table>
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
<Table>
<Caption>
VALUE PURCHASES PROCEEDS VALUE DIVIDEND
FUND 12/31/06 AT COST FROM SALES 08/31/07 INCOME*
- -------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $ -- $ 85,779,636 $ (74,709,588) $11,070,048 $ 2,063
=================================================================================================
Total
Investments
in
Affiliates $13,238,518 $310,121,336 $(305,304,114) $18,055,740 $465,538
_________________________________________________________________________________________________
=================================================================================================
</Table>
* Net of compensation to counterparties.
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, (ii) custodian credits which result
from periodic overnight cash balances at the custodian and (iii) a one time
custodian fee credit used to offset custodian fees. For the period January 1,
2007 to August 31, 2007 and the year ended December 31, 2006, the Fund and the
Closed-End Fund received credits from these arrangements, which resulted in the
reduction of the Fund and the Closed-End Fund's total expenses of $11,538 and
$23,439, 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 certain Trustees and Officers of the Fund. 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, certain 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.
19
AIM Select Real Estate Income Fund
During the period January 1, 2007 to August 31, 2007 and the year ended
December 31, 2006, the Fund and the Closed-End Fund paid legal fees of $4,459
and $7,122, 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
Pursuant to an exemptive order from the Securities and Exchange Commission, the
Fund effective on the Reorganization Date 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. During the period January 1, 2007
to August 31, 2007 and the year ended December 31, 2006, the Fund did not borrow
or lend under the interfund lending facility.
Effective on June 27, 2007, the Fund is a party to 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 from June 27,
2007 to August 31, 2007, the Fund did not borrow under the uncommitted unsecured
revolving credit facility.
For the period January 1, 2007 to March 12, 2007, the Closed-End Fund is a
party to a committed line of credit facility with a syndicate administered by
JPMorgan Chase Bank. The Closed-End Fund may borrow up to the lesser of (i)
$250,000,000, or (ii) the limits set by its prospectus for borrowings. The
Closed-End 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 0.05% on the unused
balance of the committed line. For the period January 1, 2007 to March 12, 2007,
the Closed-End Fund did not borrow under the committed 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 contractually agreed upon rate.
NOTE 7--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities having a market value up to one-third of
the Fund's total assets. Such loans are secured by collateral equal to no less
than the market value of the loaned securities determined daily. Such collateral
will be cash or debt securities issued or guaranteed by the U.S. Government or
any of its agencies. Cash collateral received in connection with these loans is
invested in short-term money market instruments or affiliated money market
funds. It is the Fund's policy to obtain additional collateral from or return
excess collateral to the borrower by the end of the next business day, following
the valuation date of the securities loaned. Therefore, the value of the
collateral held may be temporarily less than the value of the securities on
loan. Lending securities entails a risk of loss to the Fund if and to the extent
that the market value of the securities loaned were to increase and the borrower
did not increase the collateral accordingly, and the borrower fails to return
the securities. The Fund could also experience delays and costs in gaining
access to the collateral. The Fund bears the risk of any deficiency in the
amount of the collateral available for return to the borrower due to any loss on
the collateral invested.
At August 31, 2007, securities with an aggregate value of $10,917,084 were
on loan to brokers. The loans were secured by cash collateral of $11,070,048
received by the Fund and subsequently invested in an affiliated money market
fund. For the period January 1, 2007 to August 31, 2007 and the year ended
December 31, 2006, the Fund and the Closed-End Fund received dividends on cash
collateral investments of $2,063 and $0, respectively, for securities lending
transactions, which are net of compensation to counterparties.
NOTE 8--TAX INFORMATION
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the period January 1, 2007 to
August 31, 2007 and the years ended December 31, 2006 and 2005 was as follows:
<Table>
<Caption>
2007 2006 2005
- ---------------------------------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 9,122,441 $ 42,317,025(a) $ 38,832,671(a)
- ---------------------------------------------------------------------------------------------------------
Long-term capital gain 3,664,438 151,143,466(b) 83,750,775(b)
=========================================================================================================
Total distributions $12,786,879 $193,460,491 $122,583,446
_________________________________________________________________________________________________________
=========================================================================================================
</Table>
(a) Includes Preferred Shares ordinary income distributions of $1,756,638
and $2,090,399 for the years ended December 31, 2006 and 2005,
respectively.
(b) Includes Preferred Shares long-term capital gain distributions of
$6,274,173 and $4,508,384 for the years ended December 31, 2006 and
2005, respectively.
20
AIM Select Real Estate Income Fund
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2007 and December 31, 2006, the components of net assets on a
tax basis were as follows:
<Table>
<Caption>
2007 2006
- ------------------------------------------------------------------------------------------
Undistributed ordinary income $ 5,222,936 $ --
- ------------------------------------------------------------------------------------------
Undistributed long-term gain 70,280,404 3,656,775
- ------------------------------------------------------------------------------------------
Net unrealized appreciation -- investments 7,107,595 140,256,424
- ------------------------------------------------------------------------------------------
Temporary book/tax differences (77,189) (70,787)
- ------------------------------------------------------------------------------------------
Shares of beneficial interest 141,993,739 534,551,221
==========================================================================================
Total net assets $224,527,485 $678,393,633
__________________________________________________________________________________________
==========================================================================================
</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 net 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 benefits.
The Fund does not have a capital loss carryforward as of August 31, 2007.
NOTE 9--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the period January 1, 2007 to August 31, 2007 was $96,914,172
and $515,098,675, respectively and during the year ended December 31, 2006 was
$201,025,669 and $562,983,172, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------------------------
EIGHT MONTHS ENDED YEAR ENDED
AUGUST 31, DECEMBER 31,
2007 2006
- ------------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $15,477,717 $142,397,229
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (8,370,122) (2,140,805)
================================================================================================
Net unrealized appreciation of investment securities $ 7,107,595 $140,256,424
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $227,481,874 at August 31, 2007. Cost of investments for
tax purposes is $536,174,892 at December 31, 2006.
</Table>
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of expenses related to the
plan of reorganization and the use of a portion of the proceeds from redemptions
as distributions, on August 31, 2007, undistributed net investment income was
increased by $256,266, undistributed net realized gain was decreased by
$36,990,000 and shares of beneficial interest increased by $36,733,734. This
reclassification had no effect on the net assets of the Fund.
21
AIM Select Real Estate Income Fund
NOTE 11--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 unless certain waiver criteria are met and under certain circumstances
load waiver shares may be subject to a CDSC. Class B shares and Class C shares
are sold with a CDSC. Institutional Class shares are sold at net asset value.
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*
- -------------------------------------------------------------------------------------------------------------------------
EIGHT MONTHS ENDED YEAR ENDED
AUGUST 31, DECEMBER 31,
2007(A)(B) 2006
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 141,022 $ 2,382,123 -- $ --
- -------------------------------------------------------------------------------------------------------------------------
Class B(c) 10,418 174,122 -- --
- -------------------------------------------------------------------------------------------------------------------------
Class C(c) 22,500 365,894 -- --
- -------------------------------------------------------------------------------------------------------------------------
Institutional Class(c) 581 10,017 -- --
=========================================================================================================================
Issued as reinvestment of dividends:
Class A 212,635 3,618,000 -- --
- -------------------------------------------------------------------------------------------------------------------------
Class B(c) 55 926 -- --
- -------------------------------------------------------------------------------------------------------------------------
Class C(c) 35 588 -- --
- -------------------------------------------------------------------------------------------------------------------------
Institutional Class(c) 10 172 -- --
=========================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 1 22 -- --
- -------------------------------------------------------------------------------------------------------------------------
Class B (1) (22) -- --
=========================================================================================================================
Reacquired:(d)
Class A (25,696,786) (435,827,235) (827,300)(e) (13,033,473)(e)
- -------------------------------------------------------------------------------------------------------------------------
Class B(c) (474) (6,892) -- --
- -------------------------------------------------------------------------------------------------------------------------
Class C(c) (620) (9,170) -- --
- -------------------------------------------------------------------------------------------------------------------------
Institutional Class(c) -- 239 -- --
=========================================================================================================================
(25,310,624) $(429,291,216) (827,300)(e) $(13,033,473)(e)
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
(*) For the year ended December 31, 2005, there were no changes in shares
outstanding.
(a) There are three entities that are each record owners of more than 5% of
the outstanding shares of the Fund and in the aggregate they own 40% 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.
(b) Upon the Reorganization as an open-end fund on March 12, 2007, holders
of the Closed-End Fund Common Shares received 39,108,196 Class A shares
of the Fund with an aggregate net assets value of $680,052,002 in
connection with such reorganization, which was equal to the number of
Closed-End Fund Common Shares they owned and the aggregate net assets
value prior to the Reorganization. The net asset value of the Fund's
Class A shares received in connection with the Reorganization
immediately after the Reorganization was the same as the net asset value
of Closed-End Fund Common Shares immediately prior to the
Reorganization.
(c) Class B, Class C and Institutional Class shares commenced on March 9,
2007.
(d) Net of redemption fees of $8,762,412 allocated among the classes based
on relative net assets of each class.
(e) Closed-End Fund repurchased and retired Common Shares.
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 has assessed the
application of FIN 48 to the Fund and has determined that the adopting of FIN 48
is not expected to have a material impact on the Fund. Management intends for
the Fund to adopt FIN 48 provisions during the fiscal year ending August 31,
2008 as required.
22
AIM Select Real Estate Income Fund
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
March 12, 2007 includes financial data for the common shares of the Closed-End
Fund.
<Table>
<Caption>
CLASS A*
------------------------------------------------
JANUARY 1, 2007
TO YEAR ENDED DECEMBER 31,
AUGUST 31, --------------------------
2007 2006 2005
- -------------------------------------------------------------------------------
Net asset value, beginning of
period $ 17.35 $ 17.49 $ 20.02
- -------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.44(a) 0.86 0.90
- -------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized
and unrealized) (1.54) 3.88 (0.36)
- -------------------------------------------------------------------------------
Less distributions to auction
rate preferred shareholders of
Closed-End Fund from net
investment income(c) N/A (0.20) (0.17)
===============================================================================
Total from investment
operations (1.10) 4.54 0.37
===============================================================================
Less offering costs charged to
paid-in-capital:
Offering costs on common
shares of Closed-End Fund -- -- --
- -------------------------------------------------------------------------------
Offering costs on auction rate
preferred shares of
Closed-End Fund -- -- --
- -------------------------------------------------------------------------------
Dilutive effect of common
share offering of Closed-End
Fund -- -- --
===============================================================================
Total offering costs charged
to paid-in capital of
Closed-End Fund -- -- --
===============================================================================
Less distributions:
Dividends from net investment
income (0.38) (0.89) (1.24)
- -------------------------------------------------------------------------------
Distributions from net
realized gains (0.09) (3.84) (1.66)
- -------------------------------------------------------------------------------
Return of capital -- -- --
===============================================================================
Total distributions (0.47) (4.73) (2.90)
===============================================================================
Increase from common shares of
Closed-End Fund repurchased -- 0.05 --
===============================================================================
Redemption fees added to shares
of beneficial interest 0.49 N/A N/A
===============================================================================
Net asset value, end of period $ 16.27 $ 17.35 $ 17.49
===============================================================================
Market value per common share of
Closed-End Fund N/A $ 16.67 $ 14.98
_______________________________________________________________________________
===============================================================================
Total return at net asset value (3.59)%(d)(e) 29.15%(f) 4.44%(f)
===============================================================================
Market value return(f) N/A 44.88% 2.33%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $224,000 $678,394 $698,380
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average net
assets:
With fee waivers and/or
expense reimbursements 1.08%(g) 0.96%(h) 0.95%(h)
- -------------------------------------------------------------------------------
Without fee waivers and/or
expense reimbursements 1.23%(g) 1.33%(h) 1.33%(h)
===============================================================================
Ratio of net investment income
to average net assets 3.82%(g) 4.59%(h) 4.70%(h)
===============================================================================
Ratio of distributions to
auction rate preferred
shareholders of Closed-End
Fund to average net assets
attributable to common shares
of Closed-End Fund N/A 1.30%(i) 0.86%
===============================================================================
Portfolio turnover rate(j) 24% 23% 17%
===============================================================================
Auction rate preferred shares of
Closed-End Fund:
Liquidation value, end of
period (000s omitted) N/A -- $205,000
===============================================================================
Total shares outstanding N/A -- 8,200
===============================================================================
Asset coverage per share N/A -- $110,168
===============================================================================
Liquidation and market value
per share N/A -- $ 25,000
_______________________________________________________________________________
===============================================================================
<Caption>
CLASS A*
-------------------------------------------
MAY 31, 2002
(COMMENCEMENT
YEAR ENDED DECEMBER 31, DATE) TO
-------------------- DECEMBER 31,
2004 2003 2002
- --------------------------------
Net asset value, beginning of
period $ 17.83 $ 12.83 $ 14.33
- --------------------------------
Income from investment
operations:
Net investment income 0.85 0.95(b) 0.49(b)
- --------------------------------
Net gains (losses) on
securities (both realized
and unrealized) 3.16 5.33 (1.35)
- --------------------------------
Less distributions to auction
rate preferred shareholders of
Closed-End Fund from net
investment income(c) (0.08) (0.06) (0.04)
================================
Total from investment
operations 3.93 6.22 (0.90)
================================
Less offering costs charged to
paid-in-capital:
Offering costs on common
shares of Closed-End Fund -- -- (0.03)
- --------------------------------
Offering costs on auction rate
preferred shares of
Closed-End Fund -- (0.00) (0.07)
- --------------------------------
Dilutive effect of common
share offering of Closed-End
Fund -- (0.00) (0.00)
================================
Total offering costs charged
to paid-in capital of
Closed-End Fund -- (0.00) (0.10)
================================
Less distributions:
Dividends from net investment
income (1.24) (0.79) (0.42)
- --------------------------------
Distributions from net
realized gains (0.50) -- --
- --------------------------------
Return of capital -- (0.43) (0.08)
================================
Total distributions (1.74) (1.22) (0.50)
================================
Increase from common shares of
Closed-End Fund repurchased -- -- --
================================
Redemption fees added to shares
of beneficial interest N/A N/A N/A
================================
Net asset value, end of period $ 20.02 $ 17.83 $ 12.83
================================
Market value per common share of
Closed-End Fund $ 17.50 $ 16.59 $ 12.30
________________________________
================================
Total return at net asset value 24.43%(f) 51.41%(f) (6.90)%(f)
================================
Market value return(f) 16.89% 46.95% (14.73)%
________________________________
================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $799,358 $712,069 $511,940
________________________________
================================
Ratio of expenses to average net
assets:
With fee waivers and/or
expense reimbursements 0.93%(h) 1.00%(b)(h) 1.02% (b)(h)(i)
- --------------------------------
Without fee waivers and/or
expense reimbursements 1.32%(h) 1.41%(b)(h) 1.43% (b)(h)(i)
================================
Ratio of net investment income
to average net assets 4.64%(h) 6.46%(b)(h) 6.28% (b)(h)(i)
================================
Ratio of distributions to
auction rate preferred
shareholders of Closed-End
Fund to average net assets
attributable to common shares
of Closed-End Fund 0.42% 0.43% 0.50%(i)
================================
Portfolio turnover rate(j) 19% 37% 35%
================================
Auction rate preferred shares of
Closed-End Fund:
Liquidation value, end of
period (000s omitted) $205,000 $205,000 $205,000
================================
Total shares outstanding 8,200 8,200 8,200
================================
Asset coverage per share $122,483 $111,838 $ 87,432
================================
Liquidation and market value
per share $ 25,000 $ 25,000 $ 25,000
________________________________
================================
</Table>
(*) Prior to March 12, 2007 the Fund operated as a Closed-End Fund. On such
date, holders of common shares of Closed-End Fund received Class A
shares of the Fund equal to the number of Closed-End Fund common shares
they owned prior to the Reorganization.
(a) Calculated using average shares outstanding.
(b) As a result of changes in accounting principles generally accepted in
the United States of America, the Closed-End Fund reclassified periodic
payments made under interest rate swap agreements, previously included
within interest expense as a component of realized gain (loss) in the
Statement of Operations. The effect of this reclassification was to
increase the net investment income ratio by 0.67%, decrease the expense
ratio by 0.67% and increase net investment income per share by $0.10 for
the year ended December 31, 2003. For consistency, similar
reclassifications have been made to prior year amounts, resulting in an
increase to the net investment income ratio of 0.38%, a decrease to the
expense ratio of 0.38% and an increase to net investment income per
share of $0.03 for the period May 31, 2002 (commencement date) through
December 31, 2002.
23
AIM Select Real Estate Income Fund
NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED)
(c) Based on average number of common shares outstanding of Closed-End Fund.
(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 and is not
annualized for periods less than one year.
(e) Includes the impact of the temporary 2% redemption fee which was
effective March 12, 2007 through March 11, 2008.
(f) Net asset value return includes adjustments in accordance with
accounting principles generally accepted in the United States of America
and measures the changes in common shares' value of Closed-End Fund over
the period indicated, taking into account dividends as reinvested.
Market value return is computed based upon the New York Stock Exchange
market price of the Closed-End Fund's common shares and excludes the
effects of brokerage commissions. Dividends and distributions, if any,
are assumed for purposes of this calculation, to be reinvested at prices
obtained under the Closed-End Fund's dividend reinvestment plan. Not
annualized for periods less than one year.
(g) Ratios are annualized and based on average daily net assets of
$417,801,298.
(h) Ratios do not reflect the effect of dividend payments to auction rate
preferred shareholders of Closed-End Fund; income ratios reflect income
earned on investments made with assets attributable to auction rate
preferred shares of Closed-End Fund.
(i) Annualized.
(j) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS B CLASS C INSTITUTIONAL CLASS
------------- ------------- --------------------
MARCH 9, 2007 MARCH 9, 2007 MARCH 9, 2007
(COMMENCEMENT (COMMENCEMENT (COMMENCEMENT
DATE) TO DATE) TO DATE) TO
AUGUST 31, AUGUST 31, AUGUST 31,
2007 2007 2007
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $17.34 $17.34 $17.34
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.22 0.22 0.32
- -----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.56) (1.56) (1.57)
=======================================================================================================================
Total from investment operations (1.34) (1.34) (1.25)
=======================================================================================================================
Less dividends from net investment income (0.24) (0.24) (0.30)
=======================================================================================================================
Redemption fees added to shares of beneficial interest 0.47 0.47 0.48
=======================================================================================================================
Net asset value, end of period $16.23 $16.23 $16.27
_______________________________________________________________________________________________________________________
=======================================================================================================================
Total return(b)(c) (5.10)% (5.10)% (4.53)%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 162 $ 356 $ 10
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of expenses to average net assets(d) 2.04% 2.04% 0.89%
=======================================================================================================================
Ratio of net investment income to average net assets(d) 2.86% 2.86% 4.01%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Portfolio turnover rate(e) 24% 24% 24%
_______________________________________________________________________________________________________________________
=======================================================================================================================
</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) Includes the impact of the temporary 2% redemption fee which was
effective March 12, 2007 through March 11, 2008.
(d) Ratios are annualized and based on average daily net assets of $78,209,
82,050 and 9,942 for Class B, Class C and Institutional Class shares,
respectively.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
NOTE 14--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
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 A I M Advisors, Inc. ("AIM") and A I M
Distributors, Inc. ("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. By agreement with the Commissioner of
Securities, AIM's time to respond to that Order has been indefinitely suspended.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, INVESCO Funds Group,
Inc. ("IFG") (the former investment advisor to certain AIM Funds), 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; and
- that certain AIM Funds inadequately employed fair value pricing.
24
AIM Select Real Estate Income Fund
NOTE 14--LEGAL PROCEEDINGS--(CONTINUED)
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.
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 INVESCO PLC'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 INVESCO 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.
25
AIM Select Real Estate Income Fund
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
AIM Select Real Estate Income 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 Select Real Estate Income Fund
(one of the funds constituting AIM Counselor Series Trust, formerly the sole
portfolio constituting AIM Select Real Estate Income Fund, hereafter referred to
as the "Fund") at August 31, 2007, 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, 2007 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
October 19, 2007
Houston, Texas
26
AIM Select Real Estate Income Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur actual account values and actual expenses. expense ratio and an assumed rate of
two types of costs: (1) transaction costs, You may use the information in this table, return of 5% per year before expenses,
which may include sales charges (loads) on together with the amount you invested, to which is not the Fund's actual return.
purchase payments or contingent deferred estimate the expenses that you paid over
sales charges on redemptions; and the period. Simply divide your account The hypothetical account values and
redemption fees, if any; and (2) ongoing value by $1,000 (for example, an $8,600 expenses may not be used to estimate the
costs, including distribution and/or account value divided by $1,000 = 8.6), actual ending account balance or expenses
service (12b-1) fees; and other Fund then multiply the result by the number in you paid for the period. YOU MAY USE THIS
expenses. This example is intended to help the table under the heading entitled INFORMATION TO COMPARE THE ONGOING COSTS
you understand your ongoing costs (in "Actual Expenses Paid During Period" to OF INVESTING IN THE FUND AND OTHER FUNDS.
dollars) of investing in the Fund and to estimate the expenses you paid on your To do so, compare this 5% hypothetical
compare these costs with ongoing costs of account during this period (March 12, example with the 5% hypothetical examples
investing in other mutual funds. The 2007, through August 31, 2007 for the that appear in the shareholder reports of
actual ending account value and expenses Class B and C shares). Because the actual the other funds.
of the Class A shares are based on an ending account value and expense
investment of $1,000 invested at the information in the example is not based Please note that the expenses shown
beginning of the period and held for the upon a six month period for the Class B in the table are meant to highlight your
entire period March 1, 2007, through and C, the ending account value and ongoing costs only and do not reflect any
August 31, 2007. The actual ending account expense information may not provide a transaction costs, such as sales charges
value and expenses of the Class B and C meaningful comparison to mutual funds that (loads) on purchase payments, contingent
shares in the below example are based on provide such information for a full six deferred sales charges on redemptions, and
an investment of $1,000 invested on March month period. redemption fees, if any. Therefore, the
12, 2007 and held through August 31, 2007. hypothetical information is useful in
HYPOTHETICAL EXAMPLE FOR COMPARISON comparing ongoing costs only, and will not
ACTUAL EXPENSES PURPOSES help you determine the relative total
costs of owning different funds. In
The table below provides information about The table below also provides information addition, if these transaction costs were
about hypothetical account values and included, your costs would have been
hypothetical expenses based on the Fund's higher.
actual
====================================================================================================================================
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 (3/01/07) (8/31/07)(1) PERIOD(2),(5) (8/31/07) PERIOD(3),(6) RATIO (4)
A $1,000.00 $944.00 $5.88 $1,019.16 $ 6.11 1.20%
B(1) 1,000.00 939.00 9.37 1,014.92 10.36 2.04
C(1) 1,000.00 939.00 9.37 1,014.92 10.36 2.04
(1) The actual ending account value is based on the actual total return of the Fund for the period March 1, 2007, through August
31, 2007 (March 12, 2007, through August 31, 2007 for the Class B and C 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 B and C shares actual expenses are
equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by
173 (March 12, 2007, through August 31, 2007)/365. Because the Class B and C 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, and C shares of the Fund and other funds because such data is
based on a full six month period.
(4) The Fund, which was previously a closed-end fund, was reorganized on March 12, 2007 as an open-end fund and Class A shares were
issued for Closed-End Fund Common Shares. The annualized expense ratio restated as if the expenses of the open-end fund had
been in effect throughout the entire most recent fiscal half year is 1.29% for Class A shares.
(5) The actual expenses paid restated as if the changes discussed above in footnote 4 had been in effect throughout the entire most
recent fiscal half year are $6.32 for the Class A shares.
(6) The hypothetical expenses paid restated as if the changes discussed above in footnote 4 had been in effect throughout the
entire most recent fiscal half year are $6.56 for the Class A shares.
====================================================================================================================================
27
Supplement to Annual Report dated 8/31/07
AIM SELECT REAL ESTATE INCOME FUND
INSTITUTIONAL CLASS SHARES ========================================== SHARE CLASSES PRIMARILY DUE TO DIFFERING
AVERAGE ANNUAL TOTAL RETURNS SALES CHARGES AND CLASS EXPENSES.
The following information has been For periods ended 8/31/07
prepared to provide Institutional Class CLASS A SHARES ISSUED IN CONNECTION
shareholders with a performance overview Inception 16.97% WITH THE FUND'S REORGANIZATION TO AN
specific to their holdings. Institutional 5 Years 18.48 OPEN-END FUND WILL BE SUBJECT TO A 2%
Class shares are offered exclusively to 1 Year 4.83 REDEMPTION FEE UNTIL MARCH 11, 2008. NEW
institutional investors, including defined PURCHASES ON OR AFTER MARCH 11, 2007, ARE
contribution plans that meet certain AVERAGE ANNUAL TOTAL RETURNS NOT SUBJECT TO A REDEMPTION FEE. SEE
criteria. For periods ended 6/30/07, most recent PROSPECTUS FOR MORE INFORMATION.
calendar quarter-end
========================================== HAD THE ADVISOR NOT WAIVED FEES AND/OR
NASDAQ SYMBOL ASRIX Inception 18.22% REIMBURSED EXPENSES IN THE PAST,
========================================== 5 Years 18.03 PERFORMANCE WOULD HAVE BEEN LOWER.
1 Year 17.81
========================================== PLEASE NOTE THAT PAST PERFORMANCE IS
NOT INDICATIVE OF FUTURE RESULTS. MORE
ON MARCH 12, 2007, THE FUND REORGANIZED RECENT RETURNS MAY BE MORE OR LESS THAN
FROM A CLOSED-END FUND TO AN OPEN-END THOSE SHOWN. ALL RETURNS ASSUME
FUND. THE INCEPTION DATE FOR THE OPEN-END REINVESTMENT OF DISTRIBUTIONS (REINVESTED
FUND'S INSTITUTIONAL CLASS SHARES IS MARCH AT NET ASSET VALUE, EXCEPT FOR PERIODS
9, 2007; RETURNS SINCE THAT DATE ARE PRIOR TO MARCH 12, 2007 WHERE
HISTORICAL RETURNS. ALL OTHER RETURNS ARE REINVESTMENTS WERE MADE AT THE LOWER OF
BLENDED RETURNS OF THE HISTORICAL THE CLOSED-END FUNDS NET ASSET VALUE OR
PERFORMANCE OF INSTITUTIONAL CLASS SHARES MARKET PRICE) AT NAV. INVESTMENT RETURN
AND THE HISTORICAL PERFORMANCE OF THE AND PRINCIPAL VALUE WILL FLUCTUATE SO YOUR
CLOSED-END FUND'S COMMON SHARES AT NET SHARES, WHEN REDEEMED, MAY BE WORTH MORE
ASSET VALUE (NAV), RESTATED TO REFLECT THE OR LESS THAN THEIR ORIGINAL COST. SEE FULL
ANNUAL OTHER EXPENSES OF THE INSTITUTIONAL REPORT FOR INFORMATION ON COMPARATIVE
CLASS SHARES, WHICH ARE ESTIMATED TO BE BENCHMARKS. PLEASE CONSULT YOUR FUND
0.04% HIGHER THAN THOSE OF THE CLOSED-END PROSPECTUS FOR MORE INFORMATION. FOR THE
FUND. THE CLOSED-END FUND'S COMMON SHARES MOST CURRENT MONTH-END PERFORMANCE, PLEASE
INCEPTION DATE IS MAY 31, 2002. CALL 800-451-4246 OR VISIT
AIMINVESTMENTS.COM.
INSTITUTIONAL CLASS SHARES HAVE NO SALES
CHARGE; THEREFORE, PERFORMANCE IS AT NAV.
PERFORMANCE OF INSTITUTIONAL CLASS SHARES
WILL DIFFER FROM PERFORMANCE OF OTHER
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 SREI-INS-1 AIM Distributors, Inc. [AIM INVESTMENTS LOGO]
--REGISTERED TRADEMARK--
Information about your Fund's expenses
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE expenses that you paid over the period. expense ratio and an assumed rate of
Simply divide your account value by $1,000 return of 5% per year before expenses,
As a shareholder of the Fund, you incur (for example, an $8,600 account value which is not the Fund's actual return.
ongoing costs. This example is intended to divided by $1,000 = 8.6), then multiply
help you understand your ongoing costs (in the result by the number in the table The hypothetical account values and
dollars) of investing in the Fund and to under the heading entitled "Actual expenses may not be used to estimate the
compare these costs with ongoing costs of Expenses Paid During Period" to estimate actual ending account balance or expenses
investing in other mutual funds. The the expenses you paid on your account you paid for the period. YOU MAY USE THIS
actual ending account value and expenses during the period, March 12, 2007, through INFORMATION TO COMPARE THE ONGOING COSTS
in the below example are based on an August 31, 2007. Because the actual ending OF INVESTING IN THE FUND AND OTHER FUNDS.
investment of $1,000 invested on March 12, account value and expense information in To do so, compare this 5% hypothetical
2007 and held through August 31, 2007. The the example is not based upon a six month example with the 5% hypothetical examples
hypothetical ending account value and period, the ending account value and that appear in the shareholder reports of
expenses in the below example are based on expense information may not provide a the other funds.
an investment of $1,000 invested at the meaningful comparison to mutual funds that
beginning of the period and held for the provide such information for a full six Please note that the expenses shown in
entire six month period March 1, 2007, month period. the table are meant to highlight your
through August 31, 2007. ongoing costs only. Therefore, the
HYPOTHETICAL EXAMPLE FOR COMPARISON hypothetical information is useful in
ACTUAL EXPENSES PURPOSES comparing ongoing costs only, and will not
help you determine the relative total
The table below provides information about The table below also provides information costs of owning different funds.
actual account values and actual expenses. about hypothetical account values and
You may use the information in this table, hypothetical expenses based on the Fund's
together with the amount you invested, to actual
estimate the
====================================================================================================================================
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 (3/1/07)(1) (8/31/07)(1) PERIOD(2) (8/31/07) PERIOD(3) RATIO
Institutional $1,000.00 $944.90 $4.10 $1,020.72 $4.53 0.89%
(1) The actual ending account value is based on the actual total return of the Fund for the period March 12, 2007, through August
31, 2007, 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, 2007, through August 31, 2007.
(2) Actual expenses are equal to the annualized expense ratio as indicated above multiplied by the average account value over the
period, multiplied by 173 (March 12, 2007, through August 31, 2007)/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 SREI-INS-1 A I M Distributors, Inc.
AIM Select Real Estate Income Fund
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
The Board of Trustees (the Board) of AIM responsibility of the Senior Officer is to are competent and able to continue to
Counselor Series Trust is required under manage the process by which the AIM Funds' carry out their responsibilities under the
the Investment Company Act of 1940 to proposed management fees are negotiated Fund's advisory agreement.
approve annually the renewal of the AIM during the annual contract renewal process
Select Real Estate Income Fund (the Fund) to ensure that they are negotiated in a In determining whether to continue the
investment advisory agreement with A I M manner which is at arms' length and Fund's advisory agreement, the Board
Advisors, Inc. (AIM). During contract reasonable. Accordingly, the Senior considered the prior relationship between
renewal meetings held on June 25-27, 2007, Officer must either supervise a AIM and the Fund, as well as the Board's
the Board as a whole and the disinterested competitive bidding process or prepare an knowledge of AIM's operations, and
or "independent" Trustees, voting independent written evaluation. The Senior concluded that it was beneficial to
separately, approved the continuance of Officer has recommended that an maintain the current relationship, in
the Fund's investment advisory agreement independent written evaluation be provided part, because of such knowledge. The Board
for another year, effective July 1, 2007. and, upon the direction of the Board, has also considered the steps that AIM and its
In doing so, the Board determined that the prepared an independent written affiliates have taken over the last
Fund's advisory agreement is in the best evaluation. several years to improve the quality and
interests of the Fund and its shareholders efficiency of the services they provide to
and that the compensation to AIM under the During the annual contract renewal the Funds in the areas of investment
Fund's advisory agreement is fair and process, the Board considered the factors performance, product line diversification,
reasonable. discussed below under the heading "Factors distribution, fund operations, shareholder
and Conclusions and Summary of Independent services and compliance. The Board
The independent Trustees met separately Written Fee Evaluation" in evaluating the concluded that the quality and efficiency
during their evaluation of the Fund's fairness and reasonableness of the Fund's of the services AIM and its affiliates
investment advisory agreement with advisory agreement at the contract renewal provide to the AIM Funds in each of these
independent legal counsel from whom they meetings and at their meetings throughout areas have generally improved, and support
received independent legal advice, and the the year as part of their ongoing the Board's approval of the continuance of
independent Trustees also received oversight of the Fund. The Fund's advisory the Fund's advisory agreement.
assistance during their deliberations from agreement was considered separately,
the independent Senior Officer, a although the Board also considered the B. FUND PERFORMANCE
full-time officer of the AIM Funds who common interests of all of the AIM Funds
reports directly to the independent in their deliberations. The Board The Board compared the Fund's performance
Trustees. The following discussion more comprehensively considered all of the during the past one and three calendar
fully describes the process employed by information provided to them and did not years to the performance of funds in the
the Board to evaluate the performance of identify any particular factor that was Fund's Lipper peer group that are not
the AIM Funds (including the Fund) controlling. Furthermore, each Trustee may managed by AIM, and against the
throughout the year and, more have evaluated the information provided performance of all funds in the Lipper
specifically, during the annual contract differently from one another and Real Estate Funds Index. The Board also
renewal meetings. attributed different weight to the various reviewed the methodology used by Lipper to
factors. The Trustees recognized that the identify the Fund's peers. The Board noted
THE BOARD'S FUND EVALUATION PROCESS advisory arrangements and resulting that the Fund's performance was below the
advisory fees for the Fund and the other median performance of its peers for the
The Board's Investments Committee has AIM Funds are the result of years of one and three year periods. The Board
established three Sub-Committees which are review and negotiation between the noted that the Fund's performance was
responsible for overseeing the management Trustees and AIM, that the Trustees may below the performance of the Index for the
of a number of the series portfolios of focus to a greater extent on certain one and three year periods. The Board also
the AIM Funds. This Sub-Committee aspects of these arrangements in some noted that the Fund was reorganized from a
structure permits the Trustees to focus on years than others, and that the Trustees' closed-end fund to an open-end fund on
the performance of the AIM Funds that have deliberations and conclusions in a March 12, 2007 and that the comparative
been assigned to them. The Sub-Committees particular year may be based in part on performance data that they reviewed was
meet throughout the year to review the their deliberations and conclusions of that of the open-end fund. The Board also
performance of their assigned funds, and these same arrangements throughout the considered the steps AIM has taken over
the Sub-Committees review monthly and year and in prior years. the last several years to improve the
quarterly comparative performance quality and efficiency of the services
information and periodic asset flow data FACTORS AND CONCLUSIONS AND SUMMARY OF that AIM provides to the AIM Funds. The
for their assigned funds. These materials INDEPENDENT WRITTEN FEE EVALUATION Board concluded that AIM continues to be
are prepared under the direction and responsive to the Board's focus on fund
supervision of the independent Senior The discussion below serves as a summary performance. However, due to the Fund's
Officer. Over the course of each year, the of the Senior Officer's independent under-performance, the Board also
Sub-Committees meet with portfolio written evaluation, as well as concluded that it would be appropriate for
managers for their assigned funds and a discussion of the material factors and the Board to continue to closely monitor
other members of management and review related conclusions that formed the basis and review the performance of the Fund.
with these individuals the performance, for the Board's approval of the Fund's Although the independent written
investment objective(s), policies, advisory agreement and sub-advisory evaluation of the Fund's Senior Officer
strategies and limitations of these funds. agreement. Unless otherwise stated, (discussed below) only considered Fund
information set forth below is as of June performance through the most recent
In addition to their meetings 27, 2007 and does not reflect any changes calendar year, the Board also reviewed
throughout the year, the Sub-Committees that may have occurred since that date, more recent Fund performance and this
meet at designated contract renewal including but not limited to changes to review did not change their conclusions.
meetings each year to conduct an in-depth the Fund's performance, advisory fees,
review of the performance, fees and expense limitations and/or fee waivers. C. ADVISORY FEES AND FEE WAIVERS
expenses of their assigned funds. During
the contract renewal process, the Trustees I INVESTMENT ADVISORY AGREEMENT The Board compared the Fund's contractual
receive comparative performance and fee advisory fee rate to the contractual
data regarding all the AIM Funds prepared A. NATURE, EXTENT AND QUALITY OF SERVICES advisory fee rates of funds in the Fund's
by an independent company, Lipper, Inc., PROVIDED BY AIM Lipper peer group that are not managed by
under the direction and supervision of the AIM, at a common asset level and as of the
independent Senior Officer who also The Board reviewed the advisory services end of the past calendar year. The Board
prepares a separate analysis of this provided to the Fund by AIM under the noted that the Fund's advisory fee rate
information for the Trustees. Each Fund's advisory agreement, the was comparable to the median advisory fee
Sub-Committee then makes recommendations performance of AIM in providing these rate of its peers. The Board also reviewed
to the Investments Committee regarding the services, and the credentials and the methodology used by Lipper and noted
performance, fees and expenses of their experience of the officers and employees that the contractual fee rates shown by
assigned funds. The Investments Committee of AIM who provide these services. The Lipper include any applicable long-term
considers each SubCommittee's Board's review of the qualifications of contractual fee waivers. The Board also
recommendations and makes its own AIM to provide these services included the compared the Fund's contractual advisory
recommendations regarding the performance, Board's consideration of AIM's portfolio fee rate to the contractual advisory fee
fees and expenses of the AIM Funds to the and product review process, various back rates of other clients of AIM and its
full Board. Moreover, the Investments office support functions provided by AIM, affiliates with investment strategies
Committee considers each SubCommittee's and AIM's equity and fixed income trading comparable to those of the Fund, including
recommendations in making its annual operations. The Board concluded that the three mutual funds advised by AIM, one
recommendation to the Board whether to nature, extent and quality of the advisory mutual fund sub-advised by an AIM
approve the continuance of each AIM Fund's services provided to the Fund by AIM were affiliate, and three offshore funds
investment advisory agreement and appropriate and that AIM currently is advised and sub-advised by AIM affiliates.
sub-advisory agreement, if applicable providing satisfactory advisory services The Board noted that the Fund's rate was:
(advisory agreements), for another year. in accordance with the terms of the Fund's (i) below the rates for two of the mutual
advisory agreement. In addition, based on funds and comparable to the rate for the
The independent Trustees, as mentioned their ongoing meetings throughout the year third mutual fund; (ii) above the
above, are assisted in their annual with the Fund's portfolio managers, the sub-advisory fee rate for the sub-advised
evaluation of the advisory agreements by Board concluded that these individuals mutual fund, although the advisory fee
the independent Senior Officer. One rate for such sub-advised mutual fund
(continued)
28
AIM SELECT REAL ESTATE INCOME FUND
was above the Fund's; and (iii) below the AIM's affiliates, had prepared an agreement. In addition, based on their
advisory fee rates for two of the three independent written evaluation to assist ongoing meetings throughout the year with
offshore funds and comparable to the the Board in determining the the Fund's portfolio managers, the Board
advisory fee rate for the third such reasonableness of the proposed management concluded that these individuals are
offshore fund. fees of the AIM Funds, including the Fund. competent and able to continue to carry
The Board noted that they had relied upon out their responsibilities under the
Additionally, the Board compared the the Senior Officer's written evaluation Fund's sub-advisory agreement.
Fund's contractual advisory fee rate to instead of a competitive bidding process.
the total advisory fees paid by numerous In determining whether to continue the B. FUND PERFORMANCE
separately managed accounts/wrap accounts Fund's advisory agreement, the Board
advised by an AIM affiliate. The Board considered the Senior Officer's written The Board compared the Fund's performance
noted that the Fund's rate was generally evaluation. during the past one and three calendar
above the rates for the separately managed years to the performance of funds in the
accounts/wrap accounts. The Board G. COLLATERAL BENEFITS TO AIM AND ITS Fund's Lipper peer group that are not
considered that management of the AFFILIATES managed by AIM, and against the
separately managed accounts/wrap accounts performance of all funds in the Lipper
by the AIM affiliate involves different The Board considered various other Real Estate Funds Index. The Board also
levels of services and different benefits received by AIM and its reviewed the methodology used by Lipper to
operational and regulatory requirements affiliates resulting from AIM's identify the Fund's peers. The Board noted
than AIM's management of the Fund. The relationship with the Fund, including the that the Fund's performance was below the
Board concluded that these differences are fees received by AIM and its affiliates median performance of its peers for the
appropriately reflected in the fee for their provision of administrative, one and three year periods. The Board
structure for the Fund and the separately transfer agency and distribution services noted that the Fund's performance was
managed accounts/wrap accounts. to the Fund. The Board considered the below the performance of the Index for the
performance of AIM and its affiliates in one and three year periods. The Board also
The Board noted that AIM has not providing these services and the noted that the Fund was reorganized from a
proposed any advisory fee waivers or organizational structure employed by AIM closed-end fund to an open-end fund on
expense limitations for the Fund. The and its affiliates to provide these March 12, 2007 and that the comparative
Board concluded that it was not necessary services. The Board also considered that performance data that they reviewed was
at this time to discuss with AIM whether these services are provided to the Fund that of the open-end fund. The Board also
to implement any such waivers or expense pursuant to written contracts which are considered the steps AIM has taken over
limitations because the Fund's overall reviewed and approved on an annual basis the last several years to improve the
expense ratio was comparable to the median by the Board. The Board concluded that AIM quality and efficiency of the services
expense ratio of the funds in the Fund's and its affiliates were providing these that AIM provides to the AIM Funds. The
Lipper peer group that are not managed by services in a satisfactory manner and in Board concluded that AIM continues to be
AIM. accordance with the terms of their responsive to the Board's focus on fund
contracts, and were qualified to continue performance. However, due to the Fund's
After taking account of the Fund's to provide these services to the Fund. underperformance, the Board also concluded
contractual advisory fee rate, as well as that it would be appropriate for the Board
the comparative advisory fee information The Board considered the benefits to continue to closely monitor and review
discussed above, the Board concluded that realized by AIM as a result of portfolio the performance of the Fund. Although the
the Fund's advisory fees were fair and brokerage transactions executed through independent written evaluation of the
reasonable. "soft dollar" arrangements. Under these Fund's Senior Officer (discussed below)
arrangements, portfolio brokerage only considered Fund performance through
D. ECONOMIES OF SCALE AND BREAKPOINTS commissions paid by the Fund and/or other the most recent calendar year, the Board
funds advised by AIM are used to pay for also reviewed more recent Fund performance
The Board considered the extent to which research and execution services. The Board and this review did not change their
there are economies of scale in AIM's noted that soft dollar arrangements shift conclusions.
provision of advisory services to the the payment obligation for the research
Fund. The Board also considered whether and executions services from AIM to the C. SUB-ADVISORY FEES
the Fund benefits from such economies of funds and therefore may reduce AIM's
scale through contractual breakpoints in expenses. The Board also noted that The Board compared the Fund's contractual
the Fund's advisory fee schedule or research obtained through soft dollar sub-advisory fee rate to the sub-advisory
through advisory fee waivers or expense arrangements may be used by AIM in making fees paid by other sub-advisory clients of
limitations. The Board noted that the investment decisions for the Fund and may the Sub-Advisor with investment strategies
Fund's contractual advisory fee schedule therefore benefit Fund shareholders. The comparable to those of the Fund, including
includes seven breakpoints and that the Board concluded that AIM's soft dollar three mutual funds sub-advised by the
level of the Fund's advisory fees, as a arrangements were appropriate. The Board Sub-Advisor and three offshore funds
percentage of the Fund's net assets, had also concluded that, based on their review sub-advised by the Sub-Advisor. The Board
decreased as net assets increased because and representations made by AIM, these noted that the Fund's sub-advisory fee
of the breakpoints. Based on this arrangements were consistent with rate was: (i) above the sub-advisory fee
information, the Board concluded that the regulatory requirements. rates for the three mutual funds; (ii)
Fund's advisory fees appropriately reflect below the sub-advisory fee rates for two
economies of scale at current asset The Board considered the fact that the of the offshore funds and above the
levels. The Board also noted that the Fund Fund's uninvested cash and cash collateral sub-advisory fee rate for the third
shares directly in economies of scale from any securities lending arrangements offshore fund. Additionally, the Board
through lower fees charged by third party may be invested in money market funds compared the Fund's contractual
service providers based on the combined advised by AIM pursuant to procedures sub-advisory fee rate to the total
size of all of the AIM Funds and approved by the Board. The Board noted advisory fees paid by numerous separately
affiliates. that AIM will receive advisory fees from managed accounts/wrap accounts sub-advised
these affiliated money market funds by the Sub-Advisor with investment
E. PROFITABILITY AND FINANCIAL RESOURCES attributable to such investments, although strategies comparable to those of the
OF AIM AIM has contractually agreed to waive the Fund. The Board noted that the Fund's
advisory fees payable by the Fund with sub-advisory fee rate was generally
The Board reviewed information from AIM respect to its investment of uninvested comparable to the rates for the separately
concerning the costs of the advisory and cash in these affiliated money market managed accounts/wrap accounts. The Board
other services that AIM and its affiliates funds through at least June 30, 2008. The considered the services to be provided by
provide to the Fund and the profitability Board considered the contractual nature of the Sub-Advisor pursuant to the Fund's
of AIM and its affiliates in providing this fee waiver and noted that it remains sub-advisory agreement and the services to
these services. The Board also reviewed in effect until at least June 30, 2008. be provided by AIM pursuant to the Fund's
information concerning the financial The Board concluded that the Fund's advisory agreement, as well as the
condition of AIM and its affiliates. The investment of uninvested cash and cash allocation of fees between AIM and the
Board also reviewed with AIM the collateral from any securities lending Sub-Advisor pursuant to the sub-advisory
methodology used to prepare the arrangements in the affiliated money agreement. The Board noted that the
profitability information. The Board market funds is in the best interests of sub-advisory fees have no direct effect on
considered the overall profitability of the Fund and its shareholders. the Fund or its shareholders, as they are
AIM, as well as the profitability of AIM paid by AIM to the Sub-Advisor, and that
in connection with managing the Fund. The II SUB-ADVISORY AGREEMENT AIM AND THE SUB-ADVISOR ARE AFFILIATES.
BOARD NOTED THAT AIM CONTINUES TO OPERATE AFTER TAKING ACCOUNT OF THE FUND'S
AT A NET PROFIT, ALTHOUGH INCREASED A. NATURE, EXTENT AND QUALITY OF SERVICES contractual sub-advisory fee rate, as well
expenses in recent years have reduced the PROVIDED BY THE SUB-ADVISOR as the comparative sub-advisory fee
profitability of AIM and its affiliates. information, the Board concluded that the
The Board concluded that the Fund's The Board reviewed the services provided Fund's sub-advisory fees were fair and
advisory fees were fair and reasonable, by INVESCO Institutional (N.A.), Inc. (the reasonable.
and that the level of profits realized by Sub-Advisor) under the Fund's sub-advisory
AIM and its affiliates from providing agreement, the performance of the D. FINANCIAL RESOURCES OF THE SUB-ADVISOR
services to the Fund was not excessive in Sub-Advisor in providing these services,
light of the nature, quality and extent of and the credentials and experience of the The Board considered whether the
the services provided. The Board officers and employees of the Sub-Advisor Sub-Advisor is financially sound and has
considered whether AIM is financially who provide these services. The Board the resources necessary to perform its
sound and has the resources necessary to concluded that the nature, extent and obligations under the Fund's sub-advisory
perform its obligations under the Fund's quality of the services provided by the agreement, and concluded that the
advisory agreement, and concluded that AIM Sub-Advisor were appropriate and that the Sub-Advisor has the financial resources
has the financial resources necessary to Sub-Advisor currently is providing necessary to fulfill these obligations.
fulfill these obligations. satisfactory services in accordance with
the terms of the Fund's sub-advisory
F. INDEPENDENT WRITTEN EVALUATION OF THE
FUND'S SENIOR OFFICER
The Board noted that, upon their
direction, the Senior Officer of the Fund,
who is independent of AIM and
29
AIM Select Real Estate Income Fund
AIM SELECT REAL ESTATE INCOME FUND
Form 1099-DIV, Form 1042-S and other year-end tax information provide
shareholders with actual calendar year amounts that should be included in their
tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the
Internal Revenue Code or to meet a specific state's requirement.
The Fund designates the following amounts or, if subsequently determined to be
different, the maximum amount allowable for the period January 1, 2007 to August
31, 2007:
FEDERAL AND STATE INCOME TAX
<Table>
Long-Term Capital Gain Dividends $40,654,438
Qualified Dividend Income* 2.36%
Corporate Dividends Received Deduction* 0%
</Table>
* The above percentages are based on ordinary income dividends paid to
shareholders during the fund's fiscal year.
ADDITIONAL NON-RESIDENT ALIEN SHAREHOLDER INFORMATION
The percentages of qualifying assets not subject to the U.S. estate tax for the
fiscal quarters ended February 28, 2007, May 31, 2007 and August 31, 2007 were
2.15%, 1.69%, and 3.10%, respectively.
30
AIM Select Real Estate Income 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 77046-1173. Each
trustee oversees 105 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. Each officer serves for a one year term or until their
successors are elected and qualified. Column two below includes length of time
served with predecessor entities, if any.
<Table>
<Caption>
OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIP(S)
POSITION(S) HELD WITH THE OFFICER PRINCIPAL OCCUPATION(S) HELD BY
TRUST SINCE DURING PAST 5 YEARS TRUSTEE/ DIRECTOR
- -------------------------------------------------------------------------------------------------------------------------
Interested Persons
- -------------------------------------------------------------------------------------------------------------------------
Martin L. Flanagan(1) -- 1960 2007 Director, Chief Executive Officer and None
Trustee President, INVESCO PLC (parent of AIM
and a global investment management
firm); Chairman, A I M Advisors, Inc.
(registered investment advisor);
Director, Chairman, Chief Executive
Officer and President, IVZ Inc. (holding
company); INVESCO North American
Holdings, Inc. (holding company);
Chairman and President, INVESCO Group
Services, Inc. (service provider);
Trustee, The AIM Family of Funds(R);
Chairman, Investment Company Institute;
and Member of Executive Board, SMU Cox
School of Business
Formerly: President, Co-Chief Executive
Officer, Co-President, Chief Operating
Officer and Chief Financial Officer,
Franklin Resources, Inc. (global
investment management organization)
- -------------------------------------------------------------------------------------------------------------------------
Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None
Trustee, President and President, A I M Management Group Inc.
Principal (financial services holding company),
Executive Officer AIM Mutual Fund Dealer Inc. (registered
broker dealer), A I M Advisors, Inc.,
AIM Funds Management Inc. d/b/a INVESCO
Enterprise Services (registered
investment advisor and registered
transfer agent) and 1371 Preferred Inc.
(holding company); Director, Chairman,
Chief Executive Officer and President,
A I M Capital Management, Inc.
(registered investment advisor);
Director and President, INVESCO Funds
Group, Inc. (registered investment
advisor and register transfer agent) and
AIM GP Canada Inc. (general partner for
a limited partnership); Director, A I M
Distributors, Inc. (registered broker
dealer); Director and Chairman, AIM
Investment Services, Inc. (registered
transfer agent), Fund Management Company
(registered broker dealer) and INVESCO
Distributors, Inc. (registered broker
dealer); Director, President and
Chairman, IVZ Callco Inc. (holding
company); INVESCO Inc. (holding company)
and AIM Canada Holdings Inc. (holding
company); Director and Chief Executive
Officer, AIM Trimark Corporate Class
Inc. (formerly AIM Trimark Global Fund
Inc.) (corporate mutual fund company)
and AIM Trimark Canada Fund Inc.
(corporate mutual fund company);
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); 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); and Manager,
Powershares Capital Management LLC
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.; President, AIM
Trimark Global Fund Inc. and AIM Trimark
Canada Fund Inc.; and Director, Trimark
Trust (federally regulated Canadian
Trust Company)
- -------------------------------------------------------------------------------------------------------------------------
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); Reich & Tang Funds
(Chairman) (registered investment
company) (7 portfolios); Daily Income
Fund (4 portfolios), California Daily
Tax Free Income Fund, Inc., Connecticut
Daily Tax Free Income Fund, Inc. and New
Jersey Daily Municipal Fund, Inc.,
Annuity and Life Re (Holdings), Ltd.
(insurance company); and Homeowners of
America Holding Corporation (property
casualty company)
Formerly: Director, CompuDyne
Corporation (provider of product and
services to the public security market);
Director, President and Chief Executive
Officer, Volvo Group North America,
Inc.; Senior Vice President, AB Volvo;
Director of various affiliated Volvo
companies; and Director, Magellan
Insurance Company
- -------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 2003 Chief Executive Officer, Twenty First Administaff
Trustee Century Group, Inc. (government affairs
company); and Owner and Chief Executive
Officer, Dos Angelos Ranch, L.P.
(cattle, hunting, corporate
entertainment); and Discovery Global
Education Fund (non-profit)
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company)
- -------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Director, Reich & Tang Funds) (7
Trustee Naftalis and Frankel LLP 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 None
Trustee Formerly: Partner, Deloitte & Touche;
and Director, Mainstay VP Series Funds,
Inc. (25 portfolios)
- -------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Mr. Flanagan was appointed as Trustee of the Trust on February 24, 2007. Mr.
Flanagan is considered an interested person of the Trust because he is an
officer of the advisor to the Trust, and an officer and a director of
INVESCO 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.
31
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Select Real Estate Income Fund
<Table>
<Caption>
OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIP(S)
POSITION(S) HELD WITH THE OFFICER PRINCIPAL OCCUPATION(S) HELD BY TRUSTEE/
TRUST SINCE DURING PAST 5 YEARS DIRECTOR
- -------------------------------------------------------------------------------------------------------------------------
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., A I M Advisors,
Inc. and A I M Capital Management, Inc.;
Director, Vice President and Secretary,
INVESCO Distributors, Inc.; Vice
President and Secretary, AIM Investment
Services, Inc. and Fund Management
Company; Senior Vice President and
Secretary, A I M Distributors, Inc.;
Director and Vice President, INVESCO
Funds Group Inc.; Senior Vice President,
Chief Legal Officer and Secretary of The
AIM Family of Funds--Registered
Trademark--; and Manager, Powershares
Capital Management LLC
Formerly: Vice President, A I M Capital
Management, Inc.; 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, INVESCO PLC; N/A
Vice President 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, INVESCO PLC; Director, INVESCO
Funds Group, Inc.; and Vice President of
The AIM Family of Funds--Registered
Trademark--
Formerly: Director, Senior Vice N/A
President, Secretary and General
Counsel, A I M Management Group Inc. and
A I M Advisors, Inc.; Senior Vice
President, A I M Distributors, Inc.;
Director, General Counsel and Vice
President, Fund Management Company; 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--;
Director and Vice President, INVESCO
Distributors, Inc.; Chief Executive
Officer and President, INVESCO Funds
Group, Inc.; and Senior Vice President
and General Counsel, Liberty Financial
Companies, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Sidney M. Dilgren -- 1961 2004 Vice President, A I M Advisors, Inc. and N/A
Vice President, Principal A I M Capital Management, Inc.; and Vice
Financial Officer and President, Treasurer and Principal
Treasurer Financial Officer of The AIM Family of
Funds--Registered Trademark--
Formerly: Fund Treasurer, A I M
Advisors, Inc.; Senior Vice President,
AIM Investment Services, Inc.; and Vice
President, A I M Distributors, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2003 Head of INVESCO's World Wide Fixed N/A
Vice President Income and Cash Management Group;
Director of Cash Management and Senior
Vice President, A I M Advisors, Inc. and
A I M Capital Management, Inc; Director
and President, Fund Management Company;
Vice President, The AIM Family of
Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust); and
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)
Formerly: Chief Cash Management Officer
and Managing Director, A I M Capital
Management, Inc.; Vice President, A I M
Advisors, Inc. and The AIM Family of
Funds--Registered Trademark-- (AIM
Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free
Investments Trust only)
- -------------------------------------------------------------------------------------------------------------------------
Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance N/A
Anti-Money Laundering Officer, A I M Advisors, Inc., A I M
Compliance Officer Capital Management, Inc., A I M
Distributors, Inc., AIM Investment
Services, Inc., AIM Private Asset
Management, Inc., Fund Management
Company and The AIM Family of
Funds--Registered Trademark--
Formerly: Manager of the Fraud
Prevention Department, AIM Investment
Services, Inc.
- -------------------------------------------------------------------------------------------------------------------------
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. and A I M Capital
Management, Inc.; Chief Compliance
Officer of The AIM Family of
Funds--Registered Trademark--, INVESCO
Global Asset Management (N.A.), Inc.,
(registered investment advisor), INVESCO
Institutional (N.A.), Inc., (registered
investment advisor), INVESCO Private
Capital Investments, Inc. (holding
company), INVESCO Private Capital, Inc.
(registered investment advisor) and
INVESCO Senior Secured Management, Inc.
(registered investment advisor); and
Vice President, A I M Distributors,
Inc., AIM Investment Services, Inc. and
Fund Management Company
Formerly: Vice President, A I M Capital
Management, Inc.; Global Head of Product
Development, AIG-Global Investment
Group, Inc.; and Chief Compliance
Officer and Deputy General Counsel,
AIG-SunAmerica Asset 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
Suite 100 11 Greenway Plaza Inc. LLP International
Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana Street (N.A.), Inc.
Houston, TX 77046-1173 Suite 100 Suite 2900 INVESCO
Houston, TX 77046-1173 Houston, TX 77002-5678 Realty
Advisors
Division
Three
Galleria
Tower
Suite
500
13155
Noel
Road
Dallas,
TX
75340-5042
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
1735 Market Street, 51st & Frankel LLP P.O. Box 4739 Company
Floor 1177 Avenue of the Houston, TX 77210-4739 225 Franklin Street
Philadelphia, PA 19103-7599 Americas Boston, MA 02110-2801
New York, NY 10036-2714
</Table>
32
[EDELIVERY GO PAPERLESS
AIMINVESTMENTS.COM/EDELIVERY
GRAPHIC]
REGISTER FOR EDELIVERY FUND HOLDINGS AND PROXY VOTING INFORMATION
eDelivery is the process of receiving your fund The Fund provides a complete list of its holdings four times in each fiscal
and account information via e-mail. Once your year, at the quarter-ends. For the second and fourth quarters, the lists appear
quarterly statements, tax forms, fund reports, in the Fund's semiannual and annual reports to shareholders. For the first and
and prospectuses are available, we will send you third quarters, the Fund files the lists with the Securities and Exchange
an e-mail notification containing links to these Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is
documents. For security purposes, you will need available at AIMinvestments.com. From our home page, click on Products &
to log in to your account to view your statements Performance, then Mutual Funds, then Fund Overview. Select your Fund from the
and tax forms. drop-down menu and click on Complete Quarterly Holdings. Shareholders can also
look up the Fund's Forms N-Q on the SEC Web site at sec.gov. Copies of the
WHY SIGN UP? Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in
Washington, D.C. You can obtain information on the operation of the Public
Register for eDelivery to: Reference Room, including information about duplicating fee charges, by calling
202-942-8090 or 800-732-0330, or by electronic request at the following e-mail
o save your Fund the cost of printing and address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-21048 and
postage. 333-84256.
o reduce the amount of paper you receive. 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,
o gain access to your documents faster by not upon request, from our Client Services department at 800-959-4246 or on the AIM
waiting for the mail. 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,
o view your documents online anytime at your sec.gov.
convenience.
Information regarding how the Fund voted proxies related to its portfolio
o save the documents to your personal computer securities during the 12 months ended June 30, 2007, is available at our Web
or print them out for your records. 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
HOW DO I SIGN UP? drop-down menu. The information is also available on the SEC Web site, sec.gov.
It's easy. Just follow these simple steps: If used after January 20, 2008, this report must be accompanied by a Fund
Performance & Commentary or by an AIM Quarterly Performance Review for the most
1. Log in to your account. recent quarter-end. Mutual funds and exchange-traded funds distributed by A I M
Distributors, Inc.
2. Click on the "Service Center" tab.
3. Select "Register for eDelivery" and complete
the consent process.
This AIM service is provided by AIM Investment
Services, Inc.
SREI-AR-1 A I M Distributors, Inc.
[AIM INVESTMENTS LOGO]
--REGISTERED TRADEMARK--
AIM STRUCTURED CORE FUND
Annual Report to Shareholders o August 31, 2007
[COVER GLOBE IMAGE]
DOMESTIC EQUITY
Large-Cap Blend
Table of Contents
Letters to Shareholders .................. 2
Performance Summary ...................... 4
Management Discussion .................... 4
Long-term Fund Performance ............... 6
Supplemental Information ................. 8
Schedule of Investments .................. 9
Financial Statements ..................... 12
Notes to Financial Statements ............ 15
Financial Highlights ..................... 21
Auditor's Report ......................... 25
Fund Expenses ............................ 26
Approval of Advisory Agreement ........... 27
Tax Information .......................... 29
Trustees and Officers .................... 30
[AIM INVESTMENT SOLUTIONS]
[GRAPHIC] [GRAPHIC]
[DOMESTIC [FIXED
EQUITY] INCOME]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[TARGET [TARGET [DIVERSIFIED
RISK] MATURITY] PORTFOLIOS]
[GRAPHIC] [GRAPHIC]
[SECTOR [INTERNATIONAL/
EQUITY] GLOBAL EQUITY]
[AIM INVESTMENTS LOGO]
- --REGISTERED TRADEMARK--
AIM Structured Core Fund
Dear Shareholders of the AIM Family of Funds:
I'm pleased to provide you with this report, which includes a discussion of how your
Fund was managed during the period under review, and what factors affected its
[TAYLOR performance. The following pages contain important information that answers questions
PHOTO] you may have about your investment.
Despite a significant, albeit short-lived, stock market sell-off in late February
and early March--and a more severe stock market decline that began in July--major stock
Philip Taylor market indexes in the United States and abroad generally performed well for the 12
months ended August 31, 2007. Reasons for their favorable performance included positive
economic growth, particularly overseas; strong corporate profits; and strong
merger-and-acquisition activity, among other factors.
In July, institutional investors on Wall Street as well as individual investors on
Main Street became concerned about growing delinquencies in the subprime mortgage
market. They worried that such delinquencies, together with higher interest rates,
might lead to a "credit crunch" that could reduce the availability of credit or
increase borrowing costs for individuals and corporations, thereby slowing the economy.
In an effort to ensure that the weak housing market and tight credit markets did not
affect the U.S. economy more generally, the U.S. Federal Reserve Board in September cut
its key federal funds target rate for the first time in more than four years.
At AIM Investments --REGISTERED TRADEMARK--, we know that market conditions
change--often suddenly and sometimes dramatically. We can help you deal with market
volatility by offering a broad range of mutual funds, including:
o Domestic, global and international equity funds
o Taxable and tax-exempt fixed-income funds
o Allocation portfolios, with risk/return characteristics to match your needs
o AIM Independence Funds--target-maturity funds that combine retail mutual funds and
PowerShares --REGISTERED TRADEMARK-- exchange-traded funds--with risk/return
characteristics that change as your target retirement date nears
We believe in the value of working with a trusted financial advisor. Your financial
advisor can recommend various AIM funds that, together, can create a portfolio that's
appropriate for your long-term investment goals and risk tolerance regardless of
prevailing short-term market conditions.
In conclusion
Bob Graham, my friend and colleague, recently announced his decision to step down as
vice chair of the AIM Funds board of directors. In 1976, Bob was one of three men who
co-founded AIM. In the three decades since, he has been instrumental in transforming
AIM from a small investment management firm into one of America's most respected mutual
fund companies--and, in 1997, into a global independent retail and institutional
investment manager.
In May, with shareholder approval, AIM Investments' parent company changed its name
from AMVESCAP PLC to INVESCO PLC, uniting our worldwide operations and global expertise
under one new name. While the name of our parent company may be new to you, I can
assure you that our commitment to excellent customer service remains unchanged. Our
highly trained, courteous client service representatives are eager to answer your
questions, provide you with product information or assist you with account
transactions. I encourage you to give us an opportunity to serve you by calling us at
800-959-4246.
All of us at AIM are committed to helping you achieve your financial goals. We work
every day to earn your trust, and we're grateful for the confidence you've placed in
us.
Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
President - AIM Funds
CEO, AIM Investments
October 17, 2007
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 mutual funds represented by AIM
Investments and the PowerShares Exchange-Traded Fund Trust.
2
AIM Structured Core Fund
Dear Fellow Shareholders:
In overseeing the management of the AIM family of funds on your behalf, your Board
of Trustees of the AIM Funds continues to focus on improved investment performance,
reduced shareholder costs, and high ethical standards.
Your Board welcomes two new members: Marty Flanagan, President and CEO of INVESCO,
[CROCKETT AIM's parent company, and Phil Taylor, who was named CEO of AIM Investments
PHOTO] --REGISTERED TRADEMARK-- in April 2006. Robert Graham, who has given more than 30 years
of leadership to the company and the mutual fund industry since founding AIM in 1976,
has retired, stepping down in the process from his most recent role as vice chairman of
the Board. We thank Bob for his many contributions and wish him a long and happy
future.
Our review of fund performance has shown healthy progress, but the process is
necessarily one of continuous improvement. In general, as of June 30, 2007, we have
Bruce L. Crockett seen persistent investment discipline and more consistently good results. While this
statement may not apply to every AIM Fund all the time, as I write this letter, the
overall trend in fund management and performance has been positive.
The investment management talent at AIM has recently been enhanced by the promotion
of Karen Dunn Kelley to Head of INVESCO's Worldwide Fixed Income as well as Director of
AIM Global and Cash Management, with responsibility for all fixed income and money
market funds that serve both institutional and individual investors. Under Karen's
direction, AIM's cash management organization grew to one of the world's largest and
most respected, with top-tier performance. The operations now combined under her charge
represent more than $160 billion in assets, 120 investment professionals, and products
that span the entire yield curve (as of August 31, 2007).
In other news, your Board took a more active role in preparing for "proxy season,"
the period when fund managers must vote the shares held by their funds "for" or
"against" various proposals on the ballots of the issuing companies. Beginning in the
2007 proxy season, AIM implemented new proxy voting policies, developed by management
in conjunction with an ad hoc Board committee, which provided a solid framework for
properly evaluating and executing the many decisions the AIM Funds are required to make
to vote shares.
In general, the AIM Funds voted for proposals that would allow shareholders a
greater role in election of directors, proxy access and "say for pay." The AIM Funds
voted against directors who AIM believed failed to govern well in cases of corporate
mismanagement, such as the backdating of options grants, and against "poison pill" and
"take under" proposals that would favor the financial interests of managers at the
expense of investors in the case of a merger or acquisition. You can view the proxy
votes cast for your fund by going to AIMinvestments.com. Click the "About Us" tab, then
go to "Required Notices" and "Proxy Voting Activity."
Additionally, your Board raised the amount its members are recommended to invest in
the AIM Funds within three years of joining the Board, with the goal of aligning our
interests even more closely with yours.
Furthermore, at our June meeting we renewed the investment advisory contracts
between the AIM Funds and AIM for another year, applying the same rigorous evaluation
process that was enhanced and formalized in 2005. For more information on this process,
please visit AIMinvestments.com. Click on the "Products and Performance" tab and go to
"Investment Advisory Agreement Renewals."
Your Board's ability to best represent your interests depends on our knowledge of
your opinions and concerns. Please send me an email (bruce@brucecrockett.com) with your
thoughts on the following:
1) How important is it to you to hear about your Board's decisions and activities in
these letters?
2) What other information (on overall performance, specific funds, managers, etc.)
would make the letters more meaningful to you?
3) Would you prefer that communication from your Board continue to be delivered in
paper form by regular mail or be sent electronically by email?
If you would prefer to communicate through a quick online survey, please go to
AIMinvestments.com and provide your responses there.
We need to hear from you to do our best job, and I look forward to your responses.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board of Directors
October 17, 2007
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 mutual funds represented by AIM
Investments and the PowerShares Exchange-Traded Fund Trust.
3
AIM Structured Core Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
======================================================================================= and relative valuation. The sum of the
PERFORMANCE SUMMARY scores from these four factors makes up
our alpha (excess return) forecast,
For the fiscal year ended August 31, 2007, AIM Structured Core Fund underperformed its relative to the average stock in the
broad market and style-specific benchmark, the S&P 500 Index. @Underperformance was universe. Stocks are also evaluated on a
primarily the result of our decision to not own certain stocks that were large multitude of other factors to develop a
contributors to the index's return. stock-specific risk forecast and
transaction cost forecast.
Your Fund's long-term performance appears later in this report.
We then incorporate the alpha forecast,
FUND VS. INDEXES risk forecast and transaction cost
forecast-- using an optimizer (a
Total returns, 8/31/06-8/31/07, excluding applicable sales charges. If sales charges proprietary software system)--to build a
were included, returns would be lower. portfolio that we believe is an optimal
balance of the stocks' potential return
Class A Shares 11.60% and risk. This portfolio is constructed
Class B Shares 10.74 according to certain constraints to
Class C Shares 10.74 increase the probability that the Fund's
Class R Shares 11.33 relative performance and volatility remain
S&P 500 Index@ (Broad Market/Style-Specific Index) 15.13 within the Fund strategy's guidelines. The
Lipper Large-Cap Core Funds Index@ (Peer Group Index) 14.65 portfolio is continually monitored by the
Fund management team. The overall
SOURCE: @LIPPER INC. investment process is repeated on a
monthly basis to determine which companies
How we invest o Universe Development should be bought or sold.
We manage your Fund to provide exposure to o Stock Rankings Market Conditions and Your Fund
large cap core equity stocks. We seek to
outperform the S&P 500 Index while o Risk Assessment Over the fiscal year ended August 31,
minimizing the amount of additional risk 2007, the U.S. stock market delivered
relative to the benchmark. The Fund can be o Portfolio Construction strong double-digit returns despite
used as a long-term allocation to large concerns about subprime mortgages and a
cap stocks that compliments other o Trading weakening housing market. As the reporting
style-specific strategies within a period drew to a close, we saw a series of
diversified asset allocation strategy. While the companies included within the generally positive economic developments
S&P 500 Index are used as a general guide and were encouraged by signs of continued
The investment process integrates the for developing the Fund's investable economic strength and positive
following key steps: universe, non-benchmark stocks may also be
considered. Each stock in the universe is
evaluated on four factors: company
earnings momentum, price trend, management
action
(continued)
========================================== ========================================== ==========================================
PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS*
By sector 1. Integrated Oil & Gas 8.1% 1. Exxon Mobil Corp. 5.4%
Financials 20.1% 2. Pharmaceuticals 7.0 2. Microsoft Corp. 3.3
Information Technology 20.1 3. Computer Hardware 6.8 3. Cisco Systems, Inc. 3.2
Energy 10.3 4. Other Diversified 4. Hewlett-Packard Co. 2.8
Consumer Discretionary 10.2 Financial Services 6.7 5. Apple Inc. 2.7
Health Care 9.5 5. Communications 6. Pfizer Inc. 2.7
Industrials 9.4 Equipment 7. JPMorgan Chase & Co. 2.7
Consumer Staples 8.8 Total Net Assets $5.05 million 8. Altria Group, Inc 2.6
Telecommunication Services 4.6 Total Number of Holdings* 96 9. Merck & Co. Inc. 2.4
Materials 4.2 10. General Electric Co. 2.4
Utilities 2.0
Money Market Funds Plus Other
Assets Less Liabilities 0.8
The Fund's holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings.
========================================== ========================================== ==========================================
4
AIM Structured Core Fund
performance across most market Stock selection within the portfolio JEREMY S. LEFKOWITZ
capitalizations and sectors. was weak for the fiscal year primarily as
the result of the optimization process. Portfolio manager, is lead manager of AIM
Gross domestic product (GDP), a measure The largest detractor from relative Structured Core Fund. He began his
of economic growth, increased at a healthy performance came from not owning certain investments career in 1968 and has been
annualized rate of 3.8% in the second benchmark stocks which performed well associated with INVESCO Institutional
quarter of 2007.(1) This was a significant during the fiscal year. These stocks and/or its affiliates since 1982. Mr.
increase over the first quarter of 2007 included Amgen, Starbucks and Advanced Lefkowitz earned a B.S. in industrial
when GDP grew at an annualized rate of Micro Devices. Stocks we overweighted, engineering and an M.B.A. in finance from
just 0.6%.(1) Much of the growth in the such as TESORO, Apple Computer and MEMC Columbia University.
second quarter was driven by an increase Electronic Materials, contributed
in net exports and higher defense positively to Fund performance. Our MAUREEN DONNELLAN
spending. strategy emphasized stocks we believed
possessed strong earnings growth, positive Portfolio manager, is manager of AIM
Inflation, as measured by the Consumer price trends and reasonable valuations. Structured Core Fund. She has been
Price Index, rose at an annualized rate of associated with INVESCO Institutional
4.5% during the first seven months of 2007 In terms of risk management, we seek to and/or its affiliates since 1974.
compared to 2.5% for all of 2006.(2) This minimize any style biases in the
increase was largely due to energy costs, portfolio. Active managers typically add W. LAWSON MCWHORTER
which rose by an annualized rate of 21.3% value in one of or a combination of four
during the first seven months of 2007.(2) areas: beta bias (relative volatility), Portfolio manager, is manager of AIM
This was a reversal from 2006, when energy style bias, sector/industry over/under Structured Core Fund. He has been
costs actually declined during the second weight and stock selection. We attempt to associated with INVESCO Institutional
half of the year and were up only 2.9% for add value through our stock selection and/or its affiliates since 2005. Mr.
all of 2006.(2) decisions. Consequently, our risk McWhorter earned a B.A. with cum laude
management process seeks to neutralize the honors from Davidson College. He is a
It is important to understand our Fund's exposure relative to the benchmark Chartered Market Technician.
investment process to better evaluate the with regard to beta, style and
drivers of our relative performance versus sector/industry exposures. WILLIAM E. MERSON
the benchmark. We generally evaluate
performance based on the impact of our We thank you for your continued Portfolio manager, is manager of AIM
stock selection and risk management. investment in AIM Structured Core Fund. Structured Core Fund. He has been
associated with INVESCO Institutional
Our stock selection model, based on the Sources: (1) Bureau of Economic Analysis, and/or its affiliates since 1984. Mr.
four factors (company earnings momentum, (2) Bureau of Labor Statistics Merson earned a B.B.A. from Manhattan
price trend, management action and College and an M.B.A. from New York
relative value) making up our alpha The views and opinions expressed in University.
(excess return) forecast for stocks in our management's discussion of fund
investment universe, was a positive performance are those of A I M Advisors, DANIEL TSAI
contributor to Fund performance. Inc. These views and opinions are subject
to change at any time based on factors Chartered Financial Analyst, portfolio
In selecting holdings for the Fund, we such as market and economic conditions. manager, is manager of AIM Structured
also take into account our risk and These views and opinions may not be relied Core Fund. He has been associated with
transaction cost forecasts. We use our upon as investment advice or INVESCO Institutional and/or its
software system optimizer to assist in recommendations, or as an offer for a affiliates since 2000. Mr. Tsai earned a
making investment decisions, based on risk particular security. The information is B.S. in mechanical engineering from
and transaction cost forecasts as well as not a complete analysis of every aspect of National Taiwan University and a M.S. in
our alpha forecast. Consequently, while any market, country, industry, security or mechanical engineering from the University
our stock selection model may identify a the fund. Statements of fact are from of Michigan. He also earned a M.S. in
stock with an attractive alpha forecast, sources considered reliable, but A I M computer science at Wayne State
the optimizer may indicate that its Advisors, Inc. makes no representation or University.
transaction costs are too high and/or its warranty as to their completeness or
risk level is unacceptable. Placing more accuracy. Although historical performance ANNE M. UNFLAT
of an emphasis on transaction costs and is no guarantee of future results, these
potential risk in making stock selections insights may help you understand our Portfolio manager, is manager of AIM
can benefit or detract from Fund investment management philosophy. Structured Core Fund. She has been
performance. For the fiscal year, it associated with INVESCO Institutional
detracted from our results. See important Fund and index and/or its affiliates since 1988. Ms.
disclosures later in this report. Unflat graduated magna cum laude from
Queens College with a B.A. in economics.
She earned her M.B.A. degree in finance
from St. John's University.
Assisted by the U.S. Structured Products
Group Research Team
5
AIM Structured Core Fund
YOUR FUND'S LONG-TERM PERFORMANCE
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND AND INDEX DATA FROM 3/31/06
LIPPER
LARGE-CAP
AIM STRUCTURED CORE AIM STRUCTURED CORE AIM STRUCTURED CORE AIM STRUCTURED CORE CORE FUNDS
DATE FUND-CLASS A SHARES FUND-CLASS B SHARES FUND-CLASS C SHARES FUND-CLASS R SHARES S&P 500 INDEX(1) INDEX(1)
3/31/06 $ 9450 $10000 $10000 $10000 $10000 $10000
4/06 9554 10100 10100 10100 10134 10104
5/06 9261 9790 9790 9800 9843 9798
6/06 9337 9859 9859 9870 9856 9806
7/06 9412 9939 9939 9959 9917 9772
8/06 9630 10159 10159 10180 10152 10015
9/06 9866 10399 10399 10430 10414 10226
10/06 10272 10819 10819 10860 10753 10567
11/06 10423 10969 10969 11010 10957 10774
12/06 10487 11028 11028 11070 11111 10883
1/07 10697 11250 11250 11304 11279 11059
2/07 10419 10947 10947 11000 11059 10868
3/07 10583 11109 11109 11162 11182 10977
4/07 10986 11524 11524 11589 11677 11434
5/07 11361 11918 11918 11994 12084 11824
6/07 11063 11595 11595 11669 11884 11681
7/07 10583 11089 11089 11162 11516 11352
8/07 10748 10851 11251 11334 11688 11482
====================================================================================================================================
SOURCES: (1)LIPPER INC.
Past performance cannot guarantee charges. Index results include reinvested
comparable future results. dividends, but they do not reflect sales
charges. Performance of an index of funds
The data shown in the chart include reflects fund expenses and management
reinvested distributions, applicable sales fees; performance of a market index does
charges, Fund expenses and management not. Performance shown in the chart and
fees. Results for Class B shares are table(s) does not reflect deduction of
calculated as if a hypothetical taxes a shareholder would pay on Fund
shareholder had liquidated his entire distributions or sale of Fund shares.
investment in the Fund at the close of the Performance of the indexes does not
reporting period and paid the applicable reflect the effects of taxes.
contingent deferred sales
6
AIM Structured Core Fund
========================================== ==========================================
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
As of 8/31/07, including applicable sales As of 6/30/07, the most recent calendar
charges quarter-end, including applicable sales
charges
CLASS A SHARES
Inception (3/31/06) 5.22% CLASS A SHARES
1 Year 5.49 Inception (3/31/06) 8.44%
1 Year 11.92
CLASS B SHARES
Inception (3/31/06) 5.92% CLASS B SHARES
1 Year 5.74 Inception (3/31/06) 9.45%
1 Year 12.59
CLASS C SHARES
Inception (3/31/06) 8.66% CLASS C SHARES
1 Year 9.74 Inception (3/31/06) 12.57%
1 Year 16.59
CLASS R SHARES
Inception (3/31/06) 9.22% CLASS R SHARES
1 Year 11.33 Inception (3/31/06) 13.15%
1 Year 18.22
========================================== ==========================================
THE PERFORMANCE DATA QUOTED REPRESENT PAST CLASS A SHARE PERFORMANCE REFLECTS THE
PERFORMANCE AND CANNOT GUARANTEE MAXIMUM 5.50% SALES CHARGE, AND CLASS B
COMPARABLE FUTURE RESULTS; CURRENT AND CLASS C SHARE PERFORMANCE REFLECTS THE
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 DISTRIBUTIONS, BEGINNING AT THE TIME OF PURCHASE TO 0% AT
CHANGES IN NET ASSET VALUE AND THE EFFECT THE BEGINNING OF THE SEVENTH YEAR. THE
OF THE MAXIMUM SALES CHARGE UNLESS CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
OTHERWISE STATED. INVESTMENT RETURN AND YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU HAVE A FRONT-END SALES CHARGE; RETURNS
MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHOWN ARE AT NET ASSET VALUE AND DO NOT
SHARES. REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
ON A TOTAL REDEMPTION OF RETIREMENT PLAN
THE NET ANNUAL FUND OPERATING EXPENSE ASSETS WITHIN THE FIRST YEAR.
RATIO SET FORTH IN THE MOST RECENT FUND
PROSPECTUS AS OF THE DATE OF THIS REPORT THE PERFORMANCE OF THE FUND'S SHARE
FOR CLASS A, CLASS B, CLASS C AND CLASS R CLASSES WILL DIFFER PRIMARILY DUE TO
SHARES WAS 1.00%, 1.75%, 1.75% AND 1.25%, DIFFERENT SALES CHARGE STRUCTURES AND
RESPECTIVELY.(1) THE TOTAL ANNUAL FUND CLASS EXPENSES.
OPERATING EXPENSE RATIO SET FORTH IN THE
MOST RECENT FUND PROSPECTUS AS OF THE DATE HAD THE ADVISOR NOT WAIVED FEES AND/OR
OF THIS REPORT FOR CLASS A, CLASS B, CLASS REIMBURSED EXPENSES, PERFORMANCE WOULD
C AND CLASS R SHARES WAS 1.90%, 2.65%, HAVE BEEN LOWER.
2.65% AND 2.15%, RESPECTIVELY. THE EXPENSE
RATIOS PRESENTED ABOVE MAY VARY FROM THE (1) Total annual operating expenses less
EXPENSE RATIOS PRESENTED IN OTHER SECTIONS any contractual fee waivers and/or
OF THIS REPORT THAT ARE BASED ON EXPENSES expense reimbursements by the advisor
INCURRED DURING THE PERIOD COVERED BY THIS in effect through at least June 30,
REPORT. 2008. See current prospectus for more
information.
==========================================
FOR A DISCUSSION OF THE RISKS OF
INVESTING IN YOUR FUND AND INDEXES USED
IN THIS REPORT, PLEASE TURN THE PAGE.
==========================================
7
AIM Structured Core Fund
AIM STRUCTURED CORE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL.
o Unless otherwise stated, information presented in this report is as of
August 31, 2007, and is based on total net assets.
o Unless otherwise noted, all data in this report are from A I M Management
Group Inc.
ABOUT SHARE CLASSES derivatives. Leveraging entails risks such OTHER INFORMATION
as magnifying changes in the value of the
o Class B shares are not available as an portfolio's securities. Derivatives are o The returns shown in the management's
investment for retirement plans subject to counterparty risk--the risk discussion of Fund performance are
maintained pursuant to Section 401 of that the other party will not complete the based on net asset values calculated
the Internal Revenue Code, including transaction with the Fund. for shareholder transactions.
401(k) plans, money purchase pension Generally accepted accounting
plans and profit sharing plans, except o There is no guarantee that the principles require adjustments to be
for plans that have existing accounts investment techniques and risk analyses made to the net assets of the Fund at
invested in Class B shares. used by the Fund's portfolio managers period end for financial reporting
will produce the desired results. purposes, and as such, the net asset
o Class R shares are available only to values for shareholder transactions
certain retirement plans. Please see o The prices of securities held by the and the returns based on those net
the prospectus for more information. Fund may decline in response to market asset values may differ from the net
risks. asset values and returns reported in
PRINCIPAL RISKS OF INVESTING IN THE FUND the Financial Highlights.
ABOUT INDEXES USED IN THIS REPORT
o Credit risk is the risk of loss on an o Industry classifications used in this
investment due to the deterioration of o The S&P 500 --REGISTERED TRADEMARK-o report are generally according to the
an issuer's financial health. Such a Index is a market Global Industry Classification
deterioration of financial health may capitalization-weighted index covering Standard, which was developed by and
result in a reduction of the credit all major areas of the U.S. economy. It is the exclusive property and a
rating of the issuer's securities and is not the 500 largest companies, but service mark of Morgan Stanley Capital
may lead to the issuer's inability to rather the most widely held 500 International Inc. and Standard &
honor its contractual obligations, companies chosen with respect to market Poor's.
including making timely payment of size, liquidity, and their industry.
interest and principal. o The Chartered Financial Analyst
o THE LIPPER LARGE-CAP CORE FUNDS INDEX --REGISTERED TRADEMARK-- (CFA
o Prices of equity securities change in is an equally weighted representation --REGISTERED TRADEMARK--) designation
response to many factors including the of the largest funds in the Lipper is a globally recognized standard for
historical and prospective earnings of Large-Cap Core Funds category. These measuring the competence and integrity
the issuer, the value of its assets, funds typically have an average of investment professionals.
general economic conditions, interest price-to-earnings ratio, price-to-book
rates, investor perceptions and market ratio, and three-year sales-per-share
liquidity. growth value, compared to the S&P 500
Index.
o Foreign securities have additional
risks, including exchange rate changes, o The Fund is not managed to track the
political and economic upheaval, the performance of any particular index,
relative lack of information, including the indexes defined here, and
relatively low market liquidity, and consequently, the performance of the
the potential lack of strict financial Fund may deviate significantly from the
and accounting controls and standards. performance of the index.
o Interest rate risk refers to the risk o A direct investment cannot be made in
that bond prices generally fall as an index. Unless otherwise indicated,
interest rates rise; conversely, bond index results include reinvested
prices generally rise as interest rates dividends, and they do not reflect
fall. sales charges. Performance of an index
of funds reflects fund expenses;
o The Fund may use enhanced investment performance of a market index does not.
techniques such as leveraging and
======================================================================================= ==========================================
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 SCAUX
Class B Shares SBCUX
======================================================================================= Class C Shares SCCUX
Class R Shares SCRUX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
==========================================
AIMINVESTMENTS.COM
8
AIM Structured Core Fund
SCHEDULE OF INVESTMENTS(A)
August 31, 2007
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-99.17%
ADVERTISING-0.20%
Omnicom Group Inc. 200 $ 10,186
==================================================================
AEROSPACE & DEFENSE-1.93%
Honeywell International Inc. 500 28,075
- ------------------------------------------------------------------
Lockheed Martin Corp. 700 69,398
==================================================================
97,473
==================================================================
APPLICATION SOFTWARE-0.12%
Compuware Corp.(b) 750 6,083
==================================================================
AUTO PARTS & EQUIPMENT-0.13%
WABCO Holdings Inc. 150 6,789
==================================================================
AUTOMOBILE MANUFACTURERS-0.52%
General Motors Corp. 850 26,129
==================================================================
AUTOMOTIVE RETAIL-0.72%
AutoZone, Inc.(b) 300 36,387
==================================================================
BIOTECHNOLOGY-0.70%
Biogen Idec Inc.(b) 550 35,101
==================================================================
BROADCASTING & CABLE TV-0.16%
CBS Corp.-Class B 250 7,878
==================================================================
COMMUNICATIONS EQUIPMENT-5.33%
Cisco Systems, Inc.(b) 5,000 159,600
- ------------------------------------------------------------------
Juniper Networks, Inc.(b) 2,150 70,778
- ------------------------------------------------------------------
Research In Motion Ltd. (Canada)(b) 450 38,434
==================================================================
268,812
==================================================================
COMPUTER & ELECTRONICS RETAIL-1.48%
RadioShack Corp. 3,150 74,875
==================================================================
COMPUTER HARDWARE-6.80%
Apple Inc.(b) 1,000 138,480
- ------------------------------------------------------------------
Hewlett-Packard Co. 2,850 140,647
- ------------------------------------------------------------------
International Business Machines Corp. 550 64,180
==================================================================
343,307
==================================================================
CONSTRUCTION & FARM MACHINERY & HEAVY
TRUCKS-1.35%
Terex Corp.(b) 850 67,898
==================================================================
CONSUMER FINANCE-0.23%
Discover Financial Services(b) 500 11,570
==================================================================
</Table>
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------
DATA PROCESSING & OUTSOURCED SERVICES-1.28%
Broadridge Financial Solutions Inc. 350 $ 6,360
- ------------------------------------------------------------------
Electronic Data Systems Corp. 1,050 24,035
- ------------------------------------------------------------------
MasterCard, Inc.-Class A 250 34,247
==================================================================
64,642
==================================================================
DEPARTMENT STORES-1.29%
Kohl's Corp.(b) 1,100 65,230
==================================================================
DIVERSIFIED CHEMICALS-0.91%
Dow Chemical Co. (The) 450 19,184
- ------------------------------------------------------------------
E. I. du Pont de Nemours and Co. 550 26,812
==================================================================
45,996
==================================================================
DIVERSIFIED METALS & MINING-0.83%
Southern Copper Corp. 400 42,100
==================================================================
ELECTRIC UTILITIES-0.35%
American Electric Power Co., Inc. 200 8,896
- ------------------------------------------------------------------
Reliant Energy Inc.(b) 350 8,929
==================================================================
17,825
==================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-1.46%
Emerson Electric Co. 1,500 73,845
==================================================================
ELECTRONIC MANUFACTURING SERVICES-0.28%
Tyco Electronics Ltd.(b) 400 13,948
==================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-0.21%
Mosaic Co. (The)(b) 250 10,505
==================================================================
FOOD RETAIL-1.58%
Kroger Co. (The) 2,400 63,792
- ------------------------------------------------------------------
Safeway Inc. 500 15,865
==================================================================
79,657
==================================================================
FOOTWEAR-0.78%
NIKE, Inc.-Class B 700 39,438
==================================================================
GENERAL MERCHANDISE STORES-1.30%
Big Lots, Inc.(b) 2,200 65,494
==================================================================
HEALTH CARE DISTRIBUTORS-1.50%
AmerisourceBergen Corp. 1,300 62,205
- ------------------------------------------------------------------
McKesson Corp. 100 5,721
- ------------------------------------------------------------------
PharMerica Corp.(b) 450 7,985
==================================================================
75,911
==================================================================
HEALTH CARE EQUIPMENT-0.28%
Covidien Ltd.(b) 350 13,941
==================================================================
</Table>
9
AIM Structured Core Fund
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------
HOUSEHOLD PRODUCTS-0.52%
Colgate-Palmolive Co. 300 $ 19,896
- ------------------------------------------------------------------
Procter & Gamble Co. (The) 100 6,531
==================================================================
26,427
==================================================================
HOUSEWARES & SPECIALTIES-0.28%
Newell Rubbermaid Inc. 550 14,185
==================================================================
INDEPENDENT POWER PRODUCERS & ENERGY
TRADERS-0.42%
Dynegy Inc.-Class A(b) 2,650 21,439
==================================================================
INDUSTRIAL CONGLOMERATES-2.43%
General Electric Co. 3,150 122,440
==================================================================
INDUSTRIAL MACHINERY-1.47%
Illinois Tool Works Inc. 1,200 69,804
- ------------------------------------------------------------------
SPX Corp. 50 4,503
==================================================================
74,307
==================================================================
INDUSTRIAL REIT'S-0.42%
ProLogis 350 21,056
==================================================================
INTEGRATED OIL & GAS-8.08%
Chevron Corp. 600 52,656
- ------------------------------------------------------------------
Exxon Mobil Corp. 3,200 274,336
- ------------------------------------------------------------------
Marathon Oil Corp. 1,500 80,835
==================================================================
407,827
==================================================================
INTEGRATED TELECOMMUNICATION SERVICES-4.59%
AT&T Inc. 700 27,909
- ------------------------------------------------------------------
Qwest Communications International Inc.(b) 9,450 84,577
- ------------------------------------------------------------------
Verizon Communications Inc. 2,850 119,358
==================================================================
231,844
==================================================================
INTERNET RETAIL-0.62%
Amazon.com, Inc.(b) 150 11,987
- ------------------------------------------------------------------
IAC/InterActiveCorp(b) 700 19,453
==================================================================
31,440
==================================================================
INVESTMENT BANKING & BROKERAGE-4.09%
Goldman Sachs Group, Inc. (The) 500 88,005
- ------------------------------------------------------------------
Merrill Lynch & Co., Inc. 550 40,535
- ------------------------------------------------------------------
Morgan Stanley 1,250 77,962
==================================================================
206,502
==================================================================
INVESTMENT COMPANIES-EXCHANGE TRADED
FUNDS-0.58%
S&P 500 Depositary Receipts Trust-Series 1 200 29,518
==================================================================
</Table>
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------
LEISURE PRODUCTS-2.04%
Hasbro, Inc. 1,050 $ 29,620
- ------------------------------------------------------------------
Mattel, Inc. 3,400 73,542
==================================================================
103,162
==================================================================
METAL & GLASS CONTAINERS-0.57%
Owens-Illinois, Inc.(b) 600 24,132
- ------------------------------------------------------------------
Pactiv Corp.(b) 150 4,388
==================================================================
28,520
==================================================================
MOTORCYCLE MANUFACTURERS-0.64%
Harley-Davidson, Inc. 600 32,274
==================================================================
MULTI-LINE INSURANCE-3.40%
American International Group, Inc. 1,850 122,100
- ------------------------------------------------------------------
Loews Corp. 1,050 49,360
==================================================================
171,460
==================================================================
MULTI-UTILITIES-1.28%
PG&E Corp. 800 35,600
- ------------------------------------------------------------------
Xcel Energy, Inc. 1,400 28,854
==================================================================
64,454
==================================================================
OFFICE ELECTRONICS-0.58%
Xerox Corp. 1,700 29,121
==================================================================
OIL & GAS EXPLORATION & PRODUCTION-1.14%
Devon Energy Corp. 300 22,593
- ------------------------------------------------------------------
Encana Corp (Canada) 600 35,100
==================================================================
57,693
==================================================================
OIL & GAS REFINING & MARKETING-1.05%
Tesoro Corp. 1,000 49,330
- ------------------------------------------------------------------
Valero Energy Corp. 50 3,426
==================================================================
52,756
==================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-6.68%
Bank of America Corp. 2,350 119,098
- ------------------------------------------------------------------
Citigroup Inc. 1,800 84,384
- ------------------------------------------------------------------
JPMorgan Chase & Co. 3,000 133,560
==================================================================
337,042
==================================================================
PHARMACEUTICALS-7.05%
Forest Laboratories, Inc.(b) 1,850 69,615
- ------------------------------------------------------------------
King Pharmaceuticals, Inc.(b) 1,850 27,806
- ------------------------------------------------------------------
Merck & Co. Inc. 2,450 122,916
- ------------------------------------------------------------------
Pfizer Inc. 5,450 135,378
==================================================================
355,715
==================================================================
</Table>
10
AIM Structured Core Fund
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------
PROPERTY & CASUALTY INSURANCE-1.57%
ACE Ltd. 100 $ 5,776
- ------------------------------------------------------------------
Allstate Corp. (The) 600 32,850
- ------------------------------------------------------------------
Travelers Cos., Inc. (The) 800 40,432
==================================================================
79,058
==================================================================
RETAIL REIT'S-2.35%
Kimco Realty Corp. 1,000 42,820
- ------------------------------------------------------------------
Simon Property Group, Inc. 800 75,936
==================================================================
118,756
==================================================================
SEMICONDUCTORS-2.08%
NVIDIA Corp.(b) 2,050 104,878
==================================================================
SOFT DRINKS-3.35%
Coca-Cola Co. (The) 2,200 118,316
- ------------------------------------------------------------------
PepsiCo, Inc. 750 51,022
==================================================================
169,338
==================================================================
STEEL-1.68%
United States Steel Corp. 900 85,032
==================================================================
SYSTEMS SOFTWARE-4.40%
BMC Software, Inc.(b) 1,050 32,151
- ------------------------------------------------------------------
McAfee Inc.(b) 650 23,237
- ------------------------------------------------------------------
Microsoft Corp. 5,800 166,634
==================================================================
222,022
==================================================================
</Table>
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE-0.76%
Fannie Mae 350 $ 22,963
- ------------------------------------------------------------------
Freddie Mac 250 15,403
==================================================================
38,366
==================================================================
TOBACCO-3.33%
Altria Group, Inc. 1,900 131,879
- ------------------------------------------------------------------
Loews Corp-Carolina Group 150 11,418
- ------------------------------------------------------------------
UST Inc. 500 24,640
==================================================================
167,937
==================================================================
Total Common Stocks & Other Equity
Interests (Cost $4,629,379) 5,005,589
==================================================================
MONEY MARKET FUNDS-1.24%
Liquid Assets Portfolio-Institutional
Class(c) 31,329 31,329
- ------------------------------------------------------------------
Premier Portfolio-Institutional Class(c) 31,329 31,329
==================================================================
Total Money Market Funds (Cost $62,658) 62,658
==================================================================
TOTAL INVESTMENTS-100.41% (Cost $4,692,037) 5,068,247
==================================================================
OTHER ASSETS LESS LIABILITIES-(0.41)% (20,485)
==================================================================
NET ASSETS-100.00% $5,047,762
__________________________________________________________________
==================================================================
</Table>
Investment Abbreviations:
<Table>
REIT - Real Estate Investment Trust
</Table>
Notes to Schedule of Investments:
(a) Industry classifications used in this report are generally according to the
Global Industry Classification Standard, which was developed by and is the
exclusive property and a service mark of Morgan Stanley Capital
International Inc. and Standard & Poor's.
(b) Non-income producing security.
(c) 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.
11
AIM Structured Core Fund
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2007
<Table>
ASSETS:
Investments, at value (Cost $4,629,379) $5,005,589
- -----------------------------------------------------------
Investments in affiliated money market funds
(Cost $62,658) 62,658
===========================================================
Total investments (Cost $4,692,037) 5,068,247
===========================================================
Receivables for:
Fund shares sold 200
- -----------------------------------------------------------
Dividends 7,212
- -----------------------------------------------------------
Fund expenses absorbed 21,849
- -----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 3,823
- -----------------------------------------------------------
Other assets 13,895
===========================================================
Total assets 5,115,226
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Fund shares reacquired 2,000
- -----------------------------------------------------------
Trustee deferred compensation and retirement
plans 3,823
- -----------------------------------------------------------
Accrued distribution fees 10,625
- -----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 2,619
- -----------------------------------------------------------
Accrued transfer agent fees 485
- -----------------------------------------------------------
Accrued operating expenses 47,912
===========================================================
Total liabilities 67,464
===========================================================
Net assets applicable to shares outstanding $5,047,762
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $4,603,929
- -----------------------------------------------------------
Undistributed net investment income 13,050
- -----------------------------------------------------------
Undistributed net realized gain 54,573
- -----------------------------------------------------------
Unrealized appreciation 376,210
===========================================================
$5,047,762
___________________________________________________________
===========================================================
NET ASSETS:
Class A $1,531,541
___________________________________________________________
===========================================================
Class B $ 846,826
___________________________________________________________
===========================================================
Class C $1,043,377
___________________________________________________________
===========================================================
Class R $ 683,903
___________________________________________________________
===========================================================
Institutional Class $ 942,115
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 136,853
___________________________________________________________
===========================================================
Class B 75,999
___________________________________________________________
===========================================================
Class C 93,667
___________________________________________________________
===========================================================
Class R 61,242
___________________________________________________________
===========================================================
Institutional Class 84,013
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 11.19
- -----------------------------------------------------------
Offering price per share
(Net asset value of $11.19 divided by
94.50%) $ 11.84
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per share $ 11.14
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per share $ 11.14
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per share $ 11.17
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per share $ 11.21
___________________________________________________________
===========================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12
AIM Structured Core Fund
STATEMENT OF OPERATIONS
For the year ended August 31, 2007
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $15) $ 71,627
- -----------------------------------------------------------------------
Dividends from affiliated money market funds 2,161
=======================================================================
Total investment income 73,788
=======================================================================
EXPENSES:
Advisory fees 26,135
- -----------------------------------------------------------------------
Administrative services fees 50,000
- -----------------------------------------------------------------------
Custodian fees 5,351
- -----------------------------------------------------------------------
Distribution fees:
Class A 3,308
- -----------------------------------------------------------------------
Class B 7,735
- -----------------------------------------------------------------------
Class C 8,078
- -----------------------------------------------------------------------
Class R 3,377
- -----------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 3,285
- -----------------------------------------------------------------------
Transfer agent fees -- Institutional 31
- -----------------------------------------------------------------------
Trustees' and officer's fees and benefits 16,417
- -----------------------------------------------------------------------
Registration and filing fees 91,412
- -----------------------------------------------------------------------
Reports to shareholders 17,272
- -----------------------------------------------------------------------
Professional services fees 70,118
- -----------------------------------------------------------------------
Other 8,272
=======================================================================
Total expenses 310,791
=======================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangement(s) (255,653)
=======================================================================
Net expenses 55,138
=======================================================================
Net investment income 18,650
=======================================================================
REALIZED AND UNREALIZED GAIN FROM:
Net realized gain from investment securities 100,642
=======================================================================
Change in net unrealized appreciation of investment
securities 272,805
=======================================================================
Net realized and unrealized gain 373,447
=======================================================================
Net increase in net assets resulting from operations $ 392,097
_______________________________________________________________________
=======================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13
AIM Structured Core Fund
STATEMENT OF CHANGES IN NET ASSETS
For the year ended August 31, 2007 and the period March 31, 2006 (commencement
date) through August 31, 2006
<Table>
<Caption>
2007 2006
- --------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 18,650 $ 9,240
- --------------------------------------------------------------------------------------
Net realized gain (loss) 100,642 (46,069)
- --------------------------------------------------------------------------------------
Change in net unrealized appreciation 272,805 103,405
======================================================================================
Net increase in net assets resulting from operations 392,097 66,576
======================================================================================
Distributions to shareholders from net investment income:
Class A (20,605) --
- --------------------------------------------------------------------------------------
Class B (7,234) --
- --------------------------------------------------------------------------------------
Class C (6,815) --
- --------------------------------------------------------------------------------------
Class R (9,690) --
- --------------------------------------------------------------------------------------
Institutional Class (11,700) --
======================================================================================
Decrease in net assets resulting from distributions (56,044) --
======================================================================================
Share transactions-net:
Class A 446,057 960,946
- --------------------------------------------------------------------------------------
Class B 143,523 630,331
- --------------------------------------------------------------------------------------
Class C 364,389 615,597
- --------------------------------------------------------------------------------------
Class R 13,698 600,010
- --------------------------------------------------------------------------------------
Institutional Class 270,572 600,010
======================================================================================
Net increase in net assets resulting from share
transactions 1,238,239 3,406,894
======================================================================================
Net increase in net assets 1,574,292 3,473,470
======================================================================================
NET ASSETS:
Beginning of year 3,473,470 --
======================================================================================
End of year (including undistributed net investment income
of $13,050 and $50,421, respectively) $5,047,762 $3,473,470
______________________________________________________________________________________
======================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
14
AIM Structured Core Fund
NOTES TO FINANCIAL STATEMENTS
August 31, 2007
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's investment objective is 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 or official closing price as of the close of
the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on that
day. Securities traded in the over-the-counter market are valued based on
prices furnished by independent pricing services or market makers. When
such securities are valued by an independent pricing service they may be
considered fair valued. 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 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 open-end and closed-end registered
investment companies that trade on an exchange are valued at the last sales
price or official closing price as of the close of the customary trading
session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) and unlisted equities 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, including commercial paper,
having 60 days or less to maturity are recorded at amortized cost which
approximates value. Debt securities are subject to interest rate and credit
risks. In addition, all debt securities involve some risk of default with
respect to interest and/or principal payments.
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. If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at
the market quotations. Because trading hours for certain foreign securities
end before the close of the NYSE, closing market quotations may become
unreliable. If between the time trading ends on a particular security and
the close of the customary trading session on the NYSE, events occur that
are significant and may make the closing price unreliable, the Fund may
fair value the security. If 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. Foreign securities may have additional risks including exchange
rate changes, potential for sharply devalued currencies and high inflation,
political and economical upheaval, the relative lack of issuer information,
relatively low market liquidity and the potential lack of strict financial
and accounting controls and standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources
and are valued at the last bid price in the case of equity securities and
in the case of debt obligations, the mean between the last bid and asked
prices.
Securities for which market quotations are not readily available or are
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity.
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.
15
AIM Structured Core Fund
The Fund may receive proceeds from litigation settlements involving Fund
investments. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
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
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., AIM pays INVESCO Institutional (N.A.), Inc. 40% of
the amount of AIM's compensation on the sub-advised assets.
16
AIM Structured Core Fund
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 at least June 30, 2008. 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 INVESCO PLC ("INVESCO")
(formerly "AMVESCAP PLC") 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. In addition, the Fund may also
benefit from a one time credit used to offset custodian expenses. These credits
are used to pay certain expenses incurred by the Fund.
Further, effective July 1, 2007, AIM has contractually agreed, through at
least June 30, 2008, to waive 100% of the advisory fee AIM receives from the
affiliated money market funds on investments by the Fund in such affiliated
money market funds. Prior to July 1, 2007, AIM had voluntarily agreed to waive
25% of the advisory fee AIM receives from the affiliated money market funds on
investments by the Fund in such affiliated money market funds.
For the year ended August 31, 2007, AIM waived advisory fees and reimbursed
expenses of $251,470 and reimbursed class level expenses of $1,173, $686, $716,
$599, and $31 for Class A, Class B, Class C, Class R and Institutional Class
shares, respectively.
At the request of the Trustees of the Trust, INVESCO 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, 2007, INVESCO did not reimburse any expenses.
The Trust has entered into a master administrative services agreement with
AIM pursuant to which the Fund has agreed to pay AIM for certain administrative
costs incurred in providing accounting services, to the Fund. For the year ended
August 31, 2007, expenses incurred under the agreement are shown in the
Statement of Operations as administrative services fees.
The Trust has entered into a transfer agency and service agreement with AIM
Investment Services, Inc. ("AIS") pursuant to which the Fund has agreed to pay
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, 2007,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
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 Plan payments, up to 0.25% of the
average daily net assets of each class of 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. Financial Industry Regulatory
Authority ("FINRA"), formerly known as National Association of Securities
Dealers, 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. For the year
ended August 31, 2007, expenses incurred under the Plans are shown in the
Statement of Operations as distribution fees.
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, 2007, ADI advised the Fund that it retained $1,291 in front-end
sales commissions from the sale of Class A shares and $0, $50, $32 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--INVESTMENTS IN AFFILIATES
The Fund is permitted, pursuant to 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, 2007. During the period each investment maintained
a $1.00 net asset value, as such there is no realized gain/(loss) and no change
in unrealized appreciation/(depreciation).
<Table>
<Caption>
VALUE PURCHASES PROCEEDS VALUE DIVIDEND
FUND 08/31/06 AT COST FROM SALES 08/31/07 INCOME
- -------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-
Institutional
Class $ -- $408,108 $(376,779) $31,329 $1,083
- -------------------------------------------------------------------------------------------------
Premier
Portfolio-
Institutional
Class -- 408,108 (376,779) 31,329 1,078
=================================================================================================
Total
Investments
in
Affiliates $ -- $816,216 $(753,558) $62,658 $2,161
_________________________________________________________________________________________________
=================================================================================================
</Table>
17
AIM Structured Core Fund
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, (ii) custodian credits which result
from periodic overnight cash balances at the custodian and (iii) a one time
custodian fee credit used to offset custodian fees. For the year ended August
31, 2007, the Fund received credits from these arrangements, which resulted in
the reduction of the Fund's total expenses of $978.
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 certain Trustees and Officers of the Fund. 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, certain 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, 2007, the Fund paid legal fees of $4,631
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6--BORROWINGS
Pursuant to an exemptive order from the 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
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 party to an uncommitted unsecured revolving credit facility
with State Street Bank and Trust Company ("SSB"). The Fund may borrow up to the
lesser of (i) $125,000,000, or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
credit facility can borrow on a first come, first served basis. Principal on
each loan outstanding shall bear interest at the bid rate quoted by SSB at the
time of the request for the loan.
During the year ended August 31, 2007, 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 contractually agreed upon rate.
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years ended August 31, 2007
and the period March 31, 2006 (commencement date) through August 31, 2006 was as
follows:
<Table>
<Caption>
2007 2006
- -----------------------------------------------------------------------------
Distributions paid from Ordinary income: $56,044 $--
_____________________________________________________________________________
=============================================================================
</Table>
18
AIM Structured Core Fund
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2007, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2007
- --------------------------------------------------------------------------
Undistributed ordinary income $ 15,969
- --------------------------------------------------------------------------
Undistributed long-term gain 55,275
- --------------------------------------------------------------------------
Net unrealized appreciation -- investments 375,508
- --------------------------------------------------------------------------
Temporary book/tax differences (2,919)
- --------------------------------------------------------------------------
Shares of beneficial interest 4,603,929
==========================================================================
Total net assets $5,047,762
__________________________________________________________________________
==========================================================================
</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 net unrealized
appreciation 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.
The Fund utilized $43,754 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, 2007.
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the year ended August 31, 2007 was $4,564,916 and $3,373,673,
respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- -------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 543,303
- -------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (167,795)
===============================================================================
Net unrealized appreciation of investment securities $ 375,508
_______________________________________________________________________________
===============================================================================
Cost of investments for tax purposes is $4,692,739.
</Table>
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of excise taxes on August
31, 2007, undistributed net investment income was increased by $23 and shares of
beneficial interest decreased by $23. This reclassification had no effect on the
net assets of the Fund.
19
AIM Structured Core 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 unless certain waiver criteria are met and under certain
circumstances load waiver shares may be subject to a CDSC. Class B shares and
Class C shares are sold with a CDSC. Class R shares and Institutional Class
shares are sold at net asset value. Under certain circumstances, Class R shares
are subject to a 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
(COMMENCEMENT
YEAR ENDED DATE) THROUGH
AUGUST 31, 2007(a) AUGUST 31, 2006
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------
Sold:
Class A 44,275 $ 491,285 98,774 $ 981,684
- ------------------------------------------------------------------------------------------------------------------
Class B 16,451 183,040 66,127 660,015
- ------------------------------------------------------------------------------------------------------------------
Class C 32,644 369,797 61,527 615,597
- ------------------------------------------------------------------------------------------------------------------
Class R 361 4,008 60,001 600,010
- ------------------------------------------------------------------------------------------------------------------
Institutional Class 22,949 258,872 60,001 600,010
==================================================================================================================
Issued as reinvestment of dividends:
Class A 1,872 20,605 -- --
- ------------------------------------------------------------------------------------------------------------------
Class B 656 7,234 -- --
- ------------------------------------------------------------------------------------------------------------------
Class C 618 6,815 -- --
- ------------------------------------------------------------------------------------------------------------------
Class R 880 9,690 -- --
- ------------------------------------------------------------------------------------------------------------------
Institutional Class 1,063 11,700 -- --
==================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 223 2,548 -- --
- ------------------------------------------------------------------------------------------------------------------
Class B (223) (2,548) -- --
==================================================================================================================
Reacquired:
Class A (6,193) (68,381) (2,098) (20,738)
- ------------------------------------------------------------------------------------------------------------------
Class B (3,915) (44,203) (3,097) (29,684)
- ------------------------------------------------------------------------------------------------------------------
Class C (1,122) (12,223) -- --
==================================================================================================================
110,539 $1,238,239 341,235 $3,406,894
__________________________________________________________________________________________________________________
==================================================================================================================
</Table>
(a) There is one entity that is a record owner of more than 5% of the
outstanding shares of the Fund and it owns 5% 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 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, 67% of the outstanding shares of the Fund are owned 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 has assessed the
application of FIN 48 to the Fund and has determined that the adopting of FIN 48
is not expected to have a material impact on the Fund. Management intends for
the Fund to adopt FIN 48 provisions during the fiscal year ending August 31,
2008 as required.
20
AIM Structured Core Fund
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
-----------------------------------
MARCH 31, 2006
YEAR (COMMENCEMENT
ENDED DATE) THROUGH
AUGUST 31, AUGUST 31,
2007 2006
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.19 $ 10.00
- -------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.08(a) 0.04
- -------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.10 0.15
=================================================================================================
Total from investment operations 1.18 0.19
=================================================================================================
Less dividends from net investment income (0.18) --
=================================================================================================
Net asset value, end of period $ 11.19 $ 10.19
_________________________________________________________________________________________________
=================================================================================================
Total return(b) 11.60% 1.90%
_________________________________________________________________________________________________
=================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,532 $ 985
_________________________________________________________________________________________________
=================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.02%(c) 1.06%(d)
- -------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 6.88%(c) 10.44%(d)
=================================================================================================
Ratio of net investment income to average net assets 0.67%(c) 0.95%(d)
_________________________________________________________________________________________________
=================================================================================================
Portfolio turnover rate(e) 79% 25%
_________________________________________________________________________________________________
=================================================================================================
</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 based on average daily net assets of $1,323,329
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
<Table>
<Caption>
CLASS B
-----------------------------------
MARCH 31, 2006
(COMMENCEMENT
YEAR ENDED DATE) THROUGH
AUGUST 31, AUGUST 31,
2007 2006
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.16 $ 10.00
- -------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a) 0.01
- -------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.10 0.15
=================================================================================================
Total from investment operations 1.09 0.16
=================================================================================================
Less dividends from net investment income (0.11) --
=================================================================================================
Net asset value, end of period $ 11.14 $ 10.16
_________________________________________________________________________________________________
=================================================================================================
Total return(b) 10.74% 1.60%
_________________________________________________________________________________________________
=================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 847 $ 640
_________________________________________________________________________________________________
=================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.77%(c) 1.81%(d)
- -------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 7.63%(c) 11.19%(d)
=================================================================================================
Ratio of net investment income (loss) to average net assets (0.08)%(c) 0.20%(d)
_________________________________________________________________________________________________
=================================================================================================
Portfolio turnover rate(e) 79% 25%
_________________________________________________________________________________________________
=================================================================================================
</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 based on average daily net assets of $773,468.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
21
AIM Structured Core Fund
NOTE 12--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS C
-----------------------------------
MARCH 31, 2006
(COMMENCEMENT
YEAR ENDED DATE) THROUGH
AUGUST 31, AUGUST 31,
2007 2006
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.16 $ 10.00
- -------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a) 0.01
- -------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.10 0.15
=================================================================================================
Total from investment operations 1.09 0.16
=================================================================================================
Less dividends from net investment income (0.11) --
=================================================================================================
Net asset value, end of period $ 11.14 $ 10.16
_________________________________________________________________________________________________
=================================================================================================
Total return(b) 10.74% 1.60%
_________________________________________________________________________________________________
=================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,043 $ 625
=================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.77%(c) 1.81%(d)
- -------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 7.63%(c) 11.19%(d)
=================================================================================================
Ratio of net investment income (loss) to average net assets (0.08)%(c) 0.20%(d)
_________________________________________________________________________________________________
=================================================================================================
Portfolio turnover rate(e) 79% 25%
_________________________________________________________________________________________________
=================================================================================================
</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 based on average daily net assets of $807,840.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
<Table>
<Caption>
CLASS R
-----------------------------------
MARCH 31, 2006
(COMMENCEMENT
YEAR ENDED DATE) THROUGH
AUGUST 31, AUGUST 31,
2007 2006
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.18 $ 10.00
- -------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.05(a) 0.03
- -------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.10 0.15
=================================================================================================
Total from investment operations 1.15 0.18
=================================================================================================
Less dividends from net investment income (0.16) --
=================================================================================================
Net asset value, end of period $ 11.17 $ 10.18
_________________________________________________________________________________________________
=================================================================================================
Total return(b) 11.33% 1.80%
_________________________________________________________________________________________________
=================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 684 $ 611
_________________________________________________________________________________________________
=================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.27%(c) 1.31%(d)
- -------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 7.13%(c) 10.69%(d)
=================================================================================================
Ratio of net investment income to average net assets 0.42%(c) 0.70%(d)
_________________________________________________________________________________________________
=================================================================================================
Portfolio turnover rate(e) 79% 25%
_________________________________________________________________________________________________
=================================================================================================
</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 based on average daily net assets of $675,367.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
22
AIM Structured Core Fund
NOTE 12--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
-----------------------------------
MARCH 31, 2006
(COMMENCEMENT
YEAR ENDED DATE) THROUGH
AUGUST 31, AUGUST 31,
2007 2006
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.20 $ 10.00
- -------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.10(a) 0.05
- -------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.10 0.15
=================================================================================================
Total from investment operations 1.20 0.20
=================================================================================================
Less dividends from net investment income (0.19) --
=================================================================================================
Net asset value, end of period $ 11.21 $ 10.20
_________________________________________________________________________________________________
=================================================================================================
Total return(b) 11.85% 2.00%
_________________________________________________________________________________________________
=================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 942 $ 612
=================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.77%(c) 0.80%(d)
- -------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 6.55%(c) 10.14%(d)
=================================================================================================
Ratio of net investment income to average net assets 0.92%(c) 1.21%(d)
_________________________________________________________________________________________________
=================================================================================================
Portfolio turnover rate(e) 79% 25%
_________________________________________________________________________________________________
=================================================================================================
</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 based on average daily net assets of $775,848.
(d) Annualized.
(e) 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.
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 A I M Advisors, Inc. ("AIM") and A I M Distributors, Inc.
("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. By agreement with the Commissioner of Securities, AIM's time
to respond to that Order has been indefinitely suspended.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, INVESCO Funds Group,
Inc. ("IFG") (the former investment advisor to certain AIM Funds), 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; and
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.
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 INVESCO PLC'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
23
AIM Structured Core Fund
NOTE 13--LEGAL PROCEEDINGS--(CONTINUED)
Amended Fund Derivative Complaint. On September 15, 2006, the MDL Court granted
the INVESCO 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.
24
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, 2007, the results of its operations for the year then
ended, and the changes in its net assets and the financial highlights for the
year then ended and for the period March 31, 2006 (commencement date) 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 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, 2007 by correspondence with the
custodian, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
October 19, 2007
Houston, Texas
25
AIM Structured Core Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE together with the amount you invested, to use this information to compare the
estimate the expenses that you paid over ongoing costs of investing in the Fund
As a shareholder of the Fund, you incur the period. Simply divide your account and other funds. To do so, compare this
two types of costs: (1) transaction costs, value by $1,000 (for example, an $8,600 5% hypothetical example with the 5%
which may include sales charges (loads) on account value divided by $1,000 = 8.6), hypothetical examples that appear in the
purchase payments or contingent deferred then multiply the result by the number in shareholder reports of the other funds.
sales charges on redemptions, and the table under the heading entitled
redemption fees, if any; and (2) ongoing "Actual Expenses Paid During Period" to Please note that the expenses shown in
costs, including management fees; estimate the expenses you paid on your the table are meant to highlight your
distribution and/or service (12b-1) fees; account during this period. ongoing costs only and do not reflect any
and other Fund expenses. This example is transaction costs, such as sales charges
intended to help you understand your HYPOTHETICAL EXAMPLE FOR COMPARISON (loads) on purchase payments, contingent
ongoing costs (in dollars) of investing in PURPOSES deferred sales charges on redemptions,
the Fund and to compare these costs with and redemption fees, if any. Therefore,
ongoing costs of investing in other mutual The table below also provides information the hypothetical information is useful in
funds. The example is based on an about hypothetical account values and comparing ongoing costs only, and will
investment of $1,000 invested at the hypothetical expenses based on the Fund's not help you determine the relative total
beginning of the period and held for the actual expense ratio and an assumed rate costs of owning different funds. In
entire period March 1, 2007, through of return of 5% per year before expenses, addition, if these transaction costs were
August 31, 2007. which is not the Fund's actual return. included, your costs would have been
higher.
ACTUAL EXPENSES The hypothetical account values and
expenses may not be used to estimate the
The table below provides information about actual ending account balance or expenses
actual account values and actual expenses. you paid for the period. You may
You may use the information in 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 (3/01/07) (8/31/07)(1) PERIOD(2) (8/31/07) PERIOD(2) RATIO
A $1,000.00 $1,031.30 $5.07 $1,020.21 $5.04 0.99%
B 1,000.00 1,027.70 8.89 1,016.43 8.84 1.74
C 1,000.00 1,027.70 8.89 1,016.43 8.84 1.74
R 1,000.00 1,030.40 6.35 1,018.95 6.31 1.24
(1) The actual ending account value is based on the actual total return of the Fund for the period March 1, 2007, through August
31, 2007, 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.
===================================================================================================================================
26
Supplement to Annual Report dated 8/31/07
AIM STRUCTURED CORE FUND
==========================================
INSTITUTIONAL CLASS SHARES AVERAGE ANNUAL TOTAL RETURNS PLEASE NOTE THAT PAST PERFORMANCE IS
NOT INDICATIVE OF FUTURE RESULTS. MORE
The following information has been For periods ended 8/31/07 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) 9.73% REINVESTMENT OF DISTRIBUTIONS AT NAV.
specific to their holdings. Institutional 1 Year 11.85 INVESTMENT RETURN AND PRINCIPAL VALUE WILL
Class shares are offered exclusively to FLUCTUATE SO YOUR SHARES, WHEN REDEEMED,
institutional investors, including defined AVERAGE ANNUAL TOTAL RETURNS MAY BE WORTH MORE OR LESS THAN THEIR
contribution plans that meet certain For periods ended 6/30/07, ORIGINAL COST. SEE FULL REPORT FOR
criteria. most recent calendar quarter-end INFORMATION ON COMPARATIVE BENCHMARKS.
PLEASE CONSULT YOUR FUND PROSPECTUS FOR
Inception (3/31/06) 13.74% MORE INFORMATION. FOR THE MOST CURRENT
1 Year 18.75 MONTH-END PERFORMANCE, PLEASE CALL
========================================== 800-451-4246 OR VISIT AIMINVESTMENTS.COM.
INSTITUTIONAL CLASS SHARES HAVE NO SALES HAD THE ADVISOR NOT WAIVED FEES AND/OR
CHARGE; THEREFORE, PERFORMANCE IS AT NET REIMBURSED EXPENSES, PERFORMANCE WOULD
ASSET VALUE (NAV). PERFORMANCE OF HAVE BEEN LOWER.
INSTITUTIONAL CLASS SHARES WILL DIFFER
FROM PERFORMANCE OF OTHER SHARE CLASSES
PRIMARILY DUE TO DIFFERING SALES CHARGES
AND CLASS EXPENSES.
==========================================
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.
[AIM INVESTMENTS LOGO]
AIMINVESTMENTS.COM SCOR-INS-1 A I M Distributors, Inc. --REGISTERED TRADEMARK--
Information about your Fund's expenses
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE expenses that you paid over the period. The hypothetical account values and
Simply divide your account value by $1,000 expenses may not be used to estimate the
As a shareholder of the Fund, you incur (for example, an $8,600 account value actual ending account balance or expenses
ongoing costs, including management fees divided by $1,000 = 8.6), then multiply you paid for the period. You may use this
and other Fund expenses. This example is the result by the number in the table information to compare the ongoing costs
intended to help you understand your under the heading entitled "Actual of investing in the Fund and other funds.
ongoing costs (in dollars) of investing in Expenses Paid During Period" to estimate To do so, compare this 5% hypothetical
the Fund and to compare these costs with the expenses you paid on your account example with the 5% hypothetical
ongoing costs of investing in other mutual during this period. examples that appear in the shareholder
funds. The example is based on an reports of the other funds.
investment of $1,000 invested at the HYPOTHETICAL EXAMPLE FOR COMPARISON
beginning of the period and held for the PURPOSES Please note that the expenses shown in
entire period March 1, 2007, through the table are meant to highlight your
August 31, 2007. The table below also provides information ongoing costs only. Therefore, the
about hypothetical account values and hypothetical information is useful in
ACTUAL EXPENSES hypothetical expenses based on the comparing ongoing costs only, and will not
Fund's actual expense ratio and an assumed help you determine the relative total
The table below provides information about rate of return of 5% per year before costs of owning different funds.
actual account values and actual expenses. expenses, which is not the Fund's actual
You may use the information in this return.
table, together with the amount you
invested, to estimate the
====================================================================================================================================
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 (3/1/07) (8/31/07)(1) PERIOD(2) (8/31/07) PERIOD(2) RATIO
Institutional $1,000.00 $1,032.20 $3.79 $1,021.48 $3.77 0.74%
(1) The actual ending account value is based on the actual total return of the Fund for the period March 1, 2007, through August
31, 2007, 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.
====================================================================================================================================
AIMINVESTMENTS.COM SCOR-INS-1 A I M Distributors, Inc.
AIM Structured Core Fund
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
The Board of Trustees (the Board) of AIM recommendation to the Board whether to these services included the Board's
Counselor Series Trust is required under approve the continuance of each AIM Fund's consideration of AIM's portfolio and
the Investment Company Act of 1940 to investment advisory agreement and product review process, various back
approve annually the renewal of the AIM sub-advisory agreement, if applicable office support functions provided by AIM,
Structured Core Fund (the Fund) investment (advisory agreements), for another year. and AIM's equity and fixed income trading
advisory agreement with A I M Advisors, operations. The Board concluded that the
Inc. (AIM). During contract renewal The independent Trustees, as mentioned nature, extent and quality of the
meetings held on June 25-27, 2007, the above, are assisted in their annual advisory services provided to the Fund by
Board as a whole and the disinterested or evaluation of the advisory agreements by AIM were appropriate and that AIM
"independent" Trustees, voting separately, the independent Senior Officer. One currently is providing satisfactory
approved the continuance of the Fund's responsibility of the Senior Officer is to advisory services in accordance with the
investment advisory agreement for another manage the process by which the AIM Funds' terms of the Fund's advisory agreement.
year, effective July 1, 2007. In doing so, proposed management fees are negotiated In addition, based on their ongoing
the Board determined that the Fund's during the annual contract renewal process meetings throughout the year with the
advisory agreement is in the best to ensure that they are negotiated in a Fund's portfolio managers, the Board con-
interests of the Fund and its shareholders manner which is at arms' length and cluded that these individuals are
and that the compensation to AIM under the reasonable. Accordingly, the Senior competent and able to continue to carry
Fund's advisory agreement is fair and Officer must either supervise a out their responsibilities under the
reasonable. competitive bidding process or prepare an Fund's advisory agreement.
independent written evaluation. The Senior
The independent Trustees met separately Officer has recommended that an In determining whether to continue the
during their evaluation of the Fund's independent written evaluation be provided Fund's advisory agreement, the Board
investment advisory agreement with and, upon the direction of the Board, has considered the prior relationship between
independent legal counsel from whom they prepared an independent written AIM and the Fund, as well as the Board's
received independent legal advice, and the evaluation. knowledge of AIM's operations, and
independent Trustees also received concluded that it was beneficial to
assistance during their deliberations from During the annual contract renewal maintain the current relationship, in
the independent Senior Officer, a process, the Board considered the factors part, because of such knowledge. The
full-time officer of the AIM Funds who discussed below under the heading "Factors Board also considered the steps that AIM
reports directly to the independent and Conclusions and Summary of Independent and its affiliates have taken over the
Trustees. The following discussion more Written Fee Evaluation" in evaluating the last several years to improve the quality
fully describes the process employed by fairness and reasonableness of the Fund's and efficiency of the services they
the Board to evaluate the performance of advisory agreement at the contract renewal provide to the Funds in the areas of
the AIM Funds (including the Fund) meetings and at their meetings throughout investment performance, product line
throughout the year and, more the year as part of their ongoing diversification, distribution, fund
specifically, during the annual contract oversight of the Fund. The Fund's advisory operations, shareholder services and
renewal meetings. agreement was considered separately, compliance. The Board concluded that the
although the Board also considered the quality and efficiency of the services
THE BOARD'S FUND EVALUATION PROCESS common interests of all of the AIM Funds AIM and its affiliates provide to the AIM
in their deliberations. The Board Funds in each of these areas generally
The Board's Investments Committee has comprehensively considered all of the have improved, and support the Board's
established three Sub-Committees which are information provided to them and did not approval of the continuance of the Fund's
responsible for overseeing the management identify any particular factor that was advisory agreement.
of a number of the series portfolios of controlling. Furthermore, each Trustee may
the AIM Funds. This Sub-Committee have evaluated the information provided B. FUND PERFORMANCE
structure permits the Trustees to focus on differently from one another and
the performance of the AIM Funds that have attributed different weight to the various The Board noted that the Fund has not
been assigned to them. The Sub-Committees factors. The Trustees recognized that the been in operation for a full calendar
meet throughout the year to review the advisory arrangements and resulting year. The Board also considered the
performance of their assigned funds, and advisory fees for the Fund and the other steps AIM has taken over the last several
the Sub-Committees review monthly and AIM Funds are the result of years of years to improve the quality and
quarterly comparative performance review and negotiation between the efficiency of the services that AIM
information and periodic asset flow data Trustees and AIM, that the Trustees may provides to the AIM Funds. The Board con-
for their assigned funds. These materials focus to a greater extent on certain cluded that AIM continues to be
are prepared under the direction and aspects of these arrangements in some responsive to the Board's focus on fund
supervision of the independent Senior years than others, and that the Trustees' performance.
Officer. Over the course of each year, the deliberations and conclusions in a
Sub-Committees meet with portfolio particular year may be based in part on C. ADVISORY FEES AND FEE WAIVERS
managers for their assigned funds and their deliberations and conclusions of
other members of management and review these same arrangements throughout the The Board noted that AIM had set the
with these individuals the performance, year and in prior years. contractual advisory fee schedule in the
investment objective(s), policies, Fund's advisory agreement based upon the
strategies and limitations of these funds. FACTORS AND CONCLUSIONS AND SUMMARY OF median effective management fee rate
INDEPENDENT WRITTEN FEE EVALUATION (comprised of advisory fees plus, in some
In addition to their meetings cases, administrative fees) at various
throughout the year, the Sub-Committees The discussion below serves as a summary asset levels of competitor funds with
meet at designated contract renewal of the Senior Officer's independent investment strategies comparable to those
meetings each year to conduct an in-depth written evaluation, as well as a of the Fund. In addition, the Board noted
review of the performance, fees and discussion of the material factors and that the Fund's contractual advisory fee
expenses of their assigned funds. During related conclusions that formed the basis schedule is the same as the uniform fee
the contract renewal process, the Trustees for the Board's approval of the Fund's schedule that applies to other funds
receive comparative performance and fee advisory agreement and sub-advisory advised by AIM with investment strategies
data regarding all the AIM Funds prepared agreement. Unless otherwise stated, comparable to those of the Fund, which
by an independent company, Lipper, Inc., information set forth below is as of June uniform fee schedule includes
under the direction and supervision of the 27, 2007 and does not reflect any changes breakpoints and is based on net asset
independent Senior Officer who also that may have occurred since that date, levels. The Board also compared the
prepares a separate analysis of this including but not limited to changes to Fund's contractual advisory fee rate to
information for the Trustees. Each the Fund's performance, advisory fees, the contractual advisory fee rates of
Sub-Committee then makes recommendations expense limitations and/or fee waivers. other clients of AIM and its affiliates
to the Investments Committee regarding the with investment strategies comparable
performance, fees and expenses of their I INVESTMENT ADVISORY AGREEMENT to those of the Fund, including three
assigned funds. The Investments Committee mutual funds advised by AIM and one
considers each Sub-Committee's A. NATURE, EXTENT AND QUALITY OF SERVICES mutual fund sub-advised by an AIM
recommendations and makes its own PROVIDED BY AIM affiliate. The Board noted that the
recommendations regarding the performance, Fund's rate was: (i) above the rate for
fees and expenses of the AIM Funds to the The Board reviewed the advisory services one of the mutual funds and comparable to
full Board. Moreover, the Investments provided to the Fund by AIM under the the rates for the other two mutual funds;
Committee considers each Sub-Committee's Fund's advisory agreement, the performance and (ii) comparable to the sub-advisory
recommendations in making its annual of AIM in providing these services, and fee rate for the sub-advised mutual
the credentials and experience of the fund.
officers and employees of AIM who provide
these services. The Board's review of the Additionally, the Board compared the
qualifications of AIM to provide Fund's contractual advisory fee rate to
the total advisory fees paid by numerous
separately managed accounts/wrap accounts
advised by an AIM affiliate. The Board
noted
(continued)
27
AIM Structured Core Fund
that the Fund's rate was generally above extent of the services provided. The Board 2008. The Board concluded that the Fund's
the rates for the separately managed considered whether AIM is financially investment of uninvested cash and cash
accounts/wrap accounts. The Board sound and has the resources necessary to collateral from any securities lending
considered that management of the perform its obligations under the Fund's arrangements in the affiliated money
separately managed accounts/wrap accounts advisory agreement, and concluded that AIM market funds is in the best interests of
by the AIM affiliate involves different has the financial resources necessary to the Fund and its shareholders.
levels of services and different fulfill these obligations.
operational and regulatory requirements II SUB-ADVISORY AGREEMENT
than AIM's management of the Fund. The F. INDEPENDENT WRITTEN EVALUATION OF THE
Board concluded that these differences are FUND'S SENIOR OFFICER A. NATURE, EXTENT AND QUALITY OF SERVICES
appropriately reflected in the fee PROVIDED BY THE SUB-ADVISOR
structure for the Fund and the separately The Board noted that, upon their
managed accounts/wrap accounts. direction, the Senior Officer of the Fund, The Board reviewed the services provided
who is independent of AIM and AIM's by INVESCO Institutional (N.A.), Inc.
The Board noted that AIM has affiliates, had prepared an independent (the Sub-Advisor) under the Fund's
contractually agreed to waive fees and/or written evaluation to assist the Board in sub-advisory agreement, the performance
limit expenses of the Fund through at determining the reasonableness of the of the Sub-Advisor in providing these
least June 30, 2008 in an amount necessary proposed management fees of the AIM Funds, services, and the credentials and
to limit total annual operating expenses including the Fund. The Board noted that experience of the officers and employees
to a specified percentage of average daily they had relied upon the Senior Officer's of the Sub-Advisor who provide these
net assets for each class of the Fund. The written evaluation instead of a services. The Board concluded that the
Board considered the contractual nature of competitive bidding process. In nature, extent and quality of the
this fee waiver and noted that it remains determining whether to continue the Fund's services provided by the Sub-Advisor were
in effect until at least June 30, 2008. advisory agreement, the Board considered appropriate and that the Sub-Advisor
The Board reviewed the Fund's effective the Senior Officer's written evaluation. currently is providing satisfactory
advisory fee rate, after taking account of services in accordance with the terms of
this expense limitation, and considered G. COLLATERAL BENEFITS TO AIM AND ITS the Fund's sub-advisory agreement. In
the effect this expense limitation would AFFILIATES addition, based on their ongoing meetings
have on the Fund's estimated total throughout the year with the Fund's
expenses. The Board concluded that the The Board considered various other portfolio managers, the Board concluded
levels of fee waivers/expense limitations benefits received by AIM and its that these individuals are competent and
for the Fund were fair and reasonable. affiliates resulting from AIM's able to continue to carry out their
relationship with the Fund, including the responsibilities under the Fund's
After taking account of the Fund's fees received by AIM and its affiliates sub-advisory agreement.
contractual advisory fee rate, as well as for their provision of administrative,
the comparative advisory fee information transfer agency and distribution services B. FUND PERFORMANCE
and the expense limitation discussed to the Fund. The Board considered the
above, the Board concluded that the Fund's performance of AIM and its affiliates in The Board noted that the Fund has not
advisory fees were fair and reasonable. providing these services and the been in operation for a full calendar
organizational structure employed by AIM year. The Board also considered the steps
D. ECONOMIES OF SCALE AND BREAKPOINTS and its affiliates to provide these AIM has taken over the last several years
services. The Board also considered that to improve the quality and efficiency of
The Board considered the extent to which these services are provided to the Fund the services that AIM provides to the AIM
there are economies of scale in AIM's pursuant to written contracts which are Funds. The Board concluded that AIM
provision of advisory services to the reviewed and approved on an annual basis continues to be responsive to the Board's
Fund. The Board also considered whether by the Board. The Board concluded that AIM focus on fund performance.
the Fund benefits from such economies of and its affiliates were providing these
scale through contractual breakpoints in services in a satisfactory manner and in C. SUB-ADVISORY FEES
the Fund's advisory fee schedule or accordance with the terms of their
through advisory fee waivers or expense contracts, and were qualified to continue The Board compared the Fund's contractual
limitations. The Board noted that the to provide these services to the Fund. sub-advisory fee rate to the total
Fund's contractual advisory fee schedule advisory fees paid by numerous separately
includes seven breakpoints but that, due The Board considered the benefits managed accounts/wrap accounts
to the Fund's asset level at the end of realized by AIM as a result of portfolio sub-advised by the Sub-Advisor with
the past calendar year and the way in brokerage transactions executed through investment strategies comparable to those
which the breakpoints have been "soft dollar" arrangements. Under these of the Fund. The Board noted that the
structured, the Fund has yet to benefit arrangements, portfolio brokerage Fund's sub-advisory fee rate was
from the breakpoints. Based on this commissions paid by the Fund and/or other generally comparable to or below the
information, the Board concluded that the funds advised by AIM are used to pay for rates for the separately managed
Fund's advisory fees would reflect research and execution services. The Board accounts/wrap accounts. The Board
economies of scale at higher asset levels. noted that soft dollar arrangements shift considered the services to be provided by
The Board also noted that the Fund shares the payment obligation for the research the Sub-Advisor pursuant to the Fund's
directly in economies of scale through and executions services from AIM to the sub-advisory agreement and the services
lower fees charged by third party service funds and therefore may reduce AIM's to be provided by AIM pursuant to the
providers based on the combined size of expenses. The Board also noted that Fund's advisory agreement, as well as the
all of the AIM Funds and affiliates. research obtained through soft dollar allocation of fees between AIM and the
arrangements may be used by AIM in making Sub-Advisor pursuant to the sub-advisory
E. PROFITABILITY AND FINANCIAL RESOURCES investment decisions for the Fund and may agreement. The Board noted that the
OF AIM therefore benefit Fund shareholders. The sub-advisory fees have no direct effect
Board concluded that AIM's soft dollar on the Fund or its shareholders, as they
The Board reviewed information from AIM arrangements were appropriate. The Board are paid by AIM to the Sub-Advisor, and
concerning the costs of the advisory and also concluded that, based on their review that AIM and the Sub-Advisor are
other services that AIM and its affiliates and representations made by AIM, these affiliates. After taking account of the
provide to the Fund and the profitability arrangements were consistent with Fund's contractual sub-advisory fee rate,
of AIM and its affiliates in providing regulatory requirements. as well as the comparative fee
these services. The Board also reviewed information and the expense limitation
information concerning the financial The Board considered the fact that the discussed above, the Board concluded that
condition of AIM and its affiliates. The Fund's uninvested cash and cash collateral the Fund's sub-advisory fees were fair
Board also reviewed with AIM the from any securities lending arrangements and reasonable.
methodology used to prepare the may be invested in money market funds
profitability information. The Board advised by AIM pursuant to procedures D. FINANCIAL RESOURCES OF THE SUB-ADVISOR
considered the overall profitability of approved by the Board. The Board noted
AIM, as well as the profitability of AIM that AIM will receive advisory fees from The Board considered whether the
in connection with managing the Fund. The these affiliated money market funds Sub-Advisor is financially sound and has
Board noted that AIM continues to operate attributable to such investments, although the resources necessary to perform its
at a net profit, although increased AIM has contractually agreed to waive the obligations under the Fund's sub-advisory
expenses in recent years have reduced the advisory fees payable by the Fund with agreement, and concluded that the
profitability of AIM and its affiliates. respect to its investment of uninvested Sub-Advisor has the financial resources
The Board concluded that the Fund's cash in these affiliated money market necessary to fulfill these obligations.
advisory fees were fair and reasonable, funds through at least June 30, 2008. The
and that the level of profits realized by Board considered the contractual nature of
AIM and its affiliates from providing this fee waiver and noted that it remains
services to the Fund was not excessive in in effect until at least June 30,
light of the nature, quality and
28
AIM Structured Core Fund
TAX INFORMATION
Form 1099-DIV, Form 1042-S and other year-end tax information provide
shareholders with actual calendar year amounts that should be included in their
tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the
Internal Revenue Code or to meet a specific state's requirement.
The Fund designates the following amounts or, if subsequently determined to be
different, the maximum amount allowable for its fiscal year ended August 31,
2007:
FEDERAL AND STATE INCOME TAX
<Table>
Qualified Dividend Income* 50%
Corporate Dividends Received Deduction* 50.38%
</Table>
* The above percentages are based on ordinary income dividends paid to
shareholders during the fund's fiscal year.
NON-RESIDENT ALIEN SHAREHOLDERS
<Table>
Qualified Interest Income** 16.62%
</Table>
** The above percentage is based on income dividends paid to shareholders
during the fund's fiscal year.
ADDITIONAL NON-RESIDENT ALIEN SHAREHOLDER INFORMATION
The percentages of qualifying assets not subject to the U.S. estate tax for the
fiscal quarters ended November 30, 2006, February 28, 2007, May 31, 2007 and
August 31, 2007 were 1.13%, 2.36%, 3.28%, and 2.68%, respectively.
29
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 77046-1173. Each
trustee oversees 105 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. Each officer serves for a one year term or until their
successors are elected and qualified. Column two below includes length of time
served with predecessor entities, if any.
<Table>
<Caption>
OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIP(S)
POSITION(S) HELD WITH THE OFFICER PRINCIPAL OCCUPATION(S) HELD BY
TRUST SINCE DURING PAST 5 YEARS TRUSTEE/ DIRECTOR
- -------------------------------------------------------------------------------------------------------------------------
Interested Persons
- -------------------------------------------------------------------------------------------------------------------------
Martin L. Flanagan(1) -- 1960 2007 Director, Chief Executive Officer and None
Trustee President, INVESCO PLC (parent of AIM
and a global investment management
firm); Chairman, A I M Advisors, Inc.
(registered investment advisor);
Director, Chairman, Chief Executive
Officer and President, IVZ Inc. (holding
company); INVESCO North American
Holdings, Inc. (holding company);
Chairman and President, INVESCO Group
Services, Inc. (service provider);
Trustee, The AIM Family of Funds(R);
Chairman, Investment Company Institute;
and Member of Executive Board, SMU Cox
School of Business
Formerly: President, Co-Chief Executive
Officer, Co-President, Chief Operating
Officer and Chief Financial Officer,
Franklin Resources, Inc. (global
investment management organization)
- -------------------------------------------------------------------------------------------------------------------------
Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None
Trustee, President and President, A I M Management Group Inc.
Principal (financial services holding company),
Executive Officer AIM Mutual Fund Dealer Inc. (registered
broker dealer), A I M Advisors, Inc.,
AIM Funds Management Inc. d/b/a INVESCO
Enterprise Services (registered
investment advisor and registered
transfer agent) and 1371 Preferred Inc.
(holding company); Director, Chairman,
Chief Executive Officer and President,
A I M Capital Management, Inc.
(registered investment advisor);
Director and President, INVESCO Funds
Group, Inc. (registered investment
advisor and register transfer agent) and
AIM GP Canada Inc. (general partner for
a limited partnership); Director, A I M
Distributors, Inc. (registered broker
dealer); Director and Chairman, AIM
Investment Services, Inc. (registered
transfer agent), Fund Management Company
(registered broker dealer) and INVESCO
Distributors, Inc. (registered broker
dealer); Director, President and
Chairman, IVZ Callco Inc. (holding
company); INVESCO Inc. (holding company)
and AIM Canada Holdings Inc. (holding
company); Director and Chief Executive
Officer, AIM Trimark Corporate Class
Inc. (formerly AIM Trimark Global Fund
Inc.) (corporate mutual fund company)
and AIM Trimark Canada Fund Inc.
(corporate mutual fund company);
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); 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); and Manager,
Powershares Capital Management LLC
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.; President, AIM
Trimark Global Fund Inc. and AIM Trimark
Canada Fund Inc.; and Director, Trimark
Trust (federally regulated Canadian
Trust Company)
- -------------------------------------------------------------------------------------------------------------------------
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); Reich & Tang Funds
(Chairman) (registered investment
company) (7 portfolios); Daily Income
Fund (4 portfolios), California Daily
Tax Free Income Fund, Inc., Connecticut
Daily Tax Free Income Fund, Inc. and New
Jersey Daily Municipal Fund, Inc.,
Annuity and Life Re (Holdings), Ltd.
(insurance company); and Homeowners of
America Holding Corporation (property
casualty company)
Formerly: Director, CompuDyne
Corporation (provider of product and
services to the public security market);
Director, President and Chief Executive
Officer, Volvo Group North America,
Inc.; Senior Vice President, AB Volvo;
Director of various affiliated Volvo
companies; and Director, Magellan
Insurance Company
- -------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 2003 Chief Executive Officer, Twenty First Administaff
Trustee Century Group, Inc. (government affairs
company); and Owner and Chief Executive
Officer, Dos Angelos Ranch, L.P.
(cattle, hunting, corporate
entertainment); and Discovery Global
Education Fund (non-profit)
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company)
- -------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Director, Reich & Tang Funds) (7
Trustee Naftalis and Frankel LLP 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 None
Trustee Formerly: Partner, Deloitte & Touche;
and Director, Mainstay VP Series Funds,
Inc. (25 portfolios)
- -------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Mr. Flanagan was appointed as Trustee of the Trust on February 24, 2007. Mr.
Flanagan is considered an interested person of the Trust because he is an
officer of the advisor to the Trust, and an officer and a director of
INVESCO 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.
30
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Structured Core Fund
<Table>
<Caption>
OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIP(S)
POSITION(S) HELD WITH THE OFFICER PRINCIPAL OCCUPATION(S) HELD BY TRUSTEE/
TRUST SINCE DURING PAST 5 YEARS DIRECTOR
- -------------------------------------------------------------------------------------------------------------------------
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., A I M Advisors,
Inc. and A I M Capital Management, Inc.;
Director, Vice President and Secretary,
INVESCO Distributors, Inc.; Vice
President and Secretary, AIM Investment
Services, Inc. and Fund Management
Company; Senior Vice President and
Secretary, A I M Distributors, Inc.;
Director and Vice President, INVESCO
Funds Group Inc.; Senior Vice President,
Chief Legal Officer and Secretary of The
AIM Family of Funds--Registered
Trademark--; and Manager, Powershares
Capital Management LLC
Formerly: Vice President, A I M Capital
Management, Inc.; 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, INVESCO PLC; N/A
Vice President 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, INVESCO PLC; Director, INVESCO
Funds Group, Inc.; and Vice President of
The AIM Family of Funds--Registered
Trademark--
Formerly: Director, Senior Vice N/A
President, Secretary and General
Counsel, A I M Management Group Inc. and
A I M Advisors, Inc.; Senior Vice
President, A I M Distributors, Inc.;
Director, General Counsel and Vice
President, Fund Management Company; 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--;
Director and Vice President, INVESCO
Distributors, Inc.; Chief Executive
Officer and President, INVESCO Funds
Group, Inc.; and Senior Vice President
and General Counsel, Liberty Financial
Companies, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Sidney M. Dilgren -- 1961 2004 Vice President, A I M Advisors, Inc. and N/A
Vice President, Principal A I M Capital Management, Inc.; and Vice
Financial Officer and President, Treasurer and Principal
Treasurer Financial Officer of The AIM Family of
Funds--Registered Trademark--
Formerly: Fund Treasurer, A I M
Advisors, Inc.; Senior Vice President,
AIM Investment Services, Inc.; and Vice
President, A I M Distributors, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2003 Head of INVESCO's World Wide Fixed N/A
Vice President Income and Cash Management Group;
Director of Cash Management and Senior
Vice President, A I M Advisors, Inc. and
A I M Capital Management, Inc; Director
and President, Fund Management Company;
Vice President, The AIM Family of
Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust); and
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)
Formerly: Chief Cash Management Officer
and Managing Director, A I M Capital
Management, Inc.; Vice President, A I M
Advisors, Inc. and The AIM Family of
Funds--Registered Trademark-- (AIM
Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free
Investments Trust only)
- -------------------------------------------------------------------------------------------------------------------------
Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance N/A
Anti-Money Laundering Officer, A I M Advisors, Inc., A I M
Compliance Officer Capital Management, Inc., A I M
Distributors, Inc., AIM Investment
Services, Inc., AIM Private Asset
Management, Inc., Fund Management
Company and The AIM Family of
Funds--Registered Trademark--
Formerly: Manager of the Fraud
Prevention Department, AIM Investment
Services, Inc.
- -------------------------------------------------------------------------------------------------------------------------
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. and A I M Capital
Management, Inc.; Chief Compliance
Officer of The AIM Family of
Funds--Registered Trademark--, INVESCO
Global Asset Management (N.A.), Inc.,
(registered investment advisor), INVESCO
Institutional (N.A.), Inc., (registered
investment advisor), INVESCO Private
Capital Investments, Inc. (holding
company), INVESCO Private Capital, Inc.
(registered investment advisor) and
INVESCO Senior Secured Management, Inc.
(registered investment advisor); and
Vice President, A I M Distributors,
Inc., AIM Investment Services, Inc. and
Fund Management Company
Formerly: Vice President, A I M Capital
Management, Inc.; Global Head of Product
Development, AIG-Global Investment
Group, Inc.; and Chief Compliance
Officer and Deputy General Counsel,
AIG-SunAmerica Asset 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
Suite 100 11 Greenway Plaza Inc. LLP Institutional
Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana Street (N.A.), Inc.
Houston, TX 77046-1173 Suite 100 Suite 2900 One
Houston, TX 77046-1173 Houston, TX 77002-5678 Midtown
Plaza
1360
Peachtree
Street,
N.E.
Suite
100
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
1735 Market Street, 51st & Frankel LLP P.O. Box 4739 Company
Floor 1177 Avenue of the Houston, TX 77210-4739 225 Franklin Street
Philadelphia, PA 19103-7599 Americas Boston, MA 02110-2801
New York, NY 10036-2714
</Table>
31
[EDELIVERY GO PAPERLESS
AIMINVESTMENTS.COM/EDELIVERY
GRAPHIC]
REGISTER FOR EDELIVERY FUND HOLDINGS AND PROXY VOTING INFORMATION
eDelivery is the process of receiving your fund The Fund provides a complete list of its holdings four times in each fiscal
and account information via e-mail. Once your year, at the quarter-ends. For the second and fourth quarters, the lists appear
quarterly statements, tax forms, fund reports, in the Fund's semiannual and annual reports to shareholders. For the first and
and prospectuses are available, we will send you third quarters, the Fund files the lists with the Securities and Exchange
an e-mail notification containing links to these Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is
documents. For security purposes, you will need available at AIMinvestments.com. From our home page, click on Products &
to log in to your account to view your statements Performance, then Mutual Funds, then Fund Overview. Select your Fund from the
and tax forms. drop-down menu and click on Complete Quarterly Holdings. Shareholders can also
look up the Fund's Forms N-Q on the SEC Web site at sec.gov. Copies of the
WHY SIGN UP? Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in
Washington, D.C. You can obtain information on the operation of the Public
Register for eDelivery to: Reference Room, including information about duplicating fee charges, by calling
202-942-8090 or 800-732-0330, or by electronic request at the following e-mail
o save your Fund the cost of printing and address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-09913 and
postage. 333-36074.
o reduce the amount of paper you receive. 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,
o gain access to your documents faster by not upon request, from our Client Services department at 800-959-4246 or on the AIM
waiting for the mail. Web site, AIM investments.com. On the home page, scroll down and click on AIM
Funds Proxy Policy. The information is also available on the SEC Web site,
o view your documents online anytime at your sec.gov.
convenience.
Information regarding how the Fund voted proxies related to its portfolio
o save the documents to your personal computer securities during the 12 months ended June 30, 2007, is available at our Web
or print them out for your records. 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
HOW DO I SIGN UP? drop-down menu. The information is also available on the SEC Web site, sec.gov.
It's easy. Just follow these simple steps: If used after January 20, 2008, this report must be accompanied by a Fund
Performance & Commentary or by an AIM Quarterly Performance Review for the most
1. Log in to your account. recent quarter-end. Mutual funds and exchange-traded funds distributed by AIM
Distributors, Inc.
2. Click on the "Service Center" tab.
3. Select "Register for eDelivery" and complete
the consent process.
This Aim service is provided by Aim Investment
Services, Inc.
SCOR-AR-1 A I M Distributors,Inc.
[AIM INVESTMENTS LOGO]
--REGISTERED TRADEMARK--
AIM Structured Growth Fund
Annual Report to Shareholders o August 31, 2007
[COVER GLOBE IMAGE]
DOMESTIC EQUITY
Large-Cap Growth
Table of Contents
Letters to Shareholders .................. 2
Performance Summary ...................... 4
Management Discussion .................... 4
Long-term Fund Performance ............... 6
Supplemental Information ................. 8
Schedule of Investments .................. 9
Financial Statements ..................... 12
Notes to Financial Statements ............ 15
Financial Highlights ..................... 22
Auditor's Report ......................... 27
Fund Expenses ............................ 28
Approval of Advisory Agreement ........... 29
Tax Information .......................... 31
Trustees and Officers .................... 32
[AIM INVESTMENT SOLUTIONS]
[GRAPHIC] [GRAPHIC]
[DOMESTIC [FIXED
EQUITY] INCOME]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[TARGET [TARGET [DIVERSIFIED
RISK] MATURITY] PORTFOLIOS]
[GRAPHIC] [GRAPHIC]
[SECTOR [INTERNATIONAL/
EQUITY] GLOBAL EQUITY]
[AIM INVESTMENTS LOGO]
- -- REGISTERED TRADEMARK --
AIM Structured Growth Fund
Dear Shareholders of the AIM Family of Funds:
I'm pleased to provide you with this report, which includes a discussion of how
your Fund was managed during the period under review, and what factors affected
its performance. The following pages contain important information that answers
[TAYLOR questions you may have about your investment.
PHOTO]
Despite a significant, albeit short-lived, stock market sell-off in late
February and early March--and a more severe stock market decline that began in
Philip Taylor July--major stock market indexes in the United States and abroad generally
performed well for the 12 months ended August 31, 2007. Reasons for their
favorable performance included positive economic growth, particularly overseas;
strong corporate profits; and strong merger-and-acquisition activity, among
other factors.
In July, institutional investors on Wall Street as well as individual
investors on Main Street became concerned about growing delinquencies in the
subprime mortgage market. They worried that such delinquencies, together with
higher interest rates, might lead to a "credit crunch" that could reduce the
availability of credit or increase borrowing costs for individuals and
corporations, thereby slowing the economy.
In an effort to ensure that the weak housing market and tight credit markets
did not affect the U.S. economy more generally, the U.S. Federal Reserve Board
in September cut its key federal funds target rate for the first time in more
than four years.
At AIM Investments --REGISTERED TRADEMARK--, we know that market conditions
change--often suddenly and sometimes dramatically. We can help you deal with
market volatility by offering a broad range of mutual funds, including:
o Domestic, global and international equity funds
o Taxable and tax-exempt fixed-income funds
o Allocation portfolios, with risk/return characteristics to match your needs
o AIM Independence Funds--target-maturity funds that combine retail mutual
funds and PowerShares --REGISTERED TRADEMARK-- exchange-traded funds--with
risk/return characteristics that change as your target retirement date nears
We believe in the value of working with a trusted financial advisor. Your
financial advisor can recommend various AIM funds that, together, can create a
portfolio that's appropriate for your long-term investment goals and risk
tolerance regardless of prevailing short-term market conditions.
In conclusion
Bob Graham, my friend and colleague, recently announced his decision to step
down as vice chair of the AIM Funds board of directors. In 1976, Bob was one of
three men who co-founded AIM. In the three decades since, he has been
instrumental in transforming AIM from a small investment management firm into
one of America's most respected mutual fund companies--and, in 1997, into a
global independent retail and institutional investment manager.
In May, with shareholder approval, AIM Investments' parent company changed
its name from AMVESCAP PLC to INVESCO PLC, uniting our worldwide operations and
global expertise under one new name. While the name of our parent company may be
new to you, I can assure you that our commitment to excellent customer service
remains unchanged. Our highly trained, courteous client service representatives
are eager to answer your questions, provide you with product information or
assist you with account transactions. I encourage you to give us an opportunity
to serve you by calling us at 800-959-4246.
All of us at AIM are committed to helping you achieve your financial goals.
We work every day to earn your trust, and we're grateful for the confidence
you've placed in us.
Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
President - AIM Funds
CEO, AIM Investments
October 17, 2007
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 mutual
funds represented by AIM Investments and the PowerShares Exchange-Traded
Fund Trust.
2
AIM Structured Growth Fund
Dear Fellow Shareholders:
In overseeing the management of the AIM family of funds on your behalf, your
Board of Trustees of the AIM Funds continues to focus on improved investment
performance, reduced shareholder costs, and high ethical standards.
Your Board welcomes two new members: Marty Flanagan, President and CEO of
INVESCO, AIM's parent company, and Phil Taylor, who was named CEO of AIM
Investments --REGISTERED TRADEMARK-- in April 2006. Robert Graham, who has given
[CROCKETT more than 30 years of leadership to the company and the mutual fund industry
PHOTO] since founding AIM in 1976, has retired, stepping down in the process from his
most recent role as vice chairman of the Board. We thank Bob for his many
contributions and wish him a long and happy future.
Our review of fund performance has shown healthy progress, but the process is
necessarily one of continuous improvement. In general, as of June 30, 2007, we
Bruce L. Crockett have seen persistent investment discipline and more consistently good results.
While this statement may not apply to every AIM Fund all the time, as I write
this letter, the overall trend in fund management and performance has been
positive.
The investment management talent at AIM has recently been enhanced by the
promotion of Karen Dunn Kelley to Head of INVESCO's Worldwide Fixed Income as
well as Director of AIM Global and Cash Management, with responsibility for all
fixed income and money market funds that serve both institutional and individual
investors. Under Karen's direction, AIM's cash management organization grew to
one of the world's largest and most respected, with top-tier performance. The
operations now combined under her charge represent more than $160 billion in
assets, 120 investment professionals, and products that span the entire yield
curve (as of August 31, 2007).
In other news, your Board took a more active role in preparing for "proxy
season," the period when fund managers must vote the shares held by their funds
"for" or "against" various proposals on the ballots of the issuing companies.
Beginning in the 2007 proxy season, AIM implemented new proxy voting policies,
developed by management in conjunction with an ad hoc Board committee, which
provided a solid framework for properly evaluating and executing the many
decisions the AIM Funds are required to make to vote shares.
In general, the AIM Funds voted for proposals that would allow shareholders a
greater role in election of directors, proxy access and "say for pay." The AIM
Funds voted against directors who AIM believed failed to govern well in cases of
corporate mismanagement, such as the backdating of options grants, and against
"poison pill" and "take under" proposals that would favor the financial
interests of managers at the expense of investors in the case of a merger or
acquisition. You can view the proxy votes cast for your fund by going to
AIMinvestments.com. Click the "About Us" tab, then go to "Required Notices" and
"Proxy Voting Activity."
Additionally, your Board raised the amount its members are recommended to
invest in the AIM Funds within three years of joining the Board, with the goal
of aligning our interests even more closely with yours.
Furthermore, at our June meeting we renewed the investment advisory contracts
between the AIM Funds and AIM for another year, applying the same rigorous
evaluation process that was enhanced and formalized in 2005. For more
information on this process, please visit AIMinvestments.com. Click on the
"Products and Performance" tab and go to "Investment Advisory Agreement
Renewals."
Your Board's ability to best represent your interests depends on our
knowledge of your opinions and concerns. Please send me an email
(bruce@brucecrockett.com) with your thoughts on the following:
1) How important is it to you to hear about your Board's decisions and
activities in these letters?
2) What other information (on overall performance, specific funds, managers,
etc.) would make the letters more meaningful to you?
3) Would you prefer that communication from your Board continue to be
delivered in paper form by regular mail or be sent electronically by
email?
If you would prefer to communicate through a quick online survey, please go
to AIMinvestments.com and provide your responses there.
We need to hear from you to do our best job, and I look forward to your
responses.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board of Directors
October 17, 2007
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 mutual
funds represented by AIM Investments and the PowerShares Exchange-Traded Fund
Trust.
3
AIM Structured Growth Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
======================================================================================= investable universe, nonbenchmark stocks
PERFORMANCE SUMMARY may also be considered. In our stock
selection model, each stock in the
For the fiscal year ended August 31, 2007, Class A shares of AIM Structured Growth universe is evaluated on four factors:
Fund, excluding applicable sales charges, outperformed the Fund's broad market index company earnings momentum, price trend,
but underperformed the Fund's style-specific index. @Underperformance was primarily management action and relative value. The
the result of our decision to not own certain stocks that were large contributors to sum of the scores from these four factors
the index's return. makes up our alpha (excess return)
forecast, relative to the average stock in
Your Fund's long-term performance appears later in this report. the universe. Stocks are also evaluated on
a multitude of other factors to develop a
FUND VS. INDEXES stock-specific risk forecast and
transaction cost forecast.
Total returns, 8/31/06-8/31/07, excluding applicable sales charges. If sales charges
were included, returns would be lower. We then incorporate the alpha forecast,
risk forecast and transaction cost
Class A Shares 15.63% forecast-- using an optimizer (a software
Class B Shares 14.76 system)-- to construct a portfolio that we
Class C Shares 14.76 believe is an optimal balance of the
Class R Shares 15.46 stocks' potential return and risk. This
S&P 500 Index@ (Broad Market Index) 15.13 portfolio is constructed according to
Russell 1000 Growth Index@ (Style-Specific Index) 17.70 certain constraints to increase the
Lipper Large-Cap Growth Funds Index@ (Peer Group Index) 16.90 probability that the Fund's relative
performance and volatility remain within
SOURCE: LIPPER INC. the Fund strategy's guidelines. The
portfolio is continually monitored by the
======================================================================================= Fund management team. The overall
investment process is repeated on a
HOW WE INVEST The investment process integrates the monthly basis to determine which companies
following key steps: should be bought or sold.
We manage your Fund to provide exposure to
large cap growth stocks. We seek to o Universe Development MARKET CONDITIONS AND YOUR FUND
outperform the Russell 1000 Growth Index
while minimizing the amount of additional o Stock Rankings Over the fiscal year ended August 31,
risk relative to the benchmark. The Fund 2007, the U.S. stock market delivered
can be used as a long-term allocation to o Risk Assessment strong double-digit returns despite
large cap stocks that compliments other concerns about subprime
style-specific strategies within a o Portfolio Construction
diversified asset allocation strategy. (continued)
o Trading
While the companies included within the
Russell 1000 Growth Index are used as a
general guide for developing the Fund's
========================================== ========================================== ==========================================
PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS*
By sector 1. Computer Hardware 11.0% 1. Microsoft Corp. 5.6%
Information Technology 34.1% 2. Pharmaceuticals 7.2 2. Apple Inc. 5.0
Industrials 14.2 3. Systems Software 6.6 3. Cisco Systems, Inc. 4.8
Consumer Discretionary 12.6 4. Soft Drinks 5.6 4. Hewlett-Packard Co. 4.2
Health Care 11.6 5. Communications 5. Merck & Co. Inc. 3.9
Consumer Staples 10.8 Equipment 5.6 6. General Electric Co. 3.6
Energy 5.3 Total Net Assets $173.34 million 7. Altria Group, Inc. 3.6
Financials 4.4 Total Number of 8. NVIDIA Corp. 3.4
Materials 4.1 Holdings* 76 9. Coca-Cola Co. (The) 3.2
Telecommunication Services 1.0 10. Tesoro Corp. 2.8
Money Market Funds, 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 money market fund holdings.
========================================== ========================================== ==========================================
4
AIM Structured Growth Fund
mortgages and a weakening housing market. potential risk in making stock selections JEREMY S. LEFKOWITZ
However, as the reporting period drew to a can benefit or detract from Fund
close, we saw a series of generally performance. For the fiscal year, it Portfolio manager, is lead manager of AIM
positive economic developments and were detracted from our results. Structured Growth Fund. He began his
encouraged by signs of continued economic investment career in 1968 and has been
strength and positive performance across Stock selection within the portfolio associated with INVESCO Institutional
most market capitalizations and sectors. was weak for the fiscal year primarily as and/or its affiliates since 1982. Mr.
a result of the optimization process. The Lefkowitz earned a B.S. in industrial
Gross domestic product (GDP), a measure largest detractor from relative engineering and an M.B.A. in finance from
of economic growth, increased at a healthy performance came from not owning certain Columbia University.
annualized rate of 3.8% in the second benchmark stocks which performed well
quarter of 2007.(1) This was a significant during the fiscal year. These stocks DANIEL A. KOSTYK
increase over the first quarter of 2007 included Amgen, Starbucks and McGraw Hill.
when GDP grew at an annualized rate of Stocks we overweighted, such as 3M, Chartered Financial Analyst, portfolio
just 0.6%.(1) Much of the growth in the Frontier Oil and MEMC Electronic manager, is manager of AIM Structured
second quarter was driven by an increase Materials, contributed positively to Fund Growth Fund. He has been associated with
in net exports and higher defense performance. Our strategy emphasized INVESCO Institutional and/or its
spending. stocks we believed possessed strong affiliates since 1995. Mr. Kostyk earned a
earnings growth, positive price trends and B.S. in mechanical engineering from
Inflation, as measured by the Consumer reasonable valuations. Northwestern University in Chicago.
Price Index, rose at an annualized rate of
4.5% during the first seven months of 2007 In terms of risk management, we seek to ANTHONY J. MUNCHAK
compared to 2.5% for all of 2006.(2) This minimize any style biases in the
increase was largely due to energy costs, portfolio. Active managers typically add Chartered Financial Analyst, portfolio
which rose by an annualized rate of 21.3% value in one of or a combination of four manager, is manager of AIM Structured
during the first seven months of 2007.(2) areas: beta bias (relative volatility), Growth Fund. He has been associated with
This was a reversal from 2006, when energy style bias, sector/industry over/under INVESCO Institutional and/or its
costs actually declined during the second weight and stock selection. We attempt to affiliates since 2000. Mr. Munchak earned
half of the year and were up only 2.9% for add value through our stock selection a B.S. and an M.S. from Boston College. He
all of 2006.(2) decisions. Consequently, our risk also earned an M.B.A from Bentley College.
management process seeks to neutralize the
It is important to understand our Fund's exposure relative to the benchmark GLEN E. MURPHY
investment process to better evaluate the with regard to beta, style and
drivers of our relative performance versus sector/industry exposures. Chartered Financial Analyst, portfolio
the style-specific benchmark. We manager, is manager of AIM Structured
generally evaluate performance based on We thank you for your continued Growth Fund. He has been associated with
the impact of our stock selection and risk investment in AIM Structured Growth Fund. INVESCO Institutional and/or its
management processes. affiliates since 1995. Mr. Murphy earned a
Sources: (1) Bureau of Economic Analysis, B.B.A. from the University of
Our stock selection model, based on the (2) Bureau of Labor Statistics Massachusetts and an M.S. in finance from
four factors (company earnings momentum, Boston College.
price trend, management action and The views and opinions expressed in
relative value) making up our alpha management's discussion of Fund FRANCIS M. ORLANDO
(excess return) forecast for stocks in our performance are those of A I M Advisors,
investment universe, was a positive Inc. These views and opinions are subject Chartered Financial Analyst, portfolio
contributor to Fund performance. to change at any time based on factors manager, is manager of AIM Structured
such as market and economic conditions. Growth Fund. He has been associated with
In selecting holdings for the Fund, we These views and opinions may not be relied INVESCO Institutional and/or its
also take into account our risk and upon as investment advice or affiliates since 1987. Mr. Orlando earned
transaction cost forecasts. We use our recommendations, or as an offer for a a B.B.A. from Merrimack College and an
software system optimizer to assist in particular security. The information is M.B.A. from Boston College.
making investment decisions, based on risk not a complete analysis of every aspect of
and transaction cost forecasts as well as any market, country, industry, security or Assisted by the U.S. Structured Products
our alpha forecast. Consequently, while the Fund. Statements of fact are from Group Research Team
our stock selection model may identify a sources considered reliable, but A I M
stock with an attractive alpha forecast, Advisors, Inc. makes no representation or
the optimizer may indicate that its warranty as to their completeness or
transaction costs are too high and/or its accuracy. Although historical performance
risk level is unacceptable. Placing more is no guarantee of future results, these
of an emphasis on transaction costs and insights may help you understand our
investment management philosophy.
See important Fund and index
disclosures later in this report.
5
AIM Structured Growth Fund
YOUR FUND'S LONG-TERM PERFORMANCE
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND AND INDEX DATA FROM 3/31/06
AIM STRUCTURED AIM STRUCTURED AIM STRUCTURED AIM STRUCTURED LIPPER LARGE-CAP
GROWTH FUND- GROWTH FUND- GROWTH FUND- GROWTH FUND- RUSSELL 1000 S&P 500 GROWTH FUNDS
DATE CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES GROWTH INDEX(1) INDEX(1) INDEX(1)
3/31/06 $ 9450 $10000 $10000 $10000 $10000 $10000 $10000
4/06 9488 10030 10030 10030 9986 10134 9984
5/06 9204 9720 9720 9730 9648 9843 9519
6/06 9299 9820 9820 9830 9610 9856 9487
7/06 9167 9680 9680 9691 9427 9917 9244
8/06 9384 9899 9899 9920 9721 10152 9458
9/06 9668 10190 10190 10220 9988 10414 9662
10/06 10103 10649 10649 10680 10339 10753 9953
11/06 10301 10849 10849 10880 10544 10957 10180
12/06 10262 10800 10800 10843 10580 11111 10234
1/07 10594 11141 11141 11183 10852 11279 10498
2/07 10300 10830 10830 10882 10648 11059 10261
3/07 10490 11020 11020 11073 10706 11182 10339
4/07 10822 11361 11361 11423 11210 11677 10758
5/07 11295 11852 11852 11923 11613 12084 11123
6/07 11021 11561 11552 11633 11440 11884 11018
7/07 10755 11271 11271 11353 11262 11516 10878
8/07 10852 10961 11361 11454 11442 11688 11057
SOURCES: (1) LIPPER INC.
Past performance cannot guarantee charges. Index results include reinvested
comparable future results. dividends, but they do not reflect sales
charges. Performance of an index of funds
The data shown in the chart include reflects fund expenses and management
reinvested distributions, applicable sales fees; performance of a market index does
charges, Fund expenses and management not. Performance shown in the chart and
fees. Results for Class B shares are table(s) does not reflect deduction of
calculated as if a hypothetical taxes a shareholder would pay on Fund
shareholder had liquidated his entire distributions or sale of Fund shares.
investment in the Fund at the close of the Performance of the indexes does not
reporting period and paid the applicable reflect the effects of taxes.
contingent deferred sales
6
AIM Structured Growth Fund
========================================== ==========================================
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
As of 8/31/07, including applicable sales As of 6/30/07, the most recent calendar
charges quarter-end, including applicable sales
charges
CLASS A SHARES
Inception (3/31/06) 5.93% CLASS A SHARES
1 Year 9.25 Inception (3/31/06) 8.11%
1 Year 12.03
CLASS B SHARES
Inception (3/31/06) 6.68% CLASS B SHARES
1 Year 9.76 Inception (3/31/06) 9.19%
1 Year 12.73
CLASS C SHARES
Inception (3/31/06) 9.41% CLASS C SHARES
1 Year 13.76 Inception (3/31/06) 12.24%
1 Year 16.63
CLASS R SHARES
Inception (3/31/06) 10.04% CLASS R SHARES
1 Year 15.46 Inception (3/31/06) 12.88%
========================================== 1 Year 18.35
==========================================
THE PERFORMANCE DATA QUOTED REPRESENT PAST
PERFORMANCE AND CANNOT GUARANTEE CONTINGENT DEFERRED SALES CHARGE (CDSC)
COMPARABLE FUTURE RESULTS; CURRENT FOR THE PERIOD INVOLVED. THE CDSC ON CLASS
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE B SHARES DECLINES FROM 5% BEGINNING AT THE
VISIT AIMINVESTMENTS.COM FOR THE MOST TIME OF PURCHASE TO 0% AT THE BEGINNING OF
RECENT MONTH-END PERFORMANCE. PERFORMANCE THE SEVENTH YEAR. THE CDSC ON CLASS C
FIGURES REFLECT REINVESTED DISTRIBUTIONS, SHARES IS 1% FOR THE FIRST YEAR AFTER
CHANGES IN NET ASSET VALUE AND THE EFFECT PURCHASE. CLASS R SHARES DO NOT HAVE A
OF THE MAXIMUM SALES CHARGE UNLESS FRONT-END SALES CHARGE; RETURNS SHOWN ARE
OTHERWISE STATED. INVESTMENT RETURN AND AT NET ASSET VALUE AND DO NOT REFLECT A
PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU 0.75% CDSC THAT MAY BE IMPOSED ON A TOTAL
MAY HAVE A GAIN OR LOSS WHEN YOU SELL REDEMPTION OF RETIREMENT PLAN ASSETS
SHARES. WITHIN THE FIRST YEAR.
THE NET ANNUAL FUND OPERATING EXPENSE THE PERFORMANCE OF THE FUND'S SHARE
RATIO SET FORTH IN THE MOST RECENT FUND CLASSES WILL DIFFER PRIMARILY DUE TO
PROSPECTUS AS OF THE DATE OF THIS REPORT DIFFERENT SALES CHARGE STRUCTURES AND
FOR CLASS A, CLASS B, CLASS C AND CLASS R CLASS EXPENSES.
SHARES WAS 1.00%, 1.75%, 1.75% AND 1.25%,
RESPECTIVELY.(1) THE TOTAL ANNUAL FUND HAD THE ADVISOR NOT WAIVED FEES AND/OR
OPERATING EXPENSE RATIO SET FORTH IN THE REIMBURSED EXPENSES, PERFORMANCE WOULD
MOST RECENT FUND PROSPECTUS AS OF THE DATE HAVE BEEN LOWER.
OF THIS REPORT FOR CLASS A, CLASS B, CLASS
C AND CLASS R SHARES WAS 1.90%, 2.65%, (1) Total annual operating expenses less
2.65% AND 2.15%, RESPECTIVELY. THE EXPENSE any contractual fee waivers and/or
RATIOS PRESENTED ABOVE MAY VARY FROM THE expense reimbursements by the advisor
EXPENSE RATIOS PRESENTED IN OTHER SECTIONS in effect through at least June 30,
OF THIS REPORT THAT ARE BASED ON EXPENSES 2008. See current prospectus for more
INCURRED DURING THE PERIOD COVERED BY THIS information.
REPORT.
==========================================
CLASS A SHARE PERFORMANCE REFLECTS THE FOR A DISCUSSION OF THE RISKS OF INVESTING
MAXIMUM 5.50% SALES CHARGE, AND CLASS B IN YOUR FUND AND INDEXES USED IN THIS
AND CLASS C SHARE PERFORMANCE REFLECTS THE REPORT, PLEASE TURN THE PAGE.
APPLICABLE ==========================================
7
AIM Structured Growth Fund
AIM STRUCTURED GROWTH FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF
CAPITAL.
o Unless otherwise stated, information presented in this report is as of August
31, 2007, and is based on total net assets.
o Unless otherwise noted, all data in this report are from A I M Management
Group Inc.
ABOUT SHARE CLASSES
o Class B shares are not available as an magnifying changes in the value of the o The Fund is not managed to track the
investment for retirement plans portfolio's securities. Derivatives performance of any particular index,
maintained pursuant to Section 401 of are subject to counterparty risk--the including the indexes defined here, and
the Internal Revenue Code, including risk that the other party will not consequently, the performance of the
401(k) plans, money purchase pension complete the transaction with the Fund. Fund may deviate significantly from the
plans and profit sharing plans, except performance of the index.
for plans that have existing accounts o There is no guarantee that the
invested in Class B shares. investment techniques and risk analyses o A direct investment cannot be made in
used by the Fund's portfolio managers an index. Unless otherwise indicated,
o Class R shares are available only to will produce the desired results. index results include reinvested
certain retirement plans. Please see dividends, and they do not reflect
the prospectus for more information. o The prices of securities held by the sales charges. Performance of an index
Fund may decline in response to market of funds reflects fund expenses;
PRINCIPAL RISKS OF INVESTING IN THE FUND risks. performance of a market index does not.
o Credit risk is the risk of loss on an o The Fund invests in "growth" stocks, OTHER INFORMATION
investment due to the deterioration of which may be more volatile than other
an issuer's financial health. Such a investment styles because growth stocks o The returns shown in the management's
deterioration of financial health may are more sensitive to investor discussion of Fund performance are
result in a reduction of the credit perceptions of an issuing company's based on net asset values calculated
rating of the issuer's securities and growth potential. for shareholder transactions. Generally
may lead to the issuer's inability to accepted accounting principles require
honor its contractual obligations, ABOUT INDEXES USED IN THIS REPORT adjustments to be made to the net
including making timely payment of assets of the Fund at period end for
interest and principal. o The S&P 500--REGISTERED TRADEMARK-o financial reporting purposes, and as
Index is a market such, the net asset values for
o Prices of equity securities change in capitalization-weighted index covering shareholder transactions and the
response to many factors including the all major areas of the U.S. economy. It returns based on those net asset values
historical and prospective earnings of is not the 500 largest companies, but may differ from the net asset values
the issuer, the value of its assets, rather the most widely held 500 and returns reported in the Financial
general economic conditions, interest companies chosen with respect to market Highlights.
rates, investor perceptions and market size, liquidity, and their industry.
liquidity. o Industry classifications used in this
o The Russell 1000--REGISTERED report are generally according to the
o Foreign securities have additional TRADEMARK-- Growth Index measures the Global Industry Classification
risks, including exchange rate changes, performance of those Russell 1000 Standard, which was developed by and is
political and economic upheaval, the companies with higher price-to-book the exclusive property and a service
relative lack of information, ratios and higher forecasted growth mark of Morgan Stanley Capital
relatively low market liquidity, and values. The Russell 1000--REGISTERED International Inc. and Standard &
the potential lack of strict financial TRADEMARK-- Growth Index is a Poor's.
and accounting controls and standards. trademark/ service mark of the Frank
Russell Company. Russell--REGISTERED o The Chartered Financial
o Interest rate risk refers to the risk TRADEMARK-- is a trademark of the Frank Analyst--REGISTERED TRADEMARK--
that bond prices generally fall as Russell Company. (CFA--REGISTERED TRADEMARK--)
interest rates rise; conversely, bond designation is a globally recognized
prices generally rise as interest rates o The Lipper Large-Cap Growth Funds Index standard for measuring the competence
fall. is an equally weighted representation and integrity of investment
of the largest funds in the Lipper professionals.
o The Fund may use enhanced investment Large-Cap Growth Funds category. These
techniques such as leveraging and funds typically have an above-average
derivatives. Leveraging entails risks price-to-earnings ratio, price-to-book
such as ratio, and three-year sales-per-share
growth value, compared to the S&P 500
Index.
======================================================================================= ==========================================
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 AASGX
======================================================================================= Class B Shares BASGX
Class C Shares CASGX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class R Shares RASGX
AIMINVESTMENTS.COM ==========================================
8
AIM Structured Growth Fund
SCHEDULE OF INVESTMENTS(a)
August 31, 2007
<Table>
<Caption>
SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-98.13%
AEROSPACE & DEFENSE-3.45%
Honeywell International Inc. 65,400 $ 3,672,210
- -------------------------------------------------------------------------
Lockheed Martin Corp. 23,300 2,309,962
=========================================================================
5,982,172
=========================================================================
APPAREL RETAIL-2.08%
Aeropostale, Inc.(b) 48,150 996,705
- -------------------------------------------------------------------------
American Eagle Outfitters, Inc. 101,300 2,616,579
=========================================================================
3,613,284
=========================================================================
AUTOMOBILE MANUFACTURERS-0.66%
General Motors Corp. 37,200 1,143,528
=========================================================================
AUTOMOTIVE RETAIL-0.20%
AutoZone, Inc.(b) 2,800 339,612
=========================================================================
BIOTECHNOLOGY-0.73%
Biogen Idec Inc.(b) 19,700 1,257,254
=========================================================================
COMMERCIAL PRINTING-0.47%
Deluxe Corp. 21,200 806,024
=========================================================================
COMMUNICATIONS EQUIPMENT-5.60%
Cisco Systems, Inc.(b) 259,200 8,273,664
- -------------------------------------------------------------------------
Juniper Networks, Inc.(b) 43,300 1,425,436
=========================================================================
9,699,100
=========================================================================
COMPUTER & ELECTRONICS RETAIL-2.42%
RadioShack Corp.(c) 176,200 4,188,274
=========================================================================
COMPUTER HARDWARE-11.04%
Apple Inc.(b) 62,400 8,641,152
- -------------------------------------------------------------------------
Hewlett-Packard Co. 148,000 7,303,800
- -------------------------------------------------------------------------
International Business Machines Corp.(c) 27,400 3,197,306
=========================================================================
19,142,258
=========================================================================
COMPUTER STORAGE & PERIPHERALS-0.38%
Emulex Corp.(b)(c) 33,900 662,406
=========================================================================
CONSTRUCTION & FARM MACHINERY & HEAVY
TRUCKS-2.58%
AGCO Corp.(b)(c) 44,900 1,939,680
- -------------------------------------------------------------------------
Terex Corp.(b) 31,700 2,532,196
=========================================================================
4,471,876
=========================================================================
</Table>
<Table>
<Caption>
SHARES VALUE
- -------------------------------------------------------------------------
CONSUMER FINANCE-0.65%
Discover Financial Services(b) 18,700 $ 432,718
- -------------------------------------------------------------------------
First Marblehead Corp. (The)(c) 20,700 693,243
=========================================================================
1,125,961
=========================================================================
DATA PROCESSING & OUTSOURCED SERVICES-3.17%
Broadridge Financial Solutions Inc. 28,500 517,845
- -------------------------------------------------------------------------
Electronic Data Systems Corp. 42,100 963,669
- -------------------------------------------------------------------------
MasterCard, Inc.-Class A(c) 29,300 4,013,807
=========================================================================
5,495,321
=========================================================================
DEPARTMENT STORES-2.32%
JCPenney Co., Inc. 23,000 1,581,480
- -------------------------------------------------------------------------
Kohl's Corp.(b) 41,000 2,431,300
=========================================================================
4,012,780
=========================================================================
DIVERSIFIED CHEMICALS-0.75%
E. I. du Pont de Nemours and Co. 26,800 1,306,500
=========================================================================
DIVERSIFIED METALS & MINING-1.20%
Southern Copper Corp.(c) 19,800 2,083,950
=========================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-4.08%
Emerson Electric Co. 47,200 2,323,656
- -------------------------------------------------------------------------
First Solar, Inc.(b)(c) 45,800 4,751,292
=========================================================================
7,074,948
=========================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-0.24%
Mosaic Co. (The)(b) 10,100 424,402
=========================================================================
FOOD RETAIL-0.23%
Safeway Inc. 12,600 399,798
=========================================================================
GENERAL MERCHANDISE STORES-0.93%
Big Lots, Inc.(b)(c) 54,100 1,610,557
=========================================================================
HEALTH CARE DISTRIBUTORS-0.74%
AmerisourceBergen Corp. 16,700 799,095
- -------------------------------------------------------------------------
PharMerica Corp.(b)(c) 26,900 476,942
=========================================================================
1,276,037
=========================================================================
HEALTH CARE EQUIPMENT-0.31%
Intuitive Surgical, Inc.(b) 2,400 531,072
=========================================================================
HEALTH CARE TECHNOLOGY-0.35%
Hlth Corp.(b)(c) 41,500 613,370
=========================================================================
HOME FURNISHINGS-0.66%
Tempur-Pedic International Inc.(c) 39,600 1,144,440
=========================================================================
</Table>
9
AIM Structured Growth Fund
<Table>
<Caption>
SHARES VALUE
- -------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES-3.65%
General Electric Co. 162,700 $ 6,324,149
=========================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.99%
Qwest Communications International Inc.(b) 144,200 1,290,590
- -------------------------------------------------------------------------
Verizon Communications Inc. 10,300 431,364
=========================================================================
1,721,954
=========================================================================
INTERNET SOFTWARE & SERVICES-0.74%
eBay Inc.(b) 37,800 1,288,980
=========================================================================
INVESTMENT BANKING & BROKERAGE-2.49%
Goldman Sachs Group, Inc. (The) 1,550 272,815
- -------------------------------------------------------------------------
Morgan Stanley 64,900 4,047,813
=========================================================================
4,320,628
=========================================================================
LEISURE PRODUCTS-2.19%
Hasbro, Inc. 42,400 1,196,104
- -------------------------------------------------------------------------
Mattel, Inc.(c) 120,200 2,599,926
=========================================================================
3,796,030
=========================================================================
MANAGED HEALTH CARE-2.26%
Magellan Health Services, Inc.(b) 8,300 336,980
- -------------------------------------------------------------------------
WellCare Health Plans Inc.(a)(b) 36,300 3,582,810
=========================================================================
3,919,790
=========================================================================
MOVIES & ENTERTAINMENT-1.16%
Marvel Entertainment, Inc.(b)(c) 32,600 736,760
- -------------------------------------------------------------------------
Walt Disney Co. (The) 38,000 1,276,800
=========================================================================
2,013,560
=========================================================================
OFFICE ELECTRONICS-0.58%
Xerox Corp.(b) 59,000 1,010,670
=========================================================================
OIL & GAS REFINING & MARKETING-5.23%
Frontier Oil Corp. 50,700 2,080,221
- -------------------------------------------------------------------------
Holly Corp. 23,400 1,559,610
- -------------------------------------------------------------------------
Tesoro Corp. 97,400 4,804,742
- -------------------------------------------------------------------------
Western Refining, Inc.(c) 11,900 616,896
=========================================================================
9,061,469
=========================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-0.61%
JPMorgan Chase & Co. 23,700 1,055,124
=========================================================================
PERSONAL PRODUCTS-0.53%
NBTY, Inc.(b) 25,000 917,500
=========================================================================
</Table>
<Table>
<Caption>
SHARES VALUE
- -------------------------------------------------------------------------
PHARMACEUTICALS-7.23%
Forest Laboratories, Inc.(b)(c) 101,300 $ 3,811,919
- -------------------------------------------------------------------------
King Pharmaceuticals, Inc.(b)(c) 61,200 919,836
- -------------------------------------------------------------------------
Merck & Co. Inc. 133,000 6,672,610
- -------------------------------------------------------------------------
Pfizer Inc. 45,400 1,127,736
=========================================================================
12,532,101
=========================================================================
PROPERTY & CASUALTY INSURANCE-0.45%
Travelers Cos., Inc. (The) 15,400 778,316
=========================================================================
SEMICONDUCTOR EQUIPMENT-2.26%
Lam Research Corp.(b) 6,200 332,506
- -------------------------------------------------------------------------
MEMC Electronic Materials, Inc.(b) 40,900 2,512,078
- -------------------------------------------------------------------------
Varian Semiconductor Equipment Associates,
Inc.(b)(c) 19,200 1,068,096
=========================================================================
3,912,680
=========================================================================
SEMICONDUCTORS-3.78%
National Semiconductor Corp. 22,600 594,832
- -------------------------------------------------------------------------
NVIDIA Corp.(b) 116,600 5,965,256
=========================================================================
6,560,088
=========================================================================
SOFT DRINKS-5.60%
Coca-Cola Co. (The) 103,800 5,582,364
- -------------------------------------------------------------------------
PepsiCo, Inc. 60,600 4,122,618
=========================================================================
9,704,982
=========================================================================
STEEL-1.91%
AK Steel Holding Corp.(b) 82,900 3,316,000
=========================================================================
SYSTEMS SOFTWARE-6.56%
BMC Software, Inc.(b) 43,400 1,328,908
- -------------------------------------------------------------------------
McAfee Inc.(b) 10,500 375,375
- -------------------------------------------------------------------------
Microsoft Corp. 336,600 9,670,518
=========================================================================
11,374,801
=========================================================================
THRIFTS & MORTGAGE FINANCE-0.20%
Freddie Mac 5,700 351,177
=========================================================================
TOBACCO-4.47%
Altria Group, Inc. 91,000 6,316,310
- -------------------------------------------------------------------------
Loews Corp-Carolina Group 7,700 586,124
- -------------------------------------------------------------------------
UST Inc. 17,000 837,760
=========================================================================
7,740,194
=========================================================================
Total Common Stocks & Other Equity
Interests (Cost $159,170,823) 170,105,117
=========================================================================
</Table>
10
AIM Structured Growth Fund
<Table>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------
U.S. TREASURY SECURITIES-0.15%
U.S. TREASURY BILLS-0.15%
4.58%, 09/20/07 (Cost $249,396)(d) $ 250,000(e) 249,396
=========================================================================
SHARES
MONEY MARKET FUNDS-1.48%
Liquid Assets Portfolio-Institutional
Class(f) 1,284,795 1,284,795
- -------------------------------------------------------------------------
Premier Portfolio-Institutional Class(f) 1,284,795 1,284,795
=========================================================================
Total Money Market Funds (Cost
$2,569,590) 2,569,590
=========================================================================
TOTAL INVESTMENTS (excluding investments
purchased with cash collateral from
securities on loan)-99.76% (Cost
$161,989,809) 172,924,103
=========================================================================
</Table>
<Table>
- -------------------------------------------------------------------------
<Caption>
SHARES VALUE
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES ON LOAN
MONEY MARKET FUNDS-6.29%
Liquid Assets Portfolio-Institutional
Class(f)(g) 10,906,405 $ 10,906,405
=========================================================================
Total Investments Purchased with Cash
Collateral from Securities on Loan
(Cost $10,906,405) 10,906,405
=========================================================================
TOTAL INVESTMENTS-106.05% (Cost $172,896,214) 183,830,508
=========================================================================
OTHER ASSETS LESS LIABILITIES-(6.05)% (10,487,127)
=========================================================================
NET ASSETS-100.00% $173,343,381
_________________________________________________________________________
=========================================================================
</Table>
Notes to Schedule of Investments:
(a) Industry classification used in this report are generally according to the
Global Industry Classification Standard, which was developed by and is the
exclusive property and a service mark of Morgan Stanley Capital
International Inc. and Standard & Poor's.
(b) Non-income producing security.
(c) All or a portion of this security was out on loan at August 31, 2007.
(d) Security traded on a discount basis. The interest rate shown represents the
discount rate at the time of purchase by the Fund.
(e) All or a portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 1I and Note 8.
(f) The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
(g) The security has been segregated to satisfy the commitment to return the
cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 7.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
11
AIM Structured Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2007
<Table>
ASSETS:
Investments, at value (Cost $159,420,219)* $170,354,513
- -----------------------------------------------------------
Investments in affiliated money market funds
(Cost $13,475,995) 13,475,995
===========================================================
Total investments (Cost $172,896,214) 183,830,508
===========================================================
Receivables for:
Variation margin 22,520
- -----------------------------------------------------------
Fund shares sold 349,262
- -----------------------------------------------------------
Dividends 148,894
- -----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 4,091
- -----------------------------------------------------------
Other assets 21,003
===========================================================
Total assets 184,376,278
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Fund shares reacquired 41,172
- -----------------------------------------------------------
Trustee deferred compensation and
retirement plans 5,175
- -----------------------------------------------------------
Collateral upon return of securities loaned 10,906,405
- -----------------------------------------------------------
Fund expenses advanced 21,380
- -----------------------------------------------------------
Accrued distribution fees 3,478
- -----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 2,990
- -----------------------------------------------------------
Accrued transfer agent fees 2,518
- -----------------------------------------------------------
Accrued operating expenses 49,779
===========================================================
Total liabilities 11,032,897
===========================================================
Net assets applicable to shares outstanding $173,343,381
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $156,938,575
- -----------------------------------------------------------
Undistributed net investment income 368,757
- -----------------------------------------------------------
Undistributed net realized gain 5,082,610
- -----------------------------------------------------------
Unrealized appreciation 10,953,439
===========================================================
$173,343,381
___________________________________________________________
===========================================================
NET ASSETS:
Class A $ 7,480,898
___________________________________________________________
===========================================================
Class B $ 472,087
___________________________________________________________
===========================================================
Class C $ 2,064,899
___________________________________________________________
===========================================================
Class R $ 12,735
___________________________________________________________
===========================================================
Institutional Class $163,312,762
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 653,319
___________________________________________________________
===========================================================
Class B 41,586
___________________________________________________________
===========================================================
Class C 181,894
___________________________________________________________
===========================================================
Class R 1,113
___________________________________________________________
===========================================================
Institutional Class 14,222,034
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 11.45
- -----------------------------------------------------------
Offering price per share
(Net asset value of $11.45 divided by
94.50%) $ 12.12
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 11.35
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 11.35
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per
share $ 11.44
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per
share $ 11.48
___________________________________________________________
===========================================================
</Table>
* At August 31, 2007, securities with an aggregate value of $10,841,105 were on
loan to brokers.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12
AIM Structured Growth Fund
STATEMENT OF OPERATIONS
For the year ended August 31, 2007
<Table>
INVESTMENT INCOME:
Dividends $ 1,407,273
- -------------------------------------------------------------------------
Dividends from affiliated money market funds (includes
securities lending income of $4,404) 164,017
- -------------------------------------------------------------------------
Interest 17,078
=========================================================================
Total investment income 1,588,368
=========================================================================
EXPENSES:
Advisory fees 812,402
- -------------------------------------------------------------------------
Administrative services fees 50,000
- -------------------------------------------------------------------------
Custodian fees 12,683
- -------------------------------------------------------------------------
Distribution fees:
Class A 11,770
- -------------------------------------------------------------------------
Class B 8,512
- -------------------------------------------------------------------------
Class C 12,609
- -------------------------------------------------------------------------
Class R 2,589
- -------------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 11,097
- -------------------------------------------------------------------------
Transfer agent fees -- Institutional 3,682
- -------------------------------------------------------------------------
Trustees' and officer's fees and benefits 19,272
- -------------------------------------------------------------------------
Registration and filing fees 202,585
- -------------------------------------------------------------------------
Professional services fees 74,136
- -------------------------------------------------------------------------
Other 26,475
=========================================================================
Total expenses 1,247,812
=========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangement(s) (198,752)
=========================================================================
Net expenses 1,049,060
=========================================================================
Net investment income 539,308
=========================================================================
REALIZED AND UNREALIZED GAIN FROM:
Net realized gain from:
Investment securities 5,098,739
- -------------------------------------------------------------------------
Futures contracts 164,417
=========================================================================
5,263,156
=========================================================================
Change in net unrealized appreciation of:
Investment securities 10,508,797
- -------------------------------------------------------------------------
Futures contracts 14,663
=========================================================================
10,523,460
=========================================================================
Net realized and unrealized gain 15,786,616
=========================================================================
Net increase in net assets resulting from operations $16,325,924
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13
AIM Structured Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
For the year ended August 31, 2007 and the period March 31, 2006 (commencement
date) through August 31, 2006
<Table>
<Caption>
2007 2006
- -----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 539,308 $ 83,231
- -----------------------------------------------------------------------------------------
Net realized gain (loss) 5,263,156 (73,391)
- -----------------------------------------------------------------------------------------
Change in net unrealized appreciation 10,523,460 429,979
=========================================================================================
Net increase in net assets resulting from operations 16,325,924 439,819
=========================================================================================
Distributions to shareholders from net investment income:
Class A (3,871) --
- -----------------------------------------------------------------------------------------
Class R (150) --
- -----------------------------------------------------------------------------------------
Institutional Class (290,942) --
=========================================================================================
Total distributions from net investment income (294,963) --
=========================================================================================
Distributions to shareholders from net realized gains:
Class A (2,112) --
- -----------------------------------------------------------------------------------------
Class B (835) --
- -----------------------------------------------------------------------------------------
Class C (875) --
- -----------------------------------------------------------------------------------------
Class R (648) --
- -----------------------------------------------------------------------------------------
Institutional Class (102,685) --
=========================================================================================
Total distributions from net realized gains (107,155) --
=========================================================================================
Decrease in net assets resulting from distributions (402,118) --
=========================================================================================
Share transactions-net:
Class A 6,290,642 865,449
- -----------------------------------------------------------------------------------------
Class B (309,428) 666,910
- -----------------------------------------------------------------------------------------
Class C 1,359,341 605,418
- -----------------------------------------------------------------------------------------
Class R (679,209) 600,010
- -----------------------------------------------------------------------------------------
Institutional Class 61,142,130 86,438,493
=========================================================================================
Net increase in net assets resulting from share
transactions 67,803,476 89,176,280
=========================================================================================
Net increase in net assets 83,727,282 89,616,099
=========================================================================================
NET ASSETS:
Beginning of year 89,616,099 --
=========================================================================================
End of year (including undistributed net investment income
of $368,757 and $124,412, respectively) $173,343,381 $89,616,099
_________________________________________________________________________________________
=========================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
14
AIM Structured Growth Fund
NOTES TO FINANCIAL STATEMENTS
August 31, 2007
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's investment objective is 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 or official closing price as of the close of
the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on that
day. Securities traded in the over-the-counter market are valued based on
prices furnished by independent pricing services or market makers. When
such securities are valued by an independent pricing service they may be
considered fair valued. 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 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 open-end and closed-end registered
investment companies that trade on an exchange are valued at the last sales
price or official closing price as of the close of the customary trading
session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) and unlisted equities 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, including commercial paper,
having 60 days or less to maturity are recorded at amortized cost which
approximates value. Debt securities are subject to interest rate and credit
risks. In addition, all debt securities involve some risk of default with
respect to interest and/or principal payments.
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. If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at
the market quotations. Because trading hours for certain foreign securities
end before the close of the NYSE, closing market quotations may become
unreliable. If between the time trading ends on a particular security and
the close of the customary trading session on the NYSE, events occur that
are significant and may make the closing price unreliable, the Fund may
fair value the security. If 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. Foreign securities may have additional risks including exchange
rate changes, potential for sharply devalued currencies and high inflation,
political and economical upheaval, the relative lack of issuer information,
relatively low market liquidity and the potential lack of strict financial
and accounting controls and standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources
and are valued at the last bid price in the case of equity securities and
in the case of debt obligations, the mean between the last bid and asked
prices.
Securities for which market quotations are not readily available or are
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity.
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.
15
AIM Structured Growth Fund
The Fund may receive proceeds from litigation settlements involving Fund
investments. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
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
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.
This practice does not apply to securities pledged as collateral for
securities lending transactions.
16
AIM Structured Growth 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 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., AIM pays INVESCO Institutional (N.A.), Inc. 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 at least June 30, 2008. 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 INVESCO PLC ("INVESCO")
(formerly "AMVESCAP PLC") 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. In addition, the Fund may also
benefit from a one time credit to be used to offset custodian expenses. These
credits are used to pay certain expenses incurred by the Fund.
Further, effective July 1, 2007, AIM has contractually agreed, through at
least June 30, 2008, to waive 100% of the advisory fee AIM receives from the
affiliated money market funds on investments by the Fund in such affiliated
money market funds. Prior to July 1, 2007, AIM had voluntarily agreed to waive
25% of the advisory fee AIM receives from the affiliated money market funds on
investments by the Fund in such affiliated money market funds.
For the year ended August 31, 2007, AIM waived advisory fees of $181,927 and
reimbursed class level expenses of $6,873, $1,242, $1,841, $756, and $3,682 for
Class A, Class B, Class C, Class R and Institutional Class shares, respectively.
At the request of the Trustees of the Trust, INVESCO PLC ("INVESCO")
(formerly "AMVESCAP PLC") 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, 2007, INVESCO did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
AIM pursuant to which the Fund has agreed to pay AIM for certain administrative
costs incurred in providing accounting services, to the Fund. For the year ended
August 31, 2007, expenses incurred under the agreement are shown in the
Statement of Operations as administrative services fees.
The Trust has entered into a transfer agency and service agreement with AIM
Investment Services, Inc. ("AIS") pursuant to which the Fund has agreed to pay
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, 2007,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
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 Plan payments, up to 0.25% of the
average daily net assets of each class of 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. Financial Industry Regulatory
Authority ("FINRA"), formerly known as National Association of Securities
Dealers, 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. For the year
ended August 31, 2007, expenses incurred under the Plans are shown in the
Statement of Operations as distribution fees.
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
17
AIM Structured Growth Fund
deducted from redemption proceeds prior to remittance to the shareholder. During
the year ended August 31, 2007, ADI advised the Fund that it retained $3,879 in
front-end sales commissions from the sale of Class A shares and $0, $123, $1,033
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--INVESTMENTS IN AFFILIATES
The Fund is permitted, pursuant to 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,
2007. During the period each investment maintained a $1.00 net asset value, as
such there is no realized gain/(loss) and no change in unrealized
appreciation/(depreciation).
INVESTMENTS OF DAILY AVAILABLE CASH BALANCES:
<Table>
<Caption>
VALUE PURCHASES PROCEEDS VALUE DIVIDEND
FUND 08/31/06 AT COST FROM SALES 08/31/07 INCOME
- -------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $ -- $ 35,971,800 $ (34,687,005) $ 1,284,795 $ 79,991
- -------------------------------------------------------------------------------------------------
Premier
Portfolio-Institutional
Class -- 35,971,800 (34,687,005) 1,284,795 79,622
=================================================================================================
Subtotal $ -- $ 71,943,600 $ (69,374,010) $ 2,569,590 $159,613
=================================================================================================
</Table>
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
<Table>
<Caption>
VALUE PURCHASES PROCEEDS VALUE DIVIDEND
FUND 08/31/06 AT COST FROM SALES 08/31/07 INCOME*
- -------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $ -- $ 67,466,909 $ (56,560,504) $10,906,405 $ 4,404
=================================================================================================
Total
Investments
in
Affiliates $ -- $139,410,509 $(125,934,514) $13,475,995 $164,017
_________________________________________________________________________________________________
=================================================================================================
</Table>
* Net of compensation to counterparties.
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, (ii) custodian credits which result
from periodic overnight cash balances at the custodian and (iii) a one time
custodian fee credit used to offset custodian fees. For the year ended August
31, 2007, the Fund received credits from these arrangements, which resulted in
the reduction of the Fund's total expenses of $2,431.
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 certain Trustees and Officers of the Fund. 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, certain 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, 2007, the Fund paid legal fees of $5,024
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6--BORROWINGS
Pursuant to an exemptive order from the 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
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 party to 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
18
AIM Structured Growth Fund
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, 2007, 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 contractually agreed upon rate.
NOTE 7--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities having a market value up to one-third of
the Fund's total assets. Such loans are secured by collateral equal to no less
than the market value of the loaned securities determined daily. Such collateral
will be cash or debt securities issued or guaranteed by the U.S. Government or
any of its agencies. Cash collateral received in connection with these loans is
invested in short-term money market instruments or affiliated money market
funds. It is the Fund's policy to obtain additional collateral from or return
excess collateral to the borrower by the end of the next business day, following
the valuation date of the securities loaned. Therefore, the value of the
collateral held may be temporarily less than the value of the securities on
loan. Lending securities entails a risk of loss to the Fund if and to the extent
that the market value of the securities loaned were to increase and the borrower
did not increase the collateral accordingly, and the borrower fails to return
the securities. The Fund could also experience delays and costs in gaining
access to the collateral. The Fund bears the risk of any deficiency in the
amount of the collateral available for return to the borrower due to any loss on
the collateral invested.
At August 31, 2007, securities with an aggregate value of $10,841,105 were
on loan to brokers. The loans were secured by cash collateral of $10,906,405
received by the Fund and subsequently invested in an affiliated money market
fund. For the year ended August 31, 2007, the Fund received dividends on cash
collateral investments of $4,404 for securities lending transactions, which are
net of compensation to counterparties.
NOTE 8--FUTURES CONTRACTS
On August 31, 2007, $250,000 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 08/31/07 APPRECIATION
- -------------------------------------------------------------------------------------------------------------------------
E-Mini S&P 500 Index 32 Sept.-07/Long $2,362,720 $19,145
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
NOTE 9--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the year ended August 31, 2007
and the period March 31, 2006 (commencement date) through August 31, 2006 was as
follows:
<Table>
<Caption>
2007 2006
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $346,557 $ --
- --------------------------------------------------------------------------------
Long-term capital gain 55,561 --
================================================================================
Total distributions $402,118 $ --
________________________________________________________________________________
================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2007, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2007
- ----------------------------------------------------------------------------
Undistributed ordinary income $ 5,245,220
- ----------------------------------------------------------------------------
Undistributed long-term gain 273,923
- ----------------------------------------------------------------------------
Net unrealized appreciation -- investments 10,889,870
- ----------------------------------------------------------------------------
Temporary book/tax differences (4,207)
- ----------------------------------------------------------------------------
Shares of beneficial interest 156,938,575
============================================================================
Total net assets $173,343,381
____________________________________________________________________________
============================================================================
</Table>
19
AIM Structured Growth Fund
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 net unrealized
appreciation difference is attributable primarily to losses on wash sales and
the realization for tax purposes of unrealized gains on futures contracts.
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 benefits.
The Fund utilized $44,065 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, 2007.
NOTE 10--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the year ended August 31, 2007 was $186,167,882 and
$119,651,231, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- -------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $17,497,442
- -------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (6,607,572)
===============================================================================
Net unrealized appreciation of investment securities $10,889,870
_______________________________________________________________________________
===============================================================================
Cost of investments for tax purposes is $172,940,638.
</Table>
20
AIM Structured Growth Fund
NOTE 11--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 unless certain waiver criteria are met and under certain
circumstances load waiver shares may be subject to a CDSC. Class B shares and
Class C shares are sold with a CDSC. Class R shares and Institutional Class
shares are sold at net asset value. Under certain circumstances, Class R shares
are subject to a 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
(COMMENCEMENT
YEAR ENDED DATE) THROUGH
AUGUST 31, 2007(A) AUGUST 31, 2006
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------
Sold:
Class A 754,832 $ 8,442,717 89,400 $ 891,029
- ------------------------------------------------------------------------------------------------------------------
Class B 52,116 576,888 66,886 667,410
- ------------------------------------------------------------------------------------------------------------------
Class C 201,234 2,271,388 60,554 605,418
- ------------------------------------------------------------------------------------------------------------------
Class R 797 8,993 60,001 600,010
- ------------------------------------------------------------------------------------------------------------------
Institutional Class 5,931,247 66,326,390 8,742,481 86,471,025
==================================================================================================================
Issued as reinvestment of dividends:
Class A 511 5,619 -- --
- ------------------------------------------------------------------------------------------------------------------
Class B 75 824 -- --
- ------------------------------------------------------------------------------------------------------------------
Class C 80 875 -- --
- ------------------------------------------------------------------------------------------------------------------
Class R 72 798 -- --
- ------------------------------------------------------------------------------------------------------------------
Institutional Class 35,784 393,627 -- --
==================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 2,709 31,228 -- --
- ------------------------------------------------------------------------------------------------------------------
Class B (2,728) (31,228) -- --
==================================================================================================================
Reacquired:
Class A (191,553) (2,188,922) (2,580) (25,580)
- ------------------------------------------------------------------------------------------------------------------
Class B (74,712) (855,912) (51) (500)
- ------------------------------------------------------------------------------------------------------------------
Class C (79,974) (912,922) -- --
- ------------------------------------------------------------------------------------------------------------------
Class R (59,757) (689,000) -- --
- ------------------------------------------------------------------------------------------------------------------
Institutional Class (484,204) (5,577,887) (3,274) (32,532)
==================================================================================================================
6,086,529 $67,803,476 9,013,417 $89,176,280
__________________________________________________________________________________________________________________
==================================================================================================================
</Table>
(a) 89% 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 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 has assessed the
application of FIN 48 to the Fund and has determined that the adopting of FIN 48
is not expected to have a material impact on the Fund. Management intends for
the Fund to adopt FIN 48 provisions during the fiscal year ending August 31,
2008 as required.
21
AIM Structured Growth Fund
NOTE 13--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
---------------------------------
MARCH 31, 2006
(COMMENCEMENT
YEAR ENDED DATE) TO
AUGUST 31, AUGUST 31,
2007 2006
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.93 $10.00
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.02 0.11
- -----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.53 (0.18)
===============================================================================================
Total from investment operations 1.55 (0.07)
===============================================================================================
Less distributions:
Dividends from net investment income (0.02) --
- -----------------------------------------------------------------------------------------------
Distributions from net realized gains (0.01) --
===============================================================================================
Total distributions (0.03) --
===============================================================================================
Net asset value, end of period $11.45 $ 9.93
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 15.63% (0.70)%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $7,481 $ 862
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.01%(c) 1.03%(d)
- -----------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.29%(c) 5.52%(d)
===============================================================================================
Ratio of net investment income to average net assets 0.17%(c) 2.57%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 91% 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 and is not
annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $4,708,137.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
22
AIM Structured Growth Fund
NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS B
---------------------------------
MARCH 31, 2006
(COMMENCEMENT
YEAR ENDED DATE) TO
AUGUST 31, AUGUST 31,
2007 2006
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.90 $10.00
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)(a) (0.07) 0.08
- -----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.53 (0.18)
===============================================================================================
Total from investment operations 1.46 (0.10)
===============================================================================================
Less distributions from net realized gains (0.01) --
===============================================================================================
Net asset value, end of period $11.35 $ 9.90
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 14.76% (1.00)%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 472 $ 662
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.76%(c) 1.78%(d)
- -----------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.04%(c) 6.27%(d)
===============================================================================================
Ratio of net investment income (loss) to average net assets (0.58)%(c) 1.82%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 91% 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 and is not
annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $851,148.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
<Table>
<Caption>
CLASS C
---------------------------------
MARCH 31, 2006
(COMMENCEMENT
YEAR ENDED DATE) TO
AUGUST 31, AUGUST 31,
2007 2006
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.90 $10.00
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)(a) (0.07) 0.08
- -----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.53 (0.18)
===============================================================================================
Total from investment operations 1.46 (0.10)
===============================================================================================
Less distributions from net realized gains (0.01) --
===============================================================================================
Net asset value, end of period $11.35 $ 9.90
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 14.76% (1.00)%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,065 $ 599
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.76%(c) 1.78%(d)
- -----------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.04%(c) 6.27%(d)
===============================================================================================
Ratio of net investment income (loss) to average net assets (0.58)%(c) 1.82%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 91% 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 and is not
annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $1,260,933.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
23
AIM Structured Growth Fund
NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS R
---------------------------------
MARCH 31, 2006
(COMMENCEMENT
YEAR ENDED DATE) TO
AUGUST 31, AUGUST 31,
2007 2006
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.92 $10.00
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)(a) (0.01) 0.10
- -----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.54 (0.18)
===============================================================================================
Total from investment operations 1.53 (0.08)
===============================================================================================
Less distributions:
Dividends from net investment income (0.00) --
- -----------------------------------------------------------------------------------------------
Distributions from net realized gains (0.01) --
===============================================================================================
Total distributions (0.01) --
===============================================================================================
Net asset value, end of period $11.44 $ 9.92
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 15.46% (0.80)%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 13 $ 595
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.26%(c) 1.28%(d)
- -----------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.54%(c) 5.77%(d)
===============================================================================================
Ratio of net investment income (loss) to average net assets (0.08)%(c) 2.32%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 91% 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. Not annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $517,867.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
24
AIM Structured Growth Fund
NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
---------------------------------
MARCH 31, 2006
(COMMENCEMENT
YEAR ENDED DATE) TO
AUGUST 31, AUGUST 31,
2007 2006
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.94 $ 10.00
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.05 0.12
- -----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.53 (0.18)
===============================================================================================
Total from investment operations 1.58 (0.06)
===============================================================================================
Less distributions:
Dividends from net investment income (0.03) --
- -----------------------------------------------------------------------------------------------
Distributions from net realized gains (0.01) --
===============================================================================================
Total distributions (0.04) --
===============================================================================================
Net asset value, end of period $ 11.48 $ 9.94
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 15.93% (0.60)%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $163,313 $86,898
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.75%(c) 0.77%(d)
- -----------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.89%(c) 5.20%(d)
===============================================================================================
Ratio of net investment income to average net assets 0.43%(c) 2.83%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 91% 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. Not annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $128,062,298.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
NOTE 14--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
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 A I M Advisors, Inc. ("AIM") and A I M
Distributors, Inc. ("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. By agreement with the Commissioner of
Securities, AIM's time to respond to that Order has been indefinitely suspended.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, INVESCO Funds Group,
Inc. ("IFG") (the former investment advisor to certain AIM Funds), 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; 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.
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.
25
AIM Structured Growth Fund
NOTE 14--LEGAL PROCEEDINGS--(CONTINUED)
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 INVESCO PLC'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 INVESCO 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.
26
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, 2007, the results of its operations for the year then
ended, and the changes in its net assets and the financial highlights for the
year then ended and for the period March 31, 2006 (commencement date) 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 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, 2007 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
October 19, 2007
Houston, Texas
27
AIM Structured Growth Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE together with the amount you invested, to use this information to compare the
estimate the expenses that you paid over ongoing costs of investing in the Fund
As a shareholder of the Fund, you incur the period. Simply divide your account and other funds. To do so, compare this
two types of costs: (1) transaction costs, value by $1,000 (for example, an $8,600 5% hypothetical example with the 5%
which may include sales charges (loads) on account value divided by $1,000 = 8.6), hypothetical examples that appear in the
purchase payments or contingent deferred then multiply the result by the number in shareholder reports of the other funds.
sales charges on redemptions, and the table under the heading entitled
redemption fees, if any; and (2) ongoing "Actual Expenses Paid During Period" to Please note that the expenses shown in
costs, including management fees; estimate the expenses you paid on your the table are meant to highlight your
distribution and/or service (12b-1) fees; account during this period. ongoing costs only and do not reflect any
and other Fund expenses. This example is transaction costs, such as sales charges
intended to help you understand your HYPOTHETICAL EXAMPLE FOR COMPARISON (loads) on purchase payments, contingent
ongoing costs (in dollars) of investing in PURPOSES deferred sales charges on redemptions,
the Fund and to compare these costs with and redemption fees, if any. Therefore,
ongoing costs of investing in other mutual The table below also provides information the hypothetical information is useful in
funds. The example is based on an about hypothetical account values and comparing ongoing costs only, and will
investment of $1,000 invested at the hypothetical expenses based on the Fund's not help you determine the relative total
beginning of the period and held for the actual expense ratio and an assumed rate costs of owning different funds. In
entire period March 1, 2007, through of return of 5% per year before expenses, addition, if these transaction costs were
August 31, 2007. which is not the Fund's actual return. included, your costs would have been
higher.
ACTUAL EXPENSES The hypothetical account values and
expenses may not be used to estimate the
The table below provides information about actual ending account balance or expenses
actual account values and actual expenses. you paid for the period. You may
You may use the information in 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 (3/1/07) (8/31/07)(1) PERIOD(2) (8/31/07) PERIOD(2) RATIO
A $1,000.00 $1,053.40 $5.18 $1,020.16 $5.09 1.00%
B 1,000.00 1,049.00 9.04 1,016.38 8.89 1.75
C 1,000.00 1,049.00 9.04 1,016.38 8.89 1.75
R 1,000.00 1,052.40 6.47 1,018.90 6.36 1.25
(1) The actual ending account value is based on the actual total return of the Fund for the period March 1, 2007, through August
31, 2007, 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.
====================================================================================================================================
28
Supplement to Annual Report dated 8/31/07
AIM STRUCTURED GROWTH 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 8/31/07 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) 10.51% REINVESTMENT OF DISTRIBUTIONS AT NAV.
specific to their holdings. Institutional 1 Year 15.93 INVESTMENT RETURN AND PRINCIPAL VALUE
Class shares are offered exclusively to WILL FLUCTUATE SO YOUR SHARES, WHEN
institutional investors, including defined AVERAGE ANNUAL TOTAL RETURNS REDEEMED, MAY BE WORTH MORE OR LESS THAN
contribution plans that meet certain For periods ended 6/30/07, most recent THEIR ORIGINAL COST. SEE FULL REPORT FOR
criteria. calendar quarter-end INFORMATION ON COMPARATIVE BENCHMARKS.
PLEASE CONSULT YOUR FUND PROSPECTUS FOR
Inception (3/31/06) 13.42% MORE INFORMATION. FOR THE MOST CURRENT
1 Year 18.94 MONTH-END PERFORMANCE, PLEASE CALL
========================================== 800-451-4246 OR VISIT
AIMINVESTMENTS.COM.
INSTITUTIONAL CLASS SHARES HAVE NO SALES
CHARGE; THEREFORE, PERFORMANCE IS AT NET HAD THE ADVISOR NOT WAIVED FEES
ASSET VALUE (NAV). PERFORMANCE OF AND/OR REIMBURSED EXPENSES, PERFORMANCE
INSTITUTIONAL CLASS SHARES WILL DIFFER WOULD HAVE BEEN LOWER.
FROM PERFORMANCE OF OTHER SHARE CLASSES
PRIMARILY DUE TO DIFFERING SALES CHARGES
AND CLASS EXPENSES.
==========================================
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.
================================================================================
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.
[AIM INVESTMENTS LOGO]
AIMINVESTMENTS.COM SCOR-INS-1 A I M Distributors, Inc. --REGISTERED TRADEMARK--
Information about your Fund's expenses
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE expenses that you paid over the period. The hypothetical account values and
Simply divide your account value by $1,000 expenses may not be used to estimate the
As a shareholder of the Fund, you incur (for example, an $8,600 account value actual ending account balance or expenses
ongoing costs, including management fees divided by $1,000 = 8.6), then multiply you paid for the period. You may use this
and other Fund expenses. This example is the result by the number in the table information to compare the ongoing costs
intended to help you understand your under the heading entitled "Actual of investing in the Fund and other funds.
ongoing costs (in dollars) of investing in Expenses Paid During Period" to estimate To do so, compare this 5% hypothetical
the Fund and to compare these costs with the expenses you paid on your account example with the 5% hypothetical examples
ongoing costs of investing in other mutual during this period. that appear in the shareholder reports of
funds. The example is based on an the other funds.
investment of $1,000 invested at the HYPOTHETICAL EXAMPLE FOR COMPARISON
beginning of the period and held for the PURPOSES Please note that the expenses shown in
entire period March 1, 2007, through the table are meant to highlight your
August 31, 2007. The table below also provides information ongoing costs only. Therefore, the
about hypothetical account values and hypothetical information is useful in
ACTUAL EXPENSES hypothetical expenses based on the comparing ongoing costs only, and will
Fund's actual expense ratio and an assumed not help you determine the relative total
The table below provides information about rate of return of 5% per year before costs of owning different funds.
actual account values and actual expenses. expenses, which is not the Fund's actual
You may use the information in this table, return.
together with the amount you invested, to
estimate the
====================================================================================================================================
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 (3/1/07) (8/31/07)(1) PERIOD(2) (8/31/07) PERIOD(2) RATIO
Institutional $1,000.00 $1,054.20 $3.88 $1,021.42 $3.82 0.75%
(1) The actual ending account value is based on the actual total return of the Fund for the period March 1, 2007, through August
31, 2007, 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.
====================================================================================================================================
AIMINVESTMENTS.COM SGRO-INS-1 A I M Distributors, Inc.
AIM Structured Growth Fund
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
The Board of Trustees (the Board) of AIM ment advisory agreement and sub-advisory back office support functions provided by
Counselor Series Trust is required under agreement, if applicable (advisory AIM, and AIM's equity and fixed income
the Investment Company Act of 1940 to agreements), for another year. trading operations. The Board concluded
approve annually the renewal of the AIM that the nature, extent and quality of
Structured Growth Fund (the Fund) The independent Trustees, as mentioned the advisory services provided to the
investment advisory agreement with A I M above, are assisted in their annual Fund by AIM were appropriate and that AIM
Advisors, Inc. (AIM). During contract evaluation of the advisory agreements by currently is providing satisfactory
renewal meetings held on June 25-27, 2007, the independent Senior Officer. One advisory services in accordance with the
the Board as a whole and the disinterested responsibility of the Senior Officer is to terms of the Fund's advisory agreement.
or "independent" Trustees, voting manage the process by which the AIM Funds' In addition, based on their ongoing
separately, approved the continuance of proposed management fees are negotiated meetings throughout the year with the
the Fund's investment advisory agreement during the annual contract renewal process Fund's portfolio managers, the Board
for another year, effective July 1, 2007. to ensure that they are negotiated in a concluded that these individuals are
In doing so, the Board determined that the manner which is at arms' length and competent and able to continue to carry
Fund's advisory agreement is in the best reasonable. Accordingly, the Senior out their responsibilities under the
interests of the Fund and its shareholders Officer must either supervise a Fund's advisory agreement.
and that the compensation to AIM under the competitive bidding process or prepare an
Fund's advisory agreement is fair and independent written evaluation. The Senior In determining whether to continue the
reasonable. Officer has recommended that an Fund's advisory agreement, the Board
independent written evaluation be provided considered the prior relationship between
The independent Trustees met separately and, upon the direction of the Board, has AIM and the Fund, as well as the Board's
during their evaluation of the Fund's prepared an independent written knowledge of AIM's operations, and
investment advisory agreement with evaluation. concluded that it was beneficial to
independent legal counsel from whom they maintain the current relationship, in
received independent legal advice, and the During the annual contract renewal part, because of such knowledge. The
independent Trustees also received process, the Board considered the factors Board also considered the steps that AIM
assistance during their deliberations from discussed below under the heading "Factors and its affiliates have taken over the
the independent Senior Officer, a and Conclusions and Summary of Independent last several years to improve the quality
full-time officer of the AIM Funds who Written Fee Evaluation" in evaluating the and efficiency of the services they
reports directly to the independent fairness and reasonableness of the Fund's provide to the Funds in the areas of
Trustees. The following discussion more advisory agreement at the contract renewal investment performance, product line
fully describes the process employed by meetings and at their meetings throughout diversification, distribution, fund
the Board to evaluate the performance of the year as part of their ongoing operations, shareholder services and
the AIM Funds (including the Fund) oversight of the Fund. The Fund's advisory compliance. The Board concluded that the
throughout the year and, more agreement was considered separately, quality and efficiency of the services
specifically, during the annual contract although the Board also considered the AIM and its affiliates provide to the AIM
renewal meetings. common interests of all of the AIM Funds Funds in each of these areas generally
in their deliberations. The Board have improved, and support the Board's
THE BOARD'S FUND EVALUATION PROCESS comprehensively considered all of the approval of the continuance of the Fund's
information provided to them and did not advisory agreement.
The Board's Investments Committee has identify any particular factor that was
established three Sub-Committees which are controlling. Furthermore, each Trustee may B. FUND PERFORMANCE
responsible for overseeing the management have evaluated the information provided
of a number of the series portfolios of differently from one another and The Board noted that the Fund has not
the AIM Funds. This Sub-Committee attributed different weight to the various been in operation for a full calendar
structure permits the Trustees to focus on factors. The Trustees recognized that the year. The Board also considered the steps
the performance of the AIM Funds that have advisory arrangements and resulting AIM has taken over the last several years
been assigned to them. The Sub-Committees advisory fees for the Fund and the other to improve the quality and efficiency of
meet throughout the year to review the AIM Funds are the result of years of the services that AIM provides to the AIM
performance of their assigned funds, and review and negotiation between the Funds. The Board concluded that AIM
the Sub-Committees review monthly and Trustees and AIM, that the Trustees may continues to be responsive to the Board's
quarterly comparative performance focus to a greater extent on certain focus on fund performance.
information and periodic asset flow data aspects of these arrangements in some
for their assigned funds. These materials years than others, and that the Trustees' C. ADVISORY FEES AND FEE WAIVERS
are prepared under the direction and deliberations and conclusions in a
supervision of the independent Senior particular year may be based in part on The Board noted that AIM had set the
Officer. Over the course of each year, the their deliberations and conclusions of contractual advisory fee schedule in the
Sub-Committees meet with portfolio these same arrangements throughout the Fund's advisory agreement based upon the
managers for their assigned funds and year and in prior years. median effective management fee rate
other members of management and review (comprised of advisory fees plus, in some
with these individuals the performance, FACTORS AND CONCLUSIONS AND SUMMARY OF cases, administrative fees) at various
investment objective(s), policies, INDEPENDENT WRITTEN FEE EVALUATION asset levels of competitor funds with
strategies and limitations of these funds. investment strategies comparable to those
The discussion below serves as a summary of the Fund. In addition, the Board noted
In addition to their meetings of the Senior Officer's independent that the Fund's contractual advisory fee
throughout the year, the Sub-Committees written evaluation, as well as a schedule is the same as the uniform fee
meet at designated contract renewal discussion of the material factors and schedule that applies to other funds
meetings each year to conduct an in-depth related conclusions that formed the basis advised by AIM with investment strategies
review of the performance, fees and for the Board's approval of the Fund's comparable to those of the Fund, which
expenses of their assigned funds. During advisory agreement and sub-advisory uniform fee schedule includes breakpoints
the contract renewal process, the Trustees agreement. Unless otherwise stated, and is based on net asset levels. The
receive comparative performance and fee information set forth below is as of June Board also compared the Fund's
data regarding all the AIM Funds prepared 27, 2007 and does not reflect any changes contractual advisory fee rate to the
by an independent company, Lipper, Inc., that may have occurred since that date, contractual advisory fee rates of other
under the direction and supervision of the including but not limited to changes to clients of AIM and its affiliates with
independent Senior Officer who also the Fund's performance, advisory fees, investment strategies comparable to those
prepares a separate analysis of this expense limitations and/or fee waivers. of the Fund, including two mutual funds
information for the Trustees. Each advised by AIM and two mutual funds
Sub-Committee then makes recommendations I INVESTMENT ADVISORY AGREEMENT sub-advised by an AIM affiliate. The
to the Investments Committee regarding the Board noted that the Fund's rate was: (i)
performance, fees and expenses of their A. NATURE, EXTENT AND QUALITY OF SERVICES comparable to the rate for one mutual
assigned funds. The Investments Committee PROVIDED BY AIM fund and below the rate for the second
considers each Sub-Committee's mutual fund; and (ii) above the
recommendations and makes its own The Board reviewed the advisory services sub-advisory fee rates for the two
recommendations regarding the performance, provided to the Fund by AIM under the sub-advised mutual funds, although the
fees and expenses of the AIM Funds to the Fund's advisory agreement, the performance advisory fee rates for such sub-advised
full Board. Moreover, the Investments of AIM in providing these services, and funds were above the Fund's.
Committee considers each Sub-Committee's the credentials and experience of the
recommendations in making its annual officers and employees of AIM who provide Additionally, the Board compared the
recommendation to the Board whether to these services. The Board's review of the Fund's contractual advisory fee rate to
approve the continuance of each AIM Fund's qualifications of AIM to provide these the total advisory fees paid by numerous
invest- services included the Board's separately managed accounts/wrap accounts
consideration of AIM's portfolio and advised by an AIM affiliate. The Board
product review process, various noted that the Fund's rate generally was
above the rates for
(continued)
29
AIM Structured Growth Fund
the separately managed accounts/wrap whether AIM is financially sound and has ment of uninvested cash and cash
accounts. The Board considered that the resources necessary to perform its collateral from any securities lending
management of the separately managed obligations under the Fund's advisory arrangements in the affiliated money
accounts/wrap accounts by the AIM agreement, and concluded that AIM has the market funds is in the best interests of
affiliate involves different levels of financial resources necessary to fulfill the Fund and its shareholders.
services and different operational and these obligations.
regulatory requirements than AIM's II SUB-ADVISORY AGREEMENT
management of the Fund. The Board F. INDEPENDENT WRITTEN EVALUATION OF THE
concluded that these differences are FUND'S SENIOR OFFICER A. NATURE, EXTENT AND QUALITY OF SERVICES
appropriately reflected in the fee PROVIDED BY THE SUB-ADVISOR
structure for the Fund and the separately The Board noted that, upon their
managed accounts/wrap accounts. direction, the Senior Officer of the Fund, The Board reviewed the services provided
who is independent of AIM and AIM's by INVESCO Institutional (N.A.). Inc.
The Board noted that AIM has affiliates, had prepared an independent (the Sub-Advisor) under the Fund's
contractually agreed to waive fees and/or written evaluation to assist the Board in sub-advisory agreement, the performance
limit expenses of the Fund through at determining the reasonableness of the of the Sub-Advisor in providing these
least June 30, 2008 in an amount necessary proposed management fees of the AIM Funds, services, and the credentials and
to limit total annual operating expenses including the Fund. The Board noted that experience of the officers and employees
to a specified percentage of average daily they had relied upon the Senior Officer's of the Sub-Advisor who provide these
net assets for each class of the Fund. The written evaluation instead of a services. The Board concluded that the
Board considered the contractual nature of competitive bidding process. In nature, extent and quality of the
this fee waiver and noted that it remains determining whether to continue the Fund's services provided by the Sub-Advisor were
in effect until at least June 30, 2008. advisory agreement, the Board considered appropriate and that the Sub-Advisor
The Board reviewed the Fund's effective the Senior Officer's written evaluation. currently is providing satisfactory
advisory fee rate, after taking account of services in accordance with the terms of
this expense limitation, and considered G. COLLATERAL BENEFITS TO AIM AND ITS the Fund's sub-advisory agreement. In
the effect this expense limitation would AFFILIATES addition, based on their ongoing meetings
have on the Fund's estimated total throughout the year with the Fund's
expenses. The Board concluded that the The Board considered various other portfolio managers, the Board concluded
levels of fee waivers/expense limitations benefits received by AIM and its that these individuals are competent and
for the Fund were fair and reasonable. affiliates resulting from AIM's able to continue to carry out their
relationship with the Fund, including the responsibilities under the Fund's
After taking account of the Fund's fees received by AIM and its affiliates sub-advisory agreement.
contractual advisory fee rate, as well as for their provision of administrative,
the comparative advisory fee information transfer agency and distribution services B. FUND PERFORMANCE
and the expense limitation discussed to the Fund. The Board considered the
above, the Board concluded that the Fund's performance of AIM and its affiliates in The Board noted that the Fund has not
advisory fees were fair and reasonable. providing these services and the been in operation for a full calendar
organizational structure employed by AIM year. The Board also considered the steps
D. ECONOMIES OF SCALE AND BREAKPOINTS and its affiliates to provide these AIM has taken over the last several years
services. The Board also considered that to improve the quality and efficiency of
The Board considered the extent to which these services are provided to the Fund the services that AIM provides to the AIM
there are economies of scale in AIM's pursuant to written contracts which are Funds. The Board concluded that AIM
provision of advisory services to the reviewed and approved on an annual basis continues to be responsive to the Board's
Fund. The Board also considered whether by the Board. The Board concluded that AIM focus on fund performance.
the Fund benefits from such economies of and its affiliates were providing these
scale through contractual breakpoints in services in a satisfactory manner and in C. SUB-ADVISORY FEES
the Fund's advisory fee schedule or accordance with the terms of their
through advisory fee waivers or expense contracts, and were qualified to continue The Board compared the Fund's contractual
limitations. The Board noted that the to provide these services to the Fund. sub-advisory fee rate to the total
Fund's contractual advisory fee schedule advisory fees paid by numerous separately
includes seven breakpoints but that, due The Board considered the benefits managed accounts/wrap accounts
to the Fund's asset level at the end of realized by AIM as a result of portfolio sub-advised by the Sub-Advisor with
the past calendar year and the way in brokerage transactions executed through investment strategies comparable to those
which the breakpoints have been "soft dollar" arrangements. Under these of the Fund. The Board noted that the
structured, the Fund has yet to benefit arrangements, portfolio brokerage Fund's sub-advisory fee rate was
from the breakpoints. Based on this commissions paid by the Fund and/or other generally comparable to or below the
information, the Board concluded that the funds advised by AIM are used to pay for rates for the separately managed
Fund's advisory fees would reflect research and execution services. The Board accounts/wrap accounts. The Board
economies of scale at higher asset levels. noted that soft dollar arrangements shift considered the services to be provided by
The Board also noted that the Fund shares the payment obligation for the research the Sub-Advisor pursuant to the Fund's
directly in economies of scale through and executions services from AIM to the sub-advisory agreement and the services
lower fees charged by third party service funds and therefore may reduce AIM's to be provided by AIM pursuant to the
providers based on the combined size of expenses. The Board also noted that Fund's advisory agreement, as well as the
all of the AIM Funds and affiliates. research obtained through soft dollar allocation of fees between AIM and the
arrangements may be used by AIM in making Sub-Advisor pursuant to the sub-advisory
E. PROFITABILITY AND FINANCIAL RESOURCES investment decisions for the Fund and may agreement. The Board noted that the
OF AIM therefore benefit Fund shareholders. The sub-advisory fees have no direct effect
Board concluded that AIM's soft dollar on the Fund or its shareholders, as they
The Board reviewed information from AIM arrangements were appropriate. The Board are paid by AIM to the Sub-Advisor, and
concerning the costs of the advisory and also concluded that, based on their review that AIM and the Sub-Advisor are
other services that AIM and its affiliates and representations made by AIM, these affiliates. After taking account of the
provide to the Fund and the profitability arrangements were consistent with Fund's contractual sub-advisory fee rate,
of AIM and its affiliates in providing regulatory requirements. as well as the comparative fee
these services. The Board also reviewed information and the expense limitation
information concerning the financial The Board considered the fact that the discussed above, the Board concluded that
condition of AIM and its affiliates. The Fund's uninvested cash and cash collateral the Fund's sub-advisory fees were fair
Board also reviewed with AIM the from any securities lending arrangements and reasonable.
methodology used to prepare the may be invested in money market funds
profitability information. The Board advised by AIM pursuant to procedures D. FINANCIAL RESOURCES OF THE SUB-ADVISOR
considered the overall profitability of approved by the Board. The Board noted
AIM, as well as the profitability of AIM that AIM will receive advisory fees from The Board considered whether the
in connection with managing the Fund. The these affiliated money market funds Sub-Advisor is financially sound and has
Board noted that AIM continues to operate attributable to such investments, although the resources necessary to perform its
at a net profit, although increased AIM has contractually agreed to waive the obligations under the Fund's sub-advisory
expenses in recent years have reduced the advisory fees payable by the Fund with agreement, and concluded that the
profitability of AIM and its affiliates. respect to its investment of uninvested Sub-Advisor has the financial resources
The Board concluded that the Fund's cash in these affiliated money market necessary to fulfill these obligations.
advisory fees were fair and reasonable, funds through at least June 30, 2008. The
and that the level of profits realized by Board considered the contractual nature of
AIM and its affiliates from providing this fee waiver and noted that it remains
services to the Fund was not excessive in in effect until at least June 30, 2008.
light of the nature, quality and extent of The Board concluded that the Fund's
the services provided. The Board invest-
considered
30
AIM Structured Growth Fund
TAX INFORMATION
Form 1099-DIV, Form 1042-S and other year-end tax information provide
shareholders with actual calendar year amounts that should be included in their
tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the
Internal Revenue Code or to meet a specific state's requirement.
The Fund designates the following amounts or, if subsequently determined to be
different, the maximum amount allowable for its fiscal year ended August 31,
2007:
FEDERAL AND STATE INCOME TAX
<Table>
Long-Term Capital Gain Dividends $55,561
Qualified Dividend Income* 20.16%
Corporate Dividends Received Deduction* 20.08%
U.S. Treasury Obligations* 0.70%
</Table>
* The above percentages are based on ordinary income dividends paid to
shareholders during the Fund's fiscal year.
NON-RESIDENT ALIEN SHAREHOLDERS
<Table>
Qualified Short-Term Gains $51,594
Qualified Interest Income** 22.08%
</Table>
** The above percentage is based on income dividends paid to shareholders
during the Fund's fiscal year.
ADDITIONAL NON-RESIDENT ALIEN SHAREHOLDER INFORMATION
The percentages of qualifying assets not subject to the U.S. estate tax for the
fiscal quarters ended November 30, 2006, February 28, 2007, May 31, 2007 and
August 31, 2007 were 2.68%, 3.98%, 1.72%, and 1.63%, respectively.
DISTRIBUTION INFORMATION
Shareholders were sent a notice from the Fund that set forth an estimate of the
source or sources from which the distribution was paid in December of 2006.
Subsequently, this estimate has been corrected in part. Listed below is a
written statement of the sources of this distribution, as corrected, on a book
basis.
<Table>
<Caption>
GAIN FROM SALE RETURN OF TOTAL
NET INCOME OF SECURITIES PRINCIPAL DISTRIBUTION
---------- -------------- --------- ------------
12/15/06 Class A $0.0206 $0.0000 $ 0.0100 $ 0.0306
12/15/06 Class B $ 0.000 $0.0000 $ 0.0108 $ 0.0108
12/15/06 Class C $ 0.000 $0.0000 $ 0.0108 $ 0.0108
12/15/06 Class R $0.0033 $0.0000 $ 0.0100 $ 0.0133
12/15/06 Institutional Class $0.0313 $0.0000 $ 0.0101 $ 0.4140
</Table>
Please note that the information in the preceding chart is for book purposes
only. Shareholders should be aware that the tax treatment of distributions may
differ from their book treatment. The tax treatment of distributions was set
forth in a Form 1099-DIV for the 2006 calendar year. This information is being
provided to comply with certain SEC requirements.
31
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 77046-1173. Each
trustee oversees 105 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. Each officer serves for a one year term or until their
successors are elected and qualified. Column two below includes length of time
served with predecessor entities, if any.
<Table>
<Caption>
OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIP(S)
POSITION(S) HELD WITH THE OFFICER PRINCIPAL OCCUPATION(S) HELD BY
TRUST SINCE DURING PAST 5 YEARS TRUSTEE/ DIRECTOR
- -------------------------------------------------------------------------------------------------------------------------
Interested Persons
- -------------------------------------------------------------------------------------------------------------------------
Martin L. Flanagan(1) -- 1960 2007 Director, Chief Executive Officer and None
Trustee President, INVESCO PLC (parent of AIM
and a global investment management
firm); Chairman, A I M Advisors, Inc.
(registered investment advisor);
Director, Chairman, Chief Executive
Officer and President, IVZ Inc. (holding
company); INVESCO North American
Holdings, Inc. (holding company);
Chairman and President, INVESCO Group
Services, Inc. (service provider);
Trustee, The AIM Family of Funds(R);
Chairman, Investment Company Institute;
and Member of Executive Board, SMU Cox
School of Business
Formerly: President, Co-Chief Executive
Officer, Co-President, Chief Operating
Officer and Chief Financial Officer,
Franklin Resources, Inc. (global
investment management organization)
- -------------------------------------------------------------------------------------------------------------------------
Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None
Trustee, President and President, A I M Management Group Inc.
Principal (financial services holding company),
Executive Officer AIM Mutual Fund Dealer Inc. (registered
broker dealer), A I M Advisors, Inc.,
AIM Funds Management Inc. d/b/a INVESCO
Enterprise Services (registered
investment advisor and registered
transfer agent) and 1371 Preferred Inc.
(holding company); Director, Chairman,
Chief Executive Officer and President,
A I M Capital Management, Inc.
(registered investment advisor);
Director and President, INVESCO Funds
Group, Inc. (registered investment
advisor and register transfer agent) and
AIM GP Canada Inc. (general partner for
a limited partnership); Director, A I M
Distributors, Inc. (registered broker
dealer); Director and Chairman, AIM
Investment Services, Inc. (registered
transfer agent), Fund Management Company
(registered broker dealer) and INVESCO
Distributors, Inc. (registered broker
dealer); Director, President and
Chairman, IVZ Callco Inc. (holding
company); INVESCO Inc. (holding company)
and AIM Canada Holdings Inc. (holding
company); Director and Chief Executive
Officer, AIM Trimark Corporate Class
Inc. (formerly AIM Trimark Global Fund
Inc.) (corporate mutual fund company)
and AIM Trimark Canada Fund Inc.
(corporate mutual fund company);
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); 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); and Manager,
Powershares Capital Management LLC
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.; President, AIM
Trimark Global Fund Inc. and AIM Trimark
Canada Fund Inc.; and Director, Trimark
Trust (federally regulated Canadian
Trust Company)
- -------------------------------------------------------------------------------------------------------------------------
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); Reich & Tang Funds
(Chairman) (registered investment
company) (7 portfolios); Daily Income
Fund (4 portfolios), California Daily
Tax Free Income Fund, Inc., Connecticut
Daily Tax Free Income Fund, Inc. and New
Jersey Daily Municipal Fund, Inc.,
Annuity and Life Re (Holdings), Ltd.
(insurance company); and Homeowners of
America Holding Corporation (property
casualty company)
Formerly: Director, CompuDyne
Corporation (provider of product and
services to the public security market);
Director, President and Chief Executive
Officer, Volvo Group North America,
Inc.; Senior Vice President, AB Volvo;
Director of various affiliated Volvo
companies; and Director, Magellan
Insurance Company
- -------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 2003 Chief Executive Officer, Twenty First Administaff
Trustee Century Group, Inc. (government affairs
company); and Owner and Chief Executive
Officer, Dos Angelos Ranch, L.P.
(cattle, hunting, corporate
entertainment); and Discovery Global
Education Fund (non-profit)
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company)
- -------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Director, Reich & Tang Funds) (7
Trustee Naftalis and Frankel LLP 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 None
Trustee Formerly: Partner, Deloitte & Touche;
and Director, Mainstay VP Series Funds,
Inc. (25 portfolios)
- -------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Mr. Flanagan was appointed as Trustee of the Trust on February 24, 2007. Mr.
Flanagan is considered an interested person of the Trust because he is an
officer of the advisor to the Trust, and an officer and a director of
INVESCO 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.
32
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Structured Growth Fund
<Table>
<Caption>
OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIP(S)
POSITION(S) HELD WITH THE OFFICER PRINCIPAL OCCUPATION(S) HELD BY TRUSTEE/
TRUST SINCE DURING PAST 5 YEARS DIRECTOR
- -------------------------------------------------------------------------------------------------------------------------
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., A I M Advisors,
Inc. and A I M Capital Management, Inc.;
Director, Vice President and Secretary,
INVESCO Distributors, Inc.; Vice
President and Secretary, AIM Investment
Services, Inc. and Fund Management
Company; Senior Vice President and
Secretary, A I M Distributors, Inc.;
Director and Vice President, INVESCO
Funds Group Inc.; Senior Vice President,
Chief Legal Officer and Secretary of The
AIM Family of Funds--Registered
Trademark--; and Manager, Powershares
Capital Management LLC
Formerly: Vice President, A I M Capital
Management, Inc.; 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, INVESCO PLC; N/A
Vice President 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, INVESCO PLC; Director, INVESCO
Funds Group, Inc.; and Vice President of
The AIM Family of Funds--Registered
Trademark--
Formerly: Director, Senior Vice N/A
President, Secretary and General
Counsel, A I M Management Group Inc. and
A I M Advisors, Inc.; Senior Vice
President, A I M Distributors, Inc.;
Director, General Counsel and Vice
President, Fund Management Company; 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--;
Director and Vice President, INVESCO
Distributors, Inc.; Chief Executive
Officer and President, INVESCO Funds
Group, Inc.; and Senior Vice President
and General Counsel, Liberty Financial
Companies, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Sidney M. Dilgren -- 1961 2004 Vice President, A I M Advisors, Inc. and N/A
Vice President, Principal A I M Capital Management, Inc.; and Vice
Financial Officer and President, Treasurer and Principal
Treasurer Financial Officer of The AIM Family of
Funds--Registered Trademark--
Formerly: Fund Treasurer, A I M
Advisors, Inc.; Senior Vice President,
AIM Investment Services, Inc.; and Vice
President, A I M Distributors, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2003 Head of INVESCO's World Wide Fixed N/A
Vice President Income and Cash Management Group;
Director of Cash Management and Senior
Vice President, A I M Advisors, Inc. and
A I M Capital Management, Inc; Director
and President, Fund Management Company;
Vice President, The AIM Family of
Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust); and
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)
Formerly: Chief Cash Management Officer
and Managing Director, A I M Capital
Management, Inc.; Vice President, A I M
Advisors, Inc. and The AIM Family of
Funds--Registered Trademark-- (AIM
Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free
Investments Trust only)
- -------------------------------------------------------------------------------------------------------------------------
Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance N/A
Anti-Money Laundering Officer, A I M Advisors, Inc., A I M
Compliance Officer Capital Management, Inc., A I M
Distributors, Inc., AIM Investment
Services, Inc., AIM Private Asset
Management, Inc., Fund Management
Company and The AIM Family of
Funds--Registered Trademark--
Formerly: Manager of the Fraud
Prevention Department, AIM Investment
Services, Inc.
- -------------------------------------------------------------------------------------------------------------------------
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. and A I M Capital
Management, Inc.; Chief Compliance
Officer of The AIM Family of
Funds--Registered Trademark--, INVESCO
Global Asset Management (N.A.), Inc.,
(registered investment advisor), INVESCO
Institutional (N.A.), Inc., (registered
investment advisor), INVESCO Private
Capital Investments, Inc. (holding
company), INVESCO Private Capital, Inc.
(registered investment advisor) and
INVESCO Senior Secured Management, Inc.
(registered investment advisor); and
Vice President, A I M Distributors,
Inc., AIM Investment Services, Inc. and
Fund Management Company
Formerly: Vice President, A I M Capital
Management, Inc.; Global Head of Product
Development, AIG-Global Investment
Group, Inc.; and Chief Compliance
Officer and Deputy General Counsel,
AIG-SunAmerica Asset 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
Suite 100 11 Greenway Plaza Inc. LLP (N.A.), Inc.
Houston, TX Suite 100 11 Greenway Plaza 1201 Louisiana Street One Midtown Plaza
77046-1173 Houston, TX Suite 100 Suite 2900 1360 Peachtree Street,
77046-1173 Houston, TX Houston, TX N.E.
77046-1173 77002-5678 Suite 100
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, Kramer, Levin, Services, Inc. Trust
LLP Naftalis & Frankel P.O. Box 4739 Company
1735 Market Street, LLP Houston, TX 225 Franklin Street
51st Floor 1177 Avenue of the 77210-4739 Boston, MA 02110-2801
Philadelphia, PA Americas
19103-7599 New York, NY
10036-2714
</Table>
33
[EDELIVERY GO PAPERLESS
AIMINVESTMENTS.COM/EDELIVERY
GRAPHIC]
REGISTER FOR EDELIVERY FUND HOLDINGS AND PROXY VOTING INFORMATION
eDelivery is the process of receiving your fund The Fund provides a complete list of its holdings four times in each fiscal
and account information via e-mail. Once your year, at the quarter-ends. For the second and fourth quarters, the lists appear
quarterly statements, tax forms, fund reports, in the Fund's semiannual and annual reports to shareholders. For the first and
and prospectuses are available, we will send you third quarters, the Fund files the lists with the Securities and Exchange
an e-mail notification containing links to these Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is
documents. For security purposes, you will need available at AIMinvestments.com. From our home page, click on Products &
to log in to your account to view your statements Performance, then Mutual Funds, then Fund Overview. Select your Fund from the
and tax forms. drop-down menu and click on Complete Quarterly Holdings. Shareholders can also
look up the Fund's Forms N-Q on the SEC Web site at sec.gov. Copies of the
WHY SIGN UP? Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in
Washington, D.C. You can obtain information on the operation of the Public
Register for eDelivery to: Reference Room, including information about duplicating fee charges, by calling
202-942-8090 or 800-732-0330, or by electronic request at the following e-mail
o save your Fund the cost of printing and address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-09913 and
postage. 333-36074.
o reduce the amount of paper you receive. 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,
o gain access to your documents faster by not upon request, from our Client Services department at 800-959-4246 or on the
waiting for the mail. 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,
o view your documents online anytime at your sec.gov.
convenience.
Information regarding how the Fund voted proxies related to its portfolio
o save the documents to your personal computer securities during the 12 months ended June 30, 2007, is available at our Web
or print them out for your records. 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
HOW DO I SIGN UP? drop-down menu. The information is also available on the SEC Web site, sec.gov.
It's easy. Just follow these simple steps: If used after January 20, 2008, this report must be accompanied by a Fund
Performance & Commentary or by an AIM Quarterly Performance Review for the most
1. Log in to your account. recent quarter-end. Mutual funds and exchange-traded funds distributed by A I M
Distributors, Inc.
2. Click on the "Service Center" tab.
3. Select "Register for eDelivery" and complete
the consent process.
This AIM service is provided by AIM Investment
Services, Inc.
SGRO-AR-1 A I M Distributors, Inc.
[AIM INVESTMENTS LOGO]
--REGISTERED TRADEMARK--
AIM Structured Value Fund
Annual Report to Shareholders o August 31, 2007
[COVER GLOBE IMAGE]
DOMESTIC EQUITY
Large-Cap Value
Table of Contents
<Table>
Letters to Shareholders .................. 2
Performance Summary ...................... 4
Management Discussion .................... 4
Long-term Fund Performance ............... 6
Supplemental Information ................. 8
Schedule of Investments .................. 9
Financial Statements ..................... 12
Notes to Financial Statements ............ 15
Financial Highlights ..................... 22
Auditor's Report ......................... 27
Fund Expenses ............................ 28
Approval of Advisory Agreement ........... 29
Tax Information .......................... 31
Trustees and Officers .................... 32
</Table>
[AIM INVESTMENT SOLUTIONS]
[GRAPHIC] [GRAPHIC]
[DOMESTIC [FIXED
EQUITY] INCOME]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[TARGET [TARGET [DIVERSIFIED
RISK] MATURITY] PORTFOLIOS]
[GRAPHIC] [GRAPHIC]
[SECTOR [INTERNATIONAL/
EQUITY] GLOBAL EQUITY]
[AIM INVESTMENTS LOGO]
- --REGISTERED TRADEMARK--
AIM Structured Value Fund
Dear Shareholders of the AIM Family of Funds:
I'm pleased to provide you with this report, which includes a discussion of how your
[TAYLOR Fund was managed during the period under review, and what factors affected its
PHOTO] performance. The following pages contain important information that answers questions
you may have about your investment.
Philip Taylor
Despite a significant, albeit short-lived, stock market sell-off in late February
and early March--and a more severe stock market decline that began in July--major stock
market indexes in the United States and abroad generally performed well for the 12
months ended August 31, 2007. Reasons for their favorable performance included positive
economic growth, particularly overseas; strong corporate profits; and strong
merger-and-acquisition activity, among other factors.
In July, institutional investors on Wall Street as well as individual investors on
Main Street became concerned about growing delinquencies in the subprime mortgage
market. They worried that such delinquencies, together with higher interest rates,
might lead to a "credit crunch" that could reduce the availability of credit or
increase borrowing costs for individuals and corporations, thereby slowing the economy.
In an effort to ensure that the weak housing market and tight credit markets did not
affect the U.S. economy more generally, the U.S. Federal Reserve Board in September cut
its key federal funds target rate for the first time in more than four years.
At AIM Investments --REGISTERED TRADEMARK--, we know that market conditions
change--often suddenly and sometimes dramatically. We can help you deal with market
volatility by offering a broad range of mutual funds, including:
o Domestic, global and international equity funds
o Taxable and tax-exempt fixed-income funds
o Allocation portfolios, with risk/return characteristics to match your needs
o AIM Independence Funds--target-maturity funds that combine retail mutual funds and
PowerShares --REGISTERED TRADEMARK-- exchange-traded funds--with risk/return
characteristics that change as your target retirement date nears
We believe in the value of working with a trusted financial advisor. Your financial
advisor can recommend various AIM funds that, together, can create a portfolio that's
appropriate for your long-term investment goals and risk tolerance regardless of
prevailing short-term market conditions.
In conclusion
Bob Graham, my friend and colleague, recently announced his decision to step down as
vice chair of the AIM Funds board of directors. In 1976, Bob was one of three men who
co-founded AIM. In the three decades since, he has been instrumental in transforming
AIM from a small investment management firm into one of America's most respected mutual
fund companies--and, in 1997, into a global independent retail and institutional
investment manager.
In May, with shareholder approval, AIM Investments' parent company changed its name
from AMVESCAP PLC to INVESCO PLC, uniting our worldwide operations and global expertise
under one new name. While the name of our parent company may be new to you, I can
assure you that our commitment to excellent customer service remains unchanged. Our
highly trained, courteous client service representatives are eager to answer your
questions, provide you with product information or assist you with account
transactions. I encourage you to give us an opportunity to serve you by calling us at
800-959-4246.
All of us at AIM are committed to helping you achieve your financial goals. We work
every day to earn your trust, and we're grateful for the confidence you've placed in
us.
Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
President - AIM Funds
CEO, AIM Investments
October 17, 2007
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 mutual funds represented by AIM
Investments and the PowerShares Exchange-Traded Fund Trust.
2
AIM Structured Value Fund
Dear Fellow Shareholders:
In overseeing the management of the AIM family of funds on your behalf, your Board of
Trustees of the AIM Funds continues to focus on improved investment performance,
[CROCKETT reduced shareholder costs, and high ethical standards.
PHOTO]
Your Board welcomes two new members: Marty Flanagan, President and CEO of INVESCO,
Bruce L. Crockett AIM's parent company, and Phil Taylor, who was named CEO of AIM Investments
--REGISTERED TRADEMARK-- in April 2006. Robert Graham, who has given more than 30 years
of leadership to the company and the mutual fund industry since founding AIM in 1976,
has retired, stepping down in the process from his most recent role as vice chairman of
the Board. We thank Bob for his many contributions and wish him a long and happy
future.
Our review of fund performance has shown healthy progress, but the process is
necessarily one of continuous improvement. In general, as of June 30, 2007, we have
seen persistent investment discipline and more consistently good results. While this
statement may not apply to every AIM Fund all the time, as I write this letter, the
overall trend in fund management and performance has been positive.
The investment management talent at AIM has recently been enhanced by the promotion
of Karen Dunn Kelley to Head of INVESCO's Worldwide Fixed Income as well as Director of
AIM Global and Cash Management, with responsibility for all fixed income and money
market funds that serve both institutional and individual investors. Under Karen's
direction, AIM's cash management organization grew to one of the world's largest and
most respected, with top-tier performance. The operations now combined under her charge
represent more than $160 billion in assets, 120 investment professionals, and products
that span the entire yield curve (as of August 31, 2007).
In other news, your Board took a more active role in preparing for "proxy season,"
the period when fund managers must vote the shares held by their funds "for" or
"against" various proposals on the ballots of the issuing companies. Beginning in the
2007 proxy season, AIM implemented new proxy voting policies, developed by management
in conjunction with an ad hoc Board committee, which provided a solid framework for
properly evaluating and executing the many decisions the AIM Funds are required to make
to vote shares.
In general, the AIM Funds voted for proposals that would allow shareholders a
greater role in election of directors, proxy access and "say for pay." The AIM Funds
voted against directors who AIM believed failed to govern well in cases of corporate
mismanagement, such as the backdating of options grants, and against "poison pill" and
"take under" proposals that would favor the financial interests of managers at the
expense of investors in the case of a merger or acquisition. You can view the proxy
votes cast for your fund by going to AIMinvestments.com. Click the "About Us" tab, then
go to "Required Notices" and "Proxy Voting Activity."
Additionally, your Board raised the amount its members are recommended to invest in
the AIM Funds within three years of joining the Board, with the goal of aligning our
interests even more closely with yours.
Furthermore, at our June meeting we renewed the investment advisory contracts
between the AIM Funds and AIM for another year, applying the same rigorous evaluation
process that was enhanced and formalized in 2005. For more information on this process,
please visit AIMinvestments.com. Click on the "Products and Performance" tab and go to
"Investment Advisory Agreement Renewals."
Your Board's ability to best represent your interests depends on our knowledge of
your opinions and concerns. Please send me an email (bruce@brucecrockett.com) with your
thoughts on the following:
1) How important is it to you to hear about your Board's decisions and activities in
these letters?
2) What other information (on overall performance, specific funds, managers, etc.)
would make the letters more meaningful to you?
3) Would you prefer that communication from your Board continue to be delivered in
paper form by regular mail or be sent electronically by email?
If you would prefer to communicate through a quick online survey, please go to
AIMinvestments.com and provide your responses there.
We need to hear from you to do our best job, and I look forward to your responses.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board of Directors
October 17, 2007
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 mutual funds represented by AIM
Investments and the PowerShares Exchange-Traded Fund Trust.
3
AIM Structured Value Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
======================================================================================= momentum, price trend, management action
PERFORMANCE SUMMARY and relative valuation. The sum of the
scores from these four factors makes up
For the fiscal year ended August 31, 2007, AIM Structured Value Fund our alpha (excess return) forecast,
underperformed its broad market and style-specific benchmarks.@ Underperformance relative to the average stock in the
was primarily the result of our decision to not own certain stocks that were universe. Stocks are also evaluated on a
large contributors to the index's return. multitude of other factors to develop a
stock-specific risk forecast and
Your Fund's long-term performance appears later in this report. transaction cost forecast.
FUND VS. INDEXES We then incorporate the alpha
forecast, risk forecast and transaction
Total returns, 8/31/06-8/31/07, excluding applicable sales charges. If sales cost forecast-- using an optimizer (a
charges were included, returns would be lower. software system)-- to build a portfolio
that we believe is an optimal balance of
Class A Shares 9.80% the stocks' potential return and risk.
Class B Shares 9.11 This portfolio is constructed according to
Class C Shares 9.01 certain constraints to increase the
Class R Shares 9.65 probability that the Fund's relative
S&P 500 Index@ (Broad Market Index) 15.13 performance and volatility remain within
Russell 1000 Value Index@ (Style-Specific Index) 12.85 the Fund strategy's guidelines. The
Lipper Large-Cap Value Funds Index@ (Peer Group Index) 14.09 portfolio is continually monitored by the
Fund management team. The overall
SOURCE: @LIPPER INC. investment process is repeated on a
monthly basis to determine which companies
======================================================================================= should be bought or sold.
How we invest o Universe Development Market conditions and your Fund
We manage your Fund to provide exposure to o Stock Rankings Over the fiscal year ended August 31,
large cap value stocks. We seek to 2007, the U.S. stock market delivered
outperform the Russell 1000 Value Index o Risk Assessment strong double-digit returns despite
while minimizing the amount of additional concerns about subprime mortgages and a
risk relative to the benchmark. The Fund o Portfolio Construction weakening housing market. However, as the
can be used as a long-term allocation to reporting period drew to a close, we saw a
large cap stocks that compliments other o Trading series of generally positive economic
style-specific strategies within a developments and were encouraged by signs
diversified asset allocation strategy. While the companies included within of continued economic strength and
the Russell 1000 Value Index are used as a
The investment process integrates the general guide for developing the Fund's (continued)
following key steps: investable universe, non-benchmark stocks
may also be considered. In our stock
selection model, each stock in the
universe is evaluated on four factors:
company earnings
========================================== ========================================== ==========================================
PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS*
By sector 1. Other Diversified 1. Exxon Mobil Corp. 7.1%
Financials 34.2% Financial Services 11.2% 2. General Electric Co. 4.7
Energy 15.1 2. Integrated Oil & Gas 10.0 3. Bank of America Corp. 3.9
Health Care 8.6 3. Integrated 4. Citigroup Inc. 3.8
Consumer Discretionary 8.3 Telecommunication 5. JPMorgan Chase & Co. 3.5
Industrials 7.2 Services 6.8 6. Pfizer Inc. 3.4
Telecommunication Services 6.8 4. Pharmaceuticals 6.6 7. American International
Consumer Staples 6.0 5. Investment Banking & Group, Inc. 3.2
Information Technology 4.6 Brokerage 5.9 8. Verizon Communications Inc. 3.2
Utilities 3.8 Total Net Assets $137.83 million 9. Altria Group, Inc. 2.3
Materials 3.7 Total Number of Holdings* 109 10. Morgan Stanley 2.2
U.S. Treasury Bill,
Money Market Funds
Plus Other Assets Less
Liabilities 1.7
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.
========================================== ========================================== ==========================================
4
AIM Structured Value Fund
positive performance across most market detractor from relative performance came Jeremy S. Lefkowitz
capitalizations and sectors. from not owning certain benchmark stocks
which performed well during the fiscal Portfolio manager, is lead manager of AIM
Gross domestic product (GDP), a year. These stocks included Wachovia, US Structured Value Fund. He began his
measure of economic growth, increased at a Bancorp and TimeWarner. Stocks we investment career in 1968 and has been
healthy annualized rate of 3.8% in the overweighted, such as FRONTIER OIL, TESORO associated with INVESCO Institutional
second quarter of 2007.(1) This was a and U.S. STEEL, contributed positively to and/or its affiliates since 1982. Mr.
significant increase over the first Fund performance. Our strategy emphasized Lefkowitz earned a B.S. in industrial
quarter of 2007 when GDP grew at an stocks we believed possessed strong engineering and an M.B.A. in finance from
annualized rate of just 0.6%.(1) Much of earnings growth, positive price trends and Columbia University.
the growth in the second quarter was reasonable valuations.
driven by an increase in net exports and Daniel A. Kostyk
higher defense spending. In terms of risk management, we seek
to minimize any style biases in the Chartered Financial Analyst, portfolio
Inflation, as measured by the portfolio. Active managers typically add manager, is manager of AIM Structured
Consumer Price Index, rose at an value in one of or a combination of four Value Fund. He has been associated with
annualized rate of 4.5% during the first areas: beta bias (relative volatility), INVESCO Institutional and/or its
seven months of 2007 compared to 2.5% for style bias, sector/industry over/under affiliates since 1995. Mr. Kostyk earned a
all of 2006.(2) This increase was largely weight and stock selection. We attempt to B.S. in mechanical engineering from
due to energy costs, which rose by an add value through our stock selection Northwestern University in Chicago.
annualized rate of 21.3% during the first decisions. Consequently, our risk
seven months of 2007.(2) This was a management process seeks to neutralize the Anthony J. Munchak
reversal from 2006, when energy costs Fund's exposure relative to the benchmark
actually declined during the second half with regard to beta, style and Chartered Financial Analyst, portfolio
of the year and were up only 2.9% for all sector/industry exposures. manager, is manager of AIM Structured
of 2006.(2) Value Fund. He has been associated with
We thank you for your continued INVESCO Institutional and/or its
It is important to understand our investment in AIM Structured Value Fund. affiliates since 2000. Mr. Munchak earned
investment process to better evaluate the a B.S. and an M.S. from Boston College. He
drivers of our relative performance versus Sources: (1)Bureau of Economic Analysis, also earned an M.B.A from Bentley College.
the style-specific benchmark. We generally (2)Bureau of Labor Statistics
evaluate performance based on the impact Glen E. Murphy
of our stock selection and risk management THE VIEWS AND OPINIONS EXPRESSED IN
processes. MANAGEMENT'S DISCUSSION OF FUND Chartered Financial Analyst, portfolio
PERFORMANCE ARE THOSE OF A I M ADVISORS, manager, is manager of AIM Structured
Our stock selection model, based on INC. THESE VIEWS AND OPINIONS ARE SUBJECT Value Fund. He has been associated with
the four factors (company earnings TO CHANGE AT ANY TIME BASED ON FACTORS INVESCO Institutional and/or its
momentum, price trend, management action SUCH AS MARKET AND ECONOMIC CONDITIONS. affiliates since 1995. Mr. Murphy earned a
and relative value) making up our alpha THESE VIEWS AND OPINIONS MAY NOT BE RELIED B.B.A. from the University of
(excess return) forecast for stocks in our UPON AS INVESTMENT ADVICE OR Massachusetts and an M.S. in finance from
investment universe, was a positive RECOMMENDATIONS, OR AS AN OFFER FOR A Boston College.
contributor to Fund performance. PARTICULAR SECURITY. THE INFORMATION IS
NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF Francis M. Orlando
In selecting holdings for the Fund, ANY MARKET, COUNTRY, INDUSTRY, SECURITY OR
we also take into account our risk and THE FUND. STATEMENTS OF FACT ARE FROM Chartered Financial Analyst, portfolio
transaction cost forecasts. We use our SOURCES CONSIDERED RELIABLE, BUT A I M manager, is manager of AIM Structured
software system optimizer to assist in ADVISORS, INC. MAKES NO REPRESENTATION OR Value Fund. He has been associated with
making investment decisions, based on risk WARRANTY AS TO THEIR COMPLETENESS OR INVESCO Institutional and/or its
and transaction cost forecasts as well as ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE affiliates since 1987. Mr. Orlando earned
our alpha forecast. Consequently, while IS NO GUARANTEE OF FUTURE RESULTS, THESE a B.B.A. from Merrimack College and an
our stock selection model may identify a INSIGHTS MAY HELP YOU UNDERSTAND OUR M.B.A. from Boston College.
stock with an attractive alpha forecast, INVESTMENT MANAGEMENT PHILOSOPHY.
The optimizer may indicate that its Assisted by the U.S. Structured Products
transaction costs are too high and/or its See important Fund and index disclosures Group Research Team
risk level is unacceptable. Placing more later in this report.
of an emphasis on transaction costs and
potential risk in making stock selections
can benefit or detract from Fund
performance. For the fiscal year, it
detracted from our results.
Stock selection within the portfolio
was weak for the fiscal year primarily as
the result of the optimization process.
The largest
5
AIM Structured Value Fund
YOUR FUND'S LONG-TERM PERFORMANCE
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND AND INDEX DATA FROM 3/31/06
AIM STRUCTURED AIM STRUCTURED AIM STRUCTURED AIM STRUCTURED
VALUE FUND-CLASS VALUE FUND-CLASS VALUE FUND-CLASS VALUE FUND-CLASS RUSSELL 1000 S&P LIPPER LARGE-CAP
DATE A SHARES B SHARES C SHARES R SHARES VALUE INDEX(1) 500 INDEX(1) VALUE FUNDS INDEX(1)
3/31/06 $ 9450 $10000 $10000 $10000 $10000 $10000 $10000
4/06 9639 10190 10190 10200 10254 10134 10249
5/06 9318 9850 9850 9860 9995 9843 9998
6/06 9441 9970 9970 9981 10059 9856 10005
7/06 9724 10260 10260 10281 10304 9917 10158
8/06 9866 10399 10399 10421 10476 10152 10346
9/06 10027 10569 10569 10601 10685 10414 10586
10/06 10377 10929 10929 10971 11035 10753 10902
11/06 10614 11180 11180 11221 11286 10957 11090
12/06 10748 11307 11307 11347 11540 11111 11329
1/07 11015 11588 11577 11628 11687 11279 11475
2/07 10740 11287 11287 11338 11505 11059 11270
3/07 10987 11538 11537 11598 11683 11182 11414
4/07 11385 11949 11948 12010 12115 11677 11903
5/07 11746 12319 12318 12392 12552 12084 12341
6/07 11338 11889 11879 11961 12258 11884 12153
7/07 10711 11219 11218 11298 11692 11516 11665
8/07 10835 10947 11337 11425 11823 11688 11803
SOURCES: (1) LIPPER INC.
Past performance cannot guarantee charges. Index results include reinvested
comparable future results. dividends, but they do not reflect sales
charges. Performance of an index of funds
The data shown in the chart include reflects fund expenses and management
reinvested distributions, applicable sales fees; performance of a market index does
charges, Fund expenses and management not. Performance shown in the chart and
fees. Results for Class B shares are table(s) does not reflect deduction of
calculated as if a hypothetical taxes a shareholder would pay on Fund
shareholder had liquidated his entire distributions or sale of Fund shares.
investment in the Fund at the close of the Performance of the indexes does not
reporting period and paid the applicable reflect the effects of taxes.
contingent deferred sales
6
AIM Structured Value Fund
========================================== ==========================================
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
As of 8/31/07, including applicable sales As of 6/30/07, the most recent calendar
charges quarter-end, including applicable sales
charges
CLASS A SHARES
Inception (3/31/06) 5.81% CLASS A SHARES
1 Year 3.74 Inception (3/31/06) 10.58%
1 Year 13.49
CLASS B SHARES
Inception (3/31/06) 6.58% CLASS B SHARES
1 Year 4.11 Inception (3/31/06) 11.74%
1 Year 14.23
CLASS C SHARES
Inception (3/31/06) 9.25% CLASS C SHARES
1 Year 8.01 Inception (3/31/06) 14.77%
1 Year 18.13
CLASS R SHARES
Inception (3/31/06) 9.84% CLASS R SHARES
1 Year 9.65 Inception (3/31/06) 15.38%
========================================== 1 Year 19.82
==========================================
THE PERFORMANCE DATA QUOTED REPRESENT PAST
PERFORMANCE AND CANNOT GUARANTEE CONTINGENT DEFERRED SALES CHARGE (CDSC)
COMPARABLE FUTURE RESULTS; CURRENT FOR THE PERIOD INVOLVED. THE CDSC ON CLASS
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE B SHARES DECLINES FROM 5% BEGINNING AT THE
VISIT AIMINVESTMENTS.COM FOR THE MOST TIME OF PURCHASE TO 0% AT THE BEGINNING OF
RECENT MONTH-END PERFORMANCE. PERFORMANCE THE SEVENTH YEAR. THE CDSC ON CLASS C
FIGURES REFLECT REINVESTED DISTRIBUTIONS, SHARES IS 1% FOR THE FIRST YEAR AFTER
CHANGES IN NET ASSET VALUE AND THE EFFECT PURCHASE. CLASS R SHARES DO NOT HAVE A
OF THE MAXIMUM SALES CHARGE UNLESS FRONT-END SALES CHARGE; RETURNS SHOWN ARE
OTHERWISE STATED. INVESTMENT RETURN AND AT NET ASSET VALUE AND DO NOT REFLECT A
PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU 0.75% CDSC THAT MAY BE IMPOSED ON A TOTAL
MAY HAVE A GAIN OR LOSS WHEN YOU SELL REDEMPTION OF RETIREMENT PLAN ASSETS
SHARES. WITHIN THE FIRST YEAR.
THE NET ANNUAL FUND OPERATING EXPENSE THE PERFORMANCE OF THE FUND'S SHARE
RATIO SET FORTH IN THE MOST RECENT FUND CLASSES WILL DIFFER PRIMARILY DUE TO
PROSPECTUS AS OF THE DATE OF THIS REPORT DIFFERENT SALES CHARGE STRUCTURES AND
FOR CLASS A, CLASS B, CLASS C AND CLASS R CLASS EXPENSES.
SHARES WAS 1.00%, 1.75%, 1.75% AND 1.25%,
RESPECTIVELY.(1) THE TOTAL ANNUAL FUND HAD THE ADVISOR NOT WAIVED FEES AND/OR
OPERATING EXPENSE RATIO SET FORTH IN THE REIMBURSED EXPENSES, PERFORMANCE WOULD
MOST RECENT FUND PROSPECTUS AS OF THE DATE HAVE BEEN LOWER.
OF THIS REPORT FOR CLASS A, CLASS B, CLASS
C AND CLASS R SHARES WAS 1.90%, 2.65%, (1) Total annual operating expenses less
2.65% AND 2.15%, RESPECTIVELY. THE EXPENSE any contractual fee waivers and/or
RATIOS PRESENTED ABOVE MAY VARY FROM THE expense reimbursements by the advisor
EXPENSE RATIOS PRESENTED IN OTHER SECTIONS in effect through at least June 30,
OF THIS REPORT THAT ARE BASED ON EXPENSES 2008. See current prospectus for more
INCURRED DURING THE PERIOD COVERED BY THIS information.
REPORT.
==========================================
CLASS A SHARE PERFORMANCE REFLECTS THE FOR A DISCUSSION OF THE RISKS OF INVESTING
MAXIMUM 5.50% SALES CHARGE, AND CLASS B IN YOUR FUND AND INDEXES USED IN THIS
AND CLASS C SHARE PERFORMANCE REFLECTS THE REPORT, PLEASE TURN THE PAGE.
APPLICABLE ==========================================
7
AIM Structured Value Fund
AIM STRUCTURED VALUE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL.
o Unless otherwise stated, information presented in this report is as of August 31, 2007, and is based on total net assets.
o Unless otherwise noted, all data in this report are from A I M Management Group Inc.
About share classes o The Fund may use enhanced investment o The Fund is not managed to track the
techniques such as leveraging and performance of any particular index,
o Class B shares are not available as an derivatives. Leveraging entails risks such including the indexes defined here, and
investment for retirement plans maintained as magnifying changes in the value of the consequently, the performance of the Fund
pursuant to Section 401 of the Internal portfolio's securities. Derivatives are may deviate significantly from the
Revenue Code, including 401(k) plans, subject to counterparty risk--the risk performance of the index.
money purchase pension plans and profit that the other party will not complete the
sharing plans, except for plans that have transaction with the Fund. o A direct investment cannot be made in an
existing accounts invested in Class B index. Unless otherwise indicated, index
shares. o There is no guarantee that the results include reinvested dividends, and
investment techniques and risk analyses they do not reflect sales charges.
o Class R shares are available only to used by the Fund's portfolio managers will Performance of an index of funds reflects
certain retirement plans. Please see the produce the desired results. fund expenses; performance of a market
prospectus for more information. index does not.
o The prices of securities held by the
Principal risks of investing in the Fund Fund may decline in response to market Other information
risks.
o Credit risk is the risk of loss on an o The returns shown in the management's
investment due to the deterioration of an o The Fund invests in "value" stocks, discussion of Fund performance are based
issuer's financial health. Such a which can continue to be inexpensive for on net asset values calculated for
deterioration of financial health may long periods of time and may never realize shareholder transactions. Generally
result in a reduction of the credit rating their full value. accepted accounting principles require
of the issuer's securities and may lead to adjustments to be made to the net assets
the issuer's inability to honor its About indexes used in this report of the Fund at period end for financial
contractual obligations, including making reporting purposes, and as such, the net
timely payment of interest and principal. o The S&P 500--REGISTERED TRADEMARK-- asset values for shareholder transactions
Index is a market capitalization-weighted and the returns based on those net asset
o Prices of equity securities change in index covering all major areas of the U.S. values may differ from the net asset
response to many factors including the economy. It is not the 500 largest values and returns reported in the
historical and prospective earnings of the companies, but rather the most widely held Financial Highlights.
issuer, the value of its assets, general 500 companies chosen with respect to
economic conditions, interest rates, market size, liquidity, and their o Industry classifications used in this
investor perceptions and market liquidity. industry. report are generally according to the
Global Industry Classification Standard,
o Foreign securities have additional o The Russell 1000--REGISTERED TRADEMARK-- which was developed by and is the
risks, including exchange rate changes, Value Index measures the performance of exclusive property and a service mark of
political and economic upheaval, the those Russell 1000 companies with lower Morgan Stanley Capital International Inc.
relative lack of information, relatively price-to-book ratios and lower forecasted and Standard & Poor's.
low market liquidity, and the potential growth values. The Russell
lack of strict financial and accounting 1000--REGISTERED TRADEMARK-- Value Index o The Chartered Financial
controls and standards. is a trademark/ service mark of the Frank Analyst--REGISTERED TRADEMARK--
Russell Company. Russell--REGISTERED (CFA--REGISTERED TRADEMARK--) designation
o Interest rate risk refers to the risk TRADEMARK-- is a trademark of the Frank is a globally recognized standard for
that bond prices generally fall as Russell Company. measuring the competence and integrity of
interest rates rise; conversely, bond investment professionals.
prices generally rise as interest rates o The Lipper Large-Cap Value Funds Index
fall. is an equally weighted representation of
the largest funds in the Lipper Large-Cap
Value Funds category. These funds
typically have a below-average
price-to-earnings ratio, price-to-book
ratio, and three-year sales-per-share
growth value, compared to the S&P 500
Index.
================================================================================ ==========================================
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
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class R Shares ASRVX
AIMINVESTMENTS.COM ==========================================
8
AIM Structured Value Fund
SCHEDULE OF INVESTMENTS(A)
August 31, 2007
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-98.21%
ADVERTISING-0.14%
Omnicom Group Inc. 3,800 $ 193,534
========================================================================
APPAREL RETAIL-0.37%
American Eagle Outfitters, Inc. 20,000 516,600
========================================================================
APPLICATION SOFTWARE-0.08%
Compuware Corp.(b) 13,500 109,485
========================================================================
AUTOMOBILE MANUFACTURERS-0.45%
General Motors Corp. 20,300 624,022
========================================================================
AUTOMOTIVE RETAIL-0.35%
AutoZone, Inc.(b)(c) 4,000 485,160
========================================================================
BROADCASTING & CABLE TV-0.27%
CBS Corp.-Class B 11,900 374,969
========================================================================
COMMERCIAL PRINTING-0.39%
Deluxe Corp. 14,000 532,280
========================================================================
COMMUNICATIONS EQUIPMENT-0.56%
Juniper Networks, Inc.(b) 23,400 770,328
========================================================================
COMPUTER & ELECTRONICS RETAIL-1.47%
RadioShack Corp.(c) 85,500 2,032,335
========================================================================
COMPUTER HARDWARE-1.82%
Hewlett-Packard Co. 50,800 2,506,980
========================================================================
COMPUTER STORAGE & PERIPHERALS-0.35%
Emulex Corp.(b) 24,800 484,592
========================================================================
CONSTRUCTION & FARM MACHINERY & HEAVY
TRUCKS-1.97%
AGCO Corp.(b) 32,500 1,404,000
- ------------------------------------------------------------------------
Terex Corp.(b) 16,400 1,310,032
========================================================================
2,714,032
========================================================================
CONSUMER FINANCE-0.56%
Discover Financial Services(b) 17,500 404,950
- ------------------------------------------------------------------------
First Marblehead Corp. (The)(c) 10,800 361,692
========================================================================
766,642
========================================================================
DATA PROCESSING & OUTSOURCED SERVICES-0.54%
Broadridge Financial Solutions Inc. 10,400 188,968
- ------------------------------------------------------------------------
CSG Systems International, Inc.(b) 3,600 83,232
- ------------------------------------------------------------------------
Electronic Data Systems Corp. 20,900 478,401
========================================================================
750,601
========================================================================
DEPARTMENT STORES-0.34%
Kohl's Corp.(b) 7,800 462,540
========================================================================
</Table>
<Table>
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
DIVERSIFIED BANKS-0.75%
Wells Fargo & Co. 28,400 $ 1,037,736
========================================================================
DIVERSIFIED METALS & MINING-0.44%
Southern Copper Corp.(c) 5,800 610,450
========================================================================
EDUCATION SERVICES-0.05%
ITT Educational Services, Inc.(b) 600 65,880
========================================================================
ELECTRIC UTILITIES-1.54%
American Electric Power Co., Inc. 39,400 1,752,512
- ------------------------------------------------------------------------
Progress Energy, Inc. 3,000 137,640
- ------------------------------------------------------------------------
Reliant Energy Inc.(b) 9,000 229,590
========================================================================
2,119,742
========================================================================
ELECTRONIC MANUFACTURING SERVICES-0.36%
Tyco Electronics Ltd.(b) 14,400 502,128
========================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-0.28%
Mosaic Co. (The)(b) 9,100 382,382
========================================================================
FOOD RETAIL-0.13%
Safeway Inc. 5,600 177,688
========================================================================
FOOTWEAR-0.37%
NIKE, Inc.-Class B 9,100 512,694
========================================================================
GENERAL MERCHANDISE STORES-0.50%
Big Lots, Inc.(b)(c) 20,400 607,308
- ------------------------------------------------------------------------
Dollar Tree Stores, Inc.(b) 2,000 86,900
========================================================================
694,208
========================================================================
HEALTH CARE DISTRIBUTORS-0.94%
AmerisourceBergen Corp. 22,500 1,076,625
- ------------------------------------------------------------------------
PharMerica Corp.(b) 12,200 216,314
========================================================================
1,292,939
========================================================================
HEALTH CARE EQUIPMENT-0.41%
Covidien Ltd.(b) 14,100 561,603
========================================================================
HOME FURNISHINGS-0.36%
Tempur-Pedic International Inc.(c) 17,200 497,080
========================================================================
HOUSEHOLD PRODUCTS-0.18%
Procter & Gamble Co. (The) 3,700 241,647
========================================================================
HOUSEWARES & SPECIALTIES-0.76%
Newell Rubbermaid Inc. 40,400 1,041,916
========================================================================
INDEPENDENT POWER PRODUCERS & ENERGY
TRADERS-0.04%
Dynegy Inc.-Class A(b) 7,400 59,866
========================================================================
INDUSTRIAL CONGLOMERATES-4.75%
General Electric Co. 168,400 6,545,708
========================================================================
</Table>
9
AIM Structured Value Fund
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------
INDUSTRIAL MACHINERY-0.08%
SPX Corp. 1,200 $ 108,060
========================================================================
INDUSTRIAL REIT'S-1.10%
ProLogis 25,100 1,510,016
========================================================================
INTEGRATED OIL & GAS-9.99%
Chevron Corp. 17,600 1,544,576
- ------------------------------------------------------------------------
ConocoPhillips 4,300 352,127
- ------------------------------------------------------------------------
ExxonMobil Corp. 113,800 9,756,074
- ------------------------------------------------------------------------
Marathon Oil Corp. 39,200 2,112,488
========================================================================
13,765,265
========================================================================
INTEGRATED TELECOMMUNICATION SERVICES-6.77%
AT&T Inc. 65,500 2,611,485
- ------------------------------------------------------------------------
Qwest Communications International Inc.(c) 260,400 2,330,580
- ------------------------------------------------------------------------
Verizon Communications Inc. 104,700 4,384,836
========================================================================
9,326,901
========================================================================
INTERNET RETAIL-0.09%
IAC/InterActiveCorp(b) 4,400 122,276
========================================================================
INVESTMENT BANKING & BROKERAGE-5.85%
Goldman Sachs Group, Inc. (The) 13,400 2,358,534
- ------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 36,800 2,712,160
- ------------------------------------------------------------------------
Morgan Stanley 48,000 2,993,760
========================================================================
8,064,454
========================================================================
LEISURE PRODUCTS-2.22%
Hasbro, Inc. 40,200 1,134,042
- ------------------------------------------------------------------------
Mattel, Inc. 89,200 1,929,396
========================================================================
3,063,438
========================================================================
MANAGED HEALTH CARE-0.67%
Magellan Health Services, Inc.(b)(c) 7,400 300,440
- ------------------------------------------------------------------------
WellCare Health Plans Inc.(b) 6,300 621,810
========================================================================
922,250
========================================================================
METAL & GLASS CONTAINERS-0.31%
Pactiv Corp.(b) 14,600 427,050
========================================================================
MOVIES & ENTERTAINMENT-0.58%
Marvel Entertainment, Inc.(b)(c) 17,400 393,240
- ------------------------------------------------------------------------
Walt Disney Co. (The) 12,000 403,200
========================================================================
796,440
========================================================================
MULTI-LINE INSURANCE-4.23%
American International Group, Inc. 67,600 4,461,600
- ------------------------------------------------------------------------
Loews Corp. 29,100 1,367,991
========================================================================
5,829,591
========================================================================
</Table>
<Table>
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
MULTI-UTILITIES-2.19%
CenterPoint Energy, Inc. 14,000 $ 227,080
- ------------------------------------------------------------------------
PG&E Corp.(c) 30,700 1,366,150
- ------------------------------------------------------------------------
Xcel Energy, Inc. 69,300 1,428,273
========================================================================
3,021,503
========================================================================
OFFICE ELECTRONICS-0.45%
Xerox Corp. 36,600 626,958
========================================================================
OFFICE REIT'S-0.08%
Duke Realty Corp.(c) 3,300 111,507
========================================================================
OIL & GAS REFINING & MARKETING-5.15%
Frontier Oil Corp. 60,700 2,490,521
- ------------------------------------------------------------------------
Holly Corp. 8,800 586,520
- ------------------------------------------------------------------------
Tesoro Corp. 44,900 2,214,917
- ------------------------------------------------------------------------
Western Refining, Inc.(c) 34,800 1,804,032
========================================================================
7,095,990
========================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-11.16%
Bank of America Corp. 105,200 5,331,536
- ------------------------------------------------------------------------
Citigroup Inc. 112,700 5,283,376
- ------------------------------------------------------------------------
JPMorgan Chase & Co. 107,200 4,772,544
========================================================================
15,387,456
========================================================================
PACKAGED FOODS & MEATS-0.06%
General Mills, Inc. 1,400 78,232
========================================================================
PAPER PRODUCTS-0.07%
International Paper Co.(c) 2,700 94,797
========================================================================
PERSONAL PRODUCTS-0.27%
NBTY, Inc.(b) 10,200 374,340
========================================================================
PHARMACEUTICALS-6.59%
Forest Laboratories, Inc.(b) 11,700 440,271
- ------------------------------------------------------------------------
Johnson & Johnson 1,100 67,969
- ------------------------------------------------------------------------
King Pharmaceuticals, Inc.(b) 62,400 937,872
- ------------------------------------------------------------------------
Merck & Co. Inc. 59,100 2,965,047
- ------------------------------------------------------------------------
Pfizer Inc. 187,800 4,664,952
========================================================================
9,076,111
========================================================================
PROPERTY & CASUALTY INSURANCE-5.60%
Allstate Corp. (The) 45,400 2,485,650
- ------------------------------------------------------------------------
Chubb Corp. (The) 23,200 1,186,216
- ------------------------------------------------------------------------
CNA Financial Corp. 2,900 121,684
- ------------------------------------------------------------------------
SAFECO Corp. 15,800 916,716
- ------------------------------------------------------------------------
Travelers Cos., Inc. (The) 51,800 2,617,972
- ------------------------------------------------------------------------
XL Capital Ltd.-Class A 5,200 396,240
========================================================================
7,724,478
========================================================================
REINSURANCE-0.10%
Odyssey Re Holdings Corp.(c) 3,700 134,014
========================================================================
</Table>
10
AIM Structured Value Fund
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------
RETAIL REIT'S-3.50%
General Growth Properties, Inc.(c) 12,200 $ 606,462
- ------------------------------------------------------------------------
Kimco Realty Corp.(c) 40,400 1,729,928
- ------------------------------------------------------------------------
Realty Income Corp. 2,300 62,100
- ------------------------------------------------------------------------
Regency Centers Corp.(c) 1,400 97,258
- ------------------------------------------------------------------------
Simon Property Group, Inc. 24,600 2,335,032
========================================================================
4,830,780
========================================================================
SEMICONDUCTOR EQUIPMENT-0.15%
Varian Semiconductor Equipment Associates,
Inc.(b) 3,600 200,268
========================================================================
SOFT DRINKS-1.13%
Coca-Cola Co. (The) 22,600 1,215,428
- ------------------------------------------------------------------------
PepsiCo, Inc. 5,000 340,150
========================================================================
1,555,578
========================================================================
SPECIALIZED REIT'S-0.07%
Nationwide Health Properties, Inc. 3,600 99,900
========================================================================
STEEL-2.58%
Cleveland-Cliffs Inc.(c) 4,100 312,707
- ------------------------------------------------------------------------
Nucor Corp. 6,000 317,400
- ------------------------------------------------------------------------
Steel Dynamics, Inc. 15,100 655,038
- ------------------------------------------------------------------------
United States Steel Corp. 24,100 2,276,968
========================================================================
3,562,113
========================================================================
SYSTEMS SOFTWARE-0.25%
BMC Software, Inc.(b) 6,300 192,906
- ------------------------------------------------------------------------
Microsoft Corp. 5,500 158,015
========================================================================
350,921
========================================================================
THRIFTS & MORTGAGE FINANCE-1.17%
Fannie Mae 17,800 1,167,858
- ------------------------------------------------------------------------
Freddie Mac 7,200 443,592
========================================================================
1,611,450
========================================================================
</Table>
<Table>
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
TOBACCO-4.23%
Altria Group, Inc. 45,700 $ 3,172,037
- ------------------------------------------------------------------------
Loews Corp-Carolina Group 18,000 1,370,160
- ------------------------------------------------------------------------
UST Inc. 26,000 1,281,280
========================================================================
5,823,477
========================================================================
Total Common Stocks & Other Equity
Interests (Cost $132,478,915) 135,363,381
========================================================================
<Caption>
PRINCIPAL
AMOUNT
U.S. TREASURY BILLS-0.13%
4.58%, 09/20/07 (Cost $174,577)(d) $ 175,000(e) 174,577
========================================================================
<Caption>
SHARES
MONEY MARKET FUNDS-1.40%
Liquid Assets Portfolio-Institutional
Class(f) 965,479 965,479
- ------------------------------------------------------------------------
Premier Portfolio-Institutional Class(f) 965,479 965,479
========================================================================
Total Money Market Funds (Cost
$1,930,958) 1,930,958
========================================================================
TOTAL INVESTMENTS (excluding investments
purchased with cash collateral from
securities on loan)-99.74% (Cost
$134,584,450) 137,468,916
========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES ON LOAN
MONEY MARKET FUNDS-4.46%
Liquid Assets Portfolio (Cost
$6,141,616)(f)(g) 6,141,616 6,141,616
========================================================================
TOTAL INVESTMENTS-104.20% (Cost $140,726,066) 143,610,532
========================================================================
OTHER ASSETS LESS LIABILITIES-(4.20)% (5,784,595)
========================================================================
NET ASSETS-100.00% $137,825,937
________________________________________________________________________
========================================================================
</Table>
Investment Abbreviations:
<Table>
REIT - Real Estate Investment Trust
</Table>
Notes to Schedule of Investments:
(a) Industry classifications used in this report are generally according to
the Global Industry Classification Standard, which was developed by and
is the exclusive property and a service mark of Morgan Stanley Capital
International Inc. and Standard & Poor's.
(b) Non-income producing security.
(c) All or a portion of this security was out on loan at August 31, 2007.
(d) Security traded on a discount basis. The interest rate shown represents
the discount rate at the time of purchase by the Fund.
(e) All of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 1I and Note 8.
(f) The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
(g) The security has been segregated to satisfy the commitment to return the
cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 7.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
11
AIM Structured Value Fund
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2007
<Table>
ASSETS:
Investments, at value (Cost $132,653,492)* $135,537,958
- -----------------------------------------------------------
Investments in affiliated money market funds
(Cost $8,072,574) 8,072,574
===========================================================
Total investments (Cost $140,726,066) 143,610,532
===========================================================
Receivables for:
Variation margin 18,120
- -----------------------------------------------------------
Fund shares sold 162,951
- -----------------------------------------------------------
Dividends 225,084
- -----------------------------------------------------------
Fund expenses absorbed 3,953
- -----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 4,043
- -----------------------------------------------------------
Other assets 17,255
===========================================================
Total assets 144,041,938
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Fund shares reacquired 13,219
- -----------------------------------------------------------
Trustee deferred compensation and
retirement plans 4,944
- -----------------------------------------------------------
Collateral upon return of securities loaned 6,141,616
- -----------------------------------------------------------
Accrued distribution fees 1,168
- -----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 2,798
- -----------------------------------------------------------
Accrued transfer agent fees 1,411
- -----------------------------------------------------------
Accrued operating expenses 50,845
===========================================================
Total liabilities 6,216,001
===========================================================
Net assets applicable to shares outstanding $137,825,937
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $131,076,688
- -----------------------------------------------------------
Undistributed net investment income 1,197,469
- -----------------------------------------------------------
Undistributed net realized gain 2,656,636
- -----------------------------------------------------------
Unrealized appreciation 2,895,144
===========================================================
$137,825,937
___________________________________________________________
===========================================================
NET ASSETS:
Class A $ 2,011,212
___________________________________________________________
===========================================================
Class B $ 717,817
___________________________________________________________
===========================================================
Class C $ 156,135
___________________________________________________________
===========================================================
Class R $ 10,067
___________________________________________________________
===========================================================
Institutional Class $134,930,706
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 176,364
___________________________________________________________
===========================================================
Class B 63,269
___________________________________________________________
===========================================================
Class C 13,779
___________________________________________________________
===========================================================
Class R 885
___________________________________________________________
===========================================================
Institutional Class 11,807,885
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 11.40
- -----------------------------------------------------------
Offering price per share
(Net asset value of $11.40 divided by
94.50%) $ 12.06
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 11.35
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 11.33
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per
share $ 11.38
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per
share $ 11.43
___________________________________________________________
===========================================================
</Table>
* At August 31, 2007, securities with an aggregate value of $6,102,815 were on
loan to brokers.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12
AIM Structured Value Fund
STATEMENT OF OPERATIONS
For the year ended August 31, 2007
<Table>
INVESTMENT INCOME:
Dividends $2,273,990
- ------------------------------------------------------------------------
Dividends from affiliated money market funds (includes
securities lending income of $1,309) 141,867
- ------------------------------------------------------------------------
Interest 13,674
========================================================================
Total investment income 2,429,531
========================================================================
EXPENSES:
Advisory fees 668,450
- ------------------------------------------------------------------------
Administrative services fees 50,000
- ------------------------------------------------------------------------
Custodian fees 14,971
- ------------------------------------------------------------------------
Distribution fees:
Class A 4,190
- ------------------------------------------------------------------------
Class B 10,003
- ------------------------------------------------------------------------
Class C 6,175
- ------------------------------------------------------------------------
Class R 2,685
- ------------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 6,566
- ------------------------------------------------------------------------
Transfer agent fees -- Institutional 3,694
- ------------------------------------------------------------------------
Trustees' and officer's fees and benefits 18,652
- ------------------------------------------------------------------------
Registration and filing fees 185,730
- ------------------------------------------------------------------------
Professional services fees 73,132
- ------------------------------------------------------------------------
Other 33,180
========================================================================
Total expenses 1,077,428
========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangement(s) (220,170)
========================================================================
Net expenses 857,258
========================================================================
Net investment income 1,572,273
========================================================================
REALIZED AND UNREALIZED GAIN FROM:
Net realized gain from:
Investment securities 2,562,606
- ------------------------------------------------------------------------
Futures contracts 162,498
========================================================================
2,725,104
========================================================================
Change in net unrealized appreciation of:
Investment securities 2,819,084
- ------------------------------------------------------------------------
Futures contracts 6,680
========================================================================
2,825,764
========================================================================
Net realized and unrealized gain 5,550,868
========================================================================
Net increase in net assets resulting from operations $7,123,141
________________________________________________________________________
========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13
AIM Structured Value Fund
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 2007 and the period March 31, 2006
(commencement date) to August 31, 2006
<Table>
<Caption>
2007 2006
- -----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 1,572,273 $ 134,455
- -----------------------------------------------------------------------------------------
Net realized gain (loss) 2,725,104 (11,024)
- -----------------------------------------------------------------------------------------
Change in net unrealized appreciation 2,825,764 69,380
=========================================================================================
Net increase in net assets resulting from operations 7,123,141 192,811
=========================================================================================
Distributions to shareholders from net investment income:
Class A (6,110) --
- -----------------------------------------------------------------------------------------
Class R (2,292) --
- -----------------------------------------------------------------------------------------
Institutional Class (542,391) --
=========================================================================================
Total distributions from net investment income (550,793) --
=========================================================================================
Distributions to shareholders from net realized gains:
Class A (786) --
- -----------------------------------------------------------------------------------------
Class B (625) --
- -----------------------------------------------------------------------------------------
Class C (443) --
- -----------------------------------------------------------------------------------------
Class R (432) --
- -----------------------------------------------------------------------------------------
Institutional Class (55,158) --
=========================================================================================
Total distributions from net realized gains (57,444) --
=========================================================================================
Decrease in net assets resulting from distributions (608,237) --
=========================================================================================
Share transactions-net:
Class A 1,107,095 823,210
- -----------------------------------------------------------------------------------------
Class B (169,271) 762,235
- -----------------------------------------------------------------------------------------
Class C (557,889) 607,944
- -----------------------------------------------------------------------------------------
Class R (707,324) 600,010
- -----------------------------------------------------------------------------------------
Institutional Class 55,246,248 73,405,964
=========================================================================================
Net increase in net assets resulting from share
transactions 54,918,859 76,199,363
=========================================================================================
Net increase in net assets 61,433,763 76,392,174
=========================================================================================
NET ASSETS:
Beginning of year 76,392,174 --
=========================================================================================
End of year (including undistributed net investment income
of $1,197,469 and $175,989, respectively) $137,825,937 $76,392,174
_________________________________________________________________________________________
=========================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
14
AIM Structured Value Fund
NOTES TO FINANCIAL STATEMENTS
August 31, 2007
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's investment objective is 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 or official closing price as of the close of
the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on that
day. Securities traded in the over-the-counter market are valued based on
prices furnished by independent pricing services or market makers. When
such securities are valued by an independent pricing service they may be
considered fair valued. 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 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 open-end and closed-end registered
investment companies that trade on an exchange are valued at the last sales
price or official closing price as of the close of the customary trading
session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) and unlisted equities 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, including commercial paper,
having 60 days or less to maturity are recorded at amortized cost which
approximates value. Debt securities are subject to interest rate and credit
risks. In addition, all debt securities involve some risk of default with
respect to interest and/or principal payments.
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. If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued at
the market quotations. Because trading hours for certain foreign securities
end before the close of the NYSE, closing market quotations may become
unreliable. If between the time trading ends on a particular security and
the close of the customary trading session on the NYSE, events occur that
are significant and may make the closing price unreliable, the Fund may
fair value the security. If 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. Foreign securities may have additional risks including exchange
rate changes, potential for sharply devalued currencies and high inflation,
political and economical upheaval, the relative lack of issuer information,
relatively low market liquidity and the potential lack of strict financial
and accounting controls and standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources
and are valued at the last bid price in the case of equity securities and
in the case of debt obligations, the mean between the last bid and asked
prices.
Securities for which market quotations are not readily available or are
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.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity.
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.
15
AIM Structured Value Fund
The Fund may receive proceeds from litigation settlements involving Fund
investments. Any proceeds received are included in the Statement of
Operations as realized gain/loss for investments no longer held and as
unrealized gain/loss for investments still held.
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
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.
This practice does not apply to securities pledged as collateral for
securities lending transactions.
16
AIM Structured Value 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 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., AIM pays INVESCO Institutional (N.A.), Inc. 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 at least June 30, 2008. 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 INVESCO PLC ("INVESCO")
(formerly "AMVESCAP PLC") 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. In addition, the Fund may also
benefit from a one time credit used to offset custodian expenses. These credits
are used to pay certain expenses incurred by the Fund.
Further, effective July 1, 2007, AIM has contractually agreed, through at
least June 30, 2008, to waive 100% of the advisory fee AIM receives from the
affiliated money market funds on investments by the Fund in such affiliated
money market funds (excluding investments made in affiliated money market funds
with cash collateral from securities loaned by the Fund). Prior to July 1, 2007,
AIM had voluntarily agreed to waive 25% of the advisory fee AIM receives from
the affiliated money market funds on investments by the Fund in such affiliated
money market funds.
For the year ended August 31, 2007, AIM waived advisory fees of $207,623 and
reimbursed class level expenses of $2,748, $1,640, $1,013, $881 and $3,694 for
Class A, Class B, Class C, Class R and Institutional Class shares respectively.
At the request of the Trustees of the Trust, INVESCO PLC ("INVESCO")
(formerly "AMVESCAP PLC") 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, 2007, INVESCO did not
reimburse any expenses.
The Trust has entered into a master administrative services agreement with
AIM pursuant to which the Fund has agreed to pay AIM for certain administrative
costs incurred in providing accounting services, to the Fund. For the year ended
August 31, 2007, expenses incurred under the agreement are shown in the
Statement of Operations as administrative services fees.
The Trust has entered into a transfer agency and service agreement with AIM
Investment Services, Inc. ("AIS") pursuant to which the Fund has agreed to pay
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, 2007,
expenses incurred under the agreement are shown in the Statement of Operations
as transfer agent fees.
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 Plan payments, up to 0.25% of the
average daily net assets of each class of 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. Financial Industry Regulatory
Authority ("FINRA"), formerly known as National Association of Securities
Dealers, 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. For the year
ended August 31, 2007, expenses incurred under the Plans are shown in the
Statement of Operations as distribution fees.
17
AIM Structured Value 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 year
ended August 31, 2007, ADI advised the Fund that it retained $3,216 in front-end
sales commissions from the sale of Class A shares and $0, $51, $6 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--INVESTMENTS IN AFFILIATES
The Fund is permitted, pursuant to procedures approved by the Board of Trustees,
to invest daily available cash balances and cash collateral from securities
lending transactions in affiliated money market funds. The Fund and the money
market funds below have the same investment advisor and therefore, are
considered to be affiliated. The tables below show the transactions in and
earnings from investments in affiliated money market funds for the year ended
August 31, 2007. During the period each investment maintained a $1.00 net asset
value, as such there is no realized gain/(loss) and no change in unrealized
appreciation/(depreciation).
INVESTMENTS OF DAILY AVAILABLE CASH BALANCES:
<Table>
<Caption>
VALUE PURCHASES PROCEEDS VALUE DIVIDEND
FUND 08/31/06 AT COST FROM SALES 08/31/07 INCOME
- -------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $ -- $29,819,122 $(28,853,643) $ 965,479 $ 70,441
- -------------------------------------------------------------------------------------------------
Premier
Portfolio-Institutional
Class -- 29,819,122 (28,853,643) 965,479 70,117
=================================================================================================
Total
Investments
in
Affiliates $ -- $59,638,244 $(57,707,286) $1,930,958 $140,558
=================================================================================================
</Table>
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
<Table>
<Caption>
VALUE PURCHASES PROCEEDS VALUE DIVIDEND
FUND 08/31/06 AT COST FROM SALES 08/31/07 INCOME*
- -------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $ -- $ 70,333,086 $ (64,191,470) $6,141,616 $ 1,309
=================================================================================================
Total
Investments
in
Affiliates $ -- $129,971,330 $(121,898,756) $8,072,574 $141,867
_________________________________________________________________________________________________
=================================================================================================
</Table>
* Net of compensation to counterparties.
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, (ii) custodian credits which result
from periodic overnight cash balances at the custodian and (iii) a one time
custodian fee credit used to offset custodian fees. For the year ended August
31, 2007, the Fund received credits from these arrangements, which resulted in
the reduction of the Fund's total expenses of $2,571.
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 certain Trustees and Officers of the Fund. 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, certain 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, 2007, the Fund paid legal fees of $4,953
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6--BORROWINGS
Pursuant to an exemptive order from the 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
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.
18
AIM Structured Value Fund
The Fund is a party to an uncommitted unsecured revolving credit facility
with State Street Bank and Trust Company ("SSB"). The Fund may borrow up to the
lesser of (i) $125,000,000, or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
credit facility can borrow on a first come, first served basis. Principal on
each loan outstanding shall bear interest at the bid rate quoted by SSB at the
time of the request for the loan.
During the year ended August 31, 2007, 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 contractually agreed upon rate.
NOTE 7--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities having a market value up to one-third of
the Fund's total assets. Such loans are secured by collateral equal to no less
than the market value of the loaned securities determined daily. Such collateral
will be cash or debt securities issued or guaranteed by the U.S. Government or
any of its agencies. Cash collateral received in connection with these loans is
invested in short-term money market instruments or affiliated money market
funds. It is the Fund's policy to obtain additional collateral from or return
excess collateral to the borrower by the end of the next business day, following
the valuation date of the securities loaned. Therefore, the value of the
collateral held may be temporarily less than the value of the securities on
loan. Lending securities entails a risk of loss to the Fund if and to the extent
that the market value of the securities loaned were to increase and the borrower
did not increase the collateral accordingly, and the borrower fails to return
the securities. The Fund could also experience delays and costs in gaining
access to the collateral. The Fund bears the risk of any deficiency in the
amount of the collateral available for return to the borrower due to any loss on
the collateral invested.
At August 31, 2007, securities with an aggregate value of $6,102,815 were on
loan to brokers. The loans were secured by cash collateral of $6,141,616
received by the Fund and subsequently invested in an affiliated money market
fund. For the year ended August 31, 2007, the Fund received dividends on cash
collateral investments of $1,309 for securities lending transactions, which are
net of compensation to counterparties.
NOTE 8--FUTURES CONTRACTS
On August 31, 2007, $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 08/31/07 APPRECIATION
- -------------------------------------------------------------------------------------------------------------------------
S&P 500 E-Mini Index Future 24 Sept.-07/Long $1,772,040 $10,678
_________________________________________________________________________________________________________________________
=========================================================================================================================
</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, 2007 and
March 31, 2006 (commencement date) through August 31, 2006 was as follows:
<Table>
<Caption>
2007 2006
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $562,760 $ --
- --------------------------------------------------------------------------------
Long-term capital gain 45,477 --
================================================================================
Total distributions $608,237 $ --
________________________________________________________________________________
================================================================================
</Table>
19
AIM Structured Value Fund
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2007, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2007
- ----------------------------------------------------------------------------
Undistributed ordinary income $ 3,524,858
- ----------------------------------------------------------------------------
Undistributed long-term gain 349,417
- ----------------------------------------------------------------------------
Net unrealized appreciation -- investments 2,878,961
- ----------------------------------------------------------------------------
Temporary book/tax differences (3,987)
- ----------------------------------------------------------------------------
Shares of beneficial interest 131,076,688
============================================================================
Total net assets $137,825,937
____________________________________________________________________________
============================================================================
</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 net unrealized
appreciation difference is attributable primarily to losses on wash sales and
the realization for tax purposes of unrealized gains on futures contracts.
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 benefits.
The Fund does not have a capital loss carryforward as of August 31, 2007.
NOTE 10--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the year ended August 31, 2007 was $122,026,317 and $66,923,443,
respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- -------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 8,083,008
- -------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (5,204,047)
===============================================================================
Net unrealized appreciation of investment securities $ 2,878,961
_______________________________________________________________________________
===============================================================================
Cost of investments for tax purposes is $140,731,571.
</Table>
20
AIM Structured Value Fund
NOTE 11--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 unless certain waiver criteria are met and under certain
circumstances load waiver shares may be subject to a CDSC. Class B shares and
Class C shares are sold with a CDSC. Class R shares and Institutional Class
shares are sold at net asset value. Under certain circumstances, Class R shares
are subject to a 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
(COMMENCEMENT
YEAR ENDED DATE) TO
AUGUST 31, 2007(A) AUGUST 31, 2006
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------
Sold:
Class A 198,849 $ 2,334,302 83,321 $ 836,451
- ------------------------------------------------------------------------------------------------------------------
Class B 67,041 772,625 76,011 762,735
- ------------------------------------------------------------------------------------------------------------------
Class C 26,613 319,489 60,787 607,944
- ------------------------------------------------------------------------------------------------------------------
Class R 761 8,952 60,001 600,010
- ------------------------------------------------------------------------------------------------------------------
Institutional Class 5,067,304 58,701,761 7,036,482 73,435,376
==================================================================================================================
Issued as reinvestment of dividends:
Class A 607 6,896 -- --
- ------------------------------------------------------------------------------------------------------------------
Class B 55 619 -- --
- ------------------------------------------------------------------------------------------------------------------
Class C 38 439 -- --
- ------------------------------------------------------------------------------------------------------------------
Class R 240 2,724 -- --
- ------------------------------------------------------------------------------------------------------------------
Institutional Class 52,555 597,549 -- --
==================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 6,602 76,276 -- --
- ------------------------------------------------------------------------------------------------------------------
Class B (6,621) (76,276) -- --
==================================================================================================================
Reacquired:
Class A (111,705) (1,310,379) (1,310) (13,241)
- ------------------------------------------------------------------------------------------------------------------
Class B (73,167) (866,239) (50) (500)
- ------------------------------------------------------------------------------------------------------------------
Class C (73,659) (877,817) -- --
- ------------------------------------------------------------------------------------------------------------------
Class R (60,117) (719,000) -- --
- ------------------------------------------------------------------------------------------------------------------
Institutional Class (345,649) (4,053,062) (2,807) (29,412)
==================================================================================================================
4,749,747 $54,918,859 7,312,435 $76,199,363
__________________________________________________________________________________________________________________
==================================================================================================================
</Table>
(a) 91% 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 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 has assessed the
application of FIN 48 to the Fund and has determined that the adopting of FIN 48
is not expected to have a material impact on the Fund. Management intends for
the Fund to adopt FIN 48 provisions during the fiscal year ending August 31,
2008 as required.
21
AIM Structured Value Fund
NOTE 13--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
-------------------------------
MARCH 31, 2006
(COMMENCEMENT
YEAR ENDED DATE) TO
AUGUST 31, AUGUST 31,
2007 2006
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.44 $10.00
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.14 0.20
- ---------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.89 0.24
=============================================================================================
Total from investment operations 1.03 0.44
=============================================================================================
Less distributions:
Dividends from net investment income (0.06) --
- ---------------------------------------------------------------------------------------------
Distributions from net realized gains (0.01) --
=============================================================================================
Total distributions (0.07) --
=============================================================================================
Net asset value, end of period $11.40 $10.44
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 9.80% 4.40%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,011 $ 856
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.01%(c) 1.03%(d)
- ---------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.36%(c) 5.80%(d)
=============================================================================================
Ratio of net investment income to average net assets 1.17%(c) 4.59%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate(e) 62% 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 and is not
annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $1,676,030.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
22
AIM Structured Value Fund
NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS B
-------------------------------
MARCH 31, 2006
(COMMENCEMENT
YEAR ENDED DATE) TO
AUGUST 31, AUGUST 31,
2007 2006
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.40 $10.00
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.05 0.16
- ---------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.91 0.24
=============================================================================================
Total from investment operations 0.96 0.40
=============================================================================================
Less distributions from net realized gains (0.01) --
=============================================================================================
Net asset value, end of period $11.35 $10.40
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 9.20% 4.00%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 718 $ 790
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.76%(c) 1.78%(d)
- ---------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.11%(c) 6.55%(d)
=============================================================================================
Ratio of net investment income to average net assets 0.42%(c) 3.84%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate(e) 62% 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 and is not
annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $1,000,342.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
<Table>
<Caption>
CLASS C
-------------------------------
MARCH 31, 2006
(COMMENCEMENT
YEAR ENDED DATE) TO
AUGUST 31, AUGUST 31,
2007 2006
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.40 $10.00
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.05 0.16
- ---------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.89 0.24
=============================================================================================
Total from investment operations 0.94 0.40
=============================================================================================
Less distributions from net realized gains (0.01) --
=============================================================================================
Net asset value, end of period $11.33 $10.40
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 9.01% 4.00%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 156 $ 632
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.76%(c) 1.78%(d)
- ---------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.11%(c) 6.55%(d)
=============================================================================================
Ratio of net investment income to average net assets 0.42%(c) 3.84%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate(e) 62% 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 and is not
annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $617,485.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
23
AIM Structured Value Fund
NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS R
-------------------------------
MARCH 31, 2006
(COMMENCEMENT
YEAR ENDED DATE) TO
AUGUST 31, AUGUST 31,
2007 2006
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.42 $10.00
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.11 0.18
- ---------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.90 0.24
=============================================================================================
Total from investment operations 1.01 0.42
=============================================================================================
Less distributions:
Dividends from net investment income (0.04) --
- ---------------------------------------------------------------------------------------------
Distributions from net realized gains (0.01) --
=============================================================================================
Total distributions (0.05) --
=============================================================================================
Net asset value, end of period $11.38 $10.42
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 9.65% 4.20%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 10 $ 625
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.26%(c) 1.28%(d)
- ---------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.61%(c) 6.05%(d)
=============================================================================================
Ratio of net investment income to average net assets 0.92%(c) 4.34%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate(e) 62% 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. Not annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $537,067.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
24
AIM Structured Value Fund
NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
-------------------------------
MARCH 31, 2006
(COMMENCEMENT
YEAR ENDED DATE) TO
AUGUST 31, AUGUST 31,
2007 2006
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.45 $ 10.00
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.17 0.21
- ---------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.89 0.24
=============================================================================================
Total from investment operations 1.06 0.45
=============================================================================================
Less distributions:
Dividends from net investment income (0.07) --
- ---------------------------------------------------------------------------------------------
Distributions from net realized gains (0.01) --
=============================================================================================
Total distributions (0.08) --
=============================================================================================
Net asset value, end of period $ 11.43 $ 10.45
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 10.13% 4.50%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $134,931 $73,488
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.75%(c) 0.77%(d)
- ---------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.94%(c) 5.50%(d)
=============================================================================================
Ratio of net investment income to average net assets 1.43%(c) 4.85%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate(e) 62% 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. Not annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $107,577,391.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
NOTE 14--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
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 A I M Advisors, Inc. ("AIM") and A I M Distributors, Inc.
("ADI") (Order No. 051318). 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. By agreement with the Commissioner of Securities, AIM's time
to respond to that Order has been indefinitely suspended.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, INVESCO Funds Group,
Inc. ("IFG") (the former investment advisor to certain AIM Funds), 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; and
- that certain AIM Funds inadequately employed fair value pricing.
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.
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 pretrial 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
25
AIM Structured Value Fund
NOTE 14--LEGAL PROCEEDINGS--(CONTINUED)
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 INVESCO PLC'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 INVESCO 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.
26
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, 2007, the results of its operations for the year then
ended, and the changes in its net assets and the financial highlights for the
year then ended and for the period March 31, 2006 (commencement date) 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 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, 2007 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
October 19, 2007
Houston, Texas
27
AIM Structured Value Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE together with the amount you invested, to use this information to compare the
estimate the expenses that you paid over ongoing costs of investing in the Fund and
As a shareholder of the Fund, you incur the period. Simply divide your account other funds. To do so, compare this 5%
two types of costs: (1) transaction costs, value by $1,000 (for example, an $8,600 hypothetical example with the 5%
which may include sales charges (loads) on account value divided by $1,000 = 8.6), hypothetical examples that appear in the
purchase payments or contingent deferred then multiply the result by the number in shareholder reports of the other funds.
sales charges on redemptions, and the table under the heading entitled
redemption fees, if any; and (2) ongoing "Actual Expenses Paid During Period" to Please note that the expenses shown in
costs, including management fees; estimate the expenses you paid on your the table are meant to highlight your
distribution and/or service (12b-1) fees; account during this period. ongoing costs only and do not reflect any
and other Fund expenses. This example is transaction costs, such as sales charges
intended to help you understand your HYPOTHETICAL EXAMPLE FOR COMPARISON (loads) on purchase payments, contingent
ongoing costs (in dollars) of investing in PURPOSES deferred sales charges on redemptions, and
the Fund and to compare these costs with redemption fees, if any. Therefore, the
ongoing costs of investing in other mutual The table below also provides information hypothetical information is useful in
funds. The example is based on an about hypothetical account values and comparing ongoing costs only, and will not
investment of $1,000 invested at the hypothetical expenses based on the Fund's help you determine the relative total
beginning of the period and held for the actual expense ratio and an assumed rate costs of owning different funds.
entire period March 1, 2007, through of return of 5% per year before expenses,
August 31, 2007. which is not the Fund's actual return. In addition, if these transaction costs
were included, your costs would have been
ACTUAL EXPENSES The hypothetical account values and higher.
expenses may not be used to estimate the
The table below provides information about actual ending account balance or expenses
actual account values and actual expenses. you paid for the period. You may
You may use the information in 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 (3/1/07) (8/31/07)(1) PERIOD(2) (4/30/07) PERIOD(2) RATIO
A $1,000.00 $1,008.90 $5.11 $1,020.11 $5.14 1.01%
B 1,000.00 1,005.30 8.90 1,016.33 8.94 1.76
C 1,000.00 1,004.40 8.89 1,016.33 8.94 1.76
R 1,000.00 1,008.00 6.38 1,018.85 6.41 1.26
(1) The actual ending account value is based on the actual total return of the Fund for the period March 1, 2007, through August
31, 2007, 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.
====================================================================================================================================
28
Supplement to Annual Report dated 8/31/07
AIM STRUCTURED VALUE FUND
==========================================
INSTITUTIONAL CLASS SHARES AVERAGE ANNUAL TOTAL RETURNS PLEASE NOTE THAT PAST PERFORMANCE IS
NOT INDICATIVE OF FUTURE RESULTS. MORE
The following information has been For periods ended 8/31/07 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) 10.41% REINVESTMENT OF DISTRIBUTIONS AT NAV.
specific to their holdings. Institutional 1 Year 10.13 INVESTMENT RETURN AND PRINCIPAL VALUE WILL
Class shares are offered exclusively to FLUCTUATE SO YOUR SHARES, WHEN REDEEMED,
institutional investors, including defined AVERAGE ANNUAL TOTAL RETURNS MAY BE WORTH MORE OR LESS THAN THEIR
contribution plans that meet certain For periods ended 6/30/07, ORIGINAL COST. SEE FULL REPORT FOR
criteria. most recent calendar INFORMATION ON COMPARATIVE BENCHMARKS.
quarter-end PLEASE CONSULT YOUR FUND PROSPECTUS FOR
MORE INFORMATION. FOR THE MOST CURRENT
Inception (3/31/06) 15.96% MONTH-END PERFORMANCE, PLEASE CALL
1 Year 20.32 800-451-4246 OR VISIT AIMINVESTMENTS.COM.
==========================================
HAD THE ADVISOR NOT WAIVED FEES AND/OR
INSTITUTIONAL CLASS SHARES HAVE NO SALES REIMBURSED EXPENSES, PERFORMANCE WOULD
CHARGE; THEREFORE, PERFORMANCE IS AT NET HAVE BEEN LOWER.
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 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.
[AIM INVESTMENTS LOGO]
AIMINVESTMENTS.COM SVAL-INS-1 A I M Distributors, Inc. --REGISTERED TRADEMARK--
Information about your Fund's expenses
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE expenses that you paid over the period. The hypothetical account values and
Simply divide your account value by $1,000 expenses may not be used to estimate the
As a shareholder of the Fund, you incur (for example, an $8,600 account value actual ending account balance or expenses
ongoing costs, including management fees divided by $1,000 = 8.6), then multiply you paid for the period. You may use this
and other Fund expenses. This example is the result by the number in the table information to compare the ongoing costs
intended to help you understand your under the heading entitled "Actual of investing in the Fund and other funds.
ongoing costs (in dollars) of investing in Expenses Paid During Period" to estimate To do so, compare this 5% hypothetical
the Fund and to compare these costs with the expenses you paid on your account example with the 5% hypothetical examples
ongoing costs of investing in other mutual during this period. that appear in the shareholder reports of
funds. The example is based on an the other funds.
investment of $1,000 invested at the HYPOTHETICAL EXAMPLE FOR COMPARISON
beginning of the period and held for the PURPOSES Please note that the expenses shown in
entire period March 1, 2007, through the table are meant to highlight your
August 31, 2007. The table below also provides information ongoing costs only. Therefore, the
about hypothetical account values and hypothetical information is useful in
ACTUAL EXPENSES hypothetical expenses based on the Fund's comparing ongoing costs only, and will not
actual expense ratio and an assumed rate help you determine the relative total
The table below provides information about of return of 5% per year before expenses, costs of owning different funds.
actual account values and actual expenses. which is not the Fund's actual return.
You may use the information in this table,
together with the amount you invested, to
estimate the
====================================================================================================================================
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 (3/1/07) (8/31/07)(1) PERIOD(2) (8/31/07) PERIOD(2) RATIO
Institutional $1,000.00 $1,009.70 $3.80 $1,021.42 $3.82 0.75%
(1) The actual ending account value is based on the actual total return of the Fund for the period March 1, 2007, through August
31, 2007, 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 annualized expense ratio as indicated Fund's above multiplied by the average account value over the
period, multiplied by 184/365 to reflect the most recent fiscal half year.
====================================================================================================================================
AIMINVESTMENTS.COM SVAL-INS-1 A I M Distributors, Inc.
AIM Structured Value Fund
APPROVAL OF INVESTMENT ADVISORY AGREEMENT if applicable (advisory agreements), for AIM's equity and fixed income trading
another year. operations. The Board concluded that the
The Board of Trustees (the Board) of AIM nature, extent and quality of the advisory
Counselor Series Trust is required under The independent Trustees, as mentioned services provided to the Fund by AIM were
the Investment Company Act of 1940 to above, are assisted in their annual appropriate and that AIM currently is
approve annually the renewal of the AIM evaluation of the advisory agreements by providing satisfactory advisory services
Structured Value Fund (the Fund) the independent Senior Officer. One in accordance with the terms of the Fund's
investment advisory agreement with A I M responsibility of the Senior Officer is to advisory agreement. In addition, based on
Advisors, Inc. (AIM). During contract manage the process by which the AIM Funds' their ongoing meetings throughout the year
renewal meetings held on June 25-27, 2007, proposed management fees are negotiated with the Fund's portfolio managers, the
the Board as a whole and the disinterested during the annual contract renewal process Board concluded that these individuals are
or "independent" Trustees, voting to ensure that they are negotiated in a competent and able to continue to carry
separately, approved the continuance of manner which is at arms' length and out their responsibilities under the
the Fund's investment advisory agreement reasonable. Accordingly, the Senior Fund's advisory agreement.
for another year, effective July 1, 2007. Officer must either supervise a
In doing so, the Board determined that the competitive bidding process or prepare an In determining whether to continue the
Fund's advisory agreement is in the best independent written evaluation. The Senior Fund's advisory agreement, the Board
interests of the Fund and its shareholders Officer has recommended that an considered the prior relationship between
and that the compensation to AIM under the independent written evaluation be provided AIM and the Fund, as well as the Board's
Fund's advisory agreement is fair and and, upon the direction of the Board, has knowledge of AIM's operations, and
reasonable. prepared an independent written concluded that it was beneficial to
evaluation. maintain the current relationship, in
The independent Trustees met separately part, because of such knowledge. The Board
during their evaluation of the Fund's During the annual contract renewal also considered the steps that AIM and its
investment advisory agreement with process, the Board considered the factors affiliates have taken over the last
independent legal counsel from whom they discussed below under the heading "Factors several years to improve the quality and
received independent legal advice, and the and Conclusions and Summary of Independent efficiency of the services they provide to
independent Trustees also received Written Fee Evaluation" in evaluating the the Funds in the areas of investment
assistance during their deliberations from fairness and reasonableness of the Fund's performance, product line diversification,
the independent Senior Officer, a advisory agreement at the contract renewal distribution, fund operations, shareholder
full-time officer of the AIM Funds who meetings and at their meetings throughout services and compliance. The Board
reports directly to the independent the year as part of their ongoing concluded that the quality and efficiency
Trustees. The following discussion more oversight of the Fund. The Fund's advisory of the services AIM and its affiliates
fully describes the process employed by agreement was considered separately, provide to the AIM Funds in each of these
the Board to evaluate the performance of although the Board also considered the areas generally have improved, and support
the AIM Funds (including the Fund) common interests of all of the AIM Funds the Board's approval of the continuance of
throughout the year and, more in their deliberations. The Board the Fund's advisory agreement.
specifically, during the annual contract comprehensively considered all of the
renewal meetings. information provided to them and did not B. FUND PERFORMANCE
identify any particular factor that was
THE BOARD'S FUND EVALUATION PROCESS controlling. Furthermore, each Trustee may The Board noted that the Fund has not been
have evaluated the information provided in operation for a full calendar year. The
The Board's Investments Committee has differently from one another and Board also considered the steps AIM has
established three Sub-Committees which are attributed different weight to the various taken over the last several years to
responsible for overseeing the management factors. The Trustees recognized that the improve the quality and efficiency of the
of a number of the series portfolios of advisory arrangements and resulting services that AIM provides to the AIM
the AIM Funds. This Sub-Committee advisory fees for the Fund and the other Funds. The Board concluded that AIM
structure permits the Trustees to focus on AIM Funds are the result of years of continues to be responsive to the Board's
the performance of the AIM Funds that have review and negotiation between the focus on fund performance.
been assigned to them. The Sub-Committees Trustees and AIM, that the Trustees may
meet throughout the year to review the focus to a greater extent on certain C. ADVISORY FEES AND FEE WAIVERS
performance of their assigned funds, and aspects of these arrangements in some
the Sub-Committees review monthly and years than others, and that the Trustees' The Board noted that AIM had set the
quarterly comparative performance deliberations and conclusions in a contractual advisory fee schedule in the
information and periodic asset flow data particular year may be based in part on Fund's advisory agreement based upon the
for their assigned funds. These materials their deliberations and conclusions of median effective management fee rate
are prepared under the direction and these same arrangements throughout the (comprised of advisory fees plus, in some
supervision of the independent Senior year and in prior years. cases, administrative fees) at various
Officer. Over the course of each year, the asset levels of competitor funds with
Sub-Committees meet with portfolio FACTORS AND CONCLUSIONS AND SUMMARY OF investment strategies comparable to those
managers for their assigned funds and INDEPENDENT WRITTEN FEE EVALUATION of the Fund. In addition, the Board noted
other members of management and review that the Fund's contractual advisory fee
with these individuals the performance, The discussion below serves as a summary schedule is the same as the uniform fee
investment objective(s), policies, of the Senior Officer's independent schedule that applies to other funds
strategies and limitations of these funds. written evaluation, as well as a advised by AIM with investment strategies
discussion of the material factors and comparable to those of the Fund, which
In addition to their meetings related conclusions that formed the basis uniform fee schedule includes breakpoints
throughout the year, the Sub-Committees for the Board's approval of the Fund's and is based on net asset levels. The
meet at designated contract renewal advisory agreement and sub-advisory Board also compared the Fund's contractual
meetings each year to conduct an in-depth agreement. Unless otherwise stated, advisory fee rate to the contractual
review of the performance, fees and information set forth below is as of June advisory fee rates of other clients of AIM
expenses of their assigned funds. During 27, 2007 and does not reflect any changes and its affiliates with investment
the contract renewal process, the Trustees that may have occurred since that date, strategies comparable to those of the
receive comparative performance and fee including but not limited to changes to Fund, including three mutual funds advised
data regarding all the AIM Funds prepared the Fund's performance, advisory fees, by AIM, one mutual fund sub-advised by an
by an independent company, Lipper, Inc., expense limitations and/or fee waivers. AIM affiliate, and one offshore fund
under the direction and supervision of the advised and sub-advised by AIM affiliates.
independent Senior Officer who also I INVESTMENT ADVISORY AGREEMENT The Board noted that the Fund's rate was:
prepares a separate analysis of this (i) the same as the rate for one of the
information for the Trustees. Each A. NATURE, EXTENT AND QUALITY OF SERVICES mutual funds and below the rates for two
Sub-Committee then makes recommendations PROVIDED BY AIM of the mutual funds; (ii) above the
to the Investments Committee regarding the sub-advisory fee rate for the sub-advised
performance, fees and expenses of their The Board reviewed the advisory services mutual fund, although the advisory fee
assigned funds. The Investments Committee provided to the Fund by AIM under the rate for such sub-advised fund was above
considers each Sub-Committee's Fund's advisory agreement, the performance the Fund's; and (iii) below the advisory
recommendations and makes its own of AIM in providing these services, and fee rate for the offshore fund.
recommendations regarding the performance, the credentials and experience of the
fees and expenses of the AIM Funds to the officers and employees of AIM who provide Additionally, the Board compared the
full Board. Moreover, the Investments these services. The Board's review of the Fund's contractual advisory fee rate to
Committee considers each Sub-Committee's qualifications of AIM to provide these the total advisory fees paid by numerous
recommendations in making its annual services included the Board's separately managed accounts/wrap accounts
recommendation to the Board whether to consideration of AIM's portfolio and advised by an AIM affiliate. The Board
approve the continuance of each AIM Fund's product review process, various back noted
investment advisory agreement and office support functions provided by AIM,
sub-advisory agreement, and (continued)
29
AIM Structured Value Fund
that the Fund's rate was generally above Board considered whether AIM is of uninvested cash and cash collateral
the rates for the separately managed financially sound and has the resources from any securities lending arrangements
accounts/wrap accounts. The Board necessary to perform its obligations under in the affiliated money market funds is in
considered that management of the the Fund's advisory agreement, and the best interests of the Fund and its
separately managed accounts/wrap accounts concluded that AIM has the financial shareholders.
by the AIM affiliate involves different resources necessary to fulfill these
levels of services and different obligations. II SUB-ADVISORY AGREEMENT
operational and regulatory requirements
than AIM's management of the Fund. The F. INDEPENDENT WRITTEN EVALUATION OF THE A. NATURE, EXTENT AND QUALITY OF SERVICES
Board concluded that these differences are FUND'S SENIOR OFFICER PROVIDED BY THE SUB-ADVISOR
appropriately reflected in the fee
structure for the Fund and the separately The Board noted that, upon their The Board reviewed the services provided
managed accounts/wrap accounts. direction, the Senior Officer of the Fund, by INVESCO Institutional (N.A.), Inc. (the
who is independent of AIM and AIM's Sub-Advisor) under the Fund's sub-advisory
The Board noted that AIM has affiliates, had prepared an independent agreement, the performance of the
contractually agreed to waive fees and/or written evaluation to assist the Board in Sub-Advisor in providing these services,
limit expenses of the Fund through at determining the reasonableness of the and the credentials and experience of the
least June 30, 2008 in an amount necessary proposed management fees of the AIM Funds, officers and employees of the Sub-Advisor
to limit total annual operating expenses including the Fund. The Board noted that who provide these services. The Board
to a specified percentage of average daily they had relied upon the Senior Officer's concluded that the nature, extent and
net assets for each class of the Fund. The written evaluation instead of a quality of the services provided by the
Board considered the contractual nature of competitive bidding process. In Sub-Advisor were appropriate and that the
this fee waiver and noted that it remains determining whether to continue the Fund's Sub-Advisor currently is providing
in effect until at least June 30, 2008. advisory agreement, the Board considered satisfactory services in accordance with
The Board reviewed the Fund's effective the Senior Officer's written evaluation. the terms of the Fund's sub-advisory
advisory fee rate, after taking account of agreement. In addition, based on their
this expense limitation, and considered G. COLLATERAL BENEFITS TO AIM AND ITS ongoing meetings throughout the year with
the effect this expense limitation would AFFILIATES the Fund's portfolio managers, the Board
have on the Fund's estimated total concluded that these individuals are
expenses. The Board concluded that the The Board considered various other competent and able to continue to carry
levels of fee waivers/expense limitations benefits received by AIM and its out their responsibilities under the
for the Fund were fair and reasonable. affiliates resulting from AIM's Fund's sub-advisory agreement.
relationship with the Fund, including the
After taking account of the Fund's fees received by AIM and its affiliates B. FUND PERFORMANCE
contractual advisory fee rate, as well as for their provision of administrative,
the comparative advisory fee information transfer agency and distribution services The Board noted that the Fund has not been
and the expense limitation discussed to the Fund. The Board considered the in operation for a full calendar year. The
above, the Board concluded that the Fund's performance of AIM and its affiliates in Board also considered the steps AIM has
advisory fees were fair and reasonable. providing these services and the taken over the last several years to
organizational structure employed by AIM improve the quality and efficiency of the
D. ECONOMIES OF SCALE AND BREAKPOINTS and its affiliates to provide these services that AIM provides to the AIM
services. The Board also considered that Funds. The Board concluded that AIM
The Board considered the extent to which these services are provided to the Fund continues to be responsive to the Board's
there are economies of scale in AIM's pursuant to written contracts which are focus on fund performance.
provision of advisory services to the reviewed and approved on an annual basis
Fund. The Board also considered whether by the Board. The Board concluded that AIM C. SUB-ADVISORY FEES
the Fund benefits from such economies of and its affiliates were providing these
scale through contractual breakpoints in services in a satisfactory manner and in The Board compared the Fund's contractual
the Fund's advisory fee schedule or accordance with the terms of their sub-advisory fee rate to the total
through advisory fee waivers or expense contracts, and were qualified to continue advisory fees paid by numerous separately
limitations. The Board noted that the to provide these services to the Fund. managed accounts/wrap accounts sub-advised
Fund's contractual advisory fee schedule by the Sub-Advisor with investment
includes seven breakpoints but that, due The Board considered the benefits strategies comparable to those of the
to the Fund's asset level at the end of realized by AIM as a result of portfolio Fund. The Board noted that the Fund's
the past calendar year and the way in brokerage transactions executed through sub-advisory fee rate was generally
which the breakpoints have been "soft dollar" arrangements. Under these comparable to or below the rates for the
structured, the Fund has yet to benefit arrangements, portfolio brokerage separately managed accounts/wrap accounts.
from the breakpoints. Based on this commissions paid by the Fund and/or other The Board considered the services to be
information, the Board concluded that the funds advised by AIM are used to pay for provided by the Sub-Advisor pursuant to
Fund's advisory fees would reflect research and execution services. The Board the Fund's sub-advisory agreement and the
economies of scale at higher asset levels. noted that soft dollar arrangements shift services to be provided by AIM pursuant to
The Board also noted that the Fund shares the payment obligation for the research the Fund's advisory agreement, as well as
directly in economies of scale through and executions services from AIM to the the allocation of fees between AIM and the
lower fees charged by third party service funds and therefore may reduce AIM's Sub-Advisor pursuant to the sub-advisory
providers based on the combined size of expenses. The Board also noted that agreement. The Board noted that the
all of the AIM Funds and affiliates. research obtained through soft dollar sub-advisory fees have no direct effect on
arrangements may be used by AIM in making the Fund or its shareholders, as they are
E. PROFITABILITY AND FINANCIAL RESOURCES investment decisions for the Fund and may paid by AIM to the Sub-Advisor, and that
OF AIM therefore benefit Fund shareholders. The AIM and the Sub-Advisor are affiliates.
Board concluded that AIM's soft dollar After taking account of the Fund's
The Board reviewed information from AIM arrangements were appropriate. The Board contractual sub-advisory fee rate, as well
concerning the costs of the advisory and also concluded that, based on their review as the comparative fee information and the
other services that AIM and its affiliates and representations made by AIM, these expense limitation discussed above, the
provide to the Fund and the profitability arrangements were consistent with Board concluded that the Fund's
of AIM and its affiliates in providing regulatory requirements. sub-advisory fees were fair and
these services. The Board also reviewed reasonable.
information concerning the financial The Board considered the fact that the
condition of AIM and its affiliates. The Fund's uninvested cash and cash collateral D. FINANCIAL RESOURCES OF THE SUB-ADVISOR
Board also reviewed with AIM the from any securities lending arrangements
methodology used to prepare the may be invested in money market funds The Board considered whether the
profitability information. The Board advised by AIM pursuant to procedures Sub-Advisor is financially sound and has
considered the overall profitability of approved by the Board. The Board noted the resources necessary to perform its
AIM, as well as the profitability of AIM that AIM will receive advisory fees from obligations under the Fund's sub-advisory
in connection with managing the Fund. The these affiliated money market funds agreement, and concluded that the
Board noted that AIM continues to operate attributable to such investments, although Sub-Advisor has the financial resources
at a net profit, although increased AIM has contractually agreed to waive the necessary to fulfill these obligations.
expenses in recent years have reduced the advisory fees payable by the Fund with
profitability of AIM and its affiliates. respect to its investment of uninvested
The Board concluded that the Fund's cash in these affiliated money market
advisory fees were fair and reasonable, funds through at least June 30, 2008. The
and that the level of profits realized by Board considered the contractual nature of
AIM and its affiliates from providing this fee waiver and noted that it remains
services to the Fund was not excessive in in effect until at least June 30, 2008.
light of the nature, quality and extent of The Board concluded that the Fund's
the services provided. The investment
30
AIM Structured Value Fund
TAX INFORMATION
Form 1099DIV, Form 1042S and other year-end tax information provide shareholders
with actual calendar year amounts that should be included in their tax returns.
Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the
Internal Revenue Code or to meet a specific state's requirement.
The Fund designates the following amounts or, if subsequently determined to be
different, the maximum amount allowable for its fiscal year ended August 31,
2007:
FEDERAL AND STATE INCOME TAX
<Table>
Long-Term Capital Gain Dividends $45,477
Qualified Dividend Income* 40.06%
Corporate Dividends Received Deduction* 40.09%
U.S. Treasury Obligations* 0.13%
</Table>
* The above percentages are based on ordinary income dividends paid to
shareholders during the fund's fiscal year.
NONRESIDENT ALIEN SHAREHOLDERS
<Table>
Qualified ShortTerm Gains $11,968
Qualified Interest Income** 11.41%
</Table>
** The above percentage is based on income dividends paid to shareholders
during the fund's fiscal year.
ADDITIONAL NONRESIDENT ALIEN SHAREHOLDER INFORMATION
The percentages of qualifying assets not subject to the U.S. estate tax for the
fiscal quarters ended November 30, 2006, February 28, 2007, May 31, 2007 and
August 31, 2007 were 2.77%, 3.20%, 2.19%, and 1.53%, respectively.
31
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 77046-1173. Each
trustee oversees 105 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. Each officer serves for a one year term or until their
successors are elected and qualified. Column two below includes length of time
served with predecessor entities, if any.
<Table>
<Caption>
OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIP(S)
POSITION(S) HELD WITH THE OFFICER PRINCIPAL OCCUPATION(S) HELD BY
TRUST SINCE DURING PAST 5 YEARS TRUSTEE/ DIRECTOR
- -------------------------------------------------------------------------------------------------------------------------
Interested Persons
- -------------------------------------------------------------------------------------------------------------------------
Martin L. Flanagan(1) -- 1960 2007 Director, Chief Executive Officer and None
Trustee President, INVESCO PLC (parent of AIM
and a global investment management
firm); Chairman, A I M Advisors, Inc.
(registered investment advisor);
Director, Chairman, Chief Executive
Officer and President, IVZ Inc. (holding
company); INVESCO North American
Holdings, Inc. (holding company);
Chairman and President, INVESCO Group
Services, Inc. (service provider);
Trustee, The AIM Family of Funds(R);
Chairman, Investment Company Institute;
and Member of Executive Board, SMU Cox
School of Business
Formerly: President, Co-Chief Executive
Officer, Co-President, Chief Operating
Officer and Chief Financial Officer,
Franklin Resources, Inc. (global
investment management organization)
- -------------------------------------------------------------------------------------------------------------------------
Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None
Trustee, President and President, A I M Management Group Inc.
Principal (financial services holding company),
Executive Officer AIM Mutual Fund Dealer Inc. (registered
broker dealer), A I M Advisors, Inc.,
AIM Funds Management Inc. d/b/a INVESCO
Enterprise Services (registered
investment advisor and registered
transfer agent) and 1371 Preferred Inc.
(holding company); Director, Chairman,
Chief Executive Officer and President,
A I M Capital Management, Inc.
(registered investment advisor);
Director and President, INVESCO Funds
Group, Inc. (registered investment
advisor and register transfer agent) and
AIM GP Canada Inc. (general partner for
a limited partnership); Director, A I M
Distributors, Inc. (registered broker
dealer); Director and Chairman, AIM
Investment Services, Inc. (registered
transfer agent), Fund Management Company
(registered broker dealer) and INVESCO
Distributors, Inc. (registered broker
dealer); Director, President and
Chairman, IVZ Callco Inc. (holding
company); INVESCO Inc. (holding company)
and AIM Canada Holdings Inc. (holding
company); Director and Chief Executive
Officer, AIM Trimark Corporate Class
Inc. (formerly AIM Trimark Global Fund
Inc.) (corporate mutual fund company)
and AIM Trimark Canada Fund Inc.
(corporate mutual fund company);
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); 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); and Manager,
Powershares Capital Management LLC
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.; President, AIM
Trimark Global Fund Inc. and AIM Trimark
Canada Fund Inc.; and Director, Trimark
Trust (federally regulated Canadian
Trust Company)
- -------------------------------------------------------------------------------------------------------------------------
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); Reich & Tang Funds
(Chairman) (registered investment
company) (7 portfolios); Daily Income
Fund (4 portfolios), California Daily
Tax Free Income Fund, Inc., Connecticut
Daily Tax Free Income Fund, Inc. and New
Jersey Daily Municipal Fund, Inc.,
Annuity and Life Re (Holdings), Ltd.
(insurance company); and Homeowners of
America Holding Corporation (property
casualty company)
Formerly: Director, CompuDyne
Corporation (provider of product and
services to the public security market);
Director, President and Chief Executive
Officer, Volvo Group North America,
Inc.; Senior Vice President, AB Volvo;
Director of various affiliated Volvo
companies; and Director, Magellan
Insurance Company
- -------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 2003 Chief Executive Officer, Twenty First Administaff
Trustee Century Group, Inc. (government affairs
company); and Owner and Chief Executive
Officer, Dos Angelos Ranch, L.P.
(cattle, hunting, corporate
entertainment); and Discovery Global
Education Fund (non-profit)
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company)
- -------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Director, Reich & Tang Funds) (7
Trustee Naftalis and Frankel LLP 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 None
Trustee Formerly: Partner, Deloitte & Touche;
and Director, Mainstay VP Series Funds,
Inc. (25 portfolios)
- -------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Mr. Flanagan was appointed as Trustee of the Trust on February 24, 2007. Mr.
Flanagan is considered an interested person of the Trust because he is an
officer of the advisor to the Trust, and an officer and a director of
INVESCO 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.
32
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Structured Value Fund
<Table>
<Caption>
OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIP(S)
POSITION(S) HELD WITH THE OFFICER PRINCIPAL OCCUPATION(S) HELD BY TRUSTEE/
TRUST SINCE DURING PAST 5 YEARS DIRECTOR
- -------------------------------------------------------------------------------------------------------------------------
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., A I M Advisors,
Inc. and A I M Capital Management, Inc.;
Director, Vice President and Secretary,
INVESCO Distributors, Inc.; Vice
President and Secretary, AIM Investment
Services, Inc. and Fund Management
Company; Senior Vice President and
Secretary, A I M Distributors, Inc.;
Director and Vice President, INVESCO
Funds Group Inc.; Senior Vice President,
Chief Legal Officer and Secretary of The
AIM Family of Funds--Registered
Trademark--; and Manager, Powershares
Capital Management LLC
Formerly: Vice President, A I M Capital
Management, Inc.; 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, INVESCO PLC; N/A
Vice President 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, INVESCO PLC; Director, INVESCO
Funds Group, Inc.; and Vice President of
The AIM Family of Funds--Registered
Trademark--
Formerly: Director, Senior Vice N/A
President, Secretary and General
Counsel, A I M Management Group Inc. and
A I M Advisors, Inc.; Senior Vice
President, A I M Distributors, Inc.;
Director, General Counsel and Vice
President, Fund Management Company; 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--;
Director and Vice President, INVESCO
Distributors, Inc.; Chief Executive
Officer and President, INVESCO Funds
Group, Inc.; and Senior Vice President
and General Counsel, Liberty Financial
Companies, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Sidney M. Dilgren -- 1961 2004 Vice President, A I M Advisors, Inc. and N/A
Vice President, Principal A I M Capital Management, Inc.; and Vice
Financial Officer and President, Treasurer and Principal
Treasurer Financial Officer of The AIM Family of
Funds--Registered Trademark--
Formerly: Fund Treasurer, A I M
Advisors, Inc.; Senior Vice President,
AIM Investment Services, Inc.; and Vice
President, A I M Distributors, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2003 Head of INVESCO's World Wide Fixed N/A
Vice President Income and Cash Management Group;
Director of Cash Management and Senior
Vice President, A I M Advisors, Inc. and
A I M Capital Management, Inc; Director
and President, Fund Management Company;
Vice President, The AIM Family of
Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust); and
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)
Formerly: Chief Cash Management Officer
and Managing Director, A I M Capital
Management, Inc.; Vice President, A I M
Advisors, Inc. and The AIM Family of
Funds--Registered Trademark-- (AIM
Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free
Investments Trust only)
- -------------------------------------------------------------------------------------------------------------------------
Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance N/A
Anti-Money Laundering Officer, A I M Advisors, Inc., A I M
Compliance Officer Capital Management, Inc., A I M
Distributors, Inc., AIM Investment
Services, Inc., AIM Private Asset
Management, Inc., Fund Management
Company and The AIM Family of
Funds--Registered Trademark--
Formerly: Manager of the Fraud
Prevention Department, AIM Investment
Services, Inc.
- -------------------------------------------------------------------------------------------------------------------------
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. and A I M Capital
Management, Inc.; Chief Compliance
Officer of The AIM Family of
Funds--Registered Trademark--, INVESCO
Global Asset Management (N.A.), Inc.,
(registered investment advisor), INVESCO
Institutional (N.A.), Inc., (registered
investment advisor), INVESCO Private
Capital Investments, Inc. (holding
company), INVESCO Private Capital, Inc.
(registered investment advisor) and
INVESCO Senior Secured Management, Inc.
(registered investment advisor); and
Vice President, A I M Distributors,
Inc., AIM Investment Services, Inc. and
Fund Management Company
Formerly: Vice President, A I M Capital
Management, Inc.; Global Head of Product
Development, AIG-Global Investment
Group, Inc.; and Chief Compliance
Officer and Deputy General Counsel,
AIG-SunAmerica Asset 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
Suite 100 11 Greenway Plaza Inc. LLP Institutional
Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana Street (N.A.), Inc.
Houston, TX 77046-1173 Suite 100 Suite 2900 One
Houston, TX 77046-1173 Houston, TX 77002-5678 Midtown
Plaza
1360
Peachtree
Street,
N.E.
Suite
100
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
1735 Market Street, 51st & Frankel LLP P.O. Box 4739 Company
Floor 1177 Avenue of the Houston, TX 77210-4739 225 Franklin Street
Philadelphia, PA 19103-7599 Americas Boston, MA 02110-2801
New York, NY 10036-2714
</Table>
33
[EDELIVERY GO PAPERLESS
AIMINVESTMENTS.COM/EDELIVERY
GRAPHIC]
REGISTER FOR EDELIVERY FUND HOLDINGS AND PROXY VOTING INFORMATION
eDelivery is the process of receiving your fund The Fund provides a complete list of its holdings four times in each fiscal
and account information via e-mail. Once your year, at the quarter-ends. For the second and fourth quarters, the lists appear
quarterly statements, tax forms, fund reports, in the Fund's semiannual and annual reports to shareholders. For the first and
and prospectuses are available, we will send you third quarters, the Fund files the lists with the Securities and Exchange
an e-mail notification containing links to these Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is
documents. For security purposes, you will need available at AIMinvestments.com. From our home page, click on Products &
to log in to your account to view your statements Performance, then Mutual Funds, then Fund Overview. Select your Fund from the
and tax forms. drop-down menu and click on Complete Quarterly Holdings. Shareholders can also
look up the Fund's Forms N-Q on the SEC Web site at sec.gov. Copies of the
WHY SIGN UP? Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in
Washington, D.C. You can obtain information on the operation of the Public
Register for eDelivery to: Reference Room, including information about duplicating fee charges, by calling
202-942-8090 or 800-732-0330, or by electronic request at the following e-mail
o save your Fund the cost of printing and address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-09913 and
postage. 333-36074.
o reduce the amount of paper you receive. 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,
o gain access to your documents faster by not upon request, from our Client Services department at 800-959-4246 or on the AIM
waiting for the mail. 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,
o view your documents online anytime at your sec.gov.
convenience.
Information regarding how the Fund voted proxies related to its portfolio
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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"). There were no amendments to the Code during the period
covered by the report. 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 Raymond Stickel, Jr. Mr.
Stickel 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 2007 Pursuant to Fees Billed for year end 2006
to the Registrant Waiver of Services Rendered to Pursuant to Waiver
for fiscal year end Pre-Approval the Registrant for of Pre-Approval
2007 Requirement(1) fiscal year end 2006 Requirement(1)
------------------- ------------------- -------------------- --------------------
Audit Fees $272,969 N/A $220,075 N/A
Audit-Related Fees $ 0 0% $ 0 0%
Tax Fees(2) $ 57,896 0% $ 41,929 0%
All Other Fees $ 0 0% $ 0 0%
-------- --------
Total Fees $330,865 0% $262,004 0%
PWC billed the Registrant aggregate non-audit fees of $57,896 for the fiscal
year ended 2007, and $41,929 for the fiscal year ended 2006, 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 brought to the attention of the Registrant's Audit Committee and
approved by the Registrant's Audit Committee prior to the completion of the
audit.
(2) Tax fees for the fiscal year end August 31, 2007 includes fees billed for
reviewing tax returns. Tax fees for fiscal year end August 31, 2006
includes fees billed for reviewing tax returns and consultation services.
FEES BILLED BY PWC RELATED TO AIM AND AIM AFFILIATES
PWC billed A I M Advisors, Inc. ("AIM"), the Registrant's adviser, and any
entity controlling, controlled by or under common control with AIM that provides
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 2007 Provided for fiscal fiscal year end 2006 Provided for fiscal
That Were Required year end 2007 That Were Required year end 2006
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 provided
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 brought to the attention of the Registrant's
Audit Committee and approved by the Registrant's Audit Committee prior to
the completion of the audit.
(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 2007, and $0 for the fiscal
year ended 2006, 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 14, 2007, 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 14,
2007, 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 9, 2007
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 9, 2007
By: /s/ SIDNEY M. DILGREN
---------------------------------
Sidney M. Dilgren
Principal Financial Officer
Date: November 9, 2007
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.